Hello, and welcome to Zillow Group's fourth quarter and fiscal year 2025 financial results call. We ask that you hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Brad, you may begin.

Thank you. Good afternoon, and welcome to Zillow Group's quarterly earnings call. Joining me today to discuss our results are Zillow Group's CEO, Jeremy Waxman, and CFO, Jeremy Hoffman. During today's call, we will make forward-looking statements about our future performance and operating plans based on current expectations and assumptions. These statements are subject to risks and uncertainties, and we encourage you to consider the risk factors described in our SEC filings for additional information. We undertake no obligation to update these statements as a result of new information or future events, except as required by law. Please review the cautionary statement and additional information in our earnings release, which can be found on our Investor Relations website. This call is being broadcast on the Internet and is available on our Investor Relations website. A recording of the call will be available later today. During the call, we will discuss GAAP and non-GAAP measures, including adjusted EBITDA, which we refer to as EBITDA, and adjusted free cash flow, which we refer to as free cash flow. We encourage you to read our updated investor presentation, shareholder letter, and earnings release, all of which can be found on our investor relations website, as they contain important information about our GAAP and non-GAAP results, including reconciliations of historical non-GAAP financial measures. We will open the call with remarks, followed by live Q&A. And with that, I will now turn the call over to Jeremy Waxman.

