Z - NASDAQ

Hello and welcome to

Thank you. Good afternoon, and welcome to

Good afternoon, everyone, and thank you for joining us. Q4 capped a year of strong execution for

Thanks, Jeremy, and good afternoon, everyone. We delivered strong results in Q4 and are well positioned to continue delivering strong performance as we execute on our strategy in 2026 and beyond. Q4 2025 revenue was up 18% year over year to $654 million, near the top end of our outlook range. Our revenue performance combined with effective cost management delivered EBITDA of $149 million, near the midpoint of our outlook range. Q4 EBITDA margin was 23%, 260 basis points higher than a year ago. Our full-year 2025 EBITDA grew 25% year over year as we continue to scale revenue and control costs. Importantly, as a result of these efforts, we reported positive GAAP net income in Q4 and for full year 2025. For sale revenue grew 11% year over year in Q4, to $475 million, approximately 800 basis points above the 3% residential real estate industry growth as reported by NAR. We estimate purchase mortgage origination volume was roughly flat year over year in Q4, which is noteworthy given a majority of buyers transacting with

Thank you. At this time, if you would like to ask a question, please click on the raise hand button which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk. And then you will hear your name called. Please accept, unmute your audio, and ask your question. We'll wait a moment to allow the queue to form. Our first question will come from Nick Jones with BNP Paribas Security Corp. Please unmute your line and ask your question.

Great. Thanks for taking the questions. I have two, one on rentals and one on AI. Can you elaborate a little bit on rental trends? You're gaining share on the long tail. You're gaining share with multifamily. Driving 30% annual growth. So, I mean, what are you kind of hearing from the multifamily side as far as product market fit goes? And how much more opportunity or white space do you see there kind of maybe this year and beyond? That's the first question. And the second question is a great slide on your positioning for vertically integrated AI. Partnered with OpenAI today. Can you talk about how you see kind of a vertical AI future in

Yeah. Thanks, Nick. Maybe I'll start, and Jeremy add on anything you want. I think on rentals, I mean, the growth you're seeing in the business, it's really just our strategy working. Honestly. It's the as we talked about, we have a pretty unique strategy in rentals in that we're the marketplace that's focused on trying to organize all of the types of supply, not just the big apartment communities, but the long tail single-family listings. And as Jeremy talked about, you know, more than or two and a half million on average in Q4 listings.

We think that's the most in the category.

That's what drives the audience. Right? I mean, the 31 million unique visitors per comm score that lead is widening because we're solving their problem. They want to find as much inventory as possible in one place. And they want a digital transaction. Right? Having portable applications, able to sign custom leases, be able to make rent payments, report credit, report rents, to build credit, all those things. Those are tools the renters want. And then once you satisfy and delight the demand, that's when the advertisers really want to get access to that demand. So when you have this high-quality audience, increasingly, multifamily advertisers want to bring more of their portfolios online. That's why you see the building growth. And the revenue growth accelerate. And, you know, as Jeremy talked about, the ROI is really the signal there. You know, we consistently hear we're the highest ROI advertising spend of all their sources of advertising spend, and they spend at a bunch of places. So that's really what's driving the revenue growth you've seen, you saw in Q4. It's why we expect the revenue growth to continue as Jeremy talked about. We feel very confident in our ability to get to that billion-dollar-plus revenue target that we've put out for you all in rentals. And important to remember as we get closer to that target, we don't think that's the end. We think there's a very big rentals opportunity to go after beyond that billion-dollar-plus mile marker. But for now, we're really excited to just make progress towards it.

And then

you know, on the AI question, I mean, I think I talked about it in my prepared remarks. You know, I think it's really this is just a unique category and we have a really unique strategy that I think is going to benefit from AI. Right? Residential real estate, it's highly regulated, deeply local, it's organized around millions of independent licensed professionals, and then the consumer experience it's not a one-visit transaction. It's high dollar, high stakes, takes place over months or sometimes years. And the average buyer buys once every fourteen years at this point. So, you know, you're turning to a professional team and you're turning to a vertically integrated experience to really help you with that, that's something that where we think AI is actually an ingredient to us building this vertical rather than a threat or something and why we lean into it. And I think that's also why we're so confident that we're going to be the ones to help deliver that.

Our strategy

to build this vertically integrated experience is what we've been doing for years now and we're the ones with deep industry expertise and the proprietary assets and data at scale. Right? So, yes, of course, we have the audience. But the industry software tools, the data, and the transaction workflows and the trust of the professionals to help build this integrated transaction, is what we're focused on. And when AI comes into the category, we think it's going to help make that vertical experience even better. Right? Elevating the professionals, taking away the busy work so they can convert more transactions, they can be more efficient. And delight in our shared customers. That's what we think the end of this rainbow looks like, and we're excited to go deliver it.

Great. Thank you.

Our next question will come from Brad with RBC Capital Markets. Your line is open. Please unmute and ask your question.

