Zillow (Z) Q2 2025: Rentals Revenue Accelerates 36% as Multifamily Listings Surge

2025-08-06 | By EarningsIQ Research

Zillow’s Q2 results highlight a decisive pivot toward rentals, with multifamily listings and revenue growth outpacing the broader real estate market. Execution on product innovation and expanded distribution partnerships are translating into increased advertiser wallet share and a path to billion-dollar rentals revenue, even as for-sale and mortgage segments deliver resilient gains. Management’s tone and investments signal confidence in scaling both sides of the platform, with accelerating rentals momentum expected to drive the next leg of growth.

Summary

  • Rentals Marketplace Outpaces: Multifamily and rentals growth is now the primary engine of acceleration.
  • Enhanced Markets Expand: For-sale strategy is driving incremental share gains and higher agent engagement.
  • Distribution Leverage Rises: Redfin and Realtor.com integrations unlock broader reach and monetization upside.

Performance Analysis

Zillow delivered 15% year-over-year revenue growth in Q2, with the rentals segment emerging as the major growth lever. Rentals revenue jumped 36% year-over-year, led by a 56% surge in multifamily, which now accounts for a growing share of the 2.4 million active rental listings. Multifamily property count increased 45% to 64,000, reflecting both new advertiser wins and expanded wallet share among existing partners. Residential revenue grew 6% and for-sale revenue outpaced the flat industry backdrop, with agent and software offerings (including Premier Agent, Showcase, and FollowUpBoss) supporting the expansion. Mortgage revenue rose 41%, driven by a 48% increase in purchase loan origination volume as Zillow Home Loans adoption climbed in enhanced markets.

Cost discipline remained evident, with total operating expenses and cost of revenue up 9%, below the pace of revenue growth. EBITDA margin reached 24%, and the company posted its second consecutive quarter of positive net income. Share repurchases and the settlement of convertible notes reduced cash balances, but Zillow is now debt-free and expects buybacks to offset 2025 stock-based compensation. Variable costs are rising in support of rentals and mortgage initiatives, but fixed costs grew just 3%, enabling margin expansion even as the company invests in growth levers.

  • Rentals Revenue Acceleration: Multifamily and rentals outpaced all other segments, now central to growth narrative.
  • Cost Leverage Maintained: Fixed cost growth held to 3%, supporting expanding EBITDA margins.
  • Distribution Partnerships Contribute: Redfin and Realtor.com broaden reach and drive incremental value for advertisers.

Zillow’s Q2 marked a clear transition, with rentals scaling rapidly and for-sale execution delivering steady share gains against a challenging macro housing environment.

Executive Commentary

"We are building that truly integrated, digitized, end-to-end transaction experience. That relentless focus on creating great products and experiences is why we're growing share, in both for sale and rentals, and why Zillow is a beloved brand."

Jeremy Waxman, CEO

"Q2 2025 revenue exceeded our expectations, up 15% year-over-year... Our better-than-expected revenue performance combined with effective cost management delivered EBITDA of $155 million at the high end of our outlook range."

Jeremy Hoffman, CFO

Strategic Positioning

1. Rentals Platform Scale and Monetization

Zillow Rentals, two-sided rental marketplace, is scaling rapidly through a combination of inventory aggregation and transaction modernization. The platform now leads the category with 2.4 million active listings and 36 million unique monthly visitors, supported by strong partnerships with Redfin and Realtor.com. Multifamily is the primary growth engine, with property count and revenue both accelerating. The focus on end-to-end digital leasing, payments, and credit reporting is deepening engagement with both renters and property managers, positioning Zillow for continued wallet share gains and a clear path to $1 billion-plus in rentals revenue.

2. Enhanced Markets and Agent Productivity

Enhanced markets, integrated transaction experience geographies, are central to Zillow’s for-sale strategy. In Q2, 27% of connections came through enhanced markets, with a target of 35% by year-end and 75% longer-term. FollowUpBoss, agent CRM platform, now handles 96% of enhanced market connections, with growing adoption of AI-driven features to streamline agent workflows and boost conversion rates. These initiatives are driving higher agent productivity, increased Zillow Home Loans adoption, and incremental share gains versus a flat industry backdrop.

3. Product and Technology Innovation

Continuous product innovation is underpinning both consumer and agent value propositions. Key launches include Buyability, affordability tool for home buyers, Offer Insights for real-time pricing guidance, and SkyTour, immersive 3D home tour technology. AI-powered features in FollowUpBoss and in-app messaging are automating communication and lead management, freeing up agents to focus on high-value client engagement. These investments are designed to create a differentiated, tech-enabled experience that strengthens Zillow’s brand and drives long-term engagement.

