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Thank you. Good afternoon, and welcome to

Thank you, Brad, and good afternoon, everyone. Thank you for joining us. I'm pleased to share our strong Q2 results today, including continued double-digit revenue growth and positive net income. We're gaining share in For Sale and Rentals, and we're doing it while maintaining cost discipline to deliver on our 2025 targets for continued EBITDA margin expansion and GAAP net income. As we work to streamline residential real estate transactions with our housing super app, everything we build is designed to offer a benefit for both consumers and the industry. People want and deserve a better experience than the antiquated and analog one they've become used to in real estate. Consumers and professionals experience a digital, streamlined, automated and delightful process in almost every other part of their lives, from rides and restaurant reservations to flights and lodging. And it's reasonable we'd expect the same in real estate. That's where

Thanks, Jeremy, and good afternoon, everyone. As you just heard, we delivered strong results in Q2 and are well positioned to continue doing so as we execute on our strategy. Q2 2025 revenue exceeded our expectations, up 15% year-over-year to $655 million, which was above our outlook range. Our better-than-expected revenue performance, combined with effective cost management delivered EBITDA of $155 million at the high end of our outlook range. Q2 EBITDA margin was 24%, with our trailing 12-month EBITDA growing 26% year-over-year as we continue to scale revenue and control costs. As a result of these efforts, in Q2, we reported our second consecutive quarter of positive GAAP net income. For Sale revenue grew 9% year-over-year in Q2 to $482 million, 700 to 800 basis points above residential real estate industry growth of 2% according to data tracked by

[Operator Instructions] Our first question will come from Ron Josey with Citi.

I wanted to ask a little bit more and drill in on the Rentals business, just given the goal or the guidance for accelerating growth in the back half, but then also just the strength in multifamily properties and the net additions. So help us understand just on the insights, what you're seeing, what you're hearing with your conversations from large property managers, maybe your go-to-market strategy from a pricing perspective, how that's helping? And just your overall, call it, confidence level, which I presume to be pretty high given the comments in the prepared remarks. But just going forward as rentals becomes a larger part of the overall business.

Yes. Thanks, Ron. Hof, I'll start maybe and you can jump in with anything I missed. I think at the high level, you're seeing the results both in Q2 and our confidence for Q3 and second half of the year just come from the strategy working, the team executing and great partner satisfaction. We are, as I said in prepared remarks, really building this comprehensive 2-sided marketplace. That is what solves the renter's #1 problem, having as much of the inventory as possible because there is no one-stop shop for all the inventory.

And Ron, I'll just chime in just to put some numbers behind it. Jeremy hit it well. But Q1, we grew rentals 33% Q2, we grew rentals 36%, including 56% within multifamily. Q3, we expect 40% plus. And full year, we expect 40% for rentals. So that acceleration, you really start to see build, and it's on the back of a lot of good work and a lot of good sales efforts as well.

Our next question will come from Brad Erickson with RBC.

Two for me. So one, last quarter, resi rev growth was a little bit below the market. And this quarter, it was noticeably ahead. Thanks for all the -- I appreciate all the drivers within marketplace and kind of software services you gave in the prepared remarks. But I guess, quarter-over-quarter, what specifically would you say the change was that drove the faster than market growth? And I'm talking, of course, excluding the mortgage piece of it. And then I have a follow-up.

Thanks, Brad, for the question. I'll take it. It's Jeremy Hofmann. We were quite pleased with Q2 revenue growth and the outperformance there, and that was in both Residential and For Sale more broadly. And I think you've heard this from us many times before, but we'll say it again. We tend to look at this metric over a time period of kind of full year multiyear view. And if you look back, those periods in time are pretty smooth. So look at the last 2 years, for example, on a 2-year stack basis, For Sale outperformed the market by 15% and that outperformance is what really gives us confidence for the longer-term mid-cycle targets, right? We're trying to go from 27% of connections in these Enhanced Markets now to 35% by the end of this year and then 75% for those mid- cycle targets. It's that formula plus everything else within residential and the for-sale segment that we're doing. And it's some combination of continuing to execute on Enhanced Markets, Showcase continuing to expand,

Got it. And then just a follow-up on rentals kind of along the lines of Ron's question. We get asked a lot about the contribution from Redfin on this back half acceleration where you're calling for. Can you help us just maybe unpack that at all? Or maybe if you could just walk us through how we should think about the Redfin contribution that's layering on top of the rentals growth?

