PART I – FINANCIAL INFORMATION Financial Statements (unaudited) The company reported a 13% year-over-year revenue increase to $598 million in Q1 2025, achieving a net income of $8 million and positive operating cash flow of $104 million Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $914 | $1,082 | | Short-term investments | $689 | $776 | | Total current assets | $2,154 | $2,334 | | Total assets | $5,746 | $5,829 | | Total current liabilities | $875 | $831 | | Total liabilities | $992 | $981 | | Total shareholders' equity | $4,754 | $4,848 | Condensed Consolidated Statements of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $598 | $529 | | Gross profit | $459 | $406 | | Loss from operations | $(9) | $(45) | | Net income (loss) | $8 | $(23) | | Diluted EPS | $0.03 | $(0.10) | Condensed Consolidated Statements of Cash Flows (in millions) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $104 | $80 | | Net cash used in investing activities | $(52) | $(204) | | Net cash provided by (used in) financing activities | $(219) | $71 | | Net decrease in cash | $(167) | $(53) | Note 5. Intangible Assets, Net Net intangible assets increased to $297 million by March 2025, primarily due to a $100 million payment for a Redfin partnership, with $20 million in Q1 amortization expense - On February 6, 2025, Zillow entered into a partnership with Redfin, making a $100 million payment that is categorized as customer relationships and will be amortized over an estimated useful life of nine years58 Intangible Assets Breakdown (in millions) | Category | Net Value (Mar 31, 2025) | Net Value (Dec 31, 2024) | | :--- | :--- | :--- | | Customer relationships | $161 | $65 | | Software | $65 | $62 | | Developed technology | $44 | $51 | | Total | $297 | $207 | Note 6. Debt Total debt increased to $592 million by March 2025, including $419 million in convertible notes maturing in May 2025 and $173 million in repurchase agreements, with new borrowing capacity added - The company's 2025 Notes, with a principal amount of $419 million, mature on May 15, 2025. Zillow has elected to settle conversions with a combination of cash for the principal and Class C capital stock for the conversion premium67 Debt Summary (in millions) | Debt Instrument | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total master repurchase agreements | $173 | $145 | | 2025 Notes | $419 | $418 | | Total debt | $592 | $563 | - Zillow Home Loans increased its borrowing capacity by entering into a new $150 million master repurchase agreement with Bank of Montreal on February 27, 2025, and later amended its JPMorgan agreement in April 2025 to increase capacity to $200 million and extend the maturity6162 Note 8. Share Repurchase Authorizations The company repurchased $250 million of stock in Q1 2025, with $131 million remaining under authorization, and an additional $1.0 billion was approved in May 2025 Q1 2025 Share Repurchase Activity (in millions, except share data) | Stock Class | Shares Repurchased (thousands) | Weighted-Average Price | Total Purchase Price | | :--- | :--- | :--- | :--- | | Class A common stock | 2,460 | $73.75 | $181 | | Class C capital stock | 879 | $78.03 | $69 | | Total | 3,339 | | $250 | - On May 2, 2025, the Board authorized an additional $1.0 billion for share repurchases, bringing the total authorization to $3.5 billion. As of March 31, 2025, $131 million was available from previous authorizations72 Note 11. Commitments and Contingencies The company has $300 million in future purchase commitments and is involved in several legal proceedings, including patent infringement and securities class action lawsuits, with potential but unquantifiable losses - Zillow is involved in a patent infringement lawsuit with IBM, a federal securities class action suit regarding its former Zillow Offers business, and several shareholder derivative suits. The company believes a loss is reasonably possible but cannot estimate the amount818283 Future Purchase Commitments (in millions) | Period | Purchase Obligations | | :--- | :--- | | Remainder of 2025 | $116 | | 2026 | $117 | | 2027 | $66 | | 2028 | $1 | | Total | $300 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 13% revenue increase to $598 million in Q1 2025, driven by strong growth across all segments, resulting in $153 million Adjusted EBITDA and a robust liquidity position of $1.6 billion Key Metrics Key metrics for Q1 2025 showed positive trends with 2.35 billion visits and 227 million unique users, alongside a 32% increase in loan origination volume to $796 million Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Visits (millions) | 2,354 | 2,316 | 2% | | Average monthly unique users (millions) | 227 | 217 | 5% | For Sale Revenue per TTV (Trailing Twelve Months) | Metric | TTM Ended Mar 31, 2025 | TTM Ended Mar 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | For Sale revenue (in millions) | $1,773 | $1,585 | 12% | | Total transaction value (in trillions) | $1.7 | $1.6 | 7% | | For Sale revenue per TTV (basis points) | 10.2 | 9.7 | 5% | Loan Origination Volume (in millions) | Loan Type | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Purchase loan origination | $791 | $601 | 32% | | Refinance loan origination | $5 | $4 | 25% | | Total loan origination | $796 | $605 | 32% | Results of Operations Total revenue increased 13% to $598 million in Q1 2025, with Residential, Mortgages, and Rentals segments growing 6%, 32%, and 