Online real estate marketplace Zillow (NASDAQ: ZG) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 14.5% year on year to $655 million. The company expects next quarter’s revenue to be around $668 million, close to analysts’ estimates. Its GAAP profit of $0.01 per share was in line with analysts’ consensus estimates.
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Zillow (ZG) Q2 CY2025 Highlights:
- Revenue: $655 million vs analyst estimates of $647.2 million (14.5% year-on-year growth, 1.2% beat)
- EPS (GAAP): $0.01 vs analyst estimates of $0.02 (in line)
- Adjusted EBITDA: $155 million vs analyst estimates of $152.4 million (23.7% margin, 1.7% beat)
- Revenue Guidance for Q3 CY2025 is $668 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q3 CY2025 is $155 million at the midpoint, below analyst estimates of $160.3 million
- Operating Margin: -1.7%, up from -6.6% in the same quarter last year
- Market Capitalization: $20.35 billion
Company Overview
Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ: ZG) is the leading U.S. online real estate marketplace.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Zillow struggled to consistently generate demand over the last five years as its sales dropped at a 7.8% annual rate. This was below our standards and suggests it’s a low quality business.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Zillow’s annualized revenue growth of 12.3% over the last two years is above its five-year trend, but we were still disappointed by the results. 
This quarter, Zillow reported year-on-year revenue growth of 14.5%, and its $655 million of revenue exceeded Wall Street’s estimates by 1.2%. Company management is currently guiding for a 15% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 14.3% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and implies its newer products and services will catalyze better top-line performance.
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Operating Margin
Zillow’s operating margin has risen over the last 12 months, but it still averaged negative 8.4% over the last two years. This is due to its large expense base and inefficient cost structure.
This quarter, Zillow generated a negative 1.7% operating margin. The company's consistent lack of profits raise a flag.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Although Zillow’s full-year earnings are still negative, it reduced its losses and improved its EPS by 34.5% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.
In Q2, Zillow reported EPS at $0.01, up from negative $0.07 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Zillow’s full-year EPS of negative $0.24 will reach break even.
Key Takeaways from Zillow’s Q2 Results
It was good to see Zillow narrowly top analysts’ revenue and EBITDA expectations this quarter. On the other hand, its EBITDA guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $81.98 immediately after reporting.
Big picture, is Zillow a buy here and now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
