Breaking Down Zillow Group, Inc. (ZG) Financial Health: Key Insights for Investors

You're looking at Zillow Group, Inc. (ZG) and trying to figure out if its financial engine can handle the bumpy housing market, so let's cut straight to the numbers. The third quarter of 2025 showed Zillow's pivot to a more integrated model is defintely paying off, delivering total revenue of $676 million, a solid 16% jump year-over-year, which beat their own outlook. That's not just market tailwinds; it's execution, especially in high-growth areas like Rentals, which surged 41%, and Mortgages, which was up 36%, fueled by a 57% increase in purchase loan origination volume. Here's the quick math: they pulled in a GAAP net income of $10 million for the quarter, a real turnaround from previous losses, plus they're sitting on $1.4 billion in cash and investments, giving them a massive war chest for the next cycle. Still, with the full-year 2025 analyst consensus revenue projection sitting at $2.63 billion, the question isn't just about growth, but about how they'll convert that traffic-now 250 million average monthly unique users-into sustained profitability in a high-rate environment.

Revenue Analysis

You're looking for a clear picture of where Zillow Group, Inc. (ZG) is making its money right now, and the short answer is that the business model is successfully shifting, even in a tough housing market. The company's trailing twelve-month (TTM) revenue ending Q3 2025 hit a solid $2.48 billion, representing a 15.17% year-over-year growth. That's a strong signal that Zillow Group, Inc. is outperforming the broader residential real estate industry's transaction volume growth, which was much slower. It's defintely a growth story.

The key takeaway from the Q3 2025 results, which posted $676 million in total revenue, is the significant acceleration in non-traditional revenue streams. The company's core business remains strong, but the high-growth areas are where the strategic pivot to the 'housing super app' is truly paying off. This is where you see the future of the company's revenue mix.

Here's the quick math on the segment contributions for Q3 2025, which shows a clear change from a year ago:

The primary revenue source is still the For Sale segment, which includes the Premier Agent program and other agent and software offerings. Residential revenue, which is the largest component of For Sale, grew 7% year-over-year to $435 million in Q3 2025, benefiting from the expansion of products like Zillow Showcase and agent software. Still, the growth rate here is modest compared to the other segments.

What this estimate hides is the power of the other segments. The significant change in the revenue mix is the explosive growth in Rentals and Mortgages. The Rentals segment, driven by both multifamily and single-family listings, surged 41% year-over-year to $174 million in Q3 2025. This segment now accounts for approximately 26% of the total company revenue, up from 21% a year prior. That's a huge jump in contribution.

Also, the Mortgages segment is showing serious momentum, increasing 36% year-over-year to $53 million. This growth is directly tied to the strategy of making Zillow Home Loans a more integrated part of the home-buying process, with purchase loan origination volume climbing 57%. This focus on an end-to-end experience-from finding a home to financing it-is a clear strategic shift, designed to capture more of the total transaction value. You can see how this aligns with their long-term goals by reviewing their Mission Statement, Vision, & Core Values of Zillow Group, Inc. (ZG).

• Rentals revenue is the fastest-growing major segment, up 41%.
• Mortgages revenue is accelerating, up 36%.
• Residential revenue provides the largest, most stable base, up 7%.

The company is successfully transitioning from being just a listing portal to a transaction enabler, and the revenue numbers for 2025 prove it. The focus is no longer just on the agent lead generation but on owning more of the customer journey, from rentals to financing, which diversifies the revenue base and reduces reliance on the cyclical For Sale market.

Profitability Metrics

You're looking at Zillow Group, Inc. (ZG) because you see the potential for a tech platform to dominate the residential real estate market, but the financials have been historically messy. The good news is that the company is defintely moving toward sustained profitability in 2025, hitting a critical milestone in Q3.

The direct takeaway is that Zillow Group, Inc. has a powerhouse gross margin-typical of a software company-but its operating expenses are still eating up most of that profit, though the trend is improving dramatically. For the third quarter of 2025 (Q3 2025), Zillow Group, Inc. reported total revenue of $676 million and a GAAP net income of $10 million.

