Zillow Group, Inc. (ZG) Earnings Call Transcript & Summary

Good afternoon, and welcome to the next session of the Deutsche Bank MIT Conference. My name is Lloyd Walmsley from the Internet equity research team here at DB. And I'm excited to welcome Jeremy Wacksman, the COO of Zillow, to the conference. As COO, Jeremy leads Zillow Group's business Product Operations, Engineering, Industry and Brokerage Licensing teams. In this role, Jeremy focuses on the Zillow 2.0 vision for the future of real estate, building a seamless customer experience across products and services. Jeremy previously served as President of Zillow and CMO of the Zillow Group. Jeremy, it's great to have you. Thanks for being here.

Yes. Thanks for having me. Excited to be here.

I'll go through some questions. And anybody listening, feel free to enter a question into the Q&A module on the website. I'll try to get to them or integrate them into my list to the extent they're relevant. And so I guess for starters, congratulations, Jeremy, on the new role. Rich has had this Zillow 2.0 Vision, he articulated since taking over the CEO role. It sounds like this is something you guys are starting to really actualize. Talk about where you are at Zillow and executing on that vision? And then how some of the management changes you all announced in the last week or 2 with your promotion help the company with what you're looking to accomplish?

Yes. I mean, as Rich talked about on the call, I mean, customers simply want to move, right? And we are trying to help them by getting to a more seamless and integrated transaction, whether they're trying to sell to Zillow or sell with one of our partners, whether they're going to buy a Zillow Offers home or buy a home with one of our partners. We gave this great example of a customer, Terry Lee, in the shareholder letter that was trying to sell, buy and finance all at the same time. And so we have all the pieces in place to build this platform. And we're rolling these services out nationwide. We've moved beyond testing, but it's still really early days. And the focus for us is on building that integration. And the organ announcements are really about helping get to that streamlined vision, helping these businesses that have been building work better together and start to build the services needed to just help that customer move.

Okay. In the Zillow Offers business, how are you all finding the right balance between consumer pricing and unit economics that resonates with consumers and where you guys make money. Is there anything standing in the way or development you need to do to see mass adoption?

Yes. So with Zillow Offers, right, our goal is to be a market maker, and we remain really focused on that plus or minus 2% unit economics before interest expense. Now obviously, in Q4 and coming out of the pandemic, our unit economics were a bit outsized, and we talked about that. The majority of that was HPA and trying to find what does this market look like coming out of the pandemic. But there also were structural improvements, right, across renovation, across selling costs, across holding costs. And we obviously still have more work to do, but we're pleased to see some of that progress. But the biggest factor in growing Zillow Offers is consumer education, right? You ask 100 people in this country how they sell their house. And most of them -- the vast majority of them don't know a service like this exists because it's so new, because it's so different. And so getting out there and educating and building awareness and trial with customers is really what we're focused on. And again, it's part of this integration, right? As you come to Zillow and start your home search and start thinking about how to sell and you check your Zestimate, what are my options? How can I learn about how I might sell, how I might work with a partner, how I it might work with Zillow? So that's really the biggest thing that we have to go work on over the next few years.

So you've announced the Zestimate is a standing offer in 20 cities. It would seem almost to be transformative in your position in iBuying and for the industry in terms of just adding liquidity to market. How do we expect that to change the business?

Yes, that's right. So we announced the Zestimate as our initial offer. It's now in 23 cities and around 1 million homes since the announcement. And what that really does is it reduces friction at the top of the funnel, right, for the customer. And it removes this dissonance between what might my initial offer be and my Zestimate. Everyone is starting their home selling journey, looking at their Zestimates, and they're wondering what they could get. And so giving them the confidence that this is their buying power, the market value of their home, they may want to go off and shop in this type market and then come back and talk about their offer, it just makes it easier. And again, when you can remove friction, and you can improve automation and speed to that initial offer at the top of the funnel, that's a better customer experience. And for us, it's exciting because it's really this actualization of this vision we had, really, when we started the company. The initial dream of the Zestimate was a bid and an ask on every rooftop. And so now, around 1 million homes, that's really what this is. And for us, we're just getting started. We're really excited to have it live and have it out in so many markets, and we'll be building and expanding it over time.

