Zillow Group Class C (Z) AI Stock Analysis

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Zillow Group Class C

(NASDAQ:Z)

Rating:66Neutral

Price Target:

$85.00

▲(12.57%Upside)

Zillow Group's stock score reflects strong earnings performance and strategic growth initiatives, particularly in the Rentals segment, which are major positives. However, ongoing net losses and valuation concerns weigh on the score. The bullish technical indicators suggest momentum, but caution is warranted due to potential overvaluation.

Positive Factors

New Partnerships

Z's recently launched partnership with RDFN provides a notable unlock of additional rental supply, allowing Z's two-sided marketplace to further benefit.

Product Expansion

The expansion of Real Time Touring will help drive higher lead conversion and reignite monetization, helping Premier Agent return to growth consistent with or better than the housing market.

Revenue Growth

Rentals revenue grew 33% and now comprise 22% of total revenue; $1bn target reaffirmed as the multifamily strategy is showing strong traction.

Negative Factors

Guidance

Guidance for the second quarter was slightly below estimates on both the top and bottom lines.

Market Expectations

Zillow shares traded down following the 1Q results, due to less upside in the 1Q revenue than anticipated and 1Q Residential revenue growth decelerating from 11% in 4Q to 6%.

Residential Revenue

Residential revenue continues to face market-driven headwinds, growing only 6% year over year.

Zillow Group Class C (Z) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$17.41B

Dividend YieldN/A

Average Volume (3M)1.79M

Price to Earnings (P/E)―

Beta (1Y)1.33

Revenue Growth14.96%

EPS Growth49.24%

CountryUS

Employees6,819

SectorCommunication Services

Sector Strength81

IndustryInternet Content & Information

Share Statistics

EPS (TTM)0.41

Shares Outstanding183,358,690

10 Day Avg. Volume1,981,012

30 Day Avg. Volume1,793,736

Financial Highlights & Ratios

PEG Ratio1.07

Price to Book (P/B)1.74

Price to Sales (P/S)0.00

P/FCF Ratio1.79

Enterprise Value/Market Cap0.47

Enterprise Value/Revenue0.94

Enterprise Value/Gross Profit4.65

Enterprise Value/Ebitda17.79

Forecast

1Y Price Target

$80.86

Price Target Upside7.09% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

Zillow Group Class C Business Overview & Revenue Model

Company DescriptionZillow Group, Inc., a digital real estate company, operates real estate brands on mobile applications and Websites in the United States. The company operates through three segments: Homes; Internet, Media & Technology; and Mortgages. The Homes segment is involved in resale of homes; and title and escrow services to home buyers and sellers, including title search procedures for title insurance policies, escrow, and other closing services. The IMT segment offers premier agent, rentals, and new construction marketplaces, as well as dotloop, display, and other advertising, as well as business software solutions. The Mortgage segment provides home loans; and marketing products including custom quote and connect services. Its portfolio of brands includes Zillow Rentals, Trulia, StreetEasy, Zillow Closing Services, HotPads, and Out East. The company was incorporated in 2004 and is headquartered in Seattle, Washington.

How the Company Makes MoneyZillow Group makes money primarily through its real estate ecosystem, which includes advertising, leads, and ancillary services. The company generates significant revenue from its Premier Agent program, where real estate professionals pay for advertising and receive leads from interested buyers and sellers. Additionally, Zillow offers paid services for rental professionals and property managers through Zillow Rentals. Another key revenue stream is Zillow Home Loans, providing mortgage origination and related services. The company also gains revenue from its Zillow Offers program, where it buys, sells, and rents properties directly, though this segment's focus has shifted over time. Strategic partnerships with real estate brokerages and technology integrations further enhance its revenue potential.

Zillow Group Class C Key Performance Indicators (KPIs)

Any

Average Unique Monthly Visitors

Average Unique Monthly Visitors
Measures the average number of distinct visitors to Zillow’s platforms each month, indicating the site’s popularity and potential for ad revenue growth.