Gross Profit and Operational Efficiency

Zillow Group, Inc.'s gross profit margin is a clear sign of its business model strength. In Q3 2025, the company generated a gross profit of $491 million, translating to a gross profit margin of approximately 72.63%. This is a massive figure, especially when you compare it to a traditional U.S. real estate brokerage firm, which saw its average gross margin sit near 10% at the end of 2024. That difference is your investment thesis: Zillow Group, Inc. is a high-margin technology and advertising platform, not a low-margin brokerage.

Here's the quick math on the operational side: The challenge lies below the gross profit line. The company spends heavily on sales, marketing, and technology development to maintain its market-leading position. This is why the operating margin (which accounts for these expenses) is still near breakeven.

• Gross Margin (Q3 2025): 72.63%
• Operating Margin (Q3 2025, GAAP): -0.4%
• Net Margin (Q3 2025, GAAP): 1%

Net Profitability and Trend Analysis

The shift to positive GAAP net income in Q3 2025 is a critical turning point. The 1% GAAP net income margin, while small, is a 400 basis point increase year-over-year, demonstrating effective cost management and revenue growth. This is a sharp reversal from the annual net loss of -$112 million reported for the 2024 fiscal year. The company's goal for the full year 2025 is to achieve positive GAAP net income, which signals a fundamental change in financial health.

The improvement in the operating margin from -7.7% in Q3 2024 to -0.4% in Q3 2025 is a clear indicator that the company is successfully scaling its operations and managing its large expense base. You can see this efficiency also in the Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin, which expanded to 24% in Q3 2025, a more than 200 basis point increase year-over-year.

Industry Comparison: Tech vs. Real Estate

To be fair, Zillow Group, Inc. operates in a hybrid space, but its profitability profile leans toward its tech peers, especially in the advertising segment. For comparison, here are the average margins for the U.S. Advertising industry (a good proxy for Zillow Group, Inc.'s Premier Agent business) as of early 2025:

What this estimate hides is that Zillow Group, Inc.'s gross margin is vastly superior-more than double the industry average-but its operating and net margins are still lagging the Advertising industry's 3.00% net margin. This gap shows where the investment is going: R&D and Sales/Marketing are still very high as the company chases market share and develops its integrated-transaction strategy. The high gross margin gives them a huge cushion to invest, but investors need to see that -0.4% operating margin turn definitively positive and grow toward the peer average. For more on the shareholder base, check out Exploring Zillow Group, Inc. (ZG) Investor Profile: Who's Buying and Why?

Next step: Analyze the balance sheet to see how this cash flow shift impacts liquidity. Finance: Review Q3 2025 cash flow statement for operating cash flow trends by next Tuesday.

Debt vs. Equity Structure

You're looking at Zillow Group, Inc. (ZG)'s balance sheet to understand how they fund their growth, and the answer is clear: they are a low-leverage, cash-rich technology company. This is a critical distinction from traditional real estate firms. The company's financial strategy heavily favors equity and cash over debt, which gives them immense flexibility, especially in a volatile housing market.

As of the third quarter of 2025, Zillow Group, Inc. (ZG) reported a total debt of just $272.0 million against a total shareholder equity of nearly $5.0 billion. This is a very conservative capital structure. Their long-term debt was essentially $0 million as of June 30, 2025, which is a massive de-risking move.

A Debt-to-Equity Ratio That Stands Out

The most telling metric here is the debt-to-equity (D/E) ratio, which measures a company's financial leverage (how much debt is used to finance assets relative to shareholder equity). Zillow Group, Inc. (ZG)'s D/E ratio as of Q3 2025 was exceptionally low at only 5.4% (or 0.054).

Here's the quick math on why this matters: a D/E ratio of 5.4% means that for every dollar of shareholder equity, the company has only about five cents of debt. Compare this to the broader real estate sector, where D/E ratios often range from 1.0 to over 8.0. Zillow Group, Inc. (ZG) is defintely structured like a tech platform, not a capital-intensive property owner.

• Low ratio signals low financial risk.
• More equity means less reliance on external creditors.