So in terms of bundling, help us understand the consumer demand here. Is it the convenience? Is it the cost savings? Walk us through what's really resonating with customers?

Yes. It's both, right? It is both convenience and potential cost savings. This transaction is one of the most stressful, and it's definitely the largest in many of our customers' lives. And you have dozens of parties, right? If you're trying to time the sale of a home, the purchase of a new home, the financing of the new home, the move, that's 2 transactions, that's multiple systems coordinating that buy and sell. And so if we can make that more streamlined, more transparent and more integrated, eventually getting to one transaction from the customer perspective, that's fantastic. And we can have our partner agents help make that move more seamless. So it is more convenient. It also can be cost savings, right? Think about a single CAC for that customer across several product offerings versus these single point solutions you have to pay for and being able to drive cost savings at scale of an integrated transaction. That allows us to provide meaningful savings to the customer as well, while also delivering margin for the businesses. So we are -- when we're able to offer it, we see meaningful positive demand signals from the customer, but it's early, right? And it's going to take time to build this. So bundling the services we have, that's a very strong customer signal. Ultimately, we want to get to a more integrated experience where you're only having to fill things out once. You're only having to go to one system to enter your information, to get your transaction done.

So what needs to happen to scale up partner leads? Is that something that can be material in 2021, or more 2022? Clearly, that's part of the bundle, but it's also really powerful in its own right?

Yes. So scaling Zillow Offers is the best way to scale partner leads. And we use that word partner leads intentionally, right, because it is both potentially a listing, right? Oftentimes, a customer comes to us, they see their initial offer on their Zestimate, or they want to get their initial offer, and they end up listing traditionally. That's a great opportunity for our partner, Premier Agents. But equally, the story we gave in the shareholder letter, Terry, she traded into Zillow, and she used a great Premier Agent to buy her next home. And so that's a partner lead as well. And so scaling that integrated offering and allowing us to provide that great customer experience, that becomes the fulcrum of the move. And then all of the adjacent services, the buy side experience, the home loan, the closing services and eventually other adjacencies are all going to come off of helping make that move happen.

So how do you feel about the competitive environment in the sector? Public companies raising capital across the iBuyer space, the brokerage space, CoStar looking to maybe move into residential more. How do you feel about the environment where you sit today in a space attracting lots of capital?

Yes. I mean, we're really proud of what we accomplished this past year. It was an incredible year of uncertainty with the pandemic. And then, of course, we also saw the housing market really come out of that as a boom and people Zillow-surfing and dreaming and starting to participate in this great reshuffling we're seeing. And we believe we're really in a great position to take advantage of this offline to online real estate 2.0 tailwind that's really coming, right? We have the largest audience. We have an incredibly strong buy-side model with our Premier Agent and our rentals businesses. Still very small market share, but tremendous audience attention. And we're building these sell-side opportunities, right, to sell to Zillow or with Zillow via one of our partners. So these businesses fuel each other as we keep going back to this integrated example because they also create this opportunity for ecosystem economics, right? The adjacent products and services that come from helping someone like Terry with their sale and with their purchase. So again, it's early in terms of building and delivering against that, but we think the assets that we have really put us in a great position to build that platform for more and more customers.

I wanted to get your take on higher rates. We've been seeing rates move pretty rapidly in the last few weeks. How does this affect each operating segment of the business? Is there any kind of rule of thumb in terms of either mortgage rate or pace of change at which it maybe impacts transactions, be it in the broader industry or your mortgage business? Give us your sense of how that may or may not impact the business?

