Executive Summary / Key Takeaways

• Integrated "Housing Super App" Strategy Driving Outperformance: Zillow Group is actively transforming the fragmented real estate journey into a seamless, digital "housing super app" experience. This strategy, centered on integrating services from search to financing and closing, is enabling Zillow to consistently outperform the broader housing market, which continues to "bounce along the bottom".
• AI and Proprietary Technology as Core Differentiators: Zillow's long-standing commitment to AI, from the foundational Zestimate to advanced features like AI-powered virtual staging in Zillow Showcase and intelligent tools in Follow Up Boss, creates a significant competitive moat. These technologies enhance user experience, drive agent efficiency, and improve transaction conversion rates.
• Robust Growth in Rentals and Mortgages: The Rentals segment is a key growth engine, with revenue accelerating significantly (41% YoY in Q3 2025) driven by multifamily property expansion and strategic partnerships. Zillow Home Loans is also demonstrating strong growth (36% YoY in Q3 2025) through deep integration within Zillow's Enhanced Markets.
• Path to Sustained Profitability and Mid-Cycle Targets: Zillow achieved positive GAAP net income in Q3 2025 and is on track for full-year GAAP profitability in 2025, alongside expanding EBITDA margins. Management projects a clear path to $5 billion in annual revenue and 45% EBITDA margins in a normalized housing market, even with conservative assumptions for macro conditions.
• Competitive Pressures and Regulatory Scrutiny: Despite its strong market position, Zillow faces intense competition and increasing regulatory scrutiny, including antitrust lawsuits regarding its Redfin partnership and copyright infringement claims. The company is vigorously defending these actions, asserting its pro-consumer and pro-competitive stance.

The Digital Transformation of Home: Zillow's Super App Vision

Zillow Group, Inc. is not merely a real estate listing portal; it is an architect of the future of home, reimagining the entire real estate journey to make it a more seamless reality for millions. Since its inception in 2004, Zillow has been a consumer-focused, product-led company, fundamentally altering how people interact with the housing market. A pivotal moment arrived in 2006 with the launch of the Zestimate, an early application of AI and machine learning that provided automated home valuations, instantly empowering consumers with data previously held by industry insiders. This innovation laid the groundwork for Zillow's overarching strategy: to build a comprehensive "housing super app" that integrates every step of the moving process, from initial search and agent connection to financing, renting, and closing.

The company operates in a dynamic and highly competitive environment, characterized by persistent challenges in the U.S. residential real estate market. Low housing inventory, elevated and volatile mortgage interest rates, and inflationary conditions have created a market that has been "bouncing along the bottom". Despite these macro headwinds, Zillow's strategic focus on product innovation and integrated transaction services has enabled it to consistently outperform the broader industry. Zillow maintains a dominant market position, boasting the most visited real estate app and website in the United States, with approximately two-thirds of the real estate audience using its platforms at some point in their journey. This extensive reach translates into significant network effects, where more users attract more listings, thereby increasing the platform's value and solidifying its competitive moat.

Technological Edge: AI as the Foundation of the Super App

Zillow's competitive differentiation is deeply rooted in its proprietary technology and its relentless pursuit of AI-driven innovation. Beyond the foundational Zestimate, the company has integrated advanced AI across its ecosystem to enhance user experience, streamline agent workflows, and drive transaction efficiency.

One of Zillow's key technological differentiators is Zillow Showcase, an AI-powered rich media technology that generates seamless 3D models of homes with interactive floor plans. Launched nationwide in 2024 and continuously enhanced, Showcase was featured on 3.2% of all new U.S. listings by the end of Q3 2025, more than double its share from a year prior. This technology offers tangible benefits: Showcase listings typically sell for 2% more than similar non-Showcase listings on Zillow, translating to a bonus of over $9,000 on an average home sale. Agents utilizing Showcase also report winning 30% more listings. Recent innovations include AI-powered virtual staging, which allows buyers to instantly restyle rooms, and SkyTour, a dynamic interactive video experience that uses drone footage and machine learning to create realistic 3D models of a home's exterior. These features not only make listings stand out but also provide buyers with a more immersive and informed shopping experience, ultimately accelerating sales.

