10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934

For the quarterly period ended September 30, 2016

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-36853

ZILLOW GROUP, INC.

(Exact name of registrant as specified in its charter)

Washington	47-1645716
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1301 Second Avenue, Floor 31, Seattle, Washington	98101
(Address of principal executive offices)	(Zip Code)

(206) 470-7000

@ZillowGroup

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of October 26, 2016, 54,075,108 shares of Class A common stock, 6,217,447 shares of Class B common stock, and 120,957,805 shares of Class C capital stock were outstanding.

ZILLOW GROUP, INC.

Quarterly Report on Form 10-Q

For the Three Months Ended September 30, 2016

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)		2
	Condensed Consolidated Balance Sheets		2
	Condensed Consolidated Statements of Operations		3
	Condensed Consolidated Statements of Comprehensive Income (Loss)		4
	Condensed Consolidated Statements of Cash Flows		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		41
Item 4.	Controls and Procedures		42
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		43
Item 1A.	Risk Factors		45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		46
Item 4.	Mine Safety Disclosures		46
Item 6.	Exhibits		47
	Signatures		48

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As used in this Quarterly Report on Form 10-Q, the terms “Zillow Group,” “the Company,” “we,” “us” and “our” refer to Zillow Group, Inc., unless the context indicates otherwise.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including Part I, Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), contains forward-looking statements based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” or the negative or plural of these words or similar expressions.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including but not limited to our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments, as well as those risks, uncertainties and assumptions described in Part 1, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2015. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements, and we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.

WHERE YOU CAN FIND MORE INFORMATION

Our filings with the Securities and Exchange Commission, or SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available on our website at www.zillowgroup.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with the SEC. The information contained on our website is not a part of this quarterly report on Form 10-Q or any other document we file with the SEC.

Investors and others should note that Zillow Group announces material financial information to its investors using its press releases, SEC filings and public conference calls and webcasts. Zillow Group intends to also use the following channels as a means of disclosing information about Zillow Group, its services and other matters and for complying with its disclosure obligations under Regulation FD:

• Zillow Group Investor Relations Webpage (http://investors.zillowgroup.com)

• Zillow Group Investor Relations Blog (http://www.zillowgroup.com/ir-blog)

• Zillow Group Twitter Account (https://twitter.com/zillowgroup)

The information Zillow Group posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following Zillow Group’s press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this quarterly report on Form 10-Q or any other document we file with the SEC, and the inclusion of our website addresses and Twitter account are as inactive textual references only.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data, unaudited)

	September 30, 2016			December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	190,760		$	229,138
Short-term investments		253,845			291,151
Accounts receivable, net of allowance for doubtful accounts of $1,318 and $3,378 at September 30, 2016 and December 31, 2015, respectively		39,939			29,789
Prepaid expenses and other current assets		17,238			24,016
Total current assets		501,782			574,094
Restricted cash		1,053			3,015
Property and equipment, net		94,045			85,523
Goodwill		1,923,480			1,909,167
Intangible assets, net		537,177			558,881
Other assets		6,967			5,020
Total assets	$	3,064,504		$	3,135,700
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	6,697		$	3,361
Accrued expenses and other current liabilities		34,745			43,047
Accrued compensation and benefits		24,611			11,392
Deferred revenue		27,005			21,450
Deferred rent, current portion		1,236			1,172
Total current liabilities		94,294			80,422
Deferred rent, net of current portion		13,991			13,743
Long-term debt		230,000			230,000
Deferred tax liabilities and other long-term liabilities		134,513			132,482
Total liabilities		472,798			456,647
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized as of September 30, 2016 and December 31, 2015; no shares issued and outstanding as of September 30, 2016 and December 31, 2015		—			—
Class A common stock, $0.0001 par value; 1,245,000,000 shares authorized as of September 30, 2016 and December 31, 2015; 54,065,859 and 53,299,111 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		5			5
Class B common stock, $0.0001 par value; 15,000,000 shares authorized as of September 30, 2016 and December 31, 2015; 6,217,447 shares issued and outstanding as of September 30, 2016 and December 31, 2015		1			1
Class C capital stock, $0.0001 par value; 600,000,000 shares authorized as of September 30, 2016 and December 31, 2015; 120,924,426 and 118,958,359 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		12			12
Additional paid-in capital		3,065,042			2,956,111
Accumulated other comprehensive income (loss)		198			(471	)
Accumulated deficit		(473,552	)		(276,605	)
Total shareholders’ equity		2,591,706			2,679,053
Total liabilities and shareholders’ equity	$	3,064,504		$	3,135,700

See accompanying notes to condensed consolidated financial statements.

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ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue	$	224,592		$	176,765		$	618,977		$	475,307
Costs and expenses:
Cost of revenue (exclusive of amortization) (1)		18,254			16,453			51,926			46,509
Sales and marketing		92,794			82,044			290,810			229,272
Technology and development		69,171			53,718			201,009			142,783
General and administrative		37,690			42,672			271,159			124,506
Acquisition-related costs		93			1,988			890			16,144
Restructuring costs		—			3,425			—			35,142
Loss (gain) on divestiture of businesses		(1,251	)		4,143			(1,251	)		4,143
Total costs and expenses		216,751			204,443			814,543			598,499
Income (loss) from operations		7,841			(27,678	)		(195,566	)		(123,192	)
Other income		561			366			1,995			1,085
Interest expense		(1,595	)		(1,590	)		(4,740	)		(3,900	)
Income (loss) before income taxes		6,807			(28,902	)		(198,311	)		(126,007	)
Income tax benefit		—			2,853			1,364			2,853
Net income (loss)	$	6,807		$	(26,049	)	$	(196,947	)	$	(123,154	)
Net income (loss) per share — basic and diluted	$	0.04		$	(0.15	)	$	(1.10	)	$	(0.74	)
Weighted-average shares outstanding — basic		180,583			177,098			179,577			166,986
Weighted-average shares outstanding — diluted		189,661			177,098			179,577			166,986
(1)    Amortization of website development costs and intangible assets included in technology and development	$	21,917		$	16,405		$	62,821		$	45,304

See accompanying notes to condensed consolidated financial statements.

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ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net income (loss)	$	6,807		$	(26,049	)	$	(196,947	)	$	(123,154	)
Other comprehensive income (loss):
Unrealized gains (losses) on investments		(179	)		154			664			284
Reclassification adjustment for net (gains) losses from investments included in net loss		—			(1	)		5			(14	)
Net unrealized gains (losses) on investments		(179	)		153			669			270
Total other comprehensive income (loss)		(179	)		153			669			270
Comprehensive income (loss)	$	6,628		$	(25,896	)	$	(196,278	)	$	(122,884	)

See accompanying notes to condensed consolidated financial statements.

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ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Nine Months Ended September 30,
	2016			2015
Operating activities
Net loss	$	(196,947	)	$	(123,154	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of amounts assumed in connection with acquisitions:
Depreciation and amortization		74,852			54,031
Share-based compensation expense		81,152			80,902
Restructuring costs		—			19,206
Release of valuation allowance on certain deferred tax assets		(1,364	)		(2,853	)
Loss on disposal of property and equipment		3,416			1,007
Loss (gain) on divestiture of businesses		(1,360	)		3,690
Bad debt expense		1,715			2,414
Deferred rent		312			2,635
Amortization of bond premium		1,171			2,090
Changes in operating assets and liabilities:
Accounts receivable		(11,770	)		(4,009	)
Prepaid expenses and other assets		5,197			7,849
Accounts payable		3,296			(8,394	)
Accrued expenses and other current liabilities		(8,746	)		6,132
Accrued compensation and benefits		13,016			(2,982	)
Deferred revenue		5,645			(4,064	)
Other long-term liabilities		(21	)		4,088
Net cash provided by (used in) operating activities		(30,436	)		38,588
Investing activities
Proceeds from maturities of investments		158,828			244,079
Purchases of investments		(126,986	)		(227,223	)
Proceeds from sales of investments		4,963			8,260
Decrease in restricted cash, net of amounts assumed in connection with an acquisition		1,962			207
Purchases of property and equipment		(45,732	)		(39,594	)
Purchases of intangible assets		(7,827	)		(13,911	)
Proceeds from divestiture of businesses		3,200			17,600
Cash acquired in acquisition, net		—			173,406
Cash paid for acquisitions, net		(16,319	)		(104,192	)
Net cash provided by (used in) investing activities		(27,911	)		58,632
Financing activities
Proceeds from exercise of stock options		20,461			18,499
Value of equity awards withheld for tax liability		(492	)		(7,945	)
Net cash provided by financing activities		19,969			10,554
Net increase (decrease) in cash and cash equivalents during period		(38,378	)		107,774
Cash and cash equivalents at beginning of period		229,138			125,765
Cash and cash equivalents at end of period	$	190,760		$	233,539
Supplemental disclosures of cash flow information
Cash paid for interest	$	3,163		$	3,163
Noncash transactions:
Value of Class A common stock issued in connection with an acquisition	$	—		$	1,883,728
Capitalized share-based compensation	$	7,809		$	8,071
Write-off of fully depreciated property and equipment	$	11,585		$	24,899

See accompanying notes to condensed consolidated financial statements.

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ZILLOW GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Organization and Description of Business

Zillow Group, Inc. operates the leading real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and products to help people find vital information about homes and connect with local professionals. Zillow Group’s brands focus on all stages of the home lifecycle: renting, buying, selling, financing and home improvement. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow, Trulia, StreetEasy, HotPads and Naked Apartments. In addition, Zillow Group works with tens of thousands of real estate agents, lenders and rental professionals, helping maximize business opportunities and connect to millions of consumers. We also own and operate a number of brands for real estate, rental and mortgage professionals, including Mortech, Bridge Interactive, DotLoop and Retsly.

Certain Significant Risks and Uncertainties

We operate in a dynamic industry and, accordingly, can be affected by a variety of factors. For example, we believe that changes in any of the following areas could have a significant negative effect on us in terms of our future financial position, results of operations or cash flows: our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; rates of revenue growth; engagement and usage of our products; competition in our market; scaling and adaptation of existing technology and network infrastructure; management of our growth; qualified employees and key personnel; protection of our brand and intellectual property; changes in government regulation affecting our business; intellectual property infringement and other claims; and protection of customers’ information and other privacy concerns, among other things.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes as of and for the year ended December 31, 2015 included in Zillow Group, Inc.’s Annual Report on Form 10-K, which was filed with the SEC on February 12, 2016. The condensed consolidated balance sheet as of December 31, 2015, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

Effective February 17, 2015, Zillow Group acquired Trulia, Inc. (“Trulia”), and each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. For financial reporting and accounting purposes, Zillow was the acquirer of Trulia. The results presented in the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements reflect those of Zillow prior to the completion of the acquisition of Trulia on February 17, 2015, and Trulia’s results of operations have been included prospectively after February 17, 2015. Market Leader revenue is included in our results of operations from February 17, 2015 through the date of divestiture of September 30, 2015.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of September 30, 2016, our results of operations and comprehensive income (loss) for the three and nine month periods ended September 30, 2016 and 2015, and our cash flows for the nine month periods ended September 30, 2016 and 2015. The results of the three and nine month periods ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ended December 31, 2016 or for any interim period or for any other future year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, website development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and goodwill, among others. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected.

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Reclassifications

Certain immaterial reclassifications have been made in the condensed consolidated balance sheets and statements of cash flows to conform data for prior periods to the current format.

Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We adopted this guidance in the interim period ending on September 30, 2016. The adoption of this guidance did not have any impact on our statement of cash flows.

In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. This standard requires the use of an expected loss impairment model for instruments measured at amortized cost. For available-for-sale debt securities, an entity is required to recognize an allowance for credit losses rather than as a write-down. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. The adoption of this guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We have not yet determined the timing of adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In March 2016, the FASB issued guidance on contingent put and call options in debt instruments. This standard clarifies that the assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host only requires an analysis of the four-step decision sequence and does not require an entity to separately assess whether the contingency itself is indexed only to interest rates or the credit risk of the entity. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016 using a modified retrospective transition method, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017. We do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows.

In March 2016, the FASB issued guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, impact of forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017 using the modified retrospective approach through a cumulative-effect adjustment to beginning accumulated deficit. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

In February 2016, the FASB issued guidance on leases. This standard requires the recognition of a right-of-use asset and lease liability on the balance sheet for all leases. This standard also requires more detailed disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and early adoption is permitted. We expect to adopt this guidance on January 1, 2019. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This standard requires equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. This standard also requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, early adoption is permitted, and the guidance must be applied prospectively to equity investments that exist as of the adoption date. We expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance related to a customer’s accounting for fees paid in a cloud computing arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software

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license, the customer should account for the arrangement as a service contract. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, and early adoption is permitted. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows.

In February 2015, the FASB issued guidance relating to the consolidation analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This standard affects both the variable interest entity and voting interest entity consolidation models. All legal entities are subject to reevaluation under the revised consolidation model. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had any impact on our financial position, results of operations or cash flows.

In August 2014, the FASB issued guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern. This standard provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual reporting periods ending after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance for the year ending December 31, 2016. We do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows.

In May 2014, the FASB issued guidance on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations, identifying performance obligations and the accounting for licenses of intellectual property. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows, if any.

Note 3. Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash equivalents — Cash equivalents are comprised of highly liquid investments, including money market funds and certificates of deposit, with original maturities of less than three months. The fair value measurement of these assets is based on quoted market prices in active markets and these assets are recorded at fair value.

Investments — Our investments consist of fixed income securities, which include U.S. and foreign government agency securities, corporate notes and bonds, municipal securities and certificates of deposit. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

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The following tables present the balances of assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

	September 30, 2016
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	121,087	$	121,087	$	—
Certificates of deposit		498		—		498
Short-term investments:
U.S. government agency securities		146,914		—		146,914
Corporate notes and bonds		61,658		—		61,658
Municipal securities		29,798		—		29,798
Certificates of deposit		6,477		—		6,477
Foreign government securities		6,008		—		6,008
Commercial paper		2,990		—		2,990
Restricted cash		1,053		—		1,053
Total	$	376,483	$	121,087	$	255,396

	December 31, 2015
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	195,870	$	195,870	$	—
Certificates of deposit		1,622		—		1,622
Short-term investments:
U.S. government agency securities		193,168		—		193,168
Corporate notes and bonds		41,314		—		41,314
Municipal securities		39,853		—		39,853
Certificates of deposit		11,837		—		11,837
Foreign government securities		4,979		—		4,979
Restricted cash		3,015		—		3,015
Total	$	491,658	$	195,870	$	295,788

See Note 9 for the carrying amount and estimated fair value of the Company’s convertible senior notes.

We did not have any Level 3 assets as of September 30, 2016 or December 31, 2015. There were no liabilities measured at fair value as of September 30, 2016 or December 31, 2015.

Note 4. Cash, Cash Equivalents, Investments and Restricted Cash

Our investments are classified as available-for-sale securities and are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in shareholders’ equity, while realized gains and losses and other-than-temporary impairments are reported as a component of net income (loss) based on specific identification. On January 1, 2015 we transferred our cash equivalent and investment portfolio of approximately $440.8 million from held-to-maturity to available-for-sale, which resulted in the recognition of an insignificant loss of $0.1 million. The transfer of the investment portfolio to available-for-sale was made to provide increased flexibility in the use of our investments to support current operations.

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The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash and cash equivalents, available-for-sale investments and restricted cash as of the dates presented (in thousands):

	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	69,175	$	—	$	—		$	69,175
Cash equivalents:
Money market funds		121,087		—		—			121,087
Certificates of deposit		498		—		—			498
Short-term investments:
U.S government agency securities		146,814		117		(17	)		146,914
Corporate notes and bonds		61,650		22		(14	)		61,658
Municipal securities		29,816		1		(19	)		29,798
Certificates of deposit		6,476		1		—			6,477
Foreign government securities		5,994		14		—			6,008
Commercial paper		2,990		—		—			2,990
Restricted cash		1,053		—		—			1,053
Total	$	445,553	$	155	$	(50	)	$	445,658

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	31,646	$	—	$	—		$	31,646
Cash equivalents:
Money market funds		195,870		—		—			195,870
Certificates of deposit		1,622		—		—			1,622
Short-term investments:
U.S government agency securities		193,623		1		(456	)		193,168
Corporate notes and bonds		41,390		1		(77	)		41,314
Municipal securities		39,878		11		(36	)		39,853
Certificates of deposit		11,839		1		(3	)		11,837
Foreign government securities		4,985		—		(6	)		4,979
Restricted cash		3,015		—		—			3,015
Total	$	523,868	$	14	$	(578	)	$	523,304

The following table presents available-for-sale investments by contractual maturity date as of September 30, 2016 (in thousands):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	199,026	$	199,100
Due after one year through two years		54,714		54,745
Total	$	253,740	$	253,845

Note 5. Property and Equipment, net

The following table presents the detail of property and equipment as of the dates presented (in thousands):

	September 30, 2016			December 31, 2015
Website development costs	$	93,792		$	74,750
Computer equipment		26,848			20,965
Leasehold improvements		34,991			32,918
Construction-in-progress		18,888			15,630
Office equipment, furniture and fixtures		17,264			13,495
Property and equipment		191,783			157,758
Less: accumulated amortization and depreciation		(97,738	)		(72,235	)
Property and equipment, net	$	94,045		$	85,523

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We recorded depreciation expense related to property and equipment (other than website development costs) of $3.6 million and $3.2 million, respectively, during the three months ended September 30, 2016 and 2015, and $12.0 million and $8.7 million, respectively, during the nine months ended September 30, 2016 and 2015.

We capitalized $13.0 million and $13.6 million, respectively, in website and software development costs during the three months ended September 30, 2016 and 2015, and $38.1 million and $35.4 million, respectively, during the nine months ended September 30, 2016 and 2015. Amortization expense for website development costs included in technology and development expenses was $10.4 million and $6.2 million, respectively, during the three months ended September 30, 2016 and 2015, and $29.4 million and $16.8 million, respectively, during the nine months ended September 30, 2016 and 2015.

Construction-in-progress primarily consists of website development costs that are capitalizable, but for which the associated applications had not been placed in service.

Note 6. Acquisitions

Acquisition of Bridge Interactive Group

In July 2016, Zillow, Inc., Bridge Interactive Group, LLC, a Georgia limited liability company (“Bridge Interactive”), each of the members of Bridge Interactive, and an individual acting as the seller representative, entered into a Securities Purchase Agreement pursuant to which Zillow, Inc. acquired all of the outstanding ownership interests of Bridge Interactive on August 1, 2016. Bridge Interactive is a creator of broker and multiple listing service (MLS) back-office software. Our acquisition of Bridge Interactive has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of August 1, 2016.

Acquisition-related costs incurred, which primarily included legal and accounting fees and other external costs directly related to the acquisition, were expensed as incurred and were not material.

The results of operations related to the acquisition of Bridge Interactive have been included in our condensed consolidated financial statements since the date of acquisition, and are not significant. Pro forma financial information for the acquisition accounted for as a business combination has not been presented, as the effects were not material to our condensed consolidated financial statements.

Acquisition of Naked Apartments

In February 2016, Zillow, Inc., Nectarine Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Zillow, Inc. (“Merger Sub”), Naked Apartments, Inc., a Delaware corporation (“Naked Apartments”), and an individual acting as the stockholder representative, entered into an Agreement and Plan of Merger (the “Naked Apartments Merger Agreement”), pursuant to which Zillow, Inc. acquired Naked Apartments on February 22, 2016 for approximately $13.2 million in cash. Under the terms and subject to the conditions of the Naked Apartments Merger Agreement, Merger Sub merged with and into Naked Apartments, with Naked Apartments remaining as the surviving company and a wholly owned subsidiary of Zillow, Inc. Naked Apartments is New York City’s largest rentals-only platform.

Our acquisition of Naked Apartments has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of February 22, 2016. Goodwill, which represents the expected synergies from combining the acquired assets and the operations of the acquirer, as well as intangible assets that do not qualify for separate recognition, is measured as of the acquisition date as the excess of consideration transferred, which is also measured at fair value, and the net of the fair values of the assets acquired and the liabilities assumed as of the acquisition date.

The total purchase price has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date. Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands):

Current assets	$	371
Identifiable intangible assets		3,700
Goodwill		10,610
Current liabilities		(101	)
Deferred tax liabilities		(1,416	)
Total preliminary estimated purchase price	$	13,164

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Our estimates and assumptions related to the purchase price allocation are preliminary and subject to change during the measurement period (up to one year from the acquisition date) as we finalize the amount of intangible assets, goodwill and deferred taxes recorded in connection with the acquisition.

Acquisition-related costs incurred, which primarily included legal and accounting fees and other external costs directly related to the acquisition, were expensed as incurred and were not material.

The results of operations related to the acquisition of Naked Apartments have been included in our condensed consolidated financial statements since the date of acquisition, and are not significant. Pro forma financial information for the acquisition accounted for as a business combination has not been presented, as the effects were not material to our condensed consolidated financial statements.

Acquisition of Trulia

Effective February 17, 2015, pursuant to the Merger Agreement dated as of July 28, 2014 by and among Zillow, Zillow Group and Trulia, following the consummation of the transactions contemplated by the Merger Agreement, each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. With the addition of Trulia, we expanded our audience and added another consumer brand that offers buyers, sellers, homeowners and renters access to information about homes and real estate for free, and provides advertising and software solutions that help real estate professionals grow their business.

At the effective time of the merger, each share of Zillow Class A common stock was converted into the right to receive one share of fully paid and nonassessable Zillow Group Class A common stock, and each share of Zillow Class B common stock was converted into the right to receive one share of fully paid and nonassessable Zillow Group Class B common stock. Generally, each Zillow stock option and restricted stock unit outstanding (whether or not vested or exercisable) as of the effective time of the merger was assumed by Zillow Group and converted into a corresponding equity award to purchase or acquire shares of Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original option or award. Any unvested shares of Zillow Class A common stock subject to a repurchase option, risk of forfeiture or other condition as of the effective time of the merger were exchanged for shares of Zillow Group Class A common stock that were also unvested and subject to the same repurchase option, risk of forfeiture or other condition. Each Zillow restricted unit outstanding as of the effective time of the merger was assumed by Zillow Group and converted into the right to receive Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original restricted unit.