Good afternoon, everyone, and thank you for joining us. Q4 capped a year of strong execution for Zillow and continued progress on our long-term strategy to make moving easier. We delivered excellent results across the business and achieve all of our reported financial targets for full year 2025, including full-year profitability, and we're carrying that momentum into 2026. This week marks 20 years since Zillow.com launched with a simple idea, to give consumers access to clear information in a process that often lacked it. What started as a way to see what homes were worth evolved into the place to search and discover listings for sale and for rent, and is now an integrated ecosystem spanning the entire experience of buying, selling, renting, and financing. Zillow's evolution reflects two decades of relentless product innovation grounded in consumer advocacy and strong industry partnerships. We're solving problems on behalf of consumers in a category unlike almost any other. Residential real estate is highly regulated, deeply local, and organized around independent licensed professionals operating in hundreds of distinct markets. Transactions are high-dollar, high-stakes, highly personal, and for most people, they happen only a handful of times over their entire lifetime. That combination makes real estate an especially difficult and vertical for general-purpose AI to disrupt. Success requires trusted partners and systems that reliably support complex journeys that unfold over months, not moments. Zillow is built for that reality. We're not optimizing for leads alone. Our products facilitate the entire transaction. That means supporting everyone involved, buyers, sellers, agents, loan officers, renters, property managers, and enabling the essential workflows that move people from interest to action and from action to closing. what differentiates zillow is the combination of assets we bring together at scale we have a trusted brand and deeply engaged consumer audience with roughly 80 percent of our traffic coming directly to us and we provide best-in-class software that professionals rely on every day to run and grow their businesses agents who use at least one of our products touch an estimated 80% of residential real estate transactions. That puts Zillow in a unique position to improve outcomes for consumers and partners. Professionals make repeated decisions as they engage with clients at every step of the transaction. So even small improvements in workflow, timing, and clarity compound over time. Helping professionals deliver better service more efficiently helps us reduce friction for consumers throughout their journey. We are rapidly executing on an ambitious multi-year strategy to integrate and digitize the many disparate pieces of the real estate transaction for consumers and for the professionals who serve them. Our software is deeply embedded in daily workflows and helps agents manage tours, financing, listing strategy, and client communication more effectively. That includes broadly used industry platforms such as Showing Time, which enables 90% of all tours of homes for sale in the U.S. And Follow-Up Boss, our customer relationship management software that powers daily activity for more than 80% of the highest volume teams in the country. These capabilities reflect years of deliberate execution, building technology that works across hundreds of markets, millions of consumers, and a wide range of professional needs. Zillow has been applying advanced technology in this category for 20 years, from natural language search and the neural Zestimate powered by machine learning, to personalized discovery, to rich media and virtual touring, to workflow automation and coordination, and now generative AI. Our focus is on building what matters most, improving customer experiences, boosting productivity for real estate professionals, and strengthening transaction outcomes over time for them and for Zillow. It's working. I'll walk through how this shows up in our results now, and then I'll share more detail on how our strategy and product innovation play out in real transactions and positions us for continued progress. Zillow's Q4 and full-year 2025 performance reflect excellent execution and meaningful progress across the business. In Q4, total revenue increased 18% year-over-year, coming in near the top of our outlook range. And I'm proud to share that for the full year, total revenue grew 16%, consistent with our mid-teens growth outlook. We also expanded full-year EBITDA margins by nearly 200 basis points year-over-year, in line with our outlook and in an important milestone for the company we reported 23 million of gap net income for the full year delivering on our expectation of full year profitability in for sale revenue grew 11 year-over-year in q4 with eight percent growth in residential revenue and 39 growth in mortgages revenue for the full year we delivered 1.9 billion in for sale revenue up 9% from 2024. Our for sale performance continues to outpace industry transaction trends and reflects our ability to convert more high intent movers already in our funnel and to improve outcomes for agents and loan officers through a more integrated experience. In rentals, Q4 revenue was up 45% year over year, driven by 63% growth in multifamily revenue. For the full year, rentals revenue reached $630 million, up 39% from 2024. Multifamily revenue grew 58% for the full year. Taken together, our results show we're executing a clear strategy, gaining share across for sale and rentals, and building a platform designed for durable growth across market conditions. In For Sale, we're creating a more connected experience across search, touring, financing, and agent collaboration, which continues to deliver meaningful growth for Zillow and positive outcomes for consumers, agents, and loan officers. Our focus is on reducing friction and uncertainty by helping all participants in the transaction work together more effectively, regardless of of whether their relationship begins on Zillow. Leveraging technology to improve speed, clarity and coordination while supporting the human judgment and local expertise that ultimately move transactions forward. For sale revenue totaled 1.9 billion in 2025 up 9% year over year. Cumulatively over the past three years for sale revenue grew 16% while the housing market shrunk as existing home sales were down 19%. We continue to expand existing products, broaden our reach, convert more customers already in our funnel, and integrate the experience more deeply. This strategy is clearly working, and we believe we are well on our way to achieving our $1 billion incremental revenue target in For Sale. Our success in For Sale is largely driven by continuous improvements to our customer experiences and growth in our enhanced markets, where the integrated experience comes to life as we bring together buyers, agents, and loan officers in a more coordinated way. In Q4, 44% of our connections came through enhanced markets, up from 21% a year ago, and well on our way to our intermediate target of at least 75%. Across these markets, Zillow Home Loans has averaged double-digit adoption as consumers see value in our offerings. We help buyers understand what they can afford and provide a convenient application with fast loan officer responses, free appraisals to eligible buyers, free access to credit monitoring, and competitive rates, all of which is driving strong growth in purchase originations. As we continue to grow, we are also improving our processes and offerings. In 2025, we saw an 11% increase in loan officer productivity, even as we added 40% more loan officers who take time to ramp up. At the same time, we grew total purchase loan origination volume 53% year over year. We also improved transaction conversion rate among Zillow preferred agents in 2025, while expanding the integrated enhanced market experience to more customers