Zillow Group (Z) Q4 2025 earnings review
Rentals Engine Fires on All Cylinders, Driving GAAP Profitability
Zillow closed FY25 with accelerating momentum. Q4 revenue grew 18% YoY to $654M, beating the high end of guidance, while the company achieved its first full year of positive GAAP Net Income ($23M). The standout story is the explosion in Rentals revenue (+45% YoY), driven by a 63% surge in multifamily performance. The 'Housing Super App' strategy is validating: Enhanced Markets now represent 44% of all connections, driving a 67% spike in purchase mortgage origination volume. While the core Residential business grew a modest 8%, the diversification into Rentals and Mortgages is successfully offsetting macro housing headwinds.
🐂 Bull Case
Rentals revenue accelerated for the fourth consecutive quarter, reaching +45% YoY. Multifamily revenue jumped 63%, validated by a 44% increase in property listings. This segment has become a standalone growth engine distinct from interest rate sensitivity.
The integrated transaction strategy is working. Enhanced Markets expanded to 44% of connections (up from 21% a year ago). This integration drove Purchase Loan Origination volume up 67% YoY, significantly outpacing the flat industry backdrop.
🐻 Bear Case
Management addressed ongoing legal matters (FTC suit regarding Redfin syndication). While confident, rising legal expenses contributed to a 200 bps headwind on Q1 2026 Adjusted EBITDA margin guidance.
Residential revenue (Premier Agent) grew only 8% YoY. While outperforming the flat housing market, it lags significantly behind the company's newer growth engines, suggesting the core search-and-lead-gen business is maturing.
⚖️ Verdict: 🟢🟢
Bullish. Zillow has successfully diversified away from pure lead-generation. The acceleration in Rentals and Mortgages, combined with full-year GAAP profitability, proves the 'Super App' thesis is generating alpha even in a stagnant housing market.
Key Themes
Rentals Segment Acceleration
Accelerating. Rentals revenue grew 45% YoY to $168M, marking a significant acceleration from 33% in Q1. The primary driver is Multifamily revenue (+63% YoY), supported by a 44% increase in property count to 72,000. The Redfin partnership and increased wallet share are compounding gains.
Enhanced Markets Execution
Accelerating. The rollout of Enhanced Markets is the linchpin of Zillow's transaction strategy. Share of connections in these markets hit 44% in Q4, more than doubling from 21% a year ago. This integration is directly correlating with mortgage attach rates.
Mortgage Purchase Volume Surge
Accelerating. Purchase loan origination volume skyrocketed 67% YoY to $1.5 billion. This vastly outperformed the industry (which was flat YoY). The integration of Zillow Home Loans into the agent workflow via Enhanced Markets is the clear causal factor.
Zillow Pro & Software Suite
New. Management announced 'Zillow Pro,' a comprehensive suite including Follow Up Boss and Showcase, designed to manage an agent's entire book of business. While monetization is currently in beta, this signals a shift toward SaaS-like recurring revenue and deeper agent lock-in beyond lead gen.
Rising Legal & Compliance Costs
Stable/Negative. Adjusted EBITDA expenses are guided to rise in 26Q1 ($535-540M), partly driven by 'elevated legal expenses.' Management explicitly noted a 200 basis point margin headwind in Q1 due to legal costs, likely related to the FTC inquiry and industry class actions.
Share Repurchase Deceleration
Decelerating. Cash usage for buybacks has slowed. Zillow repurchased $232M in Q4, down from higher levels earlier in the year (total $670M for FY25). Cash balance dropped from $1.4B in Q3 to $1.3B in Q4. With $711M remaining on authorization, the pace has moderated.
Other KPIs
Reversing. Zillow achieved its first full year of positive GAAP net income (1% margin), reversing a loss of $112M in FY24. Q4 net margin was 0% (positive $3M), proving that the pivot to profitability is sustainable even while investing in growth.
Accelerating. EBITDA grew 33% YoY, with margin expanding 260 basis points to 23%. This demonstrates operating leverage despite the investments in Rentals sales staff and lead acquisition costs.
Stable. Cash and investments ended at $1.3B, down slightly from $1.4B in Q3, largely due to share repurchases ($232M). The company remains well-capitalized to fund the Zillow Pro rollout and handle legal headwinds.
Guidance
Decelerating. Based on segment guidance (For Sale ~11%, Rentals ~40%), total revenue growth implies low-double digits, a deceleration from the 18% reported in 25Q4. Management cites seasonal payroll taxes and continued macro housing pressure.
Decelerating. While still hyper-growth, the guide of ~40% is a slight deceleration from the 45% printed in 25Q4. Driven by continued multifamily strength.
Stable. Consistent with FY25 performance (+16%). Management expects Rentals to grow ~30% for the full year, implying a tapering in the second half, while the variable cost base is expected to align with revenue growth by H2.
Accelerating. Expenses are rising sequentially from $505M in 25Q4. Driven by seasonal payroll taxes, Redfin lead acquisition costs, and legal fees. This represents a margin headwind for Q1.
Key Questions
Zillow Pro Monetization Timeline
Zillow Pro is currently in beta. When do you expect this to become a material revenue line item, and does it carry a higher margin profile than the legacy Premier Agent business?
Legal Expense Runway
With legal expenses cited as a 200bps drag in Q1, should investors model this elevated run-rate for the entirety of FY26, or is this a one-time spike related to specific case milestones?
Rentals Deceleration in H2
Guidance implies Rentals growth slowing from ~40% in Q1 to ~30% for the full year. Is this purely law of large numbers, or do you anticipate saturation in the multifamily ad market?