At the effective time of the merger, each share of Trulia common stock was converted into the right to receive 0.444 of a share of fully paid and nonassessable Zillow Group Class A common stock. Generally, each Trulia stock option, restricted stock unit, and stock appreciation right outstanding (whether or not vested or exercisable) as of the effective time of the merger was assumed by Zillow Group and converted into a corresponding equity award to purchase, acquire shares of, or participate in the appreciation in the price of Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original option or award, subject to specified adjustments to reflect the effect of the Trulia exchange ratio. Each outstanding unvested Trulia stock option and restricted stock unit held by a member of the Trulia board of directors immediately prior to the effective time of the merger who was not an employee of Trulia or any subsidiary of Trulia became fully vested immediately prior to the effective time of the merger in accordance with the terms of the applicable award agreements.

Our acquisition of Trulia has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of February 17, 2015. Goodwill, which represents the expected synergies from combining the acquired assets and the operations of the acquirer, as well as intangible assets that do not qualify for separate recognition, is measured as of the acquisition date as the excess of consideration transferred, which is also measured at fair value, and the net of the fair values of the assets acquired and the liabilities assumed as of the acquisition date.

In all cases in which Zillow Group’s closing stock price is a determining factor in arriving at the amount of merger consideration, the stock price assumed is the closing price of Zillow Class A common stock on NASDAQ on February 17, 2015 ($109.14 per share, unadjusted for the August 2015 stock split effected in the form of a dividend). The purchase price to effect the acquisition of Trulia of approximately $2.0 billion is summarized in the following table (in thousands):

Value of Class A common stock issued	$	1,883,728
Substituted stock options and stock appreciation rights assumed by Zillow Group attributable to pre-combination service		54,853
Substituted restricted stock units assumed by Zillow Group attributable to pre-combination service		27,798
Cash paid in lieu of fractional outstanding shares		41
Total purchase price	$	1,966,420

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A total of 17,259,704 shares of Zillow Group Class A common stock were issued in connection with the acquisition of Trulia. Trulia stockholders did not receive any fractional shares of Zillow Group Class A common stock in connection with the acquisition. Instead of receiving any fractional shares, each holder of Trulia common stock was paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ on the last complete trading day prior to the date of the effective time of the merger.

A portion of the purchase price has been attributed to the substitution of Trulia’s stock options, restricted stock units and stock appreciation rights outstanding as of February 17, 2015, for corresponding stock options, restricted stock units and stock appreciation rights to purchase, vest in or participate in the appreciation in the price of shares of Zillow Group Class A common stock, all at an exchange ratio of 0.444. The fair value of Trulia’s share-based awards assumed in connection with the acquisition, including stock options, restricted stock units and stock appreciation rights, which relate to post-combination service will be recorded by Zillow Group as share-based compensation expense ratably over the remaining related vesting period of the respective award. The share-based compensation expense related to stock options and stock appreciation rights assumed is estimated at the acquisition date using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 53%, a risk-free interest rate of 1.10%, and an expected life of three years. For restricted stock units assumed, Zillow Group used the market value of Zillow’s Class A common stock on the date of acquisition to determine the fair value of the award.

The total purchase price has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date. Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands):

Cash and cash equivalents	$	173,447
Accounts receivable		13,093
Prepaid expenses and other current assets		20,833
Restricted cash		6,946
Property and equipment		30,189
Other assets		434
Identifiable intangible assets		549,000
Goodwill		1,736,362
Accounts payable, accrued expenses and other current liabilities		(51,258	)
Accrued compensation and benefits		(8,324	)
Deferred revenue		(8,300	)
Long-term debt		(230,000	)
Debt premium recorded in additional paid-in capital		(126,386	)
Deferred tax liabilities and other long-term liabilities		(139,616	)
Total purchase price	$	1,966,420

The fair value of identifiable intangible assets acquired consisted of the following (in thousands):

	Estimated Fair Value		Estimated Useful Life (in years)
Trulia trade names and trademarks	$	351,000		Indefinite
Market Leader trade names and trademarks		2,000		2
Customer relationships		92,000		3-7
Developed technology		91,000		3-7
Advertising relationships		9,000		3
MLS home data feeds		4,000		3
Total	$	549,000

The fair value of the intangible assets acquired was determined by Zillow Group, and Zillow Group considered or relied in part upon a valuation report of a third-party expert. Zillow Group used an income approach to measure the fair value of the trade names and trademarks and the developed technology based on the relief-from-royalty method. Zillow Group used an income approach to measure the fair value of the customer relationships based on the excess earnings method, whereby the fair value is estimated based upon the present value of cash flows that the applicable asset is expected to generate. Zillow Group used an income approach to measure the fair value of the advertising relationships based on a with and without analysis, whereby the fair value is estimated based

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on the present value of cash flows the combined business is expected to generate with and without the advertising relationships. Zillow Group used a cost approach to measure the fair value of the MLS home data feeds based on the estimated cost to replace the data feed library. These fair value measurements were based on Level 3 measurements under the fair value hierarchy.

A portion of the total purchase price was allocated to Trulia’s 2020 Notes (see Note 9). In accordance with the accounting guidance related to business combinations, the 2020 Notes are recognized at fair value as of the effective date of the acquisition. The fair value of the 2020 Notes as of the date of acquisition was approximately $356.4 million. The fair value of the 2020 Notes as of the date of acquisition was determined by Zillow Group, and Zillow Group considered or relied in part upon a valuation report of a third-party expert. The fair value of the 2020 Notes was determined through combination of the use of a binomial lattice valuation model and consideration of quoted market prices. The fair value is classified as Level 3 due to the use of significant unobservable inputs such as implied volatility of Zillow Group’s Class A common stock, discount spread and the limited trading activity for the 2020 Notes. Given the fair value of the 2020 Notes as of the date of acquisition of $356.4 million was at a substantial premium to the principal amount of $230.0 million, the premium amount of $126.4 million has been recorded as additional paid-in capital in the consolidated balance sheet as of the effective date of the acquisition. Accordingly, Zillow Group has recognized the liability component of the 2020 Notes at the stated par amount in the consolidated balance sheet as of the effective date of the acquisition. The conversion feature included in the 2020 Notes is not required to be bifurcated and separately accounted for as it meets the equity scope exception given the conversion feature (i) is indexed to Zillow Group’s Class A common stock and (ii) would be classified in shareholder’s equity. Further, the 2020 Notes do not permit or require Zillow Group to settle the debt in cash (in whole or in part) upon conversion.

A portion of the total purchase price was allocated to deferred tax liabilities primarily related to an indefinite-lived intangible asset generated in connection with the acquisition. Due to the recognition of a $351.0 million indefinite-lived Trulia trade name and trademark intangible asset as of the effective date of the acquisition, a deferred tax liability of $139.5 million was recognized which cannot be offset by the recognized deferred tax assets.

The results of operations related to the acquisition of Trulia have been included in our consolidated financial statements since the date of acquisition of February 17, 2015. However, disclosure of the amounts of revenue and earnings of the acquiree since the acquisition date is impracticable because discrete financial information is not available due to the rapid integration of Zillow’s and Trulia’s operations.

Unaudited Pro Forma Financial Information

The following unaudited pro forma condensed combined financial information gives effect to the acquisition of Trulia as if it were consummated on January 1, 2014 (the beginning of the comparable prior reporting period in the year of acquisition). The unaudited pro forma condensed combined financial information is presented for informational purposes only. The unaudited pro forma condensed combined financial information does not represent true historical financial information. Further, the unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on January 1, 2014 and should not be taken as representative of future results of operations of the combined company.

The following table presents the unaudited pro forma condensed combined financial information for the periods presented, except for the financial information presented for the three and nine month periods ended September 30, 2016 and revenue for the three months ended September 30, 2015, which are presented on an as-reported basis (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015 (1)			2016			2015 (2)
Revenue	$	224,592	$	176,765		$	618,977		$	510,565
Net income (loss)	$	6,807	$	(21,393	)		(196,947	)	$	(65,978	)

(1) The pro forma net loss for the three months ended September 30, 2015 includes pro forma adjustments for $3.4 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements and $1.2 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements.

(2) The pro forma net loss for the nine months ended September 30, 2015 includes pro forma adjustments for $49.1 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $37.3 million to eliminate share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $35.3 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements, $2.4 million to record additional amortization expense for acquired intangible assets and $1.1 million to eliminate Trulia’s historical amortization of capitalized website development costs.

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Note 7. Goodwill

The following table presents the change in goodwill from December 31, 2015 through September 30, 2016 (in thousands):

Balance as of December 31, 2015	$	1,909,167
Goodwill recorded in connection with the acquisition of Naked Apartments		10,610
Goodwill recorded in connection with the acquisition of Bridge Interactive		4,899
Reduction of goodwill in connection with the divestiture of a business		(1,196	)
Balance as of September 30, 2016	$	1,923,480

The goodwill recorded in connection with the acquisitions of Naked Apartments and Bridge Interactive, which includes intangible assets that do not qualify for separate recognition, is not deductible for tax purposes.

Note 8. Intangible Assets

The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands):

	September 30, 2016
	Cost		Accumulated Amortization			Net
Purchased content	$	40,544	$	(21,491	)	$	19,053
Software		9,971		(4,315	)		5,656
Customer relationships		103,200		(27,110	)		76,090
Developed technology		110,080		(31,652	)		78,428
Trade names and trademarks		4,960		(2,669	)		2,291
Advertising relationships		9,000		(4,848	)		4,152
MLS home data feeds		1,100		(593	)		507
Total	$	278,855	$	(92,678	)	$	186,177

	December 31, 2015
	Cost		Accumulated Amortization			Net
Purchased content	$	37,581	$	(19,649	)	$	17,932
Software		6,961		(2,845	)		4,116
Customer relationships		103,425		(16,204	)		87,221
Developed technology		108,295		(19,515	)		88,780
Trade names and trademarks		4,860		(2,212	)		2,648
Advertising relationships		9,000		(2,598	)		6,402
MLS home data feeds		1,100		(318	)		782
Total	$	271,222	$	(63,341	)	$	207,881

Amortization expense recorded for intangible assets for the three months ended September 30, 2016 and 2015 was $11.6 million and $10.2 million, respectively. Amortization expense recorded for intangible assets for the nine months ended September 30, 2016 and 2015 was $33.4 million and $28.5 million, respectively. These amounts are included in technology and development expenses.

As of September 30, 2016, we have an indefinite-lived intangible asset for $351.0 million that we recorded in connection with our February 2015 acquisition of Trulia for Trulia’s trade names and trademarks that is not subject to amortization.

Note 9. Convertible Senior Notes

In connection with the February 2015 acquisition of Trulia, a portion of the total purchase price was allocated to Trulia’s Convertible Senior Notes due in 2020 (the “2020 Notes”), which are unsecured senior obligations. Pursuant to and in accordance with the Merger Agreement, Zillow Group entered into a supplemental indenture in respect of the 2020 Notes in the aggregate principal amount of $230.0 million, which supplemental indenture provides, among other things, that, at the effective time of the Trulia Merger, (i) each outstanding 2020 Note is no longer convertible into shares of Trulia common stock and is convertible solely into shares of Zillow Group Class A common stock, pursuant to, and in accordance with, the terms of the indenture governing the 2020 Notes, and

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(ii) Zillow Group guaranteed all of the obligations of Trulia under the 2020 Notes and related indenture. The aggregate principal amount of the 2020 Notes is due on December 15, 2020 if not earlier converted or redeemed. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually on June 15 and December 15 of each year.

Holders of the 2020 Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding the maturity date. In connection with the supplemental indenture in respect of the 2020 Notes, the conversion ratio immediately prior to the effective time of the Trulia Merger of 27.8303 shares of Trulia common stock per $1,000 principal amount of notes was adjusted to 12.3567 shares of our Class A common stock per $1,000 principal amount of notes based on the exchange ratio of 0.444 per the Merger Agreement. This was equivalent to an initial conversion price of approximately $80.93 per share of our Class A common stock. In connection with the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common shareholders, the conversion ratio has been further adjusted to 41.4550 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $24.12 per share of our Class A common stock. The conversion ratio will be adjusted for certain dilutive events and will be increased in the case of corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture governing the notes). The conversion option of the 2020 Notes has no cash settlement provisions. The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock.

The holders of the 2020 Notes will have the ability to require us to repurchase the notes in whole or in part upon the occurrence of an event that constitutes a “Fundamental Change” (as defined in the indenture governing the notes, including such events as a “change in control” or “termination of trading”, subject to certain exceptions). In such case, the repurchase price would be 100% of the principal amount of the 2020 Notes plus accrued and unpaid interest, if any, to, but excluding, the Fundamental Change repurchase date. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the notes. There are no financial covenants associated with the 2020 Notes.

We may not redeem the 2020 Notes prior to December 20, 2018. We may redeem the 2020 Notes, at our option, in whole or in part on or after December 20, 2018, if the last reported sale price per share of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

Interest expense related to the 2020 Notes for the three months ended September 30, 2016 and 2015 was $1.6 million. Interest expense related to the 2020 Notes for the nine months ended September 30, 2016 and 2015 was $4.7 million and $3.9 million, respectively. Accrued interest related to the 2020 Notes as of September 30, 2016 is $1.8 million, and is recorded in accrued expenses and other current liabilities in our condensed consolidated balance sheet.

The estimated fair value and carrying value of the 2020 Notes were $346.4 million and $230.0 million, respectively, as of September 30, 2016. The estimated fair value and carrying value of the 2020 Notes were $272.9 million and $230.0 million, respectively, as of December 31, 2015. The estimated fair value of the 2020 Notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for the 2020 Notes.

Note 10. Income Taxes

We are subject to federal and state income taxes in the United States and in Canada. During the three and nine month periods ended September 30, 2016 and 2015, we did not have a material amount of reportable taxable income, and we are not projecting a material amount of reportable taxable income for the year ending December 31, 2016. We have provided a full valuation allowance against our net deferred tax assets as of September 30, 2016 and December 31, 2015 because, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets will not be realized. Therefore, no current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $735.2 million as of December 31, 2015, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $11.6 million (tax effected) as of December 31, 2015.

We recorded an income tax benefit of $1.4 million for the nine months ended September 30, 2016 primarily due to a deferred tax liability generated in connection with Zillow Group’s February 22, 2016 acquisition of Naked Apartments that can be used to realize certain deferred tax assets for which we had previously provided a full allowance. We recorded an income tax benefit of $2.9 million for the nine months ended September 30, 2015 primarily due to a deferred tax liability generated in connection with Zillow, Inc.’s August 20, 2015 acquisition of DotLoop that can be used to realize certain deferred tax assets for which we had previously provided a full valuation allowance.

Note 11. Shareholders’ Equity

Preferred Stock

Our board of directors has the authority to fix and determine and to amend the number of shares of any series of preferred stock that is wholly unissued or to be established and to fix and determine and to amend the designation, preferences, voting powers and

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limitations, and the relative, participating, optional or other rights, of any series of shares of preferred stock that is wholly unissued or to be established, subject in each case to certain approval rights of holders of our outstanding Class B common stock. There was no preferred stock issued and outstanding as of September 30, 2016 or December 31, 2015.

Common and Capital Stock

Our Class A common stock has no preferences or privileges and is not redeemable. Holders of Class A common stock are entitled to one vote for each share.

Our Class B common stock has no preferences or privileges and is not redeemable. At any time after the date of issuance, each share of Class B common stock, at the option of the holder, may be converted into one share of Class A common stock, or automatically converted into Class A common stock upon the affirmative vote by or written consent of holders of a majority of the shares of the Class B common stock. During the three and nine month periods ended September 30, 2016 and the year ended December 31, 2015, no shares of Class B common stock were converted into Class A common stock at the option of the holders. Holders of Class B common stock are entitled to 10 votes for each share.

Our Class C capital stock has no preferences or privileges, is not redeemable and, except in limited circumstances, is non-voting.

Note 12. Share-Based Awards

In connection with our February 2015 acquisition of Trulia, we assumed the obligations of Zillow and Trulia outstanding under pre-existing stock plans. We intend that future equity grants will be made under Zillow Group’s 2011 Incentive Plan (as amended and/or restated from time to time, the “2011 Plan”) only (or a successor thereto).

Zillow Group, Inc. Amended and Restated 2011 Incentive Plan

On July 19, 2011, the 2011 Plan became effective and serves as the successor to Zillow’s 2005 Equity Incentive Plan (the “2005 Plan”). Shareholders last approved the 2011 Plan on June 15, 2016. In addition to the share reserve of 18,400,000 shares, the number of shares available for issuance under the 2011 Plan automatically increases on the first day of each of our fiscal years by a number of shares equal to the least of (a) 3.5% of our outstanding common and capital stock on a fully diluted basis as of the end of our immediately preceding fiscal year, (b) 10,500,000 shares, and (c) a lesser amount determined by our board of directors; provided, however, that any shares from any increases in previous years that are not actually issued will continue to be available for issuance under the 2011 Plan. In addition, shares previously available for grant under the 2005 Plan, but not issued or subject to outstanding awards under the 2005 Plan as of July 19, 2011, and shares subject to outstanding awards under the 2005 Plan that subsequently cease to be subject to such awards (other than by reason of exercise of the awards) are available for grant under the 2011 Plan. The 2011 Plan is administered by the compensation committee of the board of directors. Under the terms of the 2011 Plan, the compensation committee may grant equity awards, including incentive stock options, nonqualified stock options, restricted stock, restricted stock units or restricted units to employees, officers, directors, consultants, agents, advisors and independent contractors. The compensation committee has also authorized certain senior executive officers to grant equity awards under the 2011 Plan, within limits prescribed by our board of directors.

Options under the 2011 Plan are granted with an exercise price per share not less than 100% of the fair market value of our stock on the date of grant, with the exception of substituted option awards granted in connection with acquisitions, and are exercisable at such times and under such conditions as determined by the compensation committee. Under the 2011 Plan, the maximum term of an option is ten years from the date of grant. Any portion of an option that is not vested and exercisable on the date of a participant’s termination of service expires on such date. Employees generally forfeit their rights to exercise vested options after 3 months following their termination of employment or 12 months in the event of termination by reason of death, disability or retirement. Options granted under the 2011 Plan typically expire seven or 10 years from the grant date and typically vest either 25% after 12 months and ratably thereafter over the next 36 months or quarterly over a period of four years, though certain options have been granted with longer vesting schedules.

In March 2016, Zillow Group established an equity choice program pursuant to which Zillow Group grants restricted stock units and option awards to acquire shares of Class C capital stock to certain employees to retain and recognize their efforts on behalf of Zillow Group.

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Option Awards and Stock Appreciation Rights

The following table summarizes option award and stock appreciation rights activity for the year ended December 31, 2015 and the nine months ended September 30, 2016:

	Number of Shares Subject to Existing Options and Stock Appreciation Rights			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2015		17,399,292		$	18.12		5.32	$	311,040
Assumed Trulia options and stock appreciation rights in connection with February 2015 acquisition of Trulia		3,159,765			13.79
Granted		11,438,095			31.45
Exercised		(2,732,767	)		8.99
Forfeited or cancelled		(2,138,011	)		28.37
Outstanding at December 31, 2015		27,126,374			23.35		5.96		156,025
Granted		5,972,299			23.46
Exercised		(1,550,486	)		13.22
Forfeited or cancelled		(994,247	)		30.37
Outstanding at September 30, 2016		30,553,940			23.66		6.08		351,927
Vested and exercisable at September 30, 2016		13,500,955			19.22		4.29		214,983

The number of options granted during the year ended December 31, 2015 in the table above includes a total of 199,779 substituted options with a weighted-average exercise price of $9.29 per share granted in connection with our August 2015 acquisition of DotLoop, Inc.

The fair value of options granted, excluding options granted under the Stock Option Grant Program for Nonemployee Directors (“Nonemployee Director Awards”) and certain options granted to the Company’s executives in January and February 2015, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
Expected volatility	50%	55%	50%-51%	55%-56%
Expected dividend yield	—	—	—	—
Risk-free interest rate	0.90%-1.06%	1.03%-1.19%	0.89%-1.20%	1.03%-1.48%
Weighted-average expected life	4.00 years	3.5 years	3.78 years	3.5-4.58 years
Weighted-average fair value of options granted	$14.29	$11.11	$9.20	$13.98

The assumptions included in the table above exclude stock options and stock appreciation rights assumed in connection with the February 17, 2015 acquisition of Trulia (see Note 6) and unvested stock options substituted in connection with the August 20, 2015 acquisition of DotLoop.

In March 2016, option awards for an aggregate of 93,995 shares of Class C capital stock were granted as Nonemployee Director Awards, which are fully vested and exercisable on the date of grant. The fair value of options granted for the Nonemployee Director Awards, $8.91 per share, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 51%, a risk-free interest rate of 1.12%, and a weighted-average expected life of 4.25 years. During the nine months ended September 30, 2016 and 2015, share-based compensation expense recognized in our condensed consolidated statements of operations related to Nonemployee Director Awards was $0.8 million, and is included in general and administrative expenses.

In January and February 2015, option awards for a total of 3,450,000 shares of Class A common stock and Class C capital stock (as adjusted in connection with the August 2015 stock split effected in the form of a dividend) were granted to certain of the Company’s executive officers. The fair value of the option awards is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 52%, a risk-free interest rate of 1.76% and a weighted-average expected life of 6.8 years. The grant date fair value of the option awards is approximately $62.8 million. One-sixteenth of the total number of shares subject to the option awards vested and became exercisable on the first anniversary of the vesting commencement

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date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable four years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the two-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable five years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the three-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable six years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the four-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable seven years from the vesting commencement date. The option awards have a ten-year term.

As of September 30, 2016, there was a total of $189.5 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the year ended December 31, 2015 and the nine months ended September 30, 2016:

	Restricted Stock Units			Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2015		376,806		$	28.56
Assumed Trulia restricted stock units in connection with February 2015 acquisition of Trulia		3,798,957			36.38
Granted		1,354,185			28.55
Vested		(1,899,531	)		31.74
Forfeited or cancelled		(1,024,903	)		31.12
Unvested outstanding at December 31, 2015		2,605,514			32.36
Granted		2,814,296			24.99
Vested		(1,202,096	)		31.60
Forfeited or cancelled		(440,757	)		27.40
Unvested outstanding at September 30, 2016		3,776,957			27.69

Pursuant to the terms of the Naked Apartments Merger Agreement, Zillow Group established a retention bonus plan in March 2016 pursuant to which a total of 161,883 restricted stock units for shares of our Class C capital stock have been granted to employees of Naked Apartments who accepted employment with Zillow Group. For 139,075 of the restricted stock units, one-sixth of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 2.5 years. For 22,808 of the restricted stock units, 25% of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 1.5 years. The vesting of the restricted stock units is subject to the recipient’s continued full-time employment or service to Zillow Group. The total grant date fair value of the restricted stock units is approximately $3.6 million.