Yes. I'll take that one as well. We are really pleased with the partnership. It launched late April, early May and has started great. Our sales force executed well in Q2. We added 9,000 properties. I would expect that to normalize to pre-Q2 levels going forward. But when we look at the value Redfin and Realtor.com bring to us, it's the ability to take the expanded distribution and leads to all 64,000 existing properties and sell into the rest of the roughly 76,000 buildings we don't yet have on

Our next question will come from Ryan McKeveny with

Nice job in the quarter. I wanted to drill in a bit on

Ryan, thanks for the question. The short answer to your question is it's all considered part of the Showcase opportunity. I think the longer answer is kind of maybe why that is. So you're right, 2.5% of all new listings. We put out a goal of kind of 5% to 10% of all listings in intermediate term. And we don't think that's the end state. We think Showcase is something that becomes the default expectation for buyers and sellers. You want to get to that 10% number to then really start to have it become an expectation to have a flywheel. And the question you're asking, does a seller ask for it or does an agent pitch it to a seller, that starts to become both things start to contribute to seller growth. We do that now. I mean if you use the

Yes. That's helpful. Second question, in the press release, you called out that part of the contribution to the residential growth was through the new construction marketplace. And I feel like the new construction marketplace tends to be kind of a big part of the quarterly update. So maybe you can just talk to us about what's driving that? Is that some of the macro trends that we see on the homebuilding side of things? Is that share gains within the space, expanding the number of homebuilding partners. Maybe you could just unpack the new construction marketplace side of things a bit.

Yes, Ryan, I'll take that one. I would think of our new construction business as one that feels table stakes for builders. So similar to the rest of the residential business and what you're familiar with on the agent front, that business just tends to do quite well because we're a really good advertising channel, and we've been able to grow nicely through the various swings in macro as a result.

Our next question will come from John Colantuoni with Jefferies.

I wanted to ask 2. Starting with variable expenses, they've been outpacing revenue growth in the past couple of years. Can you talk about the key areas of investment you've been making? And what milestones you're looking to achieve before you'll start turning down the dial so variable expenses start tracking more closely with revenue? And second, turning to the Redfin partnership specifically, and if possible, can you discuss sort of incrementality from the leads you're now receiving from Redfin versus the opportunity to find new property managers using Redfin's existing relationships?

Yes, John, I'll take the first one, and I'll start on the second and Jeremy chime in. So the first one, we expect our variable cost base to grow ahead of revenue in 2025 with our initiatives, but grow more in line over time as initiatives scale and mature. We have to make sure and we will make sure that we're rightsizing our investments to meet the expected growth curves we see, and we're primarily investing in Rentals and

Yes. And maybe the only thing I'd add there is the incremental, which Jeremy commented on, these are incremental customers, right? Because there is no one-stop shop yet for all rental listings, you're finding renters on multiple sites, right? And so

Our next question will come from Trevor Young with Barclays.

Great. Just back to the comment around Redfin and being dollar accretive in 2H. Just to clarify, is that for 2H in aggregate? Or should we expect it to start being accretive here in 3Q?

Yes, Trevor, I'll take it, Jeremy. I think about it as both, both 3Q and second half of the year. And then obviously, we expect it to be more accretive beyond that.

Our next question will come from Benjamin Black with Deutsche Bank Research.

This is Jeff on for Ben. Can you maybe just talk about the assumptions that you're making about the broader real estate market as we look into Q3 and the back half of the year? And what kind of levers can you pull to further increase monetization on a per connection basis even in a slower housing market?

