Zillow has had an energized start to the year, surpassing its outlook for the first quarter by posting $598 million in revenue—an increase of 13% YoY and a continuation of its double-digit growth trend.
In its For Sale business, revenue was up 8% over last year ($458 million), with the residential category up 6% and mortgage up 32%. Rental revenue reached an all-time high of $129 million, up 33% year-over-year—coinciding with a deal to take on rival Redfin’s rental segment, which may be facing regulatory scrutiny.
Expenses were below anticipated figures—$50 million in the implied outlook versus $445 million spent—with leadership noting that slower hiring and lower marketing spend led to some cost savings.
CEO Jeremy Wacksman attributed the company’s growth to its continued focus on managing costs, expanding EBITDA margins and executing strategy, which includes a policy encouraging listing transparency, a continued strategic relationship with Redfin and AI-powered tools.
But he also fielded questions on major industry developments, including the macroeconomic turmoil created by tariffs and the Redfin acquisition by Rocket. That deal has not yet closed, and is facing at least one legal challenge from a Redfin investor.
Wacksman said that he saw the deal as a recognition that “the future of real estate is this integrated transaction.”
“The great news for us is that’s been our strategy for a while, and you’re seeing us grow our share of transactions executing against that strategy,” he said. “There’s gonna be multiple winners here.”
Zillow’s big ‘listing standards’ push
Last month, the company took a stand against listings that have been previously offered for sale in a selective manner, coinciding with the National Association of REALTORS®’ decision to affirm the Clear Cooperation Policy, but also allow delayed listing dissemination beyond MLS databases, essentially keeping them as insider brokerage deals.
The move, said Wacksman during the recent call with investors, is about encouraging the industry to formally implement what most are already practicing, “which is that if you’re going to market a listing—if a seller is not going to choose privacy or they’re not going to choose no internet, which are all options available to them—and you’re going to market it publicly to some buyers, you need to market it to all buyers.”
The policy, he emphasized, is meant to empower buyers and sellers and maintain education and content availability in the market so agents can continue to do their jobs effectively. For the most part, brokerages, MLSs and other organizations such as the Consumer Policy Center have publicly aligned with this principle in the name of transparency, noted Wacksman.
Zillow to build on rental strategy while moving forward with Redfin
Despite Rocket’s announcement that it would be acquiring Redfin, Zillow doesn’t anticipate changes to their ongoing partnership. The $100 million deal, which allows the real estate marketplace to post rental listings on Redfin’s site, went live last week.
“Alongside our successful partnership to distribute multifamily rental listings on Realtor.com®, we expect it to expand our reach with renters, enhance our value proposition with advertisers and drive substantial growth in leads, leases and revenue,” said Wacksman.
Building on this, the company also initiated a partnership a few weeks ago with rental property management group Appfolio, which will connect its rental audience with tools to optimize operations for property managers so they can better manage listings, fill vacancies more efficiently and elevate the renter experience.
The goal, said Wacksman, is to build an integrated experience with the understanding that there’s going to be more companies than just Zillow doing it. “We love the bet we are making that real estate is going to be further digitized and integrated, and we love our strategic positioning,” he said.
Macro headwinds and value propositions
Wacksman and CFO Jeremy Hofmann were peppered throughout the conference call by investors asking about the real estate market outlook, and specifically why the company chose not to release a market forecast this quarter.
“It’s just a little too hard to predict,” Hofmann explained. “The housing market itself has been challenging to predict the last few years, and you throw in more uncertainty…we felt better served to just tell you all our expectation is (to) grow right through it. So that’s what we plan to do in Q2.”
Hofmann characterized the macro situation as “fluid.” Both he and Wacksman focused on demand, and how affordability is the main concern as buyers continue to want homes.
“What’s keeping transaction volumes down at this kind of ‘have-to-move’ level, the (around four million) existing home sales that trade, down from five-and-a-half to six (million) average. We’re really down to only the folks that have to pull the trigger,” Wacksman said. “That doesn’t mean the demand’s not there. It just means that they’re not actually following through and able to buy, and that’s the affordability challenge, which is exacerbated by lack of inventory.”
For Zillow as a company, growth will come from rentals and other services while these challenges persist through 2025, according to Hofmann, who pointed to “self-help transactional services” like Follow Up Boss, Enhanced Markets and the Zillow Showcase program as areas of focus for the company, along with the aforementioned multifamily/rental investments.
Zillow’s key growth metrics and product highlights
Zillow engagement: About two-thirds of the real estate audience uses Zillow somewhere along their journey, more than twice any other company in the category, with 80% of traffic being driven organically. Q1 saw 227 million average monthly unique users.
Home loans: Zillow’s BuyAbility feature, which allows buyers to shop based on what they can afford, had more than 1.5 million customers enrolled since launch a year ago. More than 360,000 enrolled in March alone. Seventy percent of movers who choose to finance through Zillow Home Loans are also working with a Premier Agent partner, up from 60% a year ago.
Enhanced markets: New Enhanced Markets (where agents only pay the portal after a lead transacts on a house) were launched in April, with share of connections expected to increase to more than 35% by end of year. Twenty-four percent of its overall connections in Q1 happened in Enhanced Markets, up from 21% in Q4. More than 90% of connections in Enhanced Markets are being managed through Follow Up Boss, which uses AI to provide call summaries, and helps identify high-intent buyers and sellers through follow-ups and action items.
Zillow showcase: The technology offers AI-powered 3D modeling and interactive floor plans and appeared in about 2% of new For Sale listings as of March—up from 1.7% at the end of last year. It is projected to reach 5% – 10% of U.S. listings in the near term. Recent enhancements include a performance dashboard for agents and an upcoming integration with Virtual Staging AI.