A residential real estate platform that helps people buy, sell, rent, and finance homes across the U.S., anchored by its Zestimate home-value model and tools like Zillow Home Loans, Premier Agent, and ShowingTime. It was co-founded in 2006 by former Microsoft and Expedia executives Rich Barton and Lloyd Frink, who named it by blending "zillions" (the data points) and "pillow" (the personal side of home).
Rentals and Mortgages drove revenue up 18% to $772M, but gross margin fell to 72.8% as lead costs rose.
growth accelerated, but the cost of that growth is rising. Revenue rose 18% to $772 million, driven by a 31% increase in Rentals and a 75% increase in Mortgages, while fell 1.9 points to 72.8% as lead acquisition costs from the Redfin partnership continued to climb. The company is growing its top line at the expense of profitability, and a new restructuring plan signals a shift toward cost discipline.
Key takeaways
Rentals rose 31% to $209 million, driven by a 28% increase in quarterly revenue per average monthly rentals unique visitor as multifamily property managers continued to upgrade advertising packages.
Mortgages rose 75% to $84 million, fueled by a 94% increase in Zillow Home Loans purchase loan origination volume to $2.2 billion.
Residential grew 7% to $465 million, its eighth consecutive quarter of growth, supported by higher revenue per visit from Premier Agent and ShowingTime+.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 revenue rose 18% to $772M driven by Rentals (+31%) and Mortgages (+75%), while gross margin dipped to 73%.
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Total grew 18% to $772M, with Rentals up 31% to $209M and Mortgages up 75% to $84M, while Residential rose 7% to $465M.
contracted 1.9 points to 72.8% as cost of growth continued to outpace revenue growth, primarily due to higher lead acquisition costs tied to the Redfin rentals syndication agreement.
The company recorded $36 million in restructuring costs for a 7% headcount reduction announced in August 2026, expected to reduce expenses in the third quarter.
fell 87% to $11 million, and turned negative at -$25 million, as the company spent $826 million on share repurchases in the first half of the year.
What changed
compression continued at a similar pace: the 1.9-point decline in Q2 2026 follows a 3.5-point decline in Q1 2026, confirming that higher lead acquisition costs from the Redfin partnership are a sustained trend rather than a one-time step-up.
Residential growth held at 7% to 8%, consistent with the 7% pace in the second half of 2025 and the 8% in Q1 2026, suggesting the deceleration from the 12% peak in Q3 2024 has stabilized.
The company returned to an operating loss of $10 million after reporting its first positive since Q1 2022 in the prior quarter, as the $36 million and pressure absorbed the gains.
Share repurchases accelerated sharply: the company spent $826 million in the first half of 2026, exceeding the $670 million spent in all of 2025, reducing cash and equivalents to $572 million.
What to watch
trajectory in Q3 2026, to assess whether the restructuring and headcount reduction begin to offset the Redfin partnership lead acquisition costs and slow the rate of compression.
Residential growth rate in Q3 2026, to see whether the 7% pace holds as the housing market enters the seasonally slower period and the NAR settlement continues to reshape commission structures.
Cash position and pace, with cash and equivalents at $572 million after $826 million in buybacks, to gauge whether repurchases slow to preserve liquidity or if the company draws on its new $500 million .
Impact of the 7% headcount reduction on operating expenses in Q3 2026, to determine whether the restructuring delivers the expected cost savings and improves operating margins.
Mortgages surge was fueled by a 94% increase in total loan origination volume to $2.2B, driven by purchase loan growth at Zillow Home Loans.
Rentals growth was propelled by a 28% increase in quarterly revenue per average monthly rentals unique visitor, led by a 42% jump in multifamily revenue.
increased 15% to $562M, but contracted from 75% to 73% due to higher lead acquisition costs tied to the Redfin rentals syndication agreement.
The company recorded $36M in for a 7% headcount reduction announced in August 2026, expected to yield lower expenses in Q3 FY2026.
rose 14% to $176M; cash and investments fell to $688M from $1.3B at year-end 2025, largely due to $826M in share repurchases.
For information regarding legal proceedings in which we are involved, see Note 11 under the subsection titled “Legal Proceedings” in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. 43 Table of Contents
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For information regarding legal proceedings in which we are involved, see Note 11 under the subsection titled “Legal Proceedings” in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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There have not been any material changes to the risk factors affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. You should carefully c…
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There have not been any material changes to the risk factors affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. You should carefully consider the risks described in our Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
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