Yes. I mean, I'm not an economist, so take this with a grain of salt. But we have many great economists at Zillow. And what they tell me is it's important to kind of think about these recent rate moves in context, right? So one, these are driven by a stronger economy, not some sort of surprise policy intended to curb inflation or drive other things. And we still are in a period of really historically low rates when you zoom out. And so it's likely that any rate moves are going to be more muted or less severe on what they might drive the transaction velocity or volumes than they would have in periods past. And you put that against the backdrop of this incredibly strong housing market and these multiple tailwinds we're seeing, right? The technology shift from offline to online. The demographic trends of millennials moving into their peak home-buying years and Gen Z following shortly thereafter, and then this great reshuffling that the pandemic has awoke where people are rethinking their ability to move, right? We're still forecasting, I think, north of 7 million home sales this year, which is a high from all the way back to 2005, with really strong home price appreciation. So you had all these tailwinds. Rates bumping off the bottom, typically, can slow things down. But we think it won't be much of an impact here, just given all those strong tailwinds.

So turning to the IMT segment, we've really seen this rollercoaster in the real estate world with COVID shutdowns, the ZO business stopping, then real estate came back with a vengeance. Now we've got rising rates. How has the company managed through all of these crazy periods?

Yes. I think we're out of adjectives to talk about 2020, and we're happy we're in 2021. Our philosophy, when everything started, was to have the capital structure to support a year of operational expenses, not be dependent on capital markets for our intermediate growth, and that served us well, right? And we planned conservatively. We planned for the worst. We provided discounts to our partners to ensure they could continue to serve our customers who were trying to navigate like what does going to see a house look like. We also were able to avoid layoffs, and that helped us serve our customers as the housing market really quickly recovered. And there was a point at which we had to pause Zillow Offers because we actually weren't sure transactions will be allowed from a safety or a governmental standpoint, and we quickly got through the fog and recognized a new way to do it. So we're really happy with how we navigated a lot of uncertainty and a lot of change to even best laid forecast for what we thought would happen. And then what we came out the other side with was this upside of really pulled forward customer expectations, right? So we've talked about the great reshuffling and the demographic shifts that are coming. But years of technology adoption and desire for online tools have been compressed into weeks, right? Once remote online signatures and notaries comes online, and you can close that way, are you still choosing to drive to the title office across town to get it done? And once you can use Zillow 3D Home to virtually see a house, are you going to go to every house before you call your agent and spend the time to go see it? Or are you going to get more sure and get more confidence in your accounts, right? These tools, once people try them, they become the expectation and the standard. And so that's really one of the long-lasting benefits of this really uncertain year, was it helped reshuffle everyone's expectations of what you could do digitally.

Okay. So if we turn to the PA business, it's transitioned from PA 4.0, PA Forward. Schedule a tour seems to be a big hit. You're rolling out Flex and, eventually, I guess, integrate showing time. Where are we in the product development cycle around the PA business? Where are you guys focused on building there over the next few years?

Yes. I mean the strategy for Premier Agent remains the same as it has been for a while now, which is continue to innovate to drive better customer satisfaction and connect those customers with more and better partners who can help service them. And so you're right, we've innovated around the tour booking and letting people schedule a tour with our great partners. And you'll see more innovations coming around our ways for us to drive our customers into the hands of our partners. But we're really focusing on helping make sure our customers get a great response and get great service. And our partners are set up with the right tools to succeed and scale their business. Because that's what drives not just the CSAT of our customers, but also drives their conversion and their ROI. And so it's still really early days in terms of how much we participate in that transaction side. But we're excited about the innovations that are coming. You mentioned a few, and we'll continue to work on helping our customers buy with our great partner agents while they're also looking at Zillow Offers homes that come online.

We get a lot of questions around Flex. It was a big focus about 18 months ago. But over maybe the last 6 to 9 months, the focus has more been on the PA business more broadly. How do you manage the PA business across these various models? And how do you drive growth through these various mechanisms?

Yes. I mean I think there was a lot of conversation around Flex because it was new. But we really just think about these as 2 monetization tools, right? It's a way to engage with our partners, and we'll continue to innovate on the monetization model just as a standard way of building the Premier Agent business. But regardless of the modernization model, the strategy is the same. It's how can we help convince customers to raise their hand and reach out so that we can help them with their home search and get them in the hands of a great partner, regardless of that monetization model. And then how can we work with partners and our great individual Premier Agents and team leads to help them build their business, deliver great customer satisfaction and convert more of that business. And so optimizing customer satisfaction and optimizing conversion, that's what drives the best revenue per lead, which is going to be better for our customers and our partners.

