ZILLOW GROUP INC

Previous wording

Our portfolio of affiliates, subsidiaries and brands includes Zillow Premier Agent, Zillow Home Loans, our mortgage originations business and affiliate lender, Zillow Rentals, Trulia, StreetEasy, HotPads and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce and Follow Up Boss.

Current wording

Our portfolio of affiliates, subsidiaries and brands includes Zillow Premier Agent, Zillow Home Loans, our mortgage origination business and affiliate lender, Zillow Rentals, Trulia, StreetEasy, HotPads and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce and Follow Up Boss.

Previous wording

As of June 30, 2024, we had 6,682 employees, compared to 6,263 employees as of December 31, 2023.

Current wording

As of September 30, 2024, we had 6,835 employees, compared to 6,263 employees as of December 31, 2023.

Previous wording

Our financial performance is impacted by changes in the health of the housing market, which is impacted, in turn, by general economic conditions. Current market factors have been driven by low housing inventory, fewer new for-sale listings, increases and volatility in mortgage interest rates, as well as home price fluctuations and inflationary conditions. These factors may impact the number of transactions consumers complete using our products and services and demand for our advertising services. According to industry data from the NAR, total transaction value increased 3% during both the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 and during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Despite the current market factors mentioned above, we continue to invest in our growth pillars. We believe this continued investment has resulted in year over year total revenue results, described below, for the three and six months ended June 30, 2024 as compared to the same periods in the prior year, that exceeded industry performance for the same periods. The extent to which market factors impact our results and financial position will depend on future developments, which are uncertain and difficult to predict.

Current wording

Our financial performance is impacted by changes in the health of the housing market, which is impacted, in turn, by general economic conditions. Current market factors have been driven by low housing inventory, volatility in mortgage interest rates, volatility in rental occupancy rates, as well as home price fluctuations and inflationary conditions. These factors may impact the number of transactions consumers complete using our products and services and demand for our advertising services. According to industry data from NAR, total transaction value increased 2% during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 and 3% during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Despite the current market factors mentioned above, we continue to invest in the growth of our business. We believe this continued investment has resulted in year over year total revenue results, described below, for the three and nine months ended September 30, 2024 as compared to the same periods in the prior year, that exceeded industry performance for the same periods. The extent to which market factors impact our results and financial position will depend on future developments, which are uncertain and difficult to predict.

Previous wording

Revenue generated through ShowingTime+ includes ShowingTime revenue, which is primarily generated by Appointment Center, a software-as-a-service and call center solution allowing real estate agents, brokerages and multiple listing services to efficiently schedule real estate viewing appointments on behalf of their customers. Appointment Center services also include call center specialists who provide scheduling support to customers. ShowingTime+ revenue also includes our dotloop real estate transaction management software-as-a-service solution.

Current wording

Revenue generated through ShowingTime+ includes ShowingTime revenue, which is primarily generated by Appointment Center, a software-as-a-service and call center solution allowing real estate agents, brokerages and multiple listing services to efficiently schedule real estate viewing appointments on behalf of their customers. Appointment Center services also include call center specialists who provide scheduling support to customers. ShowingTime+ revenue also includes our dotloop real estate transaction management software-as-a-service solution, as well as Zillow Showcase, a listing marketing package.

Previous wording

For the three months ended June 30, 2024 and 2023, we generated total revenue of $572 million and $506 million, respectively, an increase of 13%, primarily due to increases in Residential, Rentals and Mortgages revenue.

Current wording

For the three months ended September 30, 2024 and 2023, we generated total revenue of $581 million and $496 million, respectively, an increase of 17%. The increase in total revenue was primarily attributable to the following:

Previous wording

•Mortgages revenue increased by $10 million, or 42%, to $34 million, driven by an increase in mortgage originations revenue, partially offset by a decrease in Custom Quote and Connect advertising services revenue.

Current wording

•Mortgages revenue increased by $15 million, or 63%, to $39 million, driven by an increase in mortgage originations revenue.

Previous wording

During the three months ended June 30, 2024 and 2023, we generated gross profit of $442 million and $402 million, respectively, an increase of 10%.

Current wording

During the three months ended September 30, 2024 and 2023, we generated gross profit of $441 million and $386 million, respectively, an increase of 14%.

