# Z — Zillow Group, Inc.

## Company & Research Metadata

- **Company:** Zillow Group, Inc.
- **Ticker:** Z
- **Exchange:** Nasdaq
- **Sector / Industry:** Communication Services / housing marketplace and services
- **Template version:** 2.7
- **Research date:** 2026-10-21
- **Valuation / score price snapshot:** $30.98 — 2026-11-03 regular-session close, America/New_York
- **Tracking tier:** Primary Watchlist
- **Owned:** Yes
- **Primary operating period reviewed:** Q2 2026
- **Historical period reviewed:** TTM, FY 2025, FY 2024; latest balance-sheet date shown below
- **Latest investor presentation reviewed:** Results release and associated financial tables; no separate slide deck materially used
- **Latest earnings call reviewed:** Q2 2026, complete material Q&A
- **Latest post-earnings management commentary reviewed:** No separate later management presentation incorporated

- **Price snapshot date:** 2026-11-03

- **Price snapshot time / timezone:** Regular-session close, America/New_York (including exchange half-days)
- **Competitor / analyst-Q&A audit:** 2026-10-28; original operating, price and valuation snapshots retained.

## What's Changed Since Previous Review

**Current Review:** 2026-10-28

**Previous Review:** 2026-10-21

**Update Trigger:** Competitor relevance and analyst-Q&A correction

| Area | Previous View | Current View | Investment Impact |
|---|---|---|---|
| Competition | Preceding operating and comparable-company classifications | Product/customer/geographic boundaries corrected; direct rivals separated from substitutes, partners and valuation anchors | Corrects the competitive comparison; does not by itself re-underwrite the valuation |
| Analyst questions | Prior source-linked Q&A summaries | Complete questions and sentence-form management answers; all 7 existing rows retained | Improves readability while preserving the recorded exchange meaning |
| Valuation and scores | Approved operating/price snapshots, scenarios, scores and decisions | Preserved | No price refresh, rerank or change to valuation assumptions in this correction pass |

**Thesis:** No new fundamental thesis determination is made in this correction pass. The prior investment decision is preserved; the corrected competitive scope should govern the next substantive review.

## Investment Snapshot

| Metric | Current View |
|---|---|
| Price Snapshot | $30.98 — 2026-11-03 regular-session close, America/New_York |
| Rating / Zone Status | Buy |
| Bear / Base / Bull Fair Value | $7.56 / $37.26 / $81.00 |
| Scenario Probabilities | 25% / 50% / 25% |
| Probability-Weighted Fair Value | $40.77 |
| Probability-Weighted Expected Return | +31.6% |
| Bear-Case Return | -75.6% |
| Strong Buy Zone | ≤ $8.32 |
| Buy Zone | >$8.32–$32.62 |
| Avoid Chasing Above | > $45.30 |
| Quality Score / Tier | 73.8 / Tier B |
| Opportunity Score / Rank | 64.6 / #18 of 76 |
| Risk Level | Medium-High |
| Tracking / Ownership | Primary Watchlist / Owned |

**Decision rationale:** Z is **Buy** at $32.24, with +26.5% probability-weighted upside and -76.6% bear-case return. Audience scale and a broader service stack can grow revenue faster than housing transactions. Confidence is 50/100 because the earnings conversion, competitive and capital assumptions below remain conditional.

## Investment Thesis

Audience scale and a broader service stack can grow revenue faster than housing transactions. Q2 revenue rose 18% to $772 million, led by rentals and mortgages. The investment requires better monetization without damaging consumer trust or agent economics. Housing recovery is helpful, but should not be the sole justification for sustained market-share gains or a premium multiple.

