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

You're looking at Zillow Group, Inc.'s stock, seeing the price at around $67.01 as of late November 2025, down 18.43% over the last year, but then you see their Q3 2025 earnings report showing a GAAP net income of $10 million on $676 million in total revenue, and it feels like a confusing signal for a real estate tech company. Honestly, the market is punishing Zillow for the sluggish housing environment-elevated mortgage rates are defintely keeping buyers on the sidelines. But here's the quick math: that Q3 revenue was a solid 16% year-over-year increase, driven not by the stagnant For Sale segment, but by the Rentals business, which surged 41% to $174 million. That's the real story: they're generating cash flow, ending Q3 with $1.4 billion in cash and investments, so the question isn't about survival, it's about whether that growth in ancillary segments justifies the $16.22 billion market cap and the moderate buy rating from analysts.

Revenue Analysis

You need a clear picture of where Zillow Group, Inc. (Z) is actually making its money, especially with the housing market being so volatile. The direct takeaway is that while the core For Sale segment is steady, the real growth engine right now is the Rentals business, which is accelerating and driving the company's return to profitability in 2025.

For the full fiscal year 2025, Zillow Group, Inc. is projecting a total revenue growth in the mid-teens range, which is solid, especially considering the headwinds in the broader residential real estate market. This growth isn't uniform; it's a story of two distinct speeds across their main segments, which are now categorized as For Sale, Rentals, and Mortgages. Honestly, the Rentals segment is defintely the star.

Here's the quick math on the segment contributions for the second quarter of 2025, which totaled $655 million in revenue:

• For Sale: This is the largest segment, primarily driven by the Premier Agent program, which connects real estate agents with buyers and sellers. It brought in $482 million in Q2 2025, representing about 73.6% of total revenue. It's the bread-and-butter, but its year-over-year growth was a more modest 9%.
• Rentals: This segment is the high-octane fuel. It generated $159 million in Q2 2025, which is about 24.3% of the total. The crucial number here is the YoY growth: a massive 36% increase. The company expects full-year 2025 Rentals revenue to grow by approximately 40%.
• Mortgages: This segment, which includes Zillow Home Loans, is also growing quickly, generating $48 million in Q2 2025, up an impressive 41% year-over-year.

What this breakdown hides is the strategic shift. Zillow Group, Inc. is successfully pivoting away from its old, capital-intensive iBuying model and focusing on its core marketplace and services. The significant changes are clearly visible in the growth rates. When you see Rentals revenue accelerating at 36% and Mortgages at 41%, compared to the For Sale segment at 9%, you know where the company is placing its bets for future profitability. This strong performance helped the company post a GAAP net income of $8 million in Q1 2025 and $2 million in Q2 2025, a real turnaround from previous losses.

To be fair, the For Sale segment is still the revenue anchor, but its growth is constrained by the slow housing market, which saw only about a 2% increase in total transaction value year-over-year in Q2 2025. The company is outperforming the market, still, by expanding its residential offerings like Zillow Showcase and agent software. Anyway, the diversification into Rentals and Mortgages is what's providing the resilience and the path to sustainable profitable growth. You can dive deeper into the players backing this strategy by Exploring Zillow Group, Inc. (Z) Investor Profile: Who's Buying and Why?

Here is a quick summary of the quarterly revenue contributions:

Finance: Keep an eye on the Rentals segment's margin expansion; that 40% growth target for the year is the key number.

Profitability Metrics

You're looking at Zillow Group, Inc. (Z) to see if their massive reach is translating into consistent, bottom-line profit, and the answer is a nuanced yes. While the Trailing Twelve Months (TTM) margins still show a slight loss on a GAAP basis, the trend in 2025 is defintely moving toward sustained profitability, driven by strong gross margins and disciplined cost management.