Previous wording

Universal Analytics is no longer offered by Google as of July 1, 2024 and has been replaced by Google Analytics 4. As a result of this change, from January 1, 2024 through June 30, 2024, we measured visits to Zillow using an internal measurement tool, but continued to use Universal Analytics to measure visits to StreetEasy. Beginning on July 1, 2024, we measure visits to both Zillow and StreetEasy using an internal measurement tool, and visits to Zillow and StreetEasy end after thirty minutes of user inactivity or at midnight. Trulia continues to measure visits with Adobe Analytics, and visits to Trulia end after thirty minutes of user inactivity.

Current wording

Universal Analytics is no longer offered by Google as of July 1, 2024 and has been replaced by Google Analytics 4. As a result of this change, from January 1, 2024 through June 30, 2024, we measured visits to Zillow using an internal measurement tool, but continued to use Universal Analytics to measure visits to StreetEasy. As of July 1, 2024, we measure visits to both Zillow and StreetEasy using an internal measurement tool, and visits to Zillow and StreetEasy end after thirty minutes of user inactivity or at midnight. Trulia continues to measure visits with Adobe Analytics, and visits to Trulia end after thirty minutes of user inactivity.

Previous wording

We believe the use of an internal measurement tool to measure visits to Zillow and StreetEasy allows us to maintain control over and provide greater insight into our end-to-end data as we enhance our broader long-term analytics strategy, while also becoming less reliant on third-party providers. We have recast prior period visits to Zillow to conform with the current period measurement methodology. The change in our measurement platform for visits resulted in an approximately 10% decrease in reported visits for the three and six month periods ended June 30, 2023, primarily driven by the methodology for campaign changes.

Current wording

We believe the use of an internal measurement tool to measure visits to Zillow and StreetEasy allows us to maintain control over and provide greater insight into our end-to-end data as we enhance our broader long-term analytics strategy, while also becoming less reliant on third-party providers. We have recast prior period visits to Zillow to conform with the current period measurement methodology. The change in our measurement platform for visits resulted in an approximately 10% decrease in reported visits for both the three and nine month periods ended September 30, 2023, primarily driven by the methodology for campaign changes.

Previous wording

Prior to January 1, 2024, we measured unique users for Zillow, StreetEasy and HotPads using Universal Analytics. As discussed above, Universal Analytics is no longer offered as of July 1, 2024 and has been replaced by Google Analytics 4. As a result of this change, from January 1, 2024 through June 30, 2024, we measured unique users for Zillow using an internal measurement tool, but continued to use Universal Analytics to measure unique users for StreetEasy and HotPads. Beginning on July 1, 2024, we measure visits to Zillow, StreetEasy and HotPads using an internal measurement tool. Trulia continues to measure unique users with Adobe Analytics.

Current wording

Prior to January 1, 2024, we measured unique users for Zillow, StreetEasy and HotPads using Universal Analytics. As discussed above, Universal Analytics is no longer offered as of July 1, 2024 and has been replaced by Google Analytics 4. As a result of this change, from January 1, 2024 through June 30, 2024, we measured unique users for Zillow using an internal measurement tool, but continued to use Universal Analytics to measure unique users for StreetEasy and HotPads. As of July 1, 2024, we measure visits to Zillow, StreetEasy and HotPads using an internal measurement tool. Trulia continues to measure unique users with Adobe Analytics.

Previous wording

We believe the use of an internal measurement tool to measure unique users for Zillow, StreetEasy and HotPads allows us to maintain control over and provide greater insight into our end-to-end data as we enhance our broader long-term analytics strategy, while also becoming less reliant on third-party providers. We have recast prior period unique users for Zillow to conform to the current period measurement methodology. The change in our measurement platform for unique users resulted in an approximately 3% increase in reported unique users for the three and six month periods ended June 30, 2023.

Current wording

We believe the use of an internal measurement tool to measure unique users for Zillow, StreetEasy and HotPads allows us to maintain control over and provide greater insight into our end-to-end data as we enhance our broader long-term analytics strategy, while also becoming less reliant on third-party providers. We have recast prior period unique users for Zillow to conform to the current period measurement methodology. The change in our measurement platform for unique users resulted in an approximately 2% increase in reported unique users for both the three and nine month periods ended September 30, 2023.