### What the Market May Be Mispricing

| Debate | Research judgment |
|---|---|
| Audience monetization and agent ROI | Audience scale and a broader service stack can grow revenue faster than housing transactions. |
| Rental growth and mortgage conversion | Audience engagement, agent returns, rental advertiser retention, mortgage conversion and revenue per transaction drive value. |
| Housing cycle, competition and SBC | Q2 rentals revenue grew 31% and mortgages 75%, while adjusted EBITDA margin was 23%. |

## Business Overview

Zillow operates housing discovery and connects consumers with agents, rentals, mortgage products and other transaction services. It monetizes advertising, lead or transaction-based agent relationships, rental listings and mortgage activity. Its value proposition is a broad consumer audience and a more integrated housing journey. Z is the nonvoting Class C share; valuation must include the other equity classes and use a consistent group share basis.

### Business Takeaway

Zillow operates housing discovery and connects consumers with agents, rentals, mortgage products and other transaction services. Audience engagement, agent returns, rental advertiser retention, mortgage conversion and revenue per transaction drive value.

## Industry, TAM & Market Share

Housing search, rentals and financing are large categories with cyclical transactions and changing industry practices. Competition from portals, brokerages and integrated transaction platforms is substantial. Total home value is not equivalent to the fee pool Zillow can monetize.

### Market-Share Analysis

Comparable same-definition share data for the subject and its principal rivals were not established. TAM estimates and company-specific volume measures are not treated as directly comparable market shares. The positioning analysis below is more reliable than a table of unmatched percentages.

#### Competitive Scale / Position

| Company / Platform | Primary Position | Relative Scale | Growth Direction | Investment Relevance |
|---|---|---|---|---|
| Realtor.com — News Corp | Direct: U.S. housing discovery and agent leads | Product scope; no matched operating-scale series | Competes for home-search users and agent spend | Customer choice in the stated segment only |
| CoStar (CSGP) — Homes.com; Apartments.com | Direct segments: home search and rental listings | Product scope; no matched operating-scale series | Competes in specified housing/rental products | Customer choice in the stated segment only |
| Rocket (RKT) — Redfin; mortgage operations | Segment-specific: housing discovery and mortgage origination | Product scope; no matched operating-scale series | Compare Redfin and lending separately | Customer choice in the stated segment only |

### Industry Takeaway

Total home value is not equivalent to the fee pool Zillow can monetize. The base case requires evidence of profitable adoption within that market.

## Customer Economics

Audience engagement, agent returns, rental advertiser retention, mortgage conversion and revenue per transaction drive value. Integrating services can improve conversion but adds operational and regulatory complexity. Lead volume is valuable only when customers and partners earn attractive outcomes.

### Customer-Economics Takeaway

The economic test is Housing cycle, competition and SBC. Lead volume is valuable only when customers and partners earn attractive outcomes.

## Competitive Landscape & Moat

### Competitive Landscape

Consumer portals, rental advertising and mortgages have distinct economics. CoStar and Rocket overlap through named products; consolidated multiples do not isolate those products.

| Competitor | Market Share | Positioning | Advantages vs. Company | Disadvantages vs. Company | Current Direction |
|---|---|---|---|---|---|
| Realtor.com — News Corp | No consistent comparable series | Direct: U.S. housing discovery and agent leads | Listing and agent-advertising relationships | Different audience and transaction-service mix | Competes for home-search users and agent spend |
| CoStar (CSGP) — Homes.com; Apartments.com | No consistent comparable series | Direct segments: home search and rental listings | Property marketplaces and sales distribution | Commercial-property data does not equal consumer portal economics | Competes in specified housing/rental products |
| Rocket (RKT) — Redfin; mortgage operations | No consistent comparable series | Segment-specific: housing discovery and mortgage origination | Integrated brokerage/lending distribution | Mortgage credit/capital mix differs from portal advertising | Compare Redfin and lending separately |

### Moat Assessment

Consumer brand, housing data and marketplace liquidity create a meaningful audience advantage. Agents and landlords can use multiple platforms, so monetization is less exclusive than audience scale suggests. Maintaining trust is part of the moat.

**Moat direction:** Stable — an analytical judgment about product and distribution economics, not a measured market-share claim.

