Zillow Group’s Q1 2025 Earnings Call Highlights

Zillow Group Inc Class C ((Z)) has held its Q1 earnings call. Read on for the main highlights of the call.

Zillow Group’s Q1 2025 earnings call conveyed a generally positive sentiment, underscored by strong revenue growth and the achievement of GAAP profitability. The company’s impressive performance in the Rentals segment and strategic expansions were highlighted, although challenges persist in the broader housing market, particularly outside the high-end segments. Anticipated increased expenses in the next quarter due to seasonal factors and partnerships were also noted.

Record-Breaking Revenue and Growth

Zillow Group reported a remarkable Q1 2025 revenue of $598 million, marking a 13% increase year-over-year. This performance exceeded expectations and continued the trend of double-digit revenue growth, showcasing the company’s strong market position and effective strategies.

Strong Performance in Rentals Segment

The Rentals segment was a standout performer, with revenue reaching an all-time high of $129 million in Q1, reflecting a 33% year-over-year increase. Multifamily revenue saw a significant growth of 47%, and the number of multifamily properties on Zillow Rentals increased by 38% year-over-year, highlighting the segment’s robust expansion.

GAAP Profitability Achieved

Zillow achieved a significant milestone by reaching GAAP profitability in Q1 2025, with a positive net income of $8 million. The EBITDA margin expanded by 200 basis points year-over-year to 26%, demonstrating improved operational efficiency and financial health.

Increased Adoption of Zillow Home Loans

There was a notable double-digit adoption of Zillow Home Loans across all Enhanced Markets. Impressively, 70% of movers who chose financing through Zillow Home Loans also worked with a Premier Agent partner, indicating strong integration and customer trust in Zillow’s offerings.

Expansion of Enhanced Markets

Zillow expanded its Enhanced Markets, with 24% of overall connections in Q1 occurring in these areas, up from 21% in Q4. The company aims to increase this to more than 35% by the end of the year, reflecting its strategic focus on market penetration and growth.

Challenging Housing Market Conditions

Despite the positive financial results, the housing market remains challenging due to macroeconomic uncertainties. This has impacted overall For Sale growth, which only grew 8% year-over-year, indicating potential headwinds in the broader market.

High-End Market Outperformance

The high-end market segment outperformed, contributing over 500 basis points of growth in total industry transaction value. This contrasts with the largely flat performance of the rest of the market, where Zillow tends to operate more frequently.

Increased Expenses in Q2

Zillow anticipates increased expenses in Q2, with EBITDA expenses expected to rise from $445 million in Q1 to an estimated $495 million. This increase is driven by normal seasonal marketing and incremental lead costs associated with the Redfin Rentals partnership.

Optimistic Forward-Looking Guidance

During the earnings call, Zillow provided an optimistic outlook for 2025, with expectations of low to mid-teens revenue growth, continued EBITDA margin expansion, and positive GAAP net income. The company emphasized its strategic focus on expanding its housing super app, increasing market share in the Rental segment, and enhancing services for buyers and sellers, contributing to its robust financial outlook.

In summary, Zillow Group’s Q1 2025 earnings call reflected a positive sentiment, driven by strong revenue growth and strategic achievements. While challenges persist in the housing market, particularly outside the high-end segments, Zillow’s strategic focus and expansion plans position it well for continued success. The company’s forward-looking guidance further underscores its confidence in achieving its financial goals for the year.