10-Q: Zillow Group Reports 18% Revenue Growth in Q1 2026

Zillow Group announced an 18% year-over-year increase in total revenue for the first quarter of 2026, driven by strong performance in its Rentals and Mortgages segments.

Summary

• Zillow Group reported an 18% increase in total revenue for the first quarter ended March 31, 2026, reaching $708 million compared to $598 million in the same period of 2025.
• Residential revenue grew by 8% to $450 million, attributed to increased revenue per visit and growth in Premier Agent, ShowingTime, new construction, and Follow Up Boss offerings.
• Mortgages revenue saw a significant jump of 56% to $64 million, driven by a 97% increase in total loan origination volume, particularly in purchase loans.
• Rentals revenue increased by 42% to $183 million, fueled by a 20% rise in average monthly unique visitors and a 18% increase in revenue per visitor, with multifamily rentals showing strong growth.
• Gross profit increased by 13% to $519 million, though gross margin slightly decreased from 77% to 73% due to higher lead acquisition costs.
• Net income was $46 million, a substantial increase from $8 million in the prior year's quarter, with diluted earnings per share at $0.19.
• Adjusted EBITDA rose by 19% to $182 million, indicating improved operational profitability.
• The company repurchased $626 million of its Class A and Class C common stock during the quarter.
• As of March 31, 2026, Zillow Group had $678 million in cash and cash equivalents and $105 million in short-term investments.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, with strong revenue growth and significant improvements in profitability, although minor concerns exist regarding user engagement metrics and gross margin.

Positives

• Total revenue increased by 18% to $708 million for the first quarter of 2026.
• Mortgages revenue surged by 56% to $64 million, driven by a 97% increase in loan origination volume.
• Rentals revenue grew by 42% to $183 million, with a 20% increase in unique visitors and a 18% increase in revenue per visitor.
• Net income increased significantly to $46 million from $8 million in the prior year.
• Adjusted EBITDA grew by 19% to $182 million, demonstrating strong operational performance.
• Residential revenue per visit increased by 12% to $0.198.
• The company has a $500 million Revolving Credit Facility, with no amounts drawn as of March 31, 2026, providing significant liquidity.
• The company has $1.3 billion remaining available for future stock repurchases.

Negatives

• Gross margin decreased from 77% to 73% due to increased lead acquisition costs associated with the Redfin rentals syndication agreement.
• Visits and unique users saw a slight decrease of 3% compared to the prior year's quarter.
• The company faces ongoing risks related to the health of the housing market, interest rates, and economic conditions.

Risks

• The health and stability of the economy and the U.S. residential real estate industry, including changes in inflationary conditions, interest rates, housing availability and affordability, labor shortages, and supply chain issues.
• The ability to manage advertising, product inventory, and pricing, and to maintain relationships with real estate partners.
• The ability to establish or maintain relationships with listing and data providers, and changes to rights to use or access listing data.
• Compliance with current and future rules and requirements from NAR, MLSs, or other real estate industry groups.
• Navigating industry changes, including potential lawsuits, settlements, or government investigations.
• Uncertainties related to policy changes, enforcement priorities, or government shutdowns.
• The ability to continue to innovate and compete to attract customers and real estate partners.
• Effectiveness of investments in new strategies, products, and services.
• Ability to operate and grow Zillow Home Loans mortgage operations, including financing and secondary market sales.
• Impact of natural disasters, climate change, geopolitical events, and other catastrophic events.
• Maintaining adequate security controls and technology systems to protect data integrity and customer privacy.
• Potential disruption in service on mobile apps or websites.
• Impact of past, pending, or future litigation and other disputes or enforcement actions.
• Ability to attract, engage, and retain a highly skilled workforce.
• Mergers, acquisitions, investments, strategic partnerships, or other corporate transactions.
• Reliance on third-party services for critical business functions.
• Protection of intellectual property and prevention of infringement, including related to artificial intelligence.
• Compliance with domestic and international laws and regulations.
• Ability to pay debt or raise additional capital or refinance indebtedness on acceptable terms.
• Fluctuations in quarterly and annual results of operations and financial position.
• Inaccuracies in assumptions, estimates, and data used for business metrics.
• Volatility of Class A and Class C common stock prices.