and more partners. Throughout 2025, we not only rolled out more enhanced markets, but also rapidly innovated on our products along the way, with a focus on improving connection quality, engagement, and productivity. Buyability, a tool from Zillow Home Loans that helps buyers understand what they can realistically afford before they take a tour or make an offer, has enrolled 3.6 million users, up from 2.9 million at the end of Q3. We've more tightly integrated buyability with Zillow Home Loans and with Follow-Up Boss. In that same vein, we recently rolled out custom pre-approval letters directly within Follow-Up Boss, allowing agents to generate offer-specific updates and collaborate faster and more seamlessly with our systems. Based on early tests, messaging within the Zillow app, powered by Follow-Up Boss, is driving more frequent communication between consumers and their agents, helping them stay aligned at key moments, communicate more consistently, and focus on delivering for clients instead of managing tasks. In 2025, Follow-Up Boss smart messages scaled from a small pilot to a nationwide feature, with agents sending more than 7 million of these AI-powered messages. Zillow's in-app messaging is fueling an increase in engagement between customers and agents which we believe will translate to better conversion and more transactions all of these agent software improvements build on the solid foundation of unique assets that already put zillow at the center of so many real estate workflows we're also continuing to expand zillow showcase our immersive listing experience that helps agents win listings and give sellers a more compelling way to market their homes showcase enhancements like sky tour and virtual staging have not only given buyers a better shopping experience, they've made Showcase even more attractive to agents and sellers, and adoption continues to grow. In Q4, Showcase was on 3.7% of new listings, up from 1.7% a year ago, and we see significant room to expand from here. Furthermore, in Q4, we announced Zillow Pro, a comprehensive suite of offerings that helps agents manage all of their clients, including those sourced outside of Zillow, in a single connected system. Over time, we expect it to reinforce Zillow's role, not just as a marketplace, but as a long-term partner helping real estate professionals operate more effectively and grow their businesses. We are currently beta testing Zillow Pro and plan to expand nationwide over the second half of the year. While in its early stages, we're encouraged by the initial feedback from agents and believe Zillow Pro creates exciting future growth potential for the company. All of these efforts reflect a consistent theme. Integration improves outcomes. We're helping consumers move forward with more confidence, helping agents and loan officers be more productive, and capturing more of the opportunity already flowing through our funnel. In rentals, we're executing against a significant opportunity and seeing some of our strongest growth as we deliver clear value for both renters and property managers. The rentals category is highly fragmented, with no single system that brings together comprehensive listings, high-intent demand, and modern transaction tools. As a reminder, our strategy to address this is twofold. First, we're building a comprehensive two-sided marketplace of homes for rent, giving renters a single, trusted destination to find every type of property, from single-family homes to large apartment communities. Second, we're modernizing the rental transaction itself, streamlining how renters and property managers connect and manage applications, leases, and payments. This strategy works because it solves real pain points on both sides of the market. Renters get transparency, efficiency, and trust. Property managers get more visibility for their inventory, better qualified applicants, and higher return on their marketing spend. And because renting is where nearly every mover starts, our progress in rentals continues to expand the top of Zillow's housing funnel and create durable growth across the business. In Q4, Zillow had 2.5 million average monthly active rental listings, ranging from single-family homes to large apartment buildings. In 2025, we estimate our share of rental listings increased to 63%, up from 54% in 2024. Zillow rentals attracted 31 million average monthly unique visitors in Q4, and because of our relentless focus on the consumer experience, renters rate Zillow as their number one preferred platform. High quality audience engagement translates into strong outcomes for our partners. Property managers tell us Zillow delivers the highest return on marketing investment in our category, which is driving wallet share as more large operators choose to advertise and upgrade their presence on Zillow. As a result, rentals revenue grew 45% year-over-year in Q4 and 39% for the full year 2025. Multifamily rentals revenue continues to be a key driver. We're adding more properties as we expand packaged offerings for property managers, encouraging them to list more of their portfolios on Zillow. As we continue to scale in rentals, we're coupling revenue growth with thoughtful investment and we see a clear path to a billion-dollar-plus annual revenue opportunity. We're getting there by improving the renter experience with clearer pricing, more streamlined applications, and more transparency, while delivering strong, measurable ROI for property managers. It's a winning combination that has allowed us to grow rentals revenue at an average of 32% annually since 2022, significantly outperforming the 14% annual rate we estimate for broader rental advertising demand. Zillow Rentals reflects the same core strengths that show up across Zillow, a trusted brand, a large and engaged audience, and product innovation that solves real problems for both sides of the market, consumers and industry professionals. The trajectory we're seeing in rentals reinforces why it continues to be one of our most compelling growth opportunities. Before I wrap up, I want to briefly address the legal matters that have been in the headlines recently. We are confident in our positions and approach, and we do not expect these matters to have a material impact on our financial position or long-term strategy. We believe deeply in our strategy, which is guided by a few core tenets. Consumers want an easier, more transparent way to rent, buy, sell, and finance their homes. Industry professionals want to scale their businesses, serve their clients more effectively, and help them get the broadest possible exposure. Our business decisions consistently focus on delivering products and experiences that do both that focus doesn't change based on market conditions or other external factors we believe zillow will continue to thrive by innovating and delivering what consumers want and industry professionals want and need we expect to continue growing across our business and further enhance the comprehensive marketplaces that consumers and the broader industry rely on our audience and engagement are strong and consumers and partners keep choosing zillow because of the scale, transparency, and experiences we offer. You can see the impact of our steady focus and consistent execution in the results we've reported today. Our multi-year strategy is designed to perform across market conditions, and the momentum we carried through 2025 has set us up well for 2026. As we mark Zillow's 20 years of building in this category, we continue to shape what's We've spent two decades earning consumer trust by investing in technology that brings transparency and efficiency to a complex process. And we are the company focused on delivering sustained value to agents across their businesses. That foundation positions us to lead in the current era and define the next era of real With that, I'll turn the call over to our CFO, Jeremy Hoffman.

