By Shaina Mishkin

Zillow Group stock slipped after the company beat first-quarter earnings expectations and reported its first quarterly net profit since 2022.

Its softer-than-expected second-quarter guidance could be weighing on the stock.

Zillow class C stock was down about 2.5% in premarket trading on Thursday after closing about 1% higher on Wednesday.

The home services company reported first-quarter net income of $8 million, beating forecasts for a net loss of $9 million, on revenue of $598 million, above expectations for $589 million.

It was the company's first quarterly net profit using generally accepted accounting principles, or GAAP, standards since 2022, according to FactSet data.

"We're well-positioned to deliver sustainable profitable growth," Zillow Chief Executive Officer Jeremy Wacksman said in a release. "As we expand our services and scale the housing super app across more markets, we are bringing more customers and real estate professionals together and making buying, selling, and renting easier for them, which is helping us grow both our revenue and profits."

The company restated its previous revenue and net income guidance for 2025 in a letter to shareholders. Zillow expects revenue growth in the low-to-mid teens and positive GAAP net income for the full year in 2025. It added that it expects its rental-segment revenue to grow about 40% for the full year.

A team of KeyBanc analysts led by Justin Patterson wrote earlier this week that they expected the company to keep full-year guidance unchanged. Zillow "has historically guided conservatively," the analysts wrote. "Given the recent volatility in mortgage rates, we believe a cautious guide is prudent."

But its softer-than-expected second quarter guidance was likely weighing on the stock immediately after the earnings release.

For the second quarter, Zillow foresees revenue in a range of $635 million to $650 million, and adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, in a range from $140 million to $155 million. Wall Street had higher hopes: Analysts polled by FactSet were expecting revenue at the high end of that range, at $649 million, and $163 million in Ebitda, higher than the company's guide.

This year's tepid housing market hasn't been kind to housing-related stocks -- Zillow included. The company's shares are down about 8.3% in 2025 as home prices stay high and the spring home-selling season is more subdued than many anticipated.

At the same time, Zillow has been refashioning its business model. The company has focused on building what it calls the "housing super app," a collection of services for real estate agents and buyers. The business model shift has been under way since it announced it would stop buying and selling homes through its Zillow Offers business in late 2021.

Zillow still makes money by selling leads to real estate agents. But it has also broadened its offerings to include workflow management software for agents and a more robust rental listings platform. In many parts of the country, it also more closely integrates its home loan offerings with its real estate listings through what it calls its "enhanced markets."

Zillow expects to log a net profit for the year -- housing market rebound or not.

"It's not like the housing market is helping," Wacksman said in an interview with Barron's, commenting on the company's first-quarter results. Zillow's 13% revenue growth in the first quarter compared with the year prior "sets us up well to feel confident in our full-year goals, " he said.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 08, 2025 08:53 ET (12:53 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.