Future Outlook

The company expects Mortgages revenue to increase in absolute dollars during the three months ending June 30, 2026, primarily driven by continued growth in Zillow Home Loans purchase loan origination volume. Rentals revenue is also expected to increase in absolute dollars during the same period, driven by continued growth in multifamily revenue from the addition of new rental properties. Sales and marketing expenses are expected to increase due to seasonality and strategic marketing investments. Cost of revenue is also expected to increase due to higher lead acquisition costs associated with the Redfin rentals syndication agreement.

Management Comments

• Zillow Group is reimagining real estate to make home a reality for more and more people.
• We continue to invest in the growth of our business, which we believe has resulted in year over year total revenue results... that exceeded industry performance for the same period.
• We believe that cash from operations and cash and cash equivalents and investment balances will be sufficient to meet our ongoing operating activities, working capital, capital expenditures, strategic acquisitions and investments and other capital requirements for at least the next 12 months, though we may choose to utilize our Revolving Credit Facility.
• We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operations, debt financing, including the Revolving Credit Facility, and equity offerings, as applicable.

Industry Context

StockSavvy.ai notes that Zillow Group's performance in Q1 2026, with an 18% revenue increase, appears to be outperforming the broader residential real estate industry, which saw a 2% TTV increase according to NAR data. The strong growth in mortgages and rentals segments highlights diversification beyond traditional residential sales, a trend observed across the proptech sector.

Comparison to Industry Standards

• Zillow Group's total revenue growth of 18% for Q1 2026 outpaced the 2% increase in Total Transaction Value (TTV) for the residential real estate industry reported by NAR for the same period.
• The company's mortgage origination volume increased by 97% year-over-year, significantly exceeding typical industry growth rates for mortgage lenders.
• Rentals revenue per average monthly unique visitor increased by 18%, indicating effective monetization strategies in the rental market, which is a key area of focus for many real estate platforms.
• While not directly comparable due to differing business models, Zillow's Adjusted EBITDA margin of 26% for Q1 2026 suggests strong operational efficiency compared to many publicly traded real estate technology companies.

Legal Proceedings

• Ongoing patent infringement lawsuit filed by IBM, with a motion for summary judgment filed on April 17, 2026.
• Consolidated federal securities class action lawsuit alleging materially false and misleading statements regarding Zillow Offers business; class certification affirmed by the Ninth Circuit.
• Shareholder derivative suits alleging breaches of fiduciary duties related to Zillow Offers wind-down and violations of federal securities laws; these suits remain stayed.
• Antitrust lawsuit filed by the FTC and several states alleging harm to competition for online multifamily rental-listings due to the partnership between Zillow and Redfin; motion to dismiss filed.

Stakeholder Impact

• Shareholders: Positive impact from increased revenue, net income, and Adjusted EBITDA, alongside significant share repurchases.
• Real Estate Agents/Partners: Continued provision of leads and software solutions, with potential for increased business through Zillow's platform.
• Mortgage Lenders: Increased origination volume through Zillow Home Loans.
• Renters and Housing Providers: Continued access to a robust marketplace and end-to-end products for rental management.
• Employees: Continued investment in headcount to support growth, though specific compensation details are not provided.

Next Steps

• Continue to invest in the growth of the business.
• Monitor and adapt to changes in the housing market, interest rates, and economic conditions.
• Potentially utilize the Revolving Credit Facility for future capital requirements.
• Continue to focus on growth in Zillow Home Loans purchase loan origination volume and multifamily rentals revenue.

Key Dates

Recommendation

The company delivered strong revenue growth and improved profitability, exceeding expectations. However, the slight decline in user engagement metrics and ongoing legal proceedings warrant a cautious approach. While the outlook for mortgages and rentals is positive, the broader real estate market remains subject to economic uncertainties. Therefore, a 'hold' recommendation is appropriate, pending further clarity on market stabilization and resolution of legal matters.

Keywords

Zillow Group, Form 10-Q, Quarterly Report, Real Estate, Mortgage, Rentals, Revenue, Financial Results, Zillow Home Loans, Premier Agent