Zillow Group Inc. shares dropped as much as 9% in post-market trading on Wednesday after the company forecast second-quarter profit that missed Wall Street expectations, citing legal and advertising expenses and a flat housing market.

The online real estate marketplace sees second-quarter adjusted earnings before interest, taxes, depreciation and amortization in a range of $150 million to $165 million, missing the average analyst estimate of $191 million. It forecast revenue of $750 million to $765 million, with the midpoint below the consensus of $761.1 million.

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The results add to mixed signals from the US real estate market after March new-home sales rose faster than expected while homebuilders' sentiment fell to a seven-month low in April as the Middle East war pushed up mortgage rates, gas prices and materials costs. Industry peer Compass Inc. this week forecast stronger-than-expected quarterly revenue.

"2026 is off to a slower start than I think folks anticipated," Zillow Chief Financial Officer Jeremy Hofmann said in an interview. "Our job is to execute and grow regardless of what the housing market does."

Hofmann said separately on the company's earnings call that the "housing market's been effectively flat. We're not planning for that to get better. It may, but we're not planning for it."

The forecasts overshadowed an upbeat first quarter. The Seattle-based company posted an 18% year-on-year rise in revenue to $708 million, near the high end of its guidance and above the consensus for $705.2 million.

First-quarter rentals revenue rose 42% from a year earlier to $183 million and mortgage revenue climbed 56% to $64 million, both beating Wall Street estimates.

In March, Compass dropped its lawsuit against Zillow that sought to block Zillow from refusing to list homes that had been advertised elsewhere first. 

The stock fell 33% this year through Wednesday's close, compared with a 7.6% increase for the S&P 500 index.