Core Viewpoint - Zillow Group reported mixed Q4 2025 results, with revenues exceeding expectations but adjusted earnings falling short [2][3] Financial Performance - The company achieved a GAAP net income of $3 million (1 cent per share), a significant improvement from a net loss of $52 million (22 cents per share) in the previous year [3] - Non-GAAP net income for Q4 2025 was $98 million (39 cents per share), up from $68 million (27 cents per share) year-over-year, but missed the consensus estimate of 42 cents per share [3] - Quarterly revenues rose to $654 million from $554 million in the prior year, surpassing the Zacks Consensus Estimate of $650 million [5] - For the full year 2025, revenues increased to $2.58 billion from $2.24 billion in 2024 [5] Segment Performance - Residential revenues grew 8% to $418 million, driven by strong growth in agent and software offerings [5] - The Mortgages segment generated $57 million in revenues, up from $41 million, primarily due to a 67% increase in purchase loan origination [6] - Rental revenues surged 45% to $168 million, largely due to a 63% year-over-year growth in multifamily revenues [6] Profitability Metrics - Gross profit for the quarter was $476 million, with margins of 73%, compared to $420 million and 76% in the prior year [7] - Adjusted EBITDA was $149 million, up from $112 million a year ago, with respective margins of 23% and 20% [7] Cash Flow and Liquidity - In Q4, Zillow generated $72 million in cash from operations, down from $122 million in the previous year [8] - For 2025, cash from operating activities was $368 million, compared to $428 million in 2024 [9] - As of December 31, 2025, the company had $768 million in cash and cash equivalents [9] Future Outlook - For Q1 2026, Zillow expects total revenues between $700 million and $710 million, with adjusted EBITDA projected at $160 million to $175 million [10] - The company anticipates a 40% year-over-year growth in Mortgages revenues and high single-digit growth in residential revenues, while rental revenues are expected to rise over 40% [10] - For 2026, Zillow forecasts mid-teens revenue growth, with rental revenues projected to increase approximately 30% year-over-year [11] Estimate Trends - Recent estimates for Zillow have trended downward, with a consensus estimate shift of -6.25% [12] - The stock currently holds a Zacks Rank 3 (Hold), indicating an expectation of in-line returns in the coming months [14]

Core Viewpoint - Zillow Group, Inc. has announced a $1.25 billion share buyback plan, reflecting confidence in its financial strategy and growth potential [1][2][3] Group 1: Share Buyback Details - The newly authorized buyback plan amounts to $1.25 billion, with Zillow having approximately $1.3 billion remaining for future repurchases [2] - From January 1 to March 4, Zillow repurchased 3.8 million shares of Class A common stock at an average price of $47.84 per share and 9.7 million shares of Class C capital stock at an average price of $45.92 per share, totaling $626 million [2] - Since 2021, Zillow has repurchased approximately $3.3 billion of stock at an average price of $49 per share, totaling 66.7 million shares [3] Group 2: Stock Performance - Following the announcement, Zillow shares are trading 4.02% higher at $47.66 [4]

Summary of Zillow Group FY Conference Call (February 26, 2026) Company Overview - **Company**: Zillow Group (NasdaqGS: Z) - **Industry**: Real Estate Technology and Online Property Listings Key Financial Performance - **2025 Growth**: Overall business grew by 16% and Adjusted EBITDA increased by 25% [6] - **GAAP Profitability**: Achieved GAAP net income profitability for all four quarters of 2025 [6] - **Rentals Business Growth**: Rentals business grew by 39% year-over-year in 2025 [6] - **Margin Expansion**: Expanded margins by approximately 200 basis points [6] 2026 Financial Outlook - **Growth Expectations**: Anticipating mid-teens growth for 2026, with rentals expected to grow by around 30% [7][8] - **Cost Management**: Fixed costs expected to remain flat with inflation, maintaining cost discipline [9] - **Revenue Drivers**: Focus on converting brand engagement into transactions, regardless of housing market conditions [8] Strategic Vision - **Housing Super App**: Aiming to be a comprehensive platform for all housing-related needs, leveraging strong brand engagement [12][13] - **Transaction Funnel**: Enhancing the transaction process by integrating various services (mortgage, rentals, etc.) into a seamless experience [12][13] - **AI Integration**: Utilizing AI to improve user experience and streamline the transaction process [18][20] Product Development and Technology - **Proprietary Technology**: Development of unique tools