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Published: 2022-02-10 00:00:00 ET
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Exhibit 99.2


Reported Consolidated Results

ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
20212020
Assets
Current assets:
Cash and cash equivalents$2,611,499 $1,703,130 
Short-term investments513,922 2,218,108 
Accounts receivable, net
154,937 69,940 
Mortgage loans held for sale106,753 330,758 
Inventory3,912,662 491,293 
Prepaid expenses and other current assets153,555 75,846 
Restricted cash226,651 75,805 
Total current assets7,679,979 4,964,880 
Contract cost assets35,465 50,719 
Beneficial interests in securitizations75,103 — 
Property and equipment, net214,555 196,152 
Right of use assets129,932 187,960 
Goodwill2,373,792 1,984,907 
Intangible assets, net180,072 94,767 
Other assets6,556 7,175 
Total assets$10,695,454 $7,486,560 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$17,230 $18,974 
Accrued expenses and other current liabilities161,459 94,487 
Accrued compensation and benefits108,464 47,666 
Borrowings under credit facilities2,311,556 670,209 
Deferred revenue51,484 48,995 
Lease liabilities, current portion23,503 28,310 
Securitization term loans1,208,753 — 
Total current liabilities3,882,449 908,641 
Lease liabilities, net of current portion147,967 207,723 
Convertible senior notes1,319,224 1,613,523 
Other long-term liabilities4,503 14,857 
Total liabilities5,354,143 2,744,744 
Shareholders’ equity:
Class A common stock
6 6 
Class B common stock
1 1 
Class C capital stock
18 17 
Additional paid-in capital7,001,084 5,880,883 
Accumulated other comprehensive income 7,234 164 
Accumulated deficit(1,667,032)(1,139,255)
Total shareholders’ equity5,341,311 4,741,816 
Total liabilities and shareholders’ equity$10,695,454 $7,486,560 



ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 Three Months Ended
December 31,		Year Ended
December 31,
 2021202020212020
Revenue:
Homes$3,348,323 $304,145 $6,015,778 $1,715,375 
IMT483,169 423,838 1,885,782 1,450,232 
Mortgages50,821 60,969 245,816 174,210 
Total revenue3,882,313 788,952 8,147,376 3,339,817 
Cost of revenue (1):
Homes 3,331,920 281,040 6,106,944 1,634,755 
IMT61,597 47,698 203,449 193,097 
Mortgages21,695 14,000 83,784 38,540 
Total cost of revenue3,415,212 342,738 6,394,177 1,866,392 
Gross profit467,101 446,214 1,753,199 1,473,425 
Operating expenses:
Sales and marketing (1)354,492 166,114 1,076,235 691,119 
Technology and development (1)114,141 97,410 474,396 390,172 
General and administrative (1)120,087 93,338 448,773 356,722 
Impairment and restructuring costs (1)72,173 — 72,173 76,800 
Acquisition-related costs892 — 8,615 — 
Integration costs680 — 680 — 
Total operating expenses662,465 356,862 2,080,872 1,514,813 
Income (loss) from operations(195,364)89,352 (327,673)(41,388)
Gain (loss) on extinguishment of debt— (4,943)(17,119)1,448 
Other income4,198 2,803 10,188 25,529 
Interest expense(68,188)(40,575)(191,910)(155,227)
Income (loss) before income taxes(259,354)46,637 (526,514)(169,638)
Income tax benefit (expense)(1,854)(601)(1,263)7,523 
Net income (loss)$(261,208)$46,036 $(527,777)$(162,115)
Net income (loss) per share:
Basic$(1.03)$0.20 $(2.11)$(0.72)
Diluted$(1.03)$0.18 $(2.11)$(0.72)
Weighted-average shares outstanding:
Basic254,013 235,341 249,937 223,848 
Diluted254,013 251,499 249,937 223,848 
(1) Includes share-based compensation expense as follows:
Cost of revenue$2,735 $2,064 $10,968 $6,685 
Sales and marketing12,161 8,370 48,131 33,110 
Technology and development28,495 21,212 117,614 80,876 
General and administrative36,822 20,799 134,973 76,879 
Impairment and restructuring costs5,506 — 5,506 — 
Total$85,719 $52,445 $317,192 $197,550 
Other Financial Data:
Income (loss) before income taxes:
Homes segment$(342,040)$(66,621)$(881,464)$(320,254)
IMT segment137,291 145,369 544,590 262,984 
Mortgages segment(26,675)7,305 (51,823)4,514 
Corporate items (2)(27,930)(39,416)(137,817)(116,882)
Total income (loss) before income taxes$(259,354)$46,637 $(526,514)$(169,638)
Adjusted EBITDA (3):
Homes segment$(206,171)$(46,890)$(649,994)$(241,969)
IMT segment220,010 203,093 853,226 556,137 
Mortgages segment(14,273)13,648 (8,651)28,825 
Total Adjusted EBITDA$(434)$169,851 $194,581 $342,993 
(2) Certain corporate items are not directly attributable to any of our segments, including the gain (loss) on extinguishment of debt, interest income earned on our short-term investments included in other income and interest costs on our convertible senior notes included in interest expense.
(3) 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) on a consolidated basis and income (loss) before income taxes for each segment, the most directly comparable GAAP financial measures, for each of the periods presented.


ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Year Ended
December 31,
 20212020
Operating activities
Net loss$(527,777)$(162,115)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization129,780 110,031 
Share-based compensation311,686 197,550 
Amortization of right of use assets22,705 24,338 
Amortization of contract cost assets41,577 36,494 
Amortization of debt discount and debt issuance costs104,437 102,401 
Loss (gain) on extinguishment of debt17,119 (1,448)
Impairment and restructuring costs56,828 76,800 
Inventory valuation adjustment407,921 — 
Deferred income taxes(2,746)(7,523)
Other adjustments to reconcile net loss to cash provided by (used in) operating activities15,249 4,761 
Changes in operating assets and liabilities:
Accounts receivable(82,312)(5,585)
Mortgage loans held for sale223,990 (294,251)
Inventory(3,826,713)345,277 
Prepaid expenses and other assets(81,614)(15,957)
Contract cost assets(26,323)(42,004)
Lease liabilities(29,276)(2,149)
Accounts payable4,699 12,972 
Accrued expenses and other current liabilities61,462 15,321 
Accrued compensation and benefits13,203 9,861 
Deferred revenue789 9,248 
Other long-term liabilities(11,378)10,175 
Net cash provided by (used in) operating activities(3,176,694)424,197 
Investing activities
Proceeds from maturities of investments2,206,344 2,230,705 
Proceeds from sales of investments— 116,394 
Purchases of investments(516,346)(3,287,071)
Purchases of property and equipment(73,305)(84,940)
Purchases of intangible assets(31,094)(23,577)
Proceeds from sale of equity investment— 10,000 
Cash paid for acquisition, net(497,320)— 
Net cash provided by (used in) investing activities1,088,279 (1,038,489)
Financing activities
Proceeds from issuance of convertible senior notes, net of issuance costs— 553,282 
Proceeds from issuance of Class C capital stock, net of issuance costs544,557 411,522 
Proceeds from issuance of term loan, net of issuance costs1,138,227 — 
Proceeds from borrowings on credit facilities3,618,299 348,684 
Repayments of borrowings on credit facilities(1,779,869)(679,042)
Net borrowings (repayments) on warehouse lines of credit and repurchase agreements(197,083)278,616 
Repurchases of Class C capital stock(302,297)— 
Settlement of convertible senior notes(1,297)(194,768)
Proceeds from exercise of stock options127,222 444,028 
Value of equity awards withheld for tax liability(129)(4)
Net cash provided by financing activities3,147,630 1,162,318 
Net increase in cash, cash equivalents and restricted cash during period1,059,215 548,026 
Cash, cash equivalents and restricted cash at beginning of period1,778,935 1,230,909 
Cash, cash equivalents and restricted cash at end of period$2,838,150 $1,778,935 
Supplemental disclosures of cash flow information
Cash paid for interest$108,928 $50,755 


