Business Context and Reporting Period
Company: Zillow Group, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and six months ended June 30, 2026
Business Overview: Zillow operates the most visited real estate app and website in the U.S., connecting consumers with agents, loan officers, and digital solutions. Its ecosystem spans the home journey, including buying, selling, renting, and financing through brands such as Zillow, Trulia, StreetEasy, and Zillow Home Loans.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Revenue | $772 million | $655 million | $1,480 million | $1,253 million |
| Net Income (Loss) | $(4) million | $2 million | $42 million | $10 million |
| Adjusted EBITDA | $176 million | $155 million | $374 million | $308 million |
| Gross Margin | 73% | 75% | 73% | 76% |
| Cash & Equivalents | $572 million | N/A | N/A | N/A |
| Operating Cash Flow (YTD) | $211 million | N/A | $211 million | $191 million |
| Debt (Master Repurchase Agreements) | $465 million | N/A | N/A | N/A |
Note: Q2 2025 Net Income was $2 million; Q2 2026 Net Loss was $4 million. YTD 2026 Net Income was $42 million.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 18% year-over-year (YoY) for both the quarter and the six-month period.
- Mortgages: Revenue surged 75% in Q2 and 66% YTD, driven by a 94% increase in loan origination volume to $2.2 billion in Q2.
- Rentals: Revenue grew 31% in Q2 and 36% YTD, fueled by a 42% increase in multifamily rentals revenue.
- Residential: Revenue rose 7% in Q2 and 8% YTD, primarily due to higher revenue per visit.
- Restructuring Costs: The company recorded $36 million in restructuring costs in Q2 2026 related to a headcount reduction plan announced in August 2026 (effective retroactively for the quarter). No such costs were recorded in the prior year period.
- Profitability: While revenue grew, Q2 2026 resulted in a net loss of $4 million compared to a net income of $2 million in Q2 2025, largely due to restructuring costs and increased operating expenses. However, YTD 2026 net income improved significantly to $42 million from $10 million in YTD 2025.
- Share Repurchases: The company repurchased $826 million of stock in the first six months of 2026, compared to $400 million in the same period in 2025.
Guidance, Outlook, and Risks
- Cost Management: On August 4, 2026, Zillow announced a plan to reduce headcount by approximately 7% to improve efficiency. Total pre-tax restructuring costs are estimated at $59 million to $64 million, with $36 million to $38 million expected as future cash severance payments.
- Outlook: Management expects Residential revenue to decrease in absolute dollars in Q3 2026 due to seasonality and a strategic shift toward the Zillow Preferred model. Conversely, Rentals revenue is expected to increase in Q3 2026 driven by multifamily growth.
- Liquidity: As of June 30, 2026, the company held $572 million in cash and cash equivalents and $110 million in short-term investments. A $500 million Revolving Credit Facility was established in January 2026, with no amounts drawn as of the reporting date.
- Legal Risks:
- FTC Antitrust Matter: The FTC and several states filed a complaint alleging the Redfin partnership harmed competition in online multifamily rental listings. Trial is set to begin August 24, 2026. The company denies wrongdoing.
- Securities Litigation: A consolidated federal securities class action regarding Zillow Offers remains pending, with a petition for certiorari filed with the Supreme Court in June 2026.
Key Investor Verification Points
- Restructuring Execution: Verify the actual cash outflow and timing of the $36–$38 million severance payments associated with the 7% headcount reduction.
- Mortgage Volume Sustainability: Assess whether the 94% YoY growth in loan origination volume is sustainable given the current interest rate environment and housing inventory levels.
- FTC Litigation Outcome: Monitor the trial beginning August 24, 2026, regarding the Redfin partnership, as potential remedies could include divestiture or business reconstruction.
- Share Repurchase Capacity: Confirm the remaining $1.1 billion authorization for share repurchases and the impact of the 45% ownership cap on future buybacks.
- Revenue Mix Shift: Track the transition of revenue from Residential to Mortgages as the company scales the Zillow Preferred model.