Previous wording

During the three and six month periods ended June 30, 2024, total loan origination volume increased 123% and 127%, respectively, compared to the three and six month periods ended June 30, 2023. These increases were primarily driven by the continued growth in Zillow Home Loans purchase loan originations as we prioritize growth in Zillow Home Loans purchase originations.

Current wording

During the three and nine month periods ended September 30, 2024, total loan origination volume increased 79% and 106%, respectively, compared to the three and nine month periods ended September 30, 2023. These increases were primarily driven by the continued growth in Zillow Home Loans purchase loan originations as we prioritize growth in Zillow Home Loans purchase originations.

Previous wording

•Residential revenue increased $29 million, or 8%. The increase in Residential revenue was partially driven by a 4% increase in the number of visits for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. Residential revenue was also positively impacted by a 3% increase in Residential revenue per visit to $0.164 for the three months ended June 30, 2024 from $0.159 for the three months ended June 30, 2023, primarily due to the inclusion of revenue from Follow Up Boss, which we acquired in December 2023, an increase in ShowingTime+ revenue as we expanded software services available to sellers and listing agents, and growth in our new construction revenue. We calculate Residential revenue per visit by dividing the revenue generated by our Residential offerings by the number of visits in the period.

Current wording

•Residential revenue increased $43 million, or 12%. The increase in Residential revenue was partially driven by an 8% increase in Residential revenue per visit to $0.166 for the three months ended September 30, 2024 from $0.153 for the three months ended September 30, 2023, primarily due to the inclusion of revenue from Follow Up Boss, which we acquired in December 2023, growth in our Premier Agent revenue primarily due to continued improvement in our ability to convert connections into transactions, an increase in ShowingTime+ revenue as we expanded software services available to sellers and listing agents, and growth in our new construction revenue. We calculate Residential revenue per visit by dividing the revenue generated by our Residential offerings by the number of visits in the period. Residential revenue was also positively impacted by a 3% increase in the number of visits for the three months ended September 30, 2024 from the three months ended September 30, 2023. We expect Residential revenue to decrease in absolute dollars during the three months ending December 31, 2024, primarily due to the impact of seasonality on the residential real estate market.

Previous wording

•Rentals revenue increased $26 million, or 29%. The increase in Rentals revenue was primarily due to a 25% increase in quarterly revenue per average monthly rentals unique visitor to $3.66 for the three months ended June 30, 2024 as compared to $2.94 for the three months ended June 30, 2023, primarily driven by growth in multifamily property listings, which drove a 44% increase in multifamily rentals revenue. We calculate quarterly revenue per average monthly rentals unique visitor by dividing total Rentals revenue for the period by the average monthly rentals unique visitors for the period and then dividing by the number of quarters in the period. Average monthly rentals unique visitors was 32 million during the three months ended June 30, 2024 and 31 million during the three months ended June 30, 2023. We have estimated average monthly rentals unique visitors using Comscore data, which measures average monthly unique visitors on rental listings on Zillow, Trulia and HotPads mobile apps and websites.

Current wording

•Rentals revenue increased $24 million, or 24%. The increase in Rentals revenue was primarily due to growth in average monthly rentals unique visitors, which increased 20% to 36 million during the three months ended September 30, 2024, from 30 million during the three months ended September 30, 2023. We have estimated average monthly rentals unique visitors using Comscore data as of September 2024, which measures average monthly unique visitors on rental listings on Zillow, Trulia and HotPads mobile apps and websites. The increase in Rentals revenue was also driven by a 4% increase in quarterly revenue per average monthly rentals unique visitor to $3.42 for the three months ended September 30, 2024, from $3.30 for the three months ended September 30, 2023, primarily driven by growth in multifamily property listings, which drove a 38% increase in multifamily rentals revenue. We calculate quarterly revenue per average monthly rentals unique visitor by dividing total Rentals revenue for the period by the average monthly rentals unique visitors for the period and then dividing by the number of quarters in the period.