Noncash transactions:
Beneficial interests in securitizations$63,289 $— 
Write-off of fully amortized intangible assets57,995 62,622 
Write-off of fully depreciated property and equipment48,626 115,086 
Capitalized share-based compensation30,372 16,557 
Property and equipment purchased on account1,357 335 

Non-GAAP Net Income (Loss) per Share
Our presentation of non-GAAP net income (loss) per share excludes the impact of share-based compensation expense, impairment and restructuring costs, acquisition-related costs, the gain (loss) on extinguishment of debt 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 (loss) per share as supplemental information to investors, as we believe the exclusion of share-based compensation expense, impairment and restructuring costs, acquisition-related costs, the gain (loss) on extinguishment of debt and income taxes facilitates investors’ operating performance comparisons on a period-to-period basis. You should not consider non-GAAP net income (loss) 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 (loss), adjusted, to net income (loss), as reported on a GAAP basis, and the calculation of non-GAAP net income (loss) per share - basic and diluted, for each of the periods presented (in thousands, except per share data, unaudited):
Three Months Ended
December 31,		Year Ended
December 31,
 2021202020212020
Net income (loss), as reported$(261,208)$46,036 $(527,777)$(162,115)
Share-based compensation expense80,213 52,445 311,686 197,550 
Impairment and restructuring costs72,173 — 72,173 76,800 
Acquisition costs892 — 8,615 — 
Loss (gain) on extinguishment of debt — 4,943 17,119 (1,448)
Income tax expense (benefit)1,854 601 1,263 (7,523)
Net income (loss), adjusted$(106,076)$104,025 $(116,921)$103,264 
Non-GAAP net income (loss) per share:
Basic$(0.42)$0.44 $(0.47)$0.46 
Diluted$(0.42)$0.41 $(0.47)$0.44 
Weighted-average shares outstanding:
Basic254,013 235,341 249,937 223,848 
Diluted254,013 251,499 249,937 235,499 
Diluted non-GAAP net income (loss) 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 (loss) 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 (loss) per share calculations (in thousands, unaudited):
Three Months Ended
December 31,		Year Ended
December 31,
 2021202020212020
Denominator for basic calculation254,013 235,341 249,937 223,848 
Effect of dilutive securities:
     Option awards— 11,203 — 8,648 
     Unvested restricted stock units— 4,723 — 3,003 
Class A common stock issuable upon conversion of the convertible senior notes due in 2020— 232 — — 
          Denominator for dilutive calculation254,013 251,499 249,937 235,499 



