ZILLOW GROUP, INC. (ZG) Q2 2025 Earnings Summary

Executive Summary

Q2 2025 revenue rose 15% year over year to $655M, beating company outlook and Wall Street revenue consensus; Adjusted EBITDA was $155M (24% margin) at the high end of guidance, while GAAP diluted EPS was $0.01 and non-GAAP diluted EPS was $0.40 . Revenue beat consensus ($647.4M*) and non-GAAP EPS missed ($0.416* vs $0.40) — a modest trade-off driven by higher variable costs and Redfin partnership lead acquisition expenses .
Management raised full-year revenue growth outlook to “mid-teens” at the higher end of prior “low- to mid-teens,” reaffirming positive GAAP net income and Adjusted EBITDA margin expansion in 2025; Q3 guide: For Sale growth similar to Q2, Rentals >40% YoY, ZHL purchase originations >40% .
Operational momentum: Rentals revenue accelerated to +36% YoY ($159M), multifamily properties +45% YoY to 64K, and mortgage purchase originations +48% YoY to $1.116B; traffic reached 243M average monthly unique users (+5% YoY) .
Capital allocation and balance sheet: Cash/investments fell to $1.2B following settlement of $419M remaining convert and $150M repurchases; company is now convertible debt-free and has $981M remaining authorization, with YTD repurchases expected to offset 2025 SBC .

What Went Well and What Went Wrong

What Went Well

Revenue outperformed a flat housing/mortgage market; For Sale +9% YoY to $482M with Residential +6% and Mortgages +41%, demonstrating share gains and effective Enhanced Markets execution .
Rentals flywheel: Revenue +36% YoY to $159M, multifamily property count +45% YoY to 64K, strengthened partner satisfaction and distribution (Redfin/Realtor.com), and transparency features (fees breakdown) that enhance conversion .
Strategic product velocity: Launches like BuyAbility, Offer Insights, Tour Itineraries, and SkyTour in Showcase increased shopper engagement and agent productivity; 27% of connections via Enhanced Markets, tracking toward >35% by year-end .

Quotes:

“Q2 was a strong quarter, marked by continued double-digit revenue growth, positive GAAP net income, and share gains in For Sale and Rentals. We now expect to deliver mid-teens revenue growth for the full year 2025…” — Jeremy Wacksman & Jeremy Hofmann in Shareholder Letter .
“Zillow’s Q2 results reflect how the power of our strategy and the strength of our execution are fueling growth across the company.” — CEO Jeremy Wacksman (press release) .

What Went Wrong

Expenses ran slightly above plan: Adjusted EBITDA expenses of $500M (+14% YoY) were modestly above the $495M outlook due to higher benefits/payroll taxes and incremental Redfin lead costs; GAAP net income margin remained ~0% .
Gross margin compression: Gross profit margin was 75% vs 77% a year ago, reflecting higher cost of revenue (lead acquisition, development amortization) and stepped-up marketing to support Rentals scaling .
Near-term OpEx trajectory: Q3 Adjusted EBITDA expenses expected to increase to $513M, primarily driven by Redfin rentals partnership lead costs, moderating near-term EPS conversion despite revenue strength .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$554	$598	$655
Gross Profit ($USD Millions)	$420	$459	$489
Gross Profit Margin (%)	76%	77%	75%
GAAP Net Income (Loss) ($USD Millions)	$(52)	$8	$2
Net Income Margin (%)	(9)%	1%	0%
Adjusted EBITDA ($USD Millions)	$112	$153	$155
Adjusted EBITDA Margin (%)	20%	26%	24%

Segment revenue breakdown:

Segment	Q4 2024	Q1 2025	Q2 2025
Residential ($USD Millions)	$387	$417	$434
Mortgages ($USD Millions)	$41	$41	$48
Total For Sale ($USD Millions)	$428	$458	$482
Rentals ($USD Millions)	$116	$129	$159
Other ($USD Millions)	$10	$11	$14

KPIs and operating metrics:

KPI	Q4 2024	Q1 2025	Q2 2025
Avg Monthly Unique Users (Millions)	204	227	243
Visits (Billions)	2.057	2.354	2.590
Active Rental Listings (Millions)	1.9	2.2	2.4
Multifamily Properties (Count)	50,000	55,000	64,000
ZHL Purchase Loan Origination Volume ($USD Millions)	$923	$791	$1,116
Cash & Investments ($USD Billions)	$1.9	$1.6	$1.2

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth	FY 2025	Low- to mid-teens	Mid-teens, at high end of prior range	Raised
Rentals revenue growth	FY 2025	~40%	~40%	Maintained
Adjusted EBITDA margin	FY 2025	Expansion	Expansion	Maintained
GAAP net income	FY 2025	Positive	Positive	Maintained
For Sale revenue growth	Q3 2025	—	Similar to Q2; Residential mid-single digits; Mortgages high-20%	New detail
Rentals revenue growth	Q3 2025	—	>40% YoY; multifamily accelerating	New detail
ZHL purchase originations	Q3 2025	—	>40% growth	New detail
Adjusted EBITDA expenses ($USD Millions)	Q3 2025	— (Q2 implied $495M)	$513M, primarily Redfin lead costs	Higher sequentially