Thanks, Jeremy. And good afternoon, everyone. We delivered strong results in Q4 and are well-positioned to continue delivering strong performance as we execute on our strategy in 2026 and beyond. Q4 2025 revenue was up 18% year-over-year to $654 million, near the top end of our outlook range. Our revenue performance, combined with effective cost management, delivered EBITDA of $149 million, near the midpoint of our outlook range. Q4 EBITDA margin was 23%, 260 basis points higher than a year ago. Our full year 2025 EBITDA grew 25% year-over-year as we continued to scale revenue and control costs. Importantly, as a result of these efforts, we reported positive GAAP net income in Q4 and for full year 2025. For sale revenue grew 11% year-over-year in Q4 to $475 million, approximately 800 basis points above the 3% residential real estate industry growth, as reported by NAR. We estimate purchase mortgage origination volume for the industry was roughly flat year-over-year in Q4, which is noteworthy given a majority of buyers transacting with Zillow purchased their home with a mortgage. Within the for sale revenue category, residential revenue was up $418 million, up 8% year-over-year and in line with our growth outlook. Residential revenue growth was driven primarily by our agent and software offerings and our new construction marketplace. Agent offerings include Zillow Preferred, Market Based Pricing, and Zillow Showcase. Software offerings primarily include FollowUpBoss, DotLoop, and ShowingTime. Within the for sale revenue category, mortgages revenue increased 39% year-over-year in Q4 to $57 million. This was better than our outlook for approximately 20% year-over-year growth, as we saw better than expected conversion rates from customers in our mortgage funnel. Purchase loan origination volume accelerated to 67% year-over-year growth in Q4, which was the main driver of our mortgages revenue growth. It is clear from our results that Zillow Home Loans has an attractive value proposition for buyers, and we are quite pleased with the strategy and execution. Turning to rentals, Q4 revenue was $168 million, with growth accelerating to 45% year-over-year. Rentals revenue comprised 26% of our total revenue in Q4, up from 21% a year ago. This growth was driven primarily by our multifamily revenue, which grew 63% year-over-year. Our value proposition to multifamily property managers and execution by our sales force to both win new properties and upgrade to more comprehensive packages is evident in our Q4 results. We increased the number of multifamily properties on our apps and sites by 44% year-over-year, reaching an all-time high of 72,000 multifamily properties as of the end of Q4, up from 50,000 properties at the end of 2024. As a reminder, we measure our multifamily property count as 25-plus unit buildings and do not include our industry-leading long-tail properties, which is a significantly larger property count. When you include these long-tail properties, Zillow Rentals had 2.5 million average monthly active rental listings in Q4, the most in the category. The quantity and quality of high-intent renters on our platform allows us to continue to expand our wallet share with property managers, who tell us Zillow delivers the highest return on marketing investment in our category. We expect to continue to drive growth in rentals towards our billion-dollar-plus annual revenue target. Q4 EBITDA expenses of $505 million were slightly above our outlook due to higher than expected legal expenses. We drove leverage on total fixed costs, which were flat year over year in Q4, compared to total revenue growth of 18%. This includes the impact of share-based compensation expense, which was down 20% year over year in Q4. The results of our cost discipline were evident in our expansion of EBITDA margins, which were up 260 basis points in Q4 year-over-year. Our net income margin expanded 990 basis points from Q4 a year ago. Turning to full year 2025, our execution throughout the year translated into 16% revenue growth, consistent with our mid-teens growth outlook and ahead of our expectations at the start of the year. In 2025, the housing market grew by 3% according to NAR, which means our revenue outperformed the housing market by 1,300 basis points. When we evaluate our performance, we focus on our ability to outperform the market over annual and multi-year periods, which we have successfully accomplished in 2025. Our for-sale revenue grew 9% in 2025, with residential revenue growing 7% and mortgages revenue growing 37%. Rentals revenue growth accelerated to 39% year-over-year in 2025 from 27% year-over-year in 2024. We grew our multifamily properties by 44% in 2025 and property managers chose to expand their investments with upgraded packages, which drove 58% multifamily revenue growth year-over-year. We combined our strong revenue growth with a disciplined cost management. We held our full year 2025 EBITDA fixed costs to approximately $1 billion, which resulted in fixed costs as a percentage of revenue declining to 41% in 2025 from 44% in 2024. Of note, total fixed costs for the company were up 2% for 2025. While we controlled costs, we continued to invest for future growth. We thoughtfully grew variable costs with additions to our rental sales force and loan officers in Zillow Home Loans. And we expanded rentals demand with our Redfin syndication agreement. This combination of strong revenue growth, disciplined cost management, and strategic investments resulted in 2025 EBITDA margin expansion of 180 basis points year over year. Share-based compensation expense of $390 million was down 13% year-over-year, which contributed to our net income margin, expanding 590 basis points to bring us to gap profitability for We made meaningful progress towards our mid-cycle financial targets. As part of those targets, we have a goal of adding $1.5 billion of revenue before any increase in existing homes sold. In 2025, we added $347 million in total incremental revenue, well on our way to achieving the goal. This performance came against the backdrop of a housing market that remains far below normal, with existing home sales flat year over year at 4.1 million homes sold. We continue to expect significant upside to our business when housing market conditions improve. Of note, assuming a more normal housing environment of 6 million existing homes sold, we estimate that we could have generated EBITDA margins in the mid to high 30% range in 2025, compared to our reported 24% EBITDA margins for the year. In 2025, we continued to be active on capital management. We retired the last of our $419 million in convertible debt in Q2 and repurchased $670 million of shares throughout the year, which in aggregate is $1.1 billion of cash returned to shareholders. Our overall outstanding share count was down 2 million shares at the end of 2025 from the end of 2024. Total share repurchases through 2025 have been $2.6 billion at a weighted average share price of $50. Going forward, we expect our share repurchase plan will continue to be a core part of our capital allocation strategy, as it has been since the end of 2021. In 2025, we generated $420 million of free cash flow, a 36% increase compared to the same period a year ago. We ended 2025 with $1.3 billion of cash and investments. We also recently secured a $500 million revolving credit facility, giving us more flexible access to capital and strengthening our overall liquidity. Turning to our outlook for Q1, we expect total revenue to be between $700 million and $710 million, implying a year-over-year increase of 18% at the midpoint of our outlook range. We expect for sale revenue growth in Q1 to be in line to slightly better than Q4, driven by residential revenue growth in the high single-digit range and mortgages revenue growth of approximately 40%. Our guidance reflects our expectation that challenging housing market conditions will continue in Q1. We expect our rentals revenue growth will be approximately 40% year-over-year in Q1, driven by further multifamily revenue growth. For Q1, we expect EBITDA to be between $160 million and $175 million, representing 24% margin at the midpoint of our outlook range. This implies EBITDA expenses of $535 to $540 million, up from $505 million in Q4. This is being driven primarily by a seasonal increase in payroll-related taxes and lead acquisition costs related to the Redfin syndication agreement. Additionally, we are increasing variable costs related to hiring of rental salespeople and loan officers in Zillow Home Loans as we continue to invest for growth. Last, we have ongoing elevated legal expenses. Of note, we estimate year-over-year increases in legal expenses will result in approximately 200 basis points headwind to EBITDA margins in Q1. Year-to-date in 2026, we have continued to repurchase our stock as we take advantage of the recent market dislocation to buyback shares at what we believe is an attractive price. Turning now to full year 2026, we expect to deliver mid-teens revenue growth. In rentals, we expect approximately 30% revenue growth in 2026, after growing rentals revenue by 39% in 2025 and 27% in 2024. We expect continued EBITDA margin expansion in 2026 as we leverage fixed costs and invest in variable costs. We expect share-based compensation expense to be down more than 10% year-over-year and to drive meaningful growth in net income. Before discussing costs and the shape of our margin expansion story for the year, I will discuss our housing expectations for 2026. We are planning for the for-sale environment to continue to bounce along the bottom. However, the affordability picture has improved and is giving us some optimism. The share of median household income spent on a newly purchased home returned to 32% in December, down from its peak of 38% in 2023. We will be watching this closely as we expect further improvement will drive a broader housing market recovery over time. With respect to costs, we plan to maintain our cost structure framework, including to continue to control our fixed cost base to drive leverage. We expect our fixed cost base of approximately $1 billion to grow with inflation and believe it is the right investment level as we execute our growth strategy. For variable costs, we plan to continue investing for growth in rentals, as well as additional loan officers in Zillow Home Loans, as we expand our enhanced market's footprint. Thus, we expect our variable cost base to grow ahead of revenue in the first half of 2026 and then trend towards in line with revenue growth in the second half of 2026. We have consistently said we will be opportunistic with our advertising spend dialing it up or down depending on where we see opportunities across the business. We see opportunities to grow marketing in 2026 versus 2025. We want to expand our awareness in our enhanced markets, and continue to strengthen demand for our rentals offering. As you think about the cadence of our expenses in 2026, note that we expect to incur elevated legal expenses throughout the year, which has an impact on year-over-year EBITDA margin growth, particularly in the first half of the year. Despite elevated legal expenses that result in approximately 100 basis points of margin headwind, we believe current consensus EBITDA estimates are reasonable for the full year. We know share-based compensation has been on investors' minds. After delivering a 13% decline in share-based compensation expense in 2025 compared to 2024, we expect to deliver more than a 10% decline in 2026. With 90% of our share-based compensation allocated to fixed employees, we are seeing increased leverage as we strive to keep fixed headcount relatively flat. The decrease in share-based compensation expense helped drive positive net income in 2025. We expect it to contribute to further net income growth in 2026. Furthermore, we have used our cash position and operating cash flow to repurchase stock, which has mitigated ongoing equity grant dilution, resulting in ending share count down 2 million shares year over year. As we look ahead, we are confident in our mid-cycle targets for $5 billion in revenue and 45% EBITDA margins, in a normalized housing market. 2025 showed good progress towards these targets. We expect to make further progress in 2026 as we continue to execute our strategy, which is for more than 75% of connections to have the enhanced market experience, to increase showcase adoption toward our intermediate term target of having showcase on 5% to 10% of total active listings, and strong growth in rentals with continued increases in multifamily property count and upgrades in packages. And looking even further beyond 2026, we are excited about Zillow Pro's future prospects to meaningfully expand our serviceable addressable market and help agents serve all of their customers. To close, we are successfully executing on our strategy and are very excited about the opportunity ahead of us. We have the right investments in place to support our strategy, and we are delivering strong growth while maintaining a disciplined cost structure that is driving expanding margins and positive gap net income. And with that operator, we'll open the line for questions.