Segment Results of Operations
The following tables present our segment results for the periods presented (in thousands, unaudited):
 Three Months Ended
December 31, 2021		Three Months Ended
December 31, 2020
HomesIMTMortgagesHomesIMTMortgages
Revenue$3,348,323 $483,169 $50,821 $304,145 $423,838 $60,969 
Cost of revenue3,331,920 61,597 21,695 281,040 47,698 14,000 
Gross profit16,403 421,572 29,126 23,105 376,140 46,969 
Operating expenses:
Sales and marketing187,110 139,700 27,682 38,647 107,598 19,869 
Technology and development32,132 74,130 7,879 26,375 64,337 6,698 
General and administrative31,796 68,847 19,444 21,406 58,836 13,096 
Impairment and restructuring costs71,247 — 926 — — — 
Acquisition-related costs— 892 — — — — 
Integration costs— 680 — — — — 
Total operating expenses322,285 284,249 55,931 86,428 230,771 39,663 
Income (loss) from operations(305,882)137,323 (26,805)(63,323)145,369 7,306 
Segment other income2,604 — 1,185 — — 1,146 
Segment interest expense (38,762)(32)(1,055)(3,298)— (1,147)
Income (loss) before income taxes (1)
$(342,040)$137,291 $(26,675)$(66,621)$145,369 $7,305 
 Year Ended
December 31, 2021		Year Ended
December 31, 2020
HomesIMTMortgagesHomesIMTMortgages
Revenue$6,015,778 $1,885,782 $245,816 $1,715,375 $1,450,232 $174,210 
Cost of revenue6,106,944 203,449 83,784 1,634,755 193,097 38,540 
Gross profit(91,166)1,682,333 162,032 80,620 1,257,135 135,670 
Operating expenses:
Sales and marketing414,797 552,592 108,846 190,818 440,517 59,784 
Technology and development124,513 317,663 32,220 106,218 260,277 23,677 
General and administrative118,790 258,161 71,822 87,034 224,757 44,931 
Impairment and restructuring costs71,247 — 926 — 73,900 2,900 
Acquisition-related costs— 8,615 — — — — 
Integration costs— 680 — — — — 
Total operating expenses729,347 1,137,711 213,814 384,070 999,451 131,292 
Income (loss) from operations(820,513)544,622 (51,782)(303,450)257,684 4,378 
Segment other income2,878 — 5,019 — 5,300 2,369 
Segment interest expense (63,829)(32)(5,060)(16,804)— (2,233)
Income (loss) before income taxes (1)$(881,464)$544,590 $(51,823)$(320,254)$262,984 $4,514 
(1) The following table presents the reconciliation of total segment income (loss) before income taxes to consolidated income (loss) before income taxes for the periods presented (in thousands, unaudited):


Three Months Ended
December 31,		Year Ended
December 31,
2021202020212020
Total segment income (loss) before income taxes$(231,424)$86,053 $(388,697)$(52,756)
Corporate interest expense(28,339)(36,130)(122,989)(136,190)
Corporate other income409 1,657 2,291 17,860 
Gain (loss) on extinguishment of debt— (4,943)(17,119)1,448 
Consolidated income (loss) before income taxes$(259,354)$46,637 $(526,514)$(169,638)
Certain corporate items are not directly attributable to any of our segments, including the gain (loss) on extinguishment of debt, interest income earned on our short-term investments included in other income and interest costs on our convertible senior notes included in interest expense.

Key Metrics
The following table presents our visits and average monthly unique users for each of the periods presented (in millions):
 Three Months Ended
December 31,		2020 to 2021
% Change
 20212020
  
Visits (1)2,283.9 2,232.3 2 %
Average monthly unique users (2)198.0 200.7 (1)%
(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 the number of homes sold through Zillow Offers for the periods presented:
Three Months Ended
December 31,		2020 to 2021
% Change
20212020
Number of homes sold8,353923805 %

The following table presents loan origination volume by purpose and in total for Zillow Home Loans for the periods presented (in thousands):
Three Months Ended
December 31,		2020 to 2021
% Change
20212020
Purchase loan origination volume$331,219 $143,549 131 %
Refinance loan origination volume559,576 687,104 (19)%
Total loan origination volume$890,795 $830,653 7 %

Non-GAAP Average Return on Homes Sold After Interest Expense

To provide investors with additional information regarding our Zillow Offers financial results, this Exhibit includes a calculation of Average Return on Homes Sold After Interest Expense, which is a non-GAAP financial measure. We have provided a reconciliation of Average Return on Homes Sold After Interest Expense to the most directly comparable GAAP financial measure, which is average gross profit (loss) per home for the Zillow Offers business.