The key takeaway from the 2025 data is that Zillow Group, Inc. has a world-class gross margin but still struggles to convert that into operating profit (EBIT) due to high sales and marketing spend. Here's the quick math on the most recent TTM figures, which capture the performance up to the end of Q3 2025:

• Gross Profit Margin: 74.87% (TTM)
• Operating Profit Margin: -3.63% (TTM)
• Net Profit Margin: -1.29% (TTM)

This tells a clear story: the core business of generating revenue from agent connections and rentals (the 'For Sale' and 'Rentals' segments) is incredibly profitable at the cost-of-goods-sold level. But, a negative operating margin means the overhead-everything from technology development to advertising-still consumes more than the gross profit.

Trends in Profitability and Operational Efficiency

The trend over 2025 is encouraging, though. Zillow Group, Inc. is successfully translating its operational focus into positive quarterly net income. In the first quarter of 2025 (Q1 2025), the company reported a GAAP net income of $8 million, resulting in a 1% net income margin. This improved in the third quarter of 2025 (Q3 2025), where net income hit $10 million on revenue of $676 million, maintaining that 1% net income margin.

This shift to positive GAAP net income is significant, representing a 400-basis-point increase year-over-year for the Q3 margin. This is a direct result of effective cost management and a focus on high-margin segments like Rentals, which saw revenue jump 41% year-over-year in Q3 2025.

The company is on track for a positive GAAP net income for the full 2025 fiscal year, with analysts forecasting a full-year Earnings Per Share (EPS) of $1.68, a massive turnaround from the prior year's negative EPS.

Industry Comparison: Where Zillow Group, Inc. Excels and Lags

When you compare Zillow Group, Inc.'s profitability ratios to the industry average for Interactive Media, the picture is one of high potential but heavy investment. Zillow Group, Inc.'s TTM Gross Margin of 74.87% is dramatically better than the industry average of 38.71%. This shows their superior platform economics and pricing power.

But, the tables turn further down the income statement. The TTM Operating Margin of -3.63% lags far behind the industry average of 17.91%. This gap is where the company is spending heavily to secure its market position and build out its 'super app' strategy (the integrated-transaction model). For a deeper look at the market forces driving this spending, you might want to read Exploring Zillow Group, Inc. (Z) Investor Profile: Who's Buying and Why?

Here's a snapshot of the TTM ratios against the sector:

What this estimate hides is the strategic nature of Zillow Group, Inc.'s negative operating margin; it's not a sign of a broken business, but rather a choice to invest in growth and market share rather than maximize immediate operating profit. They're buying future cash flow.

Debt vs. Equity Structure

If you're looking at Zillow Group, Inc. (Z), the key takeaway is that the company is defintely not relying on debt to fund its core operations. Its financial structure is overwhelmingly equity-driven, which means a very low risk profile from a leverage standpoint.

The company's Debt-to-Equity (D/E) ratio stood at a remarkably low 0.07 as of the third quarter of 2025, reflecting minimal financial leverage. For comparison, the average D/E ratio for the Real Estate Services industry is around 0.5851, so Zillow Group, Inc. operates with significantly less debt than its peers. That's a huge cushion against a downturn.

Overview of Debt Levels

Zillow Group, Inc.'s total debt is quite manageable and is mostly tied to its Zillow Home Loans segment, not its primary media and technology business. As of June 30, 2025, the company's total debt was only $230 million. This debt primarily consists of master repurchase agreements, which are essentially revolving lines of credit used to finance mortgage loans before they are sold off, making it short-term and transactional in nature.

• Total Debt (June 30, 2025): $230 million.
• Total Shareholders' Equity (June 30, 2025): $4.746 billion.
• Debt-to-Equity Ratio (Q3 2025): 0.07.

Here's the quick math: with nearly $4.746 billion in shareholder equity against only $230 million in debt, Zillow Group, Inc. is essentially self-funded.

Recent Debt and Financing Activity

The company has been actively reducing its non-core debt. In the first half of 2025, Zillow Group, Inc. settled the remaining $418 million of its 2025 Notes, which is a significant reduction in long-term debt obligations. The net issuance of debt for the trailing twelve months ending September 2025 was actually negative, at -$794 million, which clearly indicates a net repayment of debt over new borrowing.

