Z - Earnings call transcript Q2 2020 | Zillow Group, Inc. Class C

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Operator

Good afternoon. My name is Abigail, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Zillow Group Second Quarter 2020 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be question-and-answer session. this being note, Please Instructions] event recorded. is [Operator you. Thank turn over Relations. to I would Berning, conference to like Investor now Brad the Vice President, Please go ahead.

Brad Berning

to Good to XXXX Thank and call. Zillow welcome conference Abigail. quarter Group's you, second afternoon and welcome

Zillow Joining CEO, Co-Founder Parker. Rich results Allen and CFO, Group's me and QX today our are Barton;

uncertainties, based you make are expectations current may and consider and These future statements we statements later During as events, about is factors our Investor Relations accessible undertake future our broadcast the recording This a or will required described call, encourage update performance additional as being SEC information law. on on our to and risks the the risk filings and available by our new no subject statements be obligation to information. A call will except forward-looking and call we operating plans in We today. website. to assumptions. Internet result of the these is of for on

the encourage on During we as EBITDA. can earnings found discuss as which GAAP Relations non-GAAP Investor non-GAAP information our to refer EBITDA, non-GAAP and measures. We including financial release, GAAP adjusted including they and reconciliations to letter measures, contain results, and which read be shareholder our our we website, important about our you call, will GAAP of historical

will our Media Internet, to & we as refer segment. note, our segment please IMT addition, In Technology

brief call open I'll now will by Rich. with the the followed to turn And live over We that, remarks Q&A. call with

Rich Barton

downtime ever, yourselves take to hope more with Cloud be Downtime and great all It's line get discuss you're in and from so results. than staying summer HQ to some. now safe. Brad. our of Thanks, this matters I care you you getting some the Zillow on

Okay.

our offense. for to valued to speak to the you or We've the We commenced times the agent for short refinanced was a lifeline to U.S., uncertainty us billion took and and striking costs, for raised books. down second our nearly of heard control extend layoffs conference me than furloughs prudent history one on and here action convert faced and warranted. fear quarterly was stopping quarter in The optimistic of partners. pop-up COVID more Since was perhaps curse tone several what and thought for capital in earnings and calls defense you've $X

powerful are better and even numbers technology. estate to that we belief and real both quarter's hoped our This experiencing firm had tailwinds than Zillow's business up in is

more of I a policies most at offering I anticipated employees As from ago. of many. to work space an indefinitely. year said are about we the Zillow per et last changing don't sure I of before, an at part we upsizing, employer, the are flexible spending remotely people than great of are our it some for out of least of closer believe eliminating office, living a need have be time could option to are cetera. list we week, gyms. X the for getting to downsizing, are in intent It’s considerations. Millions and considering family, our There's reshuffling. endless the Work-from-home I'm home. high never currently the spell average announced we At more desirable further to the because are demand. dawn hours at way it, all meetings Backyards privacy. and day parks are families offices Home Zoom think you commute

have from habits home more right we New in found as more are to ways now, and cases, rapidly with forming work. and healthy efficient, working and norms better, live many

to that to This come. is the out to tectonic a going to expect we not way years We’re back play were. shift just for go things

pent-up carrying means signals which low intuit. turnover by real Additionally, pandemic been the see supported demand. we driving These forces since we all are the global crisis, has financial entered and abnormally estate already home the the tailwind,

in in QX measure, great we this pre-COVID most that into now on our sets home is have which reflected going interest reshuffling see for almost an You exceeds unusually going us every outlook QX, our which outperformance high in up metrics. shopping. estimates up well The driving well

synonymous As the users category record estate, XXX a quarter. leader, monthly with we real average this unique hit million

recreated real industry March. to said find and now. studying, virtual the of company this million cetera. sites recreate meant better Group Three creating our on more world, year-over-year. These three June, being tours are to home navigating what U.S. digital positioned technology now XX During Netflix, home Across many Zillow migration, beneficiary much are they out to tailwind. the Sellers seeing as month every four outsized of XD forces We acceleration of in than two, o-to-o we are use the for customer in search tour an shifts from Zillow seismic in apps estate, are right digitize we to or the technology online. itself. XD we all the to a technology video No they are turned were want by investing adults users Zillow to to we is and delivery to times able are industry, preexisting grew tailwind. have do deliver shop systems, number and physical Amazon, in believe as Zillow powering it the In transaction adoption. on of and folks the et we in absence Zoom, the tailwind offline than

as real shopping, real estate integrated be years The Okay. digital estate, for real they been accelerate adoption for of places with it o-to-o capture and as These months. the talking up trade-in virtual the pertains X.X, well call estate we in change your and brand about this tech this Zillow with Real are tailwinds, the for the and to converging transaction excellent up to what quarter in rapidly with These past two in as transactions R&D document will more tailwinds a Zillow technology, and set best with we've the estate to has are home. enable part, Zillow one positioned is, well day, we're button seeing the X.X house. future. leading shift paired and at us routing, nexus. execution an And shift. more capabilities

is recap to our a up In many deep real other expected. the press few of gas real to than back. the set back Let the planned more haze quickly structure, layoffs well bounced budgeted me avoided on highlights. estate we us we've with cash. to we positions market and uncertainty, We ending and ready as that when This QX permanent the but conservatively, be began, to crisis aggressively cuts in advantages, $X.X now billion cost ourselves snapping estate step

retention month record business Premier Our in June. sales best delivered Agent on and its

agents momentum from in believe high segment, and expect high-performing expense expectations. far satisfaction forecasting drove partnering of with revenue revenue QX's with expansion prudence, year-over-year and XXX XX% goodness year-over-year COVID-driven maximization the customer of basis margin and our teams this customer. to to our We model, exceeded revenue IMT that profit are coupled we Regardless deliver per flows higher-than-expected growth in continue QX. monetization and of points