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. We'll wait a moment to allow the queue to form. Our first question will come from Nick Jones with BNP Paribas Security Corp. Please unmute your line and ask your question.

Great. Thanks for taking the questions. I have two, one on rentals and one on AI. Can you elaborate a little bit on rental trends? You're beginning to share in the long tail, beginning to share with multifamily, driving 30% annual growth. So what are you kind of hearing from the multifamily side as far as product market fit goes and how much more opportunity or wood to chop do you see there kind of maybe this year and beyond? And that's the first question. And the second question, you had a great slide on your positioning for vertically integrated AI. You're partnering with OpenAI today. Can you talk about how you see kind of a vertical AI future and Zillow's place in it to the extent you can kind of share what you're excited about?

Yeah, thanks, Nick. Maybe I'll start and Jeremy add on anything you want. I think on rentals, I mean, the growth you're seeing in the business, it's really just our strategy working honestly it's the as we talked about we have a pretty unique strategy in rentals in that we're the marketplace that's focused on trying to organize all of the types of supply not just the big apartment communities but the long tail single family listings and as jeremy talked about you know more than or two and a half million on average in q4 listings we think that's the most in the category that's what drives the audience right i mean the 31 million unique visitors per CommScore, that lead is widening because we're solving their problem. They want to find as much inventory as possible in one place, and they want a digital transaction, right? Having portable applications, being able to sign custom leases, be able to make rent payments, report rent to build credit, all those things. Those are tools the renters want. And then once you satisfy and delight the demand, that's when the advertisers really want to get access to that demand. So when you have this high quality audience, increasingly multifamily advertisers want to bring more of their portfolios online. That's why you see the building growth and the revenue growth accelerate. And, you know, as Jeremy talked about, the ROI is really the signal there. You know, we consistently hear where the highest ROI advertising spend of all their sources of advertising spend, and they spend it a bunch of places. So that's really what's driving the revenue growth you've seen, you saw in Q4. It's why we expect the revenue growth to continue, as Jeremy talked about, we feel very confident in our ability to get to that billion-dollar-plus revenue target that we've put out for you all in rentals. And it's important to remember, as we get closer to that target, we don't think that's the end. We think there's a very big rentals opportunity to go after beyond that billion-dollar-plus mile marker. But for now, we're really excited to just make progress towards it. And then on the AI question, i mean i think i talked about it in my prepared remarks um you know i think it's really this is just a unique category and we have a really unique strategy that i think is going to benefit from ai right residential real estate it's highly regulated deeply local it's organized around millions of independent licensed professionals um and then the consumer experience it's not a one visit transaction. It's high dollar, high stakes, takes place over months or sometimes years. And the average buyer buys once every 14 years at this point. So, you know, you're turning to a professional team and you're turning to a vertically integrated experience to really help you with that. That's something that where we think AI is actually an ingredient to us building this vertical rather than a threat or something and why we lean into it. And I think that's also why we're so confident that we're going to be the ones to help deliver that. Our strategy to build this vertically integrated experience is what we've been doing for years now. And we're the ones with deep industry expertise and the proprietary assets and data at scale, right? So yes, of course, we have the audience, but the industry software tools and the data and the transaction workflows and the trust of the professionals to help build this integrated transaction is what we're focused on. And when AI comes into the category, we think it's going to help make that vertical experience even better, right? Elevating the professionals, taking away the busy work so they can convert more transactions, they can be more efficient and delight in our shared customers.

