The housing market was sluggish this summer—but not Zillow Group’s rental and mortgage businesses. The company known for its home listings portal continued to expand its other offerings in the second quarter.
Zillow on Wednesday reported earnings per share that were just shy of estimates while revenue beat expectations. The stock was up about 2% in after-hours trading after initially falling following the report.
The company reported adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $155 million on $655 million in revenue. Analysts had expected adjusted Ebitda of $154 million on $648 million in revenue. On a generally accepted accounting principles, or GAAP, basis, Zillow reported one cent a share, slightly lower than the two cents analysts had expected.
That wasn’t with help from the housing market. Homes so far this year have changed hands at a slower pace than usual as buying costs remained high.
“Tariffs and broader economic uncertainty contributed to a relatively muted home shopping season” in the second quarter, Canaccord Genuity analyst Maria Ripps wrote in a late July report. With families typically focused on summer vacations and back to school shopping in the second half of the year, “we see a more affordable housing market as unlikely to materialize.”
Zillow’s revenue, up 15% from the year prior, “outperformed the residential real estate industry’s year-over-year total transaction value growth,” Zillow executives wrote in a letter to shareholders, citing the company’s own data and data from the National Association of Realtors.
The company is known for its home listings portal, but Zillow has been building a “housing super app.” In offering more tools for agents and more services to buyers, Zillow is among the companies diversifying its business model to capture more parts of housing transactions.
“As we work to streamline residential real estate transactions with our housing super app, everything we build is designed to offer a benefit for both consumers and the industry,” CEO Jeremy Wacksman and CFO Jeremy Hofmann wrote in a shareholder letter. “We’re demonstrating consistently strong growth and are positioned for more.”
Revenue in its for-sale segment, which includes its lead generation service as well as tools for real estate professionals, buyers, and sellers, was $482 million, up 9% from the year prior. Its small-but-quickly-growing mortgages business contributed: mortgage revenue grew 41% from the year before $48 million because of an increase in purchase loan origination volume, the company said.
That growth “is really on the back of the enhanced markets that we’re rolling out,” Hofmann said in an interview with Barron’s, referring to areas where Zillow more closely integrates its additional services into the home-search process. The company said in late May that it expected to offer these services in 152 housing markets at the end of July.
“We have an opportunity to be a really big purchase mortgage originator over time, because we’re delivering good consumer value by trying to integrate these transactions,” Hofmann said.
Revenue from its rentals segment also grew quickly, rising 36% from the year before $159 million. “We are executing well and scaling rapidly,” the executives said in the letter. “We expect quarterly year-over-year rentals revenue growth to keep accelerating throughout 2025, with a clear path toward the billion-dollar-plus revenue opportunity in front of us.”
The company expects revenue in a range from $663 million to $673 million in the third quarter, in-line with analyst expectations calling for $667 million. It expects its adjusted Ebitda between $150 million and $160 million, lower than the $161 million expected by analysts.
For the full year, the company expects revenue growth in the midteens, the executives said in the letter. “We’re staying disciplined on costs and are on track to deliver on our full-year 2025 targets, including continued adjusted Ebitda margin expansion and positive GAAP net income,” they wrote.
Zillow will discuss its results on a conference call at 5 p.m. Eastern on Wednesday.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