such as 3D imaging and ShowingTime for home tours [21][22] - **Zillow Home Loans**: Significant growth in the mortgage segment, with a goal to become one of the largest lenders in the country [38][39] - **Enhanced Markets Strategy**: Aiming for 75% of connections to occur through integrated services, enhancing agent and loan officer collaboration [34][35] Market Dynamics and Challenges - **Affordability Trends**: Notable improvement in housing affordability, with the percentage of income spent on housing decreasing from 38% to 32% [46] - **Regulatory Concerns**: Ongoing litigation related to partnerships and business practices, but management remains confident in their competitive positioning [64][68] Rental Business Insights - **Growth in Rentals**: Expecting 30% growth in the rentals segment for 2026, with a clear path to a $1 billion revenue target [50][56] - **Market Share**: Currently capturing over 70% of single-family home rentals, with plans to expand further [54][56] - **Regulatory Impact**: Confidence in the partnership with Redfin despite ongoing FTC scrutiny, emphasizing pro-competitive benefits [65] Conclusion - **Long-term Ambitions**: Zillow Group is focused on expanding its market share across various segments, enhancing user experience through technology, and navigating regulatory challenges while maintaining growth momentum in a challenging housing market [39][46][64]

Financial Data and Key Metrics Changes - The company reported a revenue of $736 million in Q4, representing a 20% quarter-over-quarter decline, which was better than the anticipated 35% decline [29] - GAAP gross profit was $57 million in Q4, compared to $66 million in Q3, with a GAAP gross margin of 7.7%, up 50 basis points sequentially [30] - Adjusted EBITDA loss was $43 million, compared to $33 million in Q3, exceeding the favorable end of the guidance range [31] - The net loss for Q4 was $1.1 billion, including a $933 million non-cash loss from convertible note refinancing [31] Business Line Data and Key Metrics Changes - The company increased home acquisitions by 46% quarter-over-quarter, purchasing 1,706 homes in Q4 [29][33] - The October 2025 acquisition contract cohort achieved over 50% sold through or in resale contract, marking a 2x improvement in resale velocity compared to October 2024 [28] - The percentage of homes on the market for over 120 days decreased from 51% at the end of Q3 to 33% at the end of Q4, reflecting operational improvements [34] Market Data and Key Metrics Changes - The company expanded its geographic coverage significantly, making its product available to nearly every homeowner in the lower 48 states [20] - The operational changes under Opendoor 2.0 have resulted in a more tailored approach to pricing and selection, improving the overall market strategy [34] Company Strategy and Development Direction - The company aims to achieve adjusted net income profitability by the end of 2026 on a 12-month go-forward basis, focusing on improving unit economics and transaction velocity [2][39] - The strategy includes a shift from primarily building channels to transacting directly with buyers and sellers, reducing capital risk [3] - The company is investing in product development, particularly in AI and mortgage products, to enhance operational efficiency and customer experience [47][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory, stating that the operational changes are yielding positive results and that they are on track to meet their goals [41] - The CEO emphasized that the company is not relying on favorable macro conditions but is actively improving its operations to achieve profitability [41] - Management acknowledged the importance of building trust with customers to become the default option for home selling [59] Other Important Information - The company has made significant advancements in AI integration, improving underwriting processes and operational efficiency [50][51] - The leadership team has undergone substantial changes, with new executives in key positions, enhancing the company's capabilities [12] Q&A Session Summary Question: Where is Opendoor at currently compared to expectations and profitability? - Management stated they are on track and performing well against their four-step plan, with improvements in contribution margins since September [41] Question: What are the primary macro or pricing drivers preventing a faster ramp in acquisition contract volumes? - Management indicated that they are focused on product investment rather than immediate growth, which may affect acquisition volumes in the short term [44][46] Question: How should investors assess progress given the stock's decline? - Management advised that investors should focus on the underlying business improvements rather than the stock price, emphasizing the importance of building a product that people want [62][64] Question: If home prices drop another 5%-10% nationally, what happens to margins and inventory risk? - Management highlighted that Opendoor 2.0 is designed to move homes quickly rather than hold them, utilizing a broader toolkit for pricing and selection to mitigate risks [66]