We believe that Average Return on Homes Sold After Interest Expense is a useful financial measure to investors as it is one of the primary measures used by management in making investment decisions, measuring unit level economics and evaluating operating performance for the Zillow Offers business. The measure is intended to convey the unit level economics of homes sold during the period by presenting the average revenue and associated expenses directly attributed to the homes sold. We believe this average per unit measure facilitates meaningful period over period comparisons notwithstanding variability in the number of homes sold during a period and indicates ability to generate average returns on assets sold after considering home purchase costs, renovation costs, holding costs and selling costs.

We calculate the Average Return on Homes Sold After Interest Expense as revenue associated with homes sold during the period less direct costs attributable to those homes divided by the number of homes sold during the period. Specifically, direct costs include, with respect to each home sold during the period (1) home acquisition and renovation costs, which in turn include certain labor costs directly associated with these activities; (2) holding and selling costs; and (3) interest costs incurred.

Included in direct holding and interest expense amounts for the periods presented are holding and interest costs recorded as period expenses in prior periods associated with homes sold in the presented period, which are not calculated in accordance with, or as an alternative for, GAAP and should not be considered in isolation or as a substitute for results reported under GAAP. Excluded from certain of these direct cost amounts are costs recorded in the presented period related to homes that remain in inventory at the end of the period, as shown in the tables below. We make these period adjustments because we believe presenting Average Return on Homes Sold After Interest Expense in this manner provides a focused view on a subset of our assets - homes sold during the period - and reflecting costs associated with those homes sold from the time we acquire to the time we sell the home, which may be useful to investors.

Average Return on Homes Sold After Interest Expense is intended to illustrate the performance of homes sold during the period and is not intended to be a segment or company performance metric. Average Return on Homes Sold After Interest Expense is a supplemental measure of operating performance for a subset of assets and has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Average Return on Homes Sold After Interest Expense does not reflect capital expenditure requirements for such replacements or for new capital expenditure requirements;
•Average Return on Homes Sold After Interest Expense does not consider the potentially dilutive impact of share-based compensation;
•Average Return on Homes Sold After Interest Expense does not include period costs that were not eligible for inventory capitalization associated with homes held in inventory at the end of the period;
•Average Return on Homes Sold After Interest Expense does not reflect indirect expenses included in cost of revenue, sales and marketing, technology and development, or general and administrative expenses, some of which are recurring cash expenditures necessary to operate the business; and
•Average Return on Homes Sold After Interest Expense does not reflect income taxes.

On a GAAP basis, Zillow Offers average gross profit per home was $1,714 and $25,481, respectively, for the three months ended December 31, 2021 and 2020.



The following table presents the total return on homes sold after interest expense and the Average Return on Homes Sold After Interest Expense for the periods presented (unaudited):
Three Months Ended
December 31, 2021		Three Months Ended
December 31, 2020
TotalAverage
Per Home		TotalAverage
Per Home
Homes sold8,353 923 
Zillow Offers revenue$3,336,660,000 $399,456 $301,703,000 $326,872 
Operating costs:
Home acquisition costs (1)3,364,340,000 402,770 259,285,000 280,915 
Renovation costs (1)46,399,000 5,555 9,298,000 10,074 
Holding costs (1)(2)27,187,000 3,255 1,636,000 1,772 
Selling costs105,370,000 12,614 11,335,000 12,281 
Total operating costs3,543,296,000 424,194 281,554,000 305,042 
Interest expense (1)(2)23,986,000 2,871 2,422,000 2,624 
Return on homes sold after interest expense$(230,622,000)$(27,609)$17,727,000 $19,206 
(1) Amount excludes expenses incurred during the period that are not related to homes sold during the period.
(2) Holding costs and interest expense include $13.0 million and $7.8 million, respectively, of costs incurred in prior periods associated with homes sold in the fourth quarter of 2021 and $1.4 million and $0.6 million, respectively, of costs incurred in prior periods associated with homes sold in the fourth quarter of 2020.

