Zillow Group (ZG): AI Showcase, Financials and Cash-Flow Resilience

BHHS Deal and Showcase Adoption Put Strategy in the Spotlight — and the Numbers Support Caution#

Zillow’s August 26, 2025 partnership with Berkshire Hathaway HomeServices (BHHS) to distribute Zillow Showcase is the single most consequential commercial development in the company’s recent arc: the deal supercharges distribution for an AI-driven, agent-facing product that management says already lifts listing engagement and seller outcomes. That strategic step lands against a financial backdrop where FY2024 revenue was $2.24B, Adjusted EBITDA rose to $198MM and the company generated $285MM of free cash flow in 2024—evidence that operating cash conversion has improved even while GAAP net income remained negative at - $112MM for the year (Zillow Group - Official; Berkshire Hathaway HomeServices.

The BHHS distribution agreement is a tactical acceleration of a larger pivot: convert scale, traffic and AI tooling into recurring, monetizable listing features for agents. That shift is meaningful because it moves the revenue mix toward productized, subscription- or per-listing economics and away from one-off advertising, a change that could materially alter revenue durability if execution matches the product promise.

Earnings and Cash Flow: Improving Operating Cash, Persistent GAAP Losses#

Zillow’s FY2024 income statement shows a clear improvement in top-line growth and operating cash generation but continued pressure at the operating-profit line. Revenue rose to $2.24B in 2024 from $1.95B in 2023, a YoY increase of +14.87%, while EBITDA expanded to $198MM, producing an EBITDA margin of 8.84%. Operating income remained negative at - $197MM (margin -8.80%) and GAAP net income was - $112MM (margin -5.00%), reflecting heavy investments in product and R&D as Zillow scales AI capabilities (FY2024 annual filing.

The improvement in cash conversion is the most tangible quality-of-earnings story: net cash provided by operating activities was $428MM in 2024 versus a GAAP loss, and free cash flow of $285MM implies a free-cash-flow margin of 12.72% on 2024 revenue. That divergence—positive operating cash and negative net income—signals non-cash charges and working-capital dynamics with inflows strong enough to cover capital expenditures and support buybacks. Free cash flow resilience is a strategic asset as Zillow invests to commercialize Showcase and other AI-enabled products (Zillow Group - Official.

Table: Income Statement Snapshot (FY2021–FY2024)

(Income statement figures from company filings; margins are calculated from reported revenue.)

The year-over-year improvement in both revenue and EBITDA from 2023 to 2024 is notable: revenue growth of +14.87% combined with EBITDA expansion from $125MM to $198MM. The operating loss narrowed (operating income margin improved ~505 basis points YoY), but investment in R&D (FY2024 R&D expense $585MM) and SG&A ($1.31B) kept GAAP profitability elusive. The critical signal for investors is that Zillow’s business is generating cash even while GAAP profits lag, which buys time for product-based monetization to scale.

Balance Sheet and Capital Allocation: Net Cash or Accounting Noise? We Recalculate#

Zillow’s reported year-end balance-sheet figures show cash and short-term investments of $1.86B, total debt of $660MM, and total stockholders’ equity of $4.85B as of 2024 year-end (FY2024 filing. Using those line items to compute net debt gives a net cash position of - $1.20B (total debt $660MM minus cash & short-term investments $1,860MM = - $1,200MM). That contrasts with the company-provided netDebt figure in the dataset of - $422MM; the two figures differ because of likely definitional differences in which cash and debt components were included. We prioritize raw balance-sheet arithmetic for transparency and present both figures to show the reconciliation gap.

Calculated balance-sheet ratios offer additional perspective. Zillow’s current ratio, using year-end current assets $2.33B and current liabilities $831MM, is 2.80x—a healthy short-term liquidity buffer but lower than the TTM current ratio reported elsewhere (3.34x). Debt-to-equity using total debt $660MM and equity $4.85B is 13.61%, confirming a low-leverage profile even after recent share repurchases. These recalculations matter because they affect enterprise-value metrics and the company’s capacity to continue funding product investment while returning cash to shareholders.

Table: Balance Sheet Snapshot (FY2021–FY2024)

*Notes: 2022–2023 net-debt arithmetic requires consistent cash definitions and treatment of short-term investments; company-provided netDebt figures differ in some periods. Current ratios differ by dataset when short-term investments are and are not included in current assets.

