Nasdaq:Z
ZILLOW GROUP, INC.
A premier U.S. digital real estate platform connecting consumers with homes while monetizing vast data assets for advertising and lending partners.
Key Metrics
Investment Thesis
Bull Case
Zillow Group presents a compelling buy opportunity as it has finally achieved profitability after years of heavy investment, evidenced by the shift from a -$158M loss in 2023 to a $23M profit in 2025; the company's robust cash generation of $368M from operations and growing revenue stream suggest sustainable growth as the digital real estate landscape matures; its dominant market position and diversified monetization strategies offer strong downside protection while positioning it for accelerated growth in a recovering housing market.
Bear Case
Investors should exercise caution given the company's lingering balance sheet weakness with a negative retained earnings deficit of $1.86B and significant goodwill impairment risks totaling $2.82B; the heavy capital expenditures of $133M and substantial other cash outflows indicate ongoing pressure on liquidity and potential margin compression; furthermore, the historical pattern of losses suggests that profitability may be fragile and dependent on favorable interest rate environments which could quickly reverse.
About ZILLOW GROUP, INC.
Zillow Group Inc. is a leading digital real estate marketplace operating primarily in the United States, providing comprehensive data and advertising services to home buyers, sellers, renters, agents, and lenders through its website, mobile apps, and proprietary data platforms.
Analysis
Management Discussion
Recent financial performance highlights a pivotal turnaround where operating profit swung from negative $34M to positive territory, driven by strong operational cash flow of $368M despite a significant $1.34B reduction in financing activities due to share buybacks; the company successfully stabilized its bottom line after years of net losses, culminating in a 2025 net profit of $23M against record revenue growth from $1.96B in 2022 to $2.58B in 2025; however, investors should note the substantial goodwill of $2.82B and retained earnings deficit of -$1.86B which require continued successful execution to justify their book value.
Industry Overview
The digital real estate industry is evolving from a simple listing portal into a complex multi-sided marketplace connecting consumers, agents, lenders, and insurers; success in this sector now depends on data accuracy, user engagement metrics, and the ability to diversify revenue streams beyond traditional advertising to capture value across the entire home buying lifecycle.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $1.96B | $1.95B | $2.24B | $2.58B |
| Cost of Revenue | $367.0M | $421.0M | $527.0M | $668.0M |
| Gross Profit | $1.59B | $1.52B | $1.71B | $1.92B |
| Operating Expenses | $1.68B | $1.79B | $1.91B | $1.95B |
| Operating Income | $-93.0M | $-270.0M | $-197.0M | $-34.0M |
| R&D | $498.0M | $560.0M | $585.0M | $607.0M |
| G&A | $498.0M | $553.0M | $524.0M | $497.0M |
| Marketing | $664.0M | $658.0M | $790.0M | $843.0M |
| Stock-Based Comp | $451.0M | $451.0M | $448.0M | $390.0M |
| D&A | $157.0M | $187.0M | $240.0M | $264.0M |
| Amortization | — | — | $77.0M | $89.0M |
| Other OpEx | $24.0M | $23.0M | $7.0M | $2.0M |
| Non-Operating Income | $8.0M | $116.0M | $90.0M | $59.0M |
| Pre-Tax Income | $-85.0M | $-154.0M | $-107.0M | $25.0M |
| Income Tax | $3.0M | $4.0M | $5.0M | $2.0M |
| Continuing Ops | $-88.0M | $-158.0M | $-112.0M | $23.0M |
| Discontinued Ops | $-13.0M | $0 | $0 | $0 |
| Net Income | $-101.0M | $-158.0M | $-112.0M | $23.0M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $-101.0M | $-158.0M | $-112.0M | $23.0M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $3.60B | $3.15B | $2.33B | $2.12B |
