8-K: Zillow Group Exceeds 2025 Targets, Reports Strong Q4 Growth

Zillow Group announced robust fourth-quarter and full-year 2025 financial results, surpassing all reported financial targets and achieving full-year profitability.

Summary

• Q4 revenue increased 18% year over year to $654 million, near the high end of the company's outlook range.
• Full-year 2025 revenue reached $2.6 billion, up 16% year over year.
• The company outperformed the residential real estate industry growth by 1,500 basis points in Q4 and 1,300 basis points for full-year 2025, compared to the NAR's 3% industry growth.
• GAAP net income was $3 million in Q4 (0% net income margin) and $23 million for full-year 2025 (1% net income margin), marking significant year-over-year increases.
• Adjusted EBITDA for Q4 was $149 million (23% margin) and $622 million for full-year 2025 (24% margin), showing margin expansion.
• Mortgages revenue increased 39% year over year in Q4, primarily due to a 67% increase in purchase loan origination volume to $1.5 billion.
• Rentals revenue grew 45% year over year in Q4, driven by a 63% increase in multifamily revenue.
• Zillow Group repurchased 3.4 million shares for $232 million during Q4, contributing to a total of 12.6 million shares repurchased or received in 2025, which offset share-based compensation and reduced the ending share count by 2 million year over year.
• Traffic to Zillow Group's apps and sites in Q4 was up 8% year over year to 221 million average monthly unique users, with visits up 2% year over year at 2.1 billion.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a very positive report, demonstrating strong execution, significant financial improvements, and market share gains across key segments despite challenging industry conditions. The positive net income and robust growth in high-margin areas like Mortgages and Rentals are particularly encouraging.

Positives

• Achieved all reported full-year financial targets, including positive net income for full-year 2025.
• Outperformed the residential real estate industry growth by 1,500 basis points in Q4 and 1,300 basis points for full-year 2025.
• Strong revenue growth: Q4 revenue up 18% year over year to $654 million; Full-year 2025 revenue up 16% year over year to $2.6 billion.
• Significant improvement in GAAP net income: Q4 $3 million (0% margin) compared to $(52) million (9% loss margin) in Q4 2024; Full-year $23 million (1% margin) compared to $(112) million (5% loss margin) in 2024.
• Adjusted EBITDA margin expansion: Q4 23% (up 260 basis points year over year); Full-year 24% (up 180 basis points year over year).
• Mortgages revenue grew 39% year over year in Q4, with purchase loan origination volume up 67% to $1.5 billion.
• Rentals revenue grew 45% year over year in Q4, with multifamily revenue up 63% year over year.
• Increased traffic: 221 million average monthly unique users in Q4 (up 8% year over year); 2.1 billion visits (up 2% year over year).
• Successful share repurchase program: 3.4 million shares for $232 million in Q4; 12.6 million shares total in 2025, reducing share count by 2 million year over year.
• Zillow Home Loans saw an 11% increase in loan officer productivity in 2025 despite adding 40% more loan officers.
• BuyAbilitySM tool enrolled 3.6 million users, up from 2.9 million at the end of Q3.
• Zillow Showcase was on 3.7% of new listings in Q4, up from 1.7% a year ago, indicating growing adoption.
• Rentals share of rental listings increased to 63% in 2025, up from 54% in 2024.
• The number of multifamily properties advertising across Zillow reached 72,000 at the end of 2025, a 44% increase from the beginning of the year.

Negatives

• Cash and investments at the end of Q4 were $1.3 billion, down from $1.4 billion at the end of Q3.
• Net cash provided by operating activities for 2025 was $368 million, a 14% decrease year over year, primarily due to growth in mortgage loans held for sale.
• Gross profit margin decreased to 72.8% in Q4 2025 from 75.8% in Q4 2024.
• Q1 2026 Adjusted EBITDA expenses are expected to increase due to seasonal payroll taxes, lead acquisition costs related to the Redfin syndication agreement, hiring for growth, and ongoing elevated legal expenses.
• Expected year-over-year increases in legal expenses will contribute approximately 200 basis points of headwind to Q1 Adjusted EBITDA margin.
• Challenging housing market conditions are expected to continue in Q1 2026.

