Zillow Group, Inc. (Z): Business Model Canvas [11-2024 Updated]

In the dynamic world of real estate, Zillow Group, Inc. (Z) stands out with its innovative business model that reshapes how buyers, sellers, and agents interact. By leveraging advanced technology and forming strategic partnerships, Zillow creates a comprehensive marketplace that offers valuable resources and services to its users. Explore the intricacies of Zillow's business model canvas, which highlights its key activities, resources, and revenue streams, and discover how this company continues to lead the industry.

Zillow Group, Inc. (Z) - Business Model: Key Partnerships

Real estate agents and brokers

Zillow Group collaborates with approximately 200,000 real estate agents and brokers through its Premier Agent program. This program allows agents to purchase advertising space on Zillow's platforms, generating significant revenue for the company. In 2024, Premier Agent revenue accounted for approximately $405 million, representing a 12% increase from the previous year.

Home builders and developers

Zillow has established partnerships with various home builders and developers to expand its offerings in new construction. In 2024, revenue from new construction increased by 28%, driven by enhanced advertising services sold to builders, contributing to the overall $1.7 billion in total revenue.

Mortgage lenders and financial institutions

Zillow's mortgage arm, Zillow Home Loans, partners with numerous mortgage lenders to facilitate financing solutions for home buyers. In the first nine months of 2024, mortgage originations through Zillow Home Loans reached $2.2 billion, a 106% increase year-over-year. This collaboration enhances Zillow's service offerings, allowing for streamlined home purchase processes.

Software and technology providers

Zillow Group invests in partnerships with technology providers to enhance its platform capabilities. A notable acquisition in 2023 was Follow Up Boss, a customer relationship management tool for real estate professionals, acquired for $399 million. This acquisition is part of Zillow's strategy to integrate software solutions for agents and improve user experience.

Advertising partners

Zillow generates significant revenue through advertising partnerships. In 2024, Zillow's advertising services contributed $123 million from rental listings alone, marking a 24% increase from the previous year. These partnerships are crucial for Zillow's business model, as they provide a steady stream of revenue while enhancing visibility for advertisers.

Key Partnership	Contribution to Revenue (2024)	Growth Rate
Real Estate Agents and Brokers	$405 million	12%
Home Builders and Developers	Part of $1.7 billion Total Revenue	28%
Mortgage Lenders	$2.2 billion (Loan Originations)	106%
Software Providers (e.g., Follow Up Boss)	$399 million (Acquisition Cost)	N/A
Advertising Partners	$123 million (Rental Revenue)	24%

Zillow Group, Inc. (Z) - Business Model: Key Activities

Development of real estate technology platforms

Zillow Group invests significantly in its technology platforms to enhance user experiences and operational efficiency. As of September 30, 2024, the company capitalized website development costs of $46 million for the third quarter and $152 million for the nine months ended September 30, 2024. The total property and equipment, including website development costs, amounted to $619 million. The company reported a gross profit of $441 million for the third quarter of 2024, reflecting a 14% increase from the previous year, largely attributed to its technology-driven services.

Marketing and advertising services for agents

Zillow Group's marketing services are crucial for real estate agents and brokers, generating significant revenue. For the three months ended September 30, 2024, the total revenue from Residential services, which includes Premier Agent advertising, was $405 million, a 12% increase year-over-year. The company reported a 32% increase in sales and marketing expenses, amounting to $217 million, driven by higher advertising costs. The Premier Agent program offers a pay-for-performance model, allowing agents to pay only when leads convert into transactions.

Mortgage origination and related services

Zillow Home Loans has seen substantial growth in mortgage origination. For the three months ended September 30, 2024, mortgage revenue surged to $39 million, a 63% increase from the prior year, driven by a 79% increase in total loan origination volume to $819 million. The company focuses on purchase loan origination, which constituted a significant portion of this volume. The gain on sale margin for mortgage originations also improved by 21%.

Data analysis and market research

Zillow Group utilizes extensive data analysis and market research to enhance its service offerings. The average monthly unique visitors to Zillow's rental listings increased by 20% to 36 million in the third quarter of 2024. The company measures engagement through visits, which totaled 2.44 billion for the third quarter, marking a 3% increase from the same period in 2023. Such data informs strategic decisions and marketing approaches, directly impacting revenue growth across segments.

