March 31, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 3,401,762 | $ | 1,703,130 | |||||||
Short-term investments | 1,294,051 | 2,218,108 | |||||||||
Accounts receivable, net | 82,461 | 69,940 | |||||||||
Mortgage loans held for sale | 274,319 | 330,758 | |||||||||
Inventory | 472,397 | 491,293 | |||||||||
Prepaid expenses and other current assets | 107,877 | 75,846 | |||||||||
Restricted cash | 120,713 | 75,805 | |||||||||
Total current assets | 5,753,580 | 4,964,880 | |||||||||
Contract cost assets | 50,182 | 50,719 | |||||||||
Property and equipment, net | 190,234 | 196,152 | |||||||||
Right of use assets | 180,610 | 187,960 | |||||||||
Goodwill | 1,984,907 | 1,984,907 | |||||||||
Intangible assets, net | 87,711 | 94,767 | |||||||||
Other assets | 8,678 | 7,175 | |||||||||
Total assets | $ | 8,255,902 | $ | 7,486,560 | |||||||
Liabilities and shareholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 17,044 | $ | 18,974 | |||||||
Accrued expenses and other current liabilities | 121,692 | 94,487 | |||||||||
Accrued compensation and benefits | 49,844 | 47,666 | |||||||||
Borrowings under credit facilities | 662,175 | 670,209 | |||||||||
Deferred revenue | 54,192 | 48,995 | |||||||||
Lease liabilities, current portion | 28,465 | 28,310 | |||||||||
Total current liabilities | 933,412 | 908,641 | |||||||||
Lease liabilities, net of current portion | 200,762 | 207,723 | |||||||||
Convertible senior notes | 1,597,205 | 1,613,523 | |||||||||
Other long-term liabilities | 14,485 | 14,857 | |||||||||
Total liabilities | 2,745,864 | 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 capital | 6,596,850 | 5,880,883 | |||||||||
Accumulated other comprehensive income | 454 | 164 | |||||||||
Accumulated deficit | (1,087,291) | (1,139,255) | |||||||||
Total shareholders’ equity | 5,510,038 | 4,741,816 | |||||||||
Total liabilities and shareholders’ equity | $ | 8,255,902 | $ | 7,486,560 |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Revenue: | |||||||||||
Homes | $ | 704,152 | $ | 769,873 | |||||||
IMT | 446,328 | 330,666 | |||||||||
Mortgages | 67,960 | 25,282 | |||||||||
Total revenue | 1,218,440 | 1,125,821 | |||||||||
Cost of revenue (exclusive of amortization) (1)(2): | |||||||||||
Homes | 640,618 | 732,199 | |||||||||
IMT | 28,016 | 24,318 | |||||||||
Mortgages | 18,396 | 5,155 | |||||||||
Total cost of revenue | 687,030 | 761,672 | |||||||||
Sales and marketing (2) | 193,593 | 204,648 | |||||||||
Technology and development (2) | 148,856 | 134,918 | |||||||||
General and administrative (2) | 100,551 | 92,285 | |||||||||
Impairment costs | — | 76,800 | |||||||||
Acquisition-related costs | 817 | — | |||||||||
Total costs and expenses | 1,130,847 | 1,270,323 | |||||||||
Income (loss) from operations | 87,593 | (144,502) | |||||||||
Loss on extinguishment of debt | (1,403) | — | |||||||||
Other income | 2,439 | 9,593 | |||||||||
Interest expense | (39,555) | (37,592) | |||||||||
Income (loss) before income taxes | 49,074 | (172,501) | |||||||||
Income tax benefit | 2,890 | 9,228 | |||||||||
Net income (loss) | $ | 51,964 | $ | (163,273) | |||||||
Net income (loss) per share: | |||||||||||
Basic | $ | 0.21 | $ | (0.78) | |||||||
Diluted | $ | 0.20 | $ | (0.78) | |||||||
Weighted-average shares outstanding: | |||||||||||
Basic | 243,234 | 210,674 | |||||||||
Diluted | 259,346 | 210,674 | |||||||||
_________________ (1) Amortization of website development costs and intangible assets included in technology and development | $ | 20,838 | $ | 17,184 | |||||||
(2) Includes share-based compensation expense as follows: | |||||||||||
Cost of revenue | $ | 2,386 | $ | 1,173 | |||||||
Sales and marketing | 9,887 | 6,993 | |||||||||
Technology and development | 26,393 | 18,917 | |||||||||
