ZILLOW GROUP, INC.
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 4, 2026
ZG$30.36-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001617640-26-000052
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001617640-26-000069
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 171 current paragraphs.
109 unchanged; 39 reworded; 21 added; 8 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 14 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Rentals revenue increased by $46 million, or 26%, to $220 million, due to an increase in quarterly revenue per average monthly rentals unique visitor.
Current report
•Residential revenue decreased by $16 million, or 4%, to $419 million, due to a decrease in visits driven by weaker demand in the residential real estate market.
Current report
ZO Securities Class Action Settlement
Current report
On October 27, 2026, we entered into the Settlement Agreement to resolve all claims against all defendants alleged in the ZO securities class action. The settlement is subject to court approval. For additional information, see Note 11 of our Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and the subsection below titled “General and Administrative” under the caption “Results of Operations.”
Current report
Beginning with the three months ended September 30, 2026, we enhanced our methodology for identifying and excluding from visits any activity that we identify as generated by automated programs rather than consumers (“automated traffic”), such as programs that access our websites to index or collect content. Previously, we excluded self-identified automated traffic and estimated and excluded other automated traffic through monitoring of traffic patterns. Because the volume and sophistication of automated traffic have increased in recent periods, including traffic designed to resemble consumer activity, we now identify and exclude automated traffic at the individual visit level. Our methodology considers, among other factors, whether a user is signed in, the level of interaction during the visit, the traffic source and indicators of atypical network activity.
Current report
We believe excluding automated traffic at the individual visit level provides a more accurate indicator of consumers’ engagement with our mobile apps and websites and improves the comparability of visits across periods. We have recast prior period visits to conform with the current period methodology, which identifies and excludes automated traffic at the individual visit level, using the indicators of automated traffic available for each period. The change in methodology resulted in decreases of approximately 5% and 4% in previously reported visits for the three and nine months ended September 30, 2025, respectively.
Current report
Our methodology for identifying and excluding automated traffic from visits involves estimates and judgment and may not identify all automated traffic activity.
Current report
During the three and nine month periods ended September 30, 2026, visits to our mobile applications and websites decreased by 5% and 3%, respectively, compared to the three and nine month periods ended September 30, 2025. These decreases were primarily driven by housing market conditions, including low housing inventory, elevated and volatile mortgage interest rates and home price fluctuations.
Current report
Beginning with the three months ended September 30, 2026, we enhanced our methodology for identifying and excluding automated traffic from unique users, as identified using the methodology described under the “Visits” subsection above. We believe excluding automated traffic provides a more accurate indicator of consumer traffic to our mobile apps and websites and improves the comparability of unique users across periods. We have recast prior period average monthly unique users to conform with the current period methodology, which identifies and excludes automated traffic at each instance of access, using the indicators of automated traffic available for each period. The change in methodology resulted in decreases of approximately 11% and 10% in previously reported average monthly unique users for the three and nine months ended September 30, 2025, respectively.
Current report
Our methodology for identifying and excluding automated traffic from unique users involves estimates and judgment and may not identify all automated traffic activity.
Current report
During the three and nine month periods ended September 30, 2026, average monthly unique users decreased by 3% and 1%, respectively, compared to the three and nine month periods ended September 30, 2025. These decreases were primarily driven by housing market conditions, including low housing inventory, elevated and volatile mortgage interest rates and home price fluctuations.
Current report
Total revenue increased $48 million, or 7%, to $724 million:
Current report
Total revenue increased $275 million, or 14%, to $2.2 billion:
Current report
•Adjusted EBITDA does not reflect impairment and restructuring costs;
Current report
•Adjusted EBITDA does not reflect the ZO securities class action settlement, net of expected insurance recoveries, which we do not believe is reflective of our ongoing operating performance. In making this determination, we considered together the size of the settlement charge and that the ZO securities class action settlement relates to our Zillow Offers operations, which were wound down; and
Current report
(2) Beginning with the three months ended September 30, 2026, we calculate and report Adjusted EBITDA excluding the ZO securities class action settlement, net of expected insurance recoveries, which we do not believe is reflective of our ongoing operating performance.
Current report
Cost of revenue increased $23 million, or 12%, primarily driven by increases of $18 million in lead acquisition costs, primarily associated with our Redfin rentals syndication agreement and $7 million in mortgage loan processing costs due to increased purchase loan origination volume. These increases were partially offset by a $3 million decrease in depreciation and amortization expense. We expect cost of revenue to decrease in absolute dollars during the three months ending December 31, 2026, primarily due to the impact of seasonality on our business.
Current report
Sales and marketing expenses increased $2 million, or 1%, primarily driven by an increase of $2 million in headcount-related expenses to support loan origination costs driven by growth in Mortgages purchase loan origination volume.
Current report
General and administrative expenses increased $152 million, or 120%, primarily due to an increase of $165 million associated with the ZO securities class action settlement, net of expected insurance recoveries. This increase was partially offset by a $14 million decrease in headcount-related expenses, driven primarily by a decrease in share-based compensation expense. We expect general and administrative expenses to decrease in absolute dollars during the three months ending December 31, 2026, primarily due to the ZO securities class action settlement costs, net of expected insurance recoveries, recorded in the third quarter of 2026.
