Finvest
Z Real Estate Technology · Marketplace · Housing · Software · Thesis updated June 14, 2026

Zillow grows past a frozen housing market

01 Running thesis

Growth outside agent ads

Zillow's bull case is that the company can grow even when the housing market is flat. Q1 2026 backed that up. Revenue rose 18% to $708 million, while management kept its full-year view for mid-teens revenue growth and EBITDA margin expansion. EBITDA is a profit measure before interest, taxes, depreciation, and amortization.

The shift is clear in the mix. Residential, mostly agent advertising, remains the core. But Rentals and Mortgages are growing much faster. Rentals revenue rose 42% in Q1 2026, and Mortgages revenue rose 56%. Purchase mortgage loan volume rose 96% to $1.5 billion, and management said Zillow Home Loans is now a top 25 purchase lender.

The bear case is not about lack of demand on Zillow's websites. It is about legal risk, housing market risk, and whether the newer businesses make enough profit as they scale. Management expects legal costs to be less of a headwind in the second half of 2026 after the FTC trial. If that does not happen, the margin story gets harder.

Finn's view is mixed. Growth is the strongest part of the story, but recent performance and sentiment are weaker. The stock needs Zillow to prove that Rentals and Mortgages can keep growing without creating a new profit problem.

May 2026▲Q1 2026 results strengthened the growth case. Revenue rose 18% to $708 million, with Rentals up 42% and Mortgages up 56% year over year.
May 2026▲Management reaffirmed full-year guidance for mid-teens revenue growth, about 30% Rentals growth, and EBITDA margin expansion, even while assuming a flat housing market.
Feb 2026→The 2025 10-K confirmed strong full-year diversification, with Rentals up 39% and Mortgages up 37%. It also made commission rule change risk more concrete.
Feb 2026▼Legal risk became a clearer near-term profit drag. Management estimated higher legal expenses would create about a 200 basis point EBITDA margin headwind in Q1 2026.
Oct 2025→Q3 2025 filings showed the same split story: Rentals and Mortgages kept accelerating, while new complaints from the FTC, state attorneys general, competitors, and consumers raised risk.
Aug 2025▲Q2 2025 results raised confidence in the diversification plan. Rentals grew 36%, Mortgages grew 41%, and management lifted its full-year 2025 revenue outlook to mid-teens growth.
02 Business model

A housing traffic tollbooth

Zillow brings together people who want to buy, sell, rent, or finance a home. It then sells access, tools, and services to the professionals who want those customers. Those professionals include agents, lenders, landlords, and property managers.

The main money source is Residential. This includes Premier Agent ads and lead generation, where agents pay Zillow to reach home shoppers. Some of that is market-based advertising, and some is Flex, where Zillow gets paid based on closed transactions.

Rentals makes money from property manager ads, landlord tools, and renter application services. Mortgages makes money through Zillow Home Loans and lender advertising. Other revenue is mostly display advertising.

The model works best when Zillow has huge consumer traffic and professionals believe that traffic turns into real business. It breaks if agent budgets fall, mortgage growth costs too much, legal limits change how leads are sold, or competitors pull renters and home shoppers away.

03 Product portfolio

The pieces of the marketplace

Steady

Zillow consumer apps and sites

Zillow, Trulia, StreetEasy, HotPads, and Out East bring in home shoppers and renters. That traffic is the base for the rest of the business.

Cash cow

Premier Agent

Premier Agent sells advertising, leads, and technology to real estate agents. It is still the core revenue engine, but it is growing slower than Rentals and Mortgages.

Growth engine

Rentals Marketplace

This sells ads and software tools to landlords and property managers. Q1 2026 Rentals revenue grew 42%, helped by 57% growth in multifamily revenue.

Growth engine

Zillow Home Loans

Zillow Home Loans originates mortgages for home buyers. Q1 2026 purchase loan volume rose 96% year over year to $1.5 billion.

Option

Mortgage Marketplace

Zillow also sells advertising services to other lenders. This gives Zillow another way to monetize shoppers who are close to buying a home.

Option

ShowingTime+, Spruce, and Follow Up Boss

These tools help real estate pros schedule showings, manage customer relationships, and handle closing services. They could deepen Zillow's role in the transaction over time.

04 Business segments

Q1 revenue mix

Residential64%modest
Rentals26%growing fast
Mortgages9%growing fast
Other2%flat

The mix comes from the three months ended March 31, 2026. Residential was 64% of revenue, so Zillow is still tied to agent budgets even as Rentals and Mortgages grow faster.

05 Risk factors

What could go wrong

FTC trial costs last longer

High impact · Medium odds

Management called legal expenses a headwind in the first half of 2026 and expects less pressure in the second half after the FTC trial. If the trial drags on, or if other cases replace it, EBITDA margin expansion could miss guidance.

We watchSecond-half 2026 EBITDA margin guidance and any update on FTC trial timing or expense.

Agent economics weaken

High impact · Medium odds

The 2025 10-K says NAR settlement rule changes affected how commissions are offered and negotiated. If agent commissions fall meaningfully, agents may spend less on Zillow or leave the industry. That would hit Residential, which was 64% of Q1 2026 revenue.

We watchResidential revenue growth, Premier Agent advertiser demand, and commentary on commission pressure.

Rentals growth slows too much

Medium impact · Medium odds

Rentals grew 42% in Q1 2026, but management's full-year target is about 30%. Some slowdown is normal as the base gets larger. A sharper slowdown would raise questions about Zillow's path to $1 billion or more in annual Rentals revenue.

We watchQuarterly Rentals revenue growth, especially multifamily revenue growth and property manager spending.

Mortgages scale without profits

Medium impact · Medium odds

Mortgage volume is growing fast, with Q1 2026 purchase loan volume up 96% to $1.5 billion. But origination can require staff, compliance, and funding capacity. The open question is whether Zillow Home Loans can become large and profitable at the same time.

We watchMortgage revenue growth, loan origination volume, and any segment profit or margin disclosure.

Housing market stays frozen

Medium impact · High odds

Management planned for a flat housing market, and Zillow still guided to growth. That is encouraging, but the company is not immune to housing. Fewer moves can mean fewer agent leads, fewer mortgages, and slower demand from real estate partners.

We watchU.S. existing home sales trends, Zillow Residential growth, and management comments on lead demand.
06 Quick answers

In one breath

How does Zillow make money?

Zillow makes most of its money by selling ads, leads, and software to real estate agents, landlords, property managers, and lenders. It also originates mortgages through Zillow Home Loans.

Why is Zillow growing if the housing market is flat?

The fast growth is coming from Rentals and Mortgages, not only from traditional agent ads. In Q1 2026, Rentals grew 42% and Mortgages grew 56% year over year.

What is the biggest risk for Zillow stock?

The biggest risk is legal and regulatory pressure, including the FTC trial and industry commission rule changes. These could raise costs or reduce how much agents spend with Zillow.

Is Zillow still mainly an agent advertising company?

Yes, for now. Residential was 64% of Q1 2026 revenue, but Rentals and Mortgages are taking a larger share because they are growing faster.