• Total Q4 Revenue: $554 million, up 17% year over year.
• Full-Year 2024 Revenue: $2.2 billion, up 15% year over year.
• Q4 For Sale Revenue: $428 million, up 15% year over year.
• Q4 Rentals Revenue: $116 million, up 25% year over year.
• Q4 Net Loss: $52 million, representing 9% of revenue.
• Q4 EBITDA: $112 million, resulting in a 20% EBITDA margin.
• Full-Year 2024 EBITDA Margin Expansion: 200 basis points to 22%.
• Q4 Mortgages Revenue: $41 million, up 86% year over year.
• Q4 Multifamily Properties: 50,000, up from 37,000 at the end of 2023.
• Cash and Investments at End of Q4: $1.9 billion.
• Convertible Debt Outstanding at End of Q4: $419 million.
• Q1 2025 Revenue Outlook: $575 million to $590 million, implying a 10% year-over-year increase at the midpoint.
• Q1 2025 EBITDA Outlook: $125 million to $140 million, equating to a 23% margin at the midpoint.

• Warning! GuruFocus has detected 4 Warning Sign with Z.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zillow Group Inc (NASDAQ:Z) reported a 17% year-over-year increase in Q4 revenue, surpassing their outlook range.
• The company achieved double-digit revenue growth for the full year 2024, with a 15% increase to $2.2 billion, despite a challenging housing market.
• Zillow Group Inc (NASDAQ:Z) expanded its EBITDA margin by 200 basis points in 2024, demonstrating effective cost management.
• The Rentals segment saw a 25% year-over-year revenue increase in Q4, driven by a 35% increase in multifamily property listings.
• Zillow Group Inc (NASDAQ:Z) is on track to achieve a $5 billion revenue target with a 45% EBITDA margin in a normalized housing market, indicating strong future growth potential.

Negative Points

• Zillow Group Inc (NASDAQ:Z) reported a GAAP net loss of $52 million in Q4, representing 9% of their revenue.
• The housing market remains subdued, with expectations of low to mid-single-digit growth in 2025, potentially impacting Zillow's growth.
• The company faces ongoing challenges in the rate environment, which could affect their mortgage revenue growth.
• Zillow Group Inc (NASDAQ:Z) anticipates a more challenged housing market in Q1 2025, with relatively flat growth expected.
• The company made a $100 million upfront payment to Redfin as part of a partnership, which could impact their financials in the short term.

Q & A Highlights

Q: Can you discuss the path to achieving 75% of connections through Enhanced Markets and the benefits observed so far? Also, elaborate on the strategic rationale behind the Redfin partnership and its financial implications. A: Jeremy Wacksman, CEO, explained that the goal is to increase Enhanced Markets connections from 21% to 35% by the end of the year, eventually reaching 75%. This involves scaling agent partnerships and integrating loan officer capabilities. The Redfin partnership, as detailed by CFO Jeremy Hofmann, involves a $100 million upfront payment and aims to expand Zillow's reach, benefiting both companies and enhancing the value for property managers.

Q: Regarding the 2025 outlook for positive GAAP net income, how do you plan to manage fixed and variable costs, and what role does advertising play? A: Jeremy Hofmann, CFO, stated that achieving GAAP profitability involves outperforming the housing market, maintaining a flat fixed cost base, and leveraging stock-based compensation. Variable costs and marketing will be managed opportunistically, with investments in growth areas like rentals and Zillow Home Loans.

Q: How is AI expected to impact Zillow's business, particularly in terms of cost structure and customer experience? A: Jeremy Wacksman, CEO, expressed optimism about AI's potential to enhance efficiency for customers, partners, and employees. AI can streamline workflows, improve customer interactions, and support agents and loan officers, ultimately making the marketplace more efficient.

Q: What factors contributed to the Q4 revenue growth being slightly below market growth, and how does the Q1 guidance reflect share gains? A: Jeremy Hofmann, CFO, noted that the housing market softened at the end of the year, impacting Q4 results. However, Zillow expects to grow revenue by 10% in Q1, outperforming a flat housing market, and aims for low to mid-teens growth in 2025.

Q: Can you elaborate on the strong growth in mortgage revenue and its connection to Enhanced Markets? Also, what is your view on the current housing market dynamics? A: Jeremy Wacksman, CEO, highlighted that the growth in mortgage revenue is driven by the Enhanced Markets strategy, with mid-teens adoption rates in mature markets. He noted that the housing market faces an affordability and availability crisis, but Zillow continues to gain share and outperform despite these challenges.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.