Current report
Impairment and Restructuring Costs
Current report
Legal Obligations -On October 27, 2026, we entered into the Settlement Agreement to resolve the ZO securities class action for $212.5 million, and we expect insurance recoveries of $48 million in connection with this matter. We expect to fund the settlement within the next 12 months. For additional information regarding this settlement, see Note 11 to our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Removed paragraphs (8)
Previous report
•Residential revenue increased by $31 million, or 7%, to $465 million, due to an increase in residential revenue per visit.
Previous report
Rentals revenue increased by $50 million, or 31%, to $209 million, due to increases in quarterly revenue per average monthly rentals unique visitor and average monthly rentals unique visitors.
Previous report
Total revenue increased $117 million, or 18%, to $772 million:
Previous report
Total revenue increased $227 million, or 18%, to $1.5 billion:
Previous report
•Adjusted EBITDA does not reflect restructuring costs;
Previous report
Sales and marketing expenses increased $23 million, or 10%, primarily driven by increases of $11 million in headcount-related expenses to support loan origination costs driven by growth in Mortgages purchase loan origination volume and $9 million in marketing and advertising costs as we continue to invest in the growth of our business. We expect sales and marketing expenses to decrease in absolute dollars during the three months ending September 30, 2026 as marketing and advertising spend normalizes following strategic increases in the first half of the year.
Previous report
General and administrative expenses increased $10 million, or 8%, primarily due to an increase of $18 million in legal expenses which was partially offset by a $12 million decrease in headcount-related expenses, driven primarily by a decrease in share-based compensation expense.
Previous report
Restructuring Costs
Reworded paragraphs (39)
Previous wording
As of June 30, 2026, we had 7,232 employees, compared to 7,068 employees as of December 31, 2025.
Current wording
As of September 30, 2026, we had 6,871 employees, compared to 7,068 employees as of December 31, 2025.
Previous wording
Our financial performance is impacted by changes in the health of the housing market, which is impacted, in turn, by general economic conditions. Current market factors have been driven by low housing inventory, elevated and volatile mortgage interest rates, changes in rental inventory and occupancy rates, as well as home price fluctuations and inflationary conditions. These factors may impact the number of transactions consumers complete using our products and services and demand for our advertising services. According to residential real estate data published by NAR, TTV increased 6% during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 and increased 4% during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. We continue to invest in the growth of our business, which we believe has resulted in year over year total revenue results, described below, for the three and six month periods ended June 30, 2026 as compared to the same periods in the prior year, that exceeded industry performance for the same periods. The extent to which market factors impact our results and financial position will depend on future developments, which are uncertain and difficult to predict.
Current wording
Our financial performance is impacted by changes in the health of the housing market, which is impacted, in turn, by general economic conditions. Current market factors have been driven by low housing inventory, elevated and volatile mortgage interest rates, changes in rental inventory and occupancy rates, as well as home price fluctuations and inflationary conditions. These factors may impact the number of transactions consumers complete using our products and services and demand for our advertising services. According to residential real estate data published by NAR, TTV increased 1% during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 and increased 3% during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. We continue to invest in the growth of our business, which we believe has resulted in year-over-year total revenue results, described below, for the three and nine months ended September 30, 2026 as compared to the same periods in the prior year, that exceeded industry performance for the same periods. The extent to which market factors impact our results and financial position will depend on future developments, which are uncertain and difficult to predict.
Previous wording
For the three months ended June 30, 2026 and 2025, we generated total revenue of $772 million and $655 million, respectively, an increase of 18%. The increase in total revenue was primarily attributable to the following:
Current wording
For the three months ended September 30, 2026 and 2025, we generated total revenue of $724 million and $676 million, respectively, an increase of 7%. The increase in total revenue was primarily attributable to the following:
Previous wording
•Mortgages revenue increased by $36 million, or 75%, to $84 million, driven by an increase in mortgage originations revenue as a result of increased total loan origination volume.
Current wording
•Mortgages revenue increased by $17 million, or 32%, to $70 million, driven by an increase in mortgage originations revenue as a result of increased total loan origination volume.
Previous wording
During the three months ended June 30, 2026 and 2025, we generated gross profit of $562 million and $489 million, respectively, an increase of 15%.
Current wording
During the three months ended September 30, 2026 and 2025, we generated gross profit of $516 million and $491 million, respectively, an increase of 5%.
Previous wording
On August 4, 2026, Zillow Group announced a plan to reduce its headcount by approximately 7% of its employees. This headcount reduction is designed to allow the Company to move faster and operate more efficiently, including with a more sustainable cost structure. As a result, the Company currently estimates that it will incur pre-tax restructuring costs totaling approximately $59 million to $64 million related to employee termination costs, of which an estimated $36 million to $38 million are expected to be future cash expenditures associated with severance payments, and the remaining amount is expected to be accelerated share-based compensation expense. For the three months ended June 30, 2026, Zillow Group recorded $36 million in restructuring costs related to employee termination costs and expects that the remainder of the restructuring costs will be recognized during the three months ending September 30, 2026. These employee termination costs have been recorded as restructuring costs within our condensed consolidated statements of operations. We plan to fund the cash expenditures through existing cash and investment balances. We expect total headcount-related expenses to decrease in absolute dollars during the three months ending September 30, 2026 as a result of these cost management actions.