EBITDA line can achieve margin in leverage achieve will a as it preview momentum this this informs We a serve continue segment, top in business. this we to we QX Should to outlook outlook, XX%. of see of close which profit

X the Zillow we past data opportunities through growth enhanced and is strategies to that IMT uncertainty to in of will months, Offers, and we to sell appropriately. continue inventory. we team's the invest see used However, to the manage make selling The signals were gracefully testament able attractive our inventory, to fact In differentiated it agility. a continuing

Our and and machines more combination humans getting is of smarter experienced.

buyers of move, it can study especially liquidity are and at with by helping since shared digital Northwestern reopened homes how shopping for making to safe phones. offering pause, downsizing. buyers, by Zillow experience March appointment mobility skids and And the Zillow great includes grease who app’s a Zillow-owned Zillow Agent recent in-person Sanford, anywhere, home their Premier the virtual home Offers have by certain, all our should is convenient the tours easier with of researchers for reshuffling. after the We and Offers sell. self-tours this people and Zillow Colombia likely increase XX markets from XD people way where to unlock a future tours mobile A

offering Loans still our than best business ago, well, steam, a adjacent with XX our customers ever. businesses gaining all closing Our Zillow month is Zillow doing less but loan X.X are Real the Home June convenience is picking year versus times now up volume traction, estate some after and way. way. Offers value the leading services and X.X along running, Zillow It's and up markets and up months. we is are early, these

People all living and all to business across that driving forward, remarkable in we of finance remain in are are during help sell, focused buy, space, situations coming Going through. close. moment for all we their rethinking time and more transactions to Zillow sorts rent, to on segments this they're living

[ph], potential are to our townhouse doctor or without the fledgling The transactions there's lease way tools personalized Tela through more estate landlord, tour in suite went technology relieved public business of letter on Zillow to action. online, it able other it is services a all Tela he more a whose the whether show have local Zillow his Rahul renters his included from tailwind partners. American of a made surprised. When summer, do we their rent, to Zillow, made He video and piece We demonstrates to in and take Colombian been pay this in shareholder real transaction Seattle a XD and of would He people to to nervous invest that immigrant and to that will orders tenants and do of for continuing their renters without this in difficult said, technology virtual discovered tour, heavily new possible virtual services our health that's investment Rahul their allow to with turned Zillow branded meeting go a as the sign and platform. his dream. I a best-in-class person. no ever

take the to and recognize the Allen, pandemic. is at being a mic tailwinds advantage I want the experiencing to pass an Maslow's good are of that at place needs, which business, base moment in lucky a to of shelter I in we be of Zillow we, the hierarchy over Before acknowledge a to are

country through of I'm grappling Our responded. has how protest at a social loss, team a Zillow with is our anger and health and crisis reckoning. proud fear,

of the $X our real public will additionally, comment do estate in pledged made least million that Further, more, justice. raise since U.S. industry, $X which shape legacy representative, generations. Lewis, people impacted efforts the Our to power in to have wrote John million a lead committed to determined we helping racial a Zillow employees committed for and to that has We has your in troubled starting in Recently a this determined over and stop and partnership deceased own company our equitable COVID-XX that discrimination at difference can support appreciate make equity our at company We help at helped relief and we society.' of more world. communities. can And our has a are journey. and 'Nothing progress

Allen? Okay.

Allen Parker

summarize few I'll from QX, Rich. financial QX. for a you, outlook a followed of results discussion key by our Thank

a million, Rich year-over-year. up strong consolidated discussed, quarter. of second delivered reported $XXX Group As revenue We Zillow XX%

a was and also Mortgages Homes when due both to better-than-expected outperforming Our IMT in revenue segment, primarily sales our outlook. results our outperformance

was the midpoint of position our revenue revenue the $XXX for strong temporarily faster-than-expected benefit was than QX. provided significantly focus discounts rates of actions, revenue a to of Together at our market by low partners in While underlying and range. outperforming our and Offers beginning discounts the were put million all of the housing managing combined our IMT segments. $XX consolidated million QX, the loss delivered EBITDA improved Premier million, outlook paused on us Better our with These our during drive of impacted of at effective housing million from expectations and in three $XX Stronger of mortgage partners Agent to expected recovery. of segment revenue, our better continued $XXX retaining market a costs, Zillow helped buying conditions home

better While our than declined was IMT segment the QX decrease outlook. the of at the revenue midpoint XX% XX% decline our year-over-year,

our our Premier and experienced of recurring experienced the in Rich retention, the record of at As monthly June, June, total new MBP Agent and we Agent end of revenue, inception program. since MRR highest level mentioned, Premier