On capital allocation, Zillow repurchased $301MM of common stock in 2024 and used -$1.23B in net cash for financing activities overall, per the cash flow statement. Buybacks have been a steady element of returns—$424MM repurchased in 2023 and $947MM in 2022—but cash outlays for repurchases have been offset by consistently positive operating cash flow since 2022. The company paid no dividends. The interplay of buybacks and product investment is a governance signal: management is returning capital while continuing to back R&D and product launches, a mix that will be scrutinized as monetization targets become nearer-term priorities (FY2024 cash flow statement.

Strategy: Showcase, AI and the BHHS Distribution Shortcut#

Zillow’s strategy has pivoted from platform traffic monetization toward AI-enabled productized services for agents—Showcase is the flagship of that shift. According to company materials and press releases, Showcase packages enhanced listing presentation, immersive AI-powered visual tools and analytics that increase buyer engagement and lift probability of early pendings. Management says Showcase listings outperform standard listings on engagement metrics and yield modest price and speed uplifts; these outcomes are the commercial rationale for converting Showcase into a recurring or per-listing revenue stream (Zillow Press Releases.

The BHHS partnership announced August 26, 2025 is important because it plugs Showcase into an established brokerage distribution network at scale. That shortcut matters: distribution has been one of the highest friction points for proptech products. If adoption among BHHS agents accelerates uptake, Showcase can scale faster than Zillow could drive through direct sales alone. The economic math management has circulated—targeting 5–10% penetration of new listings up from roughly 2.5% today and citing a potential incremental revenue contribution in the low hundreds of millions—would represent a mid-single-digit to low-double-digit uplift to current revenue when fully realized. Framing that potential against 2024 revenue of $2.24B, an incremental $150–$300MM would be roughly +6.7% to +13.4% of FY2024 revenue, a material addition if achieved and sustained.

Crucially, the value proposition to agents is two-sided and concrete: agents gain tools that demonstrably shorten time-to-pending and (management claims) produce about a 2% price premium on sold homes; Zillow gains the right to charge for listing enhancements and to embed follow-on services such as rentals, mortgages and ancillaries in the broader housing super-app. The success hinge is conversion rate: can Zillow sustain product performance sufficiently to command recurring fees without encouraging competitors to replicate features at lower price points? The BHHS deal mitigates the distribution problem, but it does not eliminate competitive response risk from established brokerages and vertically integrated rivals.

Competitive Context and Moat Durability#

Zillow’s core moat is scale—traffic, data and a brand entrenched in consumer discovery—combined with engineering capability in AI and a growing set of agent tools. Competitors include Realtor.com and Redfin, and broker networks that control agent distribution. Unlike classifieds, Zillow’s bet is now on productizing listings into a premium tier that is limited by choice (scarce) and by performance (measurable outcomes). That model raises the bar for competitors who lack Zillow’s combination of consumer reach and dataset breadth.

However, the competitive threat is real. Broker-driven products can bundle listing services into agent relationships and may undercut per-listing pricing. Redfin and other players can accelerate feature rollouts or bundle AI-enabled services into transaction-based fee offsets. Zillow’s margin of safety is its user funnel: if Showcase demonstrably moves seller outcomes and agent productivity, the platform economics favor Zillow because it controls the consumer touchpoint. Execution speed, pricing discipline and the ability to demonstrate durable uplift in agent KPIs will determine whether the advantage is defensible or transient.

Reconciled Valuation Metrics (Our Calculations) — Market Expects Growth, High Multiple for Profitability Delivery#

Market pricing as of the latest quote shows ZG at $81.61 with a market capitalization of $20.34B (NASDAQ quote data via company dataset. Using year-end FY2024 figures and the market cap, simple enterprise metrics look expensive on an earnings basis but more nuanced on cash-flow metrics because of positive FCF.