The financing strategy is a clear preference for equity and retained earnings over debt financing, a classic move for a technology-focused growth company. This low-leverage model gives management maximum flexibility, especially in the current high-interest-rate environment. They aren't worried about debt service costs eating into their profit margins, which is a major advantage for their push toward positive GAAP net income for the full year 2025.

This conservative capital structure is a major strength for Zillow Group, Inc. and is a key factor to consider as you are Exploring Zillow Group, Inc. (Z) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Zillow Group, Inc. (Z) can cover its immediate bills, especially in a housing market that's been anything but predictable. The direct takeaway is that Zillow Group, Inc.'s short-term liquidity is defintely strong, backed by high cash reserves and a shift toward core, high-margin revenue streams that generate positive operating cash flow.

Assessing Zillow Group, Inc.'s Liquidity Ratios

The core liquidity metrics-the current ratio and the quick ratio (acid-test ratio)-tell a clear story. As of the third quarter of 2025, Zillow Group, Inc. reported a Current Ratio of 3.34 and a Quick Ratio of 3.34. This is exceptionally strong. A ratio of 1.0 is the baseline for comfort, meaning current assets exactly cover current liabilities. Zillow Group, Inc. has more than triple that coverage.

The fact that the two ratios are identical at 3.34 is significant. It means that inventory-which is typically the only difference between the two calculations-is practically non-existent or negligible on their balance sheet, a direct result of exiting the capital-intensive iBuying business (Zillow Offers). This is a massive de-risking move from a liquidity perspective.

• Current Ratio (Q3 2025): 3.34
• Quick Ratio (Q3 2025): 3.34
• Strong ratios mean low short-term default risk.

Working Capital and Cash Flow Trends

The working capital trend is robust, showing a healthy accumulation of cash and investments. Cash and investments totaled $1.4 billion at the end of Q3 2025, up from $1.2 billion at the end of Q2 2025. This increase provides a substantial buffer against market volatility and supports strategic investments.

Here's the quick math on cash flow (Trailing Twelve Months, or TTM, as of late 2025):

The positive Cash from Operations (CFO) of $418.00 million (TTM) shows the core business-the Premier Agent, Rentals, and Mortgages segments-is generating real cash. Plus, the positive Cash from Investing of $318.00 million (TTM) suggests the company is either selling non-core assets or keeping capital expenditures (CapEx) very low, which is a good sign of financial discipline post-iBuying.

Liquidity Strengths and Near-Term Actions

Zillow Group, Inc. is in a strong liquidity position, which is a major strength. Their Altman Z-Score, a measure of bankruptcy risk, is very strong at 16.01. This is not a company struggling to pay bills. The low debt-to-equity ratio of just 0.07 further confirms a minimal reliance on debt. Management is confident, stating they believe current cash and operations will cover all needs for at least the next 12 months.

The biggest opportunity here is the expected full-year 2025 positive Generally Accepted Accounting Principles (GAAP) net income. This transition from negative to positive GAAP profitability, coupled with the strong liquidity, means the company can fund its growth in Rentals and Zillow Home Loans without external pressure. If you are interested in the company's full financial picture, you can read more here: Breaking Down Zillow Group, Inc. (Z) Financial Health: Key Insights for Investors.

Next Step: Monitor the Q4 2025 earnings release to confirm the projected positive full-year GAAP net income and any changes to the current $1.4 billion cash position.

Valuation Analysis

You're looking at Zillow Group, Inc. (Z) and wondering if the current price of around $71.17 per share is a fair deal, especially after the stock has dipped about 2.69% so far in 2025. The quick answer is that traditional valuation metrics suggest the stock is expensive, but the analyst consensus points to a strong upside, meaning its value is tied to future growth, not today's earnings. It's a classic growth stock dilemma.