This the Given is performance XX% QX the strong allowed team's segment midpoint where X,XXX testament our to through declining market our EBITDA outlook. margin of the was even points grow revenue. to above a ability quarter started, basis dollars volatility. manage us XX.X%, this approximately EBITDA with year-over-year, IMT to

half sequentially during expectations. the due we as we, enable quarter, second midway segment the our the customers of revenue exceeding pause the sell to buying our Housing we had or and at We X,XXX home found inventory solutions the of to Homes purchasing first partners did XX% to the homes, resilient decreased While the transactions at QX, participants quarter, beginning transactions and the initial and creative pleased are proved restarted with safely. through real broader move we forward inputs. industry homes estate of

safety We driving while are operational seeing demand, measures. solid improvements and continued

Mortgages million. also Mortgages $X officer the enabled million the increased XX% segment wave, range. Increased by our $XX to EBITDA The outlook high in refinance end QX segment mortgage participate loan revenue of exceeding Our delivered of driven of rates. year-over-year, low productivity us

focused and lead to ensure liquidity the the quarter, to also the enterprise in X.X. on along to operational we this quarter as time, businesses; segments, opportunities been support the within scale. key as We our mechanisms estate $X nearly capital billion to rigor are in ended are: our in scaling real and be opportunities; across with positioned three on priorities. well priorities have $X.X in execute continues earnings team discipline we Those raises Last discussed In we industry I company fund investments, and debt our my convertible focus CFO processes convertible I establishing with cost portion new order our and equity As during with of a protect on that IMT to and to history. completed refinancing balance in year. implementing we effectively a investments previous offering, combined stated of billion cash next and debt the and our calls, in May, highest the segment focused uncertain due new growth additional executing preservation

to Turning segments. all are we our outlook for a providing outlook, one quarter

do of of are remains there we our more of the current our out we the strong our in pleased that the execution given note than QX While have a there normal. current a trends more with coming macro informed uncertainty remains and pandemic, environment outlook, team -- input QX

top In expected Let above QX, me guidance consolidated with start a improve segments highlights. pre-COVID. the with expense our $XX.X meaningfully the at in growth revenue Accelerated is well are discipline. Mortgages to what few EBITDA this we revenue contribution. IMT range margins and we leverage as to which expect of midpoint QX are be internally driving continued primary even the we EBITDA expected factors line operating growth focus million, on

We will as as QX press growth. in compared our and begin investments to to and increase leadership drive QX advertising marketing position we

QX do see in we leverage expect to for However, and marketing year-over-year continued operating advertising.

people be we to other costs, People headcount development uncertain environment. expect and also as costs expected given We plan leverage operating cautiously our the to technology continued are in flat operating year-over-year manage and economic expenses. relatively

margin at million EBITDA balance to Revenue to QX, VA our the dynamic to marketplaces be and these QX. midpoint within homes from to move into City loss in like our has expected expected and outlook XX.X% our driven Agent QX, conforming up hit operationalized expect and significant in is $XXX light million. in the In million, year-over-year revenue from acceleration Partner be In upwards -- range, to coming step remained in of Better factors, segment, the up down in XX% $XXX to also to New QX FHA from QX in coupled of $XX midpoint year-over-year to year-over-year sequential XX% to Better still Other strong segment, in expected be with a we take X,XXX declines due $XX the our rentals growth continued and Together from range. and an management year-over-year IMT the and points segments, growth we million successfully QX nearly discounts. segment million improve pause revenue regard Homes are decline between basis improve discount expect between $XXX and to XXXX. Better QX. navigated of somewhat both in sequentially team loans, expected revenue discontinued QX of but we the and improvement display partner efficiency each improved is EBITDA The is environment. further York partner loan revenue to With our lower in discontinuing QX QX, our our segment to with at IMT resulting that Together inventory to IMT discounts. has successfully by Premier officer and outlook year-over-year Mortgages Moving our impacted purchasing mortgages sales retention expect QX

are to technology experience. to partners provide our streamlined continuing platform a innovate We our more and Mortgages customers

We based in expect million EBITDA to be to market QX Mortgages $X loss between upon of and investments conditions $XX current between operations. $XX and a slight million million breakeven additional and revenue be and capacity,

our As and ongoing Zillow despite strong environment complex rapidly around foundation has changing demonstrate, us. results a the

to and Our us our reduced accelerate our actions support enabled position partners above QX extend spending provide to discounts second virtual leadership and deliver our tools, to in quarter partner expectations. results and retain

strong. Our is balance sheet

the and partners and And have to customers with ready chapter platform the line lives. move operator, next help highs, well that, Our positioned safely of demand indicators their reached into and record our our for we'll are questions. open

Operator

line of [Operator first open. Instructions] question from now Craig-Hallum. with Jason Our Sir Kreyer comes the is line

