Raymond Jones - VP-Investor Relations & Competitive Intelligence Spencer M. Rascoff - Chief Executive Officer & Director Kathleen Philips - CFO, Secretary, Treasurer & Chief Legal Officer.

Dean J. Prissman - Morgan Stanley & Co. LLC Ron Victor Josey - JMP Securities LLC Robert S. Peck - SunTrust Robinson Humphrey, Inc. John Campbell - Stephens, Inc. Mark S. Mahaney - RBC Capital Markets LLC Heath Patrick Terry - Goldman Sachs & Co. Mark A. May - Citigroup Global Markets, Inc. (Broker) Lloyd Walmsley - Deutsche Bank Securities, Inc.

Michael Graham - Canaccord Genuity, Inc..

Good day, ladies and gentlemen, and welcome to the Zillow Group Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, today's conference maybe recorded.

I would like to introduce your host for today's conference Mr. Raymond Jones. Sir, please go ahead..

Thank you. Good afternoon, and welcome to Zillow Group's third quarter 2015 earnings conference call. Joining me today to talk about our results are Spencer Rascoff, Chief Executive Officer, and Kathleen Philips, Chief Financial Officer. During the call, we will make forward-looking statements regarding future financial performance and events.

Although, we believe the expectations reflected in the forward-looking statements are reasonable, we can't guarantee these results, and actual results may differ materially.

We caution you to consider the risk factors in our SEC filings, which could cause actual results to differ materially from those in the forward-looking statements made in the press release and on this call. The date of this call is November 3, 2015, and forward-looking statements made today are based on assumptions as of this date.

We undertake no obligation to update these statements as a result of new information or future events. During this call, we will discuss GAAP and non-GAAP measures. We will also discuss results on both a reported and pro forma basis. Reported results were prepared in accordance with GAAP.

For comparative purposes, pro forma results assume the February 2015 acquisition of Trulia occurred on January 1, 2014, and reflect certain adjustments and exclusions described in our SEC filings.

We encourage you to read our press release, as it contains important information about our reported and pro forma results, including reconciliation of non-GAAP financial measures.

In our remarks, the non-GAAP financial measure adjusted EBITDA is referred to as EBITDA, which excludes other income, depreciation and amortization expense, share-based compensation expense, acquisition-related costs, restructuring costs, loss on divestiture of business, interest expense, and income tax benefit.

This call is being broadcast on the Internet and is available on the Investor Relations section of the Zillow Group website. A recording will be available after 8:00 p.m. Eastern time today. Please note that the earnings press release is available on our website and, after the call, a copy of today's remarks will also be available on our website.

Today, we will open the call with prepared remarks and all year-over-year comparisons are pro forma unless otherwise noted or the context otherwise requires. We will follow the prepared remarks with our standard live question-and-answer session.

During the Q&A, we will answer questions asked via Twitter and take questions from those dialed into the call. Individuals may submit questions by tweeting @ZillowGroup using the #ZEarnings. I will now turn the call over to Spencer..

grow our audience, because advertisers follow audience; grow our real estate agent marketplace; and grow our emerging marketplaces in mortgages, rentals, and New York through our portfolio of brands. We are finishing this year of transition in great shape.

I said a few times during 2015 that 2016 can't come soon enough, and now that we're through this integration I'm incredibly excited for the accelerating growth ahead in 2016 and beyond. Now, Kathleen will walk you through our financials in more detail..

Fourth quarter 2015 revenue is expected to be in the range of $165 million to $170 million. Our EBITDA for the fourth quarter is expected to be in the range of $20 million to $25 million, which results in a 13% EBITDA margin at the midpoint of the range.

Due to the impact of our new Class C shares, our fourth quarter 2015 basic weighted-average shares outstanding is expected to be approximately 178 million to 180 million and our diluted weighted-average shares outstanding is expected to be in the range of 194 million to 196 million.