When you look at the core valuation multiples, Zillow Group, Inc. looks pricey. The Price-to-Earnings (P/E) ratio, which tells you how much you're paying for a dollar of current earnings, is extremely high at about 163.59x on a trailing twelve-month (TTM) basis. Honestly, that TTM P/E is often distorted because the company has recently been near a loss, but even using the forecasted 2025 earnings per share (EPS) of around $1.65, the forward P/E is still over 40.

The Price-to-Book (P/B) ratio, which compares the stock price to the company's net asset value, sits at approximately 3.43x. This is a reasonable number for a technology-driven platform, but it's defintely not a deep-value signal. Plus, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is where the real premium shows up, clocking in at a steep 64.7x. Here's the quick math: the industry median for Interactive Media is closer to 10.48, so Zillow Group, Inc. is trading at a massive premium to its peers based on operating cash flow.

• P/E Ratio (TTM): 163.59x (Implies high growth expectations or recent low/negative earnings)
• P/B Ratio (2025): 3.43x (Market values assets at a premium)
• EV/EBITDA (TTM): 64.7x (Significantly higher than the industry median of 10.48)

Stock Trends and Analyst View

Over the last 52 weeks, the stock has traded in a wide range, from a low of $57.51 to a high of $93.88. This volatility, with a 2025 year-to-date decline of 2.69%, reflects a market grappling with the housing cycle and Zillow Group, Inc.'s transition away from its iBuying venture (Zillow Offers) toward its core marketplace and rentals business. The Rentals segment, for example, is a major growth driver, with Q3 2025 revenue up 41% year-over-year.

The good news is that Wall Street analysts are generally bullish. The consensus rating is a 'Moderate Buy' or 'Buy.' The average 12-month price target is around $85.87 to $91.14, suggesting a potential upside of over 20% from the current price. What this estimate hides is the risk: the high valuation multiples mean any miss on their aggressive growth targets, especially in the Premier Agent and Rentals segments, could lead to a sharp correction. You're buying a vision, not a bargain.

One key point to note: Zillow Group, Inc. does not pay a dividend, so its dividend yield and payout ratios are 0.00%. Your return here is purely from capital appreciation, not income. If you want to dig deeper into the company's full financial picture, including its strong balance sheet and cash flow, you can check out the full analysis: Breaking Down Zillow Group, Inc. (Z) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Zillow Group, Inc. (Z) and seeing strong Q3 2025 numbers-revenue up 16% to $676 million, Rentals surging 41%-but you can't ignore the legal and market headwinds. As a seasoned analyst, I see a company executing a solid pivot while simultaneously navigating a regulatory storm. The risks are real, and they fall into three clear buckets: market turbulence, regulatory pressure, and execution risk.

The biggest near-term worry is the housing market itself. Despite Zillow Group, Inc.'s operational strength, the core residential transaction volume is still constrained by high rates. Over 53% of U.S. homes have seen a decline in value over the past year, which is the highest percentage since the 2000s housing crisis. That's a massive psychological headwind for sellers, even if the typical U.S. home value remains relatively steady at $362,117 as of November 2025. Plus, the stock is volatile, with a high beta of around 2.63, meaning it swings much harder than the overall market.

• Housing market volatility remains the primary external risk.

Regulatory and Legal Overhang

The most immediate and unpredictable risk is the regulatory environment. Zillow Group, Inc. is currently facing an antitrust lawsuit from the Federal Trade Commission (FTC) over its rentals partnership with Redfin, filed in September 2025. This directly targets the Rentals segment, which is their fastest-growing area, seeing a 41% revenue surge in Q3 2025. Any disruption to this engine could defintely slow the strategic shift.