So you're -- we're forecasting, you're forecasting healthy revenue growth this year. You've been very disciplined on OpEx growth in the IMT segment. But you're kind of talking to people focusing on growth in margin dollars, not margin in that segment. Can you talk about where you're leaning into investment in that segment right now? Is it mostly advertising? Where else are you guys investing?

Yes. I mean, if you zoom out and you go back to the conversation we had earlier around like what's the biggest inhibitor to Zillow Offers growth? What's the biggest inhibitor to delivering these innovations, we talked about are in like digital tools in the hands of customers and teaching they can do more. It is around helping them realize they can't -- they don't just have to stop at searching and finding online -- or sorry, dreaming and shopping online; they can search, they can find, they can buy, right, they can transact online with great partners. And so marketing is obviously a part of that, consumer education, raising awareness, driving trial of these new services, but so is technology and technology innovations. We talked a few minutes ago around how much room and work we still have to do to get that process and that integrated experience online. So we're excited about the ability to teach our customers and help bring them to the site to experience these things and get in the hands are great partners. And we think both marketing and technology are places where we still have a lot of work to do.

Okay. You guys have announced a lot of improvements in the rental business. What are some of the bigger product unlocks over the last 12 months? And where is monetizations of rentals broadly today versus where you think it can get to in the next few years?

Yes. I mean, we continue to be really excited about our rentals business as part of the IMT business overall. As you know, the vast majority of renters are the ones who become first time homebuyers a few years down the road. And we talked about the millennials and Gen Z who are today's renters, they are today's -- they are tomorrow's pre-qualifiers, right? So the benefit of helping them with their rental experience doesn't just build a great rentals business, it also delivers to a great for sale business down the road. And so it's growing well. And part of the great reshuffling is not just happening in the for sale business, but it's causing our renters to think about where they want to live too. And so building the platform to provide all the inventory, no matter what type of rental they are looking for, and then helping them connect better and get an answer back from the supply side is what we're focused on. But again, it's still, again, really early days there, too, but we're pleased with our progress so far.

So can you talk a little bit about the competitive landscape for iBuying? And kind of where you see you all fitting within that ecosystem?

Yes. I mean, it's a common question that we get, but it's important to remember, the entire set of players here building services like Zillow Offers, it's very tiny market share. I mean, 1% or less in the largest asset class in the world. So we like our position. We talked earlier around the assets you need to have to help someone like Terry move, right? Zillow Offers was one part of her move -- of their move, and we need to build and scale that service and we need to build the operational and the machines and the people to be able to offer that in more places to more customers. But you zoom way out, most people still need to learn what this is, try it. And even when they use it, it needs to be integrated into the rest of their transaction.

So the unit economics for Zillow Offers were remarkable last quarter. I think you all have said about 500 basis points of the improvement sequentially had to do with HPA. Can you talk about the remaining 250 bps of cost efficiencies, the durability of that, how much room is left? And then more broadly, what are the areas of the cost structure in iBuying that benefit from the national scale versus others that may not be as much of a benefit from that scale?

Yes. You got that right. So the majority, I think it was around 500 bps was HPA, and then the balance was structural improvements. And that was across renovation. And so getting smarter and faster at doing renovation and changes to the machine learning models around that. Selling costs, right? So striving for efficiencies. We also recently announced Zillow Homes brokerage, which is live in a handful of markets, that will help drive efficiencies and cost savings on our selling costs. And then holding costs. That's partially efficiency, so us getting better at doing the work and getting the home from the seller to the buyer. That's also partially improvement just due to velocity in the housing market. So it is early days here. We're happy that we're seeing the structural improvements to date, even this early, and we expect to see more over time. And to your question, the benefits on these cost structure improvements are going to come from a mix of technology and experience, machine learning and data models, but also from scale. Because when we're able to scale these things and build these on an integrated platform, it's cheaper for us to run those services than it would be if you're a seller doing it by yourself, right? And so that scale advantage can show up as cost savings improvements, which can show up as lower transaction costs, which is better for the seller and the ultimate buyer of our home. So it is both of those things. And it's part of why we're so focused on not just building the platform, but also eventually getting to scale that we've talked about.

