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Zillow Group Class C (Z)
NASDAQ:Z
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Zillow Group Class C
(NASDAQ:Z)
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Rating:62Neutral
Price Target:
$58.00
▲(32.63% Upside)
Action:ReiteratedDate:02/12/26
The score is driven primarily by improving financial performance (strong balance sheet, positive cash generation, return to GAAP profitability) and a constructive earnings outlook with continued growth and margin expansion. Offsetting these positives are very weak technicals (downtrend with bearish momentum) and a demanding valuation (very high P/E with no dividend yield provided).
Positive Factors
Balance sheet strength
Extremely low leverage and sizable equity provide durable financial flexibility: supports continued product investment, share repurchases, and a $500M revolver cushion. A conservative balance sheet reduces financing risk through cycles and underpins strategic optionality over months.
Re-accelerating revenue & margin expansion
Sustained top-line re-acceleration paired with meaningful EBITDA margin expansion shows structural operational improvement, not just one-off gains. Continued mid‑teens growth guidance and improving profitability indicate the business model is scaling more efficiently, supporting durable cash generation.
High-growth rentals franchise & product traction
Rapid rentals growth and expanding listing share reflect a structural shift toward a recurring, marketplace revenue engine. Strong product adoption (Showcase, Follow‑up Boss) and network effects in rentals improve monetization durability and diversify revenue away from cyclical for‑sale demand.
Negative Factors
Operating profitability inconsistency
While GAAP net income turned positive, persistent negative EBIT indicates reliance on non‑operational items or timing effects. Sustainable earnings depend on consistent operating income; until EBIT consistently turns positive, profitability durability and earnings quality remain uncertain over the medium term.
Elevated legal & regulatory exposure
Ongoing litigation and RESPA scrutiny create structural cost and distraction risks. Multi‑period elevated legal expenses can erode margins, constrain partner relationships, and introduce regulatory uncertainty that may limit product features or go‑to‑market tactics over many quarters.
Investment-driven variable cost pressure & execution risk
Deliberate upfront spending to scale rentals and lending increases variable cost load and requires successful execution to generate returns. If adoption or conversion lags, margins could be pressured for multiple quarters and targeted enhanced‑markets share gains may take longer than planned.
Zillow Group Class C (Z) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.50B
Dividend YieldN/A
Average Volume (3M)4.53M
Price to Earnings (P/E)485.3
Beta (1Y)1.39
Revenue Growth15.17%
EPS Growth75.90%
CountryUS
Employees6,819
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.39
Shares Outstanding187,816,990
10 Day Avg. Volume6,957,871
30 Day Avg. Volume4,530,721
Financial Highlights & Ratios
PEG Ratio-5.99
Price to Book (P/B)3.38
Price to Sales (P/S)6.39
P/FCF Ratio70.23
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue4.01
Enterprise Value/Gross Profit5.40
Enterprise Value/Ebitda34.38
Forecast
1Y Price Target
$80.20Price Target Upside83.40% Upside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)2.21
Revenue Forecast (FY)$2.95B
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 generates revenue through multiple key streams. Primarily, it earns money through its Zillow Offers program, where it purchases homes directly from sellers, makes necessary repairs, and then resells them, capturing the profit margin. Additionally, the company earns revenue from advertising services provided to real estate agents and property managers, who pay to promote their listings on the Zillow platform. Zillow also offers rental listings and charges landlords for premium placement of their properties. Significant partnerships with real estate agents and brokerages, along with its expansive user base, further contribute to its earnings, allowing Zillow to monetize its extensive traffic effectively.
Zillow Group Class C Key Performance Indicators (KPIs)
Any
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.
Measures the average number of distinct visitors to Zillow’s platforms each month, indicating the site’s popularity and potential for ad revenue growth.
Data provided by:
The Fly
The FlyZillow Group Class C Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call presents a decidedly positive operational and financial picture: strong revenue growth across both for‑sale and rentals, meaningful margin expansion, GAAP profitability, robust free cash flow, share buybacks, and clear product traction (enhanced markets, rentals, Showcase, Follow‑up Boss). Near‑term challenges center on elevated legal expenses, deliberate investments that increase variable costs, and a housing market that remains subdued, which temper the pace of margin expansion in early 2026. Overall, the strength and breadth of growth and profitability achievements outweigh the lowlights and planned investments.Q4-2025 Updates
Positive Updates
Strong Top-Line Growth
Q4 2025 revenue grew 18% year over year to $654 million and full-year 2025 revenue grew 16% year over year, consistent with mid‑teens growth guidance.
Profitability and Margin Expansion
Full‑year 2025 delivered GAAP net income of $23 million. Q4 EBITDA was $149 million with a 23% margin (+260 basis points YoY). Full‑year EBITDA margin expanded ~180–200 basis points year over year and full‑year EBITDA grew 25% YoY.