Turning to our full year 2015 outlook, we now expect our full year pro forma 2015 revenue to be approximately $675 million to $680 million. We are raising our full year pro forma EBITDA, and expect it to be in the range of $95 million to $100 million, due to a portion of the cost savings realized in the third quarter.

We now expect full year, pro forma depreciation and amortization to be approximately $82 million versus our prior outlook of $90 million. The reduction was largely driven by lower amortization of web development costs.

Our full year 2015 basic weighted-average shares outstanding is expected to be approximately 169 million to 171 million and our diluted weighted-average shares outstanding is expected to be in the range of 186 million to 188 million.

For GAAP modeling purposes only, as we approached the end of the Trulia integration, we can reconcile outstanding one-time items definitively.

Thus, we now expect full year 2015 acquisition-related costs to be approximately $16 million to 18 million and restructuring-related costs to be approximately $35 million to $36 million versus our prior outlook of $20 million and $31 million to $33 million, respectively. Finally, I will recap our preliminary full year 2016 outlook.

Building upon our combined scale, we're targeting a higher total revenue growth rate in 2016 than the 2015 revenue growth rate, which we expect to be 18% year-over-year with Market Leader and 24% year-over-year without Market Leader.

We're prioritizing revenue growth over EBITDA expansion as we invest in our growth to capture a large opportunity ahead. In summary, our third quarter was strong even as we balanced execution with the transition of our agent platform. We are proud of our team's execution during this year of transition.

We are pleased that the flux associated with integration will be isolated to 2015. Now that the integration has been successfully completed, we are excited about the opportunities for audience engagement, product innovation, transaction innovation, and revenue growth in 2016. With that, we will open the call to questions..

Thank you. And our first question comes from the line of Dean Prissman with Morgan Stanley. Your line is open. Please go ahead..

Thank you for taking my questions.

So, I was wondering if you could comment on Trulia ad spend, more specifically as you've been reworking the platform and user experience, how would you prioritize spend on the brand and how are you thinking about this going forward? And then, separately, you know, I know a meaningful portion of the sales and marketing line relates to your salesforce.

Since agent count is less of a driver going forward, how should we think about operating leverage with increasing sales productivity going forward?.

Thanks Dean. So, on the Trulia ad spend, per se, let me just remind everyone that we sell Zillow Group combined.

So, when a real estate agent or a mortgage lender or a home builder or a rental property manager buys advertising, you can't buy Zillow or Trulia, you're buying Zillow Group and the combination of that audience scale was 60% to 70% share of a category, it's huge.

So, that having been said, Trulia growth at the bottom of the funnel, leads to real estate agent is very strong, 30+% year-over-year. Top of the funnel is not growing as fast as we'd like, and we're working very hard on improving that, and I'm sure we will get it moving in the right direction.

We are spending money right now, advertising the Trulia brand online. We don't breakout how much online advertising we do or offline advertising we do for that matter, across the brand that we are advertising the Trulia brand right now.

But for us, it does start with products and there's a lot of hard work being done by the Trulia product teams to improve the user experience and reduce the ad load, which directly speaks to usability and to consumer satisfaction.

So, it starts with product, it gets amplifies through PR, e-mail, and social, and SEO, and then, advertising is an important part of it, as well. On your second question around sales team productivity, if I can – let me try to understand the question.

I think you're saying, so now that you've integrated the ad products and integrated the sales team, and you've got a couple of weeks under your belt, you have a better sense of what the right side for the Premier Agent sales team, rental sales team, mortgage sales team should be across the Zillow Group, now that it's representing both brands.

The answer there – if that was the question – the answer there is there it's a little early to tell. We've only been selling on a joint basis for a handful of weeks now, so I don't have a good sense yet of what sort of steady-state sales team should be for any of our business lines now that we're selling on a combined basis.

It does feel like – I mean we're already experiencing some of the synergies that we talked about from the merger and from that combined sales team. And so, we have – we're still growing the sales teams across the different business lines, but much more slowly than we would have individually.