Core Viewpoint - Zillow's stock is currently trading at depressed levels, with mixed signals regarding its future performance and valuation Financial Performance - In the fourth quarter, Zillow reported revenue of approximately $654 million, slightly exceeding Wall Street expectations, while adjusted earnings per share (EPS) of 39 cents missed consensus by one cent [2] - Management has guided first-quarter revenue to a range of $700 million to $710 million, surpassing estimates of around $690 million, indicating ongoing top-line growth despite investor concerns about margins and profitability [2] Valuation Concerns - Legal costs and the emergence of new competitors are currently weighing on Zillow's stock valuation, creating near-term uncertainty [3] - There is potential for Zillow to benefit from normalized legal spending and a recovery in the housing market in the long term [3] Technical Indicators - The Relative Strength Index (RSI) is at 16.12, indicating that the stock is in oversold territory, which may suggest a potential reversal if buying interest increases [4] - The Moving Average Convergence Divergence (MACD) is below its signal line, reinforcing the bearish sentiment surrounding the stock [4] - The combination of an oversold RSI and bearish MACD indicates mixed momentum, suggesting that traders should remain cautious [4] Stock Performance - As of the latest publication, Zillow's shares were down 0.32% at $43.56, with a week-to-date decline of approximately 19.6% [5] - The stock is trading near its 52-week low of $43.22, with key resistance identified at $45.00 and key support at $43.00 [5]

Core Viewpoint - The company faces challenges due to elevated legal costs and competitive pressures, leading to a cautious outlook despite potential upside from a housing market recovery [1][2][8] Margin Outlook And Earnings Power - Excluding legal expenses, the company could show significant improvement in incremental margins, with estimates of around 50% incremental margins in 2025 [2][3] - Including legal costs, incremental margins are expected to remain in the 30%-40% range for the third consecutive year [3] - By 2027, as legal costs decline, adjusted EBITDA margins could normalize to approximately 60%, reflecting a return to stronger profitability [4] Revenue Growth And Housing Market Catalyst - Revenue growth is projected to slow from 16% in 2026 to 11% in 2027, but stronger performance could enhance adjusted EBITDA due to fixed-cost leverage [5] - A recovery in the housing market is seen as a significant revenue catalyst, although it is expected to occur gradually rather than sharply [5] Private Listing Networks And Competitive Risks - Management believes private listing networks account for less than 1% of total listings and currently do not materially impact the business [6] - Despite the immaterial immediate revenue impact, structural uncertainties may affect the stock's valuation multiple [6] Quarterly Results And Guidance Shortfall - The fourth-quarter adjusted EBITDA was 2% below estimates due to weaker margins, and first-quarter guidance was 5% below projections primarily due to higher costs [7] - Full-year 2026 estimates were only reduced by 1%, indicating improved expectations for the second half of 2026 [7] Overall Market Sentiment - The company is experiencing improving operating leverage and potential housing recovery as upside drivers, but legal costs and competitive dynamics warrant a cautious approach [8] - At the time of publication, Zillow shares were down 18.11% at $44.80, marking a new 52-week low [8]

Core Insights - Zillow Group reported strong Q4 2025 results with total revenue increasing by 18% year over year, contributing to a full-year revenue growth of 16% [8][20] - The company achieved full-year profitability with a GAAP net income of $23 million and expanded EBITDA margins by nearly 200 basis points [9][20] - Strategic initiatives include expanding the enhanced market strategy, integrating AI into their ecosystem, and rolling out Zillow Pro to support agents [10][19] Financial Performance - Q4 revenue reached $654 million, up 18% year over year, with EBITDA of $149 million and a margin of 23%, which is 260 basis points higher than the previous year [20] - For sale revenue grew 11% year over year in Q4 to $475 million, with