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Published: 2023-08-02 00:00:00 ET
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EX-99.2 3 q22023992.htm EX-99.2 Document

Exhibit 99.2


Reported Consolidated Results

ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
June 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$1,566 $1,466 
Short-term investments1,745 1,896 
Accounts receivable, net
90 72 
Mortgage loans held for sale73 41 
Prepaid expenses and other current assets155 126 
Restricted cash2 2 
Total current assets3,631 3,603 
Contract cost assets23 23 
Property and equipment, net309 271 
Right of use assets108 126 
Goodwill2,374 2,374 
Intangible assets, net153 154 
Other assets20 12 
Total assets$6,618 $6,563 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$21 $20 
Accrued expenses and other current liabilities118 90 
Accrued compensation and benefits50 48 
Borrowings under credit facilities66 37 
Deferred revenue49 44 
Lease liabilities, current portion29 31 
Total current liabilities333 270 
Lease liabilities, net of current portion126 139 
Convertible senior notes1,663 1,660 
Other long-term liabilities10 12 
Total liabilities2,132 2,081 
Shareholders’ equity:
Class A common stock
— — 
Class B common stock
— — 
Class C capital stock
— — 
Additional paid-in capital6,174 6,109 
Accumulated other comprehensive loss(19)(15)
Accumulated deficit(1,669)(1,612)
Total shareholders’ equity4,486 4,482 
Total liabilities and shareholders’ equity$6,618 $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
June 30,		Six Months Ended
June 30,
 2023202220232022
Revenue$506 $504 $975 $1,040 
Cost of revenue (1)104 97 196 189 
Gross profit402 407 779 851 
Operating expenses:
Sales and marketing (1) 173 163 329 337 
Technology and development (1)140 119 277 227 
General and administrative (1)153 120 276 232 
Impairment and restructuring costs2 — 8 14 
Acquisition-related costs1 — 1 — 
Total operating expenses469 402 891 810 
Income (loss) from continuing operations(67)5 (112)41 
Other income42 5 74 7 
Interest expense(9)(9)(18)(17)
Income (loss) from continuing operations before income taxes(34)1 (56)31 
Income tax benefit (expense)(1)9 (1)4 
Net income (loss) from continuing operations(35)10 (57)35 
Net loss from discontinued operations, net of income taxes— (2)— (11)
Net income (loss)$(35)$8 $(57)$24 
Net income (loss) from continuing operations per share:
Basic$(0.15)$0.04 $(0.24)$0.14 
Diluted$(0.15)$0.04 $(0.24)$0.13 
Net income (loss) per share:
Basic$(0.15)$0.03 $(0.24)$0.10 
Diluted$(0.15)$0.03 $(0.24)$0.09 
Weighted-average shares outstanding:
Basic233,629 243,942 234,023 246,229 
Diluted233,629 245,163 234,023 248,544 
(1) Includes share-based compensation expense as follows:
Cost of revenue$4 $4 $8 $7 
Sales and marketing19 14 35 25 
Technology and development42 38 81 66 
General and administrative65 43 109 78 
Share-based compensation - continuing operations$130 $99 $233 $176 
Adjusted EBITDA (2)$111 $145 $215 $311 
(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)
 Six Months Ended
June 30,
 20232022
Operating activities
Net income (loss)$(57)$24 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization85 87 
Share-based compensation233 193 
Amortization of right of use assets12 11 
Amortization of contract cost assets11 16 
Amortization of debt discount and debt issuance costs3 24 
Loss on extinguishment of debt— 21 
Accretion of bond discount(20)(11)
Other adjustments to reconcile net income (loss) to net cash provided by operating activities 1 11 
Changes in operating assets and liabilities:
Accounts receivable(19)81 
Mortgage loans held for sale(32)46 
Inventory— 3,881 
Prepaid expenses and other assets(30)4 
Contract cost assets(11)(8)
Lease liabilities(15)(8)
Accounts payable— (1)
Accrued expenses and other current liabilities27 (69)
Accrued compensation and benefits2 (47)
Deferred revenue5 1 
Other long-term liabilities(2)(1)
Net cash provided by operating activities193 4,255 
Investing activities
Proceeds from maturities of investments806 160 
Purchases of investments(638)(1,023)
Purchases of property and equipment(66)(60)
Purchases of intangible assets(18)(11)
Net cash provided by (used in) investing activities84 (934)
Financing activities
Repayments of borrowings on credit facilities— (2,205)
Net borrowings (repayments) on warehouse line of credit and repurchase agreements29 (58)
Repurchases of Class A common stock and Class C capital stock(236)(597)
Settlement of long-term debt— (1,158)
Proceeds from exercise of stock options30 42 
Net cash used in financing activities(177)(3,976)
Net increase (decrease) in cash, cash equivalents and restricted cash during period100 (655)
Cash, cash equivalents and restricted cash at beginning of period1,468 2,838 
Cash, cash equivalents and restricted cash at end of period$1,568 $2,183 
Supplemental disclosures of cash flow information
Noncash transactions:
Capitalized share-based compensation$38 $20 
Write-off of fully depreciated property and equipment16 33 
Write-off of fully amortized intangible assets2 196 
Recognition of operating right of use assets and lease liabilities— 14 
Settlement of beneficial interests in securitizations— 79 



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, acquisition-related 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, acquisition-related 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
June 30,		Six Months Ended
June 30,
 2023202220232022
Net income (loss), as reported
$(35)$8 $(57)$24 
Loss from discontinued operations, net of income taxes— 2 — 11 
Share-based compensation130 99 233 176 
Impairment and restructuring costs2 — 8 14 
Acquisition-related costs1 — 1 — 
Income taxes1 (9)1 (4)
Net income, adjusted$99 $100 $186 $221 
Non-GAAP net income per share:
Basic$0.42 $0.41 $0.80 $0.90 
Diluted$0.39 $0.38 $0.74 $0.83 
Weighted-average shares outstanding:
Basic233,629 243,942 234,023 246,229 
Diluted263,455 270,609 262,786 273,990 
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
June 30,		Six Months Ended
June 30,
 2023202220232022
Denominator for basic calculation233,629 243,942 234,023 246,229 
Effect of dilutive securities:
     Option awards1,774 964 1,516 1,757 
     Unvested restricted stock units2,606 257 1,801 558 
Convertible senior notes due in 2024 and 202625,446 25,446 25,446 25,446 
          Denominator for dilutive calculation263,455 270,609 262,786 273,990 




Key Metrics
The following table presents our visits and average monthly unique users for the periods presented (in millions, except percentages):
 Three Months Ended
June 30,		2022 to 2023
% Change		Six Months Ended
June 30,		2022 to 2023
% Change
 2023202220232022
Visits (1)2,653 2,897 (8)%5,1405,524(7)%
Average monthly unique users (2)226 234 (3)%219 222 (1)%
(1) Visits includes groups of interactions by users with the Zillow, Trulia and StreetEasy mobile apps and websites. Zillow and StreetEasy measure visits with Google Analytics and Trulia measures 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
June 30,		2022 to 2023
% Change		Six Months Ended
June 30,		2022 to 2023
% Change
2023202220232022
Purchase loan origination volume$336 $194 73%$595 $317 88%
Refinance loan origination volume4 136 (97)%7 714 (99)%
Total loan origination volume$340 $330 3%$602 $1,031 (42)%