Zillow Group’s revenue rose $48 million, or 7%, to $724 million in the third quarter of 2026, according to its results release filed on 4 November. Rentals revenue rose $46 million, or 26%, to $220 million. That is about 96% of the company’s revenue increase, by our arithmetic.
The 10-Q shows where the Rentals gain came from. Average monthly rentals unique visitors were 35 million in both quarters, while quarterly revenue per rentals visitor rose to $6.29 from $4.97. Across the company, visits fell 5% to 2.3 billion and average monthly unique users fell 3% to 215 million.
Business Pill · Distribution Advantage
An evergreen Business Engineer explainer on distribution advantage. It teaches the general idea only and does not discuss Zillow.
The key insight: Zillow’s revenue rose $48 million in the third quarter and Rentals supplied $46 million of it, about 96%, by our arithmetic; the 10-Q shows rentals visitors flat at 35 million while revenue per rentals visitor rose to $6.29 from $4.97.
Residential revenue, Zillow’s largest line, fell $16 million, or 4%, to $419 million. The release attributes the decline to “higher-than-expected mortgage rates that pressured housing transaction volume”. The 10-Q adds that it was “primarily due to a 5% decrease in visits to 2.3 billion”.
Mortgages revenue rose $17 million, or 32%, to $70 million, on a 55% increase in purchase loan origination volume to $2.0 billion. Other revenue added $1 million. Rentals, at $46 million, supplied almost all of the net gain, by our arithmetic.
The 10-Q says the Rentals increase was “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”. The shareholder letter counts a record 81,000 multifamily properties advertising on Zillow at the end of Q3, up 17%.
Rentals was 30% of total revenue in the quarter, up from 21% two years ago, the shareholder letter says. The letter adds: “We see a clear path to more than $1 billion in annual Rentals revenue”. Four quarters at the Q3 level would be $880 million, by our arithmetic.
Zillow Group third-quarter revenue by line, 2025 and 2026: Rentals $174 million to $220 million, Residential $435 million to $419 million, Mortgages $53 million to $70 million, per its release and 10-Q filed on 4 November 2026. The 10-Q puts average monthly rentals unique visitors at 35 million in both quarters.
What Zillow Says About AI
The letter argues that buying a home is not a task people will delegate. It says: “It’s not just another mundane to-do list item most people will hand over to a personal AI assistant — it’s something most people want to do.” It also says: “About 80% of our traffic still comes directly to Zillow rather than from third-party sources like search engines.”
On its own product, the letter says: “Our data shows that consumers who use AI mode spend nearly three times as long on Zillow, run more searches, view more homes and request more tours.” It adds that “AI mode is now available to 100% of our signed-in users”, and that “financing and affordability are among the most common topics people ask AI mode about”.
For agents, Zillow says it is developing agentic AI inside its Follow Up Boss CRM: “Our AI proactively surfaces the leads and conversations that most need attention and recommends next steps for the agent to approve.” Follow Up Boss had about 141,000 monthly active users in Q3, up 16%, according to the letter.
Inside the company, the letter says Zillow’s engineers are “shipping 60% more changes to production than they did in 2024, while quality has improved significantly”.
Profit, Cash and the Outlook
Zillow reported a net loss of $158 million, against net income of $10 million a year earlier, after a $165 million Zillow Offers securities class action settlement, net of expected insurance recoveries. Adjusted EBITDA, which excludes the settlement, was $182 million, a 25% margin.
Adjusted free cash flow was $46 million, against $107 million a year earlier. The reconciliation shows $73 million of net repayments on master repurchase agreements, which fund Zillow Home Loans, against $42 million of net borrowings a year earlier.
For the fourth quarter, Zillow guides revenue of $635 million to $665 million and expects both For Sale and Residential revenue to decline roughly 9% to 15% year over year. It expects Rentals growth similar to Q3 and full-year Rentals growth of about 30%.
What the Risk Factors Say
The 10-Q says: “There have not been any material changes to the risk factors affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.”
As we read the 10-Q, the quarter’s growth came from charging more per rentals visitor, through multifamily advertising packages, rather than from a larger audience.
As we read the letter, Zillow’s AI case is a defence of the destination: it argues buyers want to stay on Zillow, and it reports that about 80% of traffic comes directly rather than through search engines.
Jeremy Wacksman and Jeremy Hofmann, Zillow Q3 2026 shareholder letter, 4 November 2026
“Deep consumer engagement gives us rich context that makes our AI products more useful.”
Three Implications
FOR REVENUE MIX Rentals was 30% of revenue in the quarter, up from 21% two years ago, the letter says, and Zillow expects full-year Rentals growth of about 30%.
FOR THE FOR SALE BUSINESS Zillow guides fourth-quarter For Sale and Residential revenue down roughly 9% to 15% year over year, after Residential fell 4% in Q3.
FOR AI MODE The letter reports longer sessions for AI mode users and says the feature reaches 100% of signed-in users; it does not give a revenue figure for it.
The framework says: “The Container Moat — built by closed data loops inside a customer’s environment, nascent but the deepest position in the stack.”
As we read it, Zillow’s letter describes that kind of loop in its own words: engagement gives context to its AI, and every transaction that runs through its infrastructure improves the experience for the next consumer. The framework does not discuss Zillow.
The time-on-site comparison for AI mode users is Zillow’s own data; the letter does not say how many users use AI mode or whether it changes revenue. The 80% direct-traffic figure is a Zillow internal estimate. Rentals visitors are rounded to millions in the 10-Q, so a small change in visitors would not show.
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Zillow grew revenue 7% while its visits fell 5%. Rentals supplied about 96% of the increase, by our arithmetic, and did it on the same 35 million monthly rentals visitors, earning $6.29 per visitor instead of $4.97. The letter’s AI case rests on keeping buyers on Zillow rather than with an outside assistant.
A note on sourcing. Figures and quotations are from Zillow Group’s third-quarter 2026 results release, shareholder letter and Form 10-Q, filed with the SEC on 4 November 2026. Changes, shares of growth and the annualised Rentals figure are our arithmetic.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
