8-K: Zillow Group Exceeds Q2 Outlook, Boosts 2025 Forecast

Zillow Group reported strong second-quarter 2025 financial results, surpassing revenue expectations and raising its full-year 2025 revenue growth outlook to mid-teens.

Summary

• Total revenue for Q2 2025 was $655 million, up 15% year-over-year, exceeding the company's outlook range.
• Adjusted EBITDA for Q2 2025 was $155 million, at the high end of the company's outlook range, with an Adjusted EBITDA margin of 24%.
• GAAP net income for Q2 2025 was $2 million, with a net income margin of 0%.
• For Sale revenue increased 9% year-over-year to $482 million in Q2 2025.
• Residential revenue grew 6% year-over-year to $434 million in Q2 2025.
• Mortgages revenue increased 41% year-over-year to $48 million in Q2 2025, driven by a 48% increase in purchase loan origination volume to $1.1 billion.
• Rentals revenue increased 36% year-over-year to $159 million in Q2 2025, primarily due to multifamily revenue growing 56% year-over-year.
• Traffic to Zillow Group's mobile apps and sites in Q2 2025 was up 5% year-over-year to 243 million average monthly unique users.
• Cash and investments at the end of Q2 2025 were $1.2 billion, down from $1.6 billion at the end of Q1 2025, primarily due to the May 2025 settlement of $419 million in convertible notes and $150 million in share repurchases.
• The company raised its full-year 2025 revenue growth outlook to mid-teens, from the previous lowto mid-teens range.
• Zillow Group expects continued Adjusted EBITDA margin expansion and positive GAAP net income for the full year 2025.

Sentiment

Score: 8

Explanation: Zillow Group reported strong Q2 2025 results, exceeding revenue and Adjusted EBITDA outlooks, and raised its full-year revenue guidance. The company demonstrated significant market share gains in a flat industry, achieved positive GAAP net income, and became convertible debt-free. While cash and investments decreased due to debt settlement and share repurchases, the overall financial health and strategic execution appear robust.

Positives

• Q2 2025 revenue of $655 million exceeded the company's outlook range.
• Q2 2025 Adjusted EBITDA of $155 million was at the high end of the company's outlook range.
• GAAP net income was positive at $2 million in Q2 2025.
• Total revenue growth of 15% year-over-year outperformed the residential real estate industry's total transaction value growth of 2% (Zillow estimate) and 1% (NAR data).
• Mortgages revenue increased 41% year-over-year, with purchase loan origination volume up 48%.
• Rentals revenue increased 36% year-over-year, with multifamily revenue up 56%.
• Traffic to mobile apps and sites increased 5% year-over-year to 243 million average monthly unique users.
• The company is now convertible debt-free after settling $419 million of convertible notes in May 2025.
• The full-year 2025 revenue growth outlook was raised to mid-teens, indicating stronger expected performance.
• Expects continued Adjusted EBITDA margin expansion and positive GAAP net income for the full year 2025.
• Enhanced Markets connections reached 27% of total connections, progressing towards a goal of over 35% by year-end.
• 96% of Enhanced Market connections are now handled through Follow Up Boss, improving agent efficiency.
• Zillow Home Loans continues to have double-digit adoption rates in Enhanced Markets.
• Over 2 million people have enrolled in BuyAbility, a tool to help buyers understand affordability.
• New product launches like Offer Insights, Tour Itineraries, and SkyTour enhance the user and agent experience.
• Zillow Rentals is #1 in partner satisfaction for return on marketing investment and has the most active rental listings (2.4 million) in the category.
• Multifamily properties advertising on Zillow Rentals increased 45% year-over-year to 64,000.

Negatives

• Cash and investments decreased by $445 million from Q1 2025 to Q2 2025, primarily due to debt settlement and share repurchases.
• Gross profit margin decreased from 77% in Q2 2024 to 75% in Q2 2025.
• Total operating expenses and cost of revenue increased 9% year-over-year, driven by higher lead acquisition costs from the Redfin rentals partnership and increased sales and marketing expenses.
• Adjusted EBITDA expenses were slightly above the Q2 outlook ($500 million vs. $495 million) due to slightly higher than expected benefits costs and payroll taxes.

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, affecting traffic to mobile applications and websites, or changes to rights to use or timely access listing data.
• Ability to comply with current and future rules and requirements promulgated by the National Association of REALTORS, multiple listing services, or other real estate industry groups or governing bodies.
• Ability to navigate industry changes, including as a result of past, pending or future lawsuits, settlements or government investigations.
• Uncertainties related to policy changes or enforcement priorities 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 obtaining sufficient financing, meeting customer financing needs, and reselling originated mortgages.
• The duration and impact of natural disasters, climate change, geopolitical events, and other catastrophic events (including public health crises) on operations, demand, or general economic conditions.
• Ability to maintain adequate security controls or technology systems, or those of third parties, to protect data integrity and privacy.
• Ability to navigate any significant disruption in service on mobile applications or websites or in the network.
• The impact of past, pending or future litigation and other disputes or enforcement actions.
• Ability to attract, engage, and retain a highly skilled workforce.
• Impact of acquisitions, investments, strategic partnerships, capital-raising activities, or other corporate transactions or commitments by Zillow 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 generative 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.
• 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 used to calculate business, performance and operating metrics.
• Volatility of Class A common stock and Class C capital stock prices.

