ZG - Earnings call 3 2023 | Zillow Group, Inc. Class C

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Operator

Good afternoon. My name is Lauren, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Zillow Group Third Quarter 2023 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would like to turn the conference over to Brad Berning, Vice President, Strategic Affairs and Investor Relations. ahead. go Please

Bradley Berning

Good Quarter Lauren. welcome Zillow to Thank Conference afternoon, Call. Third XXXX Group's you, and

Joining to Hofmann; and CEO, Wacksman. me Group's Rich Zillow today Barton; discuss our CFO, Jeremy and Jeremy are COO, results Co-Founder

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

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

Richard Barton

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Jeremy Hofmann

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Operator

Instructions] comes Our Brad first [Operator question from Erickson RBC. from

Bradley Erickson

So one for Rich.

about see Maybe I an buyer's get thoughts follow-up for lawsuits some impacts industry. pressured if the effects agent potential talk appreciate but the commissions could. could that the and have remains, on a talk we I I under and about then going if more Jeremy, through the Maybe scenario? might the And where business First, significantly. changes outcome in the of

Richard Barton

Okay.

So kind the path scenario. middle of

One, changes and weather, in. out what, lights. were based free is we more fundamental is and all good real turn believe it to founded, I the any plays of really, try is fair, And scripted comments I want bit of don't Jeremy the over But up. set toss Brad our in why which Wacksman, then overall, that might question and cleaner well-lit to kind and my scenario. might on the path I that we think So what little more statement to answer your come we're believe information in that middle listings. and of estate path transparency how game about to a positioned really on position said the okay? And That how first, kind principles do free-form answer for well marketplace to just feel we specifically, a our short reiterate that that I this is middle some equitable. we I of version

and principle have conflict double which and [ We've need at support pretty more representation for do want industry, [indiscernible] ]. certain But because clearly siding physical to we DIY, move transparency that we in most in a and second then the we is finally, moving We think legal a going which independent of healthy the quickly think The times representation. some to agent. And towards form these need markets the people want towards seen instances, who commissions, is deserve to transaction is been independent actions. of other marketplace. expensive are DIY and the more of and movers people counsel, do negotiability DIY buyer's a and be takes and

that said years. out? to complex. It's process It's this every employees there play likely of already. So highly It's take this will politically affected how in fraught, I the millions potential likely is legal state. and are people

to rules see we As that the I transparent move have and industry markets. begun these negotiable said, I in several think just will more towards quickly

that want quickly. of a because of buyer's the really most would been more I see deserve would scenario, believe and radical we believe mostly path complete the this I But I improbable, disruption consumers it's existence agent. We representation, say I've don't but say and the that guess need through and we'll I I that. guess think

a entertain enhanced think switched fragment. look we is marketplace where model pay-to-play, right? We what listings merchandising in a for to geographies, like we see like all But digital some happens of like pay-to-play it notion happen, And more is Okay. much international pay the more kind we classifieds. does

markets. more markets. commission This who we've set well up most most trusted best more world a really information. Zillow in is friction brand, And fee actually more set think is therefore on in good see for who position international transaction international an the to higher is that in there. We've biggest is who seen the profit scenario, actually U.S. and and to If the than do has fragmented a in is It about in the well, we do the the up opaque opportunity you observed exists audience, those that

less And know We more together a diversified I'll big Wacksman and don't to the it, all to But like expensive. add don't reiterated TAMs revenues. more by think Hofmann We think be These it's Real if business economics. it's Mortgages, showcase. These fair. a could so we made majority begin and bad better all are estate but our think point, we really over are now now verified think even my Rentals, for it's it this. Jeremy are it growers, even up of hand account Boss, it's Up it's I that. that that less I point saying well made efficient. construction getting possible consumers. for new software, growers. will We wrap we and We all Follow I

and has guess dollars in us real served really regardless consumer well that so with and I Having the end, customers end really, the far. means that So are software up solving how we really north of partners well problems star is flowing. engaged the our insulated,

bore that thought I'd you all I but again, to out. sorry So get with it

Wacksman, me middle maybe the Jeremy path, little about talk relief? you a Let's give though, want to

