Abstract
Zillow Group, Inc. will release second-quarter 2026 results after market close on August 5, 2026 (Post Market), with consensus pointing to mid‑teens revenue growth and modest EPS expansion as investors scrutinize execution across Residential, Rentals, and Mortgages amid affordability headwinds and product rollouts.Market Forecast
Consensus for the current quarter anticipates revenue of 758.04 million US dollars, up 17.13% year over year, EPS of 0.45, up 6.27% year over year, and EBIT of 10.94 million US dollars, up 175.67% year over year. Forecasts do not include formal gross-margin or net-margin guidance from the company; the market expects stable unit economics with mix effects driven by segment growth differences.Residential advertising and lead-generation is expected to remain the primary driver this quarter, supported by continued adoption of Preferred, Zillow Showcase, and New Construction tools. Mortgages appears the most promising growth vector given last quarter’s 64.00 million US dollars in revenue, up 56% year over year on a 96% surge in purchase loan originations, with Rentals also sustaining strong momentum.
Last Quarter Review
In the first quarter of 2026, Zillow Group, Inc. delivered revenue of 708.00 million US dollars, a gross profit margin of 73.31%, GAAP net income attributable to shareholders of 46.00 million US dollars, a net profit margin of 6.50%, and adjusted EPS of 0.53, up 29.27% year over year; quarter over quarter, net income grew 1,433.33%. The quarter beat Street expectations on both revenue and EPS, though the shares fell in extended trading as management noted modest near-term gains and reported traffic softness. Business highlights featured Residential revenue of 450.00 million US dollars (up 8% year over year), Rentals revenue of 183.00 million US dollars (up 42% year over year), Mortgages revenue of 64.00 million US dollars (up 56% year over year), and For Sale revenue of 514.00 million US dollars (up 12% year over year).Current Quarter Outlook
Residential
Residential is positioned to anchor total revenue again this quarter, with growth tied to the health of agent advertising budgets and the conversion efficiency of lead products. Execution focus remains on the commercialization and measured expansion of products such as Preferred, Zillow Showcase, and the New Construction marketplace, which together improve listing presentation, buyer matching, and lead quality for partners. Management commentary following the last report indicated only modest sequential gains due to affordability pressures, suggesting investors will parse conversion rates, sold impressions, and Flex take rates rather than expecting an outsized step-up in spend.Internally, embedding AI into the consumer and partner experience remains a core focus, enhancing personalization, content generation, and on-platform engagement. The commercial impact this quarter will likely come through improved conversion on the same traffic base rather than pure traffic expansion, with product-level optimization a central lever. Given last quarter’s solid For Sale revenue trend (up 12% year over year to 514.00 million US dollars), the bar for Residential is to sustain mid‑single- to high‑single‑digit growth while avoiding adverse mix shifts that could compress margins in the near term.
Risk management in Residential centers on maintaining predictable lead quality and aligning inventory of high-intent buyers with the capacity and willingness of agents to spend. With affordability still a drag on near-term demand elasticity, the near-term outperformance scenario hinges on more effective cross-sell and re-targeting rather than volume growth alone. Investors will be attuned to any indication of improving close rates or higher-frequency engagement among high‑intent cohorts that could signal upside to implied second-half pacing.
Mortgages
Mortgages delivered the fastest growth last quarter, with revenue of 64.00 million US dollars, up 56% year over year, supported by a 96% jump in purchase loan originations to 1.50 billion US dollars. The operational thesis for this quarter is that integrated pre‑approval, loan routing, and agent workflows can lift attach rates to buyer leads, especially those sourced via Flex, while reinforcing lifetime value across buyer journeys. Recent changes that allow agents to get pre‑approval credit from non‑company sourced leads are helping channel adoption, though feedback has been mixed, underscoring a practical integration curve for teams adapting their processes.From a P&L perspective, near-term profitability is sensitive to gain-on-sale margins and fulfillment productivity; if rates and spreads remain relatively steady, throughput and attach-rate gains can translate to incremental revenue without proportional cost growth. The debate this quarter is less about headline originations and more about the durability of attach-rate improvements and how the company balances speed of scale-up against customer satisfaction in the loan process. As a wedge into a broader transaction ecosystem, Mortgages remains the clearest incremental growth opportunity, but the stock reaction may depend on evidence that the attach-rate trajectory is improving rather than plateauing after last quarter’s acceleration.
An upside scenario features continued double‑digit year‑over‑year revenue growth with stable to improving gain‑on‑sale margins, combined with better on‑time close metrics and standardized pre‑approval flows across partner teams. A downside scenario would show uneven funnel conversion, heightened friction in workflow adoption among agents, or slower-than-expected capture of pre‑approved buyers into funded loans. Management’s commentary around the quality of the funnel and the mix of purchase versus refi will therefore carry weight in how investors recalibrate second-half expectations.
