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Zillow Q2 beats outlook as revenue rises and restructuring costs mount
The housing and mortgage slowdowns persisted in guidance, with Zillow expecting purchase mortgage originations to fall low to mid single digits.
Zillow Group reported a second-quarter result that topped its own outlook on nearly every line, even as the company simultaneously announced restructuring actions and leadership changes. On its August 5 call, CEO Jeremy Wacksman and newly expanded COO and CFO Jeremy Hofmann described a plan to grow faster than the broader housing market, backed by a restructuring intended to fund that expansion.
Financially, Zillow said revenue rose 18% year over year to $772 million, ahead of the high end of guidance. EBITDA was $176 million, a 23% margin. For Sale revenue increased 14% to $549 million, despite purchase mortgage activity being described as flat, while mortgages revenue climbed 75% to $84 million as purchase loan origination volume nearly doubled.
Zillow also highlighted rental momentum, with Rentals revenue up 31% to $209 million, supported by 42% multifamily growth and a record 79,000 multifamily properties on its platform, up 23% from a year earlier. The company said AI Mode is live for about 20% of signed-in users, where engaged consumers spend more than three times as long on the site and contact an agent at nearly three times the rate of other users.
The restructuring and market pressure were the counterweight. Zillow eliminated about 7% of its workforce, recording $36 million in restructuring costs in the quarter and expecting another $23 million to $28 million in Q3. Despite adjusted net income of $118 million, Zillow posted a GAAP net loss of $4 million, and management revised its purchase mortgage market outlook, now expecting originations to decline low to mid single digits versus prior expectations.