Z - NASDAQ

Hello, and welcome to

Thank you. Good afternoon, and welcome to

Good afternoon, everyone, and thank you for joining us. I'm pleased to share that

Thanks, Jeremy, and good afternoon, everyone. We delivered strong results in Q3 that exceeded our expectations and are well positioned to continue delivering strong performance as we execute on our strategy in 2025 and beyond. Q3 revenue was up 16% year-over-year to $676 million, which was above the high end of our outlook range. Our better-than-expected revenue performance, combined with effective cost management, delivered EBITDA of $165 million also above the high end of our outlook range. Q3 EBITDA margin was 24%, more than 200 basis points higher than a year ago. Our trailing 12-month EBITDA as of the end of Q3 grew 29% year-over-year as we continue to scale revenue and control costs. We reported GAAP net income of $10 million in Q3 as a result of these efforts. For Sale revenue grew 10% year-over-year in Q3 to $488 million, roughly 500 basis points above the mid-single-digit residential real estate industry growth as reported by the NAR and tracked by

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

Maybe, Jeremy Wacksman, I wanted to ask a bigger picture question for you just on all the news around AI and commentary around

Yes. Thanks for the question, Ron. I mean we think about this as really pure opportunity. We're excited about the partnership integration we did with OpenAI to be the first real estate app and one of the first apps in this new paradigm. I think you should expect other providers to build out similar ecosystems. And this is really similar to other platform shifts that create expansion into leading brands. Think about as search exploded, think about as mobile exploded, and we were early on to the mobile platform as well. And just look at how brands like ours developed in those shifts, right? Mobile wasn't a replacement. It was additive. It was more time spent. It was incremental use cases. It was easier for us to start to build a more digital transaction than you had in desktop search and the browser only. So we think of it the same way. That's why we kind of call it another new doorway directly in. And then to your question on brand, I mean, I think that's why we feel so fortunate we have a great strong brand that consumers want whenever you get these new opportunities, it's an opportunity to be additive to that. And when our core base, 80% of our traffic comes to us brand direct. And the data and the platform and the software that we offer, those differentiators to create this really unique experience, I think, get strengthened by these platform shifts. So I know there's a lot that is written about, well, what does this mean for acquisition? It will, for sure, be an opportunity for all of us to tap into more customer demand in more new ways. But we're also equally excited about the ability to build AI into

Our next question will come from Dan Kurnos with Benchmark.

A couple. We've obviously done a lot of work on the Marriott court cases. Clients are particularly focused on the recent FTC suit. So maybe it would just be great to get your perspective on any impacts and how you think it plays out? And then separately, the other hot topic with investors is somewhat related, Compass proposed acquisition of Anywhere. So antitrust concerns aside, maybe your views on any potential disruption if agents choose or are forced to take their 3-phase marketing program or if anyone else bandwagons on their efforts to grow the private marketplace listings.

Yes. Maybe I'll try and hit both of those, and Jeremy hop on with anything I missed. With respect to the FTC case, we've been syndicating multifamily property listings to Redfin for about 6 months now. We're seeing the benefits to both consumers and property managers. You see more consumers can see more listings on all of our sites. An interesting stat is renters on Redfin now have access to 3x the number of rental properties they had when Redfin was trying to acquire those on their own. So it's very pro consumer. And then it's also very pro property manager. As a result of the syndication agreement, property managers are seeing increased ROI. As we said earlier, we're #1 in partner satisfaction for return on investment. And while we are excited about that ROI we deliver today, there's a ton of room for growth. We hear regularly from our large property managers that we are the strongest advertising channel, as they're thinking about their very complicated advertising mix, yes, they advertise on

Our next question will come from Brad Erickson with RBC.

I have 2. First, I guess, the residential business looks like it outgrew the market by a couple of points in Q3. Can you just lay out maybe any market forces that leaned one way or the other on the resi business during the quarter that netted out to that number? And then second, can you just talk about what's embedded from a market growth perspective in the Q4 guide? And then I have a follow-up.

Yes, Brad, it's Jeremy Hofmann. I'll take that one. Yes, we were definitely pleased with the outperformance in Q3. For Sale grew 10%, which outperformed the housing market by about 5%. And then obviously, the mortgage market was flat. So pleased to be able to keep taking share. When we zoom out, our For Sale line has outperformed the industry by 20% over the last 2 years on a 2-year stack. So that's great as well because that's what we tend to focus on more than quarterly fluctuations. On the residential front within For Sale, I'd note that the revenue accelerated from Q2 to Q3. So we went from 6% growth in Q2 to 7% growth in Q3 despite a 400 basis point more difficult comp. So I think that's an interesting thing for you all to just keep eyes on and part of the market dynamics. And obviously, Q4 is probably an easier comp for the housing market comparatively. So when we look at what we're doing, we're pretty consistently outperforming the market. We're doing it over multiple periods and feel like the way in which we're doing so is pretty consistent. The enhanced markets are performing well.

