Zillow Group, Inc. (ZG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Zillow's earnings call indicates strong revenue growth across segments, optimistic guidance, and a focus on enhancing agent efficiency with Zillow Pro. Despite legal cost drags, margin expansion is expected, and the mortgage segment shows robust growth potential. The Q&A highlighted confidence in strategy amid industry challenges, with no significant risks from legal issues or market changes. This positive sentiment, combined with anticipated growth and strategic initiatives, suggests a likely positive stock price movement.
Key Financial Performance
Total Revenue (Q4 2025) $654 million, an 18% increase year-over-year. Growth attributed to strong execution and effective cost management.
Full Year Total Revenue (2025) $2.6 billion, a 16% increase year-over-year. Growth driven by mid-teens growth outlook and outperforming the housing market by 1,300 basis points.
EBITDA (Q4 2025) $149 million, representing a 23% margin, up 260 basis points year-over-year. Growth due to effective cost management and revenue scaling.
Full Year EBITDA (2025) $624 million, a 25% increase year-over-year. Growth attributed to disciplined cost management and revenue scaling.
Net Income (Full Year 2025) $23 million, achieving GAAP profitability for the year. Improvement due to revenue growth and cost control.
For Sale Revenue (Q4 2025) $475 million, an 11% increase year-over-year. Growth driven by agent and software offerings and new construction marketplace.
Residential Revenue (Q4 2025) $418 million, an 8% increase year-over-year. Growth attributed to agent offerings and software solutions.
Mortgages Revenue (Q4 2025) $57 million, a 39% increase year-over-year. Growth driven by better-than-expected conversion rates and 67% growth in purchase loan origination volume.
Rentals Revenue (Q4 2025) $168 million, a 45% increase year-over-year. Growth driven by multifamily revenue and increased property listings.
Multifamily Revenue (Q4 2025) 63% increase year-over-year. Growth due to expanded property listings and upgraded packages for property managers.
Free Cash Flow (Full Year 2025) $420 million, a 36% increase year-over-year. Growth attributed to disciplined cost management and strong revenue performance.
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Operating Highlights
Zillow Pro: A comprehensive suite of offerings that helps agents manage all of their clients in a single connected system. Currently in beta testing, with plans for nationwide expansion in the second half of the year.
BuyAbility: A tool from Zillow Home Loans that helps buyers understand affordability before making an offer. Enrolled 3.6 million users, up from 2.9 million in Q3.
Zillow Showcase: An immersive listing experience with enhancements like SkyTour and virtual staging. Adoption grew to 3.7% of new listings in Q4, up from 1.7% a year ago.
Follow Up Boss: Customer relationship management software integrated with Zillow Home Loans. Features like custom pre-approval letters and AI-powered smart messages scaled to nationwide use.
Rentals: Q4 revenue grew 45% year-over-year, driven by 63% growth in multifamily revenue. Full-year Rentals revenue reached $630 million, up 39% from 2024. Multifamily properties increased by 44% year-over-year.
For Sale: Revenue grew 11% year-over-year in Q4, with 8% growth in residential revenue and 39% growth in mortgages revenue. Full-year For Sale revenue reached $1.9 billion, up 9% from 2024.
Revenue Growth: Total revenue increased 18% year-over-year in Q4 and 16% for the full year 2025. EBITDA margins expanded by nearly 200 basis points year-over-year.
Cost Management: Full-year fixed costs were held to approximately $1 billion, with share-based compensation expense down 13% year-over-year.
Integration Strategy: Focused on integrating and digitizing real estate transactions for consumers and professionals. Enhanced markets accounted for 44% of connections in Q4, up from 21% a year ago.
Market Share Expansion: Zillow Rentals increased its share of rental listings to 63% in 2025, up from 54% in 2024. For Sale revenue outpaced the housing market, which grew by only 3%.
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Risk or Challenges
Legal Matters: The company is facing ongoing elevated legal expenses, which are expected to persist throughout the year. These legal matters have been in the headlines recently, and while the company is confident in its positions, they pose a financial burden and could potentially impact operations.
Housing Market Conditions: The housing market remains far below normal, with existing home sales flat year-over-year at 4.1 million homes sold. This challenging environment is expected to continue, impacting the company's For Sale revenue growth and overall performance.
Elevated Variable Costs: The company plans to increase variable costs related to hiring rental salespeople and loan officers, as well as lead acquisition costs. These investments, while aimed at growth, could strain margins in the short term.
