A second round of layoffs cast a shadow over Zillow’s second-quarter earnings on Tuesday, which revealed the Seattle-based portal giant’s revenue had grown 18 percent year over year to $772 million.
Zillow’s For Sale (+14 percent to $549 million), Residential (+7 percent to $465 million), Mortgage (+75 percent to $84 million), and Rental (+31 percent to $209 million) segments all logged annual gains. However, the growth rate of the Residential and Rentals segments decelerated slightly quarter over quarter, and net losses ballooned to $4 million after a $2 million net income the previous year, reflecting the challenge of operating in a relatively flat housing market.
In a pre-earnings call with Inman, Zillow Chief Executive Officer Jeremy Wacksman discussed the layoffs and whether they contradict the portal’s messaging about its financial strength. The CEO said the layoffs, which affected 500 employees across several teams, were done to “better position Zillow for the path ahead” as lackluster sales growth, sticky mortgage rates, and political and economic upheaval complicate the housing landscape.
Jeremy Wacksman
“As I shared with our employees yesterday, we’re obviously grateful to every person who’s leaving, and we’ve been supporting them through the transition, and it’s never easy to say goodbye to our colleagues,” he said, echoing his Front Porch blog post. “But the changes are about better positioning Zillow for the path ahead, and that includes having the right folks in the right roles and having the organizational structure to be able to move faster.”
“This was a structural reorganization, so we’re moving teams around. We’re eliminating roles as part of that. We’re changing roles as part of that,” he added. “So anytime that happens, you’re going to have, unfortunately, people who are impacted, even if those people are great colleagues. And that’s the unfortunate part of doing this. But it is really about setting us up for the opportunity in front of us and ensuring we’re building toward the future.”
Wacksman said the For Sale and Rentals “strategy is still working nicely,” with Zillow AI mode driving up consumer engagement, Zillow Preview expanding to 100 brokerage partners, and Showcase appearing on 5 percent of all new listings and 10 percent of listings in the top 10 markets. The portal said both segments are making progress toward a $1 billion incremental revenue opportunity.
“I know you talked to Misha [Fisher]. I wish I could give better news, or Misha can get better news on the housing market,” he said. “The macro right now is not getting any better, and you know we kind of fear it’s getting a little worse … That’s not great for all of the agents and brokers and teams that use our products and services, but the good news, the silver lining, is there are still people moving. Flat is still, you know, 4 million and change existing-home sales turning over.”
“And the products and services that we offer agents and that we offer buyers and sellers are even more valued in a market like this … You really see that shows up directly in our revenue results,” he added.
Zillow’s shareholder letter provides more insight into its strategy, with the portal leaning deeper into Zillow Preferred. Zillow Preferred partners pay on the back end, with Zillow charging a 25 percent referral fee once a lead converts to a closed transaction.
Preferred has stringent performance standards; however, Zillow said that’s paying off — with Preferred generating 23 percent more revenue per connection than legacy advertising in 2025, a premium that’s expected to grow to 35 percent by the end of 2026. The portal said Preferred will account for roughly 75 percent of connections by the end of 2026, with the goal that “nearly all connections will be serviced by Preferred partners over time.”
Alongside Preferred, the portal’s artificial intelligence push — the latest output of which is Zillow AI mode — is intended to create a higher-intent, ready-to-transact consumer base that will, hopefully, buoy Zillow through a constricting market.
“That’s a more efficient transaction. That’s an ability for an agent to grow their business profitably,” Wacksman said. “Right, and that’s really been the long arc of what Zillow has been building for agents. Can we help get you the highest-intent customers? Can we help get you the most informed and educated customers? And the more times we give them tools to use, the more times they show up in your agent’s inbox ready to transact.”
Jeremy Hofmann
Wacksman said company leaders are bullish about the future, with Chief Financial Officer Jeremy Hofmann’s role expanding to include chief operating officer duties as former COO, Jun Choo, steps down due to health issues. He will stay in an advisory role until the end of 2026.
“Jeremy is an exceptional financial and operational leader and a critical strategic partner to the entire executive team and me,” he said. “His deep understanding of our business, combined with the strength of the finance leadership team he has cultivated, gives us great confidence that this expanded role will accelerate our ability to execute and scale.”
Longtime Zillow executives Katie Berroth and Eric Wilson have also been promoted to vice president roles in strategy and operations and in Zillow Home Loans. And Cassandra Knight has been appointed as the portal’s first-ever chief legal and policy officer, a key role as the portal finds itself entangled in multiple legal battles, including class-action suits from homebuyers and a continued tug-of-war with Compass and several major multiple listing services, such as MRED and Realtracs.
“We just announced a data licensing agreement with Realtracs to continue to get our listings from them. If a home is marketed, it should be marketed to all and available to all,” he said. “And so, I think despite a lot of the noise and rhetoric out there, we continue to work with hundreds, virtually every MLS in the country through these data licensing agreements; we continue to help support agents because that’s what they want, right?”
“If you’re selling your home, you want your home on Zillow, and if you’re buying a home, you want to find all the homes on Zillow, and so that’s how our marketplace works,” he added. “It’s how it has worked. It’s how we expect to continue to work.”