Current wording
On August 4, 2026, Zillow Group announced a plan to reduce its headcount by approximately 7% of its employees. This headcount reduction is designed to allow the Company to move faster and operate more efficiently, including with a more sustainable cost structure. For additional information regarding our restructuring costs, see Note 14 of our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q and the subsection below titled “Impairment and Restructuring Costs” under the caption “Results of Operations.”
Previous wording
We have recast TTV and For Sale revenue per TTV for the twelve months ended June 30, 2025 to conform with the revised TTV methodology used for the twelve months ended June 30, 2026, described above. The change in methodology to calculate TTV resulted in an approximately 26% increase in TTV and 20% decrease in For Sale revenue per TTV reported for the twelve months ended June 30, 2025, primarily due to differences in existing residential homes sold and average sales price of existing residential homes sold for the period as collected and estimated by Zillow Group compared to as reported by NAR.
Current wording
We have recast TTV and For Sale revenue per TTV for the twelve months ended September 30, 2025 to conform with the revised TTV methodology used for the twelve months ended September 30, 2026, described above. The change in methodology to calculate TTV resulted in an approximately 22% increase in TTV and 18% decrease in For Sale revenue per TTV reported for the twelve months ended September 30, 2025, primarily due to differences in existing residential homes sold and average sales price of existing residential homes sold for the period as collected and estimated by Zillow Group compared to as reported by NAR.
Previous wording
During the three and six months ended June 30, 2026, total loan origination volume increased 94% and 95%, respectively, compared to the three and six months ended June 30, 2025. This increase was primarily driven by the continued growth in Zillow Home Loans purchase loan originations in line with our strategic priorities.
Current wording
During the three and nine months ended September 30, 2026, total loan origination volume increased 54% and 79%, respectively, compared to the three and nine months ended September 30, 2025. These increases were primarily driven by the continued growth in Zillow Home Loans purchase loan originations in line with our strategic priorities.
Previous wording
•Rentals revenue increased $50 million, or 31%. The increase in Rentals revenue was primarily due to a 28% increase in quarterly revenue per average monthly rentals unique visitor to $5.65 for the three months ended June 30, 2026 from $4.42 for the three months ended June 30, 2025, primarily driven by a 42% increase in multifamily rentals revenue due to growth in multifamily property listings and in revenue per property as property managers upgraded to more comprehensive advertising packages. We calculate quarterly revenue per average monthly rentals unique visitor by dividing total Rentals revenue for the period by the average monthly rentals unique visitors for the period and then dividing by the number of quarters in the period. The increase in Rentals revenue was also driven by growth in average monthly rentals unique visitors, which increased 3% to 37 million during the three months ended June 30, 2026 from 36 million during the three months ended June 30, 2025. We have estimated average monthly rentals unique visitors using Comscore data, which measures average monthly unique visitors on rental listings on Zillow’s, Trulia’s and HotPads’ mobile apps and websites, and on Realtor.com and beginning in February 2025, Redfin and its sites, including Rent.com and ApartmentGuide.com. We expect Rentals revenue to increase in absolute dollars during the three months ending September 30, 2026, primarily driven by continued growth in multifamily revenue from the addition of new rental properties.
Current wording
•Rentals revenue increased $46 million, or 26%. The increase in Rentals revenue was primarily due to a 26% increase in quarterly revenue per average monthly rentals unique visitor to $6.29 for the three months ended September 30, 2026 from $4.97 for the three months ended September 30, 2025, primarily driven by a 35% increase in multifamily rentals revenue due to growth in multifamily property listings and in revenue per property as property managers upgraded to more comprehensive advertising packages. We calculate quarterly revenue per average monthly rentals unique visitor by dividing total Rentals revenue for the period by the average monthly rentals unique visitors for the period and then dividing by the number of quarters in the period. Average monthly rentals unique visitors were 35 million for both the three months ended September 30, 2026 and 2025. We have estimated average monthly rentals unique visitors using Comscore data, which measures average monthly unique visitors on rental listings on Zillow’s, Trulia’s and HotPads’ mobile apps and websites, and on Realtor.com, and beginning in February 2025, Redfin and its sites, including Rent.com and ApartmentGuide.com.
Previous wording
•Mortgages revenue increased $59 million, or 66%, primarily driven by a $64 million increase in mortgage originations revenue. The increase in mortgage originations revenue was primarily due to a 95% increase in total loan origination volume to $3.8 billion for the six months ended June 30, 2026 from $1.9 billion for the six months ended June 30, 2025. This increase was largely driven by continued growth in Zillow Home Loans purchase loan origination volume as we continued expanding the integrated transaction experience.
Current wording
•Mortgages revenue increased $17 million, or 32%, primarily driven by a $21 million increase in mortgage originations revenue. The increase in mortgage originations revenue was primarily due to a 54% increase in total loan origination volume to $2.0 billion for the three months ended September 30, 2026 from $1.3 billion for the three months ended September 30, 2025. This increase was largely driven by continued growth in Zillow Home Loans purchase loan origination volume as we continued expanding the integrated transaction experience. We expect Mortgages revenue to decrease in absolute dollars during the three months ending December 31, 2026, primarily due to higher mortgage interest rates and the impact of seasonality on the residential real estate market.