Previous wording

•Mortgages revenue increased $10 million, or 42%. This increase was primarily driven by a $16 million increase in mortgage originations revenue, partially offset by a $5 million decrease in Custom Quote and Connect advertising services revenue. The increase in mortgage originations revenue was primarily due to a 123% increase in total originations volume from $340 million for the three months ended June 30, 2023 to $759 million for the three months ended June 30, 2024, primarily driven by continued growth in Zillow Home Loans purchase loan origination volume. The increase in mortgage originations revenue was also attributable to a 23% increase in gain on sale margin. Gain on sale margin represents the net gain on sale of mortgage loans divided by total loan origination volume for the period. Net gain on sale of mortgage loans includes all components related to the origination and sale of mortgage loans, including the net gain on sale of loans into the secondary market, loan origination fees, unrealized gains and losses associated with changes in fair value of IRLCs and mortgage loans held for sale, realized and unrealized gains or losses from derivative financial instruments and the provision for losses relating to representations and warranties. The increase in mortgage originations revenue was partially offset by a $5 million decrease in Custom Quote and Connect advertising services revenue, which was primarily due to a 24% decrease in leads generated from marketing products sold to mortgage professionals. This decrease in leads was primarily driven by a shift in strategic priority as we focus on organic growth of our mortgage origination business.

Current wording

•Mortgages revenue increased $15 million, or 63%. This increase was primarily driven by a $16 million increase in mortgage originations revenue. The increase in mortgage originations revenue was primarily due to a 79% increase in total loan origination volume to $819 million for the three months ended September 30, 2024 from $457 million for the three months ended September 30, 2023, primarily driven by continued growth in Zillow Home Loans purchase loan origination volume. The increase in mortgage originations revenue was also attributable to a 21% increase in gain on sale margin. Gain on sale margin represents the net gain on sale of mortgage loans divided by total loan origination volume for the period. Net gain on sale of mortgage loans includes all components related to the origination and sale of mortgage loans, including the net gain on sale of loans into the secondary market, loan origination fees, unrealized gains and losses associated with changes in fair value of IRLCs and mortgage loans held for sale, realized and unrealized gains or losses from derivative financial instruments and the provision for losses relating to representations and warranties.

Previous wording

•Residential revenue increased $61 million, or 8%. The increase in Residential revenue was partially driven by a 4% increase in the number of visits for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Residential revenue was also positively impacted by a 4% increase in Residential revenue per visit to $0.167 for the six months ended June 30, 2024 from $0.160 for the six months ended June 30, 2023, primarily due to the inclusion of revenue from Follow Up Boss, which we acquired in December 2023, an increase in ShowingTime+ revenue as we expanded software services available to sellers and listing agents, accelerating growth in our new construction revenue, and continued improvement in our ability to connect high-intent customers to agents.

Current wording

•Residential revenue increased $104 million, or 9%. The increase in Residential revenue was driven by a 6% increase in Residential revenue per visit to $0.166 for the nine months ended September 30, 2024 from $0.158 for the nine months ended September 30, 2023, primarily due to the inclusion of revenue from Follow Up Boss, which we acquired in December 2023, growth in our Premier Agent revenue primarily due to continued improvement in our ability to convert connections into transactions, an increase in ShowingTime+ revenue as we expanded software services available to sellers and listing agents, and accelerating growth in our new construction revenue. The increase in Residential revenue was also attributable to a 4% increase in the number of visits for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Previous wording

•Rentals revenue increased $49 million, or 30%. The increase in Rentals revenue was primarily due to a 34% increase in quarterly revenue per average monthly rentals unique visitor to $3.69 for the six months ended June 30, 2024 as compared to $2.75 for the six months ended June 30, 2023, primarily driven by growth in multifamily property listings, which drove a 45% increase in multifamily rentals revenue.

Current wording

•Rentals revenue increased $73 million, or 28%. The increase in Rentals revenue was primarily due to a 24% increase in quarterly revenue per average monthly rentals unique visitor to $3.62 for the nine months ended September 30, 2024 as compared to $2.93 for the nine months ended September 30, 2023, primarily driven by growth in multifamily property listings, which drove a 42% increase in multifamily rentals revenue. The increase in rentals revenue was also due to growth in the number of average monthly rentals unique visitors, which increased 3% to 31 million during the nine months ended September 30, 2024, from 30 million during the nine months ended September 30, 2023.

