Zillow Group's Q2 EPS Lags Estimates, Revenues Rise Y/Y

Zillow Group Z reported its second-quarter 2025 adjusted earnings per share (EPS) of 40 cents, which missed the Zacks Consensus Estimate of 44 cents. However, the figure increased 2.6% on a year-over-year basis.

Results reflected higher for-sale revenues and rental revenues year over year. However, increased sales and marketing expenses and the cost of revenues undermined the results to some extent.

Total revenues of $655 million surpassed the Zacks Consensus Estimate of $646.6 million. The figure improved 14.5% year over year.

Zillow Group’s Q2 in Detail

For-sale revenues reported during the second quarter were higher by 8.8% at $482 million. Residential revenues of $434 million increased 6.1% year over year, aided by growth in the company’s agent and software offerings. Mortgage revenues were 41.2% higher year over year at $48 million, backed by a 48% increment in purchase loan origination volume to $1.1 billion.

Rental revenues grew 35.9% year over year to $159 million, led by multifamily revenue growth of 56% year over year in the second quarter.

The adjusted EBITDA margin improved 100 basis points year over year to 24% of revenues at $155 million, led by better-than-expected revenue growth and effective cost management.

Online traffic on Zillow Group’s mobile applications and sites was higher by 5% year over year to 243 million average monthly unique users. Visits improved 4% year over year to 2.6 billion.

However, sales and marketing expenses increased 10.2% year over year to $226 million due to higher investments in personnel and marketing and advertising costs. The cost of revenues grew 27.7% year over year to $166 million due to an increase in lead acquisition costs related to strategic partnerships.

Balance Sheet of Zillow Group

Zillow ended the second quarter of 2025 with $1.2 billion in cash and investments, down from $1.6 billion at the end of the prior quarter

Z’s 2025 Outlook

Zillow expects its third-quarter 2025 total revenues to be in the range of $663-673 million and adjusted EBITDA between $150 and $160 million.

Third-quarter for-sale revenues are expected to grow on a similar line to the for-sale revenue growth reported in the second quarter, driven by residential revenue growth in the mid-single-digit range and mortgage revenue growth in the high 20% range. Rental revenues are anticipated to increase by more than 40% year over year, driven by accelerated multifamily revenue growth.

The company expects its adjusted EBITDA expenses to be higher in the third quarter at around $513 million due to lead costs relating to the Redfin rentals partnership.

For 2025, management projects mid-teens revenue growth at the higher end of its previous guidance, with adjusted EBITDA margin expansion. The company expects its rental revenues to grow by around 40% year over year and to have a positive GAAP net income.

Zillow Group’s Zacks Rank

Zillow Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zillow Group, Inc. Price, Consensus and EPS Surprise

Zillow Group, Inc. price-consensus-eps-surprise-chart | Zillow Group, Inc. Quote

Performance of Other Broader Real Estate Market Stocks

CBRE Group Inc. CBRE reported second-quarter 2025 core EPS of $1.19, ahead of the Zacks Consensus Estimate of $1.05. The reported figure also increased by 46.9% year over year.

Results reflected year-over-year revenue growth across most of its business segments except the Real Estate Investments segment. CBRE’s resilient businesses generated net revenue growth of 17%, surpassing the 15% increase in its transactional businesses.

Iron Mountain Incorporated IRM reported second-quarter adjusted funds from operations (AFFO) per share of $1.24, beating the Zacks Consensus Estimate of $1.19. This figure jumped 14.8% year over year.

IRM’s results reflected solid performances across all segments, including the storage, service, global RIM and data center business. However, higher interest expenses in the quarter undermined the performance to an extent.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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