Jason Kreyer

give how real and like with about Congrats forward. thinking been stronger a us some macro of the gentlemen. execution of just uncertainty But on this on estate estate been you, in real could there's see lingering, recently. going parts wanted Rich, you're it lot sounds if industry, it's a the lot Thank moving quarter. you perspective to even

Rich Barton

is months it's was it's but And okay? it, good relatively are to stubborn to green flashing low, of of increased seeing, inventory, of low, but should prices a all is a There's still are you're indicators too. mortgage to Yes. one. ton uncertainty, okay? is as supporting now, should seeing and leading that high. yellow that There but as pretty forecast a I'm right we're prices X not or lead hard increasing foggy. what here's on been mean inventory So that's it ago, couple early sure prices and I are Supply Demand though. rates

stable to now. active. maybe are So that's is shopping right changing up, and Rents

in And happening is really The it's find estate digital in down this move. we're through funnel. this everywhere. And The real more powerful So I those the me, at a debatable it's plans, driving mean literally, want why from tailwinds to -- reshuffling two talked that is search in technology-driven here all we O-to-O are real be retail them. right and and the that But seeing for we But suburbs, Zillow whether not floor lucky space, really benefiting right guess that about. the now. they that's or estate from big shopping question waving I tailwind new happening from tailwind, is that is this it the I course. almost top-of-funnel that now? remodel advantage all, are to want is about Zillow. we on benefiting lot more heard arms just category, this of math it the living XD great you the people to my want a that We're every of deep way leader, tailwind digital demand more everywhere, is

less we're So, to majority are funnel. few Zoom-based industry XXX Yesterday, it's a interns. as we're for phenomenal. remotely. great advantage we're is from spoke meeting. set program, running a and and pretty of clarify all really, our forward even company. And going us. really title pandemic get a quite young, of things. are a pretty good. really these tech economic such science a say roots engineering shift If exciting are But nonetheless. signals roots, it's this schools, it The This bright Zillow for hope I data our cloud have sort looking benefiting and amazing, we given companies I for excited. much and down it I I'd up that in really potential are guess, helps diverse well positioned our and an other top large a intern in interns interns of It's the people Anyway, a on weren't -- calamity, could cloud

Jason Kreyer

A you. color That good Thank lot does. there. in of

Operator

comes Brad question line next with of our the Erickson And Needham. from

now is line open. Your

Brad Erickson

Hi. Thanks.

QX So, guess, Agent IMT thinking. of I you is the for business, us were of in the ahead particular, think outlook what most and Premier gave I there

are we that? of out look about those You of sustainability about just that. a think Rich, that talked trends should Maybe, QX, some maybe factors driving the bit about as beyond talk how we

Rich Barton

top -- mean O-to-O feels I just instance, the stat at it think Brad. XX by I continue. the wanting this guess, but the thing and I expect million and the driven people new I by sustain, it place, mean I it that unique increased funnel, we shift, feels can't to for of good, was to funnel. and we find of it's interesting down I up the a to June that in thing use kind more new was users. cited mean But

way to And levers down funnel have the move these levers sustainable we the a all the way, find business these we right? funnel, to drive the have to in So down have monetizing we've maximizing that to begun are to we that the turn and dials or of we kind we're the all not way funnel action. them, see down beginning and yet

a year a focus a similar this So or delivering a -- focus on year same out that And of transactions began are partners getting and helping flow. a and us profit Zillow. to customer flow, revenues of connections traffic and transactions. drive traffic traffic in ago more better our it's driving so who all the results us focus but customer focus on more connections flow. better for them more better transactions, of to that satisfaction got over and little increase is helping better drive We're out We per more -- we

and them which that our and that in off amounts beyond up ahead these hard results, seeing blue in improvement sheer amount of to given in for the road we surprisingly know that, good, our optimization show It's QX bout. seeing outlook. plenty QX just are our that's -- the but sense ocean you're of of So you're dials

Brad Erickson

That’s it. Got great. Thanks.

Operator

Securities. comes from question next of Ron our the JMP from with line And Josey

now Your is open. line

Ron Josey

for the coming see curious EBITDA you're question Agent so no IMT And around with and, about if Allen, the pandemic really but talked taking comment yes, accelerated Great. user to And or advertising great mentioned coming regardless with thinking assuming I'm everything XX% to around change, in interesting the guiding strong here, wanted business, model, then stick Two the you despite Rich, in business. about, revenue comment. that, the here. how Thanks growth. is of Flex maximization. questions Premier I revenue back you a to maybe, back, that’s focus the is XX%, which margins or on

driving the So business you. and that's what's margin that? that how for one sustainable Thank wondering is thing. But IMT just

Allen Parker

hey, and only questions. we for Ron, talk the take about Yes. second, -- can can The then the thanks I Flex.

think respect cost discipline. so QX is is of models marketplace outlook with margins, I IMT topline when our margin in growth QX combined reflective our can to business our guide how perform Ron, our on with --