Legal Expenses Impact on Margins: Elevated legal expenses are expected to result in approximately 200 basis points headwind to EBITDA margins in Q1 and 100 basis points for the full year, impacting profitability.
Market Recovery Uncertainty: The company is planning for the For Sale environment to continue to 'bounce along the bottom,' with no clear timeline for a broader housing market recovery, adding uncertainty to revenue projections.
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Guidance & Outlook
Revenue Growth: Zillow expects mid-teens revenue growth for the full year 2026, with Q1 revenue projected between $700 million and $710 million, representing an 18% year-over-year increase at the midpoint.
Rentals Revenue: Rentals revenue is expected to grow approximately 30% in 2026, following 39% growth in 2025. Multifamily revenue growth will continue to be a key driver.
For Sale Revenue: For Sale revenue growth in Q1 2026 is expected to be in line or slightly better than Q4 2025, with residential revenue growth in the high single-digit range and mortgages revenue growth of approximately 40%.
EBITDA Margin: Zillow anticipates continued EBITDA margin expansion in 2026, despite elevated legal expenses expected to persist throughout the year.
Housing Market Conditions: The company expects the For Sale environment to remain challenging in 2026 but sees potential for improvement in affordability, which could drive a broader housing market recovery over time.
Zillow Pro Expansion: Zillow Pro, currently in beta testing, is planned for nationwide expansion in the second half of 2026, offering significant future growth potential.
Share-Based Compensation: Share-based compensation expense is expected to decline by more than 10% year-over-year in 2026, contributing to net income growth.
Enhanced Markets: Zillow aims for more than 75% of connections to have the enhanced market experience by 2026, up from 44% in Q4 2025.
Showcase Adoption: The company targets Showcase adoption on 5% to 10% of total active listings in the intermediate term, up from 3.7% in Q4 2025.
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Shareholder Return Plan
Share Repurchase Program: In 2025, Zillow repurchased $670 million of shares, totaling $1.1 billion in cash returned to shareholders. Since 2021, the company has repurchased $2.6 billion worth of shares at a weighted average share price of $50. The overall outstanding share count decreased by 2 million shares at the end of 2025 compared to the end of 2024. Zillow plans to continue its share repurchase program as a core part of its capital allocation strategy.
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Key Q&A
Q:Can you elaborate on rental trends and the opportunity in the multifamily sector?
A:The growth in Rentals is driven by Zillow's unique strategy of organizing all types of supply, including single-family listings and multifamily properties. With 2.5 million average Q4 listings and 31 million unique visitors, Zillow is solving inventory and digital transaction needs. Multifamily advertisers are increasingly bringing portfolios online due to high ROI, and Zillow is confident in achieving its $1 billion-plus revenue target in Rentals, with further opportunities beyond that.
Q:How does Zillow view its positioning in the vertical AI space and its partnership with OpenAI?
A:Zillow sees AI as an ingredient to building a vertically-integrated real estate experience. The company leverages its deep industry expertise, proprietary assets, and data to enhance the consumer experience and elevate professionals. AI is expected to improve efficiency, reduce busy work, and help professionals convert more transactions.
Q:Does recent industry consolidation and private listing networks pose any risk to Zillow's business?
A:No, Zillow does not expect any risk or impact. Private listing networks represent a small share (1% or less) of listings, as most agents and sellers prefer broad exposure to maximize price and sell homes faster. Transparency and broad marketing remain key consumer and agent preferences.
Q:Is the RESPA case creating any adverse effects for Zillow Home Loans (ZHL) or the enhanced market strategy?
A:No, the RESPA case is not causing adverse effects. Zillow's strategy focuses on consumer choice, integrated transactions, and building trust with agents. ZHL is experiencing strong growth, with 37% growth in Q4 and double-digit adoption rates in enhanced markets.
Q:Are there any changes to Zillow's business strategy due to legal challenges?
A:No, Zillow does not expect any meaningful changes to its business strategy or financial position due to legal challenges.
Q:What is the framework for revenue contributions from newer products and enhanced markets in 2026?
A:Zillow expects mid-teens revenue growth at the company level, with 30% growth in Rentals. Contributions will come from enhanced markets, Zillow Showcase, Follow Up Boss, Zillow Home Loans, and new construction business. Rentals is well-positioned for continued growth.
Q:What is the status and impact of Zillow Pro's rollout?
