Zillow Group walked into this earnings print with the stock already under pressure over the past quarter, then watched another 8.5% get sliced off in a single session to around US$33. That sharp move reflects real anxiety about profit quality more than the topline story. Revenue for the quarter came in at US$772m and adjusted earnings before interest, tax, depreciation and amortization reached US$176m with a 23% margin, yet basic earnings per share flipped to a small loss. The market is treating that margin squeeze as the headline, not the revenue strength.

Is Zillow Group a mispriced recovery story after this profit wobble, or is the premium P/E simply too far ahead of reality? Compare the market reaction with our valuation analysis for Zillow Group

Q2 2026 Earnings Summary

• Total Revenue, Q2 2026 vs. Q2 2025: US$772 million vs. US$655 million (up 17.8%)
• Net Income, Q2 2026 vs. Q2 2025: loss of US$4 million vs. profit of US$2 million (moved from profit to loss)
• Basic EPS, Q2 2026 vs. Q2 2025: loss of US$0.018 per share vs. profit of US$0.008 per share (moved from profit to loss)
• Adjusted EBITDA Margin, Q2 2026: 23% on adjusted EBITDA of US$176 million (management highlighted this as a key profitability measure)

Tired of reading through earnings reports and spreadsheets trying to work out what really changed for Zillow Group this quarter? Get a clear visual view of how the company’s profitability and valuation stack up in the latest company report for Zillow Group.

Zillow bullish thesis meets real operating milestones

The bullish story around Zillow hinges on the housing super app idea delivering more revenue per mover, better Rentals monetization, and improving margins. Q2 shows real progress against those checkpoints. For Sale revenue reached US$549m and Rentals hit US$209m, with multifamily units on the platform up 23% to 79,000. That supports the view that Rentals can be a recurring, higher visibility stream rather than a side business.

The transition to the outcome based Zillow Preferred model is also hitting tangible milestones. Preferred connections are now 61% of the mix compared with 21% at the end of 2024, and management is still targeting more than 75% by the end of 2026. That shift, together with 138,000 monthly active users on Follow Up Boss and early traction for Zillow Pro, backs the claim that software and integrated workflows are starting to carry more of the growth load.

Compare how this operational progress at Zillow Group lines up with institutional expectations. See the consensus price target analysis for Zillow Group to check whether Wall Street price targets are keeping pace with the super app story.

Evaluating Zillow bears on profit quality and risk

Bears argue that Zillow’s super app push comes with fragile profit quality, heavy legal risk, and overreliance on housing volumes. This quarter gives that view some support. Revenue of US$772m and a 23% adjusted EBITDA margin look healthy, yet reported net income slipped to a US$4m loss versus expectations for a US$21m profit. That gap points to higher legal and product costs that the adjusted figures smooth over rather than solve.

The surprise loss lands while securities and antitrust litigation is intensifying and while MRED has cut a key Chicago listing feed. Those are exactly the structural risks critics focus on. At the same time, Rentals revenue grew 31% and multifamily units rose 23%, which works against the idea that competitive pressure is already crippling the model. Overall, Zillow’s growth metrics push back on a collapse story, but the missed profitability milestone and legal drag keep the bearish thesis alive.

Review whether Zillow Group’s one off legal and product costs are isolated or early signals by reading our risk analysis for Zillow Group which shows 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.