So given where fees are in the market today for iBuying, as consumer education improves, can this be a much bigger portion of the market? I mean, I think you can see directly on the Opendoor website, the fees, I think, are 5%. As Stan Humphrey said in a recent interview, when people decline a ZO offer and ultimately sell their house, the difference is kind of less than 1%. So how do you make people feel like they're kind of getting the right price on ZO?

It's a great question. [ Susan ] did talk a bunch about it, if you read some of our press around Zestimate as an offer. It does go back to consumer trust, right? So it stands right. We benchmark our offers against, hey, for people that turn us down, what do they go actually end up selling their home for, and it's virtually the same. It's basis points off. And that's because when we're right, we're trying to make the market. We're trying to estimate what your market value is and express that to you transparently. But customers, I think, it will take a while for them to both understand what this service is, gain trust in this service, ultimately, promote the service to their friends via word of mouth. And those things take a while. Think about the very first time you heard about an Uber, and you're going to get in the backseat of a stranger's car. And fast forward x years later, and you've told all your friends about it, and you're now expecting an even better service delivery from your phone than they gave you a few years ago. So that curve and that adoption of expectations is rapid once it starts, but it takes a while. And so our goal, and I think some of our category competitors goals, is to make the market and be transparent about our offers. So that as people understand what their selling options are, they know what they can try and do, and they understand what Zillow Offers is. But it goes back to -- we've got a long way to go to get to that point of both consumer awareness, engagement and trust in these services.

So you guys have said, Jeremy, in the past that the buy box for the home segment is -- could be 50% of the market. What are some of the gating factors kind of getting you from where you are today to that 50% range?

Yes. For us, it's about building the platform and ultimately getting to scale. So that 50% target, that looks at kind of the type of home that fits in a Zillow Offers buy box today extrapolated against all the markets we could be in, in the country, right? And so it's a way to think about, wow, this type of offering with enough data around, enough transaction velocity around these homes can be really broadly available. And we'll carefully manage the rollout of the service, commensurate with the ability to build the platform and the technology to offer to more people. So we have to manage our own operations and we have to scale our operations intentionally with the demand that we see. But ultimately, this type of service, we think, can be available on the majority of homes in the country.

So wanted to shift gears to mortgage. Can you just, I guess, start off with just your vision for how Zillow operates in the mortgage segment and process for consumers?

Yes. I'll go back to that customer story we gave in the shareholder letter I talked about earlier. The home loan is a big part of that, right? They had to trade in their home. They had to find a new home to buy. And they ultimately had to move their equity from their old home to their new home via a home loan. And that process is still very disconnected from the purchase process and from the sale process and the transaction itself. And so our long-term vision is to actually have that be a more integrated experience, right? You can imagine a one-stop shop where you start on Zillow, you click a button and get your trade-in offer. You go shopping. You find the home you want to buy, and you know what you're qualified for. And then when you close and you consummate the transaction, it's all in one place. It all has certainty that it's going to close, and there's not a lot of risk from so many third parties. We're a long way from that, right? So today, we're focused on scaling and building our mortgage offering to be able to become one of the engines of this integrated transaction platform. So today and tomorrow, you're going to see us talk about the mortgage business as a mortgage business. And over time, you're going to see us start to talk more about the innovation we can bring as that becomes a part of an integrated transaction.

And I guess you've been building for the last, I think, about 2 years, this -- the factory for conforming loans, scaling out the technology. What are some of the biggest things left to build in that segment that you're focused on now?

