Zillow Group reported third-quarter earnings that surpassed analyst predictions, driven by significant growth in its mortgage and rentals divisions. The real estate listings and technology company posted four cents per share on $676 million in revenue, demonstrating resilience despite broader market conditions.
Key Takeaways
- Zillow's Q3 earnings beat analyst estimates, reporting $676 million in revenue.
- Mortgage revenue jumped 36% to $53 million, fueled by a 57% rise in purchase loan originations.
- Rentals revenue surged 41% to $174 million, with multifamily property listings increasing by 47%.
- The company projects strong growth to continue in both its mortgage and rental segments for the rest of the year.
Zillow's Strong Financial Performance
Zillow Group delivered a robust third-quarter performance, outperforming Wall Street's forecasts. Analysts had anticipated two cents per share on $671 million in revenue. The company's actual results exceeded these expectations, signaling a positive trajectory.
According to Zillow's report, the company earned four cents per share. Total revenue reached $676 million for the quarter. This strong showing led to a 3.9% climb in the company's stock shortly after the earnings were released, although shares closed up 0.28% at $71.72 on Thursday.
Quick Facts
- Q3 Revenue: $676 million
- Earnings Per Share: 4 cents
- Mortgage Revenue Growth: 36%
- Rentals Revenue Growth: 41%
Mortgage and Rentals Drive Growth
While Zillow's residential revenue, which includes its agent software and advertising businesses, saw a 7% increase to $435 million, the real standout performances came from its mortgages and rentals segments. These areas are experiencing rapid expansion, contributing significantly to the company's overall success.
Mortgage revenue saw a substantial 36% increase, reaching $53 million. This growth was primarily driven by a 57% surge in purchase loan originations, which totaled $1.3 billion. Zillow executives highlighted their strategy to encourage more buyers to use Zillow Home Loans as a key factor in this success.
"Our consistently strong performance reinforces that Zillow can grow regardless of what the residential real estate market is doing," wrote Zillow CEO Jeremy Wacksman and CFO Jeremy Hofmann in a letter to shareholders.
Expanding Mortgage Footprint
Despite the rapid growth, Zillow's current mortgage origination volume remains relatively small compared to industry giants. For instance, United Wholesale Mortgage reported $27.3 billion in purchase loan originations in its second quarter alone. However, Zillow executives are ambitious about their future in the mortgage market.
CFO Jeremy Hofmann expressed confidence in the company's potential. He stated in an interview that Zillow aims to become one of the largest purchase mortgage originators in the country. This long-term vision underscores the strategic importance of the mortgage business to Zillow's future.
Context on Zillow's Business Model
Zillow Group has been actively diversifying its service offerings beyond its traditional real estate agent business. The company focuses on building out its mortgages and rentals platforms to create a more integrated experience for users. This strategy aims to capture more value across the entire real estate transaction lifecycle, from searching for a home to securing financing and finding rental properties.
Booming Rentals Business
Zillow's rentals business also posted impressive numbers, with revenue climbing 41% to $174 million. This growth reflects a significant increase in property managers utilizing Zillow's platform. The number of multifamily properties advertising on Zillow jumped 47% from the same period in 2024, reaching 69,000.
The company's rentals strategy has been a key area of focus, despite some external challenges. Zillow's rental partnership with Redfin, for example, recently drew a Federal Trade Commission complaint. Addressing this, Hofmann emphasized the company's view of its rentals strategy as "pro-competitive, pro-consumer, and pro-property manager."
- Multifamily properties advertising on Zillow: 69,000
- Increase from 2024: 47%
Outlook for the Fourth Quarter
Looking ahead, Zillow anticipates continued strong performance. The company expects fourth-quarter revenue to range from $645 million to $655 million, surpassing analyst estimates of $644 million. Adjusted EBITDA is projected to be between $145 million and $155 million, aligning with analyst forecasts.
Zillow executives project their mortgage revenue to grow approximately 30% in the second half of the year compared to the same period in 2024. Rentals revenue is expected to see even higher growth, forecasted at over 45% in the fourth quarter year-over-year. These projections highlight the company's confidence in its current strategies and market position.
The leadership team acknowledged external challenges but expressed confidence in their ability to navigate them. Their letter to shareholders noted, "As we continue to deliver excellent results, we’re also aware of the external noise that has gotten louder in recent months—and we’re confident in our ability to execute through it."
This forward-looking statement reinforces Zillow's focus on execution and sustained growth across its diverse business segments.