The fair value of the outstanding restricted stock units will be recorded as share-based compensation expense over the vesting period. As of September 30, 2016, there was $96.3 million of total unrecognized compensation cost related to unvested restricted stock units.

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Share-Based Compensation Expense

The following table presents the effects of share-based compensation in our condensed consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of revenue	$	1,524	$	1,378	$	4,370	$	3,440
Sales and marketing		5,968		7,446		17,566		20,439
Technology and development		8,035		7,642		23,160		20,413
General and administrative		11,758		11,549		36,056		36,610
Restructuring costs		—		1,059		—		15,063
Total	$	27,285	$	29,074	$	81,152	$	95,965

Note 13. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period. In the calculation of basic net income (loss) per share, undistributed earnings are allocated assuming all earnings during the period were distributed.

Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period and potentially dilutive Class A common stock and Class C capital stock equivalents, except in cases where the effect of the Class A common stock or Class C capital stock equivalent would be antidilutive. Potential Class A common stock and Class C capital stock equivalents consist of Class A common stock and Class C capital stock issuable upon exercise of stock options and stock appreciation rights and Class A common stock and Class C capital stock underlying unvested restricted stock awards and unvested restricted stock units using the treasury stock method. Potential Class A common stock equivalents also include Class A common stock issuable upon conversion of the 2020 Notes using the if-converted method.

For the periods presented, the following table reconciles the denominators used in the basic and diluted net income (loss) per share calculations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Denominator for basic calculation		180,583		177,098		179,577		166,986
Effect of dilutive securities:
Option awards and stock appreciation rights		7,928		—		—		—
Unvested restricted stock awards and restricted stock units		1,150		—		—		—
Denominator for dilutive calculation		189,661		177,098		179,577		166,986

For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net income (loss) per share because their effect would have been antidilutive (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Weighted-average Class A common stock and Class C capital stock option awards and stock appreciation rights outstanding		8,456		13,142		17,874		17,115
Weighted-average Class A common stock and Class C capital stock unvested restricted stock awards and restricted stock units outstanding		235		3,186		3,559		3,714
Class A common stock issuable upon conversion of the 2020 Notes		10,026		9,535		10,026		9,535
Total Class A common stock and Class C capital stock equivalents		18,717		25,863		31,459		30,364

In the event of liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of all classes of common and capital stock have equal rights to receive all the assets of the Company after the rights of the holders of preferred stock have been satisfied. We have not presented net income (loss) per share under the two-class method for our Class A common stock, Class B common stock and Class C capital stock because it would be the same for each class due to equal dividend and liquidation rights for each class.

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Note 14. Commitments and Contingencies

Lease Commitments

We have entered into various non-cancelable operating lease agreements for certain of our office space and equipment with original lease periods expiring between 2017 and 2024. We are committed to pay a portion of the related operating expenses under certain of these lease agreements. Certain of these arrangements have free rent periods or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis. Operating lease expense for the three months ended September 30, 2016 and 2015 was $4.3 million and $3.8 million, respectively. Operating lease expense for the nine months ended September 30, 2016 and 2015 was $12.1 million and $11.2 million, respectively.

Purchase Commitments

We have entered into various non-cancelable purchase commitments for content related to our mobile applications and websites. License agreement terms vary by vendor. In some instances, we retain perpetual rights to this information after the contract ends; in other instances, the information and data are licensed only during the fixed term of the agreement. Additionally, certain data license agreements provide for uneven payment amounts throughout the contract term.

We capitalize payments made to third parties for data licenses that we expect to provide future economic benefit through the recovery of the costs of these arrangements via the generation of our revenue and margins. For data license contracts that include uneven payment amounts, we capitalize the payments as they are made as an intangible asset and amortize the total contract value over the estimated useful life. For contracts in which we have perpetual rights to the data, the total contract value is amortized on a straight-line basis over the life of the contract plus two years, which is equivalent to the estimated useful life of the asset. For contracts in which we do not have access to the data beyond the contractual term, the total contract value is amortized on a straight-line basis over the term of the contract. We evaluate data content contracts for potential capitalization at the inception of the arrangement as well as each time periodic payments to third parties are made.

The amortization period for the capitalized purchased content is based on our best estimate of the useful life of the asset, which ranges from two to nine years. The capitalized purchased data content is amortized on a straight-line basis as the pattern of delivery of the economic benefits of the data cannot reliably be determined because we do not have the ability to reliably predict future traffic to our websites and mobile applications.

Under certain other data agreements, the underlying data is obtained on a subscription basis with consistent monthly or quarterly recurring payment terms over the contractual period. Upon the expiration of such arrangements, we no longer have the right to access the related data, and therefore, the costs incurred under such contracts are not capitalized and are expensed as payments are made. We would immediately lose rights to data under these arrangements if we were to cancel the subscription and/or cease making payments under the subscription arrangements.

Letters of Credit

As of September 30, 2016, we have outstanding letters of credit of approximately $5.2 million, $1.8 million, $1.1 million and $1.1 million, respectively, which secure our lease obligations in connection with the operating leases of our San Francisco, Seattle, New York and Denver office spaces.

Surety Bonds

In the course of business, we are required to provide financial commitments in the form of surety bonds to third parties as a guarantee of our performance on and our compliance with certain obligations. If we were to fail to perform or comply with these obligations, any draws upon surety bonds issued on our behalf would then trigger our payment obligation to the surety bond issuer. We have outstanding surety bonds issued for our benefit of approximately $3.6 million and $3.4 million, respectively, as of September 30, 2016 and December 31, 2015.

Legal Proceedings

We are involved in a number of legal proceedings concerning matters arising in connection with the conduct of our business activities, some of which are at preliminary stages and some of which seek an indeterminate amount of damages. We regularly evaluate the status of legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made if accruals are not appropriate. For certain cases described below, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damages sought are, in our view, unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there

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are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories presented. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material effect on our financial position, results of operations or cash flow.

In September 2010, LendingTree, LLC (“LendingTree”) filed a complaint against us for patent infringement in the U.S. District Court for the Western District of North Carolina. The complaint alleged, among other things, that our website technology infringes two patents purporting to cover a “Method and computer network for coordinating a loan over the internet.” The complaint sought, among other things, a judgment that we infringed certain patents held by LendingTree, an injunction against the alleged infringing activities and an award for damages. We denied the allegations and asserted defenses and counterclaims seeking declarations that we are not infringing the patents and that the patents are invalid. In March 2014, a federal jury found that Zillow does not infringe the patents and that the patents asserted by LendingTree are invalid. In April, 2014, LendingTree filed two motions for judgment as a matter of law and for a new trial, all of which we opposed. In October 2014, the Court issued an order upholding the jury verdict and denying LendingTree’s motions. In November 2014, LendingTree filed a notice of appeal and, in September 2015, LendingTree filed its opening brief. In December 2015, we filed a response brief to LendingTree’s opening brief. A hearing regarding LendingTree’s appeal occurred in June 2016. In July 2016, the Court of Appeals for the Federal Circuit issued an order in which it found all claims asserted against us invalid under Section 101. In September 2016, LendingTree filed notice that they would be filing to appeal for a rehearing, but failed to file by the deadline. There are no further avenues for appeal or rehearing; the order issued by the Court of Appeals will stand. We have not recorded an accrual related to this complaint as of September 30, 2016 or December 31, 2015, as we do not believe a loss is probable or reasonably estimable.

In March 2014, Move, Inc., the National Association of Realtors and three related entities (collectively, “Plaintiffs”), filed a complaint against us and Errol Samuelson, our Chief Industry Development Officer, in the Superior Court of the State of Washington in King County, alleging, among other things, that Zillow and Mr. Samuelson misappropriated plaintiffs’ trade secrets in connection with Mr. Samuelson joining Zillow in March 2014. The Plaintiffs sought, among other things, an injunction against the alleged misappropriations and Mr. Samuelson working for us, as well as significant monetary damages. In February 2015, Plaintiffs filed an amended complaint that, among other things, added Curt Beardsley, our Vice President of MLS Partnerships, as a defendant in the matter. In August 2015, Zillow filed an amended answer and counterclaim against Plaintiffs that alleged, among other things, that Plaintiffs violated the Washington Trade Secrets Act and aided and abetted a breach of the duty of confidentiality through the public filing of a document that included Zillow’s confidential information and trade secrets. On January 8, 2016, Plaintiffs filed a motion seeking sanctions against defendants for alleged evidence spoliation. The court held a spoliation hearing in April and on May 17, 2016 denied Plaintiffs motion for sanctions as to Zillow and Mr. Samuelson. With respect to Mr. Beardsley, the Court denied the motion as to terminating sanctions but granted the motion ordering a permissive adverse inference instruction with respect to five devices. Defendants each filed multiple motions for partial summary judgment against Plaintiffs regarding, among other things, certain of their claims of alleged misappropriation of trade secrets. Defendants also filed various motions seeking to exclude or limit damages. The court entered various rulings granting and denying these motions in 2016. On June 6, 2016, the Company reached an amicable resolution by way of a settlement agreement and release (the “Settlement Agreement”) with Plaintiffs pursuant to which the Company agreed to pay Plaintiffs $130.0 million in connection with a release of all claims. On June 16, 2016, pursuant to the terms agreed to between the parties, the court dismissed all claims and counterclaims asserted in this matter with prejudice. The Settlement Agreement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. The settlement was paid in June 2016 and was recorded in general and administrative expenses in our condensed consolidated statements of operations for the nine month period ended September 30, 2016.

In March 2015, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) notified the Company that it was initiating a compliance review to determine the Company’s compliance with one or more federal labor laws enforced by the DOL. The Company understands that the scope of this review is limited to the review of the Company’s compliance with certain wage and hour laws with respect to Zillow, Inc. inside sales consultants during a two-year period between 2013 and 2015. In October 2015, the DOL orally informed us that the compliance review was ongoing but that, based on its preliminary findings, it believed the Company may have failed to pay overtime to such inside sales consultants. As discussed below, on May 5, 2016, Zillow, Inc. agreed to settle a class action lawsuit which alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. The settlement of the class action lawsuit is contingent on Zillow, Inc.’s complete resolution of the DOL compliance review. As related to the DOL compliance review, the Company does not believe there is a reasonable possibility that a material loss in excess of amounts accrued for the class action lawsuit described below will be incurred. As a result, we have not recorded an accrual related to the DOL compliance review as of September 30, 2016.

In November 2014, a former employee filed a putative class action lawsuit against us in the United States District Court, Central District of California, with the caption Ian Freeman v. Zillow, Inc. The complaint alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. After the court granted our two motions to dismiss certain claims, plaintiff filed a second amended complaint that includes claims under the Fair Labor Standards Act. On November 20, 2015, plaintiff filed a motion for class certification. On February 26, 2016, the court granted the plaintiff’s motion for class certification. On May 5, 2016, the parties agreed to settle the lawsuit for an immaterial amount. The settlement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. The settlement class

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includes all current and former inside sales consultants employed by Zillow, Inc. in any office from January 1, 2010 through the present. We have recorded an accrual for an immaterial amount related to the settlement as of September 30, 2016. The settlement is contingent on the court approving the class action settlement and upon Zillow, Inc.’s complete resolution of the DOL compliance review described above. On June 9, 2016, the Ninth Circuit Court of Appeals granted our petition for permission to appeal the order granting class certification. We do not believe there is a reasonable possibility that a material loss in excess of amounts accrued may be incurred.

In addition to the matters discussed above, from time to time, we are involved in litigation and claims that arise in the ordinary course of business. Although we cannot be certain of the outcome of any litigation and claims, nor the amount of damages and exposure that we could incur, we currently believe that the final disposition of such matters will not have a material effect on our financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements and out of intellectual property infringement claims made by third parties. In addition, we have agreements that indemnify certain issuers of surety bonds against losses that they may incur as a result of executing surety bonds on our behalf. For our indemnification arrangements, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with certain of our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary.

Note 15. Related Party Transactions

In February 2015, we paid approximately $0.3 million in filing fees directly to the Federal Trade Commission (the “FTC”), on behalf of and in connection with filings made by Mr. Richard Barton, our Executive Chairman, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), which filings were required due to Mr. Barton’s ownership of Zillow, Inc.’s common stock. In April 2016, we paid approximately $0.1 million for a tax “gross-up” payment to Mr. Barton to cover the imputed income associated with one of his HSR Act filings.

Note 16. Self-Insurance

Prior to January 1, 2016, we were self-insured for a portion of our medical and dental benefits for certain employees of Trulia since the date of our acquisition of Trulia in February 2015. Beginning on January 1, 2016, we are self-insured for medical benefits for all qualifying Zillow Group employees. The medical plan carries a stop-loss policy which will protect from individual claims during the plan year exceeding $150,000 or when cumulative medical claims exceed 125% of expected claims for the plan year. We record estimates of the total costs of claims incurred based on an analysis of historical data and independent estimates. Our liability for self-insured medical claims is included within accrued compensation and benefits in our condensed consolidated balance sheet and was $1.8 million as of September 30, 2016 and $0.5 million as of December 31, 2015.

Note 17. Employee Benefit Plan

Prior to January 1, 2016, we maintained separate defined contribution 401(k) retirement plans for employees of Zillow and Trulia. Effective January 1, 2016, we have a single defined contribution 401(k) retirement plan covering Zillow Group employees who have met certain eligibility requirements (“the Zillow Group 401(k) Plan”). Eligible employees may contribute pretax compensation up to a maximum amount allowable under the Internal Revenue Service limitations. Employee contributions and earnings thereon vest immediately. We currently match up to 4% of employee contributions under the Zillow Group 401(k) Plan. The total expense related to the Zillow Group 401(k) Plan for the three months ended September 30, 2016 and 2015 was $2.4 million and $1.0 million, respectively. The total expense related to the Zillow Group 401(k) Plan for the nine months ended September 30, 2016 and 2015 was $7.1 million and $3.1 million, respectively.

Note 18. Segment Information and Revenue

We have one reportable segment. Our reportable segment has been identified based on how our chief operating decision-maker manages our business, makes operating decisions and evaluates operating performance. The chief executive officer acts as the chief operating decision-maker and reviews financial and operational information on an entity-wide basis. We have one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components. Accordingly, we have determined that we have a single reporting segment and operating unit structure.

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The chief executive officer reviews information about revenue categories, including marketplace revenue and display revenue. The following table presents our revenue categories during the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Marketplace revenue:
Premier Agent	$	158,322	$	119,448	$	439,957	$	322,526
Other real estate		28,799		10,214		72,847		23,006
Mortgages		19,775		12,624		54,621		32,575
Market Leader		—		10,957		—		29,544
Total Marketplace revenue		206,896		153,243		567,425		407,651
Display revenue		17,696		23,522		51,552		67,656
Total revenue	$	224,592	$	176,765	$	618,977	$	475,307

Note 19. Subsequent Events

On October 7, 2016, Zillow purchased for $10.0 million a 10 percent equity interest in a variable interest entity for which we are not the primary beneficiary. This investment will be accounted for as a cost method investment and classified within other assets in the consolidated balance sheet.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Statements containing words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” “estimate,” or similar expressions constitute forward-looking statements. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, including in the section titled “Note Regarding Forward-Looking Statements,” and also those factors discussed in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2015.

Overview of our Business

Zillow Group, Inc. operates the leading real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and products to help people find vital information about homes and connect with local professionals. Zillow Group’s brands focus on all stages of the home lifecycle: renting, buying, selling, financing and home improvement. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow, Trulia, StreetEasy, HotPads and Naked Apartments. In addition, Zillow Group works with tens of thousands of real estate agents, mortgage and rental professionals, helping maximize business opportunities and connect to millions of consumers. We also own and operate a number of brands for real estate, mortgage and rental professionals, including Mortech, Bridge Interactive, DotLoop and Retsly.

Our living database of more than 110 million U.S. homes—homes for sale, homes for rent and homes not currently on the market—attracts an active and vibrant community of users. Individuals and businesses that use Zillow’s mobile applications and websites have updated information on more than 67 million homes and added more than 438 million home photos, creating exclusive home profiles not available anywhere else. These profiles include detailed information about homes, including property facts, listing information and purchase and sale data. We provide this information to our users where, when and how they want it, through our industry-leading mobile applications that enable consumers to access our information when they are curbside, viewing homes, and through our websites. Using complex, proprietary automated valuation models, we provide current home value estimates, or Zestimates, and current rental price estimates, or Rent Zestimates, on more than 100 million U.S. homes.

We generate revenue from the sale of advertising services and our suite of tools to businesses and professionals primarily associated with the real estate, rental and mortgage industries. These professionals include local real estate and rental professionals, mortgage professionals and brand advertisers. Our two revenue categories are marketplace revenue and display revenue.

Marketplace revenue for the three months ended September 30, 2016 consisted of Premier Agent revenue, other real estate revenue and mortgages revenue. Premier Agent revenue is generated by the sale of advertising under our Premier Agent program, which offers a suite of marketing and business technology solutions to help real estate agents grow their businesses and personal brands. Other real estate revenue primarily includes revenue generated by Zillow Group Rentals, which includes our rentals marketplace and suite of tools for rental professionals, as well as revenue from the sale of various other advertising services and a suite of tools to real estate professionals. Mortgages revenue primarily includes advertising sold to mortgage lenders and other mortgage professionals, as well as revenue generated by Mortech, which provides subscription-based mortgage software solutions, including a product and pricing engine and lead management platform.

Display revenue primarily consists of graphical mobile and web advertising sold on a cost per thousand impressions or cost-per-click basis to advertisers promoting their brands on our mobile applications and websites and our partner websites. Impressions are delivered when a sold advertisement appears on pages viewed by users of our mobile applications and websites.

Effective February 17, 2015, Zillow Group acquired Trulia, Inc. (“Trulia”), and each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. We have included Trulia in Zillow Group’s results of operations prospectively after February 17, 2015, the date of acquisition. Because the Trulia acquisition occurred during the nine months ended September 30, 2015, the information presented in this section with respect to the nine months ended September 30, 2015 relates to Zillow on a standalone basis prior to February 17, 2015 and to Zillow Group after February 17, 2015, whereas the information presented in this section with respect to the nine months ended September 30, 2016 relates to Zillow Group. Marketplace revenue for the nine months ended September 30, 2015 also included Market Leader revenue since February 17, 2015, whereas the information presented in this section with respect to the nine months ended September 30, 2016 does not include Market Leader revenue because we divested the Market Leader business as of September 30, 2015. As a result, comparisons to the prior-year period may not be indicative of future results or future rates of growth.

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In August 2016, we completed the acquisition of Bridge Interactive Group, LLC (“Bridge Interactive”). Bridge Interactive is a creator of broker and multiple listing service (MLS) back-office software. For additional information about the acquisition of Bridge Interactive, see Note 6 to our condensed consolidated financial statements.

During the three months ended September 30, 2016, we generated revenue of $224.6 million, as compared to $176.8 million in the three months ended September 30, 2015, an increase of 27%. This increase was primarily the result of significant growth in consumer traffic to our mobile applications and websites, which increased the number of impressions and clicks we could monetize in our marketplace and display revenue categories. There were approximately 164.5 million average monthly unique users of our mobile applications and websites for the three months ended September 30, 2016 compared to 142.1 million average monthly unique users for the three months ended September 30, 2015, representing year-over-year growth of 16%. Premier Agent revenue was also positively impacted by a strategic shift to focus efforts by our sales team on high-performing agent advertisers. This strategic shift resulted in increased sales to pre-existing agent advertisers looking to expand their presence on our platform. As discussed further below, during the three months ended September 30, 2016, we began meaningful testing of a new pricing method for our Platinum Premier Agent product by which we determine the cost per impression delivered in each zip code in a dynamic way based on demand for impressions in that zip code. At this early stage, we are unable to determine how the new pricing method will impact Premier Agent revenue.

In addition, mortgages revenue increased $7.2 million for the three months ended September 30, 2016 compared to the three months ended September 30, 2015, or 57%. The increase in mortgages revenue was primarily a result of a 191% increase in our average revenue per loan information request for the three months ended September 30, 2016 compared to the three months ended September 30, 2015, which we believe was primarily a result of increased consumer and advertiser adoption of mortgage advertising products that yield higher revenue, which adoption was driven by product enhancements that allow us to monetize our mortgages products more efficiently. There were approximately 6.1 million mortgage loan information requests submitted by consumers for the three months ended September 30, 2016 compared to 11.3 million mortgage loan information requests submitted by consumers for the three months ended September 30, 2015, a decrease of 46%. We believe the decrease in the number of loan information requests submitted by consumers is due to our strategic decision to improve loan information request quality by requiring consumers to provide more information before a loan information request is submitted. We believe our mortgage product feature change creates a better experience for consumers and more valuable loan information requests for our lenders. During the first half of 2015, we changed the pricing model for our mortgage advertising products from cost-per-click to cost-per-lead, which also may have contributed to growth in mortgages revenue.

As of September 30, 2016, we had 2,642 full-time employees compared to 2,204 full-time employees as of December 31, 2015.

Unique Users

To analyze our business performance, determine financial forecasts and help develop long-term strategic plans, we frequently review unique users. Measuring unique users is important to us because our marketplace revenue depends in part on our ability to enable real estate, rental and mortgage professionals to connect with our users, and our display revenue depends in part on the number of impressions delivered. Furthermore, our community of users improves the quality of our living database of homes with their contributions. We count a unique user the first time an individual accesses one of our mobile applications using a mobile device during a calendar month and the first time an individual accesses one of our websites using a web browser during a calendar month. If an individual accesses our mobile applications using different mobile devices within a given month, the first instance of access by each such mobile device is counted as a separate unique user. If an individual accesses more than one of our mobile applications within a given month, the first access to each mobile application is counted as a separate unique user. If an individual accesses our websites using different web browsers within a given month, the first access by each such web browser is counted as a separate unique user. If an individual accesses more than one of our websites in a single month, the first access to each website is counted as a separate unique user since unique users are tracked separately for each domain. Zillow measures unique users with Google Analytics and Trulia measures unique users with Omniture analytical tools.