4. Distribution and Network Effects

Expanded partnerships with Redfin and Realtor.com are multiplying Zillow’s distribution footprint, enabling property managers to reach renters across a broader set of platforms and driving incremental value for advertisers. This network effect is self-reinforcing: more listings attract more renters, which in turn draws more property managers and upgrades to premium packages. Advertiser ROI is improving as the rental audience grows and engagement deepens, supporting both property count and wallet share expansion.

5. Cost Structure and Capital Allocation Discipline

Zillow is balancing growth investments with cost discipline, holding fixed cost growth to 3% while variable expenses scale in support of rentals and mortgage initiatives. Convertible debt has been retired, and the share repurchase program is being deployed selectively to offset dilution and enhance per-share value. Margin expansion remains a priority, with EBITDA margin guided to remain in the mid-20s as the business scales.

Key Considerations

Zillow’s Q2 performance reflects a business in transition, with rentals emerging as the primary growth lever and for-sale segments delivering resilient gains amid industry headwinds. Execution on product and distribution initiatives is translating into both user and advertiser engagement, while disciplined capital allocation is supporting margin expansion and net income growth.

Key Considerations:

  • Rentals Momentum: Multifamily revenue and property count growth are accelerating, driving confidence in the billion-dollar rentals target.
  • Enhanced Market Rollout: Methodical expansion is increasing agent engagement and Zillow Home Loans adoption, with further upside as enhanced markets reach more connections.
  • Distribution Partnerships: Redfin and Realtor.com integrations are broadening reach, supporting both advertiser ROI and incremental revenue opportunities.
  • Product Innovation: AI-powered agent tools and immersive consumer experiences are differentiating Zillow’s platform and driving adoption.
  • Cost and Capital Discipline: Fixed cost leverage and selective buybacks are supporting margin expansion and per-share value creation.

Risks

Macro housing market remains flat, with affordability and supply constraints limiting for-sale transaction volume. Rentals growth is exposed to competitive pressure and the pace of property manager adoption, while variable expenses are rising ahead of revenue in support of scaling initiatives. Regulatory changes and industry listing standards could impact platform access and agent ecosystem dynamics, though Zillow’s leadership believes most of the industry is aligned with its approach.

Forward Outlook

For Q3, Zillow guided to:

  • Total revenue of $663 million to $673 million, 14% to 16% year-over-year growth
  • For-sale revenue growth similar to Q2, with residential mid-single digits and mortgages in the high 20% range
  • Rentals revenue growth above 40%, with multifamily as the main driver
  • EBITDA of $150 million to $160 million (23% to 24% margin)

For full-year 2025, management raised guidance to the high end of mid-teens revenue growth and reiterated approximately 40% rentals revenue growth. Variable cost investments will continue in rentals and mortgages, with fixed costs expected to grow modestly. Margin expansion and positive net income remain on track, with Redfin partnership expected to be accretive in the second half.

  • Rentals acceleration is expected to continue as property count and wallet share expand.
  • Enhanced market rollout and product innovation are expected to drive incremental for-sale gains.

Takeaways

Zillow’s Q2 marked a pivotal shift toward rentals-led growth, with multifamily and distribution partnerships driving both scale and monetization. Cost discipline and capital allocation are supporting margin expansion, while enhanced markets and product innovation continue to unlock incremental value in for-sale and mortgage segments.

  • Rentals Engine Ignites: Multifamily and rentals revenue are now the primary growth levers, with accelerating momentum expected to persist through 2025.
  • Platform Effects Deepen: Product, technology, and distribution partnerships are reinforcing network effects and advertiser ROI, underpinning the path to billion-dollar rentals revenue.
  • Watch for Enhanced Market Penetration: As the share of connections in enhanced markets rises, incremental revenue and margin expansion should follow, with further upside from product adoption and agent engagement.

Conclusion

Zillow’s Q2 2025 results demonstrate a business gaining speed from its rentals flywheel, even as for-sale and mortgage segments deliver steady gains against a challenging macro backdrop. Execution on distribution, product, and cost discipline positions the company for sustained growth, with rentals now firmly established as the next major revenue pillar.

Industry Read-Through

Zillow’s rapid rentals growth and multifamily momentum signal a broader shift in real estate toward digital aggregation and transaction modernization. Competitors in the rentals and for-sale space will need to match the pace of product innovation and distribution partnerships to remain relevant. Advertiser ROI and network effects are becoming increasingly critical, with platform scale and end-to-end digital experiences likely to define future winners. The flat macro housing environment underscores the importance of diversified revenue streams and operational agility, lessons that apply across proptech and digital marketplace peers.

Z Technology Real estate Rentals Marketplace Multifamily Platform