And remember, we did reduce the size of the sales team by over a 100 people at the time of the closing of the acquisition couple of months ago. So, I'll probably have a better read on salesforce productivity and kind of right-size salesforce efficiencies when we give full 2016 numbers in the New Year. Operator, next question please..

Great. Thanks for the color..

Thanks, Dean. Next question please..

Our next question comes from the line of Ron Josey with JMP Securities. Your line is open. Please go ahead..

Great. Thanks for taking the questions. Two please. So, first on just 2016. Spencer and Kathleen, you talked about accelerating revenue growth.

Wondering what gives you confidence there? Is it newer ad products, greater share of wallet from the top producing agents like you're seeing today, that would be helpful and clearly we're looking at new products that you've launched like Premier Agent Assist, how does that factor in? And then secondly, with your comments on focusing on growth, not necessarily margin expansion.

I want to understand little bit more on just your overall advertising spend, which maybe Dean, was talking about before, 3Q was another quarter we diverted spend out of 3Q into the quarter coming going forward.

So wondering, you've got great traffic, you've got a very strong brand, understanding you've to continue to spend brand marketing, some dollars on brand marketing, what do you think the optimal spend going forward for advertising overall, maybe this year's $100 million budget is going to be a little too much? Thank you..

Great. Thank you, Ron. So, for 2016 revenue growth, you're correct in pointing out that one of the major reasons we have confidence in reacceleration of our growth is through the continued growth of our high spending agents. And we're very focused on that, and we believe that trend will continue.

We're investing a lot in products and tools to make those agents even more effective and efficient and to create greater value in the advertising they purchase. Similarly, as we said we continue to see the trend of departing low ARPA agent spending less and being replaced by these higher spending agents.

Further to that is that much of the distraction of the integration that had our focus through Q2 and Q3 has now disappeared and we can refocus our energy on the overall revenue growth of the business and we feel that we will be able to achieve significant efficiencies.

We already have demonstrated that we've done that, obviously given these current results, but we're feeling good about 2016 in that regard. As for overall ad spend, it's hard to predict what the optimal number would be.

Obviously, we love our category growth and that also gives us confidence to the 2016 revenue growth, but the way we look at ad spend and the reason that ad spend came in lower in both Q2 and Q3 than we expected is we're making an investment in both short and long-term growth of our audience.

So we set our growth goals, and then moderate our advertising to make sure that we're realizing the benefits of both types of spend. There is not an immediate return on the spend, but we also don't want to invest in the long-term in a way that doesn't make sense when we look at ROI.

So as for what next year will look like, stay tuned, and we'll fill in our thoughts on that in the New Year, but in the near-term, I hope that's helpful on how we think about it..

Great. Thank you..

And Ron, let me just – because it is so important to the conversation. Let me just give a little more color on 2016 revenue growth. So, I mean, rentals, mortgages, and StreetEasy are growing revenue quite a bit faster than we were talking about sort of them in the mid-20s%.

And we've divested Market Leader which was shrinking and display is intentionally declining year-over-year because we keep diverting adjutants away from display and more towards marketplace, but total marketplace revenue is now almost 90% of revenue. So, then that leaves you with the big piece, which is of course Premier Agent.

And there is something happening in the industry right now which is, we could feel it happening a year ago, but it feels like it's happening even more so now than ever before.

I try to – it's pretty hard to communicate through numbers, but one stat was the $5,000 a month agent spends about $60,000 a month – sorry, $60,000 a year, that those types of agents are spending, that being up 57% year-over-year. I mean these are people that are putting $60,000 a year on their credit card, right.

So, they are not really individual agents. They are forming teams, they are building businesses on Zillow Group, and it was very clear from our Las Vegas event that there is just many of those people than ever before.