General and administrative | 25,007 | 16,712 | |||||||||
Total | $ | 63,673 | $ | 43,795 | |||||||
Other Financial Data: | |||||||||||
Income (loss) before income taxes: | |||||||||||
Homes segment | $ | (58,474) | $ | (97,958) | |||||||
IMT segment | 143,575 | (41,507) | |||||||||
Mortgages segment | (1,820) | (13,145) | |||||||||
Corporate items (3) | (34,207) | (19,891) | |||||||||
Total income (loss) before income taxes | $ | 49,074 | $ | (172,501) | |||||||
Adjusted EBITDA (4): | |||||||||||
Homes segment | $ | (33,948) | $ | (74,995) | |||||||
IMT segment | 208,583 | 85,717 | |||||||||
Mortgages segment | 6,347 | (5,603) | |||||||||
Total Adjusted EBITDA | $ | 180,982 | $ | 5,119 | |||||||
(3) Certain corporate items are not directly attributable to any of our segments, including the 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. (4) 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. |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Operating activities | |||||||||||
Net income (loss) | $ | 51,964 | $ | (163,273) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 28,899 | 29,026 | |||||||||
Share-based compensation expense | 63,673 | 43,795 | |||||||||
Amortization of right of use assets | 7,350 | 6,465 | |||||||||
Amortization of contract cost assets | 10,130 | 8,415 | |||||||||
Amortization of debt discount and debt issuance costs | 25,271 | 22,547 | |||||||||
Loss on extinguishment of debt | 1,403 | — | |||||||||
Impairment costs | — | 76,800 | |||||||||
Deferred income taxes | (2,890) | (9,228) | |||||||||
Loss on disposal of property and equipment and other assets | 4,418 | 1,952 | |||||||||
Credit loss expense | 128 | 558 | |||||||||
Net loss on investment securities | — | 434 | |||||||||
Amortization (accretion) of bond premium (discount) | 4,014 | (473) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (12,649) | (5,335) | |||||||||
Mortgage loans held for sale | 56,439 | (341) | |||||||||
Inventory | 18,893 | 302,593 | |||||||||
Prepaid expenses and other assets | (28,643) | (2,916) | |||||||||
Contract cost assets | (9,593) | (9,771) | |||||||||
Lease liabilities | (6,806) | (1,625) | |||||||||
Accounts payable | (2,235) | 7,673 | |||||||||
Accrued expenses and other current liabilities | 24,889 | 4,588 | |||||||||
Accrued compensation and benefits | 2,178 | (4,967) | |||||||||
Deferred revenue | 5,197 | (4,400) | |||||||||
Other long-term liabilities | (372) | (527) | |||||||||
Net cash provided by operating activities | 241,658 | 301,990 | |||||||||
Investing activities | |||||||||||
Proceeds from maturities of investments | 920,304 | 296,272 | |||||||||
Proceeds from sales of investments | — | 53,997 | |||||||||
Purchases of investments | — | (58,459) | |||||||||
Purchases of property and equipment | (11,485) | (32,966) | |||||||||
Purchases of intangible assets | (4,485) | (4,503) | |||||||||
Net cash provided by investing activities | 904,334 | 254,341 | |||||||||
Financing activities | |||||||||||
Proceeds from issuance of Class C capital stock, net of issuance costs | 544,557 | — | |||||||||
Proceeds from borrowings on credit facilities | 126,010 | 34,460 | |||||||||
Repayments of borrowings on credit facilities | (88,340) | (294,150) | |||||||||
Net borrowings (repayments) on warehouse line of credit and repurchase agreements | (45,704) | 4,386 | |||||||||
Proceeds from exercise of stock options | 61,149 | 92,202 | |||||||||
Value of equity awards withheld for tax liability | (124) | — | |||||||||
Net cash provided by (used in) financing activities | 597,548 | (163,102) | |||||||||
Net increase in cash, cash equivalents and restricted cash during period | 1,743,540 | 393,229 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 1,778,935 | 1,230,909 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 3,522,475 | $ | 1,624,138 | |||||||
