Zillow continues exceeding financial expectations, maintaining its performance streak.
The home search platform’s revenue has consistently surpassed projections for the past two years, and the third quarter followed this pattern: Revenue reached $676 million for the third quarter, up 16% year-over-year and above the company’s previous guidance, driven by strength in its rentals and mortgage divisions.
Rentals revenue increased 41% year-over-year to $174 million, while mortgage revenue grew 36% to $53 million, according to Zillow’s shareholder letter. The company’s primary revenue stream, residential, rose 7% to $435 million.
Zillow also achieved profitability, generating $10 million during the quarter and sustaining its profitability streak for a third consecutive quarter.
While Zillow’s financial results were robust, litigation also occupied the company during the quarter, something CEO Jeremy Wacksman addressed during the earnings call.
On lawsuits: Wacksman briefly discussed some of the company’s litigation matters, particularly the Federal Trade Commission lawsuit over Zillow’s rental agreement with Redfin.
The FTC alleges that Zillow and Redfin illegally conspired to eliminate competition in the rental listings market with a syndication agreement. Attorney generals from five states filed a similar lawsuit one day later.
Wacksman noted they’ve maintained the agreement for approximately six months and have observed benefits for both consumers and property managers.
“So to us it’s obviously pro-consumer and pro-property manager, which makes it pro-competitive,” Wacksman stated. “We look forward to making that case as the process plays out.”
On the Compass-Anywhere merger: Investors questioned what impact the deal might have if it leads to more private listings, a core component of Compass’ three-phased marketing strategy, which are largely prohibited on Zillow’s site after it adopted new listing standards, prompting a lawsuit from Compass.
Wacksman indicated he doesn’t anticipate any significant impact to Zillow’s business.
“We do see maybe more noise around hidden listings and the potential to push more hidden listings onto sellers and to buyers and to harm consumers,” Wacksman stated, adding that much of the industry supports Zillow’s private listing ban.
Consumers “don’t want to put the internet back in the box, and we expect that behavior to continue, because agents are trying to do right by their sellers and sell their homes,” Wacksman added.
Key financial metrics:
Revenue: $676 million, up 16% year-over-year. Residential increased 7% to $435 million; mortgage revenue grew 36% to $53 million; and rentals revenue climbed 41% to $174 million.
Cash and investments: $1.4 billion at September’s end, up from $1.2 billion at June’s end.
Adjusted EBITDA: $165 million in Q3, up from $127 million a year earlier.
Net income: A gain of $10 million in Q3, up from $2 million the previous quarter, an improvement over its $20 million loss a year ago.
Traffic and visits: Traffic across all Zillow Group websites and applications totaled 250 million average monthly unique users in Q3, up 7% year-over-year. Total visits reached 2.5 billion in Q3, up 4% year-over-year.
Q4 outlook: For the fourth quarter, Zillow estimates revenue will range between $645 million and $655 million, representing high single-digit year-over-year growth.
Zillow dealt with litigation during the third quarter:
The private listings lawsuit filed by Compass in June has resulted in ongoing legal exchanges between the parties.
CoStar filed a copyright infringement case against Zillow in July over alleged improper photo use.
The FTC case filed in September potentially affects Zillow’s business structure.
Also in September, a class action lawsuit was filed alleging inflated costs related to Zillow’s flex referral program, and a former employee sued the company over alleged discrimination.
The company also shared positive developments during the quarter, noting in September that more than 50 brokerages had adopted Zillow Showcase. Newly named partners include The Agency, LPT Realty and Century 21 Masters in California.
“At The Agency, we’re always looking for ways to give our agents every advantage in showcasing their listings,” stated Mauricio Umansky, CEO and founder of The Agency, adding that the partnership “allows us to maximize exposure, put homes in the best light and reach more potential buyers.”
In July, Zillow unveiled a new product suite including Skytour, which allows home shoppers to obtain an interactive birds-eye view of a home and its surroundings, available exclusively to Showcase clients.
The company also hired a new chief economist in the third quarter. Mischa Fisher, who most recently taught data science at Northwestern University, has experience analyzing housing, labor and consumer spending data. She replaces former chief economist Skylar Olsen.
The $676 million quarterly revenue exceeding guidance demonstrating Zillow’s ability to consistently outperform its own projections, with the pattern suggesting either conservative forecasting or genuine business momentum exceeding management expectations as real estate market conditions improve.
The 16% year-over-year revenue growth representing healthy expansion for a mature technology company, with the double-digit increase indicating Zillow continues gaining market share and monetizing its dominant position in online real estate search despite intense competition from CoStar, Redfin, and traditional brokerage platforms.
