Zillow Group (ZG) Financials

Zillow Group (NASDAQ:ZG) has shown signs of financial stabilization and modest profitability in Q1 2025 compared to prior quarters.

Key positive developments in Q1 2025 include:

• Achieved net income of $8 million, a turnaround from multiple prior quarters of losses (e.g., Q4 2024 net loss was $52 million, and losses were persistent through 2023 and 2024 with net losses ranging from $7M to $73M).
• Generated $104 million in net cash from operating activities in Q1 2025, indicating solid operational cash flow despite past loss-making quarters with varying cash from operations.
• Marketing and other operating expenses remained relatively stable with total non-interest expense slightly decreased to $607 million compared to Q4 2024’s $623 million.
• Continued significant amortization and depreciation expenses reflecting investment in assets but also adding non-cash costs aiding the reconciliation of net income to cash flow.

Neutral observations for the quarter and recent periods:

• Total revenue increased to $615 million in Q1 2025 from $572 million in Q4 2024, driven by higher non-interest income (primarily "Other Non-Interest Income" rising to $598 million).
• The company’s liabilities remained manageable at roughly $992 million in Q1 2025, down significantly from over $2 billion in prior quarters in 2023-2024, reflecting potential debt reduction or reclassification.
• Cash and equivalents have declined from a high of $1.97 billion in Q3 2022 to about $914 million in Q1 2025, indicating significant cash burn or investment over time.
• Weighted average diluted shares outstanding increased slightly from 234 million in Q1 2024 to about 256 million in Q1 2025, modestly diluting per share metrics.

Negative trends and concerns highlighted by the data:

• Despite the recent profitable quarter, Zillow has suffered several quarters of losses over the past two years with net losses peaking at $73 million in Q4 2023.
• High marketing and operating expenses exceeding $600 million each quarter limit profit margins and reflect aggressive spending.
• Net interest expense remains consistent at about $5 to $9 million per quarter, reflecting ongoing cost of debt financing without offsetting interest income.
• Cash and equivalents and trading securities have been steadily declining from highs above $3 billion in total (cash + securities) in 2022-2023 periods to about $1.6 billion combined in Q1 2025, signaling significant cash consumption or investments.
• Net cash from financing activities shows consistent negative outflows driven primarily by large repurchases of common equity (e.g., $250 million in Q1 2025), which though defensive for shareholder value, reduces liquidity.

Summary: Zillow Group appears to have turned the corner into profitability in early 2025, with improved revenue and operational cash flow. However, the company still faces challenges from sustained high expenses, significant historical losses, and declining liquidity. Investors should watch upcoming quarters for continued profitability, expense control, and cash flow improvements to confirm a durable financial recovery.