### Competitive Takeaway

Consumer brand, housing data and marketplace liquidity create a meaningful audience advantage. The direct rivals determine commercial pressure; diversified or sector anchors provide valuation context and are not substitutes for direct competition.

## Financial Profile

### Historical Financials

Financial reporting periods follow the issuer's fiscal year: completed FY rows plus standalone current-year quarters and cumulative H1/9M for FY2026. Revenue, FCF and SBC are flows; cash is a period-end balance. FCF = operating cash flow minus property/equipment capex from SEC company facts; quarterly FCF after Q1 and any quarterly SBC derived from YTD are visibly marked. Missing values are N/D, not zero. Unit: USD millions. Data extracted from SEC-tagged filings as of 2026-11-07. Company-specific FCF definitions and acquisition effects may require further reconciliation.

| Period | Revenue | Growth | Gross Margin | Operating Margin | FCF | FCF Margin | SBC | Diluted Shares | Cash | Debt |
|---|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:|
| FY2024 | 2,236 | 14.96% | 76.43% | -8.50% | 285 | 12.75% | 448 | 234 | 1,862 | 660 |
| FY2025 | 2,583 | 15.52% | 74.14% | -1.24% | 235 | 9.10% | 390 | 254 | 1,303 | 457 |
| Q1 FY2026 | $708 | N/D | 73.3% | 5.1% | $166 (derived: CFO - capex) | 23.4% | $81 | 239.644 | $678 | N/D |
| Q2 FY2026 | $772 | N/D | 72.8% | -1.3% | −$25 (derived: current YTD - prior YTD) | -3.2% | $88 (derived: current YTD - prior YTD) | 227.896 | $572 | N/D |
| H1 FY2026 | $1,480 | N/D | 73.0% | 1.8% | $141 (derived: CFO - capex) | 9.5% | $169 | 233.891 | $572 | N/D |
| Q3 FY2026 | $724 | N/D | 71.3% | -22.2% | $128 (derived: current YTD - prior YTD) | 17.7% | $86 (derived: current YTD - prior YTD) | 225.305 | $602 | N/D |
| 9M FY2026 | $2,204 | N/D | 72.5% | -6.1% | $269 (derived: CFO - capex) | 12.2% | $255 | 229.589 | $602 | N/D |

### Financial Takeaways

Q2 rentals revenue grew 31% and mortgages 75%, while adjusted EBITDA margin was 23%. TTM FCF of $258 million was below SBC of $363 million. Scenario EPS includes ongoing compensation and mortgage costs. Repurchases should be evaluated against net dilution and the cash needs of new services.

**Financial direction:** Mixed — assess the reported trend alongside dilution and the balance sheet.

## Management & Capital Allocation

Management's integrated housing strategy has improved revenue diversification. Capital allocation should remain disciplined after the earlier exit from home flipping. Monitor organic monetization, legal and competitive developments, and economic profitability rather than adjusted EBITDA alone.

### Management Takeaway

Monitor organic monetization, legal and competitive developments, and economic profitability rather than adjusted EBITDA alone.

## Valuation

### Current Valuation

| Metric | Value |
|---|---|
| Price Snapshot | $30.98 — 2026-11-03 regular-session close, America/New_York |
| Market Capitalization | $7.30B |
| Enterprise Value | $7.16B |
| Trailing P/E | 143.58 |
| Provider forward P/E | 12.52 |
| EV / Sales | 2.55 |