	Average Monthly Unique Users for the Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands)
Unique Users		164,526		142,121		16	%

Basis of Presentation

Revenue

We generate revenue from the sale of advertising services and our suite of tools to businesses and professionals primarily associated with the real estate and mortgage industries. These professionals include local real estate and rental professionals, mortgage professionals and brand advertisers. Our two revenue categories are marketplace revenue and display revenue.

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Marketplace Revenue. Marketplace revenue for the three months ended September 30, 2016 consisted of Premier Agent revenue, other real estate revenue and mortgages revenue. Market Leader revenue is included in our results of operations from February 17, 2015 through the date of divestiture of September 30, 2015.

Premier Agent revenue is derived from our Premier Agent program. Our Premier Agent program offers a suite of marketing and business technology solutions to help real estate agents grow their businesses and personal brands. The Premier Agent program allows agents to select products and services that they can tailor to meet their business and advertising needs. The program has three tiers of participation including Premier Platinum, our flagship product, as well as Premier Gold and Premier Silver, to meet different marketing and business needs of a broad range of agents. All tiers of Premier Agents receive access to a dashboard portal on our website that provides individualized program performance analytics, as well as our personalized website service, and our free customer relationship management, or CRM, tool that captures detailed information about each contact made with a Premier Agent through our mobile and web platforms. Our Premier Gold product also includes featured listings whereby the agent’s listings will appear at the top of search results on our mobile and web platforms. Our Premier Platinum product includes the dashboard portal on our website, our personalized website service, our CRM tool, featured listings, and inclusion on our buyer’s agent list, whereby the agent appears as the agent to contact for listings in the purchased zip code.

Since 2012, we have charged customers for our Platinum Premier Agent product based on the number of impressions delivered on our buyer’s agent list in zip codes purchased and a contracted maximum cost per impression. Our Platinum Premier Agent product includes multiple deliverables which are accounted for as a single unit of accounting, as the delivery or performance of the undelivered elements is based on traffic to our mobile applications and websites. With this pricing method, we recognize revenue related to our impression-based Platinum Premier Agent product based on the lesser of (i) the actual number of impressions delivered on our buyer’s agent list during the period multiplied by the contracted maximum cost per impression, or (ii) the contractual maximum spend on a straight-line basis during the contractual period over which the services are delivered, typically over a period of six months or twelve months and then month-to-month thereafter. We charge a fixed subscription fee for Zillow Group’s Premier Gold and Premier Silver subscription products. Subscription advertising revenue for our Premier Gold and Premier Silver subscription products is recognized on a straight-line basis during the contractual period over which the services are delivered, typically over a period of six months and then month-to-month thereafter.

In 2016, we began testing a new pricing method for our Platinum Premier Agent product by which we determine the cost per impression delivered in each zip code based upon the total amount spent by Platinum Premier Agents to purchase impressions in the zip code during the month. The cost per impression that we charge is dynamic – as demand for impressions in a zip code increases or decreases, the cost per impression in that zip code may be increased or decreased. This new pricing method complements our new self-serve account interface, which we have gradually begun rolling out to Platinum Premier Agents. The interface includes account management tools that allow agent advertisers to independently control their budgets, impression buys, and the duration of their advertising commitment. We began testing this pricing method for our Platinum Premier Agent product to better align our revenue opportunities with increasing traffic levels to our mobile and web platforms and leveraging increasing demand by real estate agents for access to home shoppers who use our mobile applications and websites. We continue to evaluate this pricing method, and expect in the future to apply this method more broadly to our existing agent advertisers. We are unable to predict whether this change to our pricing method will have a material impact on net sales, revenue, or other results of operations. In our history of building our real estate and other marketplaces and product offerings, we have continually evaluated and utilized various pricing and value delivery strategies in order to better align our revenue opportunities with the growth in usage of our mobile and web platforms.

Our Trulia products included in Premier Agent revenue are primarily sold on a fixed fee subscription basis, and include Trulia Pro with featured listings and Trulia Seller Ads. Trulia’s featured listings product allows real estate professionals to receive prominent placement of their listings in Trulia’s search results. Real estate professionals sign up for new subscriptions to this product at a fixed monthly price for periods that generally range from six months to 12 months. Trulia Seller Ads enable real estate professionals to generate leads from consumers interested in selling their homes. Subscription advertising revenue for Trulia’s products included in Premier Agent revenue is recognized on a straight-line basis during the contractual period over which the services are delivered.

Other real estate revenue primarily includes revenue generated by Zillow Group Rentals, which includes our rentals marketplace and suite of tools for rental professionals, as well as revenue from the sale of various other advertising services and a suite of tools to real estate professionals. Rentals revenue primarily includes advertising sold to property managers and other rental professionals on a cost per lead and cost per lease generated basis. We recognize revenue as leads are delivered to rental professionals or as qualified leases are confirmed.

Mortgages revenue primarily includes advertising sold to mortgage lenders and other mortgage professionals on a cost per lead basis, as well as revenue generated by Mortech, which provides subscription-based mortgage software solutions, including a product and pricing engine and lead management platform, for which we recognize revenue on a straight-line basis during the contractual period over which the services are delivered. For our cost per lead mortgage advertising products, participating qualified mortgage professionals make a prepayment to gain access to consumers interested in connecting with mortgage professionals.

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Consumers who request rates for mortgage loans are presented with personalized quotes from participating mortgage professionals. We only charge mortgage professionals a fee when users contact mortgage professionals for more information regarding a mortgage loan quote. Mortgage professionals who exhaust their initial prepayment can then prepay additional funds to continue to participate in the marketplace. We recognize revenue when a user contacts a mortgage professional through Zillow Group’s mortgages platform.

Market Leader revenue primarily includes revenue from the sale of a comprehensive premium software-as-a-service based marketing product typically sold to real estate professionals as a bundle of products under a fixed fee subscription. Market Leader became part of Zillow Group through Zillow Group’s February 2015 acquisition of Trulia and was divested as of September 30, 2015.

Display Revenue. Display revenue primarily consists of graphical mobile and web advertising sold on a cost per thousand impressions or cost-per-click basis to advertisers promoting their brands on our mobile applications and websites and our partner websites, primarily in the real estate industry, including real estate brokerages, multi-family rental professionals, home builders, mortgage professionals and home services providers. Our advertising customers also include telecommunications, automotive, insurance and consumer products companies. Impressions are the number of times an advertisement is loaded on a web page and clicks are the number of times users click on an advertisement. Pricing is primarily based on advertisement size and position on our mobile applications and websites, and fees are generally billed monthly. We recognize display revenue as clicks occur or as impressions are delivered to users interacting with our mobile applications or websites. Growth in display revenue depends on continuing growth in traffic to our mobile applications and websites and migration of advertising spend online from traditional broadcast and print media.

Costs and Expenses

Cost of Revenue. Our cost of revenue consists of expenses related to operating our mobile applications and websites, including associated headcount expenses, such as salaries, benefits, share-based compensation expense and bonuses, as well as credit card fees, ad serving costs paid to third parties, revenue-sharing costs related to our commercial business relationships, multiple listing services fees and costs associated with the operation of our data center and customer websites.

Sales and Marketing. Sales and marketing expenses consist of advertising costs and other sales expenses related to promotional and marketing activities, as well as headcount expenses, including salaries, commissions, benefits, share-based compensation expense and bonuses for sales, sales support, customer support, marketing and public relations employees.

Technology and Development. Technology and development expenses consist of headcount expenses, including salaries, benefits, share-based compensation expense and bonuses for salaried employees and contractors engaged in the design, development and testing of our mobile applications and websites, and equipment and maintenance costs. Technology and development expenses also include amortization costs related to capitalized website and development activities, amortization of certain intangibles and other data agreement costs related to the purchase of data used to populate our mobile applications and websites, and amortization of intangible assets recorded in connection with acquisitions.

General and Administrative. General and administrative expenses consist of headcount expenses, including salaries, benefits, share-based compensation expense and bonuses for executive, finance, accounting, legal, human resources, recruiting and administrative support. General and administrative expenses also include legal, accounting and other third-party professional service fees and bad debt expense.

Acquisition-related Costs. Acquisition-related costs consist of investment banking, legal, accounting, tax, and regulatory filing fees associated with acquisitions.

Restructuring Costs. Restructuring costs consist of workforce reduction expenses in connection with a restructuring plan and related contract termination costs related to operating leases as a result of our February 2015 acquisition of Trulia.

Other Income

Other income consists primarily of interest income earned on our cash, cash equivalents and short-term investments.

Interest Expense

Interest expense consists of interest on the 2020 Notes we guaranteed in connection with our February 2015 acquisition of Trulia. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually on June 15 and December 15 of each year.

Income Taxes

We are subject to federal and state income taxes in the United States and in Canada. During the three and nine month periods ended September 30, 2016 and 2015, we did not have a material amount of reportable taxable income, and we are not projecting a material amount of reportable taxable income for the year ending December 31, 2016. We have provided a full valuation allowance

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against our net deferred tax assets as of September 30, 2016 and December 31, 2015 because, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets will not be realized. Therefore, no current tax liability or expense has been recorded in the financial statements. We have accumulated federal tax losses of approximately $735.2 million as of December 31, 2015, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $11.6 million (tax effected) as of December 31, 2015.

We recorded an income tax benefit of $1.4 million for the nine months ended September 30, 2016 primarily due to a deferred tax liability generated in connection with Zillow Group’s February 22, 2016 acquisition of Naked Apartments that can be used to realize certain deferred tax assets for which we had previously provided a full allowance. We recorded an income tax benefit of $2.9 million for the nine months ended September 30, 2015 primarily due to a deferred tax liability generated in connection with Zillow, Inc.’s August 20, 2015 acquisition of DotLoop that can be used to realize certain deferred tax assets for which we had previously provided a full valuation allowance.

Results of Operations

The following tables present our results of operations for the periods indicated and as a percentage of total revenue:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands, except per share data, unaudited)
Statements of Operations Data:
Revenue	$	224,592		$	176,765		$	618,977		$	475,307
Costs and expenses:
Cost of revenue (exclusive of amortization) (1) (2)		18,254			16,453			51,926			46,509
Sales and marketing (1)		92,794			82,044			290,810			229,272
Technology and development (1)		69,171			53,718			201,009			142,783
General and administrative (1)		37,690			42,672			271,159			124,506
Acquisition-related costs		93			1,988			890			16,144
Restructuring costs (1)		—			3,425			—			35,142
Loss (gain) on divestiture of businesses		(1,251	)		4,143			(1,251	)		4,143
Total costs and expenses		216,751			204,443			814,543			598,499
Income (loss) from operations		7,841			(27,678	)		(195,566	)		(123,192	)
Other income		561			366			1,995			1,085
Interest expense		(1,595	)		(1,590	)		(4,740	)		(3,900	)
Income (loss) before income taxes		6,807			(28,902	)		(198,311	)		(126,007	)
Income tax benefit		—			2,853			1,364			2,853
Net income (loss)	$	6,807		$	(26,049	)	$	(196,947	)	$	(123,154	)
Net income (loss) per share — basic and diluted	$	0.04		$	(0.15	)	$	(1.10	)	$	(0.74	)
Weighted-average shares outstanding — basic		180,583			177,098			179,577			166,986
Weighted-average shares outstanding —diluted		189,661			177,098			179,577			166,986
Other Financial Data:
Adjusted EBITDA (3)	$	59,463		$	29,477		$	(39,923	)	$	67,170

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands, unaudited)
(1) Includes share-based compensation as follows:
Cost of revenue	$	1,524	$	1,378	$	4,370	$	3,440
Sales and marketing		5,968		7,446		17,566		20,439
Technology and development		8,035		7,642		23,160		20,413
General and administrative		11,758		11,549		36,056		36,610
Restructuring costs		—		1,059		—		15,063
Total	$	27,285	$	29,074	$	81,152	$	95,965
(2) Amortization of website development costs and intangible assets included in technology and development	$	21,917	$	16,405	$	62,821	$	45,304
(3) See “Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP. Adjusted EBITDA for the nine months ended September 30, 2016 includes the impact of the settlement of a lawsuit in June 2016 whereby the Company paid $130.0 million in connection with a release of all claims.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(unaudited)
Percentage of Revenue:
Revenue		100	%		100	%		100	%		100	%
Costs and expenses:
Cost of revenue (exclusive of amortization)		8			9			8			10
Sales and marketing		41			46			47			48
Technology and development		31			30			32			30
General and administrative		17			24			44			26
Acquisition-related costs		0			1			0			3
Restructuring costs		0			2			0			7
Loss (gain) on divestiture of businesses		(1	)		2			0			1
Total costs and expenses		97			116			132			126
Income (loss) from operations		3			(16	)		(32	)		(26	)
Other income		0			0			0			0
Interest expense		(1	)		(1	)		(1	)		(1	)
Income (loss) before income taxes		3			(16	)		(32	)		(27	)
Income tax benefit		0			2			0			1
Net income (loss)		3	%		(15	%)		(32	%)		(26	%)

Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have disclosed Adjusted EBITDA within this Quarterly Report on Form 10-Q, a non-GAAP financial measure. We have provided a reconciliation below of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.

We have included Adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key metric used by our management and board of directors to measure operating performance and trends and to prepare and approve our annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.

Our use of Adjusted EBITDA 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:

• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

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• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

• Adjusted EBITDA does not reflect acquisition-related costs;

• Adjusted EBITDA does not reflect restructuring costs;

• Adjusted EBITDA does not reflect the loss (gain) on divestiture of businesses;

• Adjusted EBITDA does not reflect interest expense or other income;

• Adjusted EBITDA does not reflect income taxes; and

• Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP results.

The following table presents a reconciliation of Adjusted EBITDA to net income (loss) for each of the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands, unaudited)
Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income (loss)	$	6,807		$	(26,049	)	$	(196,947	)	$	(123,154	)
Other income		(561	)		(366	)		(1,995	)		(1,085	)
Depreciation and amortization expense		25,495			19,584			74,852			54,031
Share-based compensation expense		27,285			28,015			81,152			80,902
Acquisition-related costs		93			1,988			890			16,144
Restructuring costs		—			3,425			—			35,142
Loss (gain) on divestiture of businesses		(1,251	)		4,143			(1,251	)		4,143
Interest expense		1,595			1,590			4,740			3,900
Income tax benefit		—			(2,853	)		(1,364	)		(2,853	)
Adjusted EBITDA (1)	$	59,463		$	29,477		$	(39,923	)	$	67,170

(1) Adjusted EBITDA for the nine months ended September 30, 2016 includes the impact of the settlement of a lawsuit in June 2016 whereby the Company paid $130.0 million in connection with a release of all claims.

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

Revenue

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Revenue:
Marketplace revenue:
Premier Agent	$	158,322	$	119,448		33	%
Other real estate		28,799		10,214		182	%
Mortgages		19,775		12,624		57	%
Market Leader		—		10,957		N/A
Total Marketplace revenue		206,896		153,243		35	%
Display revenue		17,696		23,522		(25	%)
Total revenue	$	224,592	$	176,765		27	%

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	Three Months Ended September 30,
	2016			2015
Percentage of Total Revenue:
Marketplace revenue:
Premier Agent		70	%		68	%
Other real estate		13			6
Mortgages		9			7
Market Leader		—			6
Total Marketplace revenue		92			87
Display revenue		8			13
Total revenue		100	%		100	%

Overall revenue increased by $47.8 million, or 27%, for the three months ended September 30, 2016 compared to the three months ended September 30, 2015. Marketplace revenue increased by 35%, and display revenue decreased by 25%.

Marketplace revenue grew to $206.9 million for the three months ended September 30, 2016 from $153.2 million for the three months ended September 30, 2015, an increase of $53.7 million. Marketplace revenue represented 92% of total revenue for the three months ended September 30, 2016 compared to 87% of total revenue for the three months ended September 30, 2015. The increase in marketplace revenue was primarily attributable to the $38.9 million increase in Premier Agent revenue. There were approximately 164.5 million average monthly unique users of our mobile applications and websites for the three months ended September 30, 2016 compared to 142.1 million average monthly unique users for the three months ended September 30, 2015, representing year-over-year growth of 16%. This increase in unique users increased the number of impressions and clicks we could monetize in our Premier Agent marketplace. Premier Agent revenue was also positively impacted by a strategic shift to focus efforts by our sales team on high-performing agent advertisers and to encourage low performing agent advertisers to join more successful agent advertiser teams, which we believe will promote a superior consumer experience. This strategic shift resulted in increased sales to individual agent advertisers and agent advertiser teams looking to expand their presence on our platform and consolidation of the number of agent advertisers. Average monthly revenue per advertiser increased by 46% to $585 for the three months ended September 30, 2016 from $402 for the three months ended September 30, 2015. We calculate our average monthly revenue per advertiser by dividing the revenue generated by our Premier Agent program in the period by the average number of agent advertisers in the period, divided again by the number of months in the period. The average number of agent advertisers is derived by calculating the average of the beginning and ending number of agent advertisers for the period. We define an agent advertiser as an individual real estate professional or team of professionals with an active advertising contract at the end of a period. There was a decrease in agent advertisers to 89,147 as of September 30, 2016 from 96,965 as of September 30, 2015, as we continued to encourage low performing agent advertisers to join more successful agent advertiser teams. We expect this decrease in agent advertisers will lower our selling costs over time. Beginning on February 17, 2015, the reported agent advertisers reflect the effect of Zillow Group’s February 17, 2015 acquisition of Trulia. As discussed above, during the three months ended September 30, 2016, we began meaningful testing of a new pricing method for our Platinum Premier Agent product by which we determine the cost per impression delivered in each zip code in a dynamic way based on demand for impressions in that zip code. At this early stage, we are unable to determine how the new pricing method will impact Premier Agent revenue.

The increase in marketplace revenue was also attributable to growth in mortgages revenue, which increased by $7.2 million, or 57%, for the three months ended September 30, 2016 compared to the three months ended September 30, 2015. The increase in mortgages revenue was primarily a result of a 191% increase in our average revenue per loan information request for the three months ended September 30, 2016 compared to the three months ended September 30, 2015, which was primarily a result of increased consumer and advertiser adoption of mortgage advertising products that yield higher revenue, which adoption was driven by product enhancements that allow us to monetize our mortgages products more efficiently. There were approximately 6.1 million mortgage loan information requests submitted by consumers for the three months ended September 30, 2016 compared to 11.3 million mortgage loan information requests submitted by consumers for the three months ended September 30, 2015, a decrease of 46%. We believe the decrease in the number of loan information requests submitted by consumers is due to our strategic decision to improve loan information request quality by requiring consumers to provide more information before a loan information request is submitted. We believe our mortgage product feature change creates a better experience for consumers and more valuable loan information requests for our lenders. During the first half of 2015 we changed the pricing model for our mortgage advertising products from cost-per-click to cost-per-lead, which also may have contributed to growth in mortgages revenue.

Display revenue was $17.7 million for the three months ended September 30, 2016 compared to $23.5 million for the three months ended September 30, 2015, a decrease of $5.8 million. Display revenue represented 8% of total revenue for the three months ended September 30, 2016 compared to 13% of total revenue for the three months ended September 30, 2015. The decrease in display revenue is primarily a result of our strategy to deemphasize display advertising in the user experience and instead focus on growth in marketplace revenue.

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Cost of Revenue

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Cost of revenue	$	18,254	$	16,453		11	%

Cost of revenue was $18.3 million for the three months ended September 30, 2016 compared to $16.5 million for the three months ended September 30, 2015, an increase of $1.8 million, or 11%. The increase in cost of revenue was primarily attributable to increased headcount-related expenses of $1.5 million, including share-based compensation expense, driven by growth in headcount, a $1.4 million increase in data center and connectivity costs, a $0.8 million increase in credit card and ad serving fees, partially offset by a $1.5 million decrease in printing costs and costs to generate leads for customers related to the Market Leader business that we divested on September 30, 2015, and a $0.4 million decrease in miscellaneous cost of revenue expenses. We expect our cost of revenue to increase in absolute dollars in future years as we continue to incur more expenses that are associated with growth in revenue.

Sales and Marketing

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Sales and marketing	$	92,794	$	82,044		13	%

Sales and marketing expenses were $92.8 million for the three months ended September 30, 2016 compared to $82.0 million for the three months ended September 30, 2015, an increase of $10.8 million, or 13%. The increase in sales and marketing expenses was primarily attributable to increased headcount-related expenses of $7.6 million, including share-based compensation expense, due primarily to significant growth in the size of our sales team.

In addition to the increases in headcount-related expenses, tradeshow and conferences expense and related travel increased by $1.7 million. We also incurred a $0.6 million increase in marketing and advertising expenses, primarily related to advertising spend to acquire shoppers across online and offline channels, which supports our growth initiatives.

We expect our sales and marketing expenses to increase in absolute dollars in future years as we continue to expand our sales team and invest more resources in extending our audience through marketing and advertising initiatives.

Technology and Development

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Technology and development	$	69,171	$	53,718		29	%

Technology and development expenses, which include research and development costs, were $69.2 million for the three months ended September 30, 2016 compared to $53.7 million for the three months ended September 30, 2015, an increase of $15.5 million, or 29%. Approximately $8.2 million of the increase related to growth in headcount-related expenses, including share-based compensation expense, as we continue to grow our engineering headcount to support current and future product initiatives. Approximately $5.0 million of the increase related to an increase in amortization of website development costs and software. The increase in technology and development expenses was also attributable to a $0.8 million increase in amortization of acquired intangible assets, a $0.7 million increase in loss on disposal of property and equipment and a $0.8 million increase in various miscellaneous expenses.

Amortization expense included in technology and development for capitalized website development costs and software was $11.2 million and $6.2 million, respectively, the three months ended September 30, 2016 and 2015. Amortization expense included in technology and development related to intangible assets recorded in connection with acquisitions was $9.6 million and $8.8 million, respectively, for the three months ended September 30, 2016 and 2015. Other data content expense was $6.5 million and $6.4 million, respectively, for the three months ended September 30, 2016 and 2015. Amortization expense included in technology and development for purchased data content intangible assets was $1.1 million and $1.4 million, respectively, for the three months ended September 30, 2016 and 2015. We expect our technology and development expenses to increase in absolute dollars over time as we continue to build new mobile and website functionality.

