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Published: 2023-11-01 16:12:32 ET
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EX-99.2 3 q32023992.htm EX-99.2 Document

Exhibit 99.2


Reported Consolidated Results

ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)
September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$1,846 $1,466 
Short-term investments1,421 1,896 
Accounts receivable, net
97 72 
Mortgage loans held for sale96 41 
Prepaid expenses and other current assets149 126 
Restricted cash3 2 
Total current assets3,612 3,603 
Contract cost assets23 23 
Property and equipment, net324 271 
Right of use assets103 126 
Goodwill2,416 2,374 
Intangible assets, net162 154 
Other assets16 12 
Total assets$6,656 $6,563 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$28 $20 
Accrued expenses and other current liabilities87 90 
Accrued compensation and benefits52 48 
Borrowings under credit facilities91 37 
Deferred revenue48 44 
Lease liabilities, current portion28 31 
Convertible senior notes, current portion607 — 
Total current liabilities941 270 
Lease liabilities, net of current portion119 139 
Convertible senior notes, net of current portion1,057 1,660 
Other long-term liabilities10 12 
Total liabilities2,127 2,081 
Shareholders’ equity:
Class A common stock
— — 
Class B common stock
— — 
Class C capital stock
— — 
Additional paid-in capital6,247 6,109 
Accumulated other comprehensive loss(21)(15)
Accumulated deficit(1,697)(1,612)
Total shareholders’ equity4,529 4,482 
Total liabilities and shareholders’ equity$6,656 $6,563 



ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share data, which are presented in thousands, and per share data, unaudited)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Revenue$496 $483 $1,471 $1,523 
Cost of revenue (1)110 89 306 278 
Gross profit386 394 1,165 1,245 
Operating expenses:
Sales and marketing (1) 164 165 493 502 
Technology and development (1)142 142 419 369 
General and administrative (1)131 138 407 370 
Impairment and restructuring costs (1)
1 — 9 14 
Acquisition-related costs1 — 2 — 
Total operating expenses439 445 1,330 1,255 
Loss from continuing operations(53)(51)(165)(10)
Other income, net34 12 108 19 
Interest expense(9)(9)(27)(26)
Loss from continuing operations before income taxes(28)(48)(84)(17)
Income tax benefit (expense)— (3)(1)1 
Net loss from continuing operations(28)(51)(85)(16)
Net loss from discontinued operations, net of income taxes— (2)— (13)
Net loss$(28)$(53)$(85)$(29)
Net loss from continuing operations per share - basic and diluted$(0.12)$(0.21)$(0.36)$(0.07)
Net loss per share - basic and diluted$(0.12)$(0.22)$(0.36)$(0.12)
Weighted-average shares outstanding - basic and diluted233,295 240,080 235,560 244,157 
(1) Includes share-based compensation expense as follows:
Cost of revenue$4 $5 $12 $12 
Sales and marketing18 21 53 46 
Technology and development42 57 123 123 
General and administrative45 64 154 142 
Impairment and restructuring costs
— — — 2 
Share-based compensation - continuing operations$109 $147 $342 $325 
Adjusted EBITDA (2)$107 $130 $322 $441 
(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 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.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
 Nine Months Ended
September 30,
 20232022
Operating activities
Net loss$(85)$(29)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization134 121 
Share-based compensation342 341 
Amortization of right of use assets18 17 
Amortization of contract cost assets16 23 
Amortization of debt discount and debt issuance costs4 24 
Loss on extinguishment of debt— 21 
Accretion of bond discount(29)(11)
Other adjustments to reconcile net loss to net cash provided by operating activities 3 11 
Changes in operating assets and liabilities:
Accounts receivable(26)76 
Mortgage loans held for sale(55)58 
Inventory— 3,904 
Prepaid expenses and other assets(22)(13)
Contract cost assets(16)(13)
Lease liabilities(24)(15)
Accounts payable7 1 
Accrued expenses and other current liabilities(3)(49)
Accrued compensation and benefits4 (52)
Deferred revenue4 (1)
Other long-term liabilities(4)6 
Net cash provided by operating activities268 4,420 
Investing activities
Proceeds from maturities of investments1,136 455 
Purchases of investments(638)(1,474)
Purchases of property and equipment(101)(87)
Purchases of intangible assets(24)(17)
Cash paid for acquisitions, net(34)— 
Net cash provided by (used in) investing activities339 (1,123)
Financing activities
Repayments of borrowings on credit facilities— (2,205)
Net borrowings (repayments) on warehouse line of credit and repurchase agreements54 (68)
Repurchases of Class A common stock and Class C capital stock(336)(773)
Settlement of long-term debt— (1,158)
Proceeds from exercise of stock options56 44 
Net cash used in financing activities(226)(4,160)
Net increase (decrease) in cash, cash equivalents and restricted cash during period381 (863)
Cash, cash equivalents and restricted cash at beginning of period1,468 2,838 
Cash, cash equivalents and restricted cash at end of period$1,849 $1,975 
Supplemental disclosures of cash flow information
Noncash transactions:
Capitalized share-based compensation$56 $33 
Write-off of fully depreciated property and equipment29 48 
Value of Class C capital stock issued in connection with an acquisition20 — 
Write-off of fully amortized intangible assets4 200 
Recognition of operating right of use assets and lease liabilities1 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 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
September 30,		Nine Months Ended
September 30,
 2023202220232022
Net loss, as reported
$(28)$(53)$(85)$(29)
Loss from discontinued operations, net of income taxes— 2 — 13 
Share-based compensation109 147 342 323 
Impairment and restructuring costs1 — 9 14 
Acquisition-related costs1 — 2 — 
Income taxes— 3 1 (1)
Net income, adjusted$83 $99 $269 $320 
Non-GAAP net income per share:
Basic$0.36 $0.41 $1.15 $1.31 
Diluted$0.33 $0.38 $1.06 $1.22 
Weighted-average shares outstanding:
Basic233,295 240,080 235,560 244,157 
Diluted264,866 266,211 265,451 271,369 
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
September 30,		Nine Months Ended
September 30,
 2023202220232022
Denominator for basic calculation233,295 240,080 235,560 244,157 
Effect of dilutive securities:
     Option awards2,563 523 1,872 1,341 
     Unvested restricted stock units3,562 162 2,573 425 
Convertible senior notes due in 2024 and 202625,446 25,446 25,446 25,446 
          Denominator for dilutive calculation264,866 266,211 265,451 271,369 




Key Metrics
The following table presents our visits and average monthly unique users for the periods presented (in millions, except percentages):
 Three Months Ended
September 30,		2022 to 2023
% Change		Nine Months Ended
September 30,		2022 to 2023
% Change
 2023202220232022
Visits (1)2,626 2,767 (5)%7,7668,291(6)%
Average monthly unique users (2)224 236 (5)%221 227 (3)%
(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
September 30,		2022 to 2023
% Change		Nine Months Ended
September 30,		2022 to 2023
% Change
2023202220232022
Purchase loan origination volume$452 $240 88%$1,047 $557 88%
Refinance loan origination volume5 31 (84)%12 745 (98)%
Total loan origination volume$457 $271 69%$1,059 $1,302 (19)%