Zillow’s fourth quarter was marked by double-digit revenue growth and a substantial improvement in operating margin, but the market responded negatively, reflecting concerns about profitability and rising legal expenses. Management attributed the strong topline gains to accelerating momentum in rentals—especially multifamily—and continued expansion of its integrated enhanced markets strategy. CEO Jeremy Wacksman cited traction in software tools like Follow-up Boss and growth in mortgage originations as key contributors, while CFO Jeremy Hofmann noted that higher-than-anticipated legal costs weighed on margins.

Is now the time to buy ZG? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Zillow’s Q4 Earnings Call

• Nicholas Jones (BNP Paribas) asked about the sustainability and potential of rentals growth, and the impact of vertical AI integration. CEO Jeremy Wacksman described ongoing growth in listings and audience as evidence of strategy execution, and reiterated the view that AI will enhance, not disrupt, Zillow’s vertically integrated model.
• Bradley Berning (RBC Capital Markets) probed the risk posed by industry consolidation and private listing networks. Wacksman responded that such listings remain a very small share, with most agents and sellers preferring broad exposure on Zillow.
• Berning (RBC, follow-up) asked about the impact of legal challenges, specifically the RESPA case, on Zillow Home Loans and enhanced markets. Wacksman said there was no material operational impact and highlighted continued strong mortgage growth.
• John Colantuoni (Jefferies) sought updates on the Zillow Pro rollout and its effect on agent adoption. Wacksman explained the product is in beta, with nationwide expansion planned, and expects it to drive increased use of CRM tools and agent efficiency over time.
• Nikhil Devnani (Bernstein) inquired about margin expansion potential, especially in light of legal expense headwinds. CFO Jeremy Hofmann confirmed that underlying margin improvement will be better than headline figures, with legal costs creating a temporary drag of about 100 basis points this year.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will focus on (1) tracking the pace of rentals revenue and property listing expansion, (2) monitoring adoption rates and agent feedback as Zillow Pro rolls out nationwide, and (3) scrutinizing margin trends as legal expenses persist and cost controls are implemented. The effectiveness of integrated product launches and ongoing enhancements to agent and consumer digital experiences will also be key signposts.

Zillow currently trades at $43.39, down from $54.42 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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