So, when you look at our strategy of doing more agent training, focusing on selling impressions, on basically churning, low performing agents to free up impressions for these top performing agents, building out our own CRM connecting to other CRMs, all these pieces are falling into place where we're helping these top agents to be even more successful.

And it's a combination of all those things. The high growth rates of some of our emerging businesses, divesting of Market Leader and growing Premier Agent that gives us confidence. Thanks Ron. Operator, next question please..

Thank you. Our next question comes from the line of Robert Peck with SunTrust. Your line is open. Please go ahead..

Hi. Just a few quick questions here. One is you talked about leads growing around 36%, even growing 37% in October. Could you give us how the cadence of has been and where you expect that to go? And then tied with that, could you give us an update on conversion rates and how that's been trending? And then just one follow-up..

Sure. You know, it's really hard to know where that metric goes, because there are so many things that go into it, obviously it starts with traffic, but then we do so many different things on the site to try to improve that metric. I guess, with the way I look at it, Bob, I mean part of the conversation, is this has to tie to TAM.

And let me combine your two questions, I guess, if you take a 3% to 5% conversion rate on those leads, we're probably responsible, for less than 5% of all the commission checks being earned in the U.S. So said another way, all the homes that sold yesterday, we were probably responsible for 3% to 5% of those agents finding those clients.

So, in other words, I think that lead number can continue to grow a lot over the next five years or 10 years. And I'm not going to give guidance on that particular metric, but it still feels very early relative to where it can get to.

On conversion rate, we historically told investors that although we don't know for sure what the conversion rate is, from a lead to a commission check, we've thought it was around 3%, I now think it's higher than that, probably closer to 5%. But again, we don't know for sure. The reasons that I think it's increasing are several fold.

Firstly, the overall level of agent education on Internet lead conversion continues to increase as less tech-savvy agents leave the industry, and the types of agents that don't do a good job following-up Internet leads lose share.

Secondly, we've made a very concerted effort to make sure that our impressions and therefore leads, get tilted in favor of the agents, with high conversion rate. Third, more and more agents are using some sort of a CRM through our Tech Connect program, and leads are going to a CRM, more likely to convert at a higher rate.

Four, the growth in agent teams that allows for a faster follow-up on the leads, and better lead incubation.

So, if an agent follows-up on a consumer right way, and the consumer is not available, the combination of software and a team approach kind of keep helps turn that sort of dead lead into an active lead down the road, and that's more likely to become a commission check as well.

So, there are a lot of good tailwinds on driving that lead conversion rate, although it is hard for us to know exactly what it is, what the metric is..

And Spencer, really – sorry, go ahead..

Go ahead, Bob..

I was going to say is, and if you can give us an update on the $100 million of synergies, given that you are moving faster and integrating quicker than maybe you'd previously expected.

Is there an update on the $100 million number for 2016?.

Yes. I mean, the update on it is that, we believe we have achieved what we set out to achieve with those synergies. And to put into perspective, where those cost avoidances and cost savings came from, they're primarily driven by the costs we would have incurred in running two separate brands.

Trulia would have spent quite a lot of money on offline advertising and Zillow would have spent much more than we did. Similarly, we both would have spent a lot more on head count. So, the way we think about the $100 million in cost synergies is behind us. We've achieved the servings that we wanted to.

And as we think about 2016, we're thinking about a clean slate with revenue growth faster than 2015, though we will continue to prioritize growth revenue over EBITDA margin expansion..

Thanks so much..

Thanks, Bob. So, let's take a couple of questions from Twitter. All is sort of similarly themed.

One is from @sedquis who asks how do the super agents feel about the accelerating 2016 price increases? And @sedquis also says, hey #ZEarnings, what happened to same agent ARPA growth? And (35:24) says good profitability but ending agents down year-over-year, how long can you grow by charging the same agents more dough.

So, all good questions, let me try to talk about our Premier Agent business and address these different questions together. Firstly, you should realize that most of the ARPA growth, most of the growth in how much agents are spending on Zillow Group is not driven by price increases, it's driven by individual agents buying more impressions.