The calculation of Average Return on Homes Sold After Interest Expense includes only those expenses directly attributed to the homes sold during the period. To arrive at return on homes sold after interest expense, the Company deducts from Zillow Offers gross profit (loss) (1) holding costs incurred in the presented period and prior periods for homes sold during the presented period that are included in sales and marketing expense, (2) selling costs incurred in the presented period for homes sold during the presented period that are included in sales and marketing expense and (3) interest expense incurred in the presented period and prior periods for homes sold during the presented period. The Company adds to Zillow Offers gross profit (loss) (1) inventory valuation adjustments recorded during the presented period associated with homes that remain in inventory at period end, net of inventory valuation adjustments recorded in prior periods related to homes sold in the presented period, and indirect expenses included in cost of revenue and (2) share-based compensation expense and depreciation and amortization expense included in cost of revenue. The following table presents the calculation of Zillow Offers average gross profit (loss) per home and Average Return on Homes Sold After Interest Expense and a reconciliation of return on homes sold after interest expense to Zillow Offers gross profit (loss) for the periods presented (unaudited):


Three Months Ended
December 31,
Calculation of Average Gross Profit per Home20212020
Zillow Offers revenue$3,336,660,000 $301,703,000 
Zillow Offers cost of revenue3,322,341,000 278,184,000 
Zillow Offers gross profit$14,319,000 $23,519,000 
Homes sold8,353 923 
Average Zillow Offers gross profit per home$1,714 $25,481 
Reconciliation of Non-GAAP Measure to Nearest GAAP Measure
Zillow Offers gross profit$14,319,000 $23,519,000 
Holding costs included in sales and marketing (1)(24,983,000)(67,000)
Selling costs included in sales and marketing (2)(105,370,000)(11,335,000)
Interest expense (3)(23,986,000)(2,422,000)
Direct and indirect expenses included in cost of revenue (4)(96,955,000)5,620,000 
Share-based compensation and depreciation and amortization included in cost of revenue 6,353,000 2,412,000 
Return on homes sold after interest expense$(230,622,000)$17,727,000 
Homes sold8,353 923 
Average return on homes sold after interest expense$(27,609)$19,206 
(1) Amount represents holding costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period and prior periods. These costs primarily include homeowners association dues, property taxes, insurance, utilities, and cleaning and maintenance costs incurred during the time a home is held for sale after the renovation period is complete. On a GAAP basis, the Company incurred a total of $35.3 million and $2.4 million of holding costs included in sales and marketing expense for the three months ended December 31, 2021 and 2020, respectively.
(2) Amount represents selling costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period. These costs primarily include agent commissions paid upon the sale of a home.
(3) Amount represents interest expense incurred related to homes sold in the presented period that was not eligible for inventory capitalization and was therefore expensed as a period cost in the presented period and prior periods.
(4) Amount includes inventory valuation adjustments recorded during the period associated with homes that remain in inventory at period end, net of inventory valuation adjustments recorded in prior periods related to homes sold in the presented period, holding costs incurred in the renovation period that are eligible for inventory capitalization and are expensed in the period presented when the associated home is sold, as well as corporate costs allocated to Zillow Offers such as headcount expenses and hosting-related costs related to the operation of our website.



On a GAAP basis, Zillow Offers average gross profit (loss) per home was $(6,462) and $15,879, respectively, for the years ended December 31, 2021 and 2020.

