Zillow’s second quarter performance saw revenue exceed Wall Street expectations, supported by robust growth in both its For Sale and Rentals businesses. Management credited the company’s strategy of integrating digital tools—such as BuyAbility and AI-powered agent support—with cost discipline as key drivers of the quarter. CEO Jeremy Wacksman emphasized Zillow’s continued market share gains, noting that “we are gaining share in For Sale and Rentals, and we’re doing it while maintaining cost discipline.” The Rentals segment, in particular, benefited from multifamily expansion and increased engagement with large property managers, while the For Sale category outpaced broader industry trends, aided by new product features and expanded market coverage.
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Zillow (ZG) Q2 CY2025 Highlights:
- Revenue: $655 million vs analyst estimates of $647.2 million (14.5% year-on-year growth, 1.2% beat)
- Adjusted EPS: $0.40 vs analyst expectations of $0.41 (3.2% miss)
- Adjusted EBITDA: $155 million vs analyst estimates of $152.4 million (23.7% margin, 1.7% beat)
- Revenue Guidance for Q3 CY2025 is $668 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q3 CY2025 is $155 million at the midpoint, below analyst estimates of $160.1 million
- Operating Margin: -1.7%, up from -6.6% in the same quarter last year
- Market Capitalization: $19.25 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Zillow’s Q2 Earnings Call
- Ron Josey (Citi) asked about the factors driving Rentals acceleration and confidence in full-year growth. CEO Jeremy Wacksman emphasized expanding inventory, strong advertiser ROI, and new partnerships as key contributors.
- Brad Erickson (RBC) questioned the impact of the Redfin partnership on Rentals revenue. CFO Jeremy Hofmann explained that expanded distribution increases value for property managers and broadens the addressable market.
- Ryan McKeveny (Zelman & Associates) asked about the monetization of Zillow Showcase and whether direct consumer demand factors into revenue targets. Wacksman clarified that both agent- and seller-driven adoption contribute to overall growth.
- John Colantuoni (Jefferies) inquired about variable expense growth and milestones for aligning costs with revenue. Hofmann stated investments are concentrated in Rentals and Home Loans, with plans to moderate as initiatives scale.
- Andrew Boone (Citizens Bank) sought insight on AI’s role in automation and agent productivity. Wacksman described how AI-powered tools are already streamlining workflows and enhancing client engagement, with further efficiencies anticipated.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts are monitoring (1) the pace of Rentals revenue growth and multifamily property additions, (2) expansion of Enhanced Markets and the rollout of associated technology tools, and (3) the impact of AI-driven solutions on agent adoption and consumer engagement. Progress on partnerships and continued cost discipline will also be key indicators of execution.
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