So, as traffic grows lead volumes grow, we have more impressions in leads available to sell. We're more focused on selling through our inventory then increasing price. So, we are constantly re-pricing zip codes and re-pricing our impressions but most of the growth is coming from agents buying more inventory.

And to the question about number of agents being down year-over-year. I mean, I've said that we're focused on is total revenue growth from Premier Agent is growing 25% year-over-year and the declining number of agents, say, quarter-over-quarter for example is intentional.

We are trying to service small number of agents that are higher performing, and spend more on advertising, produce better service for consumers, rather than have a very large number of agents, that's spend very little.

I think in Kathleen's prepared remarks, she shared that agents that left the program, spent around $270 a month, I think it was – which is about half of the average revenue per agent or ARPA that other agents (36:54) said continue to spend with us. So, that's intentional and desired.

Operator, we'll go back to the call now for couple of more questions?.

Thank you. Our next question comes from the line of John Campbell with Stephens. Your line is open. Please go ahead..

Hey, guys.

Just, I mean it sounds like a lot of the profit beat this quarter came from I guess maybe structural cost take-out and just not necessarily tapering outspend, is that fair to say?.

Yes..

Okay.

And then, with regard to the roll off of the Market Leader rev, how should we be thinking about the impact just total company gross margin, is that going to move the needle there?.

The answer we have provided is still accurate, which for Q4 as you are thinking about the model, it was about $10 million in revenue, if that helps you..

Yeah. That's helpful. Thank you..

Next question please..

And our next question comes from the line of Mark Mahaney with RBC Capital Markets. Your line is open, please go ahead..

Thanks. If I could try to get off three questions.

First, Spencer, how long do you think this transition will take, a way towards the higher quality, higher spend advertisers? Secondly, Kathleen in terms of this, kind of your margin comments for next year, with kind of mid-20s% revenue growth, you could do a lot with margins and I understand a lot of that selective, just can you put any more fine color, because you've done around the revenue, but what margins, do you want to run margins kind of flattish 15% to 16%? And then finally, just a square one point up.

If the leads are going 37% year-over-year, really robust growth, but the real estate revenues are still robust, but they are only 27%. What's the give in between those two numbers? Why aren't those two numbers more similar? I'm trying to square that one. All right. Thanks a lot..

Sure. Good questions, Mark. I'll take the first one, Kathleen will take the second and then I'll probably take the third. So, transition to higher ARPA agents is underway, I mean, you can see it in the ARPA growth year-over-year. You see it even more in the metrics around the top ARPA agents, the $5000 a month cohort, up 57% year-over-year.

If you are in the field talking with our top-performing agents as I'm constantly, you feel that even more. This is the one of the single biggest leverage opportunities for us, as it relates to our revenue growth and to that extent, our EBITDA growth as well is cultivating more of these agents.

We have many, many leads, and we need them to go to great agents that will convert them into a commission check at a 5%, 10%, 20% conversion rate.

And I guess, I'll hit your third question at the same point, which is basically the answer comes out of my statement here, you're saying, well if leads are up 37%, and revenue is up – Premier Agent revenue is up 25% to 27% what's the delta? And the answer is obviously cost per lead is declining, because what we're doing is we're focused on sell-through and focused on increasing the number of leads that are going to top performing agents rather than increasing price.

So if you just do the math around the implied cost per lead, and then you improve the conversion just even ever so slightly, you can see that the ROI for the typical Premier Agent mathematically has to be increasing.

And so that is very deliberate, we are not taking price here, we are growing revenue share, we're growing wallet share, we're focused on creating these super agents and growing their business rather than reducing their ROI, we think that it's much more important for us to build up these super agents, and raise ARPAs than reduce ROI for them, at this stage.

And then, Kathleen you want to talk about this his tech question?.