Supplemental disclosures of cash flow information | |||||||||||
Cash paid for interest | $ | 14,191 | $ | 17,038 | |||||||
Noncash transactions: | |||||||||||
Capitalized share-based compensation | $ | 3,713 | $ | 3,670 | |||||||
Write-off of fully depreciated property and equipment | $ | 11,603 | $ | 4,143 | |||||||
Write-off of fully amortized intangible assets | $ | 1,300 | $ | — | |||||||
Property and equipment purchased on account | $ | 905 | $ | 9,445 |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net income (loss), as reported | $ | 51,964 | $ | (163,273) | |||||||
Share-based compensation expense | 63,673 | 43,795 | |||||||||
Impairment costs | — | 76,800 | |||||||||
Acquisition-related costs | 817 | — | |||||||||
Loss on extinguishment of debt | 1,403 | — | |||||||||
Income tax benefit | (2,890) | (9,228) | |||||||||
Net income (loss), adjusted | $ | 114,967 | $ | (51,906) | |||||||
Non-GAAP net income (loss) per share: | |||||||||||
Basic | $ | 0.47 | $ | (0.25) | |||||||
Diluted | $ | 0.44 | $ | (0.25) | |||||||
Weighted-average shares outstanding: | |||||||||||
Basic | 243,234 | 210,674 | |||||||||
Diluted | 259,346 | 210,674 |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Denominator for basic calculation | 243,234 | 210,674 | |||||||||
Effect of dilutive securities: | |||||||||||
Option awards | 12,437 | — | |||||||||
Unvested restricted stock units | 3,675 | — | |||||||||
Denominator for dilutive calculation | 259,346 | 210,674 |
Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||||||||
Homes | IMT | Mortgages | Homes | IMT | Mortgages | ||||||||||||||||||||||||||||||
Revenue | $ | 704,152 | $ | 446,328 | $ | 67,960 | $ | 769,873 | $ | 330,666 | $ | 25,282 | |||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Cost of revenue | 640,618 | 28,016 | 18,396 | 732,199 | 24,318 | 5,155 | |||||||||||||||||||||||||||||
Sales and marketing | 55,025 | 113,298 | 25,270 | 71,589 | 120,173 | 12,886 | |||||||||||||||||||||||||||||
Technology and development | 37,139 | 101,893 | 9,824 | 32,538 | 95,028 | 7,352 | |||||||||||||||||||||||||||||
General and administrative | 25,532 | 58,729 | 16,290 | 23,421 | 58,754 | 10,110 | |||||||||||||||||||||||||||||
Impairment costs | — | — | — | — | 73,900 | 2,900 | |||||||||||||||||||||||||||||
Acquisition-related costs | — | 817 | — | — | — | — | |||||||||||||||||||||||||||||
Total costs and expenses | 758,314 | 302,753 | 69,780 | 859,747 | 372,173 | 38,403 | |||||||||||||||||||||||||||||
Income (loss) from operations | (54,162) | 143,575 | (1,820) | (89,874) | (41,507) | (13,121) | |||||||||||||||||||||||||||||
Segment other income | — | — | 1,732 | — | — | 202 | |||||||||||||||||||||||||||||
Segment interest expense | (4,312) | — | (1,732) | (8,084) | — | (226) | |||||||||||||||||||||||||||||
Income (loss) before income taxes (1) | $ | (58,474) | $ | 143,575 | $ | (1,820) | $ | (97,958) | $ | (41,507) | $ | (13,145) | |||||||||||||||||||||||
(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): |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Total segment income (loss) before income taxes | $ | 83,281 | $ | (152,610) | |||||||
Corporate interest expense | (33,511) | (29,282) | |||||||||
Corporate other income | 707 | 9,391 | |||||||||
Loss on extinguishment of debt | (1,403) | — | |||||||||
Consolidated income (loss) before income taxes | $ | 49,074 | $ | (172,501) | |||||||
Certain corporate items are not directly attributable to any of our segments, including the 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. |
Three Months Ended March 31, | 2020 to 2021 % Change | ||||||||||||||||
2021 | 2020 | ||||||||||||||||
Visits (1) | 2,511.2 | 2,117.6 | 19 | % | |||||||||||||
