Agent-buyer connections driving Zillow’s mortgage growth 

While Zillow's core residential business is still going strong, significant growth in its other sectors is continuing to do wonders for the company's bottom line.

The company's financial results once again beat expectations, with second quarter revenue at $655 million, up 15% year-over-year. Analysts were expecting revenue to be around $647 million.

Much of that increase came from growth in Zillow Home Loans, the company's mortgage division, which jumped 41% year-over-year to $48 million. The rentals marketplace also continued to perform well, with revenue up 36% to $159 million.

What Zillow had to say

Zillow's deal with Redfin: During the earnings call, several investors asked about rentals revenue and the impact of Zillow's partnership with Redfin, which made Zillow the exclusive provider of multifamily rental listings on Redfin and its owned rental sites, Rent.com and ApartmentGuide.com. The agreement was announced in February and went live in April.

Zillow CEO Jeremy Wacksman said Redfin customers are starting to engage with Zillow through those listings, and more multifamily property managers are partnering with Zillow Rentals.

"So the incremental benefit to us and to our partners is really positive. And the cool thing about that is it's a huge benefit for the renter too," Wacksman said.

Bundled services capturing more customers: A key contributor to the company's growth is an increase in customer connections, Zillow CEO Jeremy Wacksman said in a call with Real Estate News. At the end of the second quarter, 27% of prospective buyers were contacting and working with agents Zillow referred to as  "enhanced market partners" — and that's also leading them to Zillow mortgages.

"Ideally, if the buyer and the agent are working together, we have a shot at that mortgage because we're introducing Zillow Home Loans to those agents and trying to earn their business as one of our preferred lenders. That's what drives the growth," Wacksman said.

He noted that the company wants to increase the number of connections to 35% by the end of the year — and eventually to 75% — by staying focused on offering an experience that enables customers to complete their entire transaction in one place, something Zillow has also referred to as its "super app." 

Picking up multifamily market share: The recent growth in Zillow's rentals business is primarily coming from its large multifamily division. Wacksman estimates there are roughly 140,000 residential apartment buildings with 25 or more units. Zillow now has 64,000 of them on its site, up from around 50,000 a year ago.

With home sales expected to remain subdued for the rest of the year, Wacksman said the company is focused on growing market share in preparation for an eventual rebound. "When we do get back to a more normalized market, that'll be a tailwind for growth," Wacksman said.

Key numbers

Revenue: $655 million for Q2, up 15% year-over-year and $20 million above the company's earlier outlook range. Residential, Zillow's largest revenue stream, was up 9% to $482 million.

Cash and investments: $1.2 billion at the end of June, down from $1.9 billion at the end of 2024.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $155 million in Q2, up from $134 million a year earlier.

Net income/loss: A gain of $2 million in Q2, which was an improvement from the $17 million loss a year ago.

Traffic and visits: Traffic across all Zillow Group websites and apps totaled 243 million average monthly unique users in Q2, up 5% year-over-year, the company said. Total visits were 2.6 billion in Q2, up 4% year-over-year.

Q3 outlook: For the third quarter, Zillow estimates revenue will be in the $663 million to $673 million range, continuing its double-digit year-over-year growth.

Notable moves

The company's summer launch last month included five new features, including SkyTour, which allows shoppers to maneuver above and around a home's exterior. Zillow also made improvements to tour scheduling, rolled out a new "offer insights" feature and upgraded its "BuyAbility" affordability tool, which was released last fall.

Wacksman said those features are getting strong engagement from agents, and he's optimistic that customers will also continue to utilize more of Zillow's offerings.