Zillow Group Earnings Call Signals Profitable Growth

Zillow Group Inc Class C ((Z)) has held its Q4 earnings call. Read on for the main highlights of the call.

Zillow Group Inc. struck an upbeat tone on its latest earnings call, pairing broad-based revenue growth with expanding margins and solid cash generation. Management acknowledged legal and investment-driven cost headwinds, yet emphasized that strength in rentals, mortgages and new products is powering durable profitability even in a sluggish housing market.

Strong Top-Line Growth

Q4 2025 revenue climbed 18% year over year to $654 million, capping a year in which total revenue advanced 16%, in line with prior mid-teens guidance. The performance signals that Zillow is growing faster than the broader real estate market, despite sales volumes that remain well below historical norms.

Profitability and Margin Expansion

Zillow delivered full-year 2025 GAAP net income of $23 million, marking a clear turn into sustained profitability. Q4 EBITDA reached $149 million with a 23% margin, up 260 basis points, while full-year EBITDA grew 25% and margins expanded roughly 180–200 basis points versus 2024.

For-Sale and Mortgages Momentum

For-sale revenue hit $1.9 billion in 2025, up 9% year over year, with Q4 for-sale growth accelerating to 11%, a solid result given muted existing home sales. Mortgages emerged as a standout, with revenue up 39% in Q4 and 37% for the year, backed by a sharp 67% jump in Q4 purchase originations and 53% growth for the full year.

Rentals as a High-Growth Engine

Rentals remained the star of the portfolio, with Q4 revenue surging 45% year over year and full-year 2025 rentals revenue up 39% to $630 million. Multifamily outperformed even that pace, while average monthly active rental listings reached 2.5 million and listing share rose to 63%, underscoring Zillow’s tightening grip on the rentals category.

Product Traction and Platform Integration

Enhanced markets connections rose to 44% of all connections from 21% a year earlier, highlighting traction in Zillow’s higher-intent lead products. Showcase listings climbed to 3.7% of new listings, while Follow-up Boss Smart Messages surpassed 7 million AI-powered messages and Viability enrolled 3.6 million users, signaling deeper integration across the agent toolkit.

Operational Discipline and Cash Generation

Free cash flow reached $420 million in 2025, a 36% year-over-year increase that reinforces Zillow’s ability to self-fund investments. Management paired that with cost discipline and capital returns, including a 13% decline in share-based compensation, $670 million of buybacks in 2025 and $1.3 billion in cash and investments plus a $500 million revolver on the balance sheet.

Market Share and Category Leadership

Zillow stressed its consumer and agent reach, citing about 31 million average monthly unique visitors to rentals in Q4. The company estimates roughly 80% of agent users touch approximately 80% of U.S. residential transactions, underscoring its role as a key software and demand-generation hub for the industry.

Elevated Legal Expenses and Litigation Overhang

Legal expenses ran higher than expected in Q4, pushing EBITDA expenses above outlook and trimming near-term margins. Management expects legal costs to remain elevated through 2026, implying about a 200-basis-point EBITDA margin headwind in Q1 and roughly 100 basis points for the full year.

Challenging Housing Market Backdrop

Executives framed results against a housing market that continues to “bounce along the bottom,” with about 4.1 million existing homes sold in 2025, well below normal levels. While affordability is improving, Zillow is not banking on a rapid recovery in for-sale volumes, making its growth in this environment more notable.

Rising Variable Costs from Growth Investments

The company plans to lean into growth by expanding its rentals salesforce, adding Zillow Home Loans officers and increasing marketing spend, including syndicated leads. These initiatives will push variable costs ahead of revenue in 2026 at first, putting pressure on margins before the benefits scale across the platform.

Near-Term Margin Headwinds and Seasonality

Q1 margin guidance reflects typical seasonal payroll resets and higher lead acquisition costs, compounding the legal cost drag. Management cautioned that these factors, along with deliberate variable cost build-outs, will slow the pace of margin expansion in the first half of 2026 before easing later in the year.

Execution Demands for Enhanced Markets

Scaling enhanced markets connections from 44% of connections toward a 75% target will require significant operational execution. Management highlighted the need for partner training, agent ramp-up and further Zillow Home Loans expansion, introducing multi-period execution risk around timing and the pace of adoption.

Regulatory and RESPA Headwinds

Ongoing legal matters tied to real estate regulations and related rules continue to generate headlines and potential reputational risk. While Zillow does not expect a material financial hit from these cases, the regulatory overhang could create operational distractions and underscores the importance of compliance in its growth strategy.

Forward-Looking Guidance and Outlook

For Q1 2026, Zillow guided revenue to $700–710 million, implying about 18% growth at the midpoint, with a roughly 24% EBITDA margin after legal headwinds and strong 40% growth in both rentals and mortgages. For 2026, management reiterated mid-teens revenue growth, about 30% rentals growth, continued margin expansion and ongoing buybacks as it works toward multi-year targets in a normalized housing market.

Zillow’s earnings call painted a picture of a platform gaining momentum, with rentals, mortgages and new products driving growth even as housing volumes remain soft. Legal and investment-driven cost pressures are likely to cap near-term margin upside, but strong cash flow, rising market share and disciplined execution underpin a constructive long-term story for investors.