When we compute enterprise value as market cap plus total debt minus cash & short term investments (EV = 20.34B + 0.66B - 1.86B = $19.14B), EV-to-EBITDA using FY2024 EBITDA of $198MM is ~96.67x. Price-to-Sales using market cap over FY2024 revenue (20.34B / 2.24B) is ~9.08x, and price-to-book is roughly 4.20x (20.34B / 4.85B). These multiples are higher than some publicized TTM ratios in certain datasets; the differences are driven by alternative TTM definitions, different EBITDA windows and whether short-term investments are included in cash. We present the reconciled calculations so readers see how valuation shifts with definitional choices.

Table: Reconciled Market Multiples (Calculated)

These multiples imply the market is implicitly paying for scaled growth and durable monetization of newer product lines (Showcase, rentals, mortgage integrations). The high EV/EBITDA reflects the low absolute EBITDA base; if EBITDA were to expand materially through Showcase monetization and margin leverage, multiples would compress to more typical SaaS/marketplace levels.

Risks and Execution Challenges#

The path from engagement uplift to recurring revenue is not guaranteed. Showcase must prove repeatable, measurable ROI for agents across diverse local markets. The adoption curve is uneven: management reports current penetration of roughly 2.5% of new listings with targets of 5–10% in the medium term—doubling or quadrupling that penetration requires continued product refinements, attractive pricing and rapid onboarding through distribution partners like BHHS.

Macro risks also matter. Zillow’s products monetize real-estate activity; a slowdown in housing transactions would compress demand for premium listing services. Competitive responses can erode value capture, and the economics are sensitive to pricing decisions—too aggressive a price reduces adoption; too conservative a price delays revenue realization. On the financial side, although Zillow’s balance sheet shows gross cash buffers and low net leverage under our calculations, the company has used buybacks actively; capital allocation choices will be scrutinized if monetization goals slip.

What This Means For Investors#

Investors should view Zillow’s story as a two-part equation: product execution + monetization. The BHHS partnership materially reduces the distribution friction for Showcase, and FY2024 cash-flow improvement demonstrates the company can generate and return cash even while GAAP profitability lags. Those two facts together create a constructive runway for monetization initiatives.

However, the market is pricing growth and margin expansion into current multiples. The key near-term catalysts to watch are adoption metrics (Showcase listings as a percentage of new listings), monetization unit economics (average revenue per showcased listing and renewal rates), quarterly progression in rentals revenue growth and continuing positive free cash flow. Delivering measurable results—consistent expansion of EBITDA and a demonstrable path from engagement to recurring revenue—would materially alter the valuation arithmetic. Failure to show adoption or to defend pricing against competition would keep multiples high relative to fundamentals.

Key Takeaways#

Zillow enters a new product phase where the BHHS partnership and Showcase distribution materially reduce go-to-market friction. The operational financials underpin that strategy: FY2024 revenue $2.24B, EBITDA $198MM, and free cash flow $285MM provide a cash-backed runway for product monetization. Our balance-sheet arithmetic shows a low-leverage position with calculated net cash of ~$1.20B, supporting continued investment in AI and selective buybacks. Valuation multiples are high on EBITDA (EV/EBITDA 96.7x) and price-to-sales (9.08x), indicating market expectations for meaningful profitability expansion from new product lines.

Execution and measurement are everything. If Showcase adoption—and, crucially, willingness to pay—scales through BHHS and other channels, Zillow can translate engagement uplifts into durable revenue. If adoption stalls or competitors replicate the feature set at lower prices, the revenue upside will be limited and current multiples will remain elevated relative to cash flows.

Conclusion — Strategy-Aligned Strengths; Execution Is the Differentiator#

Zillow’s strategic pivot to AI-powered agent tools and the BHHS distribution agreement are meaningful progress toward converting engagement into recurring revenue. The company has stabilized cash generation and reduced dependence on volatile advertising receipts, which materially changes the risk profile. Yet the valuation reflects optimism about monetization success; investors should expect volatility around adoption metrics and product KPIs in the near term. The investment story is not a simple valuation or earnings call; it is a proof-of-execution narrative where incremental adoption data and repeatable unit economics will be the decisive evidence that Zillow’s AI strategy has crossed from promising product to durable revenue engine.

(Company filings and press releases cited throughout: Zillow Group - Official; Zillow Press Releases; partnership details: Berkshire Hathaway HomeServices. Financial statement figures are drawn from Zillow’s 2024 filings and company releases as noted in the main text.)