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Published: 2024-02-13 00:00:00 ET
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EX-99.2 3 q42023992.htm EX-99.2 Document

Exhibit 99.2


Reported Consolidated Results

ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, unaudited)
December 31,
20232022
Assets
Current assets:
Cash and cash equivalents$1,492 $1,466 
Short-term investments1,318 1,896 
Accounts receivable, net96 72 
Mortgage loans held for sale100 41 
Prepaid expenses and other current assets140 126 
Restricted cash3 2 
Total current assets3,149 3,603 
Contract cost assets23 23 
Property and equipment, net328 271 
Right of use assets73 126 
Goodwill2,817 2,374 
Intangible assets, net241 154 
Other assets21 12 
Total assets$6,652 $6,563 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$28 $20 
Accrued expenses and other current liabilities107 90 
Accrued compensation and benefits47 48 
Borrowings under credit facilities93 37 
Deferred revenue52 44 
Lease liabilities, current portion37 31 
Convertible senior notes, current portion607 — 
Total current liabilities971 270 
Lease liabilities, net of current portion95 139 
Convertible senior notes, net of current portion1,000 1,660 
Other long-term liabilities60 12 
Total liabilities2,126 2,081 
Shareholders’ equity:
Class A common stock
— — 
Class B common stock
— — 
Class C capital stock
— — 
Additional paid-in capital6,301 6,109 
Accumulated other comprehensive loss (5)(15)
Accumulated deficit(1,770)(1,612)
Total shareholders’ equity4,526 4,482 
Total liabilities and shareholders’ equity$6,652 $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
December 31,		Year Ended December 31,
 2023202220232022
Revenue$474 $435 $1,945 $1,958 
Cost of revenue (1)115 89 421 367 
Gross profit359 346 1,524 1,591 
Operating expenses:
Sales and marketing (1)165 162 658 664 
Technology and development (1)141 129 560 498 
General and administrative (1)146 128 553 498 
Impairment and restructuring costs (1)10 10 19 24 
Acquisition-related costs2 — 4 — 
Total operating expenses464 429 1,794 1,684 
Loss from continuing operations
(105)(83)(270)(93)
Gain on extinguishment of debt
1 — 1 — 
Other income, net43 24 151 43 
Interest expense(9)(9)(36)(35)
Loss from continuing operations before income taxes
(70)(68)(154)(85)
Income tax expense
(3)(4)(4)(3)
Net loss from continuing operations
(73)(72)(158)(88)
Net loss from discontinued operations, net of income taxes— — — (13)
Net loss$(73)$(72)$(158)$(101)
Net loss from continuing operations per share - basic and diluted
$(0.32)$(0.31)$(0.68)$(0.36)
Net loss per share - basic and diluted
$(0.32)$(0.31)$(0.68)$(0.42)
Weighted-average shares outstanding - basic and diluted
232,972 236,246 233,575 242,163 
(1) Includes share-based compensation expense as follows:
Cost of revenue$4 $4 $16 $16 
Sales and marketing17 17 70 63 
Technology and development43 42 166 165 
General and administrative45 47 199 189 
Impairment and restructuring costs— — — 2 
Share-based compensation - continuing operations$109 $110 $451 $435 
 Adjusted EBITDA (2)$69 $73 $391 $514 
(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.


ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
 Year Ended December 31,
 20232022
Operating activities
Net loss$(158)$(101)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization187 157 
Share-based compensation451 451 
Amortization of right of use assets35 23 
Amortization of contract cost assets21 30 
Amortization of debt discount and debt issuance costs5 26 
Loss (gain) on extinguishment of debt(1)21 
Impairment costs
16 — 
Accretion of bond discount
(35)(18)
Inventory valuation adjustment— 9 
Other adjustments to reconcile net loss to net cash provided by operating activities
(2)15 
Changes in operating assets and liabilities:
Accounts receivable(24)82 
Mortgage loans held for sale(59)66 
Inventory— 3,904 
Prepaid expenses and other assets(17)6 
Contract cost assets(21)(18)
Lease liabilities(30)(21)
Accounts payable6 3 
Accrued expenses and other current liabilities(18)(71)
Accrued compensation and benefits(1)(60)
Deferred revenue1 (7)
Other long-term liabilities(2)7 
Net cash provided by operating activities
354 4,504 
Investing activities
Proceeds from maturities of investments1,287 802 
Purchases of investments(664)(2,191)
Purchases of property and equipment(135)(115)
Purchases of intangible assets(30)(25)
Cash paid for acquisitions, net(433)(4)
Net cash provided by (used in) investing activities25 (1,533)
Financing activities
Repayments of borrowings on credit facilities— (2,206)
Net borrowings (repayments) on warehouse line of credit and repurchase agreements56 (76)
Repurchases of Class A common stock and Class C capital stock(424)(947)
Settlement of long-term debt(56)(1,158)
Proceeds from exercise of stock options72 46 
Net cash used in financing activities
(352)(4,341)
Net increase (decrease) in cash, cash equivalents and restricted cash during period27 (1,370)
Cash, cash equivalents and restricted cash at beginning of period1,468 2,838 
Cash, cash equivalents and restricted cash at end of period$1,495 $1,468 
Supplemental disclosures of cash flow information
Cash paid for interest$28 $50 
Cash paid for taxes6 6 
Noncash transactions:
Initial fair value of contingent consideration recognized in connection with an acquisition$81 $— 
Capitalized share-based compensation73 51 
Write-off of fully depreciated property and equipment63 53 
Value of Class C capital stock issued in connection with an acquisition20 — 
Write-off of fully amortized intangible assets5 203 
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, gain 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 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, gain 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 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
December 31,		Year Ended December 31,
 2023202220232022
Net loss, as reported$(73)$(72)$(158)$(101)
Loss from discontinued operations, net of income taxes— — — 13 
Share-based compensation109 110 451 433 
Impairment and restructuring costs10 10 19 24 
Acquisition-related costs2 — 4 — 
Gain on extinguishment of debt (1)— (1)— 
Income taxes3 4 4 3 
Net income, adjusted$50 $52 $319 $372 
Non-GAAP net income per share:
Basic$0.21 $0.22 $1.37 $1.54 
Diluted$0.20 $0.21 $1.26 $1.43 
Weighted-average shares outstanding:
Basic232,972 236,246 233,575 242,163 
Diluted261,727 262,391 263,179 269,106 
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 C capital stock for the periods in which their effect would have been dilutive. The potential shares of 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
December 31,		Year Ended December 31,
 2023202220232022
Denominator for basic calculation232,972 236,246 233,575 242,163 
Effect of dilutive securities:
     Option awards1,493 457 1,776 1,118 
     Unvested restricted stock units1,816 242 2,382 379 
Convertible senior notes due in 2024 and 202625,446 25,446 25,446 25,446 
          Denominator for dilutive calculation261,727 262,391 263,179 269,106 



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
December 31,		2022 to 2023
% Change		Year Ended December 31, 2022 to 2023
% Change
 2023202220232022
  
Visits (1)2,211 2,179 1 %9,977 10,470 (5)%
Average monthly unique users (2)194 198 (2)%214 220 (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
December 31,		2022 to 2023
% Change		Year Ended December 31, 2022 to 2023
% Change
2023202220232022
Purchase loan origination volume$487 $237 105 %$1,534 $794 93 %
Refinance loan origination volume4 5 (20)%16 750 (98)%
Total loan origination volume$491 $242 103 %$1,550 $1,544 — %