residential revenue up 8% and mortgages revenue increasing by 39% [20] - Rentals revenue grew 45% year over year in Q4, driven by a 63% increase in multifamily revenue, reaching $168 million [20] Strategic Initiatives - The company is focusing on enhancing its market strategy, which includes integrating technology to improve the real estate transaction process for consumers and professionals [19][20] - Zillow Home Loans has seen double-digit adoption rates, contributing to strong growth in purchase originations [19][20] - The rollout of Zillow Pro is expected to help agents manage their clients more effectively and improve lead conversion [19][30] Market Position and Growth - Zillow's rental segment showed significant growth, with a 45% increase in Q4 revenue, and the company estimates its share of rental listings increased to 63% [11][20] - The company is optimistic about its long-term strategy, aiming for mid-teens revenue growth in 2026 and continued EBITDA margin expansion [13][20] - Zillow's unique position in the market is supported by a trusted brand and a large, engaged consumer audience, with 80% of traffic coming directly to the platform [19]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 18% year-over-year to $654 million, near the top end of the outlook range [24] - Full-year 2025 total revenue grew by 16%, consistent with the mid-teens growth outlook [30] - EBITDA for Q4 was $149 million, with a margin of 23%, up 260 basis points year-over-year [24] - Full-year 2025 EBITDA grew by 25% year-over-year, with a net income margin expansion of 990 basis points [30][32] Business Line Data and Key Metrics Changes - For Sale revenue grew by 11% year-over-year in Q4 to $475 million, with residential revenue up 8% and mortgages revenue up 39% [25][27] - Rentals revenue in Q4 was $168 million, accelerating to 45% year-over-year growth, driven by a 63% increase in multifamily revenue [28][29] - For Sale revenue for the full year reached $1.9 billion, up 9% from 2024, while Rentals revenue totaled $630 million, up 39% from 2024 [10][30] Market Data and Key Metrics Changes - Zillow's share of rental listings increased to 63% in 2025, up from 54% in 2024 [21] - Average monthly unique visitors for Zillow Rentals reached 31 million in Q4 [20] - The housing market grew by 3% in 2025, while Zillow's revenue outperformed the market by 1,300 basis points [30] Company Strategy and Development Direction - The company is focused on integrating and digitizing the real estate transaction process to improve consumer experiences and professional productivity [6][11] - Zillow Pro, a new offering, aims to help agents manage their entire business and improve lead conversion [71] - The strategy emphasizes building a comprehensive marketplace for rentals and modernizing the rental transaction process [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and does not expect legal challenges to materially impact financial performance [22][66] - The company anticipates continued growth in 2026, with mid-teens revenue growth expected and a focus on enhancing the rental business [36][38] - Management highlighted improvements in affordability in the housing market, which could drive broader recovery over time [39] Other Important Information - The company reported $23 million of GAAP net income for the full year, achieving full-year profitability [10] - Share-based compensation expense decreased by 13% year-over-year, contributing to net income growth [32][42] - The company repurchased $670 million of shares throughout 2025, returning $1.1 billion to shareholders [34][35] Q&A Session Summary Question: Can you elaborate on rental trends and opportunities? - Management indicated that the growth in rentals is due to a unique strategy focused on organizing various types of supply, including long-tail listings, which drives audience engagement and revenue growth [46][47] Question: How do you view the impact of recent industry consolidation? - Management does not expect any risk or impact from industry consolidation, as the majority of sellers and agents prefer broad exposure for their listings [55][56] Question: Is there any change in approach due to legal challenges? - Management confirmed that there are no expected changes to the business strategy due to ongoing legal challenges, maintaining confidence in their long-term approach [66][67] Question: What is the status of Zillow Pro and its impact on lead conversion? - Zillow Pro is currently in beta testing, with plans for nationwide expansion in the second half of the year, aimed at improving agent efficiency and conversion rates [71][72]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 18% year-over-year to $654 million, near the