### Comparable Company Analysis

| Company | Relevance | Public / Private | Forward P/E | EV / Sales | Growth / Margin / Risk Context |
|---|---|---|---|---|---|
| Z — Zillow Group, Inc. | Subject company | Public | 12.52 | 2.55 | housing marketplace and services; 3Y revenue-growth estimate 12.43%; operating margin 2.70% |
| Realtor.com | Direct operating competitor / substitute | Operating business of listed News Corp | N/A | N/A | consumer real-estate discovery and agent leads; no compatible standalone public multiple used |
| CSGP — CoStar | Direct Homes.com/Apartments.com segments; group mix differs | Public | 21.02 | 3.73 | property information and real estate marketplaces; 3Y revenue-growth estimate 13.04%; operating margin 2.17% |
| RKT — Rocket Companies | Redfin/housing and mortgage overlap; not a pure portal multiple | Public | 17.48 | 6.01 | mortgage origination and housing distribution; 3Y revenue-growth estimate 20.64%; operating margin 20.04% |
| Realtor.com — News Corp | Direct: U.S. housing discovery and agent leads | Operating product / listed parent | N/D — no matched snapshot collected | N/D — no matched snapshot collected | Competes for home-search users and agent spend |

**Comparable takeaway:** Consumer portals, rental advertising and mortgages have distinct economics. CoStar and Rocket overlap through named products; consolidated multiples do not isolate those products. Quoted multiples retain their original dated snapshot; missing matched multiples are not estimated. Consolidated parent multiples do not isolate the competing product. No mechanical peer average is used.

The base terminal P/E is 24×, versus the provider's current forward P/E of 12.52×. Holding that quoted multiple constant on this model's 2029 EPS gives an illustrative present value of **$19.44**, versus the central base FV of **$37.26**. Earnings definitions differ, so this is a sensitivity check; it makes the dependence on a rerating or derating explicit.

### Valuation Scenarios

| Scenario | Key Assumptions | Fair Value | Probability | Probability Rationale | Return From Price Snapshot |
|---|---|---|---|---|---|
| Bear | 3Y revenue CAGR 3%; sustainable 2029 EPS $0.70 after compensation; 16× P/E; 14% discount rate; Housing and monetization pressure limit 2029 economic EPS to $0.70. | $7.56 | 25% | Execution, financing or competitive setbacks remain credible | -75.6% |
| Base | 3Y revenue CAGR 13%; sustainable 2029 EPS $2.30 after compensation; 24× P/E; 14% discount rate; Services expansion and a normalized market produce $2.30 of 2029 economic EPS. | $37.26 | 50% | Most likely operating trajectory, requiring measurable progress | +20.3% |
| Bull | 3Y revenue CAGR 22%; sustainable 2029 EPS $4.00 after compensation; 30× P/E; 14% discount rate; Strong conversion and rental adoption produce $4 of 2029 economic EPS. | $81.00 | 25% | Successful product conversion and operating leverage; not assured | +161.5% |
| **Probability-Weighted** | Sum of each scenario value × its probability | $40.77 | **100%** | Judgmental scenario probabilities | +31.6% |

### Valuation Takeaway

- **Primary valuation method:** Present value of sustainable 2029 equity earnings × scenario P/E, plus assumed interim dividends. The three-year discount horizon approximates late-2029 earning power.
- **Cross-check methods:** Direct competition, quoted peer multiples, current cash conversion, and the separate revenue/share/net-margin bridge in [the valuation workpaper](../valuation/watchlist_models_2026-10-21.md).
- **Key valuation dependencies:** Audience monetization and agent ROI; Rental growth and mortgage conversion; Housing cycle, competition and SBC. All forward figures are independent research assumptions, not company guidance or consensus.
- **Valuation confidence / Risk Level:** 50/100 / Medium-High. Scenario values are sensitive to sustainable earnings and terminal multiples.
- **Margin-of-safety conclusion:** Buy at $32.24. New-file boundaries use Strong Buy = min(P/W FV ÷ 1.5, 1.1 × bear FV), Buy upper = P/W FV ÷ 1.25, Avoid above = P/W FV ÷ 0.90. Returns are to present fair value, not annualized returns or price targets for a particular date.