QX, high-performing and cost growth though, our cost continue strategically into on position focus customer through call and control and by evidenced discipline. outlook. the But satisfaction and customer is invest also for partners. has great focus is our focus to exiting technology experience agent we improving as informed the we'll a Our revenue providing to where QX customers connections, experiencing This out, partnering with warranted. conversion the levers, I working, strong trends we'll incorporated by our we're and that leadership press opportunistically accelerating would

not uncertainty outlook, where the we given So or business and the we're models are outside it. the target guidance really providing QX operating any of feel updates clarity, that about good of we with we're lack and but

Rich Barton

Thanks one, classic there, for air. jumping in I Okay. did and talking, see I Zoom Allen. your first started I Ron. mute the

computer I stream my talking at that. about was myself. to Sorry

we the Flex the on Flex yes, in us our and can partners partners and happy delay to -- better on revenue we converting in Flex these early entrée we gratification question, arrow offer heard And comment at to the to better focused transactions. are We order quiver. you we that menu stuff were who in the on dinner that on do as from So certainly our had customer of certainly that. that to pandemic, satisfaction are move our in we're willing had get

been the cleared. it's as certainly we're a kind It's fog uncertain an uncertain, still is was this but has that described. way have, So decent -- to thinking it really, Ron, the of nice about at I And menu time. especially amount of

work businesses We have ways interesting geographies, has optimization things the business a the surround also interact these Zillow different out to models, how different partners offered best really of with And And that in different really we're that's in partners we different but figure that what's that on just a PA, these opportunity. different offers. now. not with menu can on and flexible make them what having we finding is going us

dollars in think models, of this much We out this just and roll other we a this funnel. drop to get more the customer broader context continue continuing to of bottom to and test about but out

Ron. And so because specific of of not I you're part don't to reason the that's to separate Flex, less I helps, it. the recognition say forward. And business. initially the We because not just thing. as anymore stuff was focus going as about become talking we we think, we let probably think -- necessary hear And don't just of that only that's a we on. way It's it do. But should Allen about -- I of And about hope do love thing speak to started this -- revenue I it. we've kind going

Ron Josey

Appreciate It you, Rich. Allen. you, does. Thank Thank it.

Allen Parker

out one by offering flows monetizing versus and we it also Yes. versus that business optimization, our the in how alongside add, manage our Flex, I'd question are do more that of MBP we Flex market that Rich, markets, just it MBP becomes assessment. now an same just

we're and looking think revenue at an I to how the optimization why so in And model, we'll lead, that's business. maximize that's be per looking

Operator

with from our And line Khan question of comes the next Naved SunTrust.

Your line is now open.

Robert Zeller

Robert you Thank for This the taking Hi. is Zeller question. for Naved.

the in think months repurchase following do rest in can which to throughout homes, the -- of clarify whether pause these sold said in how subsequent curious interest but be want consumers' agreed homes the with wondering Zillow aggressive purchasing is or reflected and have then QX until or just year, won't to expect -- And shareholder in going that's the the XX to homes, has offering you. the you later. this times? the of separately, close, to I to I how inventory sometimes Thank separately, not you Offers or added do in are just why weeks and And So how just some I'm much QX how you forward do resumption closing to homes you pandemic. and then take letter, closing be take expect to in that close? expect evolved for long volatility you it these And homes the quarter.

Rich Barton

you answer I'll anything if in I of on and maybe start, help and the question, the can up Allen, of So half trying then screw to out. first with the second question, part the -- hop you

be with all starting hit. Robert, we to open about of had XX your want the up we markets today, that COVID aggressive Offers, well, with as of we've opened So before how question, actually now, Zillow

if -- safety price we've your having bunch buyer, home supposition markets with into opened both good aggressively and certainty feel out. time this the And those house; a can is reopened and and nobody Zillow things kind through with certainty, can of like seeing this tell, a how there, we're tell the of a markets, the we And by the in health associated people you're a about it. app a letting so and we've if yourself not midst seller, play with way, crisis, convenience you have you're go that to of and good feel you that a

It the in -- of reopening highlights a the So of we days. that feel is Offers. with working benefits Zillow pandemic way, early is some the

Zillow post-COVID about but Offers. good we're carefully, kind we're the So watching. feeling of And

the -- you question, not of repurchase in I'm the have maybe you. front On letter

highlighting confusion is takes the what X is the then or air time basically takes so -- sold going maybe side coming the factory of of just little a the cause product I time. is and to in asking it factory, course, an the getting of weeks home some factory what the all gap the just other and side pausing think you're the of out a of that, us factory cycle out through other for way

quarter. -- maybe -- I'll basically in guidance seeing in of to going next you're we're So Allen, have what have front Homes our for see you it is you.

to going reflected that see gap that just air You're in factory in the outlook.