Hi, guys. Thanks. I have two. First, I think we all know kind of

Thanks, Brad. I mean, short answer is no. Don't really expect any risk or impact to our business. Despite all the noise and questions, we are talking about a pretty small number of listings overall. I think, you know, 1% or less. And the reason it's small is the vast majority of sellers and agents don't want that. Right? Agents don't want to limit exposure and have a home take longer to sell or not maximize price. And they especially don't want to do that if to do so, they'd have to trade off access to

Got it. And then just a follow-up on the RESPA case. Recognize probably can't comment too much on the case itself. I'm just curious if that's creating any sort of adverse effects or on the ground for you as you go to market with

Sure. Yeah. I mean, on that, no. It's not. Right? Our long-term strategy here is based on consumer choice and building this integrated end-to-end transaction. And, you know, helping buyers understand what they can afford when they're on

Got it. Thanks.

Our next question will come from Ronald Josey with Citi. Your line is open. Please go ahead.

Great. Thanks for taking the question. Maybe a quick follow-up on Brad's just now. With all the legal challenges that are out there. Maybe Jeremy, talk to us about just is there any change in approach to

Yeah. Maybe I'll take the first one. Don't know if you can take the second. I mean, the answer to your first one is pretty short. No. We don't expect any change. We're not making meaningful change to our business or results in any issues, and we're really confident in our positions and approach. We don't expect the issues to have a material impact on our long-term strategy or our financial position.

Yeah. And then on guidance from a revenue perspective, at the full company level, we're expecting mid-teens revenue growth. On rentals, we're expecting 30% revenue growth for 2026. And that's on the face of a 39% revenue growth in 2025 and 27% in 2024. So continuing to see great or expecting to see great growth there. With respect to contributions on the for sale front, going to be more of the same, which will be some combination of enhanced markets continuing to grow,

Alright. Our next question will come from John Colantuoni with Jefferies. Your line is open. Please go ahead.

Okay. Great. Thanks for taking my questions. I wanted to start with

Maybe I'll take the first and Jeremy can take the second. On Pro, we're really excited about

Yep. And then, John, on your question around guidance and what we're trying to achieve there, I think the answer is we've always tried to be as close to the pin as possible. We've gotten better at forecasting conversion in particular in PA, so that's allowed us to get these last few quarters than maybe the magnitudes of beats you've seen previously. But always trying to get as close as possible. And then with respect to Q4, the big difference on the cost structure was really around legal expenses, and that was higher than we anticipated coming into the quarter and was ultimately a 180 basis points of margin drag for Q4. Obviously, we laid out what we think for 2026 from a legal cost perspective as well, and it will be a drag, but it's not stopping us from expanding margins, which we expect to do throughout 2026.

Very helpful. Thank you.

Our next question will come from Mark Mahaney with Evercore. Your line is open. Please go ahead.

Okay. Thanks. Maybe two questions. You talked about getting to 75% of connections coming through enhanced markets. What are the biggest obstacles to going from 44% to 75%? And you talked about that as a medium-term goal, medium, like, two to three years. Is that how we should think about it? And then on

Yeah. Thanks for the questions, Mark. Maybe I'll take the first, and Jeremy, you can take the second. On enhanced markets and the connection share, we haven't put a time frame on 75%. I mean, you should expect the rollout will continue to look similar. Right? It's both more geographies and then depth in existing geographies. We did that this year, and maybe think about pacing to be a similar clip of growth to last few years. So, you know, it's on the horizon. And, again, remember, 75% was just kind of a mile marker. We'd like to get it to as many connections as possible. And so once we got from, you know, 20 to 44 last year, we'll keep growing. We're going to find ways to bring that experience to as many customers as possible. Just as we get over half and into more into the future years, it's going to be broader and deeper and even more places. And that's to your question on what the governor is. It's operational lift and scale, and it's training partner teams and making sure our partner agents have the right capacity and quality. And then, ultimately,

Yep. And then, Mark, with respect to how to think about it for 2026, I would not expect it to be meaningful even in the second half of 2026 as we are rolling it out more nationwide. I think 2026 is really a year for learning adoption and figuring out, you know, where the key value props are. So I would think about it that way for 2026, not a financial contributor, but one where we really learn a ton. It will sit within residential as the revenue comes in. And today, we're offering it at a monthly subscription that's priced for adoption.

Thank you very much.

Our next question comes from Nikhil Devnani with Bernstein. Your line is open. Please go ahead.

Hi, there. Thanks for taking my question. I wanted to ask about margins. So on the last earnings call, you had kind of anchored to the last couple of years, which implied roughly 200 basis points or so of opportunity in margin expansion for 2026. So I just wanted to clarify, is that still how you're thinking about margin expansion this year? And then considering the 100 basis points of headwind you're calling out from legal, does that mean that your underlying margin expansion is actually getting better than what you've seen in the past couple of years as the business scales and you get a stronger handle on the various cost buckets you've already talked about? Thank you.

Yeah. Sure. It's a really good question. First, I'd say consensus feels right for the year on EBITDA. And that implies, you know, around 200 basis points of margin expansion. We do think the underlying margin profile is better than that, and there's a legal drag associated with the cost there of 100 points. So you're right to point that out that the cost structure and the leverage on the business model is getting better, and then we have those legal costs to contend with. As you think about the shape of the year, you know, the first half of the year, we're going to continue to hold fixed costs flat. With inflation. We'll continue to invest in variable across rental sales, the Redfin syndication agreement, and

Great. Thank you so much.