Previous wording

•Mortgages revenue increased $15 million, or 30%. This increase was driven by a $29 million increase in mortgage originations revenue, partially offset by a $12 million decrease in Custom Quote and Connect advertising services revenue. The increase in mortgage originations revenue was primarily due to a 127% increase in total originations volume from $602 million for the six months ended June 30, 2023 to $1.4 billion for the six months ended June 30, 2024, primarily driven by continued growth in Zillow Home Loans purchase loan origination volume. The increase in mortgage originations revenue was also attributable to a 21% increase in gain on sale margin. The increase in mortgage originations revenue was partially offset by a $12 million decrease in Custom Quote and Connect advertising services revenue, which was primarily due to a 28% decrease in leads generated from marketing products sold to mortgage professionals. This decrease in leads was primarily driven by a shift in strategic priority as we focus on organic growth of our mortgage origination business.

Current wording

•Mortgages revenue increased $30 million, or 41%. This increase was driven by a $45 million increase in mortgage originations revenue, partially offset by a $12 million decrease in Custom Quote and Connect advertising services revenue. The increase in mortgage originations revenue was primarily due to a 106% increase in total loan origination volume to $2.2 billion for the nine months ended September 30, 2024 from $1.1 billion for the nine months ended September 30, 2023, primarily driven by continued growth in Zillow Home Loans purchase loan origination volume. The increase in mortgage originations revenue was also attributable to a 20% increase in gain on sale margin. The increase in mortgage originations revenue was partially offset by a $12 million decrease in Custom Quote and Connect advertising services revenue, which was primarily due to a 20% decrease in leads generated from marketing products sold to mortgage professionals. This decrease in leads was primarily driven by our focus on organic growth of our mortgage origination business.

Previous wording

Cost of revenue increased $26 million, or 25%, driven by increases of $15 million in depreciation and amortization expense primarily due to an increase in amortization of website development costs, $4 million in mortgage loan processing costs due to increased purchase loan origination volume, and $3 million in lead acquisition costs related to partnerships.

Current wording

Cost of revenue increased $30 million, or 27%, primarily driven by increases of $14 million in depreciation and amortization expense primarily due to an increase in amortization of website development costs, $4 million in mortgage loan processing costs due to increased purchase loan origination volume, $3 million in lead acquisition costs related to partnerships, and $2 million in connectivity costs.

Previous wording

Cost of revenue increased $57 million, or 29%, driven by increases of $32 million in depreciation and amortization expense primarily due to an increase in amortization of website development costs, $8 million in mortgage loan processing costs due to increased purchase loan origination volume, $4 million in headcount-related expenses, including share-based compensation expense, $3 million in connectivity costs, and $3 million in lead acquisition costs.

Current wording

Cost of revenue increased $87 million, or 28%, primarily driven by increases of $47 million in depreciation and amortization expense primarily due to an increase in amortization of website development costs, $12 million in mortgage loan processing costs due to increased purchase loan origination volume, $7 million in lead acquisition costs related to partnerships, $5 million in connectivity costs, and $4 million in headcount-related expenses, including share-based compensation expense.

Previous wording

Gross profit increased by $69 million, or 9%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 80% to 77%.

Current wording

Gross profit increased by $55 million, or 14%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 78% to 76%.

Previous wording

Gross profit increased by $40 million, or 10%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 79% to 77%.

Current wording

Gross profit increased by $124 million, or 11%, primarily due to an increase in revenue, discussed above. Total gross margin decreased from 79% to 77%.

Previous wording

Sales and marketing expenses increased $32 million, or 18%, due to an increase of $17 million in headcount-related expenses, including share-based compensation expense, and $12 million in marketing and advertising costs as we continue to invest in the growth of our rentals marketplace. We expect sales and marketing expenses to increase in absolute dollars during the three months ending September 30, 2024 as we increase our marketing and advertising activities to support the continued expected growth of our business.

Current wording

Sales and marketing expenses increased $53 million, or 32%, due to increases of $25 million in marketing and advertising costs as we continue to invest in the growth of our rentals marketplace and $23 million in headcount-related expenses, including share-based compensation expense. We expect sales and marketing expenses to decrease in absolute dollars during the three months ending December 31, 2024 as marketing and advertising costs decrease in line with typical seasonal media spend.

Previous wording

Sales and marketing expenses increased $42 million, or 13%, due to an increase of $29 million in headcount-related expenses, including share-based compensation expense, and $8 million in marketing and advertising costs as we continue to invest in the growth of our rentals marketplace.

Current wording

Sales and marketing expenses increased $95 million, or 19%, due to increases of $52 million in headcount-related expenses, including share-based compensation expense, $33 million in marketing and advertising costs as we continue to invest in the growth of our rentals marketplace, and $4 million in travel expenses.