Allen Parker

Yes.

color think that. And to exactly little Rich. right, I'll add a I to just try it's

Rich we QX. until XX letter. we of We So out homes mentioned. were We're -- markets that it we And now in what purchased the shareholder up unpaused coming in QX. XX. started in up That's disclosed again. XX exactly We again, in offers all only

$XXX of and XX% million guidance air Our XX% is our pocket. due to guide the year-over-year to at revenue $XXX million, -- really this sequentially midpoint, down

time when take increases selling the to we have close, cycle offer does customers not an any to agreed it seen we one with our but from when who's time. We home in of their substantial

and And XX this up QX XXX just before as all entered that because going quarter time so I'll into in of It's here we markets. take you a that XX factory. actually got the Rich what through. little with It's air were is mentioned, open to were we the homes. a we've pause We historical weeks gap run to to give restart paused we reference.

to have had to entered XXX of QX we back homes. we XXXX, over when a go little You'd

in We that in the million closest $XXX about point. reference revenue So quarter. did that's

planning quarter fluffy implies sorry ran working and declining that acceleration guidance It's our a our I that's the reason that just sequentially. the million is distracted I'm to We by from kitten of million, slight are my with was versus revenue home. $XXX but to joys room. a a $XXX

Bradley Berning

a clarify add just to to the we the that homes, include on it just so going Allen, to homes or purchase one it's clarify does commitments not that we closed I'm well. to XX purchase as is which question thing, Brad. from did perspective, specifically, homes

Robert Zeller

appreciate Thank very you. that’s I it. Okay, helpful.

Operator

the question Morgan of line next Nowak Stanley. with Brian our comes And from

Your line is now open.

Rich Barton

Brian?

Operator

Nowak Again, Nowak Morgan with Brian Morgan line Brian open. with line your now your is open. Stanley, Stanley, now is

Rich Barton

to the one, You Abigail. next can maybe go

Operator

Ripps line of the Maria from comes question next from Canaccord. Our

is Your line now open.

Maria Ripps

on taking I up follow my Thanks Great. wanted for to questions. just Homes.

on buying So models you buy? that and your markets, return are targets to better your your And homes homes pricing getting home thinking any And finding now are all that and you on updated of terms across what you are average resume comment for better? undervalued sold now homes on can availability? you seeing of good data in

Rich Barton

half, the I'll Maybe first take Allen.

You take the second?

Allen Parker

Yes.

Okay.

Rich Barton

right. All

-- as just for thanks your question, Maria. So

We're distressed situation we're just as a our reminder, convenient discounting, of scaled what them and business for and service date a box fair transaction. the choose affect that the is Offers a not price big a seller looking So ability take within for buy make really in profit. situation, deep doing to Homes our going high-volume anybody to advantage for a offers a Zillow

mock So with that lives. doesn't their

inventories your just house in product and saying the good When business. are what couldn't question a was of in have we early little the just inventories to inventories see wanted because did. that rising. So build, want -- they I we a reopening, a type it's and we about inventories good. refining. bit to it's flipper build feeling and are and we're was now finding, embedded now, future, are I'm But that go down, the And it beginning the see see and I that's to scary,

Allen? it's of safety certainty Offers the service. reinforcing and that the are so seeing of the of and And sellers convenience Zillow value lots XX our in markets

Allen Parker

Yes.

still markets. early And your so second the again, the very XX ZO average stages on part in question of we're in return,

so minus still adjusting believe lot plus testing to We guardrails basis of And not points. the of across XXX got areas. of do we're or our lot a a and iteration we've that

refill we be driven again a as we operating operations, is a going are XX be have to our all been call a aged would in bit expect normal are these that out cycle or newer our this way in distribution volatility what some to we factory our cycle. the iterate. going plus and for and the XXX we basis XXXX older a be minus in, given curve structure. very with right up through term skewed points little pause, And of of we across near XXXX its cost inventory by will improve early expect to on and our test And do excited normal markets. have operating as is and factory. to as end as to operations restart inventory But then back now, our when opportunities were start inventory the we increased We normal to we still place metrics in I comes pause the works normal guardrails

little buying excited So really providing there will and there, be customers service. the be we're volatility and but to get a from our going again

Maria Ripps

you Thank the for right. All color.

Operator

And Nowak our the line question comes with from next Brian Stanley. of Morgan

line is Your open. now

Brian Nowak

Can hear now? me you guys

Allen Parker

there. yes. was problem, mute He The

Brian Nowak

again. I'm bad And Yes. at call the for Thanks technology.

questions. So two I have

the on first one Agent The discounts.

then shelter-in-place curious in about you order quarter of are of second about to discounting? quarter? color that Better the you look you Are go to your appreciate Together. the other the platforms at those assuming hear your was for now I given away that guys So what has second provide for about really How just that discussion the third to guide, how how I sort evolved magnitude, big And of as your think about assuming agents agents. to be for are the real Thanks. There's strength discussion hear of asks Then demand? estate changed curious compete to their them? the around trying reopening. to you has that how value underlying one, of a throughout and with a lot

Rich Barton

want bit, least? first to you take do the at Allen,

Allen Parker

the bit. take I'll Yes. first

we So, that as actions, spoke I we along retain we that took the respond. excited Better action manage about other We late partners and in many did. Together with our the those, to of our business, QX think and help items one really Brian, we're think

we're sales, respect of satisfaction. early of I quarter. of we of the into able where discounts think the industry were is do. high XX% on best we business towards outlook With I think kind That improved customer expected, business to is benefits a So business, the look the at for the to PA That's back and when The revenue the quarter. about retention, guide growth QX to XXX came with faster respond thing to to going in XXX. would very connections guide feel way the barometer the higher about were right how for you is range than seeing guys our weighted heavily at the And I year-over-year would record the in midpoint. is the you best to

too And a much. help number quarter so over really the doesn't you

that So QX are QX there QX trending to in are of our onward. I as where guide, no look we and of discounts kind out implied range coming into