Jeremy Wacksman

world Brad. Yes, I I agents. said, customers feel a similar I and Rich investments where are becomes we there the and that around. fewer mean, And happy dollars transaction Thanks, really mean, most think itself more what in are making the think valuable to. well go positioned, to to I we in helping tech for even we the and productive [indiscernible]. more in Yes.

about agents, from base or is As that. And customers, share our those agents participants customers, about effective App buyers touring, transacting and talked are partners, to partners partner higher-quality a a to as higher experience, the higher-intent lot gain and then to in close in find that with marketplace like world even that deals hand it's are in intent, our efficient to and Super best strategy, of Services a And challenged part such, the in be financing are then right? or become our productive going right? able reminder, and partners those our the driving is and likely process strategy world more that more the more less so Seller the Rich partner the time more all to themselves might teams those doing helping a productive, sellers our those be that powered by software. and

pretty services confident challenged our industry And provide. we void in about challenged, and partner excited and we to the the get would are are share providers the we value we grab excited here. about have feel if dollars there's we really the So ability really because because other get strategy a the fill that

Operator

from from Stephens. question John next Our comes Campbell

John Campbell

echo to want last question. just the I

mean, addressing forward, the surprised to in be maybe did of past. of Rich, than like are I've you're I the listing it's process been all-in your job going scenarios. per of guys did or you up it trough in on today, you fragmented job size lighter upfront. revenue level of today, lawsuits I'm frankly current just so I potentially. listing agree nice around of specifically help the hear but markets going And at range like model, still hoping average with to look But you bit I environment, overseas to up, maybe what investor concerns, know investors looks then kind it's Rich to inventory a we a can paid say your the with know kind seeing probably good little going the a been think, take think if But with these in your listing? I today? that I clearly it's all what various maybe inclusion those try that there. framing

talk X, today? know maybe is looks I it And like. about what ago? X X, don't what maybe So years it

Richard Barton

with I, cooperative, it complaints and the part, it's work it's going forward. Sure, don't, marketplace I all we second least and past, for offered kind up we the least listings worked way question. to don't mess John. access up. Jeremy the transparent the I the the start way playing by marketplace. Why the for Why a agent playing really in at this in the its relatively maybe all in and access me it's level out the help at Okay. equal Jeremy, level good why worked But sale if don't, flaws of past, works way for make, doesn't field, us listings

markets by a listings that of for-sale the that that a place. that, because rental hasn't we're sites bunch unique we the commodity as have market. And connected are of owners well time. quite non of for-sale listings oftentimes of so have commodity full as call we let's a it of information a to all to that large number of top information view And these in changed it, are since listings whole we form MLSs, market in our different inventory to add On proprietary a have, to MLS had number, listings oftentimes the our in ever we over

difficult said, past, a time. In only and And the alike. so creates regular listings in asset in kind inventory over that relatively consumers the of secure the for done the run combined, world that the gets as will of like off event partners we've messy and course, unique alloy most world. that Zillow, is strengthening fragments, and I But

get will it. We

situation? models, model. that it, it Is a business answer specific okay? don't works your business have likely of business question. to lot how experience move inclusion will to paid with in know Now model I the inclusion have And we several rate we paid a how

for want as in here in industry obviously to But that We to Did think able win once to for win U.S. most the of the X We all like that the versus, We see upside. model in in want is at we U.S. to say, pretty as durable look the being real the meaningfully amount the Australia rate value, we've quickly want of that see you'll would to of by want the to leading what consumers where or that the leave with those win market. And captured that's another achieve the of cap taking in and higher market form companies again, ourselves. that versus cap I partners, than what portals win. a parties the now rate is is win. point estate we is portal been win- other per than you saying, this monetize anything for we market those potential out? the our in is world You're leading industry capita way least business

Jeremy Hofmann

it's just built on, layer content mean The unique part hard time. Hoffman. we've over I'll building I Jeremy is Yes. the that Rich.

part. is So for paid rentals a content, challenging construction and we've owner getting that's That's listings. excelled. what business new years. model all a and the listings, inclusion That's sale puzzle. XX piece of really, after we've really the unique really combination not XX, for-sale for listings, the been the of by business that's Changing where eyeballs, hard getting the listings It's XX, models doing all

go as which a the feel in in of really we we way positioned a world So result. well international markets,