Previous wording

Technology and development expenses increased $4 million, or 3%, due to increases of $4 million in headcount-related expenses, including share-based compensation expense, as we continue to invest in human capital to grow our businesses, $3 million in software and hardware costs, and $2 million in travel expenses. These increases were partially offset by a $4 million decrease in third-party professional service fees driven by active cost management.

Current wording

Technology and development expenses increased $17 million, or 4%, due to increases of $19 million in headcount-related expenses, including share-based compensation expense, as we continue to invest in human capital to grow our businesses, $7 million in software and hardware costs, and $3 million in travel expenses. These increases were partially offset by a $10 million decrease in third-party professional service fees driven by active cost management.

Previous wording

General and administrative expenses decreased $13 million, or 5%, primarily due to a decrease of $18 million in headcount-related expenses, including share-based compensation expense. The decrease in headcount-related expenses was primarily driven by $17 million in share-based compensation expense associated with the departures of certain executive personnel incurred during the six months ended June 30, 2023. The decrease in general and administrative expenses was also due to a $6 million decrease in rent expense primarily driven by cost savings associated with changes in the use of certain office space in our lease portfolio. These decreases were partially offset by increases of $5 million due to the change in fair value of contingent consideration associated with our acquisition of Follow Up Boss, $5 million in third-party professional service fees and $3 million in travel expenses.

Current wording

General and administrative expenses decreased $21 million, or 5%, primarily due to a decrease of $18 million in headcount-related expenses, including share-based compensation expense. The decrease in headcount-related expenses was primarily driven by $18 million in share-based compensation expense associated with the departures of certain executive personnel incurred during the nine months ended September 30, 2023. The decrease in general and administrative expenses was also due to a $12 million decrease in rent expense primarily driven by cost savings associated with changes in the use of certain office space in our lease portfolio. These decreases were partially offset by increases of $8 million due to the change in fair value of contingent consideration associated with our acquisition of Follow Up Boss and $3 million in travel expenses.

Previous wording

Impairment and restructuring costs were $6 million and $8 million for the six months ended June 30, 2024 and 2023, respectively, and were primarily associated with changes in the use of certain office space in our lease portfolio.

Current wording

Impairment and restructuring costs were not material for the three months ended September 30, 2024 and 2023. Impairment and restructuring costs were $6 million and $9 million for the nine months ended September 30, 2024 and 2023, respectively, and were primarily associated with changes in the use of certain office space in our lease portfolio. Impairment and restructuring costs incurred during the nine months ended September 30, 2023 also included $3 million that pertained to employee termination costs.

Previous wording

Other income, net decreased $7 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, and was primarily driven by fair value adjustments on an outstanding warrant, partially offset by increases in returns on investments due to the higher interest rate environment as compared to the prior year period.

Current wording

Other income, net decreased $7 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, and was primarily driven by fair value adjustments on an outstanding warrant, partially offset by increases in returns on investments due to the higher interest rate environment as compared to the prior year period.

Previous wording

Income tax expense was not material for the three and six month periods ended June 30, 2024 and 2023.

Current wording

Income tax expense was not material for the three and nine month periods ended September 30, 2024 and 2023.

Previous wording

Our primary sources of liquidity and capital resources are cash flows from operations, debt financing and equity offerings. Our cash requirements consist principally of working capital, general corporate needs and mortgage loan originations. We continue to invest in the development and expansion of our operations using available cash flows from operations. Ongoing investments include, but are not limited to, improvements in our technology platforms, investments in new products and services, and continued investments in sales and marketing. We also use cash flows from operations to service our debt obligations and to repurchase Class A common stock, Class C capital stock, outstanding convertible senior notes or a combination thereof through our Repurchase Authorizations or otherwise.

Current wording

Our primary sources of liquidity and capital resources are cash flows from operations, debt financing and equity offerings. Our cash requirements consist principally of working capital, general corporate needs and mortgage loan originations. We continue to invest in the development and expansion of our operations using available cash flows from operations. Ongoing investments include, but are not limited to, improvements in our technology platforms, investments in new products and services, and continued investments in sales and marketing. We also use cash flows from operations to service our debt obligations and to repurchase Class A common stock, Class C capital stock, outstanding Notes or a combination thereof through our Repurchase Authorizations or otherwise.

