Zillow Group, Inc. Class C (Z) Cash Flow Statement

The ratio of operating cash flow to net income swings erratically, from -1.03 in 2026Q3 to figures exceeding 20x in 2025Q4 and 2025Q2 where net income was near breakeven, which limits the usefulness of any single-quarter conversion metric. Stock-based compensation of $169M in 2026Q2 and $86M in 2026Q3 is a meaningful non-cash add-back that appears to inflate operating cash flow relative to what shareholders economically absorb. Investors should monitor whether conversion stabilizes once SBC and working capital timing normalize, as current quality of earnings warrants further investigation.

The FCF margin pattern suggests the business can produce meaningful cash in favorable quarters, yet the spread between peak and trough is wide enough to question how repeatable these figures are. Capital expenditures remain modest at roughly 3% to 9% of revenue, so the FCF swings are driven more by operating cash timing than by investment intensity. The cash profile appears more durable than GAAP earnings, but this should be read as a cash-timing story rather than evidence of sustained, high-margin cash generation.

Large swings in working capital suggest that collections, mortgage-related balances, and payables timing exert outsized influence on reported operating cash. The 2026Q3 inflow equal to total operating cash flow implies the quarter's cash generation may be partly reversible in subsequent periods. Investors should monitor whether these movements reverse, as persistent reliance on working capital release would signal weaker underlying cash earnings.

Repurchases of this magnitude relative to quarterly free cash flow suggest management is prioritizing share count reduction, which may offset SBC dilution but at the cost of balance sheet flexibility. With no dividends paid and net income negative in several recent quarters, buybacks appear to be funded partly from accumulated cash rather than sustained earnings. This capital allocation pattern warrants further investigation to determine whether returns on repurchased shares are justified by the underlying business trajectory.