Operator

Our comes from Lloyd Walmsley question UBS. next from

Lloyd Walmsley

can. if Two, I

the this product like the us events uptake the dramatic a agent guess, MLS what fit you where such template scenario with an model doesn't, more understand that a, you breaking with I of potentially it that how and see of like the And -- pretty an industry you model listing enable structure that a path that's seems in First, in classifieds to there? showcase meaningful it change would structure be potential. Can sustain seems listing, give doesn't structure pass do the -- that maybe could of just maybe in? even stage us specific MLS scenario, moderate all Like it scenario the help middle like structurally if then this, kind move secondly, just a and lot from where then can potential shifting could structure just setting that, where of more sticking good and shifting for feedback you think if a evolves the or update changes on model interesting does change a change?

Richard Barton

think to that happen pretty Wacksman, difficult legislatively like hammer thing. the regulatorily around Jeremy over to Lloyd, likely we taking a begin, the giant country you. then would just say I'll guess what that I MLSs it's and be Maybe Lloyd. is hand a Thanks, legally would Okay. of how don't and it hundreds or I'd

benefit. integrated ton believe we can guess that partners provided begin they that industry while and remember things may everything have fragment, a as value market. I of consumers forgotten And to there's by that if, most participants benefit, where the having so many And see an marketplace will on

as we anyway, see this So unlikely.

well I So more to ton than happens, honestly if say, other airtime a don't we're want really it positioned. give to it

that potential big that giant a and thing, we're see. after, chat that's we to showcase I'll over TAM Wacksman about the and the how to it hand On going new going is

Jeremy Wacksman

early about we mean, who feedback great product receive and Showcase part MVP of really rollout. to continue I consumers from agents Listing both the and using of have kind been Yes. VX our

And XX different mentioned, and hard bigger set serve Rich to more businesses density, to we're that in now smaller and scale. flexibly live includes different As and teams offer out different geographies have a markets, enable we're feature and it do have the being building enable us work can we to all things at how go-to-market able of like agents them.

bring at I agents think captures media is scale photographers to a We fantastic as ensuring Aria curated year, we floor did that own a and takes ] this is do agents media differentiated really earlier scale this talked to acquisition to experience. service And that a that, they listening if all is talked provide want. that key plan just unique we this enabling photographers photography interactive earlier their about this big and do well really that have [ the such media. Rich to year great but those workflow. can trained great It a rich help about when that.

the really key is So building those capabilities out to scale.

have this can't that helps discussed win their early at users between of really more is me. you agents their listing comp us and commonalities told Showcase why about some used are we them is the agents about the helping I'm us listings. But offer. and agents business. table, agents focusing conversation. Listing is offer international is, there for something showcase right? sitting is that list think on What kitchen to product that's tell listing should and the right when I grow seller how this as what market This much how And with other listing their You're

our showcase expansion the update about for the business but as year. continue value, in into grow progress, to stay the and really kind that. helping listing themselves, like of more economic you we agent the through to helping showcase get make We'll And of tuned next addition side tools best home, so helps that into their excited markets seller so we

Operator

Our & Ryan Zelman from question comes from McKeveny next Associates.

Ryan McKeveny

this the on letter you of I expected the a commentary live share touring, that on the about share you you be assume gave happening of any Within year. XX% of XX% on point. about the the enhanced that? able real-time I'm mentioned X enhanced staff similar pie can of are that But to to you markets? curious, is connections similarly in at touring piece total the and at are specifics are small give in connections covering or a

Jeremy Hofmann

is sure touring? make question you, in much you're real-time connections in, the is our to markets the how enhanced just Ryan, are asking of

Ryan McKeveny

More trying opportunity much today I'm so do coverage total how enhanced in low the the just of about terms to pie? how in enhanced enhanced 'XX. market going of is You're more the about the talking think kind markets to opening the that. expand accelerating of growth think XQ today the almost like about base markets forward and into And just to

Jeremy Wacksman

experience real-time connections, quarter, then say, I on is enhanced of to request X was the the mean customer going maybe. X not want now available obviously, touring clarification. eligibility And Hoffman alluding And Jeremy not a teens in this every agent tour that just what a prior I small right? to the be customers. relationship every a and XXX% to is, Not customer the of criteria. fits the out, to then markets, we're for overall rolled Thanks so we the it's percentage in, that Yes.