top end of the outlook range [25] - Full-year 2025 total revenue grew by 16%, consistent with the mid-teens growth outlook [31] - EBITDA for Q4 was $149 million, with a margin of 23%, up 260 basis points year-over-year [25] - Full-year 2025 EBITDA grew by 25% year-over-year, with net income margin expanding by 990 basis points [31][33] Business Line Data and Key Metrics Changes - For Sale revenue grew by 11% year-over-year in Q4 to $475 million, with residential revenue up 8% and mortgages revenue up 39% [26][10] - Rentals revenue in Q4 was $168 million, growing 45% year-over-year, driven by a 63% increase in multifamily revenue [27][10] - For Sale revenue for the full year reached $1.9 billion, up 9% from 2024, while Rentals revenue for the full year was $630 million, up 39% [10][31] Market Data and Key Metrics Changes - Zillow's share of rental listings increased to 63% in 2025, up from 54% in 2024 [18] - Zillow Rentals attracted 31 million average monthly unique visitors in Q4, indicating strong audience engagement [19] - The housing market grew by 3% in 2025, with Zillow outperforming the market by 1,300 basis points [31] Company Strategy and Development Direction - The company is focused on integrating and digitizing the real estate transaction process, enhancing customer experiences and improving productivity for real estate professionals [7][9] - Zillow Pro, a new offering, aims to help agents manage their entire business and improve lead conversion [72] - The strategy emphasizes building a comprehensive marketplace for rentals and modernizing the rental transaction process [18][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and does not expect legal challenges to materially impact financial performance [22][66] - The company anticipates continued revenue growth in 2026, with mid-teens growth expected across the business [38] - Management noted improvements in housing affordability, which could lead to a broader market recovery over time [39] Other Important Information - The company reported $23 million of GAAP net income for the full year, achieving full-year profitability [10] - Share-based compensation expense decreased by 13% year-over-year, contributing to net income growth [33] - The company ended 2025 with $1.3 billion in cash and investments, and secured a $500 million revolving credit facility [35] Q&A Session Summary Question: Can you elaborate on rental trends and opportunities in multifamily? - Management indicated that the growth in rentals is due to their unique strategy of organizing various types of supply, which drives audience engagement and revenue growth [45][46] Question: How do you view the impact of recent industry consolidation on your business? - Management does not expect any risk or impact from industry consolidation, as the majority of sellers and agents prefer broad exposure [55][56] Question: Is there any change in approach to Zillow's business strategy due to legal challenges? - Management confirmed that there are no expected changes to the business strategy and remains confident in their positions [66] Question: What is the status of Zillow Pro and its impact on lead conversion? - Zillow Pro is currently in beta testing, with plans for nationwide expansion in the second half of the year, aimed at improving agent efficiency and conversion [71][72]

Core Insights - Zillow has launched a new tool called CreditClimb that allows renters to build credit through their rent payments, which can be reported to major credit bureaus for an annual fee of $20 [2][3] - The initiative aims to help renters improve their credit scores, with evidence suggesting that those using similar programs have seen significant increases in their scores [3] Company Developments - CreditClimb enables renters to report on-time payments to Equifax, Experian, and TransUnion, and also allows them to add up to two years of previous rent payments to their credit report [2] - Zillow's senior vice president, Michael Sherman, emphasized that this tool can help renters qualify for better financing options and move towards homeownership [3] Industry Trends - According to TransUnion, the percentage of consumers whose rent payments are reported has increased from 11% in 2024 to 13% in 2025, indicating a growing trend in rent payment reporting [4] - However, the number of property managers participating in rent payment reporting has decreased from 48% to 44%, suggesting a potential shift towards self-reporting by consumers [5] Consumer Behavior - Recent data indicates that consumers are seeking ways to improve their credit scores without necessarily acquiring new credit cards, with many expressing a desire for higher credit limits to enhance financial flexibility [7][8]