| Cash & Equivalents | $1.47B | $1.49B | $1.08B | $768.0M |
| Accounts Receivable | $72.0M | $96.0M | $104.0M | $149.0M |
| Prepaid Expenses | $126.0M | $140.0M | $210.0M | $287.0M |
| Other Current Assets | $1.94B | $1.42B | $938.0M | $918.0M |
| Long-Term Assets | $2.96B | $3.50B | $3.50B | $3.56B |
| PP&E (Net) | $271.0M | $328.0M | $360.0M | $350.0M |
| Intangibles | $154.0M | $241.0M | $207.0M | $279.0M |
| Goodwill | $2.37B | $2.82B | $2.82B | $2.82B |
| Operating Leases | $126.0M | $73.0M | $59.0M | $56.0M |
| Other LT Assets | $35.0M | $44.0M | $46.0M | $55.0M |
| Total Assets | $6.56B | $6.65B | $5.83B | $5.68B |
| Current Liabilities | $270.0M | $971.0M | $831.0M | $679.0M |
| Accounts Payable | $20.0M | $28.0M | $30.0M | $36.0M |
| Current Leases | $31.0M | $37.0M | $14.0M | $14.0M |
| Deferred Revenue | $44.0M | $52.0M | $62.0M | $69.0M |
| Other Current Liab | $85.0M | $747.0M | $620.0M | $426.0M |
| Long-Term Liabilities | $1.81B | $1.16B | $150.0M | $122.0M |
| LT Operating Leases | $139.0M | $95.0M | $83.0M | $79.0M |
| Other LT Liab | $1.64B | $967.0M | $-78.0M | $-321.0M |
| Total Liabilities | $2.08B | $2.13B | $981.0M | $801.0M |
| Shareholders' Equity | $4.48B | $4.53B | $4.85B | $4.88B |
| Retained Earnings | $-1.61B | $-1.77B | $-1.88B | $-1.86B |
| AOCI | $-15.0M | $-5.0M | $-3.0M | $2.0M |
| Total L&E | $6.56B | $6.65B | $5.83B | $5.68B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $-101.0M | $-158.0M | $-112.0M | $23.0M |
| Non-Cash Adjustments | $8.81B | $456.0M | $412.0M | $-49.0M |
| Working Capital Changes | $-4.21B | $56.0M | $128.0M | $394.0M |
| Cash from Operations | $4.50B | $354.0M | $428.0M | $368.0M |
| Capital Expenditures | $115.0M | $135.0M | $143.0M | $133.0M |
| Cash from Investing | $-1.53B | $25.0M | $395.0M | $-6.0M |
| Share Buybacks | $947.0M | $424.0M | $301.0M | $670.0M |
| Cash from Financing | $-4.34B | $-352.0M | $-1.23B | $-674.0M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $-1.37B | $27.0M | $-410.0M | $-312.0M |
| Beginning Cash | $2.84B | $1.47B | $1.50B | $1.08B |
| Ending Cash | $1.47B | $1.50B | $1.08B | $773.0M |
Frequently Asked Questions
How does ZILLOW GROUP, INC. make money?
The company's revenue is driven by three core pillars: Advertising Services which monetizes its high-traffic consumer sites; Lending and Financial Services which provides mortgage lead generation and title insurance referrals; and Data Services which sells property valuation and market analysis tools to investors and institutions.
What are the main risks for Z?
The company faces significant cyclicality risk as real estate transactions are highly sensitive to interest rate fluctuations and housing affordability constraints; regulatory scrutiny regarding data privacy, fair lending practices, and the valuation accuracy of its Zestimate tool poses potential legal and reputational threats; heavy reliance on advertising revenue makes it vulnerable to macroeconomic downturns that reduce consumer spending; and intense competition from other technology platforms seeking to replicate its multi-sided marketplace model.
What is Z's competitive advantage?
Zillow Group possesses an unassailable data network effect where every user interaction improves its algorithmic accuracy, creating a high barrier to entry for competitors; its diversified revenue model across advertising, financial services, and data licensing provides stability against single-market volatility; and its dominant market share in U.S. online real estate search grants it unparalleled brand recognition and first-mover advantage.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.