Zillow Group (Z) Financials

Zillow Group (NASDAQ: Z) showed a meaningful improvement in profitability and operating cash flow in Q1 2026, but the quarter also highlighted some important balance sheet and financing trends that investors should watch closely.

On the income statement, Zillow generated $720 million in revenue in Q1 2026, up from $668 million in Q4 2025 and roughly flat versus recent quarters. Net income improved to $46 million, compared with $3 million in Q4 2025 and $10 million in Q3 2025. That said, the company’s profitability still looks uneven across the past four years, with several quarters of losses in 2023 and 2024.

Cash flow was a clear bright spot in Q1 2026. Zillow produced $200 million of operating cash flow, up sharply from $72 million in Q4 2025 and $105 million in Q3 2025. The improvement suggests better core cash generation, helped by positive non-cash adjustments and operating asset/liability changes.

The balance sheet remains fairly liquid, with $678 million in cash and equivalents and $105 million in trading securities at the end of Q1 2026. However, Zillow also carries a large amount of goodwill, and debt balances remain material, even though they are lower than in some earlier periods.

• Operating cash flow strengthened materially to $200 million in Q1 2026, a strong sign of improving core cash generation.
• Net income improved to $46 million, up from $3 million in Q4 2025.
• Revenue increased to $720 million, above the $668 million posted in Q4 2025.
• Investing cash flow was positive at $376 million, supported by sales and maturities of investments.
• Liquidity remains solid with $678 million in cash and equivalents plus $105 million in trading securities.
• Gross profitability still depends heavily on non-interest income, which continues to make results somewhat volatile quarter to quarter.
• Depreciation and amortization remain sizable, reflecting a business with a meaningful asset base and acquisition-related intangibles.
• Share count has been elevated over the last year, though buybacks have reduced cash balances in some quarters.
• Financing cash flow was negative at $666 million in Q1 2026, largely due to $626 million of common equity repurchases.
• Goodwill is very large at $2.823 billion, creating potential impairment risk if the business weakens.

Looking at the broader trend over the last four years, Zillow has clearly moved away from the deep losses seen in 2022-2024. Quarterly revenue has been steadier, losses have narrowed, and operating cash flow has generally improved. Still, the business has not proven consistently durable on the bottom line, and the company has used a lot of cash on buybacks, which can be supportive of EPS but also reduces balance sheet flexibility.

Bottom line: Zillow’s Q1 2026 results point to better operational momentum and stronger cash generation, but investors should remain cautious about the company’s heavy reliance on non-interest income, ongoing buybacks, and the large goodwill balance on the books.