In the mortgage segment, BuyAbility from Zillow Home Loans is a powerful AI-driven tool that helps buyers shop based on what they can afford, providing instant estimates of loan qualifications and suggesting price caps. Since its launch, BuyAbility has enrolled 2.9 million people, significantly increasing buyer knowledge and readiness to act. For real estate professionals, Zillow's acquisition of Follow Up Boss in late 2023 has been instrumental. This industry-leading CRM system is now being supercharged with AI features, including real-time call transcripts, smart summaries with suggested next steps, and custom Zillow Home Loans pre-approval letters, all integrated directly into the system. These tools save agents hours of time, provide richer client context, and enable faster communication, allowing them to focus on high-value client interactions.

The company's commitment to being at the forefront of technological shifts is further evidenced by the debut of the Zillow app inside ChatGPT in October 2025. As the only real estate app on this widely used AI platform, Zillow is creating a new "doorway" for consumers to explore listings and connect with services, leveraging its nearly 20-year track record of responsible AI development. This early adoption positions Zillow to capitalize on how AI will transform consumer experiences, emphasizing user experience, quality of audience, unique insights, and integrated transaction services as critical differentiators.

Financial Performance and Operational Momentum

Zillow Group's financial results for the third quarter ended September 30, 2025, demonstrate strong execution of its integrated strategy, even amidst a challenging macro environment. Total revenue increased by 16% year-over-year to $676 million, exceeding the high end of the company's outlook range. This growth significantly outpaced the broader residential real estate industry's Total Transaction Value (TTV) increase of 6% during the same period. Profitability also saw notable improvement, with Adjusted EBITDA reaching $165 million, above the high end of guidance, and the EBITDA margin expanding by over 200 basis points year-over-year to 24%. This combination of revenue growth and disciplined cost management resulted in positive GAAP net income of $10 million for the quarter.

For the nine months ended September 30, 2025, net cash provided by operating activities was $296 million, and adjusted free cash flow increased 28% year-over-year to $295 million, underscoring the company's robust cash generation from core operations.

The For Sale segment, encompassing Residential and Mortgages revenue, grew 10% year-over-year to $488 million in Q3 2025, outperforming the broader housing and mortgage markets. Residential revenue increased 7% to $435 million, driven by a 4% increase in visits to Zillow's platforms and higher revenue per visit, reflecting improved connections between high-intent customers and agents, increased ShowingTime adoption, and new construction growth. Mortgages revenue surged 36% to $53 million, primarily due to a 56% increase in total loan origination volume for Zillow Home Loans, reaching $1.281 billion. This growth is a direct result of the integrated experience in Zillow's Enhanced Markets, where buyers connecting with both Zillow Home Loans and a Premier Agent partner transact at an 80% higher rate.

The Rentals segment continues to be a standout performer, with revenue accelerating 41% year-over-year to $174 million in Q3 2025. This was primarily fueled by a 62% increase in multifamily revenue, driven by growth in multifamily property listings and property managers upgrading to more comprehensive advertising packages. Zillow Rentals now boasts 2.5 million average monthly active rental listings, the most in the category, including 69,000 multifamily properties, nearly double the count from two years prior. The company's partnerships, including the recent agreement with Redfin Corporation , are expanding the reach and visibility of rental listings, providing significant value to both renters and property managers.

Competitive Landscape and Strategic Positioning

Zillow operates in a highly competitive and rapidly evolving real estate technology landscape. Its primary direct competitors include Redfin Corporation (RDFN), News Corporation (NWSA), which operates Realtor.com, and traditional brokerage networks like Realogy Holdings Corp. (RLGY). Zillow's market position is characterized by its substantial traffic, brand strength, and diversified revenue streams. It is the most visited real estate website in the U.S. and maintains a significant lead in app engagement, with approximately four times that of its closest competitor.

