Zillow Group(US:Z)2026-02-11 11:33Market Performance and User Engagement - Zillow's Zestimate feature had a median error rate of 1.8% for homes listed for sale and 7.2% for off-market homes in 2025[30]. - Zillow Rentals had 2.4 million average monthly active rental listings in 2025, a 44% increase compared to December 31, 2024[31]. - Zillow's Enhanced Market experience delivered over 40% increase in leads to agent partners by the end of 2025[31]. - The Zillow Group portfolio attracted 259 million unique users in July 2025 and approximately 9.6 billion visits throughout the year[33]. - Zillow Rentals ranked 1 in partner satisfaction for return on marketing investment in its category[34]. - Zillow Rentals has an average of 2.4 million monthly active rental listings, including 72,000 multifamily properties, and attracted 33 million unique visitors per month in 2025[36]. Financial Performance and Growth Potential - Zillow's total addressable market includes transaction fees from residential real estate transactions and rentals marketplace, indicating significant growth potential[35]. - The total addressable market (TAM) for the residential real estate industry is estimated at $202 billion, with significant contributions from transaction fees, mortgage origination revenue, and rental advertising spend[37]. - In 2025, approximately 4.8 million homes were sold in the U.S., with over $1.3 trillion in purchase mortgage origination volume[41]. - The company reported GAAP profitability in 2025, with revenue growth outpacing cost growth, positioning it for sustainable profitable growth[36]. - Residential revenue accounted for 66% of total revenue for the year ended December 31, 2025, while rentals revenue accounted for 24% of total revenue, representing 39% growth compared to the year ended December 31, 2024[81]. Operational Challenges and Risks - The business is impacted by low housing inventory, elevated mortgage interest rates, and inflationary conditions, which have affected demand for products and services[71]. - The company may face significant operating losses and may not be able to sustain or increase revenue growth or profitability over the long term[72]. - Changes in industry practices due to the NAR Settlement may alter how commissions are negotiated and could impact financial performance[75]. - The company relies on third-party services for critical business functions, and any disruption could lead to significant losses[70]. - The ability to attract and retain real estate partners is crucial, as spending reductions could adversely affect financial results[78]. - The company is subject to regulatory scrutiny and potential litigation, which could disrupt operations and harm reputation[72]. - Future changes in pricing or lead delivery methodologies may negatively impact revenue opportunities and partner spending[84]. - The company may not be able to maintain relationships with real estate listing providers, which could limit access to essential data[85]. - The business is exposed to risks related to economic conditions, including recessionary pressures and changes in consumer confidence[79]. Cybersecurity and Data Privacy - The company is subject to various cybersecurity threats, including ransomware attacks, which could disrupt operations and lead to significant losses[122]. - The company relies on various vendors for processing and storing sensitive data, which introduces cybersecurity risks and vulnerabilities, potentially harming business operations and financial condition[124]. - Security incidents could disrupt the company's ability to provide services, leading to unauthorized access or loss of sensitive data, which may adversely affect customer trust and engagement[125]. - The company faces challenges in proactively addressing evolving cybersecurity threats, which could result in undetected vulnerabilities being exploited[127]. - The company is subject to various data privacy obligations, including the Payment Card Industry Data Security Standard (PCI DSS), with potential penalties ranging from $5,000 to $100,000 per month for noncompliance[179]. - The company may be adversely affected if it fails to comply with data privacy laws, leading to significant fines, penalties, and reputational harm[182]. Strategic Initiatives and Future Opportunities - Zillow aims to explore additional opportunities in home insurance, home renovation services, moving services, and home appraisal services[38]. - The company has invested over 83,000 hours in employee training and development through its internal platforms in 2025[55]. - The company has acquired Enchant, LLC, d/b/a Follow Up Boss in December 2023, indicating ongoing strategic acquisitions to enhance its business[108]. - The company’s fraud detection processes may not fully prevent fraudulent activities, which could harm its reputation and business results[110]. - Continuous innovation in products and services is necessary to meet customer expectations; failure to do so may result in customer dissatisfaction and loss of market share[92]. Intellectual Property and Compliance - Zillow's intellectual property is critical to its success, and failure to protect it adequately could harm brand value and financial condition, especially regarding proprietary technologies like the Zestimate home valuation model[150]. - The company may face costly intellectual property disputes, which could require significant resources to defend and potentially harm business operations and financial results[155]. - Regulatory scrutiny of AI and automated underwriting practices may impact Zillow's ability to adapt its business and maintain compliance, affecting financial condition and operations[166]. - Zillow holds multiple real estate brokerage licenses and must comply with various local, state, and federal regulations to maintain these licenses, which could increase operational costs[167]. Financial Structure and Capital Management - As of December 31, 2025, the company had an accumulated deficit of $1.9 billion, indicating significant past operating losses[188]. - The company has a maximum borrowing capacity of $600 million from mortgage credit facilities as of December 31, 2025, and entered into a $500 million Revolving Credit Facility in January 2026, none of which has been drawn yet[192]. - The company may face increased costs in the future as it continues to invest in business development, including expansion of Zillow Home Loans, product and service development, and technology infrastructure[191]. - The company expects fluctuations in results of operations due to various factors, including seasonal variances in home sales and economic conditions[203]. - The company may issue additional equity or securities convertible into equity, which could have a dilutive effect on existing shareholders[215].