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Enhanced Markets penetration	21% of connections (Q4 2024) ; 24% (Q1 2025)	27%; target >35% by YE25	Increasing adoption
Zillow Home Loans adoption & originations	Purchase originations +90% YoY (Q4 2024) ; +32% YoY (Q1 2025)	+48% YoY to $1.116B; more buyers choosing ZHL	Sustained acceleration
Rentals scaling & multifamily	50K MF properties; Rentals +25% YoY (Q4 2024) ; 55–60K MF, Rentals +33% YoY (Q1 2025)	64K MF, Rentals +36% YoY; #1 traffic and widening lead	Accelerating growth
AI/product innovations	Real Time Touring, Showcase expansion (Q4 2024) ; BuyAbility, Virtual Staging, performance insights (Q1 2025)	SkyTour, Offer Insights, Tour Itineraries, BuyAbility upgrades	Continuous iteration
Cost structure and lead costs	Higher cost of revenue and marketing, strategic spend (Q4 2024) ; lead acquisition costs & dev amortization (Q1 2025)	Adjusted EBITDA expenses slightly above outlook; Q3 guide higher due to Redfin lead costs	Near-term OpEx pressure

Management Commentary

“We’re staying disciplined on costs and are on track to deliver on our full-year 2025 targets, including continued Adjusted EBITDA margin expansion and positive GAAP net income.” — Jeremy Wacksman & Jeremy Hofmann (Shareholder Letter) .
“Our For Sale strategy is working… In Q2, 27% of connections came through the Enhanced Market experience… Zillow Home Loans continued to have double-digit adoption rates across our Enhanced Markets.” — Shareholder Letter .
“Building a better experience for renters and property managers has earned us the #1 position in rentals traffic… We expect quarterly year-over-year Rentals revenue growth to keep accelerating throughout 2025.” — Shareholder Letter .

Q&A Highlights

Earnings cadence: Non-GAAP EPS of $0.40 missed by ~$0.04 vs consensus; revenue beat by ~$7.6M — reflecting higher variable costs and partnership-related lead acquisition spending that management flagged in prepared remarks/outlook .
OpEx and Q3 guide clarity: CFO highlighted Adjusted EBITDA expenses expected at ~$513M in Q3, primarily driven by Redfin rentals partnership lead costs; revenue mix and Rentals acceleration should support margins over time .
Execution drivers: CEO emphasized Enhanced Markets share gains, double-digit ZHL adoption, and product innovation (Offer Insights, BuyAbility, Tour Itineraries, SkyTour) as key conversion levers .

Estimates Context

How results compared to S&P Global Wall Street consensus:

Metric	Consensus	Actual	Delta
Revenue ($USD Millions)	647.4*	655.0	+7.6
Non-GAAP Diluted EPS ($)	0.416*	0.40	(0.016)

Values retrieved from S&P Global. For EPS, consensus and “actual” refer to non-GAAP/normalized EPS. Company-reported GAAP diluted EPS was $0.01 in Q2 2025 .*

Where estimates may need to adjust:

Revenue upward bias likely persists into Q3 given guide (For Sale similar to Q2, Rentals >40% YoY) and multifamily momentum; consensus should reflect stronger Rentals and Mortgages trajectories .
EPS models should incorporate elevated lead acquisition costs (Redfin) and higher Adjusted EBITDA expenses ($513M) in Q3 before margin expansion reasserts in H2/FY .

Key Takeaways for Investors

Mix shift to Rentals and integrated For Sale funnel continues to drive revenue outperformance vs industry TTV; momentum supported by multifamily property growth and distribution partnerships .
Expect near-term EPS pressure from lead acquisition costs (Redfin) and seasonal expenses, offset by accelerating Rentals and improving mortgage origination volumes; Adjusted EBITDA margin expansion still guided for FY 2025 .
Enhanced Markets penetration (27% → >35% target) is a durable conversion lever; continued ZHL adoption and agent software integration (Follow Up Boss, Offer Insights) are catalysts for revenue per TTV expansion .
Product innovation cadence (SkyTour, BuyAbility upgrades, Tour Itineraries) enhances shopper engagement and agent productivity, supporting sustained share gains in For Sale and Rentals .
Capital allocation remains shareholder-friendly: company is convertible debt-free, with $981M authorization remaining and repurchases expected to offset 2025 SBC, providing share count discipline .
Trading implication: Favorable revenue beat and raised FY growth outlook are positives; watch Q3 OpEx and lead cost trajectory — a set-up for potential estimate revisions on EPS path but supportive top-line beats .

Additional supporting exhibits (from 8-K press release and exhibits):

Non-GAAP net income per share reconciliation and KPIs (users/visits) .
Loan origination volume detail (purchase/refi) .
Consolidated financial statements (P&L, balance sheet, cash flows) .