Risks

• The health and stability of the economy and United States residential real estate industry, including changes in inflationary conditions, interest rates, housing availability and affordability, labor shortages, and supply chain issues.
• Ability to manage advertising, product inventory and pricing, and to maintain relationships with real estate partners.
• Ability to establish or maintain relationships with listing and data providers, or changes to rights to use or timely access listing data, or to the quality or quantity of such listing data.
• Ability to comply with current and future rules and requirements promulgated by National Association of REALTORS, multiple listing services, or other real estate industry groups or governing bodies, or decisions to repeal, amend or not enforce such rules and requirements.
• Ability to navigate industry changes, including as a result of past, pending or future lawsuits, settlements or government investigations, which may include lawsuits, settlements or investigations in which the company is not a named party.
• Uncertainties related to policy changes, enforcement priorities, or government shutdowns at the federal and state levels.
• Ability to continue to innovate and compete to attract customers and real estate partners.
• Ability to effectively invest resources to pursue new strategies, develop new products and services and expand existing products and services into new markets.
• Ability to operate and grow Zillow Home Loans mortgage operations, including the ability to obtain or maintain sufficient financing to fund the origination of mortgages, meet customers financing needs with product offerings, continue to grow origination operations and resell originated mortgages on the secondary market.
• The duration and impact of natural disasters, climate change, geopolitical events, and other catastrophic events (including public health crises) on the ability to operate, demand for products or services, or general economic conditions.
• Ability to maintain adequate security controls or technology systems, or those of third parties on which the company relies, to protect data integrity and the information and privacy of customers and other third parties.
• Ability to navigate any significant disruption in service on mobile apps or websites or in the network.
• The impact of past, pending or future litigation and other disputes or enforcement actions, which may include lawsuits or investigations to which the company is not a party.
• Ability to attract, engage, and retain a highly skilled workforce.
• Mergers, acquisitions, investments, strategic partnerships, capital-raising activities, or other corporate transactions or commitments by the company or its competitors.
• Ability to continue relying on third-party services to support critical functions of the business.
• Ability to protect and continue using intellectual property and prevent others from copying, infringing upon, or developing similar intellectual property, including as a result of artificial intelligence.
• Ability to comply with domestic and international laws, regulations, rules, contractual obligations, policies and other obligations, or to obtain or maintain required licenses to support the business and operations.
• Ability to pay debt or to raise additional capital or refinance indebtedness on acceptable terms, or at all.
• Actual or anticipated fluctuations in quarterly and annual results of operations and financial position.
• Actual or perceived inaccuracies in the assumptions, estimates and internal or third-party data that are used to calculate business, performance and operating metrics.
• Volatility of Class A common stock and Class C capital stock prices.

Future Outlook

For Q1 2026, Zillow expects For Sale revenue growth to be in line with or slightly better than Q4 2025's 11% year-over-year growth, driven by high single-digit Residential revenue growth and approximately 40% Mortgages revenue growth. Rentals revenue is projected to grow approximately 40% year over year, primarily from multifamily. Adjusted EBITDA expenses are anticipated to be $535 million to $540 million, with legal expenses contributing a 200 basis point headwind to Q1 Adjusted EBITDA margin. Challenging housing market conditions are expected to persist. For the full year 2026, Zillow forecasts mid-teens total revenue growth, approximately 30% year-over-year Rentals revenue growth, a fixed cost base of about $1 billion growing with inflation, variable costs growing ahead of revenue in the first half of 2026 and then trending toward being in line with revenue in the second half of 2026, Adjusted EBITDA margin expansion, and a decrease of over 10% in share-based compensation.