Customer service and support

Customer service remains a key component of Zillow's operations, enhancing user satisfaction and retention. As of September 30, 2024, Zillow employed 6,835 individuals, up from 6,263 at the end of 2023, reflecting an investment in customer support capabilities. The company's customer service efforts are integrated with its technology platforms, ensuring users receive timely assistance and resources throughout their real estate transactions.

Key Activity	Investment (in millions)	Revenue (in millions)	Growth Rate (%)
Technology Development	$46 (Q3 2024), $152 (YTD 2024)	$441 (Q3 2024)	14%
Marketing Services	$217 (Q3 2024)	$405 (Q3 2024)	12%
Mortgage Origination	N/A	$39 (Q3 2024)	63%
Unique Visitors	N/A	36 million (Q3 2024)	20%
Employee Count	N/A	6,835 (as of Sep 2024)	N/A

Zillow Group, Inc. (Z) - Business Model: Key Resources

Zillow's brand and market presence

Zillow Group, Inc. is recognized as the most visited real estate website in the United States. As of September 30, 2024, the company reported approximately 2.44 billion visits across its platforms, representing a 3% increase from the previous year. The brand's strength is reflected in its significant market share, with Zillow Premier Agent contributing to 70% of total revenue during the third quarter of 2024.

Proprietary technology and software solutions

Zillow has invested heavily in proprietary technology and software solutions, with capitalized website development costs totaling $46 million for the third quarter of 2024. The company’s technology offerings include ShowingTime+, Spruce, and Follow Up Boss, enhancing the real estate transaction experience for agents and consumers alike. Following the acquisition of Follow Up Boss for $399 million in December 2023, Zillow aims to integrate more comprehensive software solutions into its services.

Data analytics capabilities

Zillow leverages extensive data analytics to drive its business decisions. The company reported a 12% increase in residential revenue per visit, reaching $0.166 during the third quarter of 2024. This analytical capability enables Zillow to optimize user engagement and improve conversion rates across its platforms, crucial for maintaining its competitive edge in the real estate market.

Relationships with real estate professionals

Zillow maintains strong relationships with real estate professionals through its Premier Agent program, which generated approximately $405 million in residential revenue for the third quarter of 2024. The program offers marketing services that help agents connect with potential buyers and sellers, ensuring a steady stream of revenue and fostering loyalty among real estate professionals.

Human resources and expertise in real estate

As of September 30, 2024, Zillow employed 6,835 individuals, an increase from 6,263 employees at the end of 2023. This workforce includes experts in technology, real estate, and customer service, enabling the company to innovate and provide exceptional service to its users. The company's investment in human capital is reflected in its sales and marketing expenses, which increased by 32% year-over-year to $217 million for the third quarter of 2024.

Key Resource	Description	Financial Impact
Brand Presence	Most visited real estate website in the U.S. with 2.44 billion visits in Q3 2024.	70% of total revenue from Premier Agent services.
Technology Solutions	Proprietary platforms including ShowingTime+, Spruce, and Follow Up Boss.	$46 million capitalized for website development Q3 2024.
Data Analytics	Advanced analytics driving user engagement and revenue optimization.	Residential revenue per visit at $0.166, up 12% YoY.
Real Estate Relationships	Strong connections with agents through the Premier Agent program.	$405 million in residential revenue from Q3 2024.
Human Resources	Workforce of 6,835 employees, including real estate and tech experts.	Sales and marketing expenses of $217 million in Q3 2024, up 32% YoY.

Zillow Group, Inc. (Z) - Business Model: Value Propositions

Comprehensive real estate marketplace

Zillow Group operates the most visited real estate website in the United States, with total visits reaching approximately 2.44 billion for the three months ended September 30, 2024, a 3% increase from 2.36 billion in the same period of 2023. Their comprehensive platform connects buyers, sellers, and renters with real estate professionals, providing a centralized hub for real estate transactions.