For Sale & Mortgages Momentum
For sale revenue was $1.9 billion in 2025, up 9% YoY (Q4 for sale +11% YoY). Mortgages revenue grew 39% YoY in Q4 and 37% YoY for the full year; purchase loan origination volume accelerated materially (company cited +67% YoY in Q4 and overall purchase origination volume up 53% YoY).
Rentals as a High‑Growth Engine
Rentals revenue grew 45% YoY in Q4 and 39% YoY for full‑year 2025, reaching $630 million. Multifamily revenue grew 63% YoY in Q4 and 58% YoY for the full year. Average monthly active rental listings reached 2.5 million and estimated rental listing share increased to 63% (from 54% in 2024).
Product Traction and Platform Integration
Enhanced markets connections increased to 44% of connections (from 21% a year ago). Showcase adoption rose to 3.7% of new listings (from 1.7% a year ago). Follow‑up Boss Smart Messages scaled to over 7 million AI‑powered messages. Viability enrolled 3.6 million users (up from 2.9M at end of Q3).
Operational Discipline and Cash Generation
Full‑year free cash flow was $420 million, a 36% increase YoY. Share‑based compensation declined (13% YoY in 2025; expected >10% decline in 2026). Company repurchased $670 million of shares in 2025 and returned $1.1 billion in cash to shareholders for the year; total repurchases to date $2.6 billion. Ended 2025 with $1.3 billion in cash and investments and a $500 million revolver.
2026 Outlook and Ongoing Growth Targets
Q1 2026 revenue guidance $700–710 million (implying ~18% YoY growth at midpoint). Company expects mid‑teens revenue growth for full‑year 2026, ~30% rentals revenue growth in 2026, continued EBITDA margin expansion, and progress toward multiyear mid‑cycle targets (e.g., $5B revenue and 45% EBITDA margin in a normalized housing market).
Market Share and Category Leadership
Zillow highlighted strong consumer engagement with ~31 million average monthly unique visitors to rentals in Q4 and stated ~80% of agent users touch an estimated 80% of residential real estate transactions, reinforcing the company’s large audience and embedded industry software footprint.
Negative Updates
Elevated Legal Expenses and Ongoing Litigation
Legal expenses were higher than expected in Q4, pushing EBITDA expenses above outlook. Management expects elevated legal costs through 2026, causing an estimated ~200 basis points headwind to Q1 EBITDA margins and ~100 basis points headwind for the full year.
Challenging Housing Market Context
Management is planning for a for‑sale environment that 'bounces along the bottom' with existing home sales remaining below normal (4.1M homes sold in 2025). This moderates near‑term housing recovery assumptions despite improving affordability metrics.
Rising Variable Costs from Growth Investments
Company expects variable costs to grow ahead of revenue in 2026 due to investments in rental salesforce, Zillow Home Loans loan officers, and marketing (including Redfin syndication lead costs), which will pressure near‑term margins before these investments scale.
Near‑Term Margin Headwinds and Seasonality
Q1 margin guide reflects seasonal payroll increases and higher lead acquisition costs; legal expense volatility and deliberate variable cost buildouts will weigh on margin expansion pace in the first half of 2026.
Operational Scale and Execution Requirements for Enhanced Markets
To expand enhanced markets connection share from 44% to 75% management acknowledges operational lift, partner training, agent capacity/ramp and Zillow Home Loans scale are required — implying multi‑period execution risk and ramp timing uncertainty.
Regulatory/RESPA Headwinds (Reputational & Execution Risk)
Ongoing RESPA and related legal matters remain public headlines; while management does not expect material financial impact, such suits create regulatory uncertainty and potential operational distractions.
