Zillow shares fall as light Q1 outlook eclipses Q4 revenue, EBITDA beat

February 12, 2025 09:09 PM AEDT | By Investing

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Zillow shares fall as light Q1 outlook eclipses Q4 revenue, EBITDA beat

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Investing.com -- Zillow Group Inc (NASDAQ:ZG) Class C (NASDAQ:Z) reported fourth-quarter earnings that topped Wall Street expectations, but shares tumbled more than 12.5% in early trading Wednesday as the company issued a soft revenue guidance for the first quarter of 2025.

The real estate technology firm posted earnings per share of $0.27 for the quarter, surpassing analysts’ estimates of $0.22 by $0.05. Revenue came in at $554 million, exceeding the consensus estimate of $538.4 million.

The reported EBITDA of $112 million also beat expectations of $108 million, and was above the company's guidance of $90 million - $105 million.

The company said it expects Q1 revenue in the range of $575 million to $590 million, below analysts’ consensus estimate of $598.5 million.

For the full calendar year 2025, Zillow said it expects low to mid-teens rev growth, compared to consensus expectations of 14.6% growth. Furthermore, the company said it expects "continued" margin expansion for the year.

Following the report, D.A. Davidson reiterated a Buy rating on Z shares and lifted its price target to $90 from $75, citing "a nice broad-based revenue and EBITDA beat in 4Q'24."

"The 1Q'25 outlook was a bit light reflecting a soft start to the housing market this year amidst ongoing rate volatility and near historical bottom ~3% current existing homes turnover, but the full-year commentary was constructive and implies accelerating growth as the year progresses," they added.

Baird analysts were more cautious in their comments, maintaining a Neutral rating on Z stock and reducing EBITDA estimates. However, the firm said it is "incrementally positive on Rentals, while guidance implies further good traction with enhanced markets strategy."

Elsewhere, Piper Sandler analyst Thomas Champion lowered the price target on Zillow Group shares to $90.00 from $93.00. He also reiterated an Overweight rating. The analyst said that results were mixed, though Zillow's execution should keep them on track.

Vahid Karaahmetovic and Pratyush Thakur contributed to this report.

This article first appeared in Investing.com

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