Previous wording

As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents, investments and restricted cash of $2.6 billion and $2.8 billion, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions and money market funds. Investments consist of fixed income securities, which include U.S. government treasury securities, U.S. government agency securities, investment grade corporate securities, and commercial paper. Restricted cash primarily consists of amounts used to fund customer home purchases in our mortgage origination business. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. As of June 30, 2024, Zillow Group and its subsidiaries were in compliance with all debt covenants specified in the facilities described below.

Current wording

As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents, investments and restricted cash of $2.2 billion and $2.8 billion, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions and money market funds. Investments consist of fixed income securities, which include U.S. government treasury securities, investment grade corporate securities, U.S. government agency securities, and commercial paper. Restricted cash primarily consists of amounts used to fund customer home purchases in our mortgage origination business. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. As of September 30, 2024, Zillow Group and its subsidiaries were in compliance with all debt covenants specified in the facilities described below.

Previous wording

For the six months ended June 30, 2024, net cash provided by operating activities was $135 million. This was driven by a net loss of $40 million, adjusted by share-based compensation of $221 million, depreciation and amortization of $115 million, accretion of bond discount of $17 million, amortization of contract cost assets of $9 million, impairment costs of $6 million, amortization of right of use assets of $6 million, amortization of debt issuance costs of $3 million, and $8 million in other adjustments to reconcile net loss to cash provided by operating activities. Changes in operating assets and liabilities decreased cash provided by operating activities by $176 million. The changes in operating assets and liabilities are primarily related to a $95 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $49 million increase in prepaid expenses and other current assets primarily due to an increase in revenue from products and services billed in arrears, a $27 million decrease in lease liabilities due to contractual lease payments, a $19 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, and a $9 million increase in contract cost assets primarily due to capitalized sales commissions. These changes were partially offset by an $11 million increase in accounts payable driven by the timing of payments, a $7 million increase in deferred revenue consistent with an increase in revenue, and a $6 million increase in accrued expenses and other current liabilities primarily driven by the timing of billings.

Current wording

For the nine months ended September 30, 2024, net cash provided by operating activities was $306 million. This was driven by a net loss of $60 million, adjusted by share-based compensation of $329 million, depreciation and amortization of $178 million, accretion of bond discount of $23 million, amortization of contract cost assets of $14 million, amortization of right of use assets of $8 million, impairment costs of $6 million, amortization of debt issuance costs of $4 million, and $14 million in other adjustments to reconcile net loss to cash provided by operating activities. Changes in operating assets and liabilities decreased cash provided by operating activities by $164 million. The changes in operating assets and liabilities are primarily related to a $73 million increase in prepaid expenses and other current assets primarily due to an increase in revenue from products and services billed in arrears, a $64 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $31 million decrease in lease liabilities due to contractual lease payments, a $21 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, and a $15 million increase in contract cost assets primarily due to capitalized sales commissions. These changes were partially offset by a $25 million increase in accounts payable driven by the timing of payments, an $8 million increase in accrued expenses and other current liabilities primarily driven by the timing of billings, and a $5 million increase in deferred revenue consistent with an increase in revenue.

Previous wording

For the six months ended June 30, 2023, net cash provided by operating activities was $193 million. This was driven by a net loss of $57 million, adjusted by share-based compensation of $233 million, depreciation and amortization of $85 million, accretion of bond discount of $20 million, amortization of right of use assets of $12 million, amortization of contract cost assets of $11 million, impairment costs of $6 million, amortization of debt issuance costs of $3 million, and $5 million in other adjustments to reconcile net loss to net cash provided by operating activities. Changes in operating assets and liabilities decreased cash provided by operating activities by $75 million. The changes in operating assets and liabilities are primarily related to a $32 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $30 million increase in prepaid expenses and other current assets and a $19 million increase in accounts receivable both primarily due to an increase in revenue from products and services billed in arrears, a $15 million decrease in lease liabilities due to contractual lease payments, an $11 million increase in contract cost assets and a $2 million decrease in other long-term liabilities. These changes were partially offset by a $27 million increase in accrued expenses and other current liabilities primarily driven by the timing of billings, a $5 million increase in deferred revenue and a $2 million increase in accrued compensation and benefits.