Previous wording
•Residential revenue increased $31 million, or 7%. The increase in Residential revenue was primarily driven by a 10% increase in Residential revenue per visit to $0.184 for the three months ended June 30, 2026 from $0.168 for the three months ended June 30, 2025, primarily due to growth in our Premier Agent revenue driven by continued improvement in our ability to connect high-intent customers to agents, an increase in Zillow Showcase revenue driven by increasing adoption of our enhanced listing features by sellers and listing agents, and continued growth in new construction revenue. We calculate Residential revenue per visit by dividing the revenue generated by our Residential offerings by the number of visits in the period. We expect Residential revenue to decrease in absolute dollars during the three months ending September 30, 2026, due to housing market seasonality and as we continue to scale our Zillow Preferred model resulting in a continued shift in revenue from Residential to Mortgages as we bring the integrated transaction to more consumers.
Current wording
•Residential revenue decreased $16 million, or 4%, primarily due to a 5% decrease in visits to 2.3 billion for the three months ended September 30, 2026 from 2.4 billion for the three months ended September 30, 2025. The decrease in visits reflects weaker demand in the residential real estate market. The decrease in Residential revenue was partially offset by a 1% increase in Residential revenue per visit to $0.182 for the three months ended September 30, 2026 from $0.179 for the three months ended September 30, 2025, primarily due to an increase in Zillow Showcase revenue driven by increasing adoption of our enhanced listing features by sellers and listing agents, and continued growth in new construction revenue. We calculate Residential revenue per visit by dividing the revenue generated by our Residential offerings by the number of visits in the period. We expect Residential revenue to decrease in absolute dollars during the three months ending December 31, 2026, primarily due to the impact of seasonality on the residential real estate market and as we continue to scale our Zillow Preferred model resulting in a continued shift in revenue from Residential to Mortgages as we bring the integrated transaction to more consumers.
Previous wording
•Rentals revenue increased $104 million, or 36%. The increase in Rentals revenue was driven by a 25% increase in quarterly revenue per average monthly rentals unique visitor to $5.44 for the six months ended June 30, 2026 from $4.36 for the six months ended June 30, 2025, primarily driven by a 48% increase in multifamily rentals revenue due to growth in multifamily property listings and in revenue per property as property managers upgraded to more comprehensive advertising packages. The increase in Rentals revenue was also driven by growth in average monthly rentals unique visitors, which increased 9% to 36 million during the six months ended June 30, 2026 from 33 million during the six months ended June 30, 2025.
Current wording
•Rentals revenue increased $150 million, or 32%. The increase in Rentals revenue was driven by a 25% increase in quarterly revenue per average monthly rentals unique visitor to $5.67 for the nine months ended September 30, 2026 from $4.53 for the nine months ended September 30, 2025, primarily driven by a 43% increase in multifamily rentals revenue due to growth in multifamily property listings and in revenue per property as property managers upgraded to more comprehensive advertising packages. The increase in Rentals revenue was also driven by growth in average monthly rentals unique visitors, which increased 6% to 36 million during the nine months ended September 30, 2026 from 34 million during the nine months ended September 30, 2025.
Previous wording
•Mortgages revenue increased $36 million, or 75%, primarily driven by a $38 million increase in mortgage originations revenue. The increase in mortgage originations revenue was primarily due to a 94% increase in total loan origination volume to $2.2 billion for the three months ended June 30, 2026 from $1.1 billion for the three months ended June 30, 2025. This increase was largely driven by continued growth in Zillow Home Loans purchase loan origination volume as we continued expanding the integrated transaction experience.
Current wording
•Mortgages revenue increased $76 million, or 54%, primarily driven by an $85 million increase in mortgage originations revenue. The increase in mortgage originations revenue was primarily due to a 79% increase in total loan origination volume to $5.7 billion for the nine months ended September 30, 2026 from $3.2 billion for the nine months ended September 30, 2025. This increase was largely driven by continued growth in Zillow Home Loans purchase loan origination volume as we continued expanding the integrated transaction experience.
Previous wording
•Residential revenue increased $64 million, or 8%. The increase in Residential revenue was primarily driven by an 11% increase in Residential revenue per visit to $0.190 for the six months ended June 30, 2026 from $0.172 for the six months ended June 30, 2025, primarily due to growth in our Premier Agent revenue driven by continued improvement in our ability to connect high-intent customers to agents, an increase in Zillow Showcase revenue driven by increasing adoption of our enhanced listing features by sellers and listing agents, continued growth in new construction revenue and Follow Up Boss revenue.
Current wording
•Residential revenue increased $48 million, or 4%. The increase in Residential revenue was primarily driven by a 7% increase in Residential revenue per visit to $0.192 for the nine months ended September 30, 2026 from $0.179 for the nine months ended September 30, 2025, primarily due to an increase in Zillow Showcase revenue driven by increasing adoption of our enhanced listing features by sellers and listing agents, continued growth in new construction revenue, and continued growth in our Premier Agent revenue. The increase in Residential revenue was partially offset by a 3% decrease in visits to 6.9 billion for the nine months ended September 30, 2026, from 7.2 billion for the nine months ended September 30, 2025.