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General and Administrative

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
General and administrative	$	37,690	$	42,672		(12	%)

General and administrative expenses were $37.7 million for the three months ended September 30, 2016 compared to $42.7 million for the three months ended September 30, 2015, a decrease of $5.0 million, or 12%. The decrease in general and administrative expenses was primarily a result of a $9.7 million decrease in professional services fees, including legal fees related to certain litigation matters described in Part II, Item 1, partially offset by a $4.5 million increase in headcount-related expenses, including share-based compensation expense, driven primarily by growth in headcount in shared corporate services to support our engineering and other teams. We expect general and administrative expenses to increase over time in absolute dollars as we continue to expand our business.

Acquisition-Related Costs

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Acquisition-related costs	$	93	$	1,988		(95	%)

Acquisition-related costs were $0.1 million for the three months ended September 30, 2016, primarily as a result of our August 2016 acquisition of Bridge Interactive Group, including legal and accounting fees. Acquisition-related costs were $2.0 million for the three months ended September 30, 2015 as a result of our February 2015 acquisition of Trulia and our August 2015 acquisition of DotLoop, including legal, accounting and tax fees.

Restructuring Costs

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Restructuring costs	$	—	$	3,425		N/A

There were no restructuring costs for the three months ended September 30, 2016. Restructuring costs for the three months ended September 30, 2015 were $3.4 million. On February 17, 2015, in connection with the February 2015 acquisition of Trulia, Zillow Group undertook a restructuring plan that resulted in a total workforce reduction of nearly 350 employees, primarily to eliminate overlapping positions in the sales and marketing functions related to Trulia’s workforce at its Bellevue, Denver, New York and San Francisco locations. The restructuring plan was a result of the integration of Trulia’s business and operations with and into Zillow Group’s business. Employees directly affected by the restructuring plan were provided with severance payments, stock vesting acceleration and outplacement assistance. As of December 31, 2015, the restructuring plan was complete.

Loss (Gain) on Divestiture of Businesses

	Three Months Ended September 30,					2015 to 2016
	2016			2015		% Change
	(in thousands, unaudited)
Loss (gain) on divestiture of businesses	$	(1,251	)	$	4,143		(130	%)

The gain on divestiture of businesses was $1.3 million for the three months ended September 30, 2016 and relates to the August 2016 sale of our Diverse Solutions business. The loss on divestiture of businesses was $4.1 million for the three months ended September 30, 2015 and relates to the September 2015 sale of our Market Leader business.

Interest Expense

	Three Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Interest expense	$	1,595	$	1,590		0	%

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Interest expense was $1.6 million for the three months ended September 30, 2016 and 2015. The interest expense relates to the 2020 Notes that we guaranteed in connection with the February 2015 acquisition of Trulia, which accrue interest at 2.75% annually. For additional information regarding the 2020 Notes, see Note 9 to our condensed consolidated financial statements.

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Revenue

	Nine Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Revenue:
Marketplace revenue:
Premier Agent	$	439,957	$	322,526		36	%
Other real estate		72,847		23,006		217	%
Mortgages		54,621		32,575		68	%
Market Leader		—		29,544		N/A
Total Marketplace revenue		567,425		407,651		39	%
Display revenue		51,552		67,656		(24	%)
Total revenue	$	618,977	$	475,307		30	%

	Nine Months Ended September 30,
	2016			2015
Percentage of Total Revenue:
Marketplace revenue:
Premier Agent		71	%		68	%
Other real estate		12			5
Mortgages		9			7
Market Leader		—			6
Total Marketplace revenue		92			86
Display revenue		8			14
Total revenue		100	%		100	%

Overall revenue increased by $143.7 million, or 30%, for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015. Marketplace revenue increased by 39%, and display revenue decreased by 24%.

Marketplace revenue grew to $567.4 million for the nine months ended September 30, 2016 from $407.7 million for the nine months ended September 30, 2015, an increase of $159.8 million. Marketplace revenue represented 92% of total revenue for the nine months ended September 30, 2016 compared to 86% of total revenue for the nine months ended September 30, 2015. The increase in marketplace revenue was primarily attributable to the $117.4 million increase in Premier Agent revenue, which increased to $440.0 million for the nine months ended September 30, 2016. This increase was primarily attributable to overall growth in our Premier Agent program, due in part to our February 2015 acquisition of Trulia. There were approximately 164.5 million average monthly unique users of our mobile applications and websites for the three months ended September 30, 2016 compared to 142.1 million average monthly unique users for the three months ended September 30, 2015, representing year-over-year growth of 16%. This increase in unique users increased the number of impressions and clicks we could monetize in our Premier Agent marketplace. Premier Agent revenue was also positively impacted by a strategic shift to focus efforts by our sales team on high-performing agent advertisers and to encourage low performing agent advertisers to join more successful agent advertiser teams. This strategic shift resulted in increased sales to individual agent advertisers and agent advertiser teams looking to expand their presence on our platform and consolidation of the number of agent advertisers. Average monthly revenue per advertiser increased by 20% to $539 for the nine months ended September 30, 2016 from $450 for the nine months ended September 30, 2015. There was a decrease in agent advertisers to 89,147 as of September 30, 2016 from 96,965 as of September 30, 2015. We expect this decrease in agent advertisers will lower our selling costs over time. As discussed above, during the three months ended September 30, 2016, we began meaningful testing of a new pricing method for our Platinum Premier Agent product. We are unable to determine at this early stage how the new pricing method will impact Premier Agent revenue.

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The increase in marketplace revenue was also attributable to growth in mortgages revenue, which increased by $22.0 million, or 68%, for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015. The increase in mortgages revenue was primarily a result of a 170% increase in our average revenue per loan information request for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015, which was primarily a result of increased consumer and advertiser adoption of mortgage advertising products that yield higher revenue, which adoption was driven by product enhancements that allow us to monetize our mortgages products more efficiently. There were approximately 23.6 million mortgage loan information requests submitted by consumers for the nine months ended September 30, 2016 compared to 38.1 million mortgage loan information requests submitted by consumers for the nine months ended September 30, 2015, a decrease of 38%. We believe the decrease in the number of loan information requests submitted by consumers is due to our strategic decision to improve loan information request quality by requiring consumers to provide more information before a loan information request is triggered. We believe our mortgage product feature change creates a better experience for consumers and more valuable loan information requests for our lenders. During the first half of 2015 we changed the pricing model for our mortgage advertising products from cost-per-click to cost-per-lead, which also may have contributed to growth in mortgages revenue.

Display revenue was $51.6 million for the nine months ended September 30, 2016 compared to $67.7 million for the nine months ended September 30, 2015, a decrease of $16.1 million. Display revenue represented 8% of total revenue for the nine months ended September 30, 2016 compared to 14% of total revenue for the nine months ended September 30, 2015. The decrease in display revenue is primarily a result of our strategy to deemphasize display advertising in the user experience and instead focus on growth in marketplace revenue.

Cost of Revenue

	Nine Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Cost of revenue	$	51,926	$	46,509		12	%

Cost of revenue was $51.9 million for the nine months ended September 30, 2016 compared to $46.5 million for the nine months ended September 30, 2015, an increase of $5.4 million, or 12%. The increase in cost of revenue was primarily attributable to a $5.3 million increase in data center and connectivity costs, increased headcount-related expenses of $4.4 million, including share-based compensation expense, driven by growth in headcount, including the impact of growth in headcount as a result of our February 2015 acquisition of Trulia, a $3.3 million increase in credit card and ad serving fees, partially offset by a $4.2 million decrease in printing costs and costs to generate leads for customers related to the Market Leader business that we divested on September 30, 2015, a $1.5 million decrease in revenue share costs, a $0.6 million decrease in multiple listing services fees and a $1.3 million decrease in miscellaneous cost of revenue expenses.

Sales and Marketing

	Nine Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Sales and marketing	$	290,810	$	229,272		27	%

Sales and marketing expenses were $290.8 million for the nine months ended September 30, 2016 compared to $229.3 million for the nine months ended September 30, 2015, an increase of $61.5 million, or 27%. The increase in sales and marketing expenses was primarily attributable to increased headcount-related expenses of $34.7 million, including share-based compensation expense, including the impact of growth in headcount as a result of our February 2015 acquisition of Trulia, which resulted in significant growth in the size of our sales team.

In addition to the increases in headcount-related expenses, marketing and advertising expenses increased by $21.4 million, primarily related to advertising spend to acquire shoppers across online and offline channels, which supports our growth initiatives. We also incurred a $3.7 million increase in tradeshow and conferences expense including related travel, a $0.7 million increase in depreciation expense and a $1.0 million increase in miscellaneous sales and marketing expenses.

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Technology and Development

	Nine Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Technology and development	$	201,009	$	142,783		41	%

Technology and development expenses, which include research and development costs, were $201.0 million for the nine months ended September 30, 2016 compared to $142.8 million for the nine months ended September 30, 2015, an increase of $58.2 million, or 41%. Approximately $25.5 million of the increase related to growth in headcount-related expenses, including share-based compensation expense, including the impact of growth in headcount as a result of our February 2015 acquisition of Trulia, as we continue to grow our engineering headcount to support current and future product initiatives. The increase in technology and development expenses was also due to a $13.4 million increase in amortization related to website development costs and software, an $8.8 million increase in other non-capitalizable data content expense, a $5.0 million increase in amortization of acquired intangible assets, primarily as a result of our February 2015 acquisition of Trulia, our August 2015 acquisition of DotLoop, our February 2016 acquisition of Naked Apartments and our August 2016 acquisition of Bridge Interactive Group, a $2.6 million increase in loss on disposal of property and equipment, a $2.1 million increase in depreciation expense, and a $1.6 million increase in software, hardware and connectivity costs, partially offset by a $0.9 million decrease in amortization of purchased content.

Amortization expense included in technology and development related to intangible assets recorded in connection with acquisitions was $28.9 million and $23.9 million, respectively, for the nine months ended September 30, 2016 and 2015. Amortization expense included in technology and development for capitalized website development costs and software was $30.3 million and $16.8 million, respectively, for the nine months ended September 30, 2016 and 2015. Other data content expense was $18.8 million and $10.1 million, respectively, for the nine months ended September 30, 2016 and 2015. Amortization expense included in technology and development for purchased data content intangible assets was $3.6 million and $4.5 million, respectively, for the nine months ended September 30, 2016 and 2015.

General and Administrative

	Nine Months Ended September 30,				2015 to 2016 % Change
	2016		2015
	(in thousands, unaudited)
General and administrative	$	271,159	$	124,506		118	%

General and administrative expenses were $271.2 million for the nine months ended September 30, 2016 compared to $124.5 million for the nine months ended September 30, 2015, an increase of $146.7 million, or 118%. The increase in general and administrative expenses was primarily a result of the settlement of a lawsuit with Move, Inc. and certain other parties in June 2016 whereby the Company paid $130.0 million in connection with a release of all claims. In addition, there was a $6.7 million increase in professional services fees, including legal fees incurred in connection with the legal proceedings described in Part II, Item 1.

The increase in general and administrative expenses was also a result of an $8.6 million increase in headcount-related expenses, including share-based compensation expense, including the impact of growth in headcount as a result of our February 2015 acquisition of Trulia, a $2.8 million increase in building lease-related expenses including rent, utilities and insurance, partially offset by a $1.9 million decrease in city and state taxes.

Acquisition-Related Costs

	Nine Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Acquisition-related costs	$	890	$	16,144		(94	%)

Acquisition-related costs were $0.9 million for the nine months ended September 30, 2016, primarily as a result of our February 2016 acquisition of Naked Apartments and our August 2016 acquisition of Bridge Interactive Group, including legal and accounting fees. Acquisition-related costs were $16.1 million for the nine months ended September 30, 2015, primarily as a result of our February 2015 acquisition of Trulia, including investment banking, legal, accounting, tax, and regulatory filing fees.

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Restructuring Costs

	Nine Months Ended September 30,				2015 to 2016
	2015		2016		% Change
	(in thousands, unaudited)
Restructuring costs	$	—	$	35,142		N/A

There were no restructuring costs for the nine months ended September 30, 2016. Restructuring costs for the nine months ended September 30, 2015 were $35.1 million. On February 17, 2015, in connection with the February 2015 acquisition of Trulia, Zillow Group undertook a restructuring plan that resulted in a total workforce reduction of nearly 350 employees, primarily to eliminate overlapping positions in the sales and marketing functions related to Trulia’s workforce at its Bellevue, Denver, New York and San Francisco locations. The restructuring plan was a result of the integration of Trulia’s business and operations with and into Zillow Group’s business. Employees directly affected by the restructuring plan were provided with severance payments, stock vesting acceleration and outplacement assistance. As of December 31, 2015, the restructuring plan was complete.

Loss (Gain) on Divestiture of Businesses

	Nine Months Ended September 30,					2015 to 2016
	2016			2015		% Change
	(in thousands, unaudited)
Loss (gain) on divestiture of businesses	$	(1,251	)	$	4,143		(130	%)

The gain on divestiture of businesses was $1.3 million for the nine months ended September 30, 2016 and relates to the August 2016 sale of our Diverse Solutions business. The loss on divestiture of businesses was $4.1 million for the nine months ended September 30, 2015 and relates to the September 2015 sale of our Market Leader business.

Interest Expense

	Nine Months Ended September 30,				2015 to 2016
	2016		2015		% Change
	(in thousands, unaudited)
Interest expense	$	4,740	$	3,900		22	%

Interest expense was $4.7 million in the nine months ended September 30, 2016 compared to $3.9 million for the nine months ended September 30, 2015, an increase of $0.8 million, or 22%. The interest expense relates to the 2020 Notes that we guaranteed in connection with the February 2015 acquisition of Trulia, which accrue interest at 2.75% annually. For additional information regarding the 2020 Notes, see Note 9 to our condensed consolidated financial statements.

Liquidity and Capital Resources

As of September 30, 2016 and December 31, 2015, we had cash, cash equivalents, restricted cash, and investments of $445.7 million and $523.3 million, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions, money market funds and certificates of deposit with original maturities of three months or less. Investments as of September 30, 2016 and December 31, 2015 consisted of fixed income securities, which include U.S. government agency securities, corporate notes and bonds, municipal securities, foreign government securities, commercial paper and certificates of deposit. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. We believe that cash from operations and cash, cash equivalents and investment balances will be sufficient to meet our ongoing operating activities, working capital, capital expenditures and other capital requirements for at least the next 12 months.

On February 17, 2015, we acquired Trulia in a stock-for-stock transaction. The total purchase price of Trulia was approximately $2.0 billion. We have included Trulia’s results of operations prospectively after February 17, 2015, the date of acquisition. Our February 2015 acquisition of Trulia has a significant impact on our liquidity, financial position and results of operations. Trulia contributes to revenue, but we also incurred significant acquisition-related and other expenses.

Further, as a result of the acquisition of Trulia, Zillow Group entered into a supplemental indenture in respect of the 2020 Notes in the aggregate principal amount of $230.0 million, which supplemental indenture provides, among other things, that, at the effective time of the Trulia acquisition, (i) each outstanding 2020 Note is no longer convertible into shares of Trulia common stock and is convertible solely into shares of Zillow Group Class A common stock, pursuant to, and in accordance with, the terms of the indenture governing the 2020 Notes, and (ii) Zillow Group guaranteed all of the obligations of Trulia under the 2020 Notes and related indenture. The aggregate principal amount of the 2020 Notes is due on December 15, 2020 if not earlier converted or redeemed. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually on June 15 and December 15 of each year.

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Holders of the 2020 Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding the maturity date. In connection with the supplemental indenture in respect of the 2020 Notes, the conversion ratio immediately prior to the effective time of the Trulia Merger of 27.8303 shares of Trulia common stock per $1,000 principal amount of notes was adjusted to 12.3567 shares of our Class A common stock per $1,000 principal amount of notes based on the exchange ratio of 0.444 per the Merger Agreement. This was equivalent to an initial conversion price of approximately $80.93 per share of our Class A common stock. In connection with the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common shareholders, the conversion ratio has been further adjusted to 41.4550 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $24.12 per share of our Class A common stock. The conversion ratio will be adjusted for certain dilutive events and will be increased in the case of corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture governing the notes). The conversion option of the 2020 Notes has no cash settlement provisions. The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock.

We may not redeem the 2020 Notes prior to December 20, 2018. We may redeem the 2020 Notes, at our option, in whole or in part on or after December 20, 2018, if the last reported sale price per share of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

For additional information regarding the 2020 Notes, see Note 9 to our condensed consolidated financial statements.

In February 2016, we completed the acquisition of Naked Apartments. The total purchase price for the acquisition of Naked Apartments was approximately $13.2 million in cash. A substantial majority of the purchase price for Naked Apartments has been allocated to goodwill and intangible assets.

In June 2016, we settled a lawsuit with Move, Inc. and certain other parties whereby the Company paid $130.0 million in connection with a release of all claims. For additional information about the settlement of this lawsuit, please refer to Part II, Item 1.

The following table presents selected cash flow data for the periods presented:

	Nine Months Ended September 30,
	2016			2015
	(in thousands, unaudited)
Cash Flow Data:
Net cash provided by (used in) operating activities	$	(30,436	)	$	38,588
Net cash provided by (used in) investing activities		(27,911	)		58,632
Net cash provided by financing activities		19,969			10,554

Cash Flows Provided By (Used In) Operating Activities

Our operating cash flows result primarily from cash received from real estate professionals, mortgage professionals, rental professionals and brand advertisers. Our primary uses of cash from operating activities include payments for marketing and advertising activities and employee benefits and compensation. Additionally, uses of cash from operating activities include costs associated with operating our mobile applications and websites and other general corporate expenditures.

For the nine months ended September 30, 2016, net cash used in operating activities was $30.4 million. This was primarily driven by a net loss of $196.9 million, including the impact of the settlement of a lawsuit for $130.0 million in June 2016, adjusted by share-based compensation expense of $81.2 million, depreciation and amortization expense of $74.9 million, a loss on disposal of property and equipment of $3.4 million, bad debt expense of $1.7 million, a $1.4 million gain on the divestiture of a business and a $1.4 million non-cash change in the valuation allowance related to a deferred tax liability generated in connection with our February 2016 acquisition of Naked Apartments. Changes in operating assets and liabilities increased cash provided by operating activities by $6.6 million. The increase in operating assets and liabilities is primarily due to a $13.0 million increase in accrued compensation and benefits due primarily to an increase in sales commissions and the timing of payroll, an $11.8 million increase in accounts receivable driven by an increase in revenue and a $5.6 million increase in deferred revenue driven by an increase in revenue.

For the nine months ended September 30, 2015, net cash provided by operating activities was $38.6 million. This was driven by a net loss of $123.2 million, adjusted by share-based compensation expense of $80.9 million, depreciation and amortization expense of $54.0 million, non-cash restructuring costs of $19.2 million, a $3.7 non-cash loss on divestiture of businesses, a $2.9 million non-cash change in the valuation allowance related to a deferred tax liability generated in connection with our acquisition of DotLoop, an increase in the balance of deferred rent of $2.6 million, bad debt expense of $2.4 million, amortization of bond premium of $2.1 million, and a loss on disposal of property and equipment of $1.0 million. Changes in operating assets and liabilities decreased cash provided by operating activities by $1.4 million.

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Cash Flows Provided By (Used In) Investing Activities

Our primary investing activities include the purchase and sale or maturity of investments, the purchase of property and equipment and intangible assets, and net cash acquired or cash paid in connection with acquisitions.

For the nine months ended September 30, 2016, net cash used in investing activities was $27.9 million. This was primarily the result of $53.6 million of purchases for property and equipment and intangible assets and $16.3 million paid in connection with our February 2016 acquisition of Naked Apartments and our August 2016 acquisition of Bridge Interactive Group, partially offset by $36.8 million of net maturities and sales of investments, $3.2 million in proceeds from the divestiture of a business and a $2.0 million decrease in restricted cash.

For the nine months ended September 30, 2015, net cash provided by investing activities was $58.6 million. This was primarily the result of $173.4 million of net cash acquired in connection with our acquisition of Trulia, $25.1 million of net maturities and sales of investments, and $17.6 million in proceeds from the divestiture of businesses, partially offset by $104.2 million paid in connection with our acquisition of DotLoop and $53.5 million of purchases for property and equipment and intangible assets.

Cash Flows Provided By Financing Activities

For the nine months ended September 30, 2016 and 2015, our financing activities primarily related to the exercise of employee option awards. The proceeds from the exercise of option awards for the nine months ended September 30, 2016 and 2015 were $20.5 million and $18.5 million, respectively. In addition, for the nine months ended September 30, 2015, approximately $7.9 million of equity awards was withheld for tax liabilities.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements other than outstanding surety bonds issued for our benefit of approximately $3.6 million as of September 30, 2016. We do not believe that the surety bonds will have a material effect on our liquidity, capital resources, market risk support or credit risk support. For additional information regarding the surety bonds, see Note 14 to our condensed consolidated financial statements under the subsection titled “Surety Bonds”.

Contractual Obligations

There have been no material changes outside the ordinary course of business in our commitments under contractual obligations as previously disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016.

As of September 30, 2016, we have outstanding letters of credit of approximately $5.2 million, $1.8 million, $1.1 million and $1.1 million, respectively, which secure our lease obligations in connection with the operating leases of our San Francisco, Seattle, New York and Denver office spaces.

In the course of business, we are required to provide financial commitments in the form of surety bonds to third parties as a guarantee of our performance on and our compliance with certain obligations. If we were to fail to perform or comply with these obligations, any draws upon surety bonds issued on our behalf would then trigger our payment obligation to the surety bond issuer. We have outstanding surety bonds issued for our benefit of approximately $3.6 million as of September 30, 2016.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. For information on our critical accounting policies and estimates, see Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of our Annual Report on Form 10-K for the year ended December 31, 2015. There have been no material changes to our critical accounting policies and estimates as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

40

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily consist of fluctuations in interest rates.

Interest Rate Risk

Under our current investment policy, we invest our excess cash in money market funds, certificates of deposit, U.S. government agency securities, foreign government securities, municipal securities, and corporate notes and bonds. Our current investment policy seeks first to preserve principal, second to provide liquidity for our operating and capital needs and third to maximize yield without putting our principal at risk.

Our investments are exposed to market risk due to the fluctuation of prevailing interest rates that may reduce the yield on our investments or their fair value. As our investment portfolio is short-term in nature, we do not believe an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio, and therefore we do not expect our results of operations or cash flows to be materially affected by a sudden change in market interest rates.

