Incremental costs increased more than revenue - simple as that. The same pattern has happened in previous quarters as Zillow recruit more and more 'sweatshop' Call Center staff to cold call Realtors to sign them up as Premier Agents in a desperate attempt to grow revenues as if Z is some magical growth stock. In addition to the increased costs Zillow also incurred a $7.1M charge in the quarter in respect of Restrictive Stock Units payable to a departing executive. For some reason Zillow is reluctant to name the lucky beneficiary of stockholder funds, but my guess is that it is David Vivero who was the founder and CEO of RentJuice that was acquired by Zillow in 2012. He was VP of Zillows Rentals business until he disappeared from Zillow, and the assumption must be that he was either fired or could not stomach Zillows BS management style.