Previous wording
•Adjusted EBITDA does not reflect certain litigation costs directly associated with our pending antitrust litigation brought by the FTC and state attorneys general (“FTC Matter”), consisting of legal fees and related expenses that we have determined arise outside the ordinary course of our business and are nonrecurring, infrequent, or unusual. In making this determination, we considered the following factors: (1) the FTC Matter is the first legal proceeding of this nature brought against us, and we do not currently expect similar proceedings to recur; (2) the nature of the remedies sought by the FTC, including, among other things, a permanent injunction and a divestiture of assets or reconstruction of businesses, differs from the relief typically sought in our ordinary course litigation; and (3) the counterparties are a federal regulatory agency and state attorneys generals, which are distinct from the type of counterparties involved in our ordinary course litigation; and
Current wording
•Adjusted EBITDA does not reflect certain litigation costs directly associated with our antitrust litigation brought by the FTC and state attorneys general (“FTC Matter”), consisting of legal fees and related expenses that we have determined arose outside the ordinary course of our business and are nonrecurring, infrequent, or unusual. In making this determination, we considered the following factors: (1) the FTC Matter is the first legal proceeding of this nature brought against us, and we do not currently expect similar proceedings to recur; (2) the nature of the remedies sought by the FTC, including, among other things, a permanent injunction and a divestiture of assets or reconstruction of businesses, differs from the relief typically sought in our ordinary course litigation; and (3) the counterparties were a federal regulatory agency and state attorneys general, which are distinct from the type of counterparties involved in our ordinary course litigation;
Previous wording
Cost of revenue increased $94 million, or 31%, primarily driven by increases of $67 million in lead acquisition costs, primarily associated with our Redfin rentals syndication agreement, $11 million in mortgage loan processing costs due to increased purchase loan origination volume, $7 million in software and hardware costs, $6 million in ad serving costs to support the growth of our rentals marketplace, and $5 million in headcount-related expenses to support loan fulfillment and processing costs driven by growth in Mortgages purchase loan origination volume.
Current wording
Cost of revenue increased $117 million, or 24%, primarily driven by increases of $85 million in lead acquisition costs, primarily associated with our Redfin rentals syndication agreement, $18 million in mortgage loan processing costs due to increased purchase loan origination volume, $8 million in software and hardware costs, $6 million in headcount-related expenses to support loan fulfillment and processing costs driven by growth in Mortgages purchase loan origination volume, and $5 million in ad serving costs to support the growth of our rentals marketplace. These increases were partially offset by a $6 million decrease in depreciation and amortization expense.
Previous wording
Gross profit increased by $73 million, or 15%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 75% to 73%, primarily due to increased lead acquisition costs associated with our Redfin rentals syndication agreement.
Current wording
Gross profit increased by $25 million, or 5%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 73% to 71%.
Previous wording
Gross profit increased by $133 million, or 14%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 76% to 73%, primarily due to increased lead acquisition costs associated with our Redfin rentals syndication agreement.
Current wording
Gross profit increased by $158 million, or 11%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 75% to 72%.
Previous wording
Sales and marketing expenses increased $35 million, or 8%, primarily driven by increases of $20 million in headcount-related expenses to support loan origination costs driven by growth in Mortgages purchase loan origination volume and $10 million in marketing and advertising costs as we continue to invest in the growth of our business.
Current wording
Sales and marketing expenses increased $37 million, or 6%, primarily driven by increases of $22 million in headcount-related expenses to support loan origination costs driven by growth in Mortgages purchase loan origination volume, $10 million in marketing and advertising costs as we continue to invest in the growth of the business, and $3 million in professional service fees.
Previous wording
Technology and development expenses increased $4 million, or 1%, due to a $14 million increase in software and hardware costs which was partially offset by a $12 million decrease in headcount-related expenses driven primarily by a decrease in share-based compensation expense.
Current wording
Technology and development expenses decreased $1 million, or 1%, due to a $14 million decrease in headcount-related expenses driven primarily by a decrease in share-based compensation expense which was partially offset by a $12 million increase in software and hardware costs.
Previous wording
Technology and development expenses increased $3 million, or 2%, due to a $9 million increase in software and hardware costs which was partially offset by an $8 million decrease in headcount-related expenses driven primarily by a decrease in share-based compensation expense.
Current wording
Technology and development expenses increased $3 million, or 1%, due to a $26 million increase in software and hardware costs and $2 million in trade show and event expenses. These increases were partially offset by a $26 million decrease in headcount-related expenses driven primarily by a decrease in share-based compensation expense.
Previous wording
General and administrative expenses increased $12 million, or 5%, primarily due to an increase of $29 million in legal expenses which was partially offset by a decrease of $21 million in headcount-related expenses, including share-based compensation expense.
Current wording
General and administrative expenses increased $164 million, or 44%, primarily due to an increase of $165 million associated with the ZO securities class action settlement, net of expected insurance recoveries, and $34 million associated with FTC Matter litigation costs. These increases were partially offset by a decrease of $35 million in headcount-related expenses, including share-based compensation expense.
Previous wording
Other income, net decreased $5 million and $11 million for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025, primarily due to lower interest income driven by a decrease in our investment balances as a result of share repurchases and the settlement of the 2025 Notes.