Our next question will come from Trevor Young with Barclays. Line is open. Please ask your question.

Great. Thanks. On mortgages years ago when you had disclosed segment EBITDA, I think it was approaching EBITDA breakeven when the business was around $250 million in revenue. So a bit bigger than where we're at today. Is mortgages EBITDA profitable today and how we think about margin here in a recovery scenario as we bridge to that mid-cycle 45% EBITDA margin bogey? And then second question, just to clarify, you know, the cadence of EBITDA this upcoming year. It sounds like legal expenses were kind of outsized here in April. Embedding a bit more for the full year, you know, two points hit in January, one point hit for the full year. Should we lap that by April such that, you know, we'll see that uptick in margin really hitting in April?

Yeah. Thanks, Trevor. I'll take those. On mortgages, we don't break it out. But we love the long-term opportunity in mortgage for growth and profits. You know, we look at a landscape there that purchase mortgage is still very, very fragmented. And we think that in a more commoditized product like mortgage, brand and distribution tend to do quite well, and we have great brand and we have great distribution as well. So we love the opportunity and we're seeing it play out in the results. Mortgages grew 39% in Q4, home loans purchase originations grew 67%. And we're expecting the category to grow 40% in Q1 as well. So feel quite good about all that. Hopefully, that helps give some context on, you know, where we're headed on the mortgage front.

Our next question will come from Dae Lee with JP Morgan. Your line is open. Please ask your question.

Great. Thanks for taking my questions. I have a question on macro. So could you elaborate on the improvements you're seeing in affordability versus your expectations for housing markets to bounce along the bottom? Are you seeing anything that might be curbing some of the optimism warranted by the affordability improvement? And separately, I guess, related, are any of your investment plans meaningfully sensitive to the housing market growth? Or should we expect your expense framework to be less correlated to the housing conditions?

Yep. I'll take that. So on the macro front, we planned the cost structure. We planned the revenue. For housing to not do much this year. We are starting to see affordability get better. But not necessarily seeing it play out in homes being sold fast or anything like that. We're just pointing out the fact that housing or housing expenses as a percent of total income is down to 32% versus at a high in 2023, it was 38%. So we think that's a good sign that should drive a broader recovery over time. We're just not necessarily planning for it in 2026. And just remind me, your second question was what exactly?

If your investment plans meaningfully sensitive to the housing market growth. Or if your expenses framework should be less correlated to that.

I would think about the expense framework as consistent regardless of the macro environment. I think macro is a real positive for us. When it comes back, but our expense framework is going to be consistent regardless of what housing does.

Got it. Thank you.

Our next question will come from Lloyd Walmsley with Mizuho. Your line is open. Please go ahead.

Great. Thanks for the questions. Two, if I may. First, just can you give us a sense of if you're planning to step up enforcement of

Yeah. Maybe I'll take the first one and then Jeremy can take the second. Thanks, Lloyd. On the listing access standards, there's nothing to step up. We're enforcing them now. Remember, this is really about education. What we find is when we educate an agent that might have been miseducated, that there's a violation that would result in a listing not being broadly marketed and not being on

Yep. And then on the enhanced markets question, what I would remember or just remind you is the

Okay. Thank you, guys.

Our last question will come from Daniel Kurnos with Benchmark Company. Your line is open. Please go ahead.

Yeah. Great. Thanks. Can we just touch on the opportunity to grow marketing in '26 that you guys called out? Obviously, you've got competitors still spending pretty aggressively, although traffic seems to be accruing to you rather than them. We saw Redfin advertised during the Super Bowl. And so just curious what channels you guys are looking to press and why you think this year is a particularly good year to step up on the marketing spend. Thank you.

Yep. Dan, I can take that. I mean, I think for what we're doing, which is a modest increase, it's more about being opportunistic. Which is what Jeremy has always said. We'll be opportunistic. We see a little bit more room in enhanced markets and in rentals, and so you'll see a slight increase, which I think is a little different than what maybe some competitors are doing with volumes of spend and where they're spending. And as you pointed out, I think the reason we can do that is actually implied in your question. As the category leader, with such strong, not just brand awareness, but brand preference, we tend to benefit when others in the category advertise. We saw that even this weekend. And we'll continue to find the right places to teach people what we do, help make them aware of our new things, things like enhanced markets, to try and deepen engagement and earn the right with them to offer them more services. That's really what our focus is on our advertising spend. And you'll see us do that this year. So no change in strategy in terms of how we think about advertising. Jeremy Hofmann has always talked about it as we want to be opportunistic with our parts of the business, and that's what we're doing this year is finding the right places to really pour a little bit more gas on because we think it really helps the business.

Does that imply channel shift at all?

No. Not nothing specific on channel shift. We've been really great, really efficient advertisers at driving both top, mid, and bottom funnel. I mean, our marketing team does a great job of kind of branded response where we're building brand and reinforcing brand preference. While also driving great performance into the funnel and into our businesses, and the team will continue to do that.

Great. Super helpful. Thank you.

Yep.

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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