Zillow Group (Z) shares tumbled 5.27% in after-hours trading on Thursday, despite the company reporting its first quarterly net profit since 2022. The stock's decline appears to be driven by softer-than-expected guidance for the second quarter, overshadowing the company's better-than-anticipated first-quarter results.

For the first quarter, Zillow posted a net income of $8 million, marking a significant turnaround from a $23 million loss in the same period last year. Revenue rose to $598 million, surpassing analyst expectations of $589 million. The company's CEO, Jeremy Wacksman, stated, "We're well-positioned to deliver sustainable profitable growth," highlighting the expansion of services and scaling of their "housing super app" across more markets.

However, investors seem to be focusing on Zillow's second-quarter outlook. The company forecasts Q2 revenue between $635 million and $650 million, with the midpoint falling below the consensus estimate of $649 million. This cautious guidance, likely influenced by recent volatility in mortgage rates and a subdued spring home-selling season, appears to be weighing on investor sentiment. Despite the near-term pressure, Zillow maintains its full-year 2025 outlook, expecting low-to-mid teens revenue growth and positive GAAP net income, signaling confidence in its long-term strategy amidst a challenging housing market.