Yes. I mean, 2 years sounds like a long time, but it's not, right? And so we made an acquisition about 2 years ago, and we've been focused on, as you said, turning that business towards conforming loans and starting to scale that capacity. And we've got a great team there hard at work building that. But building that platform and building towards a more integrated offering is something that will take time and will come as we build out the mortgage offering that we have today.

So I guess, if I look at the mortgage segment, they saw really strong EBITDA margins in 3Q '20 of about 29%. Looking across the competitive landscape, it looks like they could get much higher with time in the mortgage business. Can you talk about maybe target margins for this segment? And how you think you get there over time?

Yes. I mean, I think, again, back to put in context what our focus is there, right? Our focus is to have a great purchase mortgage offering that can be attached to our existing business to help our customers move. So we're not putting out mid or long-term targets on it partially for that reason. The focus is build and scale that factory so that it can be offered to our Premier Agent and Zillow Offers customers who are, ultimately, over time, going to become transaction customers.

So what are some of your personal priorities as the new -- in the new role as COO reporting directly to Rich and kind of managing most of the business?

I mean continuing to scale the offerings we have while integrating them is kind of the dual focus of the team, right? So we have these great businesses that have grown incredibly quickly and incredibly successfully. And we don't want to slow that growth down. And so we want to continue to be able to service and satisfy more customers whichever door they come in, while also starting to build towards this integrated offering. And so that's the priority, is to help and continue to fuel and deliver for the customers that are working with us today, while we also kind of invent the future of a new way to transact, a more integrated way to transact for the customers of tomorrow.

How would you characterize Zillow's -- broadly speaking, the relationship in the industry with agents? I think there have been ups and downs over the years. It seems like things are -- the industry is broadly pretty comfortable with Zillow. Though we've seen some pushback coming off the ShowingTime's acquisition, how would you broadly characterize industry relations right now with the company, particularly as you try things like iBuying, you switch to a broker model in -- for parts of the business, like how does all that affect the relationship?

Yes. I mean, change can be scary for anyone. And we asked our partners -- we've got great Premier Agents that we asked to change how they do business all the time. And so whenever we introduce change, everything from transparency around value on the site 15 years ago when we started, to agent reviews, to instant booking, these are innovations driven by customer demand. And we often will bring many people along to say, "Hey, if it's great for the customer, they're going to transact more often. It's going to remove friction. It's going to be a business opportunity for you." We're always going to have folks that maybe resist that change or aren't as interested in working on that change. But we often talk about with our great partners, if we're doing right by the customer, and we're helping the customer more, it's going to be more business for you and more business for us. And so that's been our philosophy really since we started, and that will continue to be our philosophy. And I think us getting the message out around these changes is always tough because it's such a fragmented industry, and agents are busy. And brokers are busy. And so getting the word out about these changes and helping them process and work with them to the best of their advantage, that's going to always be our challenge. But that's why we're so focused on working backwards from what -- how do we solve a problem for the customer and then how do we best deliver that with a mix of technology and partner.

So we have one I'll take from the audience. What are some of the other ways you guys can innovate on the Premier Agent toolkit to improve agent ROIs?

Yes. I mean, we talked a bit about that earlier. Our focus there is continuing to drive more and better customer connections, right? So giving customers more ways to raise their hand and seek to start their journey. And so that might look like things like tour, that also looks like things like the Zestimate offer, right? These are ways to get people who are sitting at the top of the ski slope kind of scared to get started on the home transaction journey, willing to get started, right? Because you come all the way back to the demand to move versus the number of moves that happen, is still very dislocated. So all these innovations, getting customers comfortable and more informed and empowered, is going to drive innovation in the Premier Agent business. So that may look like things like tours, and that may look like things like 3D, but that also may look like things like new data products and new things for people to get comfortable to start their search and start their transaction.

And then in terms of building out Zillow 2.0, are there big regulatory challenges that you guys have to overcome? Obviously, there's a lot of laws like RESPA laws that are not maybe built for this era. Is that stuff of major complexity as you guys build this stuff out? How should we think about that?

