Operator: We now turn to Tom White with D.A. Davidson.
Thomas White: Maybe first one for Jeremy H. First off, congrats on the new role. The cost structure commentary, again, super helpful. On the variable expenses, you gave some examples of kind of recent efficiencies and progress. Could you maybe update us on what parts of Zillow’s business today represent kind of maybe the biggest opportunity to drive further efficiencies and variable expenses? And then, maybe one for Rich on Zillow Closing Services being sunsetted. Just curious to hear you talk about maybe how you envision Zillow disrupting kind of the title and escrow space. Clearly, there would appear to be opportunities to make it a more transparent, better experience for customers but just be curious to see how you view Zillow participating there?
Jeremy Hofmann: Yes. So I’ll take the first one. Good question. I think we’re looking for efficiencies all over the business, our most mature businesses to the ones that are newest. I would say the biggest opportunities for us on the variable efficiencies are the newest products over time, right? So between mortgage, seller services, those should get leverage as we scale. But those are the places where we are most focused ensuring we’re getting efficiency as those products come into life. And then I’ll push to Rich on the second question.
Richard Barton: Only because you asked me directly, Tom. And I haven’t spoken yet in the Q&A. So thank you for including me. Yes. So we sunsetted ZCS now because we don’t think title and escrow is important as part of the transaction but because we built that thing for Zillow Offers. And for our iBuying business and it wasn’t — it just wasn’t the right solution for us with what we have envisioned now. I think Jeremy Hofmann in his prepared remarks, talked a bit about how we think it’s an important thing. And to watch this space. We are working on alternatives right now. So watch this space. Anything to add, Jeremy Wacksman?
Jeremy Wacksman: No.
Operator: Our next question comes from John Camber with Stephens.
John Campbell: Jeremy, I’d like echo as well, congrats on the promotion and the OpEx disclosures are very helpful. You guys have obviously torched your guidance in recent quarters. I’m thinking that you’ve probably set the stage here again. But the EBITDA, that’s always going to hinge on obviously the top line. So I just maybe wanted to double-click on the Premier Agent guidance. mainly the industry forecast, it looks like you guys are baking in a down 15% to maybe down 20% year-over-year. It looks like the NAR is calling for down 7%. Fannie and MBA it looks like they averaged down 8%. So you guys are a little bit out there. I think that year-over-year decline also is implying that the market would drop a good bit sequentially off of what kind of already feels like trough levels at this stage.
But my question here is, are you seeing something internally there that might signal softer trends from here? Or is that just a conservative approach against, I guess, the continuation of market uncertainty?
Jeremy Hofmann: Yes, it’s a good question. We guided based on the best information that we have. And I think existing home sales an inventory just being as low as they are right now, puts us in a spot that we have to make the best information available that we have. We have internal economists that look at this every day. So really, given the best information that we have what we’re most focused on, I would say, is ensuring that we continue to outperform the industry. So we’re feeling quite good about the ability to outperform the last 4 quarters and we’re guiding to outperform 1,100 basis points at midpoint to midpoint in PA versus the industry for Q3 as well.
Operator: We now turn to Brian Fitzgerald with Wells Fargo.
Brian Fitzgerald: Maybe a quick follow-up to Mark and Ron’s questions on enhanced markets. Can you remind us what kind of things you’re looking at or you’re looking to see in locations to expand as an enhanced market? And then as your new products are aging in your first enhanced markets, are you seeing any changes in usage or agent behavior? Any dynamics to call out with respect to kind of enhanced market cohorts, if you will.
Jeremy Wacksman: Sure. Thanks, Brian. The things we’re looking for in our enhanced markets are — I mean, ultimately, the outputs or customer transaction share. And the indicators to that, I think we’ve talked to you all about before in the funnel are reducing the friction and so customer engagement and customer agent engagement and work with rates between those two. And so these things take a long time to mature, transactions take a long time but we watch those kind of mid-funnel indicators on both the customer side and the agent side. And as Jeremy Hofmann talked about, we’re really pleased that we’re seeing significant customer transaction share growth in our 2 oldest enhanced markets, even as we’re early in seeing the benefits of the rollout of a bunch of those capabilities.