Recent Debt Activity and Capital Strategy

Zillow Group, Inc. (ZG) has been actively reducing its debt load, which is a powerful signal of financial health. In the trailing twelve months leading up to September 2025, the company's net issuance of debt was negative $-794 million, meaning they paid down significantly more debt than they issued. This action is a much better indicator of credit quality than any formal credit rating for a company with this profile.

A major action this year was the settlement of the remaining $419 million of convertible notes in May 2025. This move cleans up the balance sheet by removing a significant chunk of long-term liability, further solidifying their position. Their strategy is clearly to fund growth through retained earnings and equity, not high-interest debt, which is smart in a rising rate environment.

The short-term debt and capital lease obligations remain manageable at $285 million as of October 31, 2025. This is small compared to their cash and investment reserves, which were $1.2 billion at the end of Q2 2025. This balance sheet strength is a key competitive advantage. You can dive deeper into the full picture in Breaking Down Zillow Group, Inc. (ZG) Financial Health: Key Insights for Investors.

To summarize their capital structure in a snapshot:

Liquidity and Solvency

You need to know if Zillow Group, Inc. (ZG) can cover its short-term bills, especially as they invest heavily in their 'housing super app' strategy. The direct takeaway is that Zillow Group's liquidity position is defintely strong, backed by significant cash reserves and minimal short-term debt, but you still need to watch their path to consistent GAAP (Generally Accepted Accounting Principles) profitability.

Looking at the balance sheet as of the third quarter of 2025 (Q3 2025), the company's ability to meet its immediate obligations is excellent. The current ratio and quick ratio (also known as the acid-test ratio) are both high, indicating a substantial cushion. A ratio of 1.0 or higher is generally considered healthy; Zillow Group is far beyond that.

• Current Ratio: Approximately 3.34. This means Zillow Group has $3.34 in current assets for every $1.00 in current liabilities.
• Quick Ratio: Also approximately 3.34. Since Zillow Group is a technology and media company with minimal inventory, the current and quick ratios are often nearly identical. This is a very strong liquidity position.

Here's the quick math: A high quick ratio shows the company can pay off its short-term debt using only its most liquid assets-cash, short-term investments, and receivables-without having to sell off any long-term assets. Their cash ratio, which only considers cash and equivalents, was also healthy at 2.12.

Working Capital and Cash Flow Trends

The trend in Zillow Group's working capital-the difference between current assets and current liabilities-has been robust, though you see strategic shifts in their cash holdings. At the end of Q3 2025, the company held $1.4 billion in cash and investments. This figure had an interesting dip and recovery earlier in the year, which tells a story about capital allocation.

In Q2 2025, the cash and investments balance dropped from $1.6 billion (Q1 2025) to $1.2 billion. This wasn't due to poor operations, but a deliberate financing action: the settlement of the remaining $419 million of convertible notes and $150 million in share repurchases. This action means Zillow Group is now convertible debt-free, a huge boost to long-term solvency, even if it temporarily reduced working capital cash. The subsequent Q3 increase back to $1.4 billion shows strong cash generation is rebuilding the reserve.

A look at the cash flow statement (Trailing Twelve Months, or TTM, ending September 30, 2025) provides a clearer picture of where the money is coming from and going:

The positive Operating Cash Flow (OCF) of $418 million TTM is the most important number here; it confirms the core business model is cash-generative, even as the company manages to post a negative GAAP operating margin of -5.57%. This difference is often due to non-cash items like stock-based compensation and depreciation. Mission Statement, Vision, & Core Values of Zillow Group, Inc. (ZG).

Potential Liquidity Concerns

The primary strength is the balance sheet's fortress-like liquidity, but the risk lies in the profitability metric. While Zillow Group reported positive GAAP net income in Q1 2025 ($8 million) and Q3 2025 ($10 million), its TTM net margin is still negative at -2.6%. The company is still in a high-growth, high-investment phase, which is reflected in their negative operating margin. This isn't an immediate liquidity concern because of the massive cash pile, but it's a long-term solvency question: can they sustain growth and margin expansion simultaneously? They are on track to deliver expanded EBITDA margins and positive net income for the full year 2025, which you should monitor closely.