Average monthly unique users (2) | 220.5 | 192.5 | 15 | % |
Three Months Ended March 31, | 2020 to 2021 % Change | ||||||||||||||||
2021 | 2020 | ||||||||||||||||
Number of homes sold | 1,965 | 2,394 | (18) | % |
Three Months Ended March 31, | 2020 to 2021 % Change | ||||||||||||||||
2021 | 2020 | ||||||||||||||||
Purchase loan origination volume | $ | 115,238 | $ | 112,221 | 3 | % | |||||||||||
Refinance loan origination volume | 1,051,807 | 24,809 | 4,140 | % | |||||||||||||
Total loan origination volume | $ | 1,167,045 | $ | 137,030 | 752 | % |
Three Months Ended | |||||||||||||||||
December 31, 2020 | September 30, 2020 | June 30, 2020 | |||||||||||||||
Purchase loan origination volume | $ | 143,549 | $ | 163,728 | $ | 120,831 | |||||||||||
Refinance loan origination volume | 687,104 | 353,360 | 147,475 | ||||||||||||||
Total loan origination volume | $ | 830,653 | $ | 517,088 | $ | 268,306 |
Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | ||||||||||||||||||||||
Total | Average Per Home | Total | Average Per Home | ||||||||||||||||||||
Homes sold | 1,965 | 2,394 | |||||||||||||||||||||
Zillow Offers revenue | $ | 700,974,000 | $ | 356,730 | $ | 769,112,000 | $ | 321,266 | |||||||||||||||
Operating costs: | |||||||||||||||||||||||
Home acquisition costs (1) | 610,194,000 | 310,531 | 689,654,000 | 288,076 | |||||||||||||||||||
Renovation costs (1) | 20,822,000 | 10,596 | 36,591,000 | 15,284 | |||||||||||||||||||
Holding costs (1)(2) | 4,552,000 | 2,317 | 9,618,000 | 4,018 | |||||||||||||||||||
Selling costs | 26,911,000 | 13,695 | 32,913,000 | 13,748 | |||||||||||||||||||
Total operating costs | 662,479,000 | 337,139 | 768,776,000 | 321,126 | |||||||||||||||||||
Interest expense (1)(2) | 3,845,000 | 1,957 | 11,056,000 | 4,618 | |||||||||||||||||||
Return on homes sold after interest expense | $ | 34,650,000 | $ | 17,634 | $ | (10,720,000) | $ | (4,478) | |||||||||||||||
(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 $1.7 million and $1.5 million, respectively, of costs incurred in prior periods associated with homes sold in the first quarter of 2021 and $5.2 million and $6.6 million, respectively, of costs incurred in prior periods associated with homes sold in the first quarter of 2020. |
Three Months Ended March 31, | |||||||||||
Calculation of Average Gross Profit per Home | 2021 | 2020 | |||||||||
Zillow Offers revenue | $ | 700,974,000 | $ | 769,112,000 | |||||||
Zillow Offers cost of revenue | 636,828,000 | 730,537,000 | |||||||||
Zillow Offers gross profit | $ | 64,146,000 | $ | 38,575,000 | |||||||
Homes sold | 1,965 | 2,394 | |||||||||
Average Zillow Offers gross profit per home | $ | 32,644 | $ | 16,113 | |||||||
Reconciliation of Non-GAAP Measure to Nearest GAAP Measure | |||||||||||
Zillow Offers gross profit | $ | 64,146,000 | $ | 38,575,000 | |||||||
Holding costs included in sales and marketing (1) | (3,879,000) | (9,618,000) | |||||||||
Selling costs included in sales and marketing (2) | (26,911,000) | (32,913,000) | |||||||||
Interest expense (3) | (3,845,000) | (11,056,000) | |||||||||
Direct and indirect expenses included in cost of revenue (4) | 4,478,000 | 3,830,000 | |||||||||
Share-based compensation expense and depreciation and amortization expense included in cost of revenue | 661,000 | 462,000 | |||||||||
Return on homes sold after interest expense | $ | 34,650,000 | $ | (10,720,000) | |||||||
Homes sold | 1,965 | 2,394 | |||||||||
Average return on homes sold after interest expense | $ | 17,634 | $ | (4,478) | |||||||
(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 $3.9 million and $5.3 million of holding costs included in sales and marketing expense for the three months ended March 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. |