A:Zillow Pro is in beta testing and planned for nationwide expansion in the second half of the year. It offers a membership bundle for agents, including CRM tools, branding, and AI-powered follow-up tools. While it is not expected to be a significant financial contributor in 2026, it aims to enhance agent efficiency and conversion.
Q:Has Zillow's approach to guidance changed, and what impacted Q4 margins?
A:Zillow aims to provide accurate guidance and has improved forecasting. Q4 margins were impacted by higher-than-expected legal expenses, which caused a 180 basis point drag. Legal costs are expected to be a drag in 2026 but will not prevent margin expansion.
Q:What are the obstacles to increasing enhanced market connections to 75%?
A:The main obstacles are operational scaling, training partner teams, and ensuring agent and loan officer capacity and quality. Zillow is confident in its ability to grow enhanced market connections, which currently stand at 44%.
Q:What is the expected financial impact of Zillow Pro in 2026?
A:Zillow Pro is not expected to be a meaningful financial contributor in 2026. The focus will be on learning, adoption, and refining the offering.
Q:What is the outlook for margin expansion in 2026?
A:Zillow expects around 200 basis points of margin expansion in 2026, with legal costs causing a 100 basis point drag. The underlying margin profile is improving, and stock-based compensation is expected to decline by over 10%, further supporting net income growth.
Q:Is the mortgage segment profitable, and what is its growth outlook?
A:Zillow does not disclose mortgage segment profitability but sees strong growth potential. In Q4, mortgages grew 39%, with Zillow Home Loans purchase originations up 67%. The category is expected to grow 40% in Q1.
Q:How is Zillow planning its investments relative to housing market conditions?
A:Zillow's expense framework is consistent regardless of housing market conditions. While affordability is improving, the company is not planning for significant housing market growth in 2026.
Q:Will Zillow enforce listing access standards more strictly?
A:Zillow is already enforcing listing access standards and focuses on educating agents about the benefits of broad marketing. Most agents and sellers prefer broad exposure for faster sales and higher prices.
Q:What is the relationship between enhanced market lead volumes and revenue?
A:Enhanced market lead volumes are not directly 1:1 with revenue growth. Zillow Home Loans revenue tends to lag behind enhanced market expansion.
Q:Why is Zillow increasing marketing spend in 2026, and are there channel shifts?
A:Zillow is modestly increasing marketing spend to capitalize on opportunities in enhanced markets and Rentals. There are no significant channel shifts, and the focus remains on efficient advertising to drive brand preference and performance.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about the RESPA case's potential adverse effects, stating that it is not causing issues but without addressing specific concerns or providing detailed evidence. Additionally, the financial impact of Zillow Pro in 2026 was not clearly quantified, with management emphasizing learning and adoption instead.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Home Loans
Investor Relations
Property manager
Relations website
Rentals Multifamily
Rentals opportunity
Showcase
agent loan
application
audience engagement
clarity
client
combination
consumer industry
coordination
decade
estate professional
funnel
hundred market
improvement
information
market condition
outcome consumer
outlook
platform
position
product transaction
productivity
professional business
property manager
renter property
statement
system
transparency
way home
workflow
Z Transcript
Zillow Group, Inc. (ZG) Q4 2025 Earnings Call Transcript
Positive2-10
Zillow's earnings call indicates strong revenue growth across segments, optimistic guidance, and a focus on enhancing agent efficiency with Zillow Pro. Despite legal cost drags, margin expansion is expected, and the mortgage segment shows robust growth potential. The Q&A highlighted confidence in strategy amid industry challenges, with no significant risks from legal issues or market changes. This positive sentiment, combined with anticipated growth and strategic initiatives, suggests a likely positive stock price movement.
Zillow Group, Inc. (ZG) Presents at Barclays 23rd Annual Global Technology Conference Transcript
Neutral12-11
Zillow Group, Inc. (ZG) Presents at UBS Global Technology and AI Conference 2025 Transcript
Neutral12-2
Zillow Group, Inc. (ZG) Q3 2025 Earnings Call Transcript
Positive10-31
Zillow's earnings call indicates strong revenue growth projections, particularly in Rentals and Home Loans, with strategic investments fueling future expansion. Despite challenging market conditions, management remains optimistic, expecting EBITDA margin expansion and positive net income. The Q&A reveals confidence in overcoming FTC-related concerns and enhancing the transaction experience through AI integration. While some responses lacked specifics, the overall sentiment is positive, driven by strong growth metrics and strategic initiatives. The lack of market cap data suggests a cautious approach, but the positive outlook supports a 2%-8% stock price increase.
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