## Analyst Questions

The table consolidates related questions and follow-ups from each material participant in the complete call.

| Analyst / Firm | Core Question | Management Response | Research Read-Through |
|---|---|---|---|
| Ryan McKeveny / Zelman | How do leadership changes and restructuring affect investment? | Management said it is building a leaner organization while preserving growth investment. | Confirm that this opportunity converts into profitable recurring demand. |
| Dan Kurnos / StoneX | How could Google compete with Zillow? | Management described Google as a competing entry point while emphasizing the broader housing ecosystem. | Stress monetization if competition or mix reduces economic yield. |
| Brad Erickson / RBC Capital Markets | How does rental growth support long-term earnings potential? | Management said rental growth supports long-term profit targets. | Confirm that this opportunity converts into profitable recurring demand. |
| Ron Josey / Citi | How do Preferred rollout and mortgage mix affect revenue timing? | Management said a shift toward mortgages creates a timing headwind. | Stress monetization if competition or mix reduces economic yield. |
| Nick Jones / BNP Paribas | How quickly can AI products be developed without reducing quality? | Management said development output is improving without sacrificing quality. | Confirm that this opportunity converts into profitable recurring demand. |
| Lloyd Walmsley / Mizuho Securities | How does the integrated mortgage experience affect segment revenue attribution? | Management said the integrated experience shifts segment revenue. | Confirm that this opportunity converts into profitable recurring demand. |
| Nikhil Devnani / Bernstein | How should reported residential growth be compared with the underlying outlook? | Management said underlying and reported growth need to be reconciled. | Treat the stated timetable as conditional on demonstrated execution. |

### Analyst-Q&A Takeaway

Rentals and integrated mortgages support monetization while segment attribution shifts reported growth. Leaner staffing and faster product development need to deliver GAAP profit after compensation, without weakening growth bets.

## Thesis Monitoring

| Driver | Current State | Positive Trigger / Catalyst | Negative Trigger / Falsifier | What It Changes |
|---|---|---|---|---|
| Audience monetization and agent ROI | Audience scale and a broader service stack can grow revenue faster than housing transactions. | Revenue trajectory sustains approximately 13% annual growth on a comparable basis | Growth remains below the 3% bear assumption over a full operating cycle | Revenue outlook and scenario probabilities |
| Rental growth and mortgage conversion | Audience engagement, agent returns, rental advertiser retention, mortgage conversion and revenue per transaction drive value. | After-cost earnings progress toward the base implied net margin of 13.1% | Competition, credit losses or service costs make that margin trajectory unattainable | Margins, moat score and valuation multiple |
| Housing cycle, competition and SBC | Q2 rentals revenue grew 31% and mortgages 75%, while adjusted EBITDA margin was 23%. | Financing and compensation remain consistent with 230.3M economic shares in the 2029 base case | Required capital or cumulative dilution materially exceeds the model without matching earnings | Financial score, confidence and downside value |

## Quality & Opportunity Scorecards

### Quality Score

| Component | Score | Weight | Weighted Contribution | Evidence |
|---|---|---|---|---|
| Business durability and economics | 76 | 25% | 19.0 | Audience engagement, agent returns, rental advertiser retention, mortgage conversion and revenue per transaction drive value. |
| Moat and competitive position | 79 | 25% | 19.8 | Consumer brand, housing data and marketplace liquidity create a meaningful audience advantage. |
| Growth runway and durability | 77 | 20% | 15.4 | Housing search, rentals and financing are large categories with cyclical transactions and changing industry practices. |
| Financial quality and balance sheet | 66 | 15% | 9.9 | Q2 rentals revenue grew 31% and mortgages 75%, while adjusted EBITDA margin was 23%. |
| Management, governance and capital allocation | 65 | 15% | 9.8 | Management's integrated housing strategy has improved revenue diversification. |
| **Quality Score** | **73.8** | **100%** | **73.8** | Weighted score, independent of ownership and current price |