Great. And then just a follow-up on

Yes, I can take that. I mean I think, first, just to outline what

Our next question will come from Nikhil Devnani with Bernstein.

When you step back and you think about the longer-term opportunity with the

Yes, I'll take that. Thanks, Nikhil. I would think about it as the expansion of

And maybe if I could follow up on Rentals. You've talked about wallet share gains on the back of the increased distribution with Redfin and Realtor. It makes for a compelling sales pitch as well for your customer base. So do you think about needing to run that business any differently from a sales strategy perspective next year if this arrangement is being kind of questioned by the case? Or is it business as usual? Just wondering how we should think about how you guys run the business in Rentals in 2026.

Yes. I'll take that one as well. It's business as usual. Jeremy laid out how we feel about the defenses we have, and we're looking forward to sharing those perspectives. But in the meantime, business as usual, I think we're really proud of what we've done in Rentals over the past couple of years, and we're confident in our ability to grow strongly in 2026. One of the questions would be why do we feel good? I think 2025 just set us up really well, right? Property growth has been strong. We grew properties in Q1 and Q3 by 5,000 a quarter. We had that spike of about 9,000 added in Q2, and we expect to grow properties nicely in Q4 even with typical seasonal patterns. And we're actually translating all that supply growth into accelerated revenue growth throughout the year. So we grew revenue 33% in Q1, 36% in Q2, 41% in Q3, expect 45% plus growth in Q4. Supply is in a great spot. And then you're right, we've added a lot of value to property managers on the demand side because of our organic traffic and those syndication agreements, right? Each of the 69,000 properties is getting more exposure across

And. Yes maybe just to add to that as like to zoom out and Jeremy touched on multifamily. If you think about the Rentals marketplace overall, obviously, multifamily is a big part of the revenue growth driver right now. But the strategy of building this 2-sided marketplace with all available listings or as much as we can and building the transaction experience for the renter, there's a ton of opportunity beyond that $1 billion-plus revenue target we've talked to you all about as you think about attracting even more renters and having them consume more content from, yes, multifamily, but also long tail. So I think if you zoom out and look over the last couple of years, that strategy has been working incredibly well. We were growing building count and growing audience all along the way, and it's obviously accelerated this year. But we feel great about that strategy. And yes, we feel great about multifamily revenue growth and its contributor to the midterm target, but we're not done there. We see a fantastic business beyond that as we layer on more value for the renter and for the property manager and the long-tail landlord.

Our next question from Tom Champion with Piper Sandler.

One question we get a lot is on the various components of residential revenue. And I'm wondering if you could just talk about the segment, the broad categories around agent software, new construction marketplace, what kind of rolls up into that number? And Jeremy, your point on the revenue acceleration was very interesting. So just curious if there was any 1 or 2 components that might have driven that. And then just really super quick, Jeremy Hofmann, if you could talk about headcount and investment into next year. I understand it's probably still in planning process, but I think you provided some early comments on '26. Just any preliminary thoughts there.

Yes. Thanks, Tom. I'll take both of those. So I'll take the For Sale relative outperformance first. Yes, it was a really good quarter. I think we've had a really good year so far. I'm really quite pleased with the team's ability to accelerate revenue into a tougher comp. So all of that does feel quite good. With respect to drivers, I would think of them as the enhanced markets are performing well. So we went to 34% of all connections at

Our next question will come from Lloyd Walmsley with Mizuho.

I just wanted to ask about sort of the back and forth of the funnel between the agent and

Lloyd, I'll take this, and welcome back to the call. We think about them as more similar than different, to be honest. I mean you hit it right. If a consumer is interested in touring homes, whether that's virtual or booking a real-time tour and they start with an agent, making sure a

Our next question will come from Dae K. Lee with JPMorgan.

