Zillow Group (NASDAQ:Z) delivered a second quarter that beat its own outlook on nearly every line, then turned around and eliminated jobs and reshuffled its leadership team. On the call held August 5, CEO Jeremy Wacksman and newly expanded COO and CFO Jeremy Hofmann laid out a business growing far faster than the housing market around it, alongside a restructuring meant to fund that growth. The two stories sitting side by side are worth pulling apart.
Bull Case: Growth Pillars Driving Strong Performance
Q2 revenue rose 18% year-over-year to $772 million, ahead of the high end of guidance, while EBITDA hit $176 million for a 23% margin. For Sale revenue climbed 14% to $549 million even though the purchase mortgage market was flat, and mortgages revenue jumped 75% to $84 million as purchase loan origination volume nearly doubled. Rentals revenue grew 31% to $209 million, powered by 42% growth in multifamily and a record 79,000 multifamily properties on the platform, up 23% from a year earlier.
Management is also leaning into AI Mode, now live for about 20% of signed-in users, where engaged consumers spend more than three times as long on the site and contact an agent at nearly three times the rate of everyone else. Zillow Home Loans has become a top-25 purchase lender nationally, and the shift toward its “preferred” agent model generated 23% more revenue per connection in 2025, with management targeting 35% by the end of 2026. The company backed that confidence with $200 million in buybacks during the quarter and $826 million year-to-date.
Bear Case: Workforce Cuts And GAAP Loss
The other side of the ledger is messier. A day before the call, Zillow eliminated roughly 7% of its workforce, booking $36 million in restructuring costs in the quarter with another $23 million to $28 million expected in the third quarter. Chief Operating Officer Jun Choo is stepping down to focus on his health, replaced in an expanded role by Hofmann. Despite the adjusted net income of $118 million, Zillow posted a GAAP net loss of $4 million.
Management also revised its view of the purchase mortgage market lower, now expecting originations down low to mid single digits rather than flat, citing rates that have risen since their lows earlier in the year. The accounting mechanics of the preferred transition are adding real drag too: residential revenue is expected to be flat in the third quarter and only in line with a shrinking mortgage industry in the fourth, as 600 to 800 basis points of revenue shifts from residential into mortgages and seasonality adds another 200 to 300 basis points of headwind in Q4.
Zillow’s Wall Street Backdrop
Hedge fund ownership fell from 70 funds to 59 in the most recent quarter, a pullback that stands out against a quarter of double-digit growth. Short interest sits at 7.32% of float, a level that suggests a real bear camp has formed rather than just routine hedging. Meanwhile, the stock trades at a forward P/E of 15.27 as of August 13, a multiple that does not look like it is pricing in aggressive growth assumptions.
Conclusion
Zillow’s core numbers, from rental growth to AI Mode engagement to its lending business, describe a company outgrowing a housing market that is barely moving. But the restructuring, the leadership churn, and the accounting headwinds baked into the next several quarters complicate that story. For the bulls, the preferred monetization model needs to keep delivering more revenue per connection as promised.
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