Management Comments

• "Delivered strong results in the fourth quarter and throughout 2025, achieving all our reported full-year financial targets, including positive net income, while continuing to gain share in both For Sale and Rentals." Jeremy Wacksman, CEO
• "Our results demonstrate our disciplined and consistent execution of our strategy. With our deeply engaged audience, industry-leading software that powers industry workflows, and two decades of AI innovation, we are uniquely positioned to drive durable growth by making the entire moving journey easier for consumers and the real estate professionals who serve them." Jeremy Wacksman, CEO
• "We are confident in our positions and approach, and we do not expect these matters [legal matters] to have a material impact on our financial position or long-term strategy."
• "We believe deeply in our strategy, which is guided by a few core tenets: Consumers want an easier, more transparent way to rent, buy, sell, and finance their homes. Industry professionals want to scale their businesses, serve their clients more effectively and help them get the broadest possible exposure."

Industry Context

StockSavvy.ai notes that Zillow Group's significant outperformance of the broader residential real estate industry (1,500 basis points in Q4 and 1,300 basis points for full-year 2025, compared to NAR's 3% growth) highlights its successful strategy in a challenging market. The strong growth in Mortgages and Rentals, particularly multifamily, indicates effective diversification and capture of market share in key segments, leveraging its integrated ecosystem and AI-powered tools to differentiate from competitors.

Comparison to Industry Standards

• Outperformed the residential real estate industry growth by 1,500 basis points in Q4 and 1,300 basis points for full-year 2025, compared to the National Association of Realtors' (NAR) estimated 3% industry growth.
• Estimated Q4 and full-year 2025 purchase mortgage origination volume for the industry was roughly flat year over year, while Zillow Home Loans saw a 67% increase in Q4 and 53% increase for full-year 2025.
• Zillow's share of rental listings increased to 63% in 2025, up from 54% in 2024, indicating strong market penetration compared to other rental platforms.
• Rentals revenue grew at an average of 32% annually since 2022, far outpacing the estimated 14% growth rate in broader rental advertising demand.
• Zillow has more than twice as many daily app users as its largest competitor (Sensor Tower data as of Dec. 31, 2025).
• ShowingTime enables 90% of all tours of homes for sale in the U.S., demonstrating a dominant position in a critical workflow.
• Follow Up Boss powers daily activity for more than 80% of the highest-volume teams in the country.

Legal Proceedings

• Management addressed recent legal matters, stating confidence in their positions and approach.
• Do not expect legal matters to have a material impact on financial position or long-term strategy.
• Increased legal expenses are expected to contribute approximately 200 basis points of headwind to Q1 Adjusted EBITDA margin.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, share repurchases, and positive outlook for revenue growth and margin expansion.
• Employees: Potential positive impact from growth investments, including hiring rentals salespeople and loan officers.
• Customers (Buyers/Sellers/Renters): Improved experience through integrated ecosystem, AI-powered tools, and new offerings like BuyAbilitySM and Zillow Showcase.
• Real Estate Professionals (Agents/Loan Officers/Property Managers): Enhanced productivity and business growth opportunities through software offerings (ShowingTime, Follow Up Boss, Zillow Pro) and increased lead quality.
• Creditors: Improved financial health and profitability reduce credit risk.

Next Steps

• Expand Zillow Pro nationwide over the second half of 2026.
• Continue to grow across the business and further enhance comprehensive marketplaces.
• Continue innovating and delivering what consumers and industry professionals want and need.

Key Dates

Recommendation

The filing indicates Zillow Group is executing exceptionally well on its strategy, significantly outperforming the broader real estate market. Achieving full-year profitability, coupled with robust revenue growth in key segments like Mortgages and Rentals, and expanding Adjusted EBITDA margins, demonstrates strong operational efficiency and market leadership. The share repurchase program further signals confidence and returns capital to shareholders. Despite anticipated legal expense headwinds and challenging housing market conditions, the company's integrated ecosystem and AI innovation position it for continued durable growth, making it a compelling 'strong buy' for long-term investors.

Keywords

Zillow, Zillow Group, Real Estate, Financial Results, Q4 2025, Full-Year 2025, Revenue Growth, Net Income, Adjusted EBITDA, Mortgages, Rentals, Home Loans, Share Repurchase, Residential Real Estate, Technology, AI, Housing Market