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Published: 2023-05-03 00:00:00 ET
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EX-99.2 3 q12023992.htm EX-99.2 Document

Exhibit 99.2


Reported Consolidated Results

ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
March 31, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$1,394 $1,466 
Short-term investments1,975 1,896 
Accounts receivable, net
75 72 
Mortgage loans held for sale48 41 
Prepaid expenses and other current assets152 126 
Restricted cash2 2 
Total current assets3,646 3,603 
Contract cost assets23 23 
Property and equipment, net290 271 
Right of use assets114 126 
Goodwill2,374 2,374 
Intangible assets, net154 154 
Other assets13 12 
Total assets$6,614 $6,563 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$21 $20 
Accrued expenses and other current liabilities101 90 
Accrued compensation and benefits45 48 
Borrowings under credit facilities42 37 
Deferred revenue49 44 
Lease liabilities, current portion29 31 
Total current liabilities287 270 
Lease liabilities, net of current portion133 139 
Convertible senior notes1,661 1,660 
Other long-term liabilities13 12 
Total liabilities2,094 2,081 
Shareholders’ equity:
Class A common stock
— — 
Class B common stock
— — 
Class C capital stock
— — 
Additional paid-in capital6,157 6,109 
Accumulated other comprehensive loss(3)(15)
Accumulated deficit(1,634)(1,612)
Total shareholders’ equity4,520 4,482 
Total liabilities and shareholders’ equity$6,614 $6,563 



ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share data, which are presented in thousands, and per share data)
 Three Months Ended
March 31,
 20232022
Revenue$469 $536 
Cost of revenue (1)92 92 
Gross profit377 444 
Operating expenses:
Sales and marketing (1) 156 174 
Technology and development (1)137 108 
General and administrative (1)123 112 
Impairment and restructuring costs6 14 
Total operating expenses422 408 
Income (loss) from continuing operations(45)36 
Other income32 2 
Interest expense(9)(8)
Income (loss) from continuing operations before income taxes(22)30 
Income tax expense— (5)
Net income (loss) from continuing operations(22)25 
Net loss from discontinued operations, net of income taxes— (9)
Net income (loss)$(22)$16 
Net income (loss) from continuing operations per share:
Basic$(0.09)$0.10 
Diluted$(0.09)$0.10 
Net income (loss) per share:
Basic$(0.09)$0.06 
Diluted$(0.09)$0.06 
Weighted-average shares outstanding:
Basic234,425 248,542 
Diluted234,425 265,945 
(1) Includes share-based compensation expense as follows:
Cost of revenue$4 $3 
Sales and marketing16 11 
Technology and development39 28 
General and administrative44 35 
Share-based compensation - continuing operations$103 $77 
Adjusted EBITDA (2)$104 $166 
(2) Adjusted EBITDA is a non-GAAP financial measure; it is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. See Exhibit 99.1 for more information regarding our presentation of Adjusted EBITDA and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, for each of the periods presented. Adjusted EBITDA excludes the impact of discontinued operations.


ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 Three Months Ended
March 31,
 20232022
Operating activities
Net income (loss)$(22)$16 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization40 43 
Share-based compensation103 91 
Amortization of right of use assets6 6 
Amortization of contract cost assets6 8 
Amortization of debt discount and debt issuance costs1 23 
Loss on extinguishment of debt— 14 
Other adjustments to reconcile net income (loss) to cash provided by operating activities (2)2 
Changes in operating assets and liabilities:
Accounts receivable(3)56 
Mortgage loans held for sale(7)14 
Inventory— 3,414 
Prepaid expenses and other assets(27)(247)
Contract cost assets(6)(4)
Lease liabilities(8)(9)
Accounts payable— 6 
Accrued expenses and other current liabilities10 (43)
Accrued compensation and benefits(3)(6)
Deferred revenue5 5 
Other long-term liabilities— 3 
Net cash provided by operating activities93 3,392 
Investing activities
Proceeds from maturities of investments433 — 
Purchases of investments(490)(525)
Purchases of property and equipment(31)(33)
Purchases of intangible assets(9)(5)
Net cash used in investing activities(97)(563)
Financing activities
Repayments of borrowings on credit facilities— (2,205)
Net borrowings (repayments) on warehouse line of credit and repurchase agreements5 (25)
Repurchases of Class A common stock and Class C capital stock(86)(348)
Settlement of long-term debt— (439)
Proceeds from exercise of stock options13 36 
Net cash used in financing activities(68)(2,981)
Net decrease in cash, cash equivalents and restricted cash during period(72)(152)
Cash, cash equivalents and restricted cash at beginning of period1,468 2,838 
Cash, cash equivalents and restricted cash at end of period$1,396 $2,686 
Supplemental disclosures of cash flow information
Noncash transactions:
Capitalized share-based compensation$18 $10 
Write-off of fully depreciated property and equipment7 18 
Write-off of fully amortized intangible assets2 168 
Recognition of operating right of use assets and lease liabilities— 16 