Key stock‑price drivers this quarter
- Delivery versus consensus on revenue and EPS: The Street expects 758.04 million US dollars in revenue (+17.13% year over year) and EPS of 0.45 (+6.27% year over year). A clean beat would likely require stronger sequential throughput in Residential monetization, Rentals resilience, and evidence of improved attach in Mortgages. - Segment mix and margin quality: With last quarter’s 73.31% gross margin and a 6.50% net margin, investors will parse mix to gauge whether growth is coming from segments with favorable contribution margins. Rentals’ strong momentum can support blended margin stability, while Mortgages’ expansion may add revenue with evolving margin cadence depending on spreads and fulfillment leverage. - User engagement and traffic: Several media notes tied the prior selloff to softness in traffic metrics despite headline beats. This quarter, commentary on engagement depth, repeat sessions, and conversion will matter as much as absolute traffic, given the company’s stated focus on embedding AI to raise on‑platform utility. - Forward‑looking tone for Q3: A leading broker previewed “fine” Q2 results but flagged that external data points indicate deceleration in Q3 even as the Street guides for stable sequential growth. Any shift in management’s tone around near‑term demand elasticity, affordability pressures, or inventory cadence could nudge second-half models. - Legal and platform overhangs: The recent dismissal of a lawsuit relating to routing practices and loan steering removes a structural overhang. Separately, analysts have discussed an AI‑related valuation ceiling risk for broad internet platforms; one house assessed worst‑case profit exposure at 1–4% if indirect traffic were 15–20%, implying limited direct P&L sensitivity but potential valuation restraint until the competitive narrative becomes clearer.Analyst Opinions
Bullish views hold the majority among directional ratings published in the past six months, with bullish at 100% versus bearish at 0% when excluding neutral or Hold stances. One major bank reiterated an Outperform rating with a 70 US dollars price target and characterized the upcoming quarter as likely “fine,” while highlighting that external reads point to potential Q3 deceleration even as consensus models assume stable sequential growth. The same broker noted channel checks showing continued friction in the quarter—particularly polarized feedback on the loans offering—yet emphasized the structural positive from the recent dismissal of a lawsuit involving fees and routing practices and pointed to process tweaks that let agents receive pre‑approval credit from non‑company sourced leads, which is aiding adoption.Another well‑known research house maintained a Buy rating with an 85 US dollars price target, framing the company’s product-led improvements in listing presentation, matching, and lead delivery as supportive of sustained monetization across Residential while calling out the acceleration in Mortgages as a key medium‑term growth vector. These bullish analysts generally accept that affordability remains a near-term headwind for transaction volumes, but they argue that consistent execution on the monetization model—particularly around premium placements, Showcase, and New Construction—can deliver revenue resilience even as buyer traffic fluctuates.
A separate institutional thread in the past two months has focused on an AI‑related valuation overhang facing digital marketplaces. While this presents a narrative headwind, the same Outperform‑rated broker estimated worst‑case profit exposure at just 1–4% assuming 15–20% indirect traffic, implying limited direct earnings risk to the current model. The implication for the stock is that, absent a deterioration in performance marketing efficiency or traffic mix, valuation could remain capped by the debate rather than operational degradation, leaving execution-based catalysts—like better attach in Mortgages, steady Rentals momentum, and stable Residential conversion—to act as the primary rerating levers.
Within this framework, the bullish camp is focused on a few verification points in the print and guide: - Confirmation of revenue near or above 758.04 million US dollars with stable to improving monetization KPIs in Residential, indicating that product and data enhancements are translating into sell‑through. - Evidence that Rentals can keep its double‑digit growth pulse, preserving mix benefits and underpinning blended gross margin stability. - Signs that the Mortgages flywheel is strengthening—namely, healthier pre‑approval flow, improving attach rates, and operational KPIs that suggest fulfillment scalability without compromising service levels. - A measured Q3 setup acknowledging affordability constraints while keeping the pathway open for sequential stability through execution rather than macro relief.
In sum, the preponderance of directional opinions remains constructive, hinging on the company’s ability to demonstrate that product‑driven improvements and cross‑segment integration can offset demand variability tied to affordability. If execution visible in last quarter’s results—708.00 million US dollars in revenue, a 73.31% gross margin, 46.00 million US dollars in GAAP net income, a 6.50% net margin, and 0.53 in adjusted EPS—extends into the second quarter with incremental traction in Mortgages and resilient Rentals, the bullish narrative foresees adequate support for consensus in the near term and potential multiple relief as legal and competitive concerns become more bounded by observed performance.
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