Enhanced visibility for listings

Zillow offers enhanced visibility for property listings through various marketing solutions. For the nine months ended September 30, 2024, the company reported a total revenue of $1.68 billion, with residential revenue contributing $1.21 billion, driven by increased visibility and engagement on their platform. The Premier Agent program allows real estate agents to gain exposure through targeted advertising, contributing significantly to Zillow's revenue streams.

Streamlined home buying and selling processes

The Zillow platform streamlines the home buying and selling processes by offering tools such as Zestimate, which provides property value estimates, and the ability to schedule showings directly through the platform. The company reported a gross profit of $441 million for the three months ended September 30, 2024, reflecting effective management of operational efficiencies. This ease of use helps to align potential buyers with properties that meet their needs effectively.

Access to financing options through Zillow Home Loans

Zillow Home Loans offers financing options that are integrated into the home buying experience. For the three months ended September 30, 2024, Zillow Home Loans generated $39 million in revenue, a 63% increase year-over-year, driven by a 79% increase in total loan origination volume to $819 million. This integration of financing solutions provides customers with a seamless experience from searching for homes to securing financing.

Tools for property management and rental applications

Zillow provides various tools for property management and rental applications, which cater to landlords and tenants alike. Rental revenue increased by 24% to $123 million for the three months ended September 30, 2024, attributed to a 20% increase in average monthly rentals unique visitors. The rental application tool allows potential tenants to apply for multiple properties efficiently, enhancing the overall rental experience.

Metric	Q3 2024	Q3 2023	Change (%)
Total Visits (billions)	2.44	2.36	3%
Total Revenue ($ million)	581	496	17%
Residential Revenue ($ million)	405	362	12%
Rentals Revenue ($ million)	123	99	24%
Mortgages Revenue ($ million)	39	24	63%

Zillow Group, Inc. (Z) - Business Model: Customer Relationships

Personalized support for agents and buyers

Zillow Group provides tailored support through its Premier Agent program, which includes the delivery of validated customer connections or leads. The Premier Agent partners benefit from a pay-for-performance model, where they only pay when a real estate transaction is closed with one of the leads, generally within two years. In 2024, Premier Agent revenue contributed significantly to Zillow's overall revenue, which totaled $1.682 billion for the nine months ended September 30, 2024, an increase of 14% compared to the same period in 2023.

Engagement through digital platforms and applications

The number of visits to Zillow's mobile applications and websites reached 2.44 billion in the three months ended September 30, 2024, a 3% increase from 2.37 billion in the same period in 2023. This increase in visits indicates a robust level of consumer engagement, which is crucial for driving sales and enhancing customer relationships.

Community building via social media and online forums

Zillow actively engages with its customers through various social media platforms and online forums, fostering a sense of community among users. The company has leveraged its large user base, which includes an estimated 36 million average monthly rentals unique visitors as of September 2024, to create a vibrant online community.

Feedback mechanisms for continuous improvement

Zillow collects feedback from users to enhance its services continually. The company reported a 4% increase in residential revenue per visit to $0.166 for the nine months ended September 30, 2024, driven by improvements in user experience based on customer feedback.

Training and resources for real estate professionals

The acquisition of Follow Up Boss for $399 million in cash, completed on December 8, 2023, allows Zillow to provide integrated software solutions and training resources for real estate professionals. This acquisition enhances Zillow's ability to support agents with better tools and training, thereby fostering stronger customer relationships.

Metric	2024	2023	% Change
Total Revenue (in millions)	$1,682	$1,471	14%
Visits (in billions)	2.44	2.37	3%
Average Monthly Rentals Unique Visitors (in millions)	36	30	20%
Residential Revenue per Visit	$0.166	$0.158	6%
Follow Up Boss Acquisition Cost (in millions)	$399	N/A	N/A

Zillow Group, Inc. (Z) - Business Model: Channels

Zillow and affiliated websites (Trulia, StreetEasy)

Zillow Group operates several key platforms, including Zillow, Trulia, and StreetEasy, which serve as primary channels for real estate listings and related services. As of September 30, 2024, Zillow had approximately 2.44 billion visits across its platforms, a 3% increase from the previous year. Unique monthly users for these platforms totaled around 36 million for rental listings, reflecting a 20% growth year-over-year.