Hof, maybe I'll start. I think the short answer is we're not assuming a lot of help from the macro. And we're just focused on driving growth in spite of that, right? We grew total company revenue 15% in '24. We expect mid-teens growth in '25. We grew 15% in Q2. We're guiding to 14% to 16% in Q3. And that's with the housing market largely flat, right? It was flat in Q2, and we don't expect a lot of relief into the latter part of the year. The story on the housing market is it's going to take a while to normalize, right, because the affordability challenge we have is really an availability problem. So mortgage rates easing helps on the margin, but we're still dealing with the fact that we're nearly 5 million homes underbuilt from not building out of new construction inventory coming out of the global financial crisis. And so that plus a bunch of sellers being locked into high mortgage or low mortgage rates and not wanting to trade up, creates a supply-demand imbalance. That's why you've seen prices run up so much from the pandemic. And it's why even with prices starting to ease in so many markets, you're still seeing volume low. So all that doesn't paint a story of a housing market that untangles itself quickly. So we aren't factoring a lot of goodness in. I think we hope that you actually see some home prices start to come down more. There are many markets where home prices have already rolled over and are down a few percentage points year-on-year and are continuing to go down because there's enough listing inventory out there. But again, we don't expect that to provide overall total transaction value relief anytime soon. And so we are just planning to grow through that. We're gaining share in for sale. We're gaining share in rentals, and we're doing that because the strategy we're putting together allows us to build great products and services for the consumer and for the professional, and they choose to use us and our stuff more often, and that drives transaction share for us and for our agent partners. So at some point, the housing market will become a growth tailwind, but we plan to grow regardless.

Okay. Great. And maybe just as a follow-up, could you talk to if you're seeing any regulatory or listening access changes influencing your platform or agent ecosystem and/or any kind of early trends in agent behavior?

Sure. we're quite pleased to see the -- really the vast majority of the industry agrees with our listing standards, right, which were crafted to work alongside the listing cooperation rules that many MLSs and brokers already practice. So we love to see that the entire industry really has been encouraged to formally implement what they most already believe that if you're going to market a listing publicly to some consumers, you should market it to all consumers. It's a huge consumer benefit that buyers can see all available inventory, that sellers can maximize their exposure. And it's a huge industry benefit because if you're an agent, whether you're at a big brokerage or a small brokerage to do your job effectively, you got to see all the content and be able to count on the MLS to have it all. So we are really pleased that early on, we've seen the majority of the industry largely adopt these standards.

Our next question will come from Tom Champion with Piper Sandler.

One of the questions we get a lot is around Enhanced Markets. And perhaps you could just talk about what you're seeing in the intermediate Enhanced Markets that are maybe part of the 2024 cohort. Curious if those are kind of coming up the maturity curve like you expect. And then maybe for Jeremy Hofmann, I'm wondering if you could just talk to the outperformance of mortgage in Q2, looked like the growth stepped up quite a little bit, but maybe is going to expect it to settle back down to high 20s in 3Q. Just curious if you could walk us through the trend in mortgage and linearity that you've seen through the year.

Sure. Jeremy, why don't I take the Enhanced Markets question and then you can hit mortgage. We're pretty pleased with the overall progress we're seeing in Enhanced Markets. We're going to start to sound like a broken record when we say methodical rollout, but that is really the name of the game here. In every market, it's about finding the next agent team or helping the agent team we have grow to take on more customers. And then it's about going into the next market and starting that process while measuring the conversion, the

Yes. And then to your second one on mortgage, we expect mortgages revenue growth in the high 20% range for Q3, which includes 40% plus purchase loan origination volume growth as the key component. So I think that's an important one to call out. As you've heard us say time and again across the for-sale business, we don't overfunction on the quarterly fluctuations. And for mortgages, things like loan value, gain on sale, that will fluctuate quarter-to-quarter. The market has been bouncing along the bottom for a while now, and we've consistently grown quite nicely despite that and expect to continue to do so. And then when we zoom out, where we're really pleased, and Jeremy hit this as well, is the consistent double-digit adoption rates across the Enhanced Markets, while the number of markets have meaningfully increased. It's --

Our next question will come from Dae Lee with JPMorgan.

I have 2 and those are follow-ups. First one on the rental opportunity. You did talk about growing the wallet share with your advertisers as one of the opportunities. So curious like where you are in terms of unlocking some of that opportunity? And is the $1 billion medium-term target more driven by the supply growth? Or is the growing wallet share part of that?

Yes, I can start and Hof jump in. I think part of why we don't talk about it is because we see just such a greenfield opportunity in front of us in terms of volume at the ROI we're providing for our partners. So Jeremy talked about it a bit. We have plenty of room as we win new advertisers, they bring a portion of their portfolio and they try one of our packages and then they experience these great ROI benefits of being on the

Got it. And as a follow-up, on Enhanced Markets, I think in May, you guys put out a release saying you're targeting 60 additional markets at the end of July. So I was curious if that 27% number you have in the letter includes that? And if not, how are you progressing on getting those additional markets live? And when you get these markets up and running, how long does it take for them to show up in your results?