The rentals revenue 41% surge to $174 million reflecting the explosive growth in that division, with the performance suggesting strong demand for rental listings as housing affordability challenges push more Americans toward renting rather than purchasing homes amid elevated mortgage rates and home prices.
The mortgage revenue 36% increase to $53 million demonstrating the lending division’s recovery from the 2022-2023 mortgage market collapse, with the growth likely driven by Zillow’s expanded mortgage marketplace connecting borrowers with lenders and earning referral fees from loan originations.
The residential revenue 7% rise to $435 million representing more modest growth in Zillow’s core business, with the slower expansion potentially reflecting challenges monetizing traditional home listings as sellers and agents resist paying for premium placement amid inventory constraints and changing market dynamics.
The third consecutive profitable quarter generating $10 million net income validating Zillow’s business model sustainability after years of losses, with the profitability streak demonstrating that the company has successfully transitioned from growth-at-all-costs mentality to disciplined operations generating positive cash flows.
The $1.4 billion cash and investments balance providing substantial financial flexibility for acquisitions, product development, or weathering potential market downturns, with the war chest positioning Zillow to capitalize on opportunities or defend against competitive threats without requiring additional capital raises.
The $165 million adjusted EBITDA representing the company’s operational profitability before accounting items, with the metric providing clearer picture of underlying business health than net income affected by non-cash charges and one-time items.
The 250 million average monthly unique users representing massive audience scale that few real estate platforms can match, with the traffic volume creating network effects where buyers and sellers congregate on Zillow because everyone else uses it, creating self-reinforcing dominance.
The 2.5 billion total quarterly visits demonstrating intense user engagement beyond simple monthly counts, with the visit volume indicating that users return repeatedly throughout home search processes rather than visiting once, suggesting Zillow successfully retains attention throughout lengthy buying journeys.
The Q4 revenue guidance of $645-$655 million representing sequential decline from Q3’s $676 million reflecting seasonal patterns where fourth quarter traditionally sees reduced real estate activity as holidays approach and winter weather discourages home shopping in many markets.
The FTC lawsuit over Redfin rental syndication agreement representing serious regulatory challenge where antitrust authorities allege anti-competitive collusion, with the case potentially forcing Zillow to restructure rental partnerships or face penalties that could reshape the company’s fastest-growing division.
CEO Wacksman’s characterization of the Redfin agreement as “pro-consumer and pro-property manager” representing predictable defense arguing that partnerships expand rather than restrict consumer choice, with the framing attempting to position the deal as efficiency-creating rather than competition-eliminating.
The five state attorneys general joining the FTC lawsuit demonstrating coordinated regulatory assault, with the multi-jurisdiction prosecution creating potential for substantial penalties and increasing litigation costs even if Zillow ultimately prevails on the merits.
The Compass lawsuit over private listings ban highlighting fundamental tension between transparency advocates who believe all properties should be publicly marketed and traditional agents who want flexibility to market exclusively through their networks before broader exposure.
Wacksman’s dismissal of Compass-Anywhere merger impact on Zillow’s business reflecting confidence that industry has moved beyond pocket listings, with the CEO arguing that sellers demand maximum exposure that private marketing cannot provide regardless of agent preferences.
The “don’t want to put the internet back in the box” rhetoric framing private listings as regressive attempt to restore pre-digital information asymmetries, with the language positioning Zillow as consumer champion against industry interests seeking to limit transparency benefiting agents over home sellers and buyers.
The CoStar copyright infringement lawsuit over photo usage representing tactical assault from primary competitor, with the case potentially forcing Zillow to remove images or pay licensing fees while distracting management attention and legal resources from business operations.
The class action lawsuit over flex referral program alleging inflated costs representing another legal front where Zillow faces accusations of overcharging agents, with the complaint potentially requiring refunds or fee restructuring if plaintiffs demonstrate pricing exceeded reasonable market rates.
The former employee discrimination lawsuit adding to litigation burden while potentially exposing internal culture problems, with employment cases creating negative publicity and discovery processes that might reveal embarrassing internal communications or policies.
The 50+ brokerages adopting Zillow Showcase demonstrating that despite tensions over private listings, traditional brokerages recognize they must partner with the platform to reach buyers, with the adoption indicating Zillow’s negotiating leverage compelling participation even from reluctant competitors.
The Agency partnership with Mauricio Umansky providing celebrity endorsement, with the luxury brokerage founder’s participation lending credibility to Showcase while generating marketing buzz from his reality television profile and high-end real estate reputation.
