Jeremy Wacksman: Yes. I mean it’s a combination of a couple of things. One, it’s about just continuing to help find higher-intent customers. As Rich talked about, we have so many mortgage shoppers on our site because 40% of all homebuyers want to start with that question but they’re all in different stages. And so helping those folks as they raise their hand and start to ask questions with things like our personalized payment experience and our prequalification system, helping find the right customers and get the right customers to our loan officers is one big piece of it. And then just tools in the factory, we’re releasing products and services so that our loan officers can more efficiently work with our customer, working in fewer systems, being able to do more digitally real-time while on the phone with the customer and not having to call them back.
All those things help them be a better consultant, a better adviser and that leads to conversion gains but also just leads to productivity and efficiency gains.
Operator: Our next question comes from Mark Mahaney with Evercore ISI.
Mark Mahaney: Okay. Two questions, please. And I’m sorry if you already touched on these. But talk about the puts and takes to getting EBITDA margins. Once we get back into growth mode, hopefully, at some point, the macro and company-specific, hopefully, we get back into that sustained growth mode. Getting the EBITDA margins for the business as a whole back up to 30%, 30% to maybe 40%. So the biggest drivers there, what you can control, what you can’t? And then, if I could just stick on the enhanced markets. And is there any evidence yet, maybe it’s too soon but is there any evidence in that those enhanced markets that you’re actually gaining share of transactions in those markets? Trying to figure out whether there’s something we can extrapolate to the rest of the country, if you’re successful in those markets.
Jeremy Hofmann: Yes, Mark, it’s Jeremy Hofmann. I can answer your first one and probably take your second as well. On the first one on EBITDA margin drivers, yes, we feel good about our ability to get to those levels as we drive revenue and leverage our cost structure over time. I think we are making progress in a number of places and believe that we have a highly leverageable cost base. So as we drive revenue, we believe that will flow through. And you saw that in the performance this quarter, right? We outperformed substantially on revenue and it flowed through to EBITDA. So feel really good there about our ability to drive that over time. And then on the share gains question, I mentioned in my prepared remarks but I’ll say it again here.
We — in Q2, we saw 50% year-over-year customer transaction share gains in Phoenix and Atlanta which are our 2 most mature enhanced markets. So it’s obviously early days. There’s a lot more markets to come from here. We’re going to be methodical about rolling those out but it is a great proof point to say, hey, the strategy feels like it is working early days.
Operator: Our next question comes from Ryan McKeveny with Zelman & Associates.
Ryan McKeveny: A question on the residential outperformance versus the industry. I’ll ask it a bit different way than Brad’s question before. So if we isolate to the half of the outperformance that is kind of secular it’s the benefits of the changes you’ve made or some of the newer initiatives, I know you don’t speak to the exact breakdown between transactions on the buy side and the sell side. But can you talk to us about how that incremental penetration is trending between those categories buy side, sell side? And I guess is it happening in both areas or are one of the 2 aspects driving things more so than the other at this point in time?
Jeremy Wacksman: Yes. I think on buy side versus sell side, I mean we don’t tease it out specifically, especially in the incremental which I think is what your question is about. But primarily most of our transactions to date are buy side, right? And so the share gains you’re seeing, the relative outperformance you’re seeing is all mostly coming from the buy side. And you heard that from Rich and Jeremy, that’s one part friction removal and higher-quality customers getting to higher-quality partners and one part relative macro tailwinds with the buyer mix. That said, we are really excited about our ability to gain and see more share gains as we layer in seller solutions as well, right, both between our multiple selling offerings, experience for our customers, right, introducing them to an open door offer if they’re interested or a Premier Agent partner if they want and Showcase, Listing Showcase which we just launched this quarter which Rich talked a bunch about as well.
So we expect share gains and customer transactions to come from both over time, even though right now, we’re seeing the benefits of our own efforts and macro efforts primarily on the buy side.
Ryan McKeveny: That’s helpful. And for Jeremy Hofmann, congrats on the new role. And yes, I appreciate the extra color, especially around the cost structure. I guess, teasing it out a little, so the fixed cost run rate around kind of the right levels at this point. Is that to suggest that on the mortgage side of the business, kind of the infrastructure, the fixed costs associated with the mortgage lending operation is in a pretty good spot today to scale over time? Or could that remain a potential area of investment, whereas maybe some of the other segments see some more cost rationalization? Yes, just curious how that overall comment might tie directly to what’s going on in the mortgage side of things.
Jeremy Hofmann: Yes. Ryan, it’s a good question. On the fixed cost side, we do feel pretty good about the amount of infrastructure we have in place for mortgage. That’s to say over the next couple of years. And of course, as it grows, we’ll see. But based on the current plan, we feel pretty good about the fixed cost. On the variable side, we will grow costs there because that means we’re hiring loan officers but that’s obviously a good thing so long as we’re manufacturing loans profitably. But on the fixed side, yes, we feel pretty good on the mortgage side. And then on the overall business, I’d say, we feel like the fixed cost investment we’ve made to date should serve us well for the current growth initiatives we have.