That's what we think the end of this rainbow looks like, and we're excited to go deliver it great thank you our next question will come from brad erickson with rbc capital markets your line is open please unmute and ask your question hi guys thanks i have two um first you know i think we all know kanzilla's stance on listing distribution requirements but you know just curious how you think about maybe any effects from some of this recent consolidation going on in the industry and private listing networks and all that, does that represent any kind of risk to the business from your perspective? And then I have a follow-up.

Thanks, Brad. I mean, the short answer is no. We don't really expect any risk or impact to our business. Despite all the noise and questions, we are talking about a pretty small number of listings I think, you know, 1% or less. And the reason it's small is the vast majority of sellers and agents don't want that, right? Agents don't want to limit exposure and have a home take longer to sell or not maximize price, and they especially don't want to do that if, to do so, they'd have to trade off access to Zillow's broad audience, right? What consumers want is more transparency, they want to sell their homes fast, they want to sell their homes for most money, and they want to market them broadly. And we hear that from both sellers and agents, and that's why I think you've historically seen these types of approaches be a very small share of listings. There is a very small share of cases where things don't sell broadly on market, and we expect that to continue.

Got it. And then just to follow up on the on the respite case, recognize you probably can't comment too much on the case itself. But just curious if if that's creating any sort of adverse effects or friction on the ground for you as you go to market with DHL or even just the enhanced market strategy overall. Thanks.

Sure. Yeah. I mean, on that. No, it's not right. Our long-term strategy here is based on consumer choice and building this integrated end-to-end transaction and, you know, helping buyers understand why they can afford when they're on Zillow, providing them a convenient application, giving them great loan officers to work with, and then helping agents see that Zillow Home Loans is a great option for them and earning the agent's trust with Zillow Home Loans so that they want to use it for some of their customers. That's really the strategy here. And you're seeing the results of that play out in the mortgage growth. I mean, really strong mortgage growth in Q4, 37% in 2025. And we're expecting continued strong mortgage growth into 2026.

And the double digit adoption rate you're seeing of Zillow Home Loans across our enhanced markets, I think is a great barometer for continuing to methodically grow the ZHL experience and expose it to more agents and more customers. got it thanks our next question will come from ron josey with city your line is open please go ahead great thanks for taking the question maybe a quick follow-up on brad's just now with all the legal challenges that are out there maybe maybe jeremy talk to us about just is there any change in approach to zilla's business strategy that has to happen because of these challenges or or anything that you feel needs to change just because of you know the multiple suits out there And then maybe for Jeremy Hoffman, just a modeling question. There's lots of moving parts in terms of newer products ramping like rentals and ZSL and mortgages doing better. And then we have newer products launching like the rollout of pro in the back half of the year. Just talk to us about the framework you were using as we build out revenue throughout 26. Obviously, we have 1Q guidance and we have EBITDA, but would love your thoughts on how you frame sort of the contributions of these newer products and enhanced markets throughout 2026. Thank you.

Yeah, maybe I'll take the first one and off. You can take the second. I mean, the answer to your first one is pretty short. No, we don't expect any change. We're not making meaningful changes to our business or results in any issues. And we're really confident in our positions and approach. We don't expect the issues to have a material impact on our long-term strategy or our financial position.

Yeah. And then on guidance from a revenue perspective at the full company level we're expecting mid-teens revenue growth on rentals we're expecting 30 revenue growth for 2026 and that's on the face of a 39 revenue growth in 2025 and 27 in 2024 so continuing to see great or expecting to see great growth there with respect to contributions on the for sale front it's going to be more of the same which will be some combination of um enhanced markets continuing to grow zilla showcase continuing to roll out follow-up boss getting in the hands of more folks zilla home loans adoption continuing to grow nicely alongside uh the enhanced markets expansion and then our new construction business continues to grow nicely that's all coupled with uh a rentals business that we think is really well positioned has executed well the last few years and we expect it to continue to be the case in 2026.

All right, our next question will come from John Colontuoni with Jefferies. Your line is open. Please go ahead.

Okay, great. Thanks for taking my questions. I wanted to start with Zillow Pro. Update us on where that rollout stands and any early learnings into how it's impacting lead conversion and agent adoption of your CRM tools. And second, on guidance, you've come in closer to the high end of your guidance in the past couple quarters, which compares to more consistently delivering upside to the high end in recent years. Has your approach to guidance transitioned so you're looking to sort of get closer to the high end rather than beat the high end. Thanks.

Maybe I'll take the first and Jeremy take the second. On Pro, we're really excited about Zillow Pro. It's in beta test now and we're planning for nationwide expansion kind of second half of the year. And a reminder, Pro is really a membership bundle. It's an offering to help the agents, all agents, not just current Zillow customers, run their whole business and help them convert all of their customers, not just Zillow customers. And that includes, you mentioned our CRM, Follow Boss. That includes premium agent profiles with curated media. It includes branding. It includes expanding the My Agent feature, which is something of particular interest for agents. helping the rest of their client database get insights from Zillow about what those clients are doing. It includes all of our AI-powered follow-up tools. And it becomes a pathway to Zillow Preferred. So as more agents are on Zillow Pro, that becomes a place where they can raise their hands and try and become eligible for Zillow Preferred. And to your question on our CRM, because Follow Boss is a key part of the bundle, we expect as more folks eventually sign up for pro, it will help follow-up boss growth and adoption. But I think equally exciting will be for existing follow-up boss customers. It's going to help increase the usage and the efficacy of follow-up boss because we're going to be bringing more AI and more insights to the part of their business that is not Zillow customers. And so many of them have great databases, great clients, great lead sources that are off Zillow and helping supercharge that and improve conversion to your question, we expect that to help them get more efficient and improve both customer service and ultimately conversion of more transactions. So again, we're really excited about it. I think it's a fantastic next step in helping really grow the SAM of our for sale business. But I will say it's early and that's why we're in beta. And that's why we were really clear on timing that we're going to learn a bunch with our beta customers in the first half this year. And we're going to march onward in the second half.