Valuation Analysis

You're looking at Zillow Group, Inc. (ZG) and trying to figure out if the market has priced it correctly. Honestly, the valuation picture is mixed, which is common for a growth-focused technology company in a cyclical industry like real estate. The consensus leans toward a Moderate Buy, but the valuation multiples suggest the stock is trading at a premium, implying the market is pricing in significant future growth.

The stock has definitely seen a run-up this year. Over the last 12 months, Zillow Group, Inc.'s stock price has climbed by 23.22%. It hit its 52-week high of $90.22 in September 2025 before pulling back. As of mid-November 2025, the stock is trading around $65.71, which is still well above its 52-week low of $56.63 from April 2025. The volatility is real, so don't expect a smooth ride.

Here's the quick math on the key valuation multiples, using data closest to the end of the 2025 fiscal year:

• Price-to-Earnings (P/E) Ratio: The trailing twelve months (TTM) P/E is negative because the company reported a TTM diluted Earnings Per Share (EPS) of $-0.260 as of June 2025. This means it was technically operating at a loss. However, analysts forecast a profitable future, giving it a forward P/E ratio of approximately 32.23 for the current period. This is a high multiple, suggesting investors expect earnings to grow fast to justify the current price.
• Price-to-Book (P/B) Ratio: Zillow Group, Inc.'s P/B ratio stands at about 3.25. This is higher than the historical median for many mature real estate companies, indicating investors are willing to pay $3.25 for every dollar of book value (assets minus liabilities). This premium reflects the value of its brand, platform, and data, which aren't fully captured on the balance sheet.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This metric is helpful for capital-intensive companies. Zillow Group, Inc.'s TTM EV/EBITDA is high at approximately 61.97. This is a very rich valuation, especially compared to the sector median, and points to high growth expectations or a belief that their EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) will expand significantly in the near term.

What this estimate hides is the company's shift away from the capital-heavy 'iBuying' business, which is now yielding better EBITDA margins in their core Internet, Media, and Technology (IMT) segment. Also, don't look for a dividend here; Zillow Group, Inc. is a growth stock, so it currently pays a $0.00 TTM dividend, resulting in a 0.00% yield. All capital is being reinvested to scale the platform.

The Wall Street analyst community is defintely optimistic, with a consensus rating of Moderate Buy. Out of thirty firms covering the stock, fifteen recommend a 'Buy' and one a 'Strong Buy,' versus twelve 'Hold' and two 'Sell' ratings. Their average 12-month price objective is around $87.42. This target suggests a potential upside of over 30% from the current November 2025 price, confirming the belief that the company is currently undervalued based on future earnings potential, despite the high multiples on current earnings.

For a deeper dive into the operational risks and opportunities that underpin these valuations, you should read the full analysis: Breaking Down Zillow Group, Inc. (ZG) Financial Health: Key Insights for Investors. Your next step should be to model a Discounted Cash Flow (DCF) valuation yourself, using a conservative 15% EBITDA growth rate for the next three years, and see if your intrinsic value aligns with the analyst's $87.42 target.

Risk Factors

You're looking at Zillow Group, Inc. (ZG)'s recent success-like the $10 million GAAP net income in Q3 2025-and thinking the path is clear. But as a seasoned analyst, I see significant near-term risks that could defintely temper that enthusiasm, particularly in the regulatory and competitive arenas.

The biggest immediate headwind is the escalating legal and regulatory scrutiny. The Federal Trade Commission (FTC) filed an antitrust lawsuit in September 2025 over Zillow Group, Inc.'s $100 million partnership with Redfin, alleging it suppressed competition in the online rental advertising market. This kind of regulatory challenge casts a long shadow, potentially leading to costly penalties or operational restrictions on a key growth segment, Rentals, which saw revenue surge 41% year-over-year to $174 million in Q3 2025. You simply can't ignore a major government agency challenging your core business model.

Competition is also intensifying far beyond what the casual investor sees. While Zillow Group, Inc. has a dominant platform, rivals like Compass Inc. are creating their own walled gardens. Following its acquisition of Anywhere Real Estate, Compass now controls an estimated 24% of U.S. real estate sales volume and is actively using exclusive listings-homes marketed privately before broader distribution-to bypass Zillow Group, Inc.'s primary listing portal role. This fragments the market, which is a direct threat to Zillow Group, Inc.'s traffic and agent monetization model.