I mean, I think how the integration comes together will take time and will obviously be state-specific. But we found that if we find a way to deliver something that the customer really benefits from, there are usually ways to build that service in a way that both the customer and the partner can deliver. So I don't know if there's anything specific there. We've navigated those challenges to date, and I think we'll continue to push on that. Think about things like in Zillow Offers markets, there are structural cost differences between states and cities and having to navigate that. And when you turn around and quickly realize, the customer actually has to navigate that on their own if they're not working with us or a great Premier Agent. And so helping them understand what those are, then also leads to great ways to help them solve the problem, which helps us solve the problem.

One coming from the audience that I'll kind of expand on, which is -- the question is anything unique about the marketing efforts that you guys have talked about coming for the second half. Can you just give us a sense for how that marketing message -- what to expect there? Is it going to be focused around Zillow Offers? Is it going to be focused around the bundle? How should we think about the, I guess, what you're planning later this year and then how that fits in with your -- how you guys have marketed over the last few years?

Yes. I don't think there's anything unique about this year versus last. I mean the pandemic kind of threw everything for a wrench in terms of timing last year. So maybe better to comp things to prior years. You've seen us start to talk about our different services as just a way to talk about Zillow and coming to Zillow, right? If you looked at our ads before, we talked about rentals, we talked about offers as a new innovation to come check out, we've talked about home loan. So like we'll continue to do that. We're going to be increasingly looking at how does talking about these different pieces lead to the reinforcing benefits of each other, right? And so Rich talked on the call about spreading our CAC across multiple services. We're going to be building out and learning, increasingly, how does that actually play out in practice in different media types and different creative execution. So ultimately, ideally, we might talk to you about selling, and you want to start with buying, but you know now that selling is an option, or vice versa. So that's not something that we spent a ton of time on historically, and it's something we've started to talk about more to our customers. As you and I talked about earlier in this conversation, part of this is about raising education a lot of these services exist. And when you do that and you get people to go, "Ha, I want to check that out." They come to Zillow and they end up working with multiple of our services more often. So that's going to be our long-term focus, and you'll see us, I think, play with that more and more through creative this year.

And as we think about this pandemic-accelerated shift to digital broadly, you all have talked about seeing a lot more virtual touring on the site. How does that trend actually impact your business? Can you walk us through the elements of that?

Yes. It's a great tailwind to this long, slow, offline to online migration of these services, right? How many years have we talked about trying to get to e-commerce and real estate? And to get to e-commerce and real estate, you have to be able to do as much as you can digitally. And so take those examples, right? Take 3D tours, something that maybe most buyers didn't discover in a market, all of a sudden showed up on a lot of listings. And they were able to say, "Wow, I can actually walk through this house. I can actually see a floor plan sometimes. I can get a sense of the space. And that helps me have a more informed in-person tour." And when I schedule that tour, I can schedule it with my agent and know the questions I want to ask and be intentional about that tour. And so it helps them move down the funnel, I think, faster because you can see a lot more homes online versus having to actually go to every home to get that same innovation. So these tools, I think, help customers become more informed and more empowered, and it helps them increase their consumption of their triaging and they're dreaming and their shopping to move into being ready to buy and knowing what to buy. So tours is a great example of that, and I don't think that goes backwards, right? Once you get a taste of that, you start to get annoyed when you go to a listing that doesn't have that walk through. And you have to actually go see it to get that same sense. So we think that flywheel spins over time, and again, we think it kind of goes one way. You could do that in the transaction space, too, right, once you're ready to go, and your refinancing or your closing and you can sign things via secure remote online notary, you're kind of annoyed you can't do that in another transaction. So these things -- these innovations of maybe out of necessity, quickly become customer expectations. And we think those are great tailwinds to both help deliver customers to our partners via Zillow more but also help teach customers that they can get this done and really, again, get them to think about transacting more than they had before.

All right. Jeremy, I'm getting all the notices that we're out of time. So thank you so much for being here. It's great to have this conversation. Thanks for participating. And hope to get you back in person maybe next year. Thanks for coming.

Great. Thanks, Lloyd. Great to be here and good to see you.