As of September 30, 2016, we also have outstanding $230.0 million aggregate principal Convertible Senior Notes due in 2020 (the “2020 Notes”). The 2020 Notes were guaranteed by Zillow Group in connection with our February 2015 acquisition of Trulia, Inc. The 2020 Notes carry a fixed interest rate of 2.75% per year.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations or financial condition. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations and financial condition.

Foreign Currency Exchange Risk

We do not believe that foreign currency exchange risk has had a material effect on our business, results of operations or financial condition. As we do not maintain a significant balance of foreign currency, we do not believe an immediate 10% increase or decrease in foreign currency exchange rates relative to the U.S. dollar would have a material effect on our business, results of operations or financial condition.

41

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of September 30, 2016. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective as of September 30, 2016.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

42

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In September 2010, LendingTree, LLC (“LendingTree”) filed a complaint against us for patent infringement in the U.S. District Court for the Western District of North Carolina. The complaint alleged, among other things, that our website technology infringes two patents purporting to cover a “Method and computer network for coordinating a loan over the internet.” The complaint sought, among other things, a judgment that we infringed certain patents held by LendingTree, an injunction against the alleged infringing activities and an award for damages. We denied the allegations and asserted defenses and counterclaims seeking declarations that we are not infringing the patents and that the patents are invalid. In March 2014, a federal jury found that Zillow does not infringe the patents and that the patents asserted by LendingTree are invalid. In April, 2014, LendingTree filed two motions for judgment as a matter of law and for a new trial, all of which we opposed. In October 2014, the Court issued an order upholding the jury verdict and denying LendingTree’s motions. In November 2014, LendingTree filed a notice of appeal and, in September 2015, LendingTree filed its opening brief. In December 2015, we filed a response brief to LendingTree’s opening brief. A hearing regarding LendingTree’s appeal occurred in June 2016. In July 2016, the Court of Appeals for the Federal Circuit issued an order in which it found all claims asserted against us invalid under Section 101. In September 2016, LendingTree filed notice that they would be filing to appeal for a rehearing, but failed to file by the deadline. There are no further avenues for appeal or rehearing; the order issued by the Court of Appeals will stand.

In March 2014, Move, Inc., the National Association of Realtors and three related entities (collectively, “Plaintiffs”), filed a complaint against us and Errol Samuelson, our Chief Industry Development Officer, in the Superior Court of the State of Washington in King County, alleging, among other things, that Zillow and Mr. Samuelson misappropriated plaintiffs’ trade secrets in connection with Mr. Samuelson joining Zillow in March 2014. The Plaintiffs sought, among other things, an injunction against the alleged misappropriations and Mr. Samuelson working for us, as well as significant monetary damages. In February 2015, Plaintiffs filed an amended complaint that, among other things, added Curt Beardsley, our Vice President of MLS Partnerships, as a defendant in the matter. In August 2015, Zillow filed an amended answer and counterclaim against Plaintiffs that alleged, among other things, that Plaintiffs violated the Washington Trade Secrets Act and aided and abetted a breach of the duty of confidentiality through the public filing of a document that included Zillow’s confidential information and trade secrets. On January 8, 2016, Plaintiffs filed a motion seeking sanctions against defendants for alleged evidence spoliation. The court held a spoliation hearing in April and on May 17, 2016 denied Plaintiffs motion for sanctions as to Zillow and Mr. Samuelson. With respect to Mr. Beardsley, the Court denied the motion as to terminating sanctions but granted the motion ordering a permissive adverse inference instruction with respect to five devices. Defendants each filed multiple motions for partial summary judgment against Plaintiffs regarding, among other things, certain of their claims of alleged misappropriation of trade secrets. Defendants also filed various motions seeking to exclude or limit damages. The court entered various rulings granting and denying these motions in 2016. On June 6, 2016, the Company reached an amicable resolution by way of a settlement agreement and release (the “Settlement Agreement”) with Plaintiffs pursuant to which the Company agreed to pay Plaintiffs $130.0 million in connection with a release of all claims. On June 16, 2016, pursuant to the terms agreed to between the parties, the court dismissed all claims and counterclaims asserted in this matter with prejudice. The Settlement Agreement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties.

In March 2015, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) notified the Company that it was initiating a compliance review to determine the Company’s compliance with one or more federal labor laws enforced by the DOL. The Company understands that the scope of this review is limited to the review of the Company’s compliance with certain wage and hour laws with respect to Zillow, Inc. inside sales consultants during a two-year period between 2013 and 2015. In October 2015, the DOL orally informed us that the compliance review was ongoing but that, based on its preliminary findings, it believed the Company may have failed to pay overtime to such inside sales consultants. As discussed below, on May 5, 2016, Zillow, Inc. agreed to settle a class action lawsuit which alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. The settlement of the class action lawsuit is contingent on Zillow, Inc.’s complete resolution of the DOL compliance review.

In November 2014, a former employee filed a putative class action lawsuit against us in the United States District Court, Central District of California, with the caption Ian Freeman v. Zillow, Inc. The complaint alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. After the court granted our two motions to dismiss certain claims, plaintiff filed a second amended complaint that includes claims under the Fair Labor Standards Act. On November 20, 2015, plaintiff filed a motion for class certification. On February 26, 2016, the court granted the plaintiff’s motion for class certification. On May 5, 2016, the parties agreed to settle the lawsuit for an immaterial amount. The settlement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. The settlement class includes all current and former inside sales consultants employed by Zillow, Inc. in any office from January 1, 2010 through the present. We have recorded an accrual for an immaterial amount related to the settlement as of September 30, 2016. The settlement is contingent on the court approving the class action settlement and upon Zillow, Inc.’s complete resolution of the DOL compliance review described above. On June 9, 2016, the Ninth Circuit Court of Appeals granted our petition for permission to appeal the order granting class certification.

43

Although the results of litigation cannot be predicted with certainty, we currently believe we have substantial and meritorious defenses to the outstanding claims.

From time to time, we are involved in litigation and claims that arise in the ordinary course of business and although we cannot be certain of the outcome of any such litigation or claims, nor the amount of damages and exposure that we could incur, we currently believe that the final disposition of such matters will not have a material effect on our business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

44

Item 1A. Risk Factors

There have not been any material changes to the risk factors affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2015. However, you should carefully consider the factors discussed in our Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

There were no unregistered sales of equity securities during the three months ended September 30, 2016.

Item 4. Mine Safety Disclosures

Not applicable.

46

Item 6. Exhibits

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

47

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 2, 2016	ZILLOW GROUP, INC.
	By:	/S/ KATHLEEN PHILIPS
	Name:	Kathleen Philips
	Title:	Chief Financial Officer, Chief Legal Officer, and Secretary

48

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13-14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Spencer M. Rascoff, certify that:

1. I have reviewed this report on Form 10-Q of Zillow Group, Inc. for the fiscal quarter ended September 30, 2016;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/S/ SPENCER M. RASCOFF
Name:	Spencer M. Rascoff
Title:	Chief Executive Officer
Date:	November 2, 2016

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13-14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kathleen Philips, certify that:

1. I have reviewed this report on Form 10-Q of Zillow Group, Inc. for the fiscal quarter ended September 30, 2016;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/S/ KATHLEEN PHILIPS
Name:	Kathleen Philips
Title:	Chief Financial Officer, Chief Legal Officer, and Secretary
Date:	November 2, 2016

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Zillow Group, Inc. (the “Company”) for the fiscal quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Spencer M. Rascoff, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/S/ SPENCER M. RASCOFF
Name:	Spencer M. Rascoff
Title:	Chief Executive Officer
Date:	November 2, 2016

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Zillow Group, Inc. (the “Company”) for the fiscal quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kathleen Philips, Chief Financial Officer, Chief Legal Officer, and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/S/ KATHLEEN PHILIPS
Name:	Kathleen Philips
Title:	Chief Financial Officer, Chief Legal Officer, and Secretary
Date:	November 2, 2016

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 26, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	ZG
Entity Registrant Name	Zillow Group, Inc.
Entity Central Index Key	0001617640
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		54,075,108
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		6,217,447
Class C Capital Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		120,957,805

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 190,760	$ 229,138
Short-term investments	253,845	291,151
Accounts receivable, net of allowance for doubtful accounts of $1,318 and $3,378 at September 30, 2016 and December 31, 2015, respectively	39,939	29,789
Prepaid expenses and other current assets	17,238	24,016
Total current assets	501,782	574,094
Restricted cash	1,053	3,015
Property and equipment, net	94,045	85,523
Goodwill	1,923,480	1,909,167
Intangible assets, net	537,177	558,881
Other assets	6,967	5,020
Total assets	3,064,504	3,135,700
Current liabilities:
Accounts payable	6,697	3,361
Accrued expenses and other current liabilities	34,745	43,047
Accrued compensation and benefits	24,611	11,392
Deferred revenue	27,005	21,450
Deferred rent, current portion	1,236	1,172
Total current liabilities	94,294	80,422
Deferred rent, net of current portion	13,991	13,743
Long-term debt	230,000	230,000
Deferred tax liabilities and other long-term liabilities	134,513	132,482
Total liabilities	472,798	456,647
Commitments and contingencies (Note 14)
Shareholders' equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized as of September 30, 2016 and December 31, 2015; no shares issued and outstanding as of September 30, 2016 and December 31, 2015
Additional paid-in capital	3,065,042	2,956,111
Accumulated other comprehensive income (loss)	198	(471)
Accumulated deficit	(473,552)	(276,605)
Total shareholders' equity	2,591,706	2,679,053
Total liabilities and shareholders' equity	3,064,504	3,135,700
Class A Common Stock
Shareholders' equity:
Common stock	5	5
Class B Common Stock
Shareholders' equity:
Common stock	1	1
Class C Capital Stock
Shareholders' equity:
Common stock	$ 12	$ 12

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts receivable, allowance for doubtful accounts	$ 1,318	$ 3,378
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	30,000,000	30,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Class A Common Stock
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	1,245,000,000	1,245,000,000
Common stock, shares issued	54,065,859	53,299,111
Common stock, shares outstanding	54,065,859	53,299,111
Class B Common Stock
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	6,217,447	6,217,447
Common stock, shares outstanding	6,217,447	6,217,447
Class C Capital Stock
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	600,000,000	600,000,000
Common stock, shares issued	120,924,426	118,958,359
Common stock, shares outstanding	120,924,426	118,958,359

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue		$ 224,592	$ 176,765	$ 618,977	$ 475,307
Costs and expenses:
Cost of revenue (exclusive of amortization)	[1]	18,254	16,453	51,926	46,509
Sales and marketing		92,794	82,044	290,810	229,272
Technology and development		69,171	53,718	201,009	142,783
General and administrative		37,690	42,672	271,159	124,506
Acquisition-related costs		93	1,988	890	16,144
Restructuring costs			3,425		35,142
Loss (gain) on divestiture of businesses		(1,251)	4,143	(1,251)	4,143
Total costs and expenses		216,751	204,443	814,543	598,499
Income (loss) from operations		7,841	(27,678)	(195,566)	(123,192)
Other income		561	366	1,995	1,085
Interest expense		(1,595)	(1,590)	(4,740)	(3,900)
Income (loss) before income taxes		6,807	(28,902)	(198,311)	(126,007)
Income tax benefit			2,853	1,364	2,853
Net income (loss)		$ 6,807	$ (26,049)	$ (196,947)	$ (123,154)
Net income (loss) per share - basic and diluted		$ 0.04	$ (0.15)	$ (1.10)	$ (0.74)
Weighted-average shares outstanding - basic		180,583	177,098	179,577	166,986
Weighted-average shares outstanding - diluted		189,661	177,098	179,577	166,986

[1] Amortization of website development costs and intangible assets included in technology and development

XML

Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Amortization of website development costs and intangible assets included in technology and development	$ 21,917	$ 16,405	$ 62,821	$ 45,304

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 6,807	$ (26,049)	$ (196,947)	$ (123,154)
Other comprehensive income (loss):
Unrealized gains (losses) on investments	(179)	154	664	284
Reclassification adjustment for net (gains) losses from investments included in net loss		(1)	5	(14)
Net unrealized gains (losses) on investments	(179)	153	669	270
Total other comprehensive income (loss)	(179)	153	669	270
Comprehensive income (loss)	$ 6,628	$ (25,896)	$ (196,278)	$ (122,884)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities
Net loss	$ (196,947)	$ (123,154)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of amounts assumed in connection with acquisitions:
Depreciation and amortization	74,852	54,031
Share-based compensation expense	81,152	80,902
Restructuring costs		19,206
Release of valuation allowance on certain deferred tax assets	(1,364)	(2,853)
Loss on disposal of property and equipment	3,416	1,007
Loss (gain) on divestiture of businesses	(1,360)	3,690
Bad debt expense	1,715	2,414
Deferred rent	312	2,635
Amortization of bond premium	1,171	2,090
Changes in operating assets and liabilities:
Accounts receivable	(11,770)	(4,009)
Prepaid expenses and other assets	5,197	7,849
Accounts payable	3,296	(8,394)
Accrued expenses and other current liabilities	(8,746)	6,132
Accrued compensation and benefits	13,016	(2,982)
Deferred revenue	5,645	(4,064)
Other long-term liabilities	(21)	4,088
Net cash provided by (used in) operating activities	(30,436)	38,588
Investing activities
Proceeds from maturities of investments	158,828	244,079
Purchases of investments	(126,986)	(227,223)
Proceeds from sales of investments	4,963	8,260
Decrease in restricted cash, net of amounts assumed in connection with an acquisition	1,962	207
Purchases of property and equipment	(45,732)	(39,594)
Purchases of intangible assets	(7,827)	(13,911)
Proceeds from divestiture of businesses	3,200	17,600
Cash acquired in acquisition, net		173,406
Cash paid for acquisitions, net	(16,319)	(104,192)
Net cash provided by (used in) investing activities	(27,911)	58,632
Financing activities
Proceeds from exercise of stock options	20,461	18,499
Value of equity awards withheld for tax liability	(492)	(7,945)
Net cash provided by financing activities	19,969	10,554
Net increase (decrease) in cash and cash equivalents during period	(38,378)	107,774
Cash and cash equivalents at beginning of period	229,138	125,765
Cash and cash equivalents at end of period	190,760	233,539
Supplemental disclosures of cash flow information
Cash paid for interest	3,163	3,163
Noncash transactions:
Value of Class A common stock issued in connection with an acquisition		1,883,728
Capitalized share-based compensation	7,809	8,071
Write-off of fully depreciated property and equipment	$ 11,585	$ 24,899

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Organization and Description of Business

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Organization and Description of Business

Note 1. Organization and Description of Business

Zillow Group, Inc. operates the leading real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and products to help people find vital information about homes and connect with local professionals. Zillow Group’s brands focus on all stages of the home lifecycle: renting, buying, selling, financing and home improvement. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow, Trulia, StreetEasy, HotPads and Naked Apartments. In addition, Zillow Group works with tens of thousands of real estate agents, lenders and rental professionals, helping maximize business opportunities and connect to millions of consumers. We also own and operate a number of brands for real estate, rental and mortgage professionals, including Mortech, Bridge Interactive, DotLoop and Retsly.

Certain Significant Risks and Uncertainties

We operate in a dynamic industry and, accordingly, can be affected by a variety of factors. For example, we believe that changes in any of the following areas could have a significant negative effect on us in terms of our future financial position, results of operations or cash flows: our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; rates of revenue growth; engagement and usage of our products; competition in our market; scaling and adaptation of existing technology and network infrastructure; management of our growth; qualified employees and key personnel; protection of our brand and intellectual property; changes in government regulation affecting our business; intellectual property infringement and other claims; and protection of customers’ information and other privacy concerns, among other things.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes as of and for the year ended December 31, 2015 included in Zillow Group, Inc.’s Annual Report on Form 10-K, which was filed with the SEC on February 12, 2016. The condensed consolidated balance sheet as of December 31, 2015, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

Effective February 17, 2015, Zillow Group acquired Trulia, Inc. (“Trulia”), and each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. For financial reporting and accounting purposes, Zillow was the acquirer of Trulia. The results presented in the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements reflect those of Zillow prior to the completion of the acquisition of Trulia on February 17, 2015, and Trulia’s results of operations have been included prospectively after February 17, 2015. Market Leader revenue is included in our results of operations from February 17, 2015 through the date of divestiture of September 30, 2015.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of September 30, 2016, our results of operations and comprehensive income (loss) for the three and nine month periods ended September 30, 2016 and 2015, and our cash flows for the nine month periods ended September 30, 2016 and 2015. The results of the three and nine month periods ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ended December 31, 2016 or for any interim period or for any other future year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, website development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and goodwill, among others. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected.

Reclassifications

Certain immaterial reclassifications have been made in the condensed consolidated balance sheets and statements of cash flows to conform data for prior periods to the current format.

Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We adopted this guidance in the interim period ending on September 30, 2016. The adoption of this guidance did not have any impact on our statement of cash flows.

In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. This standard requires the use of an expected loss impairment model for instruments measured at amortized cost. For available-for-sale debt securities, an entity is required to recognize an allowance for credit losses rather than as a write-down. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. The adoption of this guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We have not yet determined the timing of adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In March 2016, the FASB issued guidance on contingent put and call options in debt instruments. This standard clarifies that the assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host only requires an analysis of the four-step decision sequence and does not require an entity to separately assess whether the contingency itself is indexed only to interest rates or the credit risk of the entity. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016 using a modified retrospective transition method, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017. We do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows.

In March 2016, the FASB issued guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, impact of forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017 using the modified retrospective approach through a cumulative-effect adjustment to beginning accumulated deficit. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

In February 2016, the FASB issued guidance on leases. This standard requires the recognition of a right-of-use asset and lease liability on the balance sheet for all leases. This standard also requires more detailed disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and early adoption is permitted. We expect to adopt this guidance on January 1, 2019. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This standard requires equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. This standard also requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, early adoption is permitted, and the guidance must be applied prospectively to equity investments that exist as of the adoption date. We expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance related to a customer’s accounting for fees paid in a cloud computing arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, and early adoption is permitted. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows.

In February 2015, the FASB issued guidance relating to the consolidation analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This standard affects both the variable interest entity and voting interest entity consolidation models. All legal entities are subject to reevaluation under the revised consolidation model. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had any impact on our financial position, results of operations or cash flows.

In August 2014, the FASB issued guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern. This standard provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual reporting periods ending after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance for the year ending December 31, 2016. We do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows.

In May 2014, the FASB issued guidance on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations, identifying performance obligations and the accounting for licenses of intellectual property. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows, if any.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash equivalents — Cash equivalents are comprised of highly liquid investments, including money market funds and certificates of deposit, with original maturities of less than three months. The fair value measurement of these assets is based on quoted market prices in active markets and these assets are recorded at fair value.

Investments — Our investments consist of fixed income securities, which include U.S. and foreign government agency securities, corporate notes and bonds, municipal securities and certificates of deposit. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

The following tables present the balances of assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

	September 30, 2016
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	121,087	$	121,087	$	—
Certificates of deposit		498		—		498
Short-term investments:
U.S. government agency securities		146,914		—		146,914
Corporate notes and bonds		61,658		—		61,658
Municipal securities		29,798		—		29,798
Certificates of deposit		6,477		—		6,477
Foreign government securities		6,008		—		6,008
Commercial paper		2,990		—		2,990
Restricted cash		1,053		—		1,053
Total	$	376,483	$	121,087	$	255,396

	December 31, 2015
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	195,870	$	195,870	$	—
Certificates of deposit		1,622		—		1,622
Short-term investments:
U.S. government agency securities		193,168		—		193,168
Corporate notes and bonds		41,314		—		41,314
Municipal securities		39,853		—		39,853
Certificates of deposit		11,837		—		11,837
Foreign government securities		4,979		—		4,979
Restricted cash		3,015		—		3,015
Total	$	491,658	$	195,870	$	295,788

See Note 9 for the carrying amount and estimated fair value of the Company’s convertible senior notes.

We did not have any Level 3 assets as of September 30, 2016 or December 31, 2015. There were no liabilities measured at fair value as of September 30, 2016 or December 31, 2015.

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Cash, Cash Equivalents, Investments and Restricted Cash

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Cash, Cash Equivalents, Investments and Restricted Cash

Note 4. Cash, Cash Equivalents, Investments and Restricted Cash

Our investments are classified as available-for-sale securities and are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in shareholders’ equity, while realized gains and losses and other-than-temporary impairments are reported as a component of net income (loss) based on specific identification. On January 1, 2015 we transferred our cash equivalent and investment portfolio of approximately $440.8 million from held-to-maturity to available-for-sale, which resulted in the recognition of an insignificant loss of $0.1 million. The transfer of the investment portfolio to available-for-sale was made to provide increased flexibility in the use of our investments to support current operations.

The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash and cash equivalents, available-for-sale investments and restricted cash as of the dates presented (in thousands):

	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	69,175	$	—	$	—		$	69,175
Cash equivalents:
Money market funds		121,087		—		—			121,087
Certificates of deposit		498		—		—			498
Short-term investments:
U.S government agency securities		146,814		117		(17	)		146,914
Corporate notes and bonds		61,650		22		(14	)		61,658
Municipal securities		29,816		1		(19	)		29,798
Certificates of deposit		6,476		1		—			6,477
Foreign government securities		5,994		14		—			6,008
Commercial paper		2,990		—		—			2,990
Restricted cash		1,053		—		—			1,053
Total	$	445,553	$	155	$	(50	)	$	445,658

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	31,646	$	—	$	—		$	31,646
Cash equivalents:
Money market funds		195,870		—		—			195,870
Certificates of deposit		1,622		—		—			1,622
Short-term investments:
U.S government agency securities		193,623		1		(456	)		193,168
Corporate notes and bonds		41,390		1		(77	)		41,314
Municipal securities		39,878		11		(36	)		39,853
Certificates of deposit		11,839		1		(3	)		11,837
Foreign government securities		4,985		—		(6	)		4,979
Restricted cash		3,015		—		—			3,015
Total	$	523,868	$	14	$	(578	)	$	523,304

The following table presents available-for-sale investments by contractual maturity date as of September 30, 2016 (in thousands):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	199,026	$	199,100
Due after one year through two years		54,714		54,745
Total	$	253,740	$	253,845

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Note 5. Property and Equipment, net

The following table presents the detail of property and equipment as of the dates presented (in thousands):

	September 30, 2016			December 31, 2015
Website development costs	$	93,792		$	74,750
Computer equipment		26,848			20,965
Leasehold improvements		34,991			32,918
Construction-in-progress		18,888			15,630
Office equipment, furniture and fixtures		17,264			13,495
Property and equipment		191,783			157,758
Less: accumulated amortization and depreciation		(97,738	)		(72,235	)
Property and equipment, net	$	94,045		$	85,523

We recorded depreciation expense related to property and equipment (other than website development costs) of $3.6 million and $3.2 million, respectively, during the three months ended September 30, 2016 and 2015, and $12.0 million and $8.7 million, respectively, during the nine months ended September 30, 2016 and 2015.