Company Guidance
Guidance for Q1 and full-year 2026 was: Q1 revenue $700–710M (implying ~18% YoY at the midpoint), Q1 EBITDA $160–175M (≈24% margin at the midpoint) with legal expenses creating roughly a 200‑basis‑point EBITDA headwind in Q1; Q1 rentals growth ~40% YoY, Q1 mortgages growth ≈40% and residential growth in the high single digits. For full‑year 2026 the company expects mid‑teens revenue growth, ~30% rentals revenue growth, continued EBITDA margin expansion (despite an estimated ~100‑basis‑point legal drag for the year), a fixed cost base of about $1.0B, share‑based compensation down >10% YoY, variable costs to grow ahead of revenue early in the year then trend toward in line later, and continued share repurchases, with consensus EBITDA characterized as reasonable.Zillow Group Class C Financial Statement Overview
Summary
Fundamentals are improving: revenue re-accelerated and GAAP net income turned positive in 2025, supported by strong gross margins. The balance sheet is a standout with very low leverage and sizable equity, providing flexibility. Cash flow is solid with positive operating and free cash flow, though 2025 free cash flow declined and operating profitability (EBIT) is still not consistently positive.Income Statement
Revenue has re-accelerated, up ~4.0% in 2025 versus modest growth in 2024 and a flat/down 2022–2023 period. Profitability is improving: net income turned positive in 2025 ($23M) after losses in 2022–2024, while gross margin remains strong (~74% in 2025), though down from prior years. The key weakness is that operating profitability is still not consistently positive (EBIT remains negative in 2025 and 2024), leaving earnings quality and durability not yet fully proven.58
Neutral
Balance Sheet
The balance sheet is a clear strength, highlighted by very low leverage in 2025 (debt-to-equity ~0.02, down sharply from ~0.14 in 2024 and ~0.40+ in 2022–2023). Equity remains sizable and stable (~$4.88B) versus total assets (~$5.69B), which supports financial flexibility. The main drawback is still-low shareholder returns (2025 return on equity is only ~0.5%), reflecting that profitability has only recently turned positive and remains thin.86
Very Positive
Cash Flow
Cash generation is solid and more consistent recently: operating cash flow stayed positive in 2023–2025 ($354M–$428M–$368M) with positive free cash flow as well ($189M–$285M–$235M). However, free cash flow declined in 2025 (about -11% growth), and cash conversion versus accounting earnings is not especially strong in 2025 (free cash flow is ~0.64x net income per the provided metric). There is also historical volatility (notably a very large negative operating cash flow in 2021 and an unusually large positive figure in 2022), which raises questions about consistency across cycles.73
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.58B | 2.24B | 1.95B | 1.96B | 2.13B |
| Gross Profit | 1.92B | 1.71B | 1.52B | 1.59B | 1.81B |
| EBITDA | 261.00M | 179.00M | 125.00M | 130.00M | 382.00M |
| Net Income | 23.00M | -112.00M | -158.00M | -101.00M | -528.00M |
Balance Sheet | |||||
| Total Assets | 5.68B | 5.83B | 6.65B | 6.56B | 10.70B |
| Cash, Cash Equivalents and Short-Term Investments | 1.29B | 1.86B | 2.81B | 3.36B | 2.83B |
| Total Debt | 536.00M | 743.00M | 1.83B | 1.87B | 1.60B |
| Total Liabilities | 801.00M | 981.00M | 2.13B | 2.08B | 5.35B |
| Stockholders Equity | 4.88B | 4.85B | 4.53B | 4.48B | 5.34B |
Cash Flow | |||||
| Free Cash Flow | 235.00M | 285.00M | 189.00M | 4.36B | -3.28B |
| Operating Cash Flow | 368.00M | 428.00M | 354.00M | 4.50B | -3.18B |
| Investing Cash Flow | -6.00M | 395.00M | 25.00M | -1.53B | 1.09B |
| Financing Cash Flow | -674.00M | -1.23B | -352.00M | -4.34B | 3.15B |
Zillow Group Class C Technical Analysis
Negative
43.73
Price Trends
62.37
Negative
67.75
Negative
72.41
Negative
Market Momentum
-6.07
Positive
24.49
Positive
13.45
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For Z, the sentiment is Negative. The current price of 43.73 is below the 20-day moving average (MA) of 52.86, below the 50-day MA of 62.37, and below the 200-day MA of 72.41, indicating a bearish trend. The MACD of -6.07 indicates Positive momentum. The RSI at 24.49 is Positive, neither overbought nor oversold. The STOCH value of 13.45 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $10.50B | 486.57 | 0.47% | ― | 15.17% | 75.90% | |
66 Neutral | $2.76B | 18.60 | 34.90% | ― | 4.21% | ― | |
62 Neutral | $10.50B | 485.35 | 0.47% | ― | 15.17% | 75.90% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
51 Neutral | $651.53M | -11.93 | -12.25% | ― | 6.65% | 50.32% | |
50 Neutral | $25.82B | 201.30 | 0.50% | ― | -87.55% | 336.73% | |
48 Neutral | $2.75B | -26.85 | -2.31% | ― | -29.40% | -529.81% |
* Communication Services Sector Average
Z
Zillow Group Class C
43.73
-33.61
-43.46%
NBIS
Nebius Group
102.58
68.37
199.85%
ZG
Zillow Group Class A
43.84
-30.88
-41.33%
CARG
CarGurus
28.98
-2.10
-6.76%
IAC
IAC/InteractiveCorp.
35.78
-1.97
-5.22%
NXDR
Nextdoor Holdings
1.68
-0.84
-33.33%
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.