Sure, going back to the 2016 outlook I mean, it's still early days in our planning process and as I am sure you can imagine we've just reached the end of this pretty massive integration and transition, so we are really just turning in earnest to 2016 planning right now.

As we said, revenue growth we expect will be faster than in 2015 in terms of prioritizing revenue growth over EBITDA margin, now more than ever, we take a very long-term view of this business we've consolidated the category and we feel like, next year will be a terrific year for us to continue to build that foundation with higher revenue growth, but also continued investments that will pay dividends in the future.

Beyond that, we don't have anything to share, but I will reiterate that we still are taking a long-term view of eventually 40% EBITDA margins, as we've guided before..

Thank you, Kathleen..

Thanks, Mark. And operator, next question please..

Thank you. Our next question comes from the line of Heath Terry with Goldman Sachs. Your line is open. Please go ahead..

Great. Spencer, just want to get a better sense as we look out to next year. The plans for traffic growth versus pricing that's embedded in that guidance for better growth next year – better revenue growth next year versus what we've seen this year.

Can you give us a sense of how that breaks down? And I know you've touched on some of the other products that are being developed, how much is reliant on success in those products versus the core agent lead generation product?.

So, our segment that we think we can reaccelerate revenue growth above the 18% to 24% that we achieved in 2015, 18% including Market Leader, 24% excluding Market Leader, does not – it doesn't require the creation of any brand new, from the scratch, ad products in our Premier Agent business or any other business.

So, we do have a number of things that – we always have a number of things that are in different stages of development, but it doesn't require any dramatic reinvention of the business model or (43:06). Improving the revenue growth rate year-over-year is pretty simple math.

It's about divesting Market Leader, devoting more display inventory which revenue is declining year-over-year, devoting display inventory towards market place, growing StreetEasy, rentals and mortgages faster than the average and on Premier Agent trying to sell – create these top performing agents and sell more of impressions over to them, because those impressions convert the leads to higher rate.

It's a strategy I feel confident in, and I think it's just a question of execution, and I like our chances when it comes to execution..

Great. Thanks..

Thanks, Heath. Next question, operator, please..

Our next question comes from the line of Mark May with Citi. Your line is open. Please go ahead..

Thanks.

Most of mine have been answered, but just going back on the high performing agent topic, can you give us a sense – I'm sorry, if I missed this already of the total Premier Agents that you report? Kind of what portion of those fit the definition of this high performing agent that you're talking about? And for that group, I think – some of them are spending as much as $60,000 a year I believe you said.

Can you give us a sense for that typical high spending agent about how many closed leads in a given year that they may be getting through Zillow today? Thanks..

Sure. So, we don't breakout the cohorts of the agent specifically. What we share about that is that they are growing and they're growing nicely. As we said, in terms of agent numbers that's 45% year-over-year and total spend is 57% year-over-year.

In terms of side and closed transactions, we can only extrapolate that agents are behaving rationally, and when we look at the spend as a cohort of the 5,000 plus agents. Those agents likely are closing about 100 deals a year.

And so, we think that there is still significant upside as they close more transactions, they'll continue to spend more, which is why we also are investing in tools to make that happen..

DotLoop would be an example of that. So I mean, I had one of our – he is probably a $10,000 a month spend agent. I think he was from Kansas City. He told me at the Las Vegas Summit two weeks ago. He said, a good year for me, used to be five sides a year. This year, I'm on track to do 50 sides a year, 50 sides in 2015.

The only reason I'm able to do 50 sides this year is because of the lead volume from Zillow and Trulia from Zillow Group and because I use DotLoop. And so, as I stand here today in Las Vegas I closed five deals yesterday from my iPhone using DotLoop which in the past I never could have done remotely.

I would have had to be back in the office in order to close those deals. So, when I hear stories like that, I think, okay, copy paste. How do we extrapolate somebody like that, so that there are dozens of them in every major city in the country.