Future Outlook

For Q3 2025, Zillow Group expects For Sale revenue growth similar to Q2, with Residential revenue growth in the mid-single-digit range and Mortgages revenue growth in the high 20% range, and Zillow Home Loans purchase loan origination volume to grow over 40%. Rentals revenue growth is expected to accelerate to over 40% year-over-year. For the full year 2025, the company now expects mid-teens revenue growth (higher end of previous lowto mid-teens outlook), approximately 40% Rentals revenue growth, continued Adjusted EBITDA margin expansion, and positive GAAP net income.

Management Comments

• "Q2 results reflect how the power of our strategy and the strength of our execution are fueling growth across the company."
• "We're relentlessly innovating to build a better real estate experience — one that helps more consumers move with confidence and gives real estate professionals the tools they need to power their businesses and serve movers effectively."
• "Q2 was a strong quarter, marked by continued double-digit revenue growth, positive GAAP net income, and share gains in For Sale and Rentals."
• "We now expect to deliver mid-teens revenue growth for the full year 2025, at the higher end of our previous outlook of lowto mid-teens revenue growth."
• "We're staying disciplined on costs and are on track to deliver on our full-year 2025 targets, including continued Adjusted EBITDA margin expansion and positive GAAP net income."
• "Our relentless focus on creating great products and experiences is part of what makes Zillow a beloved brand that is #1 in traffic in both for-sale and rentals."
• "We're excited about the potential to unlock a billion-dollar incremental revenue opportunity as we expand the experience to 75% of transactions, even in a flat macro housing environment."
• "Overall, Zillow is delivering growth, managing costs, and leading industry innovation to provide a seamless, tech-enabled experience for movers and real estate professionals."

Industry Context

Zillow Group's Q2 2025 performance demonstrates significant resilience and market share gains in a relatively flat U.S. residential real estate market. While the industry's total transaction value grew only 1-2% and purchase mortgage origination volume grew 1%, Zillow's total revenue surged 15% year-over-year. This outperformance suggests that Zillow's strategy of building an integrated 'housing super app' and enhancing digital tools for both consumers and real estate professionals is effectively capturing market share and driving growth despite broader macroeconomic conditions. The strong growth in Mortgages and Rentals segments further indicates successful diversification and expansion within the real estate ecosystem.

Comparison to Industry Standards

• Zillow's Q2 2025 total revenue growth of 15% year-over-year significantly outperformed the residential real estate industry's total transaction value growth of 2% (Zillow's estimate) and 1% (National Association of REALTORS data).
• Zillow's Q2 2025 purchase mortgage origination volume growth of 48% year-over-year substantially exceeded the estimated industry growth of 1%.
• Zillow is cited as the #1 real estate app and website in the United States by traffic, and has approximately four times the app engagement of the next company in its category (based on data.ai data for April-June 2025).
• Zillow Rentals is stated to be #1 in partner satisfaction in its category for return on marketing investment.
• Zillow Rentals had 2.4 million active rental listings in Q2 2025, described as the most in the category, indicating a leading position in the rental marketplace.

Stakeholder Impact

• Shareholders: Positive financial results, raised outlook, share repurchases, and becoming debt-free could positively impact shareholder value.
• Consumers (Movers): Enhanced digital tools (BuyAbility, Offer Insights, Tour Itineraries, SkyTour, AI Assist for rentals) aim to provide a smoother, more confident, and transparent real estate experience.
• Real Estate Professionals (Agents, Property Managers): New software offerings (Follow Up Boss enhancements, Zillow In-App Messaging) and marketplace improvements (Showcase, Rentals partnerships) are designed to boost productivity, client service, and lead quality, helping them power their businesses.
• Creditors: Settlement of convertible notes reduces debt obligations, improving credit profile.

Next Steps

• Continue methodical expansion of the Enhanced Market experience to more customers, partners, and places, targeting 75% of transactions for a billion-dollar incremental revenue opportunity.
• Continue to expand the Zillow Home Loans product suite, including broadened down payment assistance and enhanced FHA loan offerings in select geographies.
• Continue to evolve Zillow Showcase to support scaled adoption.
• Expect quarterly year-over-year Rentals revenue growth to keep accelerating throughout 2025.
• Host a live webcast to discuss results on August 6, 2025, at 2 p.m. Pacific time (5 p.m. Eastern time).

Key Dates

Recommendation

Zillow Group's Q2 2025 results demonstrate significant outperformance relative to a flat industry, driven by strong execution of its 'housing super app' strategy. The company exceeded revenue and Adjusted EBITDA outlooks, achieved positive GAAP net income, and raised its full-year revenue guidance. Key growth drivers like Mortgages and Rentals are accelerating, and strategic initiatives like Enhanced Markets and new product launches are showing strong traction and clear paths to future revenue opportunities. Becoming convertible debt-free further strengthens the balance sheet. These factors, combined with market share gains, suggest a robust growth trajectory and strong investment potential.

Keywords

Zillow, Real Estate, Housing, Mortgages, Rentals, PropTech, Financial Results, Earnings, SEC Filing, ZG, Z