Chart InsightsZillow's average unique monthly visitors have shown a steady upward trend since 2019, with notable resilience despite fluctuations in the housing market. The recent earnings call highlights strong revenue growth, particularly in the Rentals segment, which aligns with the increased visitor engagement. However, challenges in the broader housing market could impact future growth. Zillow's strategic focus on expanding its housing super app and enhancing services for buyers and sellers is expected to sustain visitor growth and improve market share, especially in the Rentals segment, despite anticipated higher expenses in the next quarter.

Data provided by:

Main Street Data

Zillow Group Class C Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 11.24%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

Zillow Group's Q1 2025 earnings call reflected strong revenue growth and achievement of GAAP profitability, driven by impressive performance in the Rentals segment and strategic expansions. However, the housing market remains challenging, especially in the non-high-end segments. The company is facing increased expenses in the next quarter due to seasonal factors and partnerships.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

Zillow Group reported Q1 2025 revenue of $598 million, up 13% year-over-year, exceeding their expectations and continuing the trend of double-digit revenue growth.

Strong Performance in Rentals Segment

Rentals revenue reached an all-time high of $129 million in Q1, up 33% year-over-year. Multifamily revenue grew 47%, and the number of multifamily properties on Zillow Rentals increased by 38% year-over-year.

GAAP Profitability Achieved

Zillow achieved GAAP profitability in Q1 2025 with a positive net income of $8 million and an EBITDA margin expansion by 200 basis points year-over-year to 26%.

Increased Adoption of Zillow Home Loans

Double-digit adoption of Zillow Home Loans across all Enhanced Markets was noted, with 70% of movers choosing financing through Zillow Home Loans also working with a Premier Agent partner.

Expansion of Enhanced Markets

The company expanded Enhanced Markets, with 24% of overall connections in Q1 happening in these markets, up from 21% in Q4. They aim to increase this to more than 35% by the end of the year.

Negative Updates

Challenging Housing Market Conditions

The housing market remains challenging with macroeconomic uncertainties, impacting overall For Sale growth, which only grew 8% year-over-year.

High-End Market Outperformance

The high-end of the market contributed over 500 basis points of growth in total industry transaction value, while the rest of the market remained largely flat, which is where Zillow tends to operate more frequently.

Increased Expenses in Q2

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

Company Guidance

During Zillow Group's first quarter 2025 financial results call, the company provided guidance indicating a strong performance and optimistic outlook for the year. Zillow reported a total Q1 revenue of $598 million, marking a 13% year-over-year increase, with For Sale revenue growing 8%, Residential revenue up 6%, Mortgages revenue up 32%, and Rentals revenue increasing 33% to reach $129 million. The company achieved a GAAP profitability milestone with an adjusted EBITDA of $153 million, expanding the EBITDA margin by 200 basis points to 26%. Zillow aims for full-year 2025 goals of low to mid-teens revenue growth, continued EBITDA margin expansion, and positive GAAP net income. The company highlighted its strategic focus on expanding its housing super app, increasing market share in the Rental segment, and enhancing its services for buyers and sellers, contributing to its robust financial outlook.

Zillow Group Class C Financial Statement Overview

Summary

Zillow's financial performance shows strong revenue growth and a solid balance sheet, but challenges in profitability and operational costs persist. The income statement reveals consistent net losses, while the balance sheet maintains a high equity ratio and low leverage risk. Cash flow management is effective, but declining free cash flow growth indicates potential constraints.

Income Statement

Positive

The income statement reveals a company facing consistent net losses, with a net profit margin of -3.5% in TTM (Trailing-Twelve-Months). However, revenue demonstrates a positive growth trend, with a 3.1% increase from the previous year. Gross profit margins remain strong at 76.5%, indicating efficient core operations, but negative EBIT and EBITDA margins suggest challenges in managing operational costs.