The following table presents the total return on homes sold after interest expense and the Average Return on Homes Sold After Interest Expense for the periods presented (unaudited):
Year Ended
December 31, 2021		Year Ended
December 31, 2020
TotalAverage
Per Home		TotalAverage
Per Home
Homes sold15,436 5,337 
Zillow Offers revenue$5,982,357,000 $387,559 $1,710,535,000 $320,505 
Operating costs:
Home acquisition costs (1)5,721,916,000 370,686 1,527,733,000 286,253 
Renovation costs (1)110,427,000 7,154 76,691,000 14,370 
Holding costs (1)(2)43,578,000 2,823 19,977,000 3,743 
Selling costs202,230,000 13,101 71,344,000 13,368 
Total operating costs6,078,151,000 393,764 1,695,745,000 317,734 
Interest expense (1)(2)37,749,000 2,446 22,130,000 4,146 
Return on homes sold after interest expense$(133,543,000)$(8,651)$(7,340,000)$(1,375)
(1) Amount excludes expenses incurred during the period that are not related to homes sold during the period.
(2) Holding costs and interest expense include $2.3 million and $1.6 million, respectively, of costs incurred in prior periods associated with homes sold in the year ended December 31, 2021 and $7.6 million and $9.0 million, respectively, of costs incurred in prior periods associated with homes sold in the year ended December 31, 2020.



The following table presents the calculation of Zillow Offers average gross profit (loss) per home and Average Return on Homes Sold After Interest Expense and a reconciliation of return on homes sold after interest expense to Zillow Offers gross profit (loss) for the periods presented (unaudited):
Year Ended
December 31,
Calculation of Average Gross Profit (Loss) per Home20212020
Zillow Offers revenue$5,982,357,000 $1,710,535,000 
Zillow Offers cost of revenue6,082,103,000 1,625,791,000 
Zillow Offers gross profit (loss)$(99,746,000)$84,744,000 
Homes sold15,436 5,337 
Average Zillow Offers gross profit (loss) per home$(6,462)$15,879 
Reconciliation of Non-GAAP Measure to Nearest GAAP Measure
Zillow Offers gross profit (loss)$(99,746,000)$84,744,000 
Holding costs included in sales and marketing (1)(39,125,000)(18,075,000)
Selling costs included in sales and marketing (2)(202,230,000)(71,344,000)
Interest expense (3)(37,749,000)(22,130,000)
Direct and indirect expenses included in cost of revenue (4)229,534,000 10,947,000 
Share-based compensation and depreciation and amortization included in cost of revenue 15,773,000 8,518,000 
Return on homes sold after interest expense$(133,543,000)$(7,340,000)
Homes sold15,436 5,337 
Average return on homes sold after interest expense$(8,651)$(1,375)
(1) Amount represents holding costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period and prior periods. These costs primarily include homeowners association dues, property taxes, insurance, utilities, and cleaning and maintenance costs incurred during the time a home is held for sale after the renovation period is complete. On a GAAP basis, the Company incurred a total of $62.3 million and $11.3 million of holding costs included in sales and marketing expense for the years ended December 31, 2021 and 2020, respectively.
(2) Amount represents selling costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period. These costs primarily include agent commissions paid upon the sale of a home.
(3) Amount represents interest expense incurred related to homes sold in the presented period that was not eligible for inventory capitalization and was therefore expensed as a period cost in the presented period and prior periods.
(4) Amount includes inventory valuation adjustments recorded during the period associated with homes that remain in inventory at period end, net of inventory valuation adjustments recorded in prior periods related to homes sold in the presented period, holding costs incurred in the renovation period that are eligible for inventory capitalization and are expensed in the period presented when the associated home is sold, as well as corporate costs allocated to Zillow Offers such as headcount expenses and hosting-related costs related to the operation of our website.



Zillow Offers Supplemental Information

The weighted average days held for homes in inventory as of December 31, 2021 was 75 days. The weighted average days held for homes sold during the three months and year ended December 31, 2021 was 92 and 83 days, respectively.

The following table presents information on the geographic concentration of homes by state for each state where the value of homes in inventory exceeds 10% of our total inventory as of the date presented (in thousands, except number of homes and percentage of inventory, unaudited):

December 31, 2021
GeographyNumber of HomesInventory Balance% of Total Inventory
California1,364 $815,933 21 %
Florida2,025 679,949 17 
Texas1,645 533,907 14 
Georgia1,277 413,100 11 
All other states3,720 1,469,773 37 
Total10,031 $3,912,662 100 %