ZILLOW GROUP, INC. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Exceeded Q1 outlook, achieving GAAP profitability. Focused on executing strategy, managing costs, and expanding EBITDA margins.
• Zillow has a strong brand with 227 million average monthly unique users, 80% organic traffic, and four times the app engagement of competitors in the category.
• Enhanced Markets strategy: 24% of connections in Q1, aiming for 35% by year-end. Showcase feature on For Sale listings growing, with 2% of new listings using it, and agents using Showcase winning more listings.
• Rentals growth driven by comprehensive marketplace with over 2 million listings, partnership with Redfin and Appfolio, and 37 million unique visitors in March.

Segment Performance

• For Sale: Q1 revenue was $458 million, up 8% year-over-year. Residential revenue grew 6% to $417 million, and Mortgages revenue was up 32% to $41 million. Revenue contribution: For Sale segment contributed a significant portion, with Residential and Mortgages driving growth within it.
• Rentals: Rentals revenue reached an all-time high of $129 million in Q1, up 33% year-over-year. Multifamily revenue grew 47% in Q1, with multifamily properties on Zillow reaching 60,000 as of early May. Rentals segment contributed to top-line growth with strong momentum.

Guidance

• Q2 total revenue expected $635 million-$650 million, up 11%-14% year-over-year. For Sale revenue mid-single digits, Mortgages revenue ~30% growth.
• Rentals revenue expected to accelerate, with 40% growth for full year 2025. Q2 EBITDA $140 million-$155 million, margin 22%-24%.
• Full year 2025: low to mid-teens revenue growth, EBITDA margin expansion, and positive GAAP net income.

Risks

• Macro economic uncertainties impacting the housing market.
• Execution risks related to scaling Enhanced Markets and new partnerships.
• Dependence on continued consumer trust and industry adoption of listing standards.

Q: Ron Josey asked about Rentals revenue growth and multifamily unit growth.

A: Jeremy Wacksman and Jeremy Hofmann discussed Rentals strategy, property growth, audience reach, and the impact of partnerships like Redfin.

Q: Brad Erickson inquired about market share and Enhanced Markets.

A: Jeremy Hofmann and Jeremy Wacksman talked about Enhanced Markets progress, connection rates, and their role in driving growth.

Q: John Colantuoni asked about Rental growth vs prior expectations.

A: Jeremy Hofmann explained that Rentals growth is part of the guided plan, driven by the comprehensive marketplace strategy.

Q: Trevor Young questioned about the Redfin partnership and multifamily ramp.

A: Jeremy Hofmann and Jeremy Wacksman discussed partnership mechanics, property growth, and the benefits of the partnership for both parties.

Q: Thomas Champion asked about listing standards and Enhanced Markets.

A: Jeremy Wacksman spoke about listing standards and their impact on transparency, while Jeremy Hofmann discussed Enhanced Markets progress and future goals.

Q: Mark Mahaney inquired about market growth and Enhanced Markets monetization.

A: Jeremy Hofmann and Jeremy Wacksman talked about market challenges, Enhanced Markets' impact, and their role in driving growth despite macro uncertainties.

Q: Sergio Segura asked about listing standards reaction and EBITDA expenses.

A: Jeremy Wacksman discussed industry reaction to listing standards, and Jeremy Hofmann explained Q1 expenses and Q2 EBITDA expense expectations.

Q: Curtis Nagle asked about housing market impact and EBITDA guidance.

A: Jeremy Hofmann spoke about housing market uncertainty and Q2 guidance, emphasizing the plan to grow through challenging conditions.

Q: Benjamin Black asked about Listing Showcase.

A: Jeremy Wacksman discussed Showcase progress, adoption, and its potential to become a standard in the future.

Q: Dae Lee asked about agent participation and consumer behavior.

A: Jeremy Wacksman talked about agent sentiment, their preference for Zillow, and consumer demand despite housing challenges.

Q: Maria Ripps asked about Rocket/Redfin acquisition and Redfin partnership impact.

A: Jeremy Wacksman and Jeremy Hofmann discussed the acquisition's impact on the industry, partnership continuity, and the role of partnerships in driving growth.