8-K: Zillow Group Reports Strong Q4 and Full-Year 2024 Results, Exceeds Expectations

Zillow Group's Q4 revenue increased 17% year-over-year to $554 million, exceeding expectations, and the company anticipates positive GAAP net income in 2025.

Summary

• Zillow Group announced its Q4 and full-year 2024 financial results, reporting a 17% year-over-year increase in Q4 revenue to $554 million.
• This exceeded the company's outlook by $21 million.
• Full-year 2024 revenue reached $2.2 billion, a 15% increase year-over-year.
• The company's Q4 Adjusted EBITDA was $112 million, representing 20% of revenue.
• For the full year, Adjusted EBITDA was $498 million, with a margin of 22%, up 200 basis points from the previous year.
• Zillow's net loss improved, with a Q4 net loss of $52 million compared to $73 million in Q4 2023, and a full-year net loss of $112 million, down from $158 million in 2023.
• Traffic to Zillow's mobile apps and sites increased by 3% year-over-year to 204 million average monthly unique users in Q4.
• The company expects low to mid-teens revenue growth for the full year 2025 and anticipates achieving positive GAAP net income.
• For Sale revenue was up 15% year over year to $428 million in Q4.
• Residential revenue was up 11% year over year in Q4 to $387 million.
• Mortgages revenue increased 86% year over year to $41 million in Q4, due primarily to a 90% increase in purchase loan origination volume to $923 million.
• Rentals revenue increased 25% year over year to $116 million in Q4, primarily driven by multifamily revenue growing 41% year over year.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, exceeding expectations, and anticipates future profitability. While there are risks and challenges, the overall tone is optimistic and confident.

Positives

• Zillow Group exceeded its Q4 revenue and Adjusted EBITDA outlook.
• The company achieved double-digit revenue growth for the full year 2024, up 15% year-over-year.
• Adjusted EBITDA margin expanded by 200 basis points to 22% for the full year 2024.
• Mortgages revenue saw significant growth, driven by increased purchase loan origination volume.
• Rentals revenue experienced substantial growth, particularly in the multifamily sector.
• Zillow anticipates positive GAAP net income for the full year 2025.
• Traffic to Zillow's platforms continues to grow, indicating strong user engagement.
• Zillow Showcase is gaining traction, contributing to revenue growth and agent success.
• The number of multifamily properties advertising on Zillow increased significantly, reaching 50,000 at the end of 2024.
• Zillow's partnership with Redfin will expand the reach of multifamily properties that advertise with them.

Negatives

• Zillow reported a net loss for both Q4 and the full year 2024, although the losses were reduced compared to the previous year.
• Cash and investments decreased due to the settlement of the company's 2026 convertible debt.
• The company expects a more challenging housing market in Q1.

Risks

• The health and stability of the economy and the U.S. residential real estate industry could impact Zillow's performance.
• Changes in interest rates, housing availability, and affordability may affect the company's results.
• Zillow's ability to manage advertising and product inventory and maintain relationships with real estate partners is crucial.
• Compliance with current and future rules and requirements of real estate industry groups is necessary.
• The company faces risks related to litigation, settlements, and government investigations.
• Zillow's ability to innovate and compete effectively is essential for attracting customers and real estate partners.
• The company's mortgage operations are subject to risks related to financing, product offerings, and resale of originated mortgages.
• Natural disasters, climate change, geopolitical events, and public health crises could disrupt Zillow's operations and impact demand.
• Maintaining adequate security controls and protecting data integrity are critical to the company's success.
• Zillow's ability to attract, engage, and retain a highly skilled workforce is important for its growth.
• The company faces risks related to intellectual property protection and compliance with domestic and international laws and regulations.
• Volatility of Zillow's stock prices could impact investor confidence.

Future Outlook

Zillow expects low to mid-teens revenue growth for the full year 2025 and anticipates achieving positive GAAP net income. For Q1 2025, the company expects For Sale revenue growth to be in the mid-single digits, with Residential revenue growth of low to mid-single digits and Mortgages revenue growth of approximately 30%. Rentals revenue is expected to grow approximately 30% year over year in Q1.

Management Comments

• Zillow achieved its stated goals for the year, including double-digit revenue growth.
• The company expects to keep up its momentum in 2025.
• Zillow is executing well and seizing its opportunity to transform and digitize residential real estate.
• The company is excited to serve more buyers, sellers, renters, and real estate professionals this year.
• Zillow believes it has a clear path to $5 billion in revenue and 45% Adjusted EBITDA margin in a normalized housing market.

Industry Context

Zillow's performance is being viewed against the backdrop of the residential real estate industry, with the company outperforming the industry's total transaction value growth. The company is focused on capturing a larger share of customer transactions and expanding its services to increase revenue per transaction.

Comparison to Industry Standards

• Zillow's Q4 revenue outperformed the residential real estate industry's year-over-year total transaction value growth of 13% according to NAR and 15% according to industry data tracked and estimated by Zillow.
• Zillow has four times the app engagement of the next company in its category.
• About two-thirds of the real estate audience uses Zillow somewhere along their journey more than twice any other company in our category.
• Zillow Rentals has the largest consumer rentals audience, with an average of 29 million unique visitors every month a widening lead over the next company in the category and the number-one preference among renters.

Stakeholder Impact

• Shareholders can expect continued growth and profitability, with the company anticipating positive GAAP net income in 2025.
• Real estate professionals can benefit from Zillow's tools and services, such as Zillow Showcase and Follow Up Boss, to improve their business.
• Buyers and sellers can expect a streamlined and integrated experience through Zillow's housing super app.
• Renters can access a comprehensive suite of rental listings on Zillow's platform.
• Employees can expect continued investment in the company's growth and success.

Next Steps

• Continue scaling the Enhanced Markets experience to cover more connections.
• Focus on increasing connection and conversion rates to drive share growth in For Sale revenue.
• Expand the Zillow Showcase program to reach a larger percentage of U.S. listings.
• Scale Rentals revenue, with a focus on multifamily properties.
• Continue integrating Premier Agent with Zillow Home Loans.
• Continue to drive share growth relative to the industry total transaction value in For Sale revenue.

Key Dates