Zillow Group relies on AI as revenue increases by 18% in the real estate market

Zillow Group says its developers are shipping 40% more code each, on average, thanks to internal use of AI tools, allowing them to move features faster from concept to launch.

That’s one of the AI ​​claims the company made in its first-quarter shareholder letter Wednesday, which reads less like a financial recap and more like a technology strategy blueprint.

“We’re embedding AI into every real estate experience in ways that make Zillow so valuable, and we’re innovating quickly and purposefully,” CEO Jeremy Wacksman said in a letter, as the Seattle-based company reported revenue that rose 18% to $708 million in a flat housing market.

Some examples of the use of AI from the book include:

• Consumer AI search: Zillow has begun rolling out an AI-powered search mode to about 5% of its audience, or millions of users. The company said early signals show deeper conversations and more tangible engagement compared to traditional search.
• Agent tools: Follow the Manager, Zillow’s CRM tool for real estate teams, is becoming an “AI-powered workflow engine” for organizing, prioritizing, and connecting with people. Monthly active users have increased more than 70% since Zillow acquired the product at the end of 2023.
• Leasing: AI Assist, a leasing assistant embedded in multifamily listings, handles lead management, applicant screening, and leasing communications for property managers.

Wacksman also talked about competition from general-purpose AI platforms, saying Zillow’s proprietary data, deep consumer engagement, and real-time shopping tools give it advantages that are hard to replicate. Zillow launched a partnership with ChatGPT last October, putting its listings, photos, and prices on the OpenAI platform and redirecting users back to Zillow for viewings and financing.

In addition to its Zillow homes portal, Zillow Group also includes home brands such as Trulia, StreetEasy, HotPads, Landela Up Boss, ShowTime, dotloop, and Zillow Home Loans.

The company has cut jobs twice in the past 18 months, including about 200 positions in January, which it said were due to its operations rather than AI cuts.

Financial highlights: 

• Net income rose to $46 million from $8 million last year.
• The amount of home loans through Zillow Home Loans nearly doubled, rising 96% to $1.5 billion, making it a top 25 lender nationally.
• Rental income jumped 42% to $183 million, driven by a 57% increase in multifamily income.
• The company repurchased 13.5 million shares for $626 million in the quarter, eating up nearly half of its cash reserves.

Competitive measures: A day before earnings, Zillow announced a partnership with Realtor.com to expand its Zillow Preview pre-market listings to both platforms. Zillow Preview, which launched seven weeks ago, now has more than 60 brokerage partners.

The move is part of a broader industry dispute over listing transparency that has pitted Zillow against Compass, which sued over Zillow’s ban on private listings last year.

Case costs: The company flagged $11 million in rising legal fees in Q1, which is expected to rise to nearly $20 million in Q2 as the FTC probes Zillow’s lease deal with Redfin. The Compass case and the CoStar copyright case also remain active.

Market reaction: Shares of Zillow fell nearly 6% in after-hours trading, driven by lower Q1 results (beating analyst estimates) than Q2 revenue guidance of $750 million and $765 million, with the midpoint slightly below Wall Street expectations.

The company projects revenue growth in the mid-teens for a full year and projects the housing market to remain flat this cycle.