And Mark, I don't have an update as how many agents I would put into that category, but certainly, 50, 100 plus sides a year is pretty common for top performing Premier Agents like that.

Remember also, these agents are not sole practitioners, they're typically – they have an admin or transaction coordinator maybe three buyers agents to ten buyers agents, sometimes they have a listing agent or two and they are really small business owners that sit on top of the larger agent team and if they are spending $50,000 to a couple hundred thousand dollars a year with us on spend, they're business owners that have other expenses.

So that's how to think about them not really as individual agents anymore..

And likewise because they have these team built up, they can continue to grow those teams as spend, as they are successful, they will grow their teams and will spend more because they are realizing significant ROI on their investment with us..

Thanks, Mark. So I'll turn back to Twitter. Operator, there's a question from @11banthony, who asks about, what's happening in the housing sector. Housing sector is having quarter-over-quarter gains, prices are rising.

So sort of what impact does that have on your business? So, the Trulia economist and Zillow economist estimate that home values are increasing, about 4% year-over-year, nationwide, there are certain parts of the country like San Francisco, and Dallas where home values are increasing double-digits because of very strong job growth, there are other parts of the country like Baltimore and Philadelphia where home values, are not increasing at all, because they have weaker job growth.

The real story in housing right now is rent affordability, where the average American is spending 30% of their income on rent, and the historical average is 24%. And the reason for that is 10 million Americans, during the downturn, stopped being owners and started being renters.

And there was not enough rental inventory available to meet that increased demand.

And so, rents have spiked way up, I think in LA, the average renter is now spending more than 50% of their monthly income on rents, and in San Francisco I believe it is 47% the monthly income towards rent, those are unsustainably high portion of income to go towards rent, obviously, it's got to come out of other discretionary purchases or out of savings, or just out of somewhere.

So, anyway that's what's happening in housing now, is the multifamily industry is scrambling to bring rental inventory online, and renter grappling with high rents. The impact for us – it, we don't have a direct read through from the housing, macro housing to Zillow Group results.

We do well, when agents make money, and earn commissions, but frankly, agents, earn commission during upturns and during downturns. And so, – I wouldn't read too much into short-term macro housing trends, and their impact on our results.

Next question from Twitter was from @jwan584 says that Zillow Group, could you address the prior question regarding long-term opportunity, given the focus on high spend agents only? I probably addressed that, I guess, I would just say there is a significant change underway, in the real estate industry, which Zillow Group is accelerating and that is this shift away from the part-time agents who dabbles and is a hobbyist to the professional real estate team leader who is a business owner and is uses software and embraces technology.

And that trend – we are in the middle of that trend, we are helping catalyze that trend and we're the beneficiary of that trend. Eventually, most of the $60 billion in commissions will go to agents like that. And agents like that, tend to spend a lot of money advertising on Zillow Group. I'll do one more Twitter and then, back to the call.

@_BDaws asks, how will DotLoop improve your analytics on agent productivity, conversion rates et cetera? It is true that DotLoop has productivity data kind of inside of the software, because it shows whether a lead becomes a transaction. That's not really why we acquired DotLoop, although that is interesting data to be sure.

The real reason that we acquired DotLoop is to improve agents' efficiency and improve brokerages ability to track the success of their agents. So just as a story, I shared already of an agent being able to be much more productive than he ever could in the past, that is created and empowered by DotLoop and that's what it's all about. Okay.

I think, we'll go back to the call please operator.

Are there any questions on the call?.

And our next question comes from the line of Lloyd Walmsley with Deutsche Bank. Your line is open, please go ahead..

Thanks. It doesn't look like MAU is growing that fast on a year-over-year basis, but you're obviously driving more leads, can you just give us a sense for what you're doing on the end consumer level to get more leads out of per MAU particularly at Trulia where you are kind of no longer sending the same lead to multiple agents.

