How much of Zillow’s revenue comes from haram?

Zillow earns its revenue from the following segments:

  • Homes Segment:

Includes revenue generated from the resale of homes and title and escrow services.

  • Internet, Media & Technology (IMT) Segment:

Includes revenue generated from advertising services and Zillow’s suite of marketing software and technology solutions offered to residential real estate businesses, professionals, and consumers.

  • Mortgages Segment:

Includes revenue generated from mortgage originations and the related sale of mortgages on the secondary market through Zillow Home Loans, the sale of advertising services to mortgage lenders, and mortgage software solutions.

The contributions from each of Zillow’s revenue segments in their 2020 annual report were as follows:

An area of concern for Practical Islamic Finance is Zillow’s Mortgages segment as it involves extending and promoting interest-based loans.

Zillow’s Mortgages segment has grown 73% Year-over-year compared to 26% and 14% for the Homes and IMT segment respectively from 2019 to 2020. 

Accordingly, Zillow’s Mortgages segment is becoming increasingly important to Zillow’s business.

Practical Islamic Finance concludes:

A material portion of Zillow’s revenue comes from haram.

Does Zillow rely on interest to operate?

Year-to-Date
for period ended
6/30/2021
Fiscal year
ended
12/31/2020
Fiscal year
ended
12/31/2019
Interest Income $4,026$25,529$39,658
Total Revenue$2,528,420$3,339,817$2,742,837
Interest Expense $78,985$155,227$101,792
Total Expenses$2,379,102$3,381,205$2,990,322
Interest Income / Revenue0.16%0.76%1.45%
Interest Expense / Total Expense3.32%4.59%3.40%
*Numbers in thousands, U.S. dollars

Practical Islamic Finance concludes:

Riba is used but not relied upon in Zillow’s operations.

What is Zillow’s Environmental, Social, and Governance (ESG) impact?

Environment

In 2020, Zillow reduced its electricity consumption by 31.59% from 2019.

Social

Zillow has a high Glassdoor rating of 4.2 out of 5.0 from over 1,000 current and previous employees compared to a 3.3 average for all other Glassdoor rated companies.

Governance

No notable governance highlights.

Practical Islamic Finance concludes:

Zillow has a net positive ESG impact.

Comfort Rating

From Zillow’s business, financial, and ESG reviews, Practical Islamic Finance rates Zillow stock as:

Uncomfortable to invest in from a Halal perspective.

Justification for our rating

The Prophet Muhammad (peace be upon him) cursed the one who consumes riba (interest), the one who pays it, the one who writes it down (documents the contract), and the two witnesses of the agreement, and he said: they are all the same (in sin).

Muslim (1598)

It’s clear from this hadith that being involved in riba-based contracts is a serious sin that Muslims should avoid.

Accordingly, we are uncomfortable with Zillow’s Mortgages segment, and since it appears to be material to Zillow’s business, we are uncomfortable investing in Zillow from a Halal perspective.

Sources

Zillow Q2 2021 10-Q

Zillow 2020 10-K 

Zillow Sustainability Report 

Zillow Reviews