Yeah. And then, John, on your question around guidance and what we're trying to achieve there, I think the answer is we've always tried to be as close to the pin as possible. We've gotten better at forecasting conversion, in particular, in PA. So that's allowed us to get closer these last few quarters than maybe the magnitudes of beats you've seen previously, but always trying to get as close as possible. And then with respect to Q4, the big difference on the cost structure was really around legal expenses and that was higher than we anticipated coming into the quarter and was ultimately 180 basis points of margin drag for Q4. Obviously we laid out what we think for 2026 from a legal cost perspective as well and it'll be a drag but it's not stopping us from expanding margins which we expect to do throughout very helpful.

Thank you.

Our next question will come from Mark Mahaney with Evercore. Your line is open. Please go ahead.

Okay. Thanks. Maybe two questions. You talk about getting to 75% of connections coming through enhanced markets. What are the biggest obstacles to going from 44% to 75%? And you talk about that as a medium term goal, medium, like two to three years. Is that how we should think about it. And then Zillow Pro and that contribution. So we should start to see an impact of that in the second half of the year. And where in the revenue streams would that show up? Thank you.

Yeah, thanks for the questions, Mark. Maybe I'll take the first and Jeremy, you can take the second. On enhanced markets and the connection share, we haven't put a time frame on 75%, I mean, you should expect the rollout will continue to look similar, right? It's both more geographies and then depth in those existing geographies. We did that this year. And maybe think about pacing to be a similar clip of growth to the last few years. So, you know, it's on the horizon. And again, remember, 75% was just kind of a mile marker. We'd like to get it to as many connections as possible. And so once we got from, you know, 20 to 44 last year, we'll keep growing. we're going to find ways to bring that experience to as many customers as possible just as we get over half and into more into the future years it's going to be broader and deeper in even more places and that's to your question on what the governor is it's operational lift and scale and it's training partner teams and making sure our partner agents have the right capacity and quality and then ultimately zillow home loans loan officers so you have to build all those things to go grow. We're really proud of the work we did in 2025, you know, more than doubling that. And you're seeing the incremental revenue that's coming from this strategy coming to life, even against the flattish housing market. And that's why we're so confident in the billion dollar plus incremental revenue in our for sale business, just from getting this experience in more people's hands over time. So no explicit timeframe, but we feel great and we're well on our way.

And then, Mark, with respect to how to think about it for 2026, I would not expect it to be meaningful, even in the second half of 2026, as we are rolling it out more nationwide. I think 2026 is really a year for learning, adoption, and figuring out, you know, where the key value props are. So I would think about it that way for 2026, not a financial contributor, but one where we really learn a ton it will sit within residential as the revenue as the revenue comes in and today we're offering it as a monthly subscription that's priced for adoption thank you very much our next question comes from nikhil devnani with bernstein your line is open please go ahead hi there thanks for taking my question i wanted to ask about margins so on the last earnings call you had kind of anchored to the last couple of years which implied roughly 200 basis points or so of opportunity in margin expansion for 2026.

So I just wanted to clarify, is that still how you're thinking about margin expansion this year?

And then considering the 100 basis points of headwind you're calling out from legal, does that mean that your underlying margin expansion is actually getting better than what you've seen in the past couple of years as the business scales and you get a stronger handle on the various cost buckets you've already talked about thank you yeah sure it's a it's a really good question um first i'd say consensus feels right for the year on ebitda um and that implies you know around 200 basis points of margin expansion um we do think the underlying margin profile is better than that and there's a legal uh drag associated with the cost there of 100 basis points so you're right to point that out the cost structure and the leverage on the business model is getting better, and then we have those legal costs to contend with. As you think about the shape of the year, you know, the first half of the year, we're going to continue to hold fixed costs flat with inflation. We'll continue to invest in variable across rental sales, the Redfin syndication agreement, and DHL loan officers, and then we're expecting variable costs to run closer to revenue growth during the second half of the year as the sales forces mature and we lap the comps on the redfin syndication agreement uh legal will be a drag it's a 200 basis points drag in q1 it's 100 basis point uh drag for the year but overall we still explain we still expect to expand margins um similar to what we've done in 2024 and 2025 and i'd be remiss if i didn't say stock-based comp will be down we expect to be down more than 10 percent again which should drive further expansion in net income so i think

it sets us up for another good year of execution we're expecting strong revenue growth we expect ebitda will grow faster than revenue and we're expecting net income will grow even faster than both revenue and ebitda great thank you so much our next question will come from trevor young with barclays your line is open please ask your question great thanks um on mortgages years ago when you had disclosed segment ebitda i think it was approaching ebitda break even when the business was around about 250 million in revenue so a bit bigger than where we're at today is mortgages ebitda profitable today and how should we think about margin here in a recovery scenario as we bridge to that mid-cycle 45 ebitda margin bogey and then second question just to to clarify you know the cadence of EBITDA this upcoming year it sounds like legal expenses were kind of outsized here in 4q embedding a bit more for the full year you know uh two points hit in one q one point hit in the for the full year should we lap that by 4q such that you know we'll see that uptick in margin really hitting in 4q yeah thanks thanks trevor i'll take those um on In mortgages, we don't break it out, but we love the long-term opportunity in mortgage for growth and profits.

