Zillow Group (Z) Financials

Zillow Group (NASDAQ: ZG) Financial Overview and Trends

Analyzing Zillow's financials from Q3 2022 through Q1 2025 reveals several key trends across revenue, expenses, net income, cash flows, and balance sheet strength. Here's a summary to help retail investors understand Zillow's recent performance and financial health:

• For Q1 2025, Zillow reported a modest net income of $8 million, a significant improvement compared to consistent net losses in preceding quarters dating back to 2022.
• Total revenues have generally increased from approximately $486 million in Q3 2023 to $615 million in Q1 2025, indicating top-line growth primarily driven by growth in non-interest income.
• Non-cash adjustments to reconcile net income are substantial each quarter, reflecting strong depreciation and amortization expenses, which also bolster operating cash flow despite net losses.
• Operating cash flow remains solid, with $104 million generated in Q1 2025, signaling ongoing operational efficiency and cash generation capacity despite net losses in many quarters.
• Marketing and operating expenses are high, typically exceeding $600 million combined each quarter, which restrains profitability but may support growth initiatives.
• Interest expense has remained stable around $5-$10 million per quarter, without significant change, suggesting fixed financing costs despite fluctuating debt levels.
• Zillow’s goodwill and intangible assets remain large and stable, at around $2.8 billion and $297 million respectively, indicating significant recorded value from acquisitions or brand value.
• Zillow has sustained net losses in most quarters before Q1 2025, often ranging from $20 million to $73 million negative net income, showing ongoing challenges returning to consistent profitability.
• The company’s repurchase of common equity continues to be substantial, e.g., $250 million repurchased in Q1 2025, which reduces cash reserves and may stress liquidity.
• Despite improving net income, Zillow's total liabilities remain significant at approximately $992 million in Q1 2025 and previously in the billions, which could exert financial pressure alongside negative retained earnings.

Summary: Zillow Group is showing signs of potential turnaround with its first positive net income in several quarters in Q1 2025 and steadily growing revenue. Operational cash flow remains strong, supporting liquidity despite ongoing substantial expenses and historical losses. The company's balance sheet shows solid equity but continued significant liabilities and investment in goodwill. Ongoing high marketing and operating expenditures, along with equity repurchases, may pressure cash balances. Investors should watch Zillow’s ability to maintain profitability, manage expenses, and continue positive cash generation over upcoming quarters as critical indicators of financial health improvement.