TLDR
- Zillow stock fell 12.7% Thursday after reporting a surprise Q2 net loss of $4 million despite beating revenue estimates at $772 million.
- Q3 revenue guidance of $745M-$760M came in below the $774M analyst consensus.
- Zillow cut over 500 jobs, logging $36 million in restructuring costs in Q2.
- Bernstein downgraded the stock to Market-Perform, cutting its price target from $50 to $38.
- The revenue shortfall is partly tied to a model shift where agents pay Zillow after a home sale closes, creating timing lags.
Zillow stock was trading down 12.7% Thursday morning, putting it on track for its worst single-day drop since February, after the company posted a surprise net loss and guided lower for the third quarter.
Zillow reported a Q2 net loss of $4 million on revenue of $772 million. Analysts had expected a $21 million profit. On a per-share basis, Zillow lost two cents versus the nine-cent gain the Street was looking for.
Revenue was up 18% year over year, and adjusted EBITDA came in at $176 million, ahead of the $162 million estimate. Adjusted earnings of 52 cents per share also beat the 45-cent consensus.
ZILLOW GROUP $Z Q2’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $772M (Est. $758M) 🟢; +18% YoY
🔹 Adj. EPS: $0.52 (Est. $0.45) 🟢; +30% YoY
🔹 Adjusted EBITDA: $176M (Est. $160M) 🟢; +14% YoYQ3 Guide:
🔹 Revenue: $745M-$760M (Est. $774M) 🔴
🔹 Adj. EBITDA: $180M-$200M (Est. $213M) 🔴…— Wall St Engine (@wallstengine) August 5, 2026
The net loss was largely driven by $36 million in impairment and restructuring charges tied to a workforce reduction of over 500 employees announced earlier this week.
CEO Jeremy Wacksman said the cuts were made to “move faster and operate more efficiently.” He added the company remains on track for full-year revenue growth in the mid-teens.
Q3 Guidance Disappoints
For Q3, Zillow guided revenue to a range of $745 million to $760 million, below the $774 million analyst estimate. Adjusted EBITDA guidance of $180 million to $200 million also missed the $214 million consensus.
Wacksman pointed to two factors weighing on the outlook. First, Zillow now expects a decline in the broader mortgage market. Second, the company is shifting more of its business to its “Preferred” agent model.
Under the Preferred model, agents pay Zillow only after a home sale closes rather than paying upfront. Wacksman said this model generates 23% more revenue per connection, but it introduces timing lags that are dragging on near-term results.
Bernstein Downgrades, Cuts Target to $38
Bernstein downgraded Zillow to Market-Perform from Outperform Thursday, slashing its price target from $50 to $38. Analyst Nikhil Devnani said the firm is “throwing in the towel” on its Zillow call.
Devnani said Bernstein’s original bull thesis rested on expanding share gains from the Preferred model transition and meaningful operating leverage. He acknowledged the firm “got this one painfully wrong.”
The analyst flagged that Residential revenue is guided to no growth year over year in Q3, and share gains excluding Mortgage appear to be compressing. He expects these headwinds could persist through 2027.
William Blair analyst Stephen Sheldon said he expects Zillow stock to remain “range-bound” given limited visibility into a housing recovery and noisy near-term profit changes.
Zillow also announced executive changes alongside the results. CFO Jeremy Hofmann will take on the additional role of Chief Operating Officer. Jun Choo is stepping down as COO for health reasons and will stay on as an advisor through year-end.
Cassandra “Sandi” Knight has been hired as Zillow’s new Chief Legal and Policy Officer. Knight previously served as VP of Litigation and Discovery at Google.
Zillow stock is down 47% year to date, according to Dow Jones Market Data.
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