Current wording
Other income, net decreased $6 million and $17 million for the three and nine months ended September 30, 2026, respectively, as compared to the three and nine months ended September 30, 2025, primarily due to lower interest income driven by a decrease in our investment balances as a result of share repurchases, and, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, the settlement of the 2025 Notes, which occurred in May 2025.
Previous wording
Income tax expense was not material for the three and six month periods ended June 30, 2026 or 2025.
Current wording
Income tax expense was not material for the three and nine months ended September 30, 2026 or 2025.
Previous wording
As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents, investments and restricted cash of $688 million and $1.3 billion, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions, money market funds, and, from time to time, U.S. government treasury securities and commercial paper. Investments consist of fixed income securities, which include investment grade corporate securities, U.S. government treasury securities, commercial paper, and U.S. government agency securities. Restricted cash primarily consists of amounts used to fund customer home purchases in our mortgage origination operations. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. As of June 30, 2026, Zillow Group and its subsidiaries were in compliance with all debt covenants specified in the facilities described below.
Current wording
As of September 30, 2026 and December 31, 2025, we had cash and cash equivalents, investments and restricted cash of $713 million and $1.3 billion, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions, money market funds, and, from time to time, U.S. government treasury securities and commercial paper. Investments consist of fixed income securities, which include investment grade corporate securities, U.S. government treasury securities, commercial paper, and U.S. government agency securities. Restricted cash primarily consists of amounts used to fund customer home purchases in our mortgage origination operations. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. As of September 30, 2026, Zillow Group and its subsidiaries were in compliance with all debt covenants specified in the facilities described below.
Previous wording
We believe that cash from operations and cash and cash equivalents and investment balances will be sufficient to meet our ongoing operating activities, working capital, capital expenditures, strategic acquisitions and investments and other capital requirements for at least the next 12 months, though we may choose to utilize our Revolving Credit Facility. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operations, debt financing, including the Revolving Credit Facility, and equity offerings, as applicable.
Current wording
We believe that cash from operations and cash and cash equivalents and investment balances will be sufficient to meet our ongoing operating activities, working capital, capital expenditures, strategic acquisitions and investments, legal obligations and other capital requirements for at least the next 12 months, though we may choose to utilize our Revolving Credit Facility. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operations, debt financing, including the Revolving Credit Facility, and equity offerings, as applicable.
Previous wording
For the six months ended June 30, 2026, net cash provided by operating activities was $211 million. This was primarily driven by net income of $42 million, adjusted by share-based compensation of $169 million, depreciation and amortization of $130 million, amortization of contract cost assets of $13 million, amortization of right of use assets of $4 million, and $13 million in other adjustments to reconcile net income to net cash provided by operating activities. Changes in operating assets and liabilities decreased net cash provided by operating activities by $134 million. The changes in operating assets and liabilities are primarily related to a $108 million increase in mortgage loans held for sale due to the timing of loan sales, a $94 million increase in prepaid expenses and other assets primarily due to an increase in accrued revenue, a $26 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, a $13 million increase in contract cost assets primarily due to an increase in capitalized sales commissions, a $7 million decrease in lease liabilities due to contractual lease payments, and a $4 million decrease in deferred revenue. These changes were partially offset by a $49 million increase in accrued expenses and other current liabilities, a $36 million increase in accounts payable, and a $32 million increase in accrued compensation and benefits, each primarily driven by the timing of payments.
Current wording
For the nine months ended September 30, 2026, net cash provided by operating activities was $373 million. This was primarily driven by a net loss of $116 million, adjusted by share-based compensation of $255 million, depreciation and amortization of $194 million, amortization of contract cost assets of $19 million, amortization of right of use assets of $7 million, and $14 million in other adjustments to reconcile net loss to net cash provided by operating activities. Changes in operating assets and liabilities increased net cash provided by operating activities by $28 million. The changes in operating assets and liabilities are primarily related to a $246 million increase in accrued expenses and other current liabilities driven by the ZO securities class action settlement accrual, and a $38 million increase in accounts payable and a $21 million increase in accrued compensation and benefits, both primarily driven by the timing of payments. These changes were partially offset by a $163 million increase in prepaid expenses and other assets primarily attributable to an insurance recovery receivable related to the ZO securities class action settlement and an increase in accrued revenue, a $37 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $32 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, an $18 million increase in contract cost assets primarily due to an increase in capitalized sales commissions, a $16 million decrease in deferred revenue attributable to the timing of revenue recognition, and a $12 million decrease in lease liabilities due to contractual lease payments.
Previous wording
For the six months ended June 30, 2025, net cash provided by operating activities was $191 million. This was driven by net income of $10 million, adjusted by share-based compensation of $196 million, depreciation and amortization of $132 million, amortization of contract cost assets of $10 million, amortization of right of use assets of $4 million, and $9 million in other adjustments to reconcile net income to net cash provided by operating activities. Changes in operating assets and liabilities decreased net cash provided by operating activities by $152 million. The changes in operating assets and liabilities are primarily related to a $91 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $47 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, a $46 million increase in prepaid expenses and other current assets primarily due to an increase in accrued revenue, a $13 million increase in contract cost assets primarily due to an increase in capitalized sales commissions, and a $6 million decrease in lease liabilities due to contractual lease payments. These changes were partially offset by a $26 million increase in accounts payable and an $18 million increase in accrued expenses and other current liabilities, both primarily driven by the timing of payments, and an $8 million increase in deferred revenue attributable to the timing of revenue recognition.