We capitalized $13.0 million and $13.6 million, respectively, in website and software development costs during the three months ended September 30, 2016 and 2015, and $38.1 million and $35.4 million, respectively, during the nine months ended September 30, 2016 and 2015. Amortization expense for website development costs included in technology and development expenses was $10.4 million and $6.2 million, respectively, during the three months ended September 30, 2016 and 2015, and $29.4 million and $16.8 million, respectively, during the nine months ended September 30, 2016 and 2015.

Construction-in-progress primarily consists of website development costs that are capitalizable, but for which the associated applications had not been placed in service.

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Acquisitions

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Acquisitions

Note 6. Acquisitions

Acquisition of Bridge Interactive Group

In July 2016, Zillow, Inc., Bridge Interactive Group, LLC, a Georgia limited liability company (“Bridge Interactive”), each of the members of Bridge Interactive, and an individual acting as the seller representative, entered into a Securities Purchase Agreement pursuant to which Zillow, Inc. acquired all of the outstanding ownership interests of Bridge Interactive on August 1, 2016. Bridge Interactive is a creator of broker and multiple listing service (MLS) back-office software. Our acquisition of Bridge Interactive has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of August 1, 2016.

Acquisition-related costs incurred, which primarily included legal and accounting fees and other external costs directly related to the acquisition, were expensed as incurred and were not material.

The results of operations related to the acquisition of Bridge Interactive have been included in our condensed consolidated financial statements since the date of acquisition, and are not significant. Pro forma financial information for the acquisition accounted for as a business combination has not been presented, as the effects were not material to our condensed consolidated financial statements.

Acquisition of Naked Apartments

In February 2016, Zillow, Inc., Nectarine Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Zillow, Inc. (“Merger Sub”), Naked Apartments, Inc., a Delaware corporation (“Naked Apartments”), and an individual acting as the stockholder representative, entered into an Agreement and Plan of Merger (the “Naked Apartments Merger Agreement”), pursuant to which Zillow, Inc. acquired Naked Apartments on February 22, 2016 for approximately $13.2 million in cash. Under the terms and subject to the conditions of the Naked Apartments Merger Agreement, Merger Sub merged with and into Naked Apartments, with Naked Apartments remaining as the surviving company and a wholly owned subsidiary of Zillow, Inc. Naked Apartments is New York City’s largest rentals-only platform.

Our acquisition of Naked Apartments has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of February 22, 2016. Goodwill, which represents the expected synergies from combining the acquired assets and the operations of the acquirer, as well as intangible assets that do not qualify for separate recognition, is measured as of the acquisition date as the excess of consideration transferred, which is also measured at fair value, and the net of the fair values of the assets acquired and the liabilities assumed as of the acquisition date.

The total purchase price has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date. Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands):

Current assets	$	371
Identifiable intangible assets		3,700
Goodwill		10,610
Current liabilities		(101	)
Deferred tax liabilities		(1,416	)
Total preliminary estimated purchase price	$	13,164

Our estimates and assumptions related to the purchase price allocation are preliminary and subject to change during the measurement period (up to one year from the acquisition date) as we finalize the amount of intangible assets, goodwill and deferred taxes recorded in connection with the acquisition.

Acquisition-related costs incurred, which primarily included legal and accounting fees and other external costs directly related to the acquisition, were expensed as incurred and were not material.

The results of operations related to the acquisition of Naked Apartments have been included in our condensed consolidated financial statements since the date of acquisition, and are not significant. Pro forma financial information for the acquisition accounted for as a business combination has not been presented, as the effects were not material to our condensed consolidated financial statements.

Acquisition of Trulia

Effective February 17, 2015, pursuant to the Merger Agreement dated as of July 28, 2014 by and among Zillow, Zillow Group and Trulia, following the consummation of the transactions contemplated by the Merger Agreement, each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. With the addition of Trulia, we expanded our audience and added another consumer brand that offers buyers, sellers, homeowners and renters access to information about homes and real estate for free, and provides advertising and software solutions that help real estate professionals grow their business.

At the effective time of the merger, each share of Zillow Class A common stock was converted into the right to receive one share of fully paid and nonassessable Zillow Group Class A common stock, and each share of Zillow Class B common stock was converted into the right to receive one share of fully paid and nonassessable Zillow Group Class B common stock. Generally, each Zillow stock option and restricted stock unit outstanding (whether or not vested or exercisable) as of the effective time of the merger was assumed by Zillow Group and converted into a corresponding equity award to purchase or acquire shares of Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original option or award. Any unvested shares of Zillow Class A common stock subject to a repurchase option, risk of forfeiture or other condition as of the effective time of the merger were exchanged for shares of Zillow Group Class A common stock that were also unvested and subject to the same repurchase option, risk of forfeiture or other condition. Each Zillow restricted unit outstanding as of the effective time of the merger was assumed by Zillow Group and converted into the right to receive Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original restricted unit.

At the effective time of the merger, each share of Trulia common stock was converted into the right to receive 0.444 of a share of fully paid and nonassessable Zillow Group Class A common stock. Generally, each Trulia stock option, restricted stock unit, and stock appreciation right outstanding (whether or not vested or exercisable) as of the effective time of the merger was assumed by Zillow Group and converted into a corresponding equity award to purchase, acquire shares of, or participate in the appreciation in the price of Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original option or award, subject to specified adjustments to reflect the effect of the Trulia exchange ratio. Each outstanding unvested Trulia stock option and restricted stock unit held by a member of the Trulia board of directors immediately prior to the effective time of the merger who was not an employee of Trulia or any subsidiary of Trulia became fully vested immediately prior to the effective time of the merger in accordance with the terms of the applicable award agreements.

Our acquisition of Trulia has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of February 17, 2015. Goodwill, which represents the expected synergies from combining the acquired assets and the operations of the acquirer, as well as intangible assets that do not qualify for separate recognition, is measured as of the acquisition date as the excess of consideration transferred, which is also measured at fair value, and the net of the fair values of the assets acquired and the liabilities assumed as of the acquisition date.

In all cases in which Zillow Group’s closing stock price is a determining factor in arriving at the amount of merger consideration, the stock price assumed is the closing price of Zillow Class A common stock on NASDAQ on February 17, 2015 ($109.14 per share, unadjusted for the August 2015 stock split effected in the form of a dividend). The purchase price to effect the acquisition of Trulia of approximately $2.0 billion is summarized in the following table (in thousands):

Value of Class A common stock issued	$	1,883,728
Substituted stock options and stock appreciation rights assumed by Zillow Group attributable to pre-combination service		54,853
Substituted restricted stock units assumed by Zillow Group attributable to pre-combination service		27,798
Cash paid in lieu of fractional outstanding shares		41
Total purchase price	$	1,966,420

A total of 17,259,704 shares of Zillow Group Class A common stock were issued in connection with the acquisition of Trulia. Trulia stockholders did not receive any fractional shares of Zillow Group Class A common stock in connection with the acquisition. Instead of receiving any fractional shares, each holder of Trulia common stock was paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ on the last complete trading day prior to the date of the effective time of the merger.

A portion of the purchase price has been attributed to the substitution of Trulia’s stock options, restricted stock units and stock appreciation rights outstanding as of February 17, 2015, for corresponding stock options, restricted stock units and stock appreciation rights to purchase, vest in or participate in the appreciation in the price of shares of Zillow Group Class A common stock, all at an exchange ratio of 0.444. The fair value of Trulia’s share-based awards assumed in connection with the acquisition, including stock options, restricted stock units and stock appreciation rights, which relate to post-combination service will be recorded by Zillow Group as share-based compensation expense ratably over the remaining related vesting period of the respective award. The share-based compensation expense related to stock options and stock appreciation rights assumed is estimated at the acquisition date using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 53%, a risk-free interest rate of 1.10%, and an expected life of three years. For restricted stock units assumed, Zillow Group used the market value of Zillow’s Class A common stock on the date of acquisition to determine the fair value of the award.

The total purchase price has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date. Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands):

Cash and cash equivalents	$	173,447
Accounts receivable		13,093
Prepaid expenses and other current assets		20,833
Restricted cash		6,946
Property and equipment		30,189
Other assets		434
Identifiable intangible assets		549,000
Goodwill		1,736,362
Accounts payable, accrued expenses and other current liabilities		(51,258	)
Accrued compensation and benefits		(8,324	)
Deferred revenue		(8,300	)
Long-term debt		(230,000	)
Debt premium recorded in additional paid-in capital		(126,386	)
Deferred tax liabilities and other long-term liabilities		(139,616	)
Total purchase price	$	1,966,420

The fair value of identifiable intangible assets acquired consisted of the following (in thousands):

	Estimated Fair Value		Estimated Useful Life (in years)
Trulia trade names and trademarks	$	351,000		Indefinite
Market Leader trade names and trademarks		2,000		2
Customer relationships		92,000		3-7
Developed technology		91,000		3-7
Advertising relationships		9,000		3
MLS home data feeds		4,000		3
Total	$	549,000

The fair value of the intangible assets acquired was determined by Zillow Group, and Zillow Group considered or relied in part upon a valuation report of a third-party expert. Zillow Group used an income approach to measure the fair value of the trade names and trademarks and the developed technology based on the relief-from-royalty method. Zillow Group used an income approach to measure the fair value of the customer relationships based on the excess earnings method, whereby the fair value is estimated based upon the present value of cash flows that the applicable asset is expected to generate. Zillow Group used an income approach to measure the fair value of the advertising relationships based on a with and without analysis, whereby the fair value is estimated based on the present value of cash flows the combined business is expected to generate with and without the advertising relationships. Zillow Group used a cost approach to measure the fair value of the MLS home data feeds based on the estimated cost to replace the data feed library. These fair value measurements were based on Level 3 measurements under the fair value hierarchy.

A portion of the total purchase price was allocated to Trulia’s 2020 Notes (see Note 9). In accordance with the accounting guidance related to business combinations, the 2020 Notes are recognized at fair value as of the effective date of the acquisition. The fair value of the 2020 Notes as of the date of acquisition was approximately $356.4 million. The fair value of the 2020 Notes as of the date of acquisition was determined by Zillow Group, and Zillow Group considered or relied in part upon a valuation report of a third-party expert. The fair value of the 2020 Notes was determined through combination of the use of a binomial lattice valuation model and consideration of quoted market prices. The fair value is classified as Level 3 due to the use of significant unobservable inputs such as implied volatility of Zillow Group’s Class A common stock, discount spread and the limited trading activity for the 2020 Notes. Given the fair value of the 2020 Notes as of the date of acquisition of $356.4 million was at a substantial premium to the principal amount of $230.0 million, the premium amount of $126.4 million has been recorded as additional paid-in capital in the consolidated balance sheet as of the effective date of the acquisition. Accordingly, Zillow Group has recognized the liability component of the 2020 Notes at the stated par amount in the consolidated balance sheet as of the effective date of the acquisition. The conversion feature included in the 2020 Notes is not required to be bifurcated and separately accounted for as it meets the equity scope exception given the conversion feature (i) is indexed to Zillow Group’s Class A common stock and (ii) would be classified in shareholder’s equity. Further, the 2020 Notes do not permit or require Zillow Group to settle the debt in cash (in whole or in part) upon conversion.

A portion of the total purchase price was allocated to deferred tax liabilities primarily related to an indefinite-lived intangible asset generated in connection with the acquisition. Due to the recognition of a $351.0 million indefinite-lived Trulia trade name and trademark intangible asset as of the effective date of the acquisition, a deferred tax liability of $139.5 million was recognized which cannot be offset by the recognized deferred tax assets.

The results of operations related to the acquisition of Trulia have been included in our consolidated financial statements since the date of acquisition of February 17, 2015. However, disclosure of the amounts of revenue and earnings of the acquiree since the acquisition date is impracticable because discrete financial information is not available due to the rapid integration of Zillow’s and Trulia’s operations.

Unaudited Pro Forma Financial Information

The following unaudited pro forma condensed combined financial information gives effect to the acquisition of Trulia as if it were consummated on January 1, 2014 (the beginning of the comparable prior reporting period in the year of acquisition). The unaudited pro forma condensed combined financial information is presented for informational purposes only. The unaudited pro forma condensed combined financial information does not represent true historical financial information. Further, the unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on January 1, 2014 and should not be taken as representative of future results of operations of the combined company.

The following table presents the unaudited pro forma condensed combined financial information for the periods presented, except for the financial information presented for the three and nine month periods ended September 30, 2016 and revenue for the three months ended September 30, 2015, which are presented on an as-reported basis (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015 (1)			2016			2015 (2)
Revenue	$	224,592	$	176,765		$	618,977		$	510,565
Net income (loss)	$	6,807	$	(21,393	)		(196,947	)	$	(65,978	)

(1) The pro forma net loss for the three months ended September 30, 2015 includes pro forma adjustments for $3.4 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements and $1.2 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements.

(2) The pro forma net loss for the nine months ended September 30, 2015 includes pro forma adjustments for $49.1 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $37.3 million to eliminate share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $35.3 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements, $2.4 million to record additional amortization expense for acquired intangible assets and $1.1 million to eliminate Trulia’s historical amortization of capitalized website development costs.

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Goodwill

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Note 7. Goodwill

The following table presents the change in goodwill from December 31, 2015 through September 30, 2016 (in thousands):

Balance as of December 31, 2015	$	1,909,167
Goodwill recorded in connection with the acquisition of Naked Apartments		10,610
Goodwill recorded in connection with the acquisition of Bridge Interactive		4,899
Reduction of goodwill in connection with the divestiture of a business		(1,196	)
Balance as of September 30, 2016	$	1,923,480

The goodwill recorded in connection with the acquisitions of Naked Apartments and Bridge Interactive, which includes intangible assets that do not qualify for separate recognition, is not deductible for tax purposes.

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Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 8. Intangible Assets

The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands):

	September 30, 2016
	Cost		Accumulated Amortization			Net
Purchased content	$	40,544	$	(21,491	)	$	19,053
Software		9,971		(4,315	)		5,656
Customer relationships		103,200		(27,110	)		76,090
Developed technology		110,080		(31,652	)		78,428
Trade names and trademarks		4,960		(2,669	)		2,291
Advertising relationships		9,000		(4,848	)		4,152
MLS home data feeds		1,100		(593	)		507
Total	$	278,855	$	(92,678	)	$	186,177

	December 31, 2015
	Cost		Accumulated Amortization			Net
Purchased content	$	37,581	$	(19,649	)	$	17,932
Software		6,961		(2,845	)		4,116
Customer relationships		103,425		(16,204	)		87,221
Developed technology		108,295		(19,515	)		88,780
Trade names and trademarks		4,860		(2,212	)		2,648
Advertising relationships		9,000		(2,598	)		6,402
MLS home data feeds		1,100		(318	)		782
Total	$	271,222	$	(63,341	)	$	207,881

Amortization expense recorded for intangible assets for the three months ended September 30, 2016 and 2015 was $11.6 million and $10.2 million, respectively. Amortization expense recorded for intangible assets for the nine months ended September 30, 2016 and 2015 was $33.4 million and $28.5 million, respectively. These amounts are included in technology and development expenses.

As of September 30, 2016, we have an indefinite-lived intangible asset for $351.0 million that we recorded in connection with our February 2015 acquisition of Trulia for Trulia’s trade names and trademarks that is not subject to amortization.

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Convertible Senior Notes

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Convertible Senior Notes

Note 9. Convertible Senior Notes

In connection with the February 2015 acquisition of Trulia, a portion of the total purchase price was allocated to Trulia’s Convertible Senior Notes due in 2020 (the “2020 Notes”), which are unsecured senior obligations. Pursuant to and in accordance with the Merger Agreement, Zillow Group entered into a supplemental indenture in respect of the 2020 Notes in the aggregate principal amount of $230.0 million, which supplemental indenture provides, among other things, that, at the effective time of the Trulia Merger, (i) each outstanding 2020 Note is no longer convertible into shares of Trulia common stock and is convertible solely into shares of Zillow Group Class A common stock, pursuant to, and in accordance with, the terms of the indenture governing the 2020 Notes, and (ii) Zillow Group guaranteed all of the obligations of Trulia under the 2020 Notes and related indenture. The aggregate principal amount of the 2020 Notes is due on December 15, 2020 if not earlier converted or redeemed. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually on June 15 and December 15 of each year.

Holders of the 2020 Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding the maturity date. In connection with the supplemental indenture in respect of the 2020 Notes, the conversion ratio immediately prior to the effective time of the Trulia Merger of 27.8303 shares of Trulia common stock per $1,000 principal amount of notes was adjusted to 12.3567 shares of our Class A common stock per $1,000 principal amount of notes based on the exchange ratio of 0.444 per the Merger Agreement. This was equivalent to an initial conversion price of approximately $80.93 per share of our Class A common stock. In connection with the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common shareholders, the conversion ratio has been further adjusted to 41.4550 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $24.12 per share of our Class A common stock. The conversion ratio will be adjusted for certain dilutive events and will be increased in the case of corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture governing the notes). The conversion option of the 2020 Notes has no cash settlement provisions. The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock.

The holders of the 2020 Notes will have the ability to require us to repurchase the notes in whole or in part upon the occurrence of an event that constitutes a “Fundamental Change” (as defined in the indenture governing the notes, including such events as a “change in control” or “termination of trading”, subject to certain exceptions). In such case, the repurchase price would be 100% of the principal amount of the 2020 Notes plus accrued and unpaid interest, if any, to, but excluding, the Fundamental Change repurchase date. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the notes. There are no financial covenants associated with the 2020 Notes.

We may not redeem the 2020 Notes prior to December 20, 2018. We may redeem the 2020 Notes, at our option, in whole or in part on or after December 20, 2018, if the last reported sale price per share of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

Interest expense related to the 2020 Notes for the three months ended September 30, 2016 and 2015 was $1.6 million. Interest expense related to the 2020 Notes for the nine months ended September 30, 2016 and 2015 was $4.7 million and $3.9 million, respectively. Accrued interest related to the 2020 Notes as of September 30, 2016 is $1.8 million, and is recorded in accrued expenses and other current liabilities in our condensed consolidated balance sheet.

The estimated fair value and carrying value of the 2020 Notes were $346.4 million and $230.0 million, respectively, as of September 30, 2016. The estimated fair value and carrying value of the 2020 Notes were $272.9 million and $230.0 million, respectively, as of December 31, 2015. The estimated fair value of the 2020 Notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for the 2020 Notes.

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Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 10. Income Taxes

We are subject to federal and state income taxes in the United States and in Canada. During the three and nine month periods ended September 30, 2016 and 2015, we did not have a material amount of reportable taxable income, and we are not projecting a material amount of reportable taxable income for the year ending December 31, 2016. We have provided a full valuation allowance against our net deferred tax assets as of September 30, 2016 and December 31, 2015 because, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets will not be realized. Therefore, no current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $735.2 million as of December 31, 2015, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $11.6 million (tax effected) as of December 31, 2015.

We recorded an income tax benefit of $1.4 million for the nine months ended September 30, 2016 primarily due to a deferred tax liability generated in connection with Zillow Group’s February 22, 2016 acquisition of Naked Apartments that can be used to realize certain deferred tax assets for which we had previously provided a full allowance. We recorded an income tax benefit of $2.9 million for the nine months ended September 30, 2015 primarily due to a deferred tax liability generated in connection with Zillow, Inc.’s August 20, 2015 acquisition of DotLoop that can be used to realize certain deferred tax assets for which we had previously provided a full valuation allowance.

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Shareholders' Equity

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Shareholders' Equity

Note 11. Shareholders’ Equity

Preferred Stock

Our board of directors has the authority to fix and determine and to amend the number of shares of any series of preferred stock that is wholly unissued or to be established and to fix and determine and to amend the designation, preferences, voting powers and limitations, and the relative, participating, optional or other rights, of any series of shares of preferred stock that is wholly unissued or to be established, subject in each case to certain approval rights of holders of our outstanding Class B common stock. There was no preferred stock issued and outstanding as of September 30, 2016 or December 31, 2015.

Common and Capital Stock

Our Class A common stock has no preferences or privileges and is not redeemable. Holders of Class A common stock are entitled to one vote for each share.

Our Class B common stock has no preferences or privileges and is not redeemable. At any time after the date of issuance, each share of Class B common stock, at the option of the holder, may be converted into one share of Class A common stock, or automatically converted into Class A common stock upon the affirmative vote by or written consent of holders of a majority of the shares of the Class B common stock. During the three and nine month periods ended September 30, 2016 and the year ended December 31, 2015, no shares of Class B common stock were converted into Class A common stock at the option of the holders. Holders of Class B common stock are entitled to 10 votes for each share.

Our Class C capital stock has no preferences or privileges, is not redeemable and, except in limited circumstances, is non-voting.

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Share-Based Awards

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Awards

Note 12. Share-Based Awards

In connection with our February 2015 acquisition of Trulia, we assumed the obligations of Zillow and Trulia outstanding under pre-existing stock plans. We intend that future equity grants will be made under Zillow Group’s 2011 Incentive Plan (as amended and/or restated from time to time, the “2011 Plan”) only (or a successor thereto).

