Zillow Group Inc. reported fourth‑quarter 2025 results on February 10, 2026, posting revenue of $654 million, up 18% year‑over‑year, and a net income of $3 million, a turnaround from a $52 million loss in the same quarter a year earlier. Adjusted earnings per share were $0.39, slightly below the $0.40 consensus estimate, while adjusted free cash flow for the full year reached $420 million, a 36% increase from $300 million in 2024. The company’s Q4 adjusted EBITDA margin was 23%, up from 20% in Q4 2024, and the full‑year margin expanded to 24%.
The revenue beat was driven by a 45% jump in Rentals revenue to $168 million and a 39% rise in Mortgages revenue to $57 million, offsetting modest growth in For Sale revenue, which increased 11% to $475 million. Rentals growth was largely powered by a 63% increase in multifamily revenue, while mortgage originations grew 67% in purchase volume. These segment gains reflect the company’s “housing super‑app” strategy, which is expanding its footprint across the buying, selling, renting, and financing lifecycle. Compared with Q4 2024, the company’s revenue grew 18% versus a 12% decline in the prior year, underscoring a strong rebound in demand.
The net income turnaround and EPS miss can be attributed to a combination of cost controls and legal headwinds. Management highlighted disciplined spending that helped lift margins, but ongoing legal expenses—reported as a headwind to EBITDA in Q1 2026—contributed to the slight EPS shortfall. The company’s GAAP net income of $23 million for the full year marks its first profitable year since 2012, signaling a successful shift from a loss‑making model to sustainable profitability. The EPS miss of $0.01, or about 2.5%, was largely due to the impact of one‑time legal costs that were not fully offset by the margin expansion.
For the first quarter of 2026, Zillow guided revenue to $700 million–$710 million, above the consensus estimate of $691 million, and reiterated a full‑year revenue growth outlook of 16%–18%. However, the company projected adjusted EBITDA for Q1 2026 at $160 million–$175 million, below the consensus of $182.7 million, reflecting the anticipated impact of elevated legal expenses on margins. CEO Jeremy Wacksman emphasized confidence in the company’s long‑term strategy, noting that the “housing super‑app” platform is positioned to drive durable growth, while acknowledging that legal matters will not materially affect the company’s financial position.
The market reacted with a 5% slide in after‑hours trading, driven primarily by the below‑consensus EBITDA guidance and the expected legal expense headwinds. Investors focused on the margin pressure rather than the revenue beat, indicating that profitability outlook is a key concern. Despite the short‑term market reaction, the company’s strong revenue performance and return to profitability reinforce its competitive position in the real estate technology space.
Zillow’s results underscore a strategic pivot toward higher‑margin Rentals and Mortgages segments, which are less sensitive to the cyclical nature of the For Sale market. The company’s continued investment in AI and platform integration supports its “super‑app” vision, while disciplined cost management has enabled a margin expansion that offsets the impact of legal costs. The guidance signals confidence in sustaining growth, but the EBITDA outlook highlights the need for ongoing focus on cost control and legal expense management as the company scales its diversified business model.
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