33% respectively, contributing to a 22% rise in Adjusted EBITDA Revenue by Category (in millions) | Category | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Residential | $417 | $393 | $24 | 6% | | Mortgages | $41 | $31 | $10 | 32% | | Total For Sale revenue | $458 | $424 | $34 | 8% | | Rentals | $129 | $97 | $32 | 33% | | Other | $11 | $8 | $3 | 38% | | Total revenue | $598 | $529 | $69 | 13% | - Residential revenue growth was driven by a 4% increase in revenue per visit and a 2% increase in visits, reflecting strength in ShowingTime+, Premier Agent, and new construction offerings128 - Rentals revenue growth was primarily due to a 20% increase in quarterly revenue per average monthly rentals unique visitor and an 11% increase in average monthly rentals unique visitors, driven by growth in multifamily property listings127 Adjusted EBITDA Reconciliation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) | $8 | $(23) | | Income taxes | — | 2 | | Other income, net | (22) | (33) | | Depreciation and amortization | 65 | 56 | | Share-based compensation | 97 | 108 | | Impairment costs | — | 6 | | Interest expense | 5 | 9 | | Adjusted EBITDA | $153 | $125 | Liquidity and Capital Resources The company maintained strong liquidity with $1.6 billion in cash and investments, generating $104 million in operating cash flow, while utilizing cash for share repurchases and strategic partnerships - Primary sources of liquidity are cash from operations, debt, and equity offerings. As of March 31, 2025, the company had $1.6 billion in cash, cash equivalents, investments, and restricted cash149150 - Net cash used in financing activities was $219 million in Q1 2025, primarily due to $250 million in share repurchases and a $30 million contingent consideration payment, partially offset by proceeds from stock option exercises160 - Net cash used in investing activities was $52 million, driven by a $100 million payment for the Redfin partnership and other capital expenditures, partially offset by net proceeds from investments157 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from interest rate fluctuations affecting investments, debt, and mortgage operations, and from inflation impacting the housing market, though foreign currency risk is immaterial - The company's primary market risks are interest rate fluctuations and inflation. Interest rate changes affect investment income, debt valuation, and mortgage operations175 - The $419 million in 2025 Notes have a fixed interest rate, mitigating exposure to interest rate changes on that debt. However, borrowings for Zillow Home Loans are at a floating rate based on SOFR, creating market risk that is managed via hedging178179 - Inflationary pressures have led to higher mortgage rates, impacting transaction volumes and demand for services. While this has had an adverse impact on revenue, the company does not expect it to materially affect its long-term business strategy181182 Controls and Procedures As of March 31, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q1 2025 - Management, including the CEO and CFO, evaluated disclosure controls and procedures and found them to be effective as of March 31, 2025184 - No changes occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting185 PART II – OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, including patent infringement and securities class action lawsuits, with potential but unquantifiable losses, as detailed in Note 11 of the financial statements - Information regarding legal proceedings is provided in Note 11 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of the report188 Risk Factors There have been no material changes to the company's risk factors since those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes to the risk factors from those set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024189 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased $250 million of stock, with $131 million remaining under authorization and an additional $1 billion approved in May 2025, and no unregistered equity sales occurred - There were no unregistered sales of equity securities during the three months ended March 31, 2025191 Q1 2025 Stock Repurchases by Month (in millions, except share data) | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share (Class A / Class C) | Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | N/A | $381 | | Feb 2025 | 2,278 | $74.66 / $78.13 | $208 | | Mar 2025 | 1,061 | $72.53 / $71.82 | $131 | | Total Q1 | 3,339 | | $131 | - On May 2, 2025, the Board authorized an additional $1 billion for stock repurchases, increasing the total authorization to $3.5 billion193 Other Information Several executives and board members have entered into or terminated Rule 10b5-1 sales plans, including CEO Jeremy Wacksman entering a new plan and COO Jun Choo terminating a previous one - CEO Jeremy Wacksman entered into a 10b5-1 sales plan on February 13, 2025, effective May 16, 2025, to sell shares of Class C capital stock from option exercises and RSU vestings194 - COO Jun Choo terminated a previously disclosed 10b5-1 sales plan on February 28, 2025. No shares were sold under the plan prior to its termination195 - Board members Erik Blachford and Claire Cormier Thielke entered into 10b5-1 sales plans in March 2025, effective in June 2025, for the sale of Class C shares related to RSU vestings196197
Zillow Group(ZG) - 2025 Q1 - Quarterly Report