Current wording

For the nine months ended September 30, 2023, net cash provided by operating activities was $268 million. This was driven by a net loss of $85 million, adjusted by share-based compensation of $342 million, depreciation and amortization of $134 million, accretion of bond discount of $29 million, amortization of right of use assets of $18 million, amortization of contract cost assets of $16 million, impairment costs of $6 million, and amortization of debt issuance costs of $4 million. Changes in operating assets and liabilities decreased cash provided by operating activities by $135 million. The changes in operating assets and liabilities are primarily related to a $55 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $26 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, a $24 million decrease in lease liabilities due to contractual lease payments, a $22 million increase in prepaid expenses and other current assets primarily due to an increase in revenue from products and services billed in arrears, a $16 million increase in contract cost assets primarily due to capitalized sales commissions, a $4 million decrease in other long term liabilities, and a $3 million decrease in accrued expenses and other current liabilities. These changes were partially offset by a $7 million increase in accounts payable and a $4 million increase in accrued compensation and benefits both driven by the timing of payments, and a $4 million increase in deferred revenue.

Previous wording

Cash Flows Provided By (Used In) Investing Activities

Current wording

Cash Flows Provided By Investing Activities

Previous wording

Our primary investing activities include the purchase and sale or maturity of investments and the purchase of property and equipment and intangible assets.

Current wording

Our primary investing activities include the purchase and sale or maturity of investments, the purchase of property and equipment and intangible assets, and cash paid in connection with acquisitions.

Previous wording

For the six months ended June 30, 2023, net cash provided by investing activities was $84 million. This was the result of $168 million of net proceeds from the maturity of investments and $84 million of purchases of property and equipment and intangible assets.

Current wording

For the nine months ended September 30, 2024, net cash provided by investing activities was $121 million. This was the result of $251 million of net proceeds from maturities and sales of investments and $130 million of purchases of property and equipment and intangible assets.

Previous wording

For the six months ended June 30, 2024, net cash used in investing activities was $207 million. This was the result of $117 million of net purchases of investments and $90 million of purchases of property and equipment and intangible assets.

Current wording

For the nine months ended September 30, 2023, net cash provided by investing activities was $339 million. This was the result of $498 million of net proceeds from the maturity of investments, $125 million of purchases of property and equipment and intangible assets, and $34 million of cash paid for acquisitions, net of cash acquired.

Previous wording

Our primary financing activities include repurchases of Class A common stock and Class C capital stock, the exercise of employee option awards, repayments of borrowings on the warehouse line of credit and master repurchase agreements related to Zillow Home Loans and settlement of long-term debt including repurchases of the 2025 Notes.

Current wording

Our primary financing activities include repurchases of Class A common stock and Class C capital stock, the exercise of employee option awards, repayments of borrowings on the warehouse line of credit and master repurchase agreements related to Zillow Home Loans and settlement of long-term debt including a portion of the Notes.

Previous wording

For the six months ended June 30, 2024, net cash used in financing activities was $240 million, which primarily related to $301 million of cash paid for share repurchases and $89 million of cash paid for the partial repurchase of the 2025 Notes. The cash outflows were partially offset by $89 million of net borrowings on our master repurchase agreements related to Zillow Home Loans and $61 million of proceeds from the exercise of option awards.

Current wording

For the nine months ended September 30, 2024, net cash used in financing activities was $847 million, which primarily related to $697 million of cash paid for the settlement of the 2024 Notes and partial repurchase of the 2025 Notes, and $301 million of cash paid for share repurchases. The cash outflows were partially offset by $96 million of proceeds from the exercise of option awards and $55 million of net borrowings on our master repurchase agreements related to Zillow Home Loans.

Previous wording

For the six months ended June 30, 2023, net cash used in financing activities was $177 million, which primarily related to $236 million of cash paid for share repurchases, partially offset by $30 million of proceeds from the exercise of employee option awards and $29 million of net borrowings on our warehouse line of credit and master repurchase agreements related to Zillow Home Loans.

Current wording

For the nine months ended September 30, 2023, net cash used in financing activities was $226 million, which primarily related to $336 million of cash paid for share repurchases, partially offset by $56 million of proceeds from the exercise of option awards and $54 million of net borrowings on our warehouse line of credit and master repurchase agreements related to Zillow Home Loans.