We look at a landscape there that purchase mortgage is still very, very fragmented. And we think that in a more commoditized product like mortgage, brand and distribution tend to do quite well. And we have great brand and we have great distribution as well. So we love the opportunity there, and we're seeing it play out in the results, right? Mortgages grew 39 percent in Q4. So, home loans purchase originations grew 67 percent, and we're expecting the category to grow 40 percent in Q1 as well. So, feel quite good about all that, and hopefully that helps you give, helps give some context on, you know, where we're headed on the mortgage front.

Our next question will come from Daily with J.P. Morgan. Your line is open.

Please ask your question great thanks for taking my questions um i have a question on macro so could you elaborate on the improvements you're seeing in affordability versus your expectations for housing markets to bounce along the bottom are you seeing anything that might be curving some of the optimism warranted by the affordability improvement and separately or i guess relatedly are any other investment plans meaningfully sensitive to the housing market growth or should we expect your expense framework to be less correlated to the housing conditions yeah i'll take that so on the macro front we planned the cost structure we planned the revenue for housing to not do much

this year we are starting to see affordability get better but not necessarily seeing it play out in in uh in homes being sold faster or anything like that we're just pointing out the fact that uh housing or housing expenses as a percent of total income is down to 32 percent versus you know at its high in 2023 it was 38 so we think that's a good sign that should drive a broader recovery over time we're just not necessarily planning for it in 2026 and just remind me uh your second question was what exactly um if your investment plans are meaningfully sensitive to the housing in market growth or if your expenses framework

should be less correlated to that?

I would think about expense framework as consistent regardless of the macro environment. I think macro is a real positive for us when it comes back, but our expense framework is going to be consistent regardless of what housing does.

Got it, thank you.

Our next question will come from Lloyd Walmsley with Mizuho. Your line is open, please go ahead.

Great. Thanks for the questions, too, if I may. First, just can you give us a sense of if you're planning to step up enforcement of Zillow listing access standards to just sort of ensure that broad distribution of listings? And then secondly, when we look at the sort of percent of leads coming from enhanced markets, it was a big sequential step up relative to what you've been seeing this quarter. So can you just help us understand, like, I think you recognize a lot of the revenue at the time of the lead, but like, is there a leading indicator component of that at all? and like our underlying lead volumes also accelerating as enhanced market scale up, anything you could say there would be great.

Yeah, maybe I'll take the first one and then Jeremy, you can take the second. I mean, on the listening access standards, there's nothing to step up. We're enforcing them now. Remember, this is really about education. What we find is when we educate an agent that might've been miseducated, that there's a violation that would result in a listing not being broadly marketed and not being on Zillow. Most folks don't want to do that. And so we end up helping them understand, hey, there's a trade-off to make there and they want their listing on Zillow. So that's been working well.

It's why you continue to see this be a pretty small thing because most sellers and most agents who are helping sellers want broadest possible exposure for the listing to sell their home fastest and for more money yeah and then on the enhanced markets question um what i would remember or just remind you is the zillow home loans revenue uh that tends to come alongside the enhanced markets expansion and when we start to see more mortgages come through that lags so i wouldn't think about it as one-to-one as we improve as we increase the amount of connections in enhanced markets it will go one-to-one with the overall for sale business okay thank you guys our last question will come from dan kernos with benchmark company your line

is open please go ahead yeah great uh thanks um can we just touch on the opportunity to grow marketing in 26 that you guys called out obviously you've got competitors still spending pretty aggressively although traffic seems to be accruing to you rather than them we saw redfin advertised during the Super Bowl. And so just curious what channels you guys are looking to press and why you think this year is a particularly good year to step up on the marketing spend. Thank you.

Yep, Dan, I can take that. I mean, I think for what we're doing, which is a modest increase, it's more about being opportunistic, which is what Jeremy has always said will be opportunistic. We see a little bit more room in enhanced markets and in rentals. And so you'll see a slight increase, which I think is a little different than what maybe some competitors are doing with volumes of spend and where they're spending. And as you pointed out, I think the reason we can do that is actually implied in your As the category leader with such strong, not just brand awareness, but brand preference, we tend to benefit when others in the category advertise. We saw that even this weekend. And we'll continue to find the right places to teach people what we do, help make them aware of our new things, things like enhanced markets, to try and deepen engagement and earn the right with them to offer them more services. That's really what our focus is in our advertising spend. And you'll see us do that this year. So the most change in strategy in terms of how we think about advertising, Jeremy Hoffman has always talked about it, is we want to be opportunistic with our parts of the business. And that's what we're doing this year is finding the right places to really pour a little bit more gas on because we think it really helps the business.

Does that imply channel shift at all?

No, nothing specific on channel shift. We've been really great, really efficient advertisers at driving both top, mid and bottom funnel. I mean, our marketing team does a great job of kind of branded response where we're building brand and reinforcing brand preference while also driving great performance into the funnel and into our businesses. And the team will continue to do that. Great. Super helpful. Thank you.

This completes the allotted time for questions. I will now turn the call back over to Jeremy Waxman for any closing remarks.

Thank you all for joining us today. We really appreciate your continued support. We are excited for what's ahead and look forward to speaking with you all next quarter.

Thank you for joining Zillow Group's fourth quarter and full year results call. This concludes today's conference call and you may now disconnect.