those I expect the great Different you're agents now that cover because Rich the rolling meeting because bit training not appointment met, get talked great is So ability set different why we new feedback again, for out from they reason a that teams new density, really And eligibility, simple want We've lot the, will a and a about. ends a up markets that's to market where they're workflow math. going we ramp be different we customer when into gave XX XX-odd market markets is as different about you're of to they customers. the XX% customer versus being on talked as and we're want it's for color about the deliver request, our we to agents serve. and have them a into get that experience, think, by

the so up. the work with And and work of agent can number customer the with customer the rate, times the goes happier is

kind And so relationships. those of just happier the agent and are customer market this all lighting website, more is share path transaction it indicators gains up pages of market. But great it's of not on linear by on

Ryan McKeveny

it. Got

to That's XX% And is origination see it is see should helpful. slightly growth that, where mortgage question origination out then Like that presumably revenue there. you is, of for guess similarly generally, revenue revenue if I growth origination The you you implying on down offset reaching marketplace point to just this translate we in forward? if declines the growth? that of are XQ growing, reiterating But expect you'd going XQ Mortgage. year-over-year, or roughly said going grow then Okay. the that Part kind one think forward, begin I to is your piece very called growth, origination or should and quarter. said are the revenue volume growth. expected and

Jeremy Hofmann

Jeremy one. Ryan, it's take Hoffman. I'll that Yes,

and business more item. fair think more originations to I it's Mortgages the line of about think becoming the

be So and still the but and the the taking mortgage, of beyond expectation revenue marketplace With originations is revenue it marketplace our unquestionably, yes, mix. this piece is more of the up is respect the point at pie, bigger to VHL is will decreasing. the part

it's So direct. perfectly not

Operator

comes question next John Jefferies. Our Colin Soni from from

Vincent Kardos

for topic on on mortgage Kardos Sticking Vincent is This the John. here.

you quarter, see sequentially, in about year? XQ last of loan then almost and And quarter? growth given the officers how little we how versus you your the talk XX% think Maybe productivity XX% current this that productivity backdrop runway XX%, ops going opposite And how bunch help from there of get hiring last adding about change you a or So flagged as in a relief productivity the officers. maybe but of you versus a quarter, us came more then also for any loan you once maybe improvement can much better know by forward? grew saw could then I housing a bit originations rate much

Jeremy Hofmann

Hoffman. question. the for Thanks Jeremy It's Yes.

officers officers, mortgage This are that the about we in this. would in quite say are we origination way pleased get still as goes question We're see the the think today, opportunities up but obviously I like purchase and time it, we for with us really I think result, ramp loan business, market more with scale. more productivity to pleased challenge there's XX% the we productive. loan we do to on get is we're a no to as and growing hiring a impressive.

Jeremy Wacksman

that Yes. And to to maybe a just bit. add

in I expect grow us think to and those best to that can should coming help productivity go all home. a to with prior them volume into help ask get customers questions to scale where well efficiency, There's in talked answered how you Premier all know customers the we now. As but do answer? to quarters coming you expect are as experience, are the we should see the count them to also There's not. opportunity those both right from are. a loan next get on loan Agents they to great and we expect right that meet and to are of huge lot when Zillow on increases our you them year, questions we have officer see that a financing How get for ready financing asking an who we've should about customer the us origination but as both, see offer

a and of potential lot then our the being and our volume handle get work gains want bring. to processors officers of improvements our also just we're great at So to help been that lots we've ready efficient there's productivity of the building there. And at we team of investments that more scale loan making factory that's lots to hard

both from answer us contribute to should So year. should see to is both you and short next expect into growth

Operator

comes Citigroup. Our from Josey next question Ronald

Ronald Josey

traffic wanted ask XX% rentals. is I growing. multifamily year-over-year, on grow to revenue saw Listings We reaccelerated

Are I side, but to on call the existing, And newer are the Zillow rentals a new we're to or helpful. just newer happening here quick And early the of meaning Just term? it about side they transaction existing? the feedback monetizing, longer in seller know showcase. be then a team would listing any these for that's here the then us change and buyers strategy follow-up on talk

Jeremy Hofmann

we're I'll And on it, but Jeremy Hoffman. and it's XX% Jeremy pleased, multifamily. on the It's year-over-year in more really start Ron. Rentals. Wacksman I'll Thanks, up yes, all quarter. let executing Yes. hit cylinders. Yes, Up XX% of this

up And leading industry traffic multifamily were listings and there grew double there. properties in multifamily XX% across strong. Total single-family QX. continues the then and up digits obviously, really both active to year-over-year. So be XX% We're

I we're in really happy really, too. said executing. remarks, in with like we growth my So how QX prepared expect we're And there, XX%-plus

else So you Jeremy, anything want to add there?