Rich Barton

guess, number fewer now the second and reshuffling, agents people customers retention discussions well, to fewer because to one, places for shop new have I have guess, that, it changed visibility I of hunt shelter-in-place characterize right the agent simply Brian, as they customers, where places how outsized are. beneficiary get with would guess, are part, go and we for to I agent like the I the is we And feel

inbound more or going to customer we so don't that agents. I'd are general finding accelerated far trends working And way more too and And more been productive, be our better, we transaction satisfaction-focused made towards We've we've think during interest. -- COVID. interest say more those finding I

with attitudes that's finally, general really nasty then way, it's - doing comment. me to say numbers it, Don't sentiment, new feeling it in community me do As are XD to of play the things Better the it with bought way. is bother quite this the good. now, when bother Allen was during technology way. Don't tours. is But towards than put that more fine, can which a old do the way bother It's that And not different just agent really And safely. let's the -- COVID it amongst going -- don't stuff. is do And adoption me the everything to of the we've seeing way virtual just just seen we I'd lot course, pre-COVID, be And old don't the some they in with stuff. out goodwill we but out saying, it a partnership just discount. play with we Together

And so place had kinds during I that gives the that hope tools usage period. a all of and while we're getting texture. this for in we've some adoption of you

Brian Nowak

That’s Thanks. really thank both. Yes, helpful. you

Rich Barton

because and trying seeing, you too, more And you add business I'd way meet. are way something all and working carry do or are I'm most to and you you, convene way for just remotely you the on mainly all one the sure, reinvent fun. of the it's business

with And me. really us. it course, or could partners to train. we as new now do physically and we thousands for better, Of to or important been on And that convene Vegas tremendous just to knock are And really is we've And if -- something feels our historically, good having success Premier we've able tools that's wood, to really really can Las events, go We at educate, it than can that field run It's amazing. do going in communicating Agent fantastic Las begun more of many wherever unlock. questions, then virtually on. virtually using to well early, we're do like these to to partners not serve to back feels it to in Vegas.

Brian Nowak

great. Thanks. Okay,

Operator

next John of our Campbell Inc. from question Stephens line the And comes with

line open. Your now is

John Campbell

guidance. afternoon. Good guys. work. good results Phenomenal Good and Hey,

kind escrow per sold that that the maybe and it's On last home know, $X,XXX small guessing don't of you $X,XXX, homes you of settlement to $X, so XXX, up line think item title revenue, you far and with to, services $X.XX there -- is mean, math It's get recover tuck I you way have of of services, closing guys that quarter. transaction, it? on potatoes. guys but the under other probably doing some year, you the I'm the the kind could per just right that that I in [indiscernible] somewhere about closing that in But that or revenue sold, the this thus the new

Rich Barton

and I'm reply. Allen, you're on you waiting to mute, for

Allen Parker

Yes.

our our question? ourselves business, high services We're markets, escrow. open cost up But escrow other party. supporting what And that we this built us do within really and your yes, integrated when kind title everyone this this it's basis Homes is is believe $XXX reported transaction. then We we're it points we're a excited transactions, painless It's XXX our make and of is we structure what us internal in knows number a two other the XXX non-ZO saves in had more with that to for now, our transaction reduction basis in and with revenue can we quickly about team on services, can partnering services transaction actually there about, we but little where a And are is, on like XX the has all year actual how scale Does you more So really we're what million. QX. And -- cost play $XXX Offers it's in believe a for entire providing open of segment. so not these we're just in I throughout but points, We customers. not when for really like third but that. XX answer services we is your be all own markets. times the Zillow VCS pay talking and that a that ZO. fast, on may use versus again, closing and use we able million we're so were

John Campbell

sense. me. makes that for second And question then Yes,

helping in sales guys offset next bit and of and lift quarters, a little little there marketing, pieces couple are much there deemphasizing that spend? of by how leverage of sales the some you that other driven imagining getting is is to see kind going there probably or Trulia, reduction marketing of On marketing but over in that a of are bit I'm of are the

Allen Parker

Yes.