Yes, good question. So the 27% in Q2 does not include that. But I will encourage you to think about percent of connections rather than market count. We started moving out of that as a better source of modeling because each market has a different mix and share and capacity of agent teams, loan officer capacity and all that. So think about it more as we are at 27% as of the end of Q2, and our goal is to get to 35% by year-end. And then it's about a year to start to see the accretive benefits of the new experience across the cohort of customers and agents for that share of connections. So it is quite an involved process to get all the folks up and running, all the staff and training up and running. But once you do, you really see agents not just gain share, but are able to grow their businesses with our software and tools, and you start to see them try and use

Our next question will come from Stephen Sheldon with William Blair.

I just wanted to follow up on

Sure. So Showcase now at 2.5% of new listings, up from 2% end of Q1. I think trying to tease it out as a part of the overall residential component is going to be tough just actually because of the earlier question, it's all part of the agent's ROI. So we feel great about that progress. And the thing I think we're most excited about is agents see the value in winning more listings with it and sellers and buyers both see the value in having it, right? So it's this really rare kind of win-win where everyone has a great experience with it. The macro question is a good one. I think the reality is it's too small showcases to be a macro driver yet. But I will point out, we're growing Showcase this nicely in what has historically been mostly a seller's market. And as if the market were to shift to more balance, you'd think the seller and the seller's agent would benefit even more from Showcase in their listing. But if you go talk to our agent partners who use it, what they're seeing the benefits of is their ability to win more listings with it, right? And so in an environment where they have to work harder to win a listing presentation, Showcase is an even more powerful tool. And we're not exactly just sitting still with Showcase, right? Showcase launched a little more than a year ago, and we've been improving it ever since. So we added the listing dashboard last quarter. We just added SkyTour, which you haven't -- if you haven't checked it out, you should really go check out a SkyTour listing. It's an immersive experience outside the home. It stitches drone photography together to get you to be able to fly around the exterior and really get a sense of what the home is like. Those are just a couple of examples of how we'll continue creating this incredibly immersive experience that the buyer, of course, loves. Therefore, the seller will want, therefore, the agent will have to offer if they want to win listings.

Our last question will come from Andrew Boone with Citizens Bank.

I wanted to ask about AI and the improvement of just automation across the platform. You guys mentioned in the letter the 2 million people -- the 2 million smart messages that have been exchanged since June. Can you guys just talk about what AI allows for automation in terms of connecting buyers and sellers more efficiently? And what's kind of the overall vision, if we think kind of 1 to 2 years out of what you guys can do with Follow Up Boss as just more capabilities are enabled?

For sure. Thanks, Andrew. We are tremendously excited about AI's potential to rewire the industry just as it rewires all of us as workers. And if you think about the real estate industry as such a highly considered regulated purchase where you need great professionals, that is just tailor-made for supercharging the services that humans are doing and allowing humans to be great at what they do. And you're already seeing that today, right? I mean just look at some of the examples we called out this quarter for the consumer, it's a better customer experience, right? It's things like I just talked about with SkyTour, virtual staging AI, better personalization while you're shopping for the professional, the hard-working professional that has so much work to do to help delight clients, it's AI-powered relationship management software to supercharge them to let them do what they do best, which is client relations and advice and consulting and guidance, same thing for the loan officer by taking away the busy work, by automating follow-ups, by suggesting messages, by pulling in insights to make them a better client manager. So those are the features we're already putting into the wild today. And that's really, in many ways, the low-hanging fruit to start to elevate the professional and make the transaction experience more delightful. If you fast forward a couple of years into the future, you can just draw a line on what we're doing now to where we might be able to get to, to really create a more magical transaction for the buyer and seller and allow the professionals to do what they do best and have the software and the tools do more of the work for them.

This completes the allotted time for questions. I will now turn the call back over to Jeremy Wacksman for any closing remarks.

Thank you all for joining us today. We really appreciate your continued support. We are excited for what's ahead and look forward to speaking with you all next quarter.

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