Here is a quick map of the most pressing risks and Zillow Group, Inc.'s implied response:

• Regulatory Risk: FTC antitrust lawsuit and a separate class-action suit over agent referral bias.
• Market Risk: High interest rates and home prices continue to depress overall transaction volumes.
• Competitive Risk: Rivals hoarding exclusive inventory, eroding Zillow Group, Inc.'s comprehensive listing advantage.
• Operational Risk: Long-term profitability doubts after the costly strategic retreat from the iBuying (Zillow Offers) home-flipping division.

To be fair, Zillow Group, Inc. is not standing still; its mitigation strategy centers on accelerating its integrated-transaction model, often called the housing super app. They are investing heavily in technology, like AI-powered Virtual Staging, and focusing on cost control, which helped Adjusted EBITDA hit $165 million in Q3 2025. Still, these innovations are defense against a challenging environment, not a guarantee of future growth. What this estimate hides is the potential cost of litigation, which could quickly erase that $10 million quarterly net income.

Your next step is clear: Breaking Down Zillow Group, Inc. (ZG) Financial Health: Key Insights for Investors is a must-read for a deeper dive. Finance: Model the potential impact of a worst-case regulatory fine on the full-year 2025 positive net income target by Friday.

Growth Opportunities

You're looking for a clear path to future returns, and for Zillow Group, Inc. (ZG), that path is paved with vertical integration and a shift to profitability. The company is defintely moving past its heavy investment phase, with Q3 2025 results showing a pivot: net income turned positive at $10 million, a significant turnaround from previous losses. This shift is driven by a focused strategy to capture more of the total transaction value, not just the initial lead.

Here's the quick math on the near-term outlook: Wall Street analysts project Zillow Group, Inc.'s full-year 2025 revenue to land around $2.48 billion, representing a mid-teens growth rate-specifically, management is targeting the higher end of a 14% to 16% year-over-year increase. The average analyst forecast for full-year 2025 earnings is approximately $407.37 million, signaling a strong move toward sustained earnings expansion. You need to watch the core growth drivers, because they are where the real opportunity lies.

Key Growth Drivers: Beyond the Listing

Zillow Group, Inc.'s future isn't just about listing houses; it's about owning the entire transaction ecosystem. The strategic focus is on the 'Super App' concept-an all-in-one platform for buying, selling, financing, and renting. This is how they monetize their massive user base, which is their primary competitive advantage.

• Rentals: This segment is on fire. Q3 2025 Rentals revenue surged by 41% year-over-year, with multifamily revenue climbing an even more impressive 62%. The Redfin partnership for syndicating multifamily listings is a clear accelerant here.
• Mortgages: Zillow Home Loans is gaining traction, integrating financing directly into the home-shopping process. This vertical integration is critical; it captures more value from each customer.
• Product Innovation: New tools like AI-powered virtual staging and Zillow Pro (a suite of enhanced agent services) are designed to improve conversion rates for their Premier Agent program. Plus, the new integrated in-app messaging feature streamlines communication, which should help close more deals faster.

Strategic Initiatives and Competitive Edge

The company is executing on its Enhanced Market Strategy, which aims to increase the percentage of real estate connections where Zillow Group, Inc. can offer an integrated suite of services. The goal is to reach a 35% market coverage by the end of 2025. This expansion, coupled with their brand power, is how they maintain dominance against competitors.

What this estimate hides is the power of their data and brand. Zillow Group, Inc. maintains a vast database of over 160 million U.S. homes, giving them an unparalleled competitive moat. Also, the balance sheet remains conservative, with a low debt-to-equity ratio of just 0.07, giving them flexibility to invest in these growth initiatives without major interest expense constraints. This financial discipline is a major strength in a volatile housing market.

You can see the segment momentum clearly in the Q3 2025 results:

For a deeper dive into the balance sheet and valuation, check out Breaking Down Zillow Group, Inc. (ZG) Financial Health: Key Insights for Investors. Your next step should be to monitor the adoption rate of the Enhanced Market Strategy and the revenue contribution from the Mortgages segment in the next quarter's report. That will be the real tell on their long-term success.