Zillow Group reported better-than-expected revenue and a return to profitability in the first quarter of 2025. However, the company's stock declined more than 4% after hours following guidance for the upcoming quarter that fell short of analyst forecasts.
Q1 Financial Results
Zillow posted first-quarter revenue of $598 million, beating analyst estimates of $589.1 million. The company reported a net profit of $8 million, or 3 cents per share, marking its first profitable quarter in years. Growth in the rental and mortgage segments was highlighted as a key driver of the improved results [3][2].
Market Reaction and Q2 Guidance
Despite the stronger-than-expected Q1 results, Zillow's stock dropped 4.2% in after-hours trading after it issued Q2 2025 adjusted EBITDA guidance below Wall Street consensus. The lower guidance raised concerns among investors about the company's near-term growth trajectory and earnings potential [1].
Segment Performance and Business Outlook
The company credited gains in its rental and mortgage units for the improved Q1 performance. However, industry analysts noted continued caution due to the weaker Q2 outlook and broader market uncertainties. Prior to the report, market expectations were for earnings per share of $0.47 and revenue around $588 million [5].
Profitability Milestone
This quarter marks Zillow's return to profitability, reversing years of quarterly losses. The company had faced persistent net margin and return on equity challenges in recent periods [3][5].
Analysis
Zillow's ability to surpass revenue expectations and return to profitability demonstrates progress in the company's strategic focus on rentals and mortgages. However, the below-consensus Q2 guidance and muted investor response highlight lingering skepticism about the pace and durability of future growth. Analysts pointed to uncertainty in the real estate sector and the company's ability to sustain momentum across all business segments as key issues.
Outlook
While Zillow has regained profitability and showed revenue strength in the most recent quarter, cautious guidance for Q2 and investor concerns signal a challenging path ahead. Company performance in rental and mortgage segments will be closely watched, and further clarity on growth initiatives is likely to be necessary to rebuild market confidence.
