Financial Performance - Zillow reported GAAP profitability in 2025, with revenue growth outpacing cost growth, positioning the company 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]. - As of December 31, 2025, the company had an accumulated deficit of $1.9 billion, indicating significant past operating losses[188]. - The company’s growth rate may decline in the future due to various factors, including the maturation of its business and challenges in executing its growth strategy[188]. - The company’s ability to repay its debt obligations depends on future performance and cash flow generation, which may not be sufficient[190]. Market and User Engagement - The Zillow Group portfolio attracted 259 million unique users in July 2025 and approximately 9.6 billion visits throughout the year[33]. - Zillow Rentals had 2.4 million average monthly active rental listings in 2025, a 44% increase compared to December 31, 2024[31]. - 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]. - Approximately 57% of sellers are also buying at the same time, and 37% of renters planning to move within the next year intend to buy their next home[32]. Product and Service Development - Zillow's Enhanced Market experience delivered over 40% increase in leads to agent partners by the end of 2025[31]. - Zillow Home Loans achieved double-digit customer adoption rates across Enhanced Markets in 2025[34]. - In 2025, Zillow expanded its cost-transparency features across the Rentals network, providing renters with more information about move-in and monthly costs[31]. - The company aims to explore additional opportunities in home insurance, renovation services, and moving services in the future[38]. - Continuous innovation in products and services is necessary to meet customer expectations; failure to do so may lead to customer dissatisfaction and loss of market share[92]. Regulatory and Compliance Risks - The business is subject to regulatory scrutiny and potential litigation, which could result in fines, penalties, and reputational harm[72]. - Compliance with MLS rules is essential for maintaining access to listings data, and failure to comply could lead to restrictions or termination of access, impacting business operations[89]. - The company faces risks related to regulatory compliance, with potential changes in laws affecting operations and requiring additional resources for compliance[161]. - Zillow must maintain various licenses for its real estate and mortgage services, which are subject to stringent state and federal regulations[165]. - The company’s operations may be adversely affected if it fails to comply with evolving data privacy laws, leading to potential government enforcement actions and litigation[182]. Cybersecurity and Data Privacy - The company is subject to various cybersecurity threats, including phishing and ransomware attacks, which could compromise sensitive data and harm its reputation[119]. - 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]. - Cybersecurity risks are inherent to the company's operations and could materially affect its business strategy and financial condition[223]. - The company has a third-party service provider management program to assess cybersecurity risks associated with third-party providers[229]. - The information security team conducts annual cybersecurity awareness training for employees to help prevent and respond to cybersecurity incidents[226]. Competitive Landscape - The company faces intense competition from various real estate service providers, which may have advantages in resources and brand recognition, potentially harming the company's market position[94]. - The ability to attract and retain real estate partners is crucial, as spending from these partners directly affects revenue generation[78]. - The company may not be able to maintain relationships with real estate listing providers, which could limit access to essential data for its services[85]. - The company’s success depends on its ability to innovate and compete effectively in a rapidly changing technological landscape[86]. Financial and Operational 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 government-sponsored entities' operations could adversely affect Zillow Home Loans' liquidity and overall financial condition[142]. - The company faces challenges in proactively addressing evolving cybersecurity threats, which could result in undetected vulnerabilities being exploited[127]. - Disruptions in service on mobile apps or websites could damage the company's reputation and result in customer loss, affecting overall financial performance[132]. Intellectual Property and Acquisitions - The company holds 224 patents and has 225 pending patent applications, focusing on proprietary valuation models and data management techniques[46]. - The company relies on intellectual property protections, but challenges in safeguarding these rights could harm its competitive position and financial condition[150]. - The company is involved in disputes regarding the accuracy of its Zestimate and Rent Zestimate valuations, which could lead to costly litigation and impact its financial condition[105]. - The company has acquired Enchant, LLC, d/b/a Follow Up Boss in December 2023, as part of its strategy to evaluate potential acquisitions and investments[108]. Capital Structure and Stock Performance - Zillow's Class A common stock price ranged from $32.82 to $86.76 per share, while Class C capital stock ranged from $33.68 to $90.32 per share over the last three fiscal years[209]. - The company's capital structure concentrates voting control with founders, with Richard Barton and Lloyd Frink holding approximately 35% and 22.7% of voting power, respectively[211]. - Future sales of stock could lead to a decline in stock price, and there are no contractual restrictions on issuing additional shares, which may cause dilution[213]. - The company may face challenges in raising additional capital on acceptable terms, which could hinder growth and operational plans[200].
Zillow Group(ZG) - 2025 Q4 - Annual Report