The following table shows Zillow's Q3 margins over the past few years, and also shows this year's Q2 margins. As you can see, margins are expanding nicely, and I'll explain why after this table.
In terms of gross margins, I only subtract out the cost of revenues, which does not include what Zillow describes as "amortization of website development costs and intangible assets included in technology and development." Either way, those expenses are included in operating expenses, so if you'd rather look at that margin level, it is increasing even faster than gross margins.
So how did these numbers come to be? Well, as I explained before, Zillow's revenues increased by 67.47% over the prior year. However, the cost of revenues was only up 17.48%. As such, gross margin dollars increased by 77.12%. You can see that above where gross margins increased by 483 basis points.