And then, second question if I can, can you just give us a sense for how much the mortgage co-advertising is contributing to agent revenue? And kind of where penetration is? Where you think it can go? And is the RESPA or CFPB kind of investigations into this is – is this something that should be a concern? Or something that you think is not really an issue?.

Sure, Lloyd. I'll take the first one on basically lead per visitor. There are a lot of things going on sort of under the hood that drive a higher rate of leads per active user.

There are million little things on the sides that you might or might not ever noticed, and on the mobile apps, part of it is certainly the shift of our users more towards mobile who are more transaction ready, part of it is that our listings quality is dramatically better than a year ago as we now have many, many cities around the country, with full beautiful, clean, crisp, timely MLS quality data, and that makes our e-mail and push notifications more accurate and it improves the home shopper experience and makes us more useful for home shopper and that generates more serious home shopper traffic which generate to more leads per user.

Part of it is the constant A/B Testing, that we're doing across different brands, we now have four brands, the four great testbeds for innovation, where we can take the learning, something that we try in one brand, and see what it does to traffic conversion statistics, and then take it across multiple brands.

On the Trulia brand in particular, the team has been focused on features like collaboration, which help home shopper, and her spouse, or friend, or partner, parent, real estate agent, collaborate while shopping and that's the type of power user feature that is terrific, which drives a higher rate of leads per unique user.

So, there is lot of different of – a lot of different things driving the stats that I've been sharing..

And on your questions about to co-marketing, co-marketing with lenders and agents is a very small part of our business, a small contributor to ARPA revenue. Importantly though, we are not seeing lenders depart from this programs notwithstanding all of the discussions in the marketplace about the CFPB and the CFPB's recent pronouncements and actions.

I can assure you that we work diligently to comply with all of the rules put forth by government agencies and of course, we monitor the CFPB and the things that they are saying and doing to make sure that we remain in compliance and to make sure that we understand how their activities relate to our business..

Operator, I think we'll go back to the caller. We probably have one, maybe one more question for us..

Our last question comes from the line of Michael Graham with Canaccord. Your line is open. Please go ahead..

Hey, thank you. Just first on the super agents.

Can you comment on, do they tend to work for major brokers or independent brokers or for themselves and does that impact your relationship with the major brokers? And then, I just wanted to get an update on your revenue or activity focused on buy-side agents versus sell-side agents and some of the things you might be doing to accelerate the sell-side? Thanks..

Sure. Thanks. There is no clear pattern on these top performing agents, in some cases, they're with branded brokerages and other cases, they're with independent brokerages and still other cases there, their own broker and so, it's not, there is no clear pattern. Regarding buy-side, sell-side.

So, we sell, we have an ad product called Trulia Seller Ads, which sells listing leads, it sells very well, it still sold as a separate independent ad products, not integrated with Premier Agents, Zillow Group Premier Agent ad impressions, all three of our sales centers in Seattle, Denver and Irvine sell Trulia Seller Ads.

We've made a number of changes to that ad product to make it better for the consumer and better for the agent.

For example, the consumer lead on a listing inquiry – oh, sorry, on a sell-side inquiry, if you will, so what's my house worth type lead only goes to one agent now instead to multiple agents and we think that's beneficial for the consumer and for the real estate agent buying that potential listing lead.

We have still more improvements to make to that product, nothing to announce at this time, but it's certainly an important business for us.

I think, I've said, RJ, so I'll just wrap-up by saying, we said this it would be a risky quarter because of the ad product and team integrations, we did it, the results were better than expected and we're reaping the benefits of the combination of Zillow and Trulia and you see that in the $30 million EBITDA versus $20 million EBITDA in expectations and we couldn't be more excited as we approach 2016 and expanding our revenue growth rate in 2016.

So, thank you for your questions, and for those that have other questions on Twitter, we'll now take this – take the rest of the call over Twitter where we will respond to other questions that were submitted there. Thanks very much, everybody..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone, have a good day..