Zillow (Z) Q3 2025: Rentals Revenue Jumps 41% as Multifamily Listings Hit 69,000
Zillow’s Q3 showcased accelerating momentum in rentals and outperformance in for sale, underpinned by product innovation and disciplined cost management. The company’s rapid expansion in multifamily listings and deeper integration of AI-driven features signal a business well positioned for sustainable growth, even as the housing market remains at a cyclical low. Management’s confidence in expanding EBITDA margins and durable revenue growth sets a clear path toward mid-cycle targets, with rentals and integrated transaction services as key levers.
Summary
- Rentals Acceleration: Multifamily listings and wallet share gains are fueling outsized rentals revenue growth.
- Integrated Platform Expansion: Enhanced markets and new agent tools deepen Zillow’s ecosystem stickiness.
- Margin Discipline: Cost leverage and product-led innovation support sustained margin expansion into 2026.
Performance Analysis
Zillow delivered a robust quarter, with total revenue rising 16% year over year, driven by both for sale and rentals segments. The for sale business, which includes residential, mortgage, and new construction revenue streams, grew 10% year over year, outpacing the broader housing market by approximately 5 percentage points. Notably, residential revenue growth accelerated to 7% despite a tougher comp, while mortgage revenue surged 36% as purchase loan origination volumes climbed 57%.
Rentals emerged as the standout engine of growth, with revenue up 41%, now comprising 26% of total company revenue compared to 21% a year ago. Multifamily revenue, a key sub-segment, soared 62% year over year, reflecting both increased property count and higher wallet share from property managers. Cost management remained a core discipline, with fixed costs up just 5% against 16% top-line growth, and share-based compensation declining 8% year over year, enabling EBITDA margin expansion of over 200 basis points.
- Rentals Revenue Mix Shift: Rentals accounted for over a quarter of total revenue, up from just over a fifth last year, highlighting a strategic pivot.
- Agent and Software Growth: Enhanced markets, agent software adoption, and Zillow Home Loans all contributed to for sale outperformance.
- Cash Flow Strength: Free cash flow rose 28% year over year for the first nine months, supporting ongoing capital return and investment.
Zillow’s ability to drive both revenue and margin expansion in a flat housing environment underscores the resilience of its integrated, product-led model. The company’s results suggest a business gaining share on multiple fronts, with durable levers for future growth.
Executive Commentary
"In a housing market that's bouncing along the bottom, Zillow continues to outperform both our outlook and the broader industry, showing the strength of our execution and the durability of our strategy."
Jeremy Waxman, Chief Executive Officer
"Our better than expected revenue performance, combined with effective cost management, delivered EBITDA of $165 million, also above the high end of our outlook range. Q3 EBITDA margin was 24%, more than 200 basis points higher than a year ago."
Jeremy Hoffman, Chief Financial Officer
Strategic Positioning
1. Rentals Marketplace Scale and Monetization
Zillow’s rentals business is rapidly scaling, with 2.5 million average monthly active rental listings and 69,000 multifamily properties—almost double two years ago. Multifamily wallet share gains and expanded syndication partnerships (Redfin, Realtor.com) have made Zillow the leading platform for property managers seeking high-ROI advertising. The company’s cost transparency tools and reusable applications further reduce friction for renters and managers, deepening engagement and driving durable growth.
2. Integrated Transaction Ecosystem
The enhanced market strategy is central to Zillow’s long-term moat. By integrating agents, Zillow Home Loans, and new agent tools (e.g., FollowUpBoss, Showcase, Zillow Pro), the company is building a seamless end-to-end experience for buyers and sellers. Enhanced markets accounted for 34% of connections this quarter, up from 27% last quarter, with a target of 75% over the mid-term. This integration boosts transaction rates and agent stickiness, supporting both revenue and margin expansion.
3. AI-Driven Product Innovation
AI is being embedded across the Zillow ecosystem, from the debut of the Zillow app inside ChatGPT to AI-powered virtual staging in Showcase listings. These features differentiate Zillow’s consumer and agent experience, with first-mover advantage in new tech paradigms. Management views AI as a lever to increase user engagement, streamline transactions, and drive incremental monetization—positioning Zillow for the next platform shift in real estate search and discovery.
Key Considerations
Zillow’s Q3 results reflect a business model leveraging product innovation, ecosystem integration, and disciplined capital allocation to gain share in a challenging market. The company’s ability to accelerate rentals growth, expand enhanced markets, and launch new agent offerings all signal sustained operating leverage and a clear strategic roadmap.
Key Considerations:
- Rentals Growth Sustainability: Multifamily expansion and syndication partnerships are driving accelerating rentals revenue, but execution risk remains as competition and regulatory scrutiny increase.
- Enhanced Market Rollout: Progress toward the 75% enhanced market connection target is a critical lever for unlocking the next phase of for sale revenue and margin growth.
- Agent Platform Evolution: The launch of Zillow Pro and expansion of Zillow Preferred represent a shift toward deeper agent monetization and ecosystem control, with long-term implications for share and profitability.
- Cost Structure Discipline: Continued leverage on fixed costs and declining share-based compensation underpin margin expansion, but inflation and variable investment needs in growth areas warrant monitoring.
Risks
Regulatory headwinds, including the FTC’s ongoing scrutiny of syndication agreements, could impact rentals partnerships and monetization models. Competitive pressure from alternative listing platforms and agent networks may challenge Zillow’s share gains, particularly as new technologies or industry consolidation alter the landscape. Macro housing market stagnation remains a persistent risk, though Zillow’s model has shown resilience to date.
Forward Outlook
For Q4, Zillow guided to:
- Total revenue of $645 million to $655 million, representing 16% to 18% year-over-year growth.
- Rentals revenue growth accelerating to over 45% year over year, fueled by continued multifamily momentum.
For full-year 2025, management maintained guidance:
- Mid-teens revenue growth and expanding EBITDA margins.
Management emphasized factors supporting the outlook:
- Enhanced markets and integrated transaction services will drive continued share gains.
- Rentals inventory and syndication partnerships are expected to sustain above-market growth rates.
Takeaways
Zillow’s strategy of platform integration, rapid product innovation, and cost discipline is yielding both market share gains and margin expansion. The company’s outsized rentals growth and deepening agent ecosystem engagement position it for durable, multi-year growth, even as the macro housing environment remains muted.
- Rentals Momentum: Multifamily and syndication scale are driving accelerating growth and expanding the top of Zillow’s funnel.
- Agent Ecosystem Leverage: Enhanced markets and new agent tools are deepening relationships and monetization potential, with long-term share implications.
- Future Watch: Execution on enhanced market rollout, regulatory developments, and agent platform adoption will be the key drivers to monitor into 2026.
Conclusion
Zillow’s Q3 results underscore its ability to outperform in a flat housing market by scaling its rentals marketplace, deepening agent integration, and embedding AI-driven innovation across its platform. The company’s disciplined approach to cost management and capital allocation supports a credible path to sustained growth and expanding profitability.
Industry Read-Through
Zillow’s accelerating rentals revenue and success in multifamily syndication highlight the growing importance of platform scale and integrated digital experiences in real estate. The company’s product-led approach and early AI adoption set a new bar for consumer and agent engagement, pressuring peers to invest in similar capabilities. For industry participants, the shift toward end-to-end transaction platforms and deep ecosystem integration is increasingly table stakes for long-term competitiveness. The regulatory environment remains fluid, with syndication models and listing standards likely to face continued scrutiny, impacting strategic choices for all players in the residential property space.