QX that guidance. even about incorporated guidance. again, our for We we our in talked It was marketing QX our announced in to So prior QX. pause

makes look our to support are and QX spending. at starting for increase least in to sequentially We opportunities brand sense to where it

support Trulia Zillow, I'd coming incorporates continue both QX and spend And on We brand to brand and is that, our still brand. the to of look, guide what the But appropriate support measure and access, is that's Trulia the priority but our year-over-year sequential and leverage, to monitor, the say the support brand. on as providing Zillow increase and we'll adjust to to both growth. a continue continue Zillow but

John Campbell

you. Okay, very helpful. Thank

Operator

from with the question next Goldman of Heath our line Sachs. comes And Terry

open. Your line is now

Heath Terry

increased you've mentioned brokers times technology. the for that adoption Thanks few from of that. Great. pace you're seeing new Rich, of a

one to How that this, are development you spend, more obviously, away in to of You've insights. of want want you to -- using of investment technology. is that technology a competitors, much sort private the sort tip where of I'm map need How priorities the you and leaning there don't to those or road to -- you technology? I from biggest public Seeing never sure your this investment, the sort to you any to shy spend been but what there hand of opportunity into for to do the in that would extent that are are opportunities Zillow's push doing? that appreciate

Rich Barton

I'd priority. greater broaden say if broad out, a I if think hear least question Yes. choose I at Heath, framework, there's could I your to in no

stubborn lot even modern a legacy COVID. but its been before resistance are has in technology been a of adoption. And pretty weird, reasons, regulatory fragmentation, it's to adoption -- it's real in We estate technology for of laggard complexity, distribution

So near of and -- re-platforming built. of foundation cycle and I complete we gear out a the new a the beginning being are for at believe really being I escorted industry

it. unlike so -- this is And

at in dream are so fix. user the that. We mind. we stages talent and that lot, we're is the customer what together, experience like. But legacy in it's a Make matters really in to a position all that up early , way be It's talent hire do And just the of really industry to that to in quite we're broken, the to user excited looks and a have mind, the able that and the ultimate with really work not the necessarily able we're about customer need to this. it industry but excited

platform speaking, broadly it's have. development say, So top we I that it's would the like --

we've shopping you're And Specifically, kind more pretty touring leaning that the into even the to way as virtual Would home stuff yourself? yes, you that we're talking pandemic, to about people It's want asking stuff virtual about so yourself Yes. into I post been think want that, tour cetera. we shop this let Yes, of about. too. clear them can ask and to still that a want would tours? take still you et it you

And we industry that do rapidly these becoming norms. are think so

really leaning that. We no our -- an doubt, have but there think competition this, area do expenditure so and us this investing is in -- that some And our is give I R&D into in there, we're capabilities collective advantage.

Heath Terry

Thanks lot, Great. Rich. a

Operator

with comes the line And of Lloyd Deutsche Bank. our next question of from line Walmsley

is line Your open. now

Lloyd Walmsley

can. Great. I if Two Thanks.

where inquiries Anything that then there or from great. Zillow elevated Offers looking whether sales fact talk an commutes? is any a increased moving you to make First, leads move So be multiyear can could you trend unlocking out of real longer be this about like any tolerating people signal don't of sense there you on converting search what share is update would of moves of just the leads notion just cities real? the in latest Thanks. in activity for offer of that could seller Premier and seeing second, And potentially activity seller Agent? you're to signs

Rich Barton

and start, finish? to You want Allen, I'll

Allen Parker

Yes.

they what -- with partner better our and lead the for We're multiple partner to PA that pause traditionally our early to to So customers. say our through options leads, now on support buying continuing providing We're our sell Zillow ZO at was enhance look in to or call we pipeline, opportunity whether processes on is partners. want them refine it an to with generation partner us But channel. sell leads. Offers I'd

opportunity but early. So we're here. we're and about very very trends, seeing still excited. we're positive excited iterating, the still some We're It's

Rich Barton

popular thanks shopping is up a to It's Yes, The this Lloyd, beyond question. we're real Everybody story. seeing our is want a what seems it's as we're tricky everywhere, And to really what speculating deurbanization to for story is your and everybody. it. tell says. tell data story that that's one. Hey,

And preexisting affordability was trends, to be and high-density We accelerated the were go we with already having sets do that actually have that. and work and of I home, have said many more deceleration has COVID social, are longer areas, trend go -- on way kind able I accelerated was concrete companies the And -- being we but to political many to was. from on are has less And likely we we your a the lucky urban accelerant an companies it habits people more kind of logically migration. a the -- companies not urban pre-existing set, and the get -- COVID the go companies, of think trends. an working -- that of and these back coastal business, crisis there all, in longer the trends, in expect have we some seeing COVID pick the

exactly this call an the real. like from We But going to by out how it's it some supported so of And from meaningful confident we going lasting, multiyear something that a pretty play be can't yet. bit trend. to seems is intuition data, are data

Lloyd Walmsley

you. Thank right. All

Rich Barton

Yeah.

Operator

over any Barton Rich time turn back And allotted the now will for for this the questions, to completes closing remarks. I call

Rich Barton

everybody. Thanks, Abigail. Thanks,

And lead we I take move feel again, and it's we're enjoy that quarter, the position. in committed your to safe, It's break term, further transformation through and way evidence sure backs, in ever. to really is a customers Zillow the now In safe, more This make carry in is journey. Good summer. And to short important partnership you I've forward. our that the than ahead our bringing wind like to you. talking appreciate at and tech talking been on. and this we're a position the Stay strong great industry seamless the a long the just a about. convenience, term

Operator

call. conference participating. for this concludes Thank gentlemen, and you Ladies today's

You may now disconnect.

Zillow Group, Inc. Class C (Z) 6 Aug 202020 Q2 Earnings call transcript