Also, the company is dealing with an antitrust suit from Compass and a copyright lawsuit from CoStar Group. The Compass suit challenges Zillow Group, Inc.'s Listing Access Standards, which ban certain private listings. Zillow Group, Inc. is fighting back, arguing these standards promote transparency and competition, but the uncertainty of the legal process itself is a drag on investor sentiment. Here's a quick snapshot of the core legal risks:

Operational and Mitigation Strategies

From an operational standpoint, Zillow Group, Inc. is focused on what they call the 'Enhanced Market strategy'-a move toward a capital-light, software-plus-services platform. This is their primary mitigation plan against market slowness. They are aiming to expand their coverage of real estate connections in these enhanced markets to 35% by the end of 2025. They're using innovations like AI-powered tools and Zillow Pro to deepen agent and consumer engagement, which is why their Q3 Adjusted EBITDA margin improved to 24%, or $165 million.

The company's strong balance sheet, with $1.4 billion in cash and investments at the end of Q3 2025, provides a cushion against these legal and market risks. They are betting that their dominant platform and focus on an integrated transaction experience will win out, even with the near-term legal noise. To understand the long-term strategic alignment behind this push, you should review their Mission Statement, Vision, & Core Values of Zillow Group, Inc. (Z).

Next Step: Analyze the Q4 2025 guidance for Residential and Rentals revenue growth to see if the regulatory overhang is already impacting their forward outlook.

Growth Opportunities

You're looking past the current housing market's volatility and want to know where Zillow Group, Inc. (Z) is actually making its money now and in the near-term. The direct takeaway is this: Zillow is successfully pivoting from a single-channel portal to a true transaction-focused ecosystem, and its Rentals and Mortgages segments are its primary growth engines, not just the traditional 'For Sale' business.

For the full year 2025, the company is projecting a solid mid-teens revenue growth, which is a strong signal of resilience even as the macro housing environment continues to bounce along the bottom. They are also on track to deliver positive GAAP net income for the full year 2025, which is a critical inflection point after years of heavy investment. To be fair, this is a big step. Here's the quick math: analysts expect Zillow's 2025 revenue to be around $2.63 billion with an Earnings Per Share (EPS) of approximately $1.68.

Key Growth Drivers and Product Innovation

The core of Zillow's strategy is building the 'housing super app,' which is just plain English for an all-in-one digital experience for buying, selling, renting, and financing a home. This strategy is paying off in their non-traditional segments. The Rentals segment is defintely the star right now, with revenue growth accelerating to 41% year-over-year in Q3 2025, driven by a massive 62% year-over-year increase in multifamily revenue. That's a huge number, and they are aiming for a billion-dollar-plus revenue opportunity there.

In the For Sale segment, the focus is on enhancing the agent experience through the Premier Agent marketplace. Product innovations are key:

• AI-Powered Virtual Staging: Helps buyers visualize possibilities, driving engagement.
• Zillow Showcase: A premium listing experience, with adoption increasing to 3.2% of all new listings.
• Zillow Home Loans: Mortgages revenue grew 36% in Q3 2025, with purchase loan origination volume up 57% year-over-year.

They are using technology to capture value at every step, not just the initial search. It's smart business.

Strategic Levers and Competitive Edge

Zillow Group, Inc. (Z) maintains a distinct competitive advantage, mostly because they are the most visited real estate app and website in the United States. This dominance creates a powerful network effect that is tough for competitors to break. They have a massive data asset, covering over 160 million U.S. homes, which feeds their valuation models and AI tools.

Strategic partnerships are also a clear lever for future growth, especially in the Rentals space. For example, the recent partnership with Redfin to syndicate multifamily rental listings is expected to be accretive to EBITDA in the second half of 2025. Plus, the expansion of their 'Enhanced Market strategy' is a clear action plan, aiming to cover 35% of real estate connections by the end of 2025. This is how they're monetizing their massive audience more effectively.

Here's a quick look at the growth segment expectations for the full year 2025:

What this estimate hides is the continued investment in variable costs, like adding more loan officers for Zillow Home Loans, which is necessary to drive that future growth. If you want to dive deeper into the company's long-term vision, you can check out their Mission Statement, Vision, & Core Values of Zillow Group, Inc. (Z).

Finance: Track Q4 2025 results for Rentals and Mortgages to confirm the 40% and 30% growth targets by the end of the first quarter of 2026.