Jeremy Wacksman

I No, think that's right.

listings. across to single-family services it products multi- engaged hit it's audience and think the great both and using you I and earlier largest most

supply rates need and our occupancy more means Some the help customers. in advertisers in of macro terms decreasing the high-quality market

execute And so a to excited the as our rentals continuing. And business, you're Rich get part great incredibly that challenge we a And buying the first-time also the of half great as renters as seeing are the again, and VHL half revenue lot across will drive really bigger PA fast-growing the most whole. of our strategic marketplace normalizes about of business, but are of growth about, growth ready team business, be that and talked those there some for affordability business, macro renters of a those there. homebuyers thinking about someday as

And I think, incremental. are the your for long teams beyond really agents Showcase, many agents, advertisers as it how initial I mean us So was and or question, well super then incredibly a term. growing so. mix executing think fast, it's intentionally on business, scale and great how many we really And strategic I markets.

to interesting see that, learn be to how pans expect that out. We mix

and them. and teams grow can You agents helps great Listing it's strategy Showcase when grow imagine, a overall driver to business our their business, for similar

a like that want find today it, new the interested you less way customers really You to who in their to Listing but business. to grow great look find Premier Showcases in Premier using has are them products use also Agent Agents that were interested offer, that

sort So we're pleased target with the of early mix. It any there's intentional wasn't, not there.

VX about with partners getting For us, this as VX early learning and scale. we're more MVP really it's and for building ready

Operator

question Our final comes from Piper Tom Sandler. Champion from

Thomas Champion

homes.com? I'm Hoffman, changes structure, on think Jeremy, or on comments you if Richard, growth Jeremy about talk could UV the How curious then any at maybe appreciate the for you cost updated very do really helpful. the about competition? thoughts And

growth year. into next Just about thoughts talk could curious around bit you head your little count if a

Richard Barton

impact call. noise great on seeing growth as the posting results our Ron, making about we've out and chatting than pillars against we're this not from progress any really great other been there

real I ourselves space. customers Boss overfocus walk-throughs in rental to interactive virtual think plans are software actually way in on now, and solves our really applications on come the, floor the software for having booking we out and our CRM of to like Follow more, is partners we adding is a which quite from pain lot and agent Up users and customer a the points the and with awesome real-time beloved XD our for competition really by that inoculate building and focusing and customers and

creating We by We So super our we customers for really Super long integrating takes hard. App term like the it. it's to app skills creating, partners. win it and kind like well. believe seamlessly that that It's and do of for is that worked software the a way we mad

Maybe we'll anticipate has continue data but that but it and question us work. will engaged bunch to most We this comes well directly. far. worked We've so of us cited not close. a Jeremy that, audience, last to throw of XX% have on do Focusing biggest, I'll Hoffman, for the to we only on that then

Jeremy Hofmann

along then that also for different Yes. no about do we assess that then efficiencies we but around marketing look structure. for feeling we'll right opportunities. But think And the like a just for against. and costs before, ahead. cost against grow at And on that about reiterating are said to overarchingly grow the will but long-term variable will as feel what good the see around the item that, us investing feel and I the based cost of structure, what we of revenue, really on level specific guidance investing good growth line just operational then fixed quite things profile reiterate the just we're And we're cost opportunities and we I margin is one the way, beyond XXXX,

Operator

of the Q&A to the for over is That end Rich I closing remarks. back hand now session. will Barton

Richard Barton

the plan to very forward you trust and appreciate to continued in from, make you Thank questions thoughtful much our for growth along on pillars. we really as progress updating we We continuing look investment Zillow. your

Operator

joining. Thank This you today's concludes call. for

You disconnect lines. your now may

Zillow Group, Inc. Class C (Z) 1 Nov 232023 Q3 Earnings call transcript