Zillow Group, Inc. Amended and Restated 2011 Incentive Plan

On July 19, 2011, the 2011 Plan became effective and serves as the successor to Zillow’s 2005 Equity Incentive Plan (the “2005 Plan”). Shareholders last approved the 2011 Plan on June 15, 2016. In addition to the share reserve of 18,400,000 shares, the number of shares available for issuance under the 2011 Plan automatically increases on the first day of each of our fiscal years by a number of shares equal to the least of (a) 3.5% of our outstanding common and capital stock on a fully diluted basis as of the end of our immediately preceding fiscal year, (b) 10,500,000 shares, and (c) a lesser amount determined by our board of directors; provided, however, that any shares from any increases in previous years that are not actually issued will continue to be available for issuance under the 2011 Plan. In addition, shares previously available for grant under the 2005 Plan, but not issued or subject to outstanding awards under the 2005 Plan as of July 19, 2011, and shares subject to outstanding awards under the 2005 Plan that subsequently cease to be subject to such awards (other than by reason of exercise of the awards) are available for grant under the 2011 Plan. The 2011 Plan is administered by the compensation committee of the board of directors. Under the terms of the 2011 Plan, the compensation committee may grant equity awards, including incentive stock options, nonqualified stock options, restricted stock, restricted stock units or restricted units to employees, officers, directors, consultants, agents, advisors and independent contractors. The compensation committee has also authorized certain senior executive officers to grant equity awards under the 2011 Plan, within limits prescribed by our board of directors.

Options under the 2011 Plan are granted with an exercise price per share not less than 100% of the fair market value of our stock on the date of grant, with the exception of substituted option awards granted in connection with acquisitions, and are exercisable at such times and under such conditions as determined by the compensation committee. Under the 2011 Plan, the maximum term of an option is ten years from the date of grant. Any portion of an option that is not vested and exercisable on the date of a participant’s termination of service expires on such date. Employees generally forfeit their rights to exercise vested options after 3 months following their termination of employment or 12 months in the event of termination by reason of death, disability or retirement. Options granted under the 2011 Plan typically expire seven or 10 years from the grant date and typically vest either 25% after 12 months and ratably thereafter over the next 36 months or quarterly over a period of four years, though certain options have been granted with longer vesting schedules.

In March 2016, Zillow Group established an equity choice program pursuant to which Zillow Group grants restricted stock units and option awards to acquire shares of Class C capital stock to certain employees to retain and recognize their efforts on behalf of Zillow Group.

Option Awards and Stock Appreciation Rights

The following table summarizes option award and stock appreciation rights activity for the year ended December 31, 2015 and the nine months ended September 30, 2016:

	Number of Shares Subject to Existing Options and Stock Appreciation Rights			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2015		17,399,292		$	18.12		5.32	$	311,040
Assumed Trulia options and stock appreciation rights in connection with February 2015 acquisition of Trulia		3,159,765			13.79
Granted		11,438,095			31.45
Exercised		(2,732,767	)		8.99
Forfeited or cancelled		(2,138,011	)		28.37
Outstanding at December 31, 2015		27,126,374			23.35		5.96		156,025
Granted		5,972,299			23.46
Exercised		(1,550,486	)		13.22
Forfeited or cancelled		(994,247	)		30.37
Outstanding at September 30, 2016		30,553,940			23.66		6.08		351,927
Vested and exercisable at September 30, 2016		13,500,955			19.22		4.29		214,983

The number of options granted during the year ended December 31, 2015 in the table above includes a total of 199,779 substituted options with a weighted-average exercise price of $9.29 per share granted in connection with our August 2015 acquisition of DotLoop, Inc.

The fair value of options granted, excluding options granted under the Stock Option Grant Program for Nonemployee Directors (“Nonemployee Director Awards”) and certain options granted to the Company’s executives in January and February 2015, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
Expected volatility	50%	55%	50%-51%	55%-56%
Expected dividend yield	—	—	—	—
Risk-free interest rate	0.90%-1.06%	1.03%-1.19%	0.89%-1.20%	1.03%-1.48%
Weighted-average expected life	4.00 years	3.5 years	3.78 years	3.5-4.58 years
Weighted-average fair value of options granted	$14.29	$11.11	$9.20	$13.98

The assumptions included in the table above exclude stock options and stock appreciation rights assumed in connection with the February 17, 2015 acquisition of Trulia (see Note 6) and unvested stock options substituted in connection with the August 20, 2015 acquisition of DotLoop.

In March 2016, option awards for an aggregate of 93,995 shares of Class C capital stock were granted as Nonemployee Director Awards, which are fully vested and exercisable on the date of grant. The fair value of options granted for the Nonemployee Director Awards, $8.91 per share, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 51%, a risk-free interest rate of 1.12%, and a weighted-average expected life of 4.25 years. During the nine months ended September 30, 2016 and 2015, share-based compensation expense recognized in our condensed consolidated statements of operations related to Nonemployee Director Awards was $0.8 million, and is included in general and administrative expenses.

In January and February 2015, option awards for a total of 3,450,000 shares of Class A common stock and Class C capital stock (as adjusted in connection with the August 2015 stock split effected in the form of a dividend) were granted to certain of the Company’s executive officers. The fair value of the option awards is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 52%, a risk-free interest rate of 1.76% and a weighted-average expected life of 6.8 years. The grant date fair value of the option awards is approximately $62.8 million. One-sixteenth of the total number of shares subject to the option awards vested and became exercisable on the first anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable four years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the two-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable five years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the three-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable six years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the four-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable seven years from the vesting commencement date. The option awards have a ten-year term.

As of September 30, 2016, there was a total of $189.5 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the year ended December 31, 2015 and the nine months ended September 30, 2016:

	Restricted Stock Units			Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2015		376,806		$	28.56
Assumed Trulia restricted stock units in connection with February 2015 acquisition of Trulia		3,798,957			36.38
Granted		1,354,185			28.55
Vested		(1,899,531	)		31.74
Forfeited or cancelled		(1,024,903	)		31.12
Unvested outstanding at December 31, 2015		2,605,514			32.36
Granted		2,814,296			24.99
Vested		(1,202,096	)		31.60
Forfeited or cancelled		(440,757	)		27.40
Unvested outstanding at September 30, 2016		3,776,957			27.69

Pursuant to the terms of the Naked Apartments Merger Agreement, Zillow Group established a retention bonus plan in March 2016 pursuant to which a total of 161,883 restricted stock units for shares of our Class C capital stock have been granted to employees of Naked Apartments who accepted employment with Zillow Group. For 139,075 of the restricted stock units, one-sixth of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 2.5 years. For 22,808 of the restricted stock units, 25% of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 1.5 years. The vesting of the restricted stock units is subject to the recipient’s continued full-time employment or service to Zillow Group. The total grant date fair value of the restricted stock units is approximately $3.6 million.

The fair value of the outstanding restricted stock units will be recorded as share-based compensation expense over the vesting period. As of September 30, 2016, there was $96.3 million of total unrecognized compensation cost related to unvested restricted stock units.

Share-Based Compensation Expense

The following table presents the effects of share-based compensation in our condensed consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of revenue	$	1,524	$	1,378	$	4,370	$	3,440
Sales and marketing		5,968		7,446		17,566		20,439
Technology and development		8,035		7,642		23,160		20,413
General and administrative		11,758		11,549		36,056		36,610
Restructuring costs		—		1,059		—		15,063
Total	$	27,285	$	29,074	$	81,152	$	95,965

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Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

Note 13. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period. In the calculation of basic net income (loss) per share, undistributed earnings are allocated assuming all earnings during the period were distributed.

Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period and potentially dilutive Class A common stock and Class C capital stock equivalents, except in cases where the effect of the Class A common stock or Class C capital stock equivalent would be antidilutive. Potential Class A common stock and Class C capital stock equivalents consist of Class A common stock and Class C capital stock issuable upon exercise of stock options and stock appreciation rights and Class A common stock and Class C capital stock underlying unvested restricted stock awards and unvested restricted stock units using the treasury stock method. Potential Class A common stock equivalents also include Class A common stock issuable upon conversion of the 2020 Notes using the if-converted method.

For the periods presented, the following table reconciles the denominators used in the basic and diluted net income (loss) per share calculations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Denominator for basic calculation		180,583		177,098		179,577		166,986
Effect of dilutive securities:
Option awards and stock appreciation rights		7,928		—		—		—
Unvested restricted stock awards and restricted stock units		1,150		—		—		—
Denominator for dilutive calculation		189,661		177,098		179,577		166,986

For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net income (loss) per share because their effect would have been antidilutive (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Weighted-average Class A common stock and Class C capital stock option awards and stock appreciation rights outstanding		8,456		13,142		17,874		17,115
Weighted-average Class A common stock and Class C capital stock unvested restricted stock awards and restricted stock units outstanding		235		3,186		3,559		3,714
Class A common stock issuable upon conversion of the 2020 Notes		10,026		9,535		10,026		9,535
Total Class A common stock and Class C capital stock equivalents		18,717		25,863		31,459		30,364

In the event of liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of all classes of common and capital stock have equal rights to receive all the assets of the Company after the rights of the holders of preferred stock have been satisfied. We have not presented net income (loss) per share under the two-class method for our Class A common stock, Class B common stock and Class C capital stock because it would be the same for each class due to equal dividend and liquidation rights for each class.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 14. Commitments and Contingencies

Lease Commitments

We have entered into various non-cancelable operating lease agreements for certain of our office space and equipment with original lease periods expiring between 2017 and 2024. We are committed to pay a portion of the related operating expenses under certain of these lease agreements. Certain of these arrangements have free rent periods or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis. Operating lease expense for the three months ended September 30, 2016 and 2015 was $4.3 million and $3.8 million, respectively. Operating lease expense for the nine months ended September 30, 2016 and 2015 was $12.1 million and $11.2 million, respectively.

Purchase Commitments

We have entered into various non-cancelable purchase commitments for content related to our mobile applications and websites. License agreement terms vary by vendor. In some instances, we retain perpetual rights to this information after the contract ends; in other instances, the information and data are licensed only during the fixed term of the agreement. Additionally, certain data license agreements provide for uneven payment amounts throughout the contract term.

We capitalize payments made to third parties for data licenses that we expect to provide future economic benefit through the recovery of the costs of these arrangements via the generation of our revenue and margins. For data license contracts that include uneven payment amounts, we capitalize the payments as they are made as an intangible asset and amortize the total contract value over the estimated useful life. For contracts in which we have perpetual rights to the data, the total contract value is amortized on a straight-line basis over the life of the contract plus two years, which is equivalent to the estimated useful life of the asset. For contracts in which we do not have access to the data beyond the contractual term, the total contract value is amortized on a straight-line basis over the term of the contract. We evaluate data content contracts for potential capitalization at the inception of the arrangement as well as each time periodic payments to third parties are made.

The amortization period for the capitalized purchased content is based on our best estimate of the useful life of the asset, which ranges from two to nine years. The capitalized purchased data content is amortized on a straight-line basis as the pattern of delivery of the economic benefits of the data cannot reliably be determined because we do not have the ability to reliably predict future traffic to our websites and mobile applications.

Under certain other data agreements, the underlying data is obtained on a subscription basis with consistent monthly or quarterly recurring payment terms over the contractual period. Upon the expiration of such arrangements, we no longer have the right to access the related data, and therefore, the costs incurred under such contracts are not capitalized and are expensed as payments are made. We would immediately lose rights to data under these arrangements if we were to cancel the subscription and/or cease making payments under the subscription arrangements.

Letters of Credit

As of September 30, 2016, we have outstanding letters of credit of approximately $5.2 million, $1.8 million, $1.1 million and $1.1 million, respectively, which secure our lease obligations in connection with the operating leases of our San Francisco, Seattle, New York and Denver office spaces.

Surety Bonds

In the course of business, we are required to provide financial commitments in the form of surety bonds to third parties as a guarantee of our performance on and our compliance with certain obligations. If we were to fail to perform or comply with these obligations, any draws upon surety bonds issued on our behalf would then trigger our payment obligation to the surety bond issuer. We have outstanding surety bonds issued for our benefit of approximately $3.6 million and $3.4 million, respectively, as of September 30, 2016 and December 31, 2015.

Legal Proceedings

We are involved in a number of legal proceedings concerning matters arising in connection with the conduct of our business activities, some of which are at preliminary stages and some of which seek an indeterminate amount of damages. We regularly evaluate the status of legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made if accruals are not appropriate. For certain cases described below, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damages sought are, in our view, unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there

are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories presented. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material effect on our financial position, results of operations or cash flow.

In September 2010, LendingTree, LLC (“LendingTree”) filed a complaint against us for patent infringement in the U.S. District Court for the Western District of North Carolina. The complaint alleged, among other things, that our website technology infringes two patents purporting to cover a “Method and computer network for coordinating a loan over the internet.” The complaint sought, among other things, a judgment that we infringed certain patents held by LendingTree, an injunction against the alleged infringing activities and an award for damages. We denied the allegations and asserted defenses and counterclaims seeking declarations that we are not infringing the patents and that the patents are invalid. In March 2014, a federal jury found that Zillow does not infringe the patents and that the patents asserted by LendingTree are invalid. In April, 2014, LendingTree filed two motions for judgment as a matter of law and for a new trial, all of which we opposed. In October 2014, the Court issued an order upholding the jury verdict and denying LendingTree’s motions. In November 2014, LendingTree filed a notice of appeal and, in September 2015, LendingTree filed its opening brief. In December 2015, we filed a response brief to LendingTree’s opening brief. A hearing regarding LendingTree’s appeal occurred in June 2016. In July 2016, the Court of Appeals for the Federal Circuit issued an order in which it found all claims asserted against us invalid under Section 101. In September 2016, LendingTree filed notice that they would be filing to appeal for a rehearing, but failed to file by the deadline. There are no further avenues for appeal or rehearing; the order issued by the Court of Appeals will stand. We have not recorded an accrual related to this complaint as of September 30, 2016 or December 31, 2015, as we do not believe a loss is probable or reasonably estimable.

In March 2014, Move, Inc., the National Association of Realtors and three related entities (collectively, “Plaintiffs”), filed a complaint against us and Errol Samuelson, our Chief Industry Development Officer, in the Superior Court of the State of Washington in King County, alleging, among other things, that Zillow and Mr. Samuelson misappropriated plaintiffs’ trade secrets in connection with Mr. Samuelson joining Zillow in March 2014. The Plaintiffs sought, among other things, an injunction against the alleged misappropriations and Mr. Samuelson working for us, as well as significant monetary damages. In February 2015, Plaintiffs filed an amended complaint that, among other things, added Curt Beardsley, our Vice President of MLS Partnerships, as a defendant in the matter. In August 2015, Zillow filed an amended answer and counterclaim against Plaintiffs that alleged, among other things, that Plaintiffs violated the Washington Trade Secrets Act and aided and abetted a breach of the duty of confidentiality through the public filing of a document that included Zillow’s confidential information and trade secrets. On January 8, 2016, Plaintiffs filed a motion seeking sanctions against defendants for alleged evidence spoliation. The court held a spoliation hearing in April and on May 17, 2016 denied Plaintiffs motion for sanctions as to Zillow and Mr. Samuelson. With respect to Mr. Beardsley, the Court denied the motion as to terminating sanctions but granted the motion ordering a permissive adverse inference instruction with respect to five devices. Defendants each filed multiple motions for partial summary judgment against Plaintiffs regarding, among other things, certain of their claims of alleged misappropriation of trade secrets. Defendants also filed various motions seeking to exclude or limit damages. The court entered various rulings granting and denying these motions in 2016. On June 6, 2016, the Company reached an amicable resolution by way of a settlement agreement and release (the “Settlement Agreement”) with Plaintiffs pursuant to which the Company agreed to pay Plaintiffs $130.0 million in connection with a release of all claims. On June 16, 2016, pursuant to the terms agreed to between the parties, the court dismissed all claims and counterclaims asserted in this matter with prejudice. The Settlement Agreement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. The settlement was paid in June 2016 and was recorded in general and administrative expenses in our condensed consolidated statements of operations for the nine month period ended September 30, 2016.

In March 2015, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) notified the Company that it was initiating a compliance review to determine the Company’s compliance with one or more federal labor laws enforced by the DOL. The Company understands that the scope of this review is limited to the review of the Company’s compliance with certain wage and hour laws with respect to Zillow, Inc. inside sales consultants during a two-year period between 2013 and 2015. In October 2015, the DOL orally informed us that the compliance review was ongoing but that, based on its preliminary findings, it believed the Company may have failed to pay overtime to such inside sales consultants. As discussed below, on May 5, 2016, Zillow, Inc. agreed to settle a class action lawsuit which alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. The settlement of the class action lawsuit is contingent on Zillow, Inc.’s complete resolution of the DOL compliance review. As related to the DOL compliance review, the Company does not believe there is a reasonable possibility that a material loss in excess of amounts accrued for the class action lawsuit described below will be incurred. As a result, we have not recorded an accrual related to the DOL compliance review as of September 30, 2016.

In November 2014, a former employee filed a putative class action lawsuit against us in the United States District Court, Central District of California, with the caption Ian Freeman v. Zillow, Inc. The complaint alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. After the court granted our two motions to dismiss certain claims, plaintiff filed a second amended complaint that includes claims under the Fair Labor Standards Act. On November 20, 2015, plaintiff filed a motion for class certification. On February 26, 2016, the court granted the plaintiff’s motion for class certification. On May 5, 2016, the parties agreed to settle the lawsuit for an immaterial amount. The settlement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. The settlement class includes all current and former inside sales consultants employed by Zillow, Inc. in any office from January 1, 2010 through the present. We have recorded an accrual for an immaterial amount related to the settlement as of September 30, 2016. The settlement is contingent on the court approving the class action settlement and upon Zillow, Inc.’s complete resolution of the DOL compliance review described above. On June 9, 2016, the Ninth Circuit Court of Appeals granted our petition for permission to appeal the order granting class certification. We do not believe there is a reasonable possibility that a material loss in excess of amounts accrued may be incurred.

In addition to the matters discussed above, from time to time, we are involved in litigation and claims that arise in the ordinary course of business. Although we cannot be certain of the outcome of any litigation and claims, nor the amount of damages and exposure that we could incur, we currently believe that the final disposition of such matters will not have a material effect on our financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements and out of intellectual property infringement claims made by third parties. In addition, we have agreements that indemnify certain issuers of surety bonds against losses that they may incur as a result of executing surety bonds on our behalf. For our indemnification arrangements, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with certain of our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary.

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Related Party Transactions

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 15. Related Party Transactions

In February 2015, we paid approximately $0.3 million in filing fees directly to the Federal Trade Commission (the “FTC”), on behalf of and in connection with filings made by Mr. Richard Barton, our Executive Chairman, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), which filings were required due to Mr. Barton’s ownership of Zillow, Inc.’s common stock. In April 2016, we paid approximately $0.1 million for a tax “gross-up” payment to Mr. Barton to cover the imputed income associated with one of his HSR Act filings.

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Self-Insurance

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Self-Insurance

Note 16. Self-Insurance

Prior to January 1, 2016, we were self-insured for a portion of our medical and dental benefits for certain employees of Trulia since the date of our acquisition of Trulia in February 2015. Beginning on January 1, 2016, we are self-insured for medical benefits for all qualifying Zillow Group employees. The medical plan carries a stop-loss policy which will protect from individual claims during the plan year exceeding $150,000 or when cumulative medical claims exceed 125% of expected claims for the plan year. We record estimates of the total costs of claims incurred based on an analysis of historical data and independent estimates. Our liability for self-insured medical claims is included within accrued compensation and benefits in our condensed consolidated balance sheet and was $1.8 million as of September 30, 2016 and $0.5 million as of December 31, 2015.

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Employee Benefit Plan

9 Months Ended

Sep. 30, 2016

Postemployment Benefits [Abstract]

Employee Benefit Plan

Note 17. Employee Benefit Plan

Prior to January 1, 2016, we maintained separate defined contribution 401(k) retirement plans for employees of Zillow and Trulia. Effective January 1, 2016, we have a single defined contribution 401(k) retirement plan covering Zillow Group employees who have met certain eligibility requirements (“the Zillow Group 401(k) Plan”). Eligible employees may contribute pretax compensation up to a maximum amount allowable under the Internal Revenue Service limitations. Employee contributions and earnings thereon vest immediately. We currently match up to 4% of employee contributions under the Zillow Group 401(k) Plan. The total expense related to the Zillow Group 401(k) Plan for the three months ended September 30, 2016 and 2015 was $2.4 million and $1.0 million, respectively. The total expense related to the Zillow Group 401(k) Plan for the nine months ended September 30, 2016 and 2015 was $7.1 million and $3.1 million, respectively.

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Segment Information and Revenue

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information and Revenue

Note 18. Segment Information and Revenue

We have one reportable segment. Our reportable segment has been identified based on how our chief operating decision-maker manages our business, makes operating decisions and evaluates operating performance. The chief executive officer acts as the chief operating decision-maker and reviews financial and operational information on an entity-wide basis. We have one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components. Accordingly, we have determined that we have a single reporting segment and operating unit structure.

The chief executive officer reviews information about revenue categories, including marketplace revenue and display revenue. The following table presents our revenue categories during the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Marketplace revenue:
Premier Agent	$	158,322	$	119,448	$	439,957	$	322,526
Other real estate		28,799		10,214		72,847		23,006
Mortgages		19,775		12,624		54,621		32,575
Market Leader		—		10,957		—		29,544
Total Marketplace revenue		206,896		153,243		567,425		407,651
Display revenue		17,696		23,522		51,552		67,656
Total revenue	$	224,592	$	176,765	$	618,977	$	475,307

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

Note 19. Subsequent Events

On October 7, 2016, Zillow purchased for $10.0 million a 10 percent equity interest in a variable interest entity for which we are not the primary beneficiary. This investment will be accounted for as a cost method investment and classified within other assets in the consolidated balance sheet.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes as of and for the year ended December 31, 2015 included in Zillow Group, Inc.’s Annual Report on Form 10-K, which was filed with the SEC on February 12, 2016. The condensed consolidated balance sheet as of December 31, 2015, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

Effective February 17, 2015, Zillow Group acquired Trulia, Inc. (“Trulia”), and each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. For financial reporting and accounting purposes, Zillow was the acquirer of Trulia. The results presented in the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements reflect those of Zillow prior to the completion of the acquisition of Trulia on February 17, 2015, and Trulia’s results of operations have been included prospectively after February 17, 2015. Market Leader revenue is included in our results of operations from February 17, 2015 through the date of divestiture of September 30, 2015.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of September 30, 2016, our results of operations and comprehensive income (loss) for the three and nine month periods ended September 30, 2016 and 2015, and our cash flows for the nine month periods ended September 30, 2016 and 2015. The results of the three and nine month periods ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ended December 31, 2016 or for any interim period or for any other future year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, website development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and goodwill, among others. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected.

Reclassifications

Reclassifications

Certain immaterial reclassifications have been made in the condensed consolidated balance sheets and statements of