- **Quality Tier:** B
- **Speculative override:** None

### Opportunity Score

| Component | Raw Input | Normalized Score | Weight | Weighted Contribution |
|---|---|---|---|---|
| Quality | 73.8 | 73.8 | 30% | 22.1 |
| Probability-weighted upside | +31.6% | 100.0 | 35% | 35.0 |
| Bear-case downside | -75.6% | 0.0 | 20% | 0.0 |
| Risk / valuation confidence | 50 | 50.0 | 15% | 7.5 |
| **Opportunity Score** |  | **64.6** | **100%** | **64.6** |

- **Opportunity Rank:** #18 of 76
- **Zone Status:** Buy

## Portfolio Context

- **Tracking tier:** Primary Watchlist
- **Owned:** Yes
- **Tracking source of truth:** `my_watchlist.md`
- **Portfolio source of truth:** `portfolio/holdings.md`
- **Scoring independence:** Ownership, account, shares, position size and cost basis do not change research, valuation, Quality, Opportunity, rank or zones.

## Investment Decision History

| Timestamp | Price | Rating | Zone Status | Buy Zone | Strong Buy Zone | Avoid Chasing Above | Base FV | P/W FV | P/W Return | Quality | Opportunity / Rank | Change / Rationale |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026-10-21 (America/New_York) | $32.24 | Buy | Buy | >$8.32–$32.62 | ≤ $8.32 | > $45.30 | $37.26 | $40.77 | +26.5% | 73.8 | 64.6 / #15 | Initial missing-file analysis; common-universe ranking; independent scenario assumptions |

---

## Material Sources

| Source | Type | Date / Period | What It Supports |
|---|---|---|---|
| [www.sec.gov](https://www.sec.gov/Archives/edgar/data/1617640/000161764026000050/q22026991.htm) | Company IR / earnings filing | Q2 2026 | Latest operating results, guidance, products and financial supplement |
| [Z complete earnings-call transcript](https://stockanalysis.com/stocks/zg/transcripts/661679-q2-2026/) | Transcript | Q2 2026 | Prepared remarks and all material Q&A exchanges |
| [Z regular-session historical price](https://stockanalysis.com/stocks/z/history/) | Market data | 2026-10-20 close | Common price used in returns, scores and zones |
| [Z valuation statistics](https://stockanalysis.com/stocks/z/statistics/) | Market data | 2026-10-20 close; ratios retrieved 2026-10-21 | Market capitalization, shares, quoted multiples and current ratios |
| [Z historical income statement](https://stockanalysis.com/stocks/z/financials/income-statement/) | Standardized financial statements | Latest reported period and two preceding fiscal years | Historical income statement; source-native currency and definitions |
| [Z historical balance sheet](https://stockanalysis.com/stocks/z/financials/balance-sheet/) | Standardized financial statements | Latest reported period and two preceding fiscal years | Historical balance sheet; source-native currency and definitions |
| [Z historical cash flows](https://stockanalysis.com/stocks/z/financials/cash-flow-statement/) | Standardized financial statements | Latest reported period and two preceding fiscal years | Historical cash flows; source-native currency and definitions |
| [CoStar statistics](https://stockanalysis.com/stocks/csgp/statistics/) | Comparable-company market data | 2026-10-20 regular close | Peer multiples and financial context; public quote basis |
| [Rocket Companies statistics](https://stockanalysis.com/stocks/rkt/statistics/) | Comparable-company market data | 2026-10-20 regular close | Peer multiples and financial context; public quote basis |
| [2025 10-K — housing, rentals and mortgage competition](https://www.sec.gov/Archives/edgar/data/1617640/000161764026000015/z-20251231.htm) | Regulatory filing / primary product evidence | FY2025; checked 2026-10-28 | Portal versus mortgage and rental-market distinctions |
| [SEC XBRL company facts — Z](https://data.sec.gov/api/xbrl/companyfacts/CIK0001617640.json) | Regulatory filing (as tagged) | FY2026, through 2026-09-30 | Current-year standalone-quarter and year-to-date source facts for FCF, SBC, revenue and other reported metrics |