Mobile applications for real estate services

The Zillow mobile application is a crucial part of its channel strategy, providing users with access to property listings, mortgage information, and rental services. The mobile app contributed significantly to the overall traffic, with users engaging in various activities, including property searches and applications for rental listings. The app is designed to facilitate seamless interactions, resulting in a steady increase in user engagement.

Direct sales and marketing to agents

Zillow employs a direct sales strategy targeting real estate agents through its Premier Agent program. This program allows agents to purchase advertising services, which include lead generation and brand promotion. For the three months ended September 30, 2024, the Premier Agent revenue reached approximately $405 million, contributing 70% of the total revenue for that period.

Advertising platforms for property listings

Zillow generates substantial revenue through advertising placements on its platforms. The company offers various advertising products to real estate professionals, including cost-per-click ads, display ads, and lead generation services. In the nine months ending September 30, 2024, Zillow's revenue from advertising services amounted to $1.68 billion, with significant contributions from both residential and rentals segments.

Partnerships with real estate agencies

Strategic partnerships with real estate agencies enhance Zillow's reach and service offerings. These partnerships often involve revenue-sharing arrangements, where agencies pay for leads generated through Zillow's platforms. Zillow's focus on integrating services with partners helps to streamline the real estate transaction process. Notably, the acquisition of Follow Up Boss for $399 million in December 2023 was aimed at enhancing CRM capabilities for real estate professionals, thereby solidifying these partnerships.

Channel	Key Metrics	Revenue Contribution (2024)
Zillow and affiliated websites	2.44 billion visits	Part of $1.68 billion total revenue
Mobile applications	36 million unique monthly users	Part of $1.68 billion total revenue
Direct sales to agents	$405 million (Premier Agent revenue)	70% of total revenue for Q3 2024
Advertising platforms	Variety of ad products	Part of $1.68 billion total revenue
Partnerships with agencies	Revenue-sharing arrangements	Enhanced CRM capabilities post Follow Up Boss acquisition

Zillow Group, Inc. (Z) - Business Model: Customer Segments

Home buyers and sellers

Zillow serves approximately 2.44 billion visits to its websites and mobile applications each quarter, demonstrating significant engagement from home buyers and sellers. In the three months ended September 30, 2024, Zillow reported residential revenue of $405 million, up 12% from $362 million in the same quarter of 2023. This revenue is largely driven by the Premier Agent program, which provides advertising services to real estate agents targeting home buyers and sellers.

Real estate agents and brokers

Zillow's Premier Agent program is a critical revenue stream, generating substantial income through advertising services. In the nine months ended September 30, 2024, Premier Agent revenue accounted for a significant portion of the $1,207 million in residential revenue. The program's structure allows real estate agents to purchase advertising based on their share of voice in specific markets, enabling them to effectively reach potential clients.

Rental property managers and landlords

For rental property managers and landlords, Zillow offers tools and services that facilitate property management and advertising. In the third quarter of 2024, Rentals revenue was reported at $123 million, a 24% increase from $99 million in the same quarter of 2023. The average monthly unique visitors to rental listings increased by 20% to 36 million, showing robust demand for rental properties listed on the platform.

Metrics	Q3 2023	Q3 2024	% Change
Rentals Revenue ($ million)	99	123	24%
Average Monthly Unique Visitors (million)	30	36	20%

Mortgage professionals

Zillow's mortgage segment has shown significant growth, with revenues increasing by 63% year-over-year to $39 million in Q3 2024, up from $24 million in Q3 2023. The total loan origination volume reached $819 million for the three months ended September 30, 2024, a 79% increase compared to $457 million in the same quarter of 2023. This growth is driven by Zillow Home Loans, which connects consumers with mortgage professionals.

Investors in residential real estate

Zillow attracts residential real estate investors through its platform by providing data and analytics that help in making informed investment decisions. The total revenue generated by Zillow for the nine months ended September 30, 2024, was $1.682 billion, reflecting a 14% increase from $1.471 billion in the same period of 2023. Zillow's comprehensive suite of services, including market insights and property evaluations, aids investors in identifying lucrative opportunities in the real estate market.