Current wording
For the nine months ended September 30, 2025, net cash provided by operating activities was $296 million. This was primarily driven by net income of $20 million, adjusted by share-based compensation of $295 million, depreciation and amortization of $199 million, amortization of contract cost assets of $16 million, and amortization of right of use assets of $6 million, and $10 million in other adjustments to reconcile net income to net cash provided by operating activities. Changes in operating assets and liabilities decreased net cash provided by operating activities by $230 million. The changes in operating assets and liabilities are primarily related to a $132 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $67 million increase in prepaid expenses and other assets primarily due to an increase in accrued revenue, a $53 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, an $18 million increase in contract cost assets primarily due to an increase in capitalized sales commissions, and a $9 million decrease in lease liabilities due to contractual lease payments. These changes were partially offset by a $32 million increase in accrued expenses and other current liabilities and an $8 million increase in accounts payable, both primarily driven by the timing of payments, and a $7 million increase in deferred revenue attributable to the timing of revenue recognition.
Previous wording
For the six months ended June 30, 2026, net cash provided by investing activities was $325 million. This was primarily related to $414 million of net proceeds from maturities and sales of investments, partially offset by $89 million of purchases of property and equipment and intangible assets.
Current wording
For the nine months ended September 30, 2026, net cash provided by investing activities was $285 million. This was primarily related to $417 million of net proceeds from maturities and sales of investments, partially offset by $132 million of purchases of property and equipment and intangible assets.
Previous wording
For the six months ended June 30, 2025, net cash provided by investing activities was $25 million. This was primarily related to $213 million of net proceeds from maturities and sales of investments. These inflows were partially offset by $188 million of purchases of property and equipment and intangible assets, including a $100 million payment in connection with the partnership we entered into with Redfin in February 2025.
Current wording
For the nine months ended September 30, 2025, net cash provided by investing activities was $44 million. This was primarily related to $272 million of net proceeds from maturities and sales of investments, partially offset by $228 million of purchases of property and equipment and intangible assets, including a $100 million payment in connection with the rentals partnership we entered into with Redfin in February 2025.
Previous wording
Our primary financing activities include repurchases of Class A common stock and Class C capital stock, the exercise of employee option awards, repayments of borrowings on our master repurchase agreements related to Zillow Home Loans, and the payment of contingent consideration up to its acquisition-date fair value.
Current wording
Our primary financing activities include repurchases of Class A common stock and Class C capital stock, the exercise of employee option awards, repayments of borrowings on our master repurchase agreements related to Zillow Home Loans, settlements of convertible senior notes and capped call transactions, and the payment of contingent consideration up to its acquisition-date fair value.
Previous wording
For the six months ended June 30, 2026, net cash used in financing activities was $731 million, which primarily related to $826 million of cash paid for share repurchases and $27 million related to the settlement of the acquisition date fair value of the second Follow Up Boss contingent consideration earn out payment. The cash outflows were partially offset by $101 million of net borrowings on our master repurchase agreements related to Zillow Home Loans and $23 million of proceeds from the exercise of stock options.
Current wording
For the nine months ended September 30, 2026, net cash used in financing activities was $823 million, which primarily related to $846 million of cash paid for share repurchases and $27 million related to the settlement of the acquisition date fair value of the second Follow Up Boss contingent consideration earn out payment. The cash outflows were partially offset by $28 million of net borrowings on our master repurchase agreements related to Zillow Home Loans and $24 million of proceeds from the exercise of stock options.
Previous wording
For the six months ended June 30, 2025, net cash used in financing activities was $709 million, which primarily related to $419 million of cash paid for the settlement of the 2025 Notes, $400 million of cash paid for share repurchases, and $30 million related to the settlement of the acquisition date fair value of the first Follow Up Boss contingent consideration earn out payment. The cash outflows were partially offset by $85 million of net borrowings on our master repurchase agreements related to Zillow Home Loans and $55 million of proceeds from the exercise of option awards.
Current wording
For the nine months ended September 30, 2025, net cash used in financing activities was $546 million, which primarily related to $438 million of cash paid for share repurchases, $419 million of cash paid for the settlement of the 2025 Notes, and $30 million related to the settlement of the acquisition date fair value of the first Follow Up Boss contingent consideration earn out payment. The cash outflows were partially offset by $176 million of proceeds from the exercise of stock options, $127 million of net borrowings on our master repurchase agreements related to Zillow Home Loans, and $38 million of proceeds from the settlement of capped call transactions.
Previous wording
On March 4, 2026, the Board authorized the repurchase of up to an additional $1.25 billion of our Class A common stock, Class C capital stock, or a combination thereof, which increased our total cumulative Repurchase Authorizations to $4.8 billion as of June 30, 2026. On June 3, 2026, the Board approved an amendment to the Repurchase Authorizations, pursuant to which, effective June 3, 2026, no repurchase of shares under the Repurchase Authorizations is permitted if, after giving effect to such repurchase, any single shareholder would beneficially own more than 45% of the then-outstanding voting power of the Company’s voting securities. During the six months ended June 30, 2026, we repurchased 4.8 million shares of Class A common stock and 14.3 million shares of Class C capital stock at an average price of $45.25 and $42.52 per share, respectively, for an aggregate purchase price of $219 million and $607 million, respectively, totaling $826 million. As of June 30, 2026, $1.1 billion remained available for future repurchases of our stock pursuant to the Repurchase Authorizations, which repurchases decrease our liquidity and capital resources when effected.
