Zillow Group swung to a $158 million net loss in the third quarter after booking the cost of settling an investor lawsuit over Zillow Offers, the home-flipping business it shut down in 2021. The company reported Nov. 4, 2026 that the quarter included a $165 million charge for the Zillow Offers securities class action settlement, net of expected insurance recoveries. Excluding that charge, operating results held up even as Zillow’s core agent-advertising business shrank.
Revenue for the three months ended Sept. 30 rose 7% to $724 million from $676 million a year earlier, according to the release. The diluted net loss was $0.70 per share, compared with net income of $0.04 a share in the third quarter of 2025. On the company’s adjusted measures, which exclude the settlement, adjusted EBITDA rose to $182 million from $165 million, a 25% margin that Zillow said was within its outlook range. Adjusted net income was $124 million, or $0.55 a share, up from $0.44.
The settlement behind the loss
The charge closes out a case that has followed Zillow since it shut down Zillow Offers in November 2021. On Oct. 28, Zillow disclosed that it had agreed to pay $212.5 million to settle the investor class action, with about $48 million expected to come from insurance. The deal came weeks after the Supreme Court declined to hear Zillow’s challenge to the certified class of shareholders who bought stock between Aug. 5 and Nov. 2, 2021. The settlement still needs court approval.
Starting this quarter, Zillow excludes the settlement from its adjusted figures. It says it made that call by weighing the size of the charge together with the fact that the case “relates to our Zillow Offers operations, which were wound down.”
Residential slips, rentals carry the quarter
Beyond the settlement, the more important number for agents and brokers is in Zillow’s largest segment. Residential revenue, which includes the Premier Agent and Preferred lead programs, Zillow Showcase listings, new construction marketing and agent software, fell 4% to $419 million from $435 million. The company attributed the decline to “higher-than-expected mortgage rates that pressured housing transaction volume.” That is a reversal from the second quarter, when residential revenue grew 7%.
The release puts that in the context of a weak market. By Zillow’s measure, the value of existing-home sales, NAR’s count of homes sold multiplied by the average price, grew just 1% in the third quarter from a year earlier. Zillow estimates that industry purchase mortgage originations fell 4%. CEO Jeremy Wacksman called the backdrop “one of the toughest housing markets in a generation.”
Other lines did the growing:
- Rentals: revenue rose 26% to $220 million, which the company said was driven mainly by 35% growth in multifamily revenue.
- Mortgages: revenue rose 32% to $70 million on a 55% increase in purchase loan originations, to $2.0 billion. That growth was slower than the 95% gain in purchase originations Zillow reported for the second quarter.
- For Sale total: residential and mortgages together brought in $489 million, flat with a year earlier.
“Q3 highlighted Zillow’s durability. We grew revenue and outperformed the real estate category during one of the toughest housing markets in a generation,” Wacksman said. “That performance is powered by our brand, audience engagement, value to partners and strong growth levers across our well-diversified business.”
Traffic and cash
Audience numbers kept slipping. Average monthly unique users fell 3% to 215 million, and visits fell 5% to 2.3 billion. Zillow, citing Comscore, said it drew 77% of average monthly unique visitors in the real estate category.
Gross margin narrowed to 71% of revenue from 73%. Operating cash flow rose to $162 million from $105 million, but adjusted free cash flow fell to $46 million from $107 million. Cash and investments were $707 million at Sept. 30, up from $682 million at the end of June. For the first nine months, revenue rose 14% to $2.2 billion, and the net loss was $116 million.
Zillow’s outlook for the fourth quarter and full year is in a separate shareholder letter on its investor relations site, not in the release. The company scheduled a webcast for 5 p.m. Eastern on Nov. 4.
On our reading, the quarter splits Zillow into two businesses heading in different directions. The rental and lending businesses are growing at double-digit rates. The agent-lead business that has defined the company is now shrinking with transaction volume. Zillow also faces an agent antitrust suit over its Follow Up Boss software that a federal judge allowed to proceed in September. More coverage is in our technology section.