Non-GAAP Net Income per Share
Our presentation of non-GAAP net income per share excludes the impact of the results of discontinued operations, share-based compensation, impairment and restructuring costs and income taxes. This measure is not a key metric used by our management and board of directors to measure operating performance or otherwise manage the business. However, we provide non-GAAP net income per share as supplemental information to investors, as we believe the exclusion of the results of discontinued operations, share-based compensation, impairment and restructuring costs and income taxes facilitates investors’ operating performance comparisons on a period-to-period basis. You should not consider non-GAAP net income per share in isolation or as a substitute for analysis of our results as reported under GAAP.

The following table sets forth a reconciliation of non-GAAP net income, adjusted, to net income (loss), as reported on a GAAP basis, and the calculation of non-GAAP net income per share - basic and diluted, for each of the periods presented (in millions, except share data, which are presented in thousands, and per share data, unaudited):
Three Months Ended
March 31,
 20232022
Net income (loss), as reported
$(22)$16 
Loss from discontinued operations, net of income taxes— 9 
Share-based compensation103 77 
Impairment and restructuring costs6 14 
Income taxes— 5 
Net income, adjusted$87 $121 
Non-GAAP net income per share:
Basic$0.37 $0.49 
Diluted$0.35 $0.44 
Weighted-average shares outstanding:
Basic234,425 248,542 
Diluted262,665 285,817 
Diluted non-GAAP net income per share for the periods presented is calculated using diluted weighted-average shares outstanding, which includes potential shares of Class A common stock and Class C capital stock for the periods in which their effect would have been dilutive. The potential shares of Class A common stock and Class C capital stock were excluded from the calculation of non-GAAP net income per share for certain periods presented if their effect would have been antidilutive. The following table reconciles the denominators used in the basic and diluted non-GAAP net income per share calculations (in thousands, unaudited):
Three Months Ended
March 31,
 20232022
Denominator for basic calculation234,425 248,542 
Effect of dilutive securities:
     Option awards1,264 2,558 
     Unvested restricted stock units1,529 862 
Convertible senior notes due in 2024, 2025 and 202625,447 33,855 
          Denominator for dilutive calculation262,665 285,817 




Key Metrics
The following table presents our visits and average monthly unique users for each of the periods presented (in millions, except percentages):
 Three Months Ended
March 31,		2022 to 2023
% Change
 20232022
Visits (1)2,487 2,627 (5)%
Average monthly unique users (2)212 211 —%
(1) Visits includes visits to the Zillow, Trulia and StreetEasy mobile apps and websites. We measure Zillow and StreetEasy visits with Google Analytics and Trulia visits with Adobe Analytics.
(2) Zillow, StreetEasy and HotPads measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics.

The following table presents loan origination volume by purpose and in total for Zillow Home Loans for the periods presented (in millions, except percentages):
Three Months Ended
March 31,		2022 to 2023
% Change
20232022
Purchase loan origination volume$259 $123 111%
Refinance loan origination volume3 578 (99)%
Total loan origination volume$262 $701 (63)%