First one for Jeremy Wacksman. Following up on your comments on the ChatGPT integration, I understand that mobile transition was an incremental for you guys. But with ChatGPT, there is kind of like an intermediary sitting between you and the consumers kind of helping you make that connection. So like when you view the consumer journey for users who start their home search in ChatGPT versus those who start directly on

I mean I think it's really early to try and prognosticate how this all plays out. But I will say, if you think about like what framework could you use to think about that question, the actions you want to take in this category typically lend themselves to a very bespoke category experience. It's a very long-duration shopping cycle for a very large emotional asset where you have to make very almost regulated decisions and need regulated help to make that decision, right? If you're going to buy, you have to get in touch with an agent, you have to work with a loan officer or most people will do those things to make a very complicated financial decision. And the complications of the industry itself require a ton of local specific data and a ton of software to work through all those steps. So all of that to us says building GenAI into that platform is how we're going to make it easier, faster, better. Consumers are going to start and ask questions everywhere the way they always have. That's kind of, I think, where the -- does this feel like an app store or does this feel like a search engine question plays out. But once you start browsing and shopping, you ultimately raise your hand to want to transact and having a bespoke native kind of vertical experience is how most people are going to want to transact. They want this one-stop shop, and it's more about how can GenAI help enable that one-stop shop for them when they're ready. So we think about it as increased exposure. And we also think about it as like new ways to build that vertical experience because you now can interact with an intelligent piece of software that listens to you and remembers you and his patient. And so we're very excited to wire that up inside of

Got it. And then as a follow-up to Jeremy Hofmann. When you look at

Yes, I'll take that. Thanks for the question. I would think about the $1 billion mid-cycle target in For Sale coming from Preferred. Pro is really on top of that. So I don't expect any meaningful changes to the way we monetize in Preferred. I think it's working quite well, and we expect to continue to roll it out steadily over the next couple of years as we march toward those targets. And then with respect to Pro, we don't expect it to be much of a contributor from a revenue perspective in 2026. We think 2026 is a year where we do a bunch of beta testing first half of the year, start to roll it out nationally second half of the year, but we're going to really focus on adoption and learning. And then ultimately, we have, I think, a really interesting opportunity to sell Pro over time and really expand our SAM. But 2026, I wouldn't be expecting huge revenue contribution.

Our last question will come from Ryan McKeveny with

One on Showcase. So good growth and expansion of listing share. You also called out the AI-powered virtual staging rollout in 3Q. I guess any initial uplift you would say to the overall listing share based on the virtual staging? And I know that's early days, so maybe not. But maybe you could speak more broadly about virtual staging. And should we think of that offering as somewhat unique to the Showcase offering? Or could that be something of broader application over time?

Yes, Ryan, I'll take that. So on Showcase broadly, 3.2% of new listings, we feel great about. We're constantly testing ways to drive more adoption and how to help build it into the workflow of teams and agents that are working through listings. You're asking them to capture media differently in many ways. And so that's part of why so much of our tech focus is on how to make that easier. And then you're right to call out, we're also improving the product while we're growing adoption, right? So we added AI-powered virtual staging this quarter. We added SkyTour last quarter, which is this fantastic generative AI ability to fly around with all the drone media we capture. We've added listing dashboards. So we continue to add capabilities. With AI-powered virtual staging specifically, yes, we definitely could see that coming to more types of listings over time. I think we wanted to start with the listing experience where we have the native software built and learn and build from there. But over time, just like we want to see Showcase technology on more than 5% to 10% of listings over time, we've given you all that as intermediate-term targets. But the goal is really to create a more interactive listing experience on all listings. Photos and text are just not going to cut it. And that's what Showcase shows everybody, and that's why you're seeing the rapid growth of Showcase even in these early innings because this is just a better way for buyers to consume content. That's why buyers spend more time with it. That's why sellers and listing agents want it because ultimately, they're trying to get the homes sold faster and they're trying to win the next listing, and they can use Showcase to do both of those things.

That's great. And then just one final one. A couple of questions ago, you were asked about the different mortgage funnels. You called out in the shareholder letter, the loan pre-approvals within Follow Up Boss. That sounds interesting. Should we think of that as kind of additive or new to the potential funnel on the mortgage side? Or is that more -- just a more efficient way of doing things that had historically been done seemingly in a different way? Any thoughts there would be great.

Yes. Thanks, Ryan. I'll take it. I would think of it as really just making the experience better for the shopper, the agent and the loan officer. It's a really nice integration. And if you think about what a shopper is looking to do, that shopper wants a really tightly coordinated team between its loan officer and real estate agent. And we think building functionality that helps that integration work in Follow Up Boss, which is where these agents tend to run their businesses is beneficial for all parties in the transaction. So that's the way I would be thinking about it.

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

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

Thank you for joining