Zillow Group, Inc. (Z) - Business Model: Cost Structure

Technology development and maintenance costs

The technology development and maintenance costs for Zillow Group, Inc. amounted to approximately $436 million for the nine months ended September 30, 2024, reflecting a 4% increase compared to $419 million for the same period in 2023.

In the third quarter of 2024, these costs were reported at $145 million, a slight increase from $142 million in the same quarter of the previous year.

Marketing and advertising expenses

Marketing and advertising expenses for Zillow increased significantly, totaling $217 million for the nine months ended September 30, 2024, up from $164 million in 2023, which represents a 32% increase. In the third quarter of 2024, these expenses were $53 million higher than the previous year, primarily due to increased investment in the growth of their rentals marketplace.

Salaries and benefits for employees

The total headcount-related expenses, which include salaries, benefits, and share-based compensation, amounted to $1.4 billion for the nine months ended September 30, 2024. This reflects an increase of 7% compared to the previous year. As of September 30, 2024, Zillow employed 6,835 employees, up from 6,263 employees at the end of 2023.

Operational costs related to platform hosting

Operational costs associated with platform hosting and data management are included in the cost of revenue, which totaled $393 million for the nine months ended September 30, 2024, marking a 28% increase from $306 million in 2023. This increase is attributed to higher expenses related to website operational activities and hosting services.

Customer acquisition and lead generation costs

Customer acquisition costs, particularly for lead generation, are a significant part of Zillow's expenses. The company reported $4 million in lead acquisition costs related to partnerships during the three months ended September 30, 2024. Furthermore, the overall cost of revenue, which includes direct costs to originate mortgage loans and related services, increased by 27% to $140 million in the third quarter of 2024.

Cost Category	Q3 2024 (in millions)	Q3 2023 (in millions)	Change (%)
Technology Development & Maintenance	$145	$142	2%
Marketing & Advertising	$217	$164	32%
Salaries & Benefits	$1,400	$1,309	7%
Operational Costs	$393	$306	28%
Customer Acquisition Costs	$4	N/A	N/A

Zillow Group, Inc. (Z) - Business Model: Revenue Streams

Advertising revenue from agents and builders

Advertising revenue is a significant component of Zillow's business model. For the three months ended September 30, 2024, Zillow generated approximately $405 million in Residential revenue, which includes advertising services sold to real estate agents and builders. The Premier Agent program is a key driver of this revenue.

Commissions from mortgage origination

Zillow's mortgage origination revenue saw a significant increase, rising by $15 million, or 63%, to a total of $39 million for the three months ended September 30, 2024. This growth was driven by a 79% increase in total loan origination volume, which reached $819 million during the same period .

Category	Three Months Ended September 30, 2024	Three Months Ended September 30, 2023	% Change
Total Loan Origination Volume	$819 million	$457 million	79%
Mortgage Origination Revenue	$39 million	$24 million	63%

Subscription fees for premium services

Zillow offers premium services through subscription fees. The acquisition of Follow Up Boss in December 2023 has enhanced Zillow's offerings in this area. As of September 30, 2024, the revenue from subscription services contributed to the overall growth in Residential revenue, alongside increased user engagement and service utilization .

Service fees from rental applications

The Rentals revenue segment increased by $24 million, or 24%, to $123 million for the three months ended September 30, 2024. This increase is attributed to a rise in average monthly rentals unique visitors, which increased by 20% to 36 million . Service fees are collected through rental applications, allowing potential renters to apply to multiple properties for a flat fee.

Metric	Three Months Ended September 30, 2024	Three Months Ended September 30, 2023	% Change
Rentals Revenue	$123 million	$99 million	24%
Average Monthly Rentals Unique Visitors	36 million	30 million	20%

Sales of real estate data and analytics services

Zillow has expanded its offerings to include real estate data and analytics services, generating additional revenue streams. These services are marketed to real estate professionals and companies looking to leverage data for better decision-making. The revenue from these services is included in the 'Other' category, which showed an increase from $11 million in September 2023 to $14 million in September 2024, representing a 27% increase .

Updated on 16 Nov 2024

Resources:

1. Zillow Group, Inc. (Z) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Zillow Group, Inc. (Z)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Zillow Group, Inc. (Z)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.