Current wording
On March 4, 2026, the Board authorized the repurchase of up to an additional $1.25 billion of our Class A common stock, Class C capital stock, or a combination thereof, which increased our total cumulative Repurchase Authorizations to $4.8 billion as of September 30, 2026. On June 3, 2026, the Board approved an amendment to the Repurchase Authorizations, pursuant to which, effective June 3, 2026, no repurchase of shares under the Repurchase Authorizations is permitted if, after giving effect to such repurchase, any single shareholder would beneficially own more than 45% of the then-outstanding voting power of the Company’s voting securities. During the nine months ended September 30, 2026, we repurchased 4.8 million shares of Class A common stock and 14.8 million shares of Class C capital stock at an average price of $45.24 and $42.31 per share, respectively, for an aggregate purchase price of $219 million and $627 million, respectively, totaling $846 million. As of September 30, 2026, $1.1 billion remained available for future repurchases of our stock pursuant to the Repurchase Authorizations, which repurchases decrease our liquidity and capital resources when effected.
Previous wording
(2)Agreement was amended and renewed on April 23, 2026 to extend the maturity date to April 22, 2027.
Current wording
(3)Agreement was amended and renewed on April 23, 2026 to extend the maturity date to April 22, 2027.
Previous wording
(4)Agreement was amended and renewed on June 5, 2026 to increase the total maximum borrowing capacity from $100 million to $150 million and to extend the maturity date to June 4, 2027.
Current wording
(5) Agreement was amended and renewed on June 5, 2026 to increase the total maximum borrowing capacity from $100 million to $150 million and to extend the maturity date to June 4, 2027.
Previous wording
Master Repurchase Agreements - Includes principal amounts due for amounts borrowed under the master repurchase agreements to finance mortgages originated through Zillow Home Loans. Principal amounts under the master repurchase agreements are due when the related mortgage loan is sold to an investor or directly to an agency. As of June 30, 2026, we have outstanding principal amounts of $465 million.
Current wording
Master Repurchase Agreements - Includes principal amounts due for amounts borrowed under the master repurchase agreements to finance mortgages originated through Zillow Home Loans. Principal amounts under the master repurchase agreements are due when the related mortgage loan is sold to an investor or directly to an agency. As of September 30, 2026, we have outstanding principal amounts of $392 million.
Previous wording
Purchase Obligations - We have non-cancelable purchase obligations for content related to our mobile apps and websites, certain cloud computing services and amounts due under certain partnership agreements. For additional information regarding our purchase obligations, see Note 11 to our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Current wording
Purchase Obligations - We have non-cancelable purchase obligations for content related to our mobile apps and websites and for certain cloud computing, data storage, and enterprise technology services to support our business operations. For additional information regarding our purchase obligations, see Note 11 to our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Previous wording
Restructuring Payments - We expect to make future cash payments of approximately $36 million to $38 million related to the employee termination costs incurred as a result of the reduction in headcount announced on August 4, 2026. We expect these additional cash payments to be made primarily during the three months ending September 30, 2026. For additional information regarding our restructuring costs, see Note 14 to our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Current wording
Restructuring Payments- We expect to make future cash payments of approximately $11 million related to the employee termination costs incurred as a result of the reduction in headcount announced on August 4, 2026. We expect these additional cash payments to be made primarily during the three months ending December 31, 2026. For additional information regarding our restructuring costs, see Note 14 to our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
For the three months ended September 30, 2026, we recorded $32 million in restructuring costs related to employee termination costs, of which $20 million related to cash expenditures associated with severance payments and the remaining $12 million related to accelerated share-based compensation expense. For the nine months ended September 30, 2026, we recorded $68 million in restructuring costs related to employee termination costs, of which $43 million related to cash expenditures associated with severance payments and the remaining $25 million related to accelerated share-based compensation expense. We funded the cash expenditures through existing cash and investment balances. For additional information regarding our restructuring costs, see Note 14 of our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Current report — wording carried from elsewhere
(4) Agreement was amended and renewed on February 25, 2026 to increase the total maximum borrowing capacity from $150 million to $200 million and to extend the maturity date to February 24, 2027.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Cost of revenue increased $44 million, or 27%, primarily driven by increases of $29 million in lead acquisition costs, primarily associated with our Redfin rentals syndication agreement, $6 million in mortgage loan processing costs due to increased purchase loan origination volume, $4 million in software and hardware costs, $3 million in ad serving costs to support the growth of our rentals marketplace, and $3 million in headcount-related expenses to support loan fulfillment and processing costs driven by growth in Mortgages purchase loan origination volume.
Previous report — wording carried elsewhere
Restructuring costs of $36 million for the three and six months ended June 30, 2026 related to employee termination costs incurred as a result of the reduction in headcount announced on August 4, 2026. For additional information regarding our restructuring costs, see Note 14 to our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.