Balance Sheet

Positive

The balance sheet is strong with a high equity ratio of 82.7% and a low debt-to-equity ratio of 0.14, indicating a solid financial structure with limited leverage risk. Return on equity is negative due to net losses, but the company's substantial equity base provides a buffer against financial volatility.

Cash Flow

Positive

Cash flow analysis shows a decrease in free cash flow growth, but a positive operating cash flow to net income ratio of -5.58 suggests effective cash management. The free cash flow to net income ratio is 2.52, highlighting that the company generates significant cash relative to its net loss, though capital expenditure constraints may limit growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.31B	2.24B	1.95B	1.96B	8.15B	3.34B
Gross Profit	1.76B	1.71B	1.52B	1.59B	1.75B	1.58B
EBITDA	122.00M	198.00M	125.00M	123.00M	370.00M	119.96M
Net Income	-81.00M	-112.00M	-158.00M	-88.00M	-527.78M	-162.12M
Balance Sheet
Total Assets	5.75B	5.83B	6.65B	6.56B	10.70B	7.49B
Cash, Cash Equivalents and Short-Term Investments	1.60B	1.86B	2.81B	3.36B	3.13B	3.92B
Total Debt	687.00M	660.00M	1.83B	1.87B	5.01B	2.52B
Total Liabilities	992.00M	981.00M	2.13B	2.08B	5.35B	2.74B
Stockholders Equity	4.75B	4.85B	4.53B	4.48B	5.34B	4.74B
Cash Flow
Free Cash Flow	204.00M	285.00M	189.00M	4.36B	-3.28B	315.68M
Operating Cash Flow	452.00M	428.00M	354.00M	4.50B	-3.18B	424.20M
Investing Cash Flow	547.00M	395.00M	25.00M	-1.53B	1.09B	-1.04B
Financing Cash Flow	-1.52B	-1.23B	-352.00M	-4.34B	3.15B	1.16B

Zillow Group Class C Technical Analysis

Technical Analysis Sentiment

Positive

Last Price75.51

Price Trends

50DMA

69.30

Positive

100DMA

69.78

Positive

200DMA

71.57

Positive

Market Momentum

MACD

1.70

Negative

RSI

75.81

Negative

STOCH

92.94

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For Z, the sentiment is Positive. The current price of 75.51 is above the 20-day moving average (MA) of 70.94, above the 50-day MA of 69.30, and above the 200-day MA of 71.57, indicating a bullish trend. The MACD of 1.70 indicates Negative momentum. The RSI at 75.81 is Negative, neither overbought nor oversold. The STOCH value of 92.94 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for Z.

Zillow Group Class C Risk Analysis

Zillow Group Class C disclosed 49 risk factors in its most recent earnings report. Zillow Group Class C reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Zillow Group Class C Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YELP	71 Outperform	$2.21B	16.63	19.74%	―	5.93%	29.17%
ZG	71 Outperform	$17.41B	―	-1.72%	―	14.96%	49.24%
IAC	68 Neutral	$3.11B	―	-15.07%	―	-18.11%	-516.37%
CARG	67 Neutral	$3.44B	97.31	7.98%	―	0.63%	15.34%
Z	66 Neutral	$17.41B	―	-1.72%	―	14.96%	49.24%
Sector *	62 Neutral	$40.76B	-1.15	-12.05%	3.90%	2.03%	-69.70%
KIND	51 Neutral	$615.97M	―	-18.77%	―	12.01%	35.71%

* Communication Services Sector Average

Performance Comparison

Zillow Group Class C

78.91

29.51

59.74%

YELP

Yelp

35.11

-0.66

-1.85%

Zillow Group Class A

76.17

27.82

57.54%

CARG

CarGurus

34.68

9.19

36.05%

IAC

IAC/InteractiveCorp.

41.67

1.43

3.55%

KIND

Nextdoor Holdings

1.69

-1.10

-39.43%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 11, 2025