Zillow's competitive advantages are rooted in its proprietary technology, strong brand equity, and powerful network effects. The Zestimate, Zillow Showcase, and AI-powered tools in Follow Up Boss provide a technological edge that enhances user experience and agent efficiency, fostering greater customer loyalty and potentially leading to superior margins through increased efficiency. This integrated, tech-first approach differentiates Zillow from competitors like Redfin, which focuses on a lower-fee brokerage model, and Realtor.com, which relies heavily on agent partnerships and media assets. While Redfin's model may offer cost efficiency in certain services, Zillow's broader ecosystem and deeper data integration provide a more comprehensive, one-stop solution for real estate needs.

However, Zillow faces significant competitive pressures and vulnerabilities. The company's financial performance remains influenced by housing market cycles, and its expansive services can lead to higher operational costs compared to some rivals. Recent competitive and regulatory challenges include antitrust complaints from the Federal Trade Commission and several State Attorneys General regarding Zillow's partnership with Redfin for multifamily rental listings. These complaints allege harm to competition, which Zillow denies, asserting the partnership is pro-consumer and pro-competitive, providing renters with access to three times the number of rental properties on Redfin's sites than before. Additionally, Zillow is defending against a federal copyright lawsuit from CoStar Group, Inc. (CSGP), and a lawsuit from Compass, Inc. (COMP), alleging anti-competitive practices related to listing availability. Zillow maintains that its listing standards, which encourage broad availability of publicly marketed listings, are in the best interest of consumers and the industry.

Outlook and Growth Trajectory

Zillow's management is confident in its ability to deliver sustained, profitable growth, even with the expectation that the macro housing environment will "continue to bounce along the bottom" in 2026. For Q4 2025, Zillow anticipates total revenue between $645 million and $655 million, representing a 16% to 18% year-over-year increase. For Sale revenue is expected to grow in the high single digits, with Residential revenue growth similar to Q3 2025 and Mortgages revenue growth of approximately 20%. Rentals revenue is projected to accelerate further, increasing more than 45% year-over-year in Q4 2025, driven by continued multifamily growth. The Redfin partnership is expected to be accretive to EBITDA dollars in the second half of 2025.

For the full year 2025, Zillow expects to achieve mid-teens revenue growth, expanded EBITDA margins, and positive GAAP net income. This outlook is underpinned by strategic investments in variable costs, particularly in Rentals and Zillow Home Loans, while fixed cost investments are expected to grow modestly with inflation. Share-based compensation expense is projected to decrease by at least 10% year-over-year in 2025, further contributing to profitability. Looking beyond 2025, Zillow has articulated ambitious mid-cycle targets, projecting $5 billion in annual revenue and 45% EBITDA margins in a normalized housing market.

The introduction of Zillow Pro in October 2025, a new AI-powered membership suite for agents, is also expected to expand the serviceable addressable market, with beta testing in H1 2026 and a nationwide rollout in H2 2026, contributing modestly to revenue in 2026.

Conclusion

Zillow Group is executing a compelling strategy to transform the residential real estate industry through its "housing super app" vision, leveraging its leading brand, extensive audience, and proprietary AI-driven technology. The company's consistent outperformance of the broader market, robust growth in its Rentals and Mortgages segments, and clear path to sustained GAAP profitability underscore the strength of its integrated approach. While facing competitive pressures and regulatory challenges, Zillow's commitment to innovation and disciplined execution positions it favorably for long-term value creation. The ongoing expansion of Enhanced Markets, the increasing adoption of Zillow Showcase, and the strategic partnerships in the Rentals segment are key indicators of its ability to capture a significant, under-monetized market opportunity. Investors should monitor the continued rollout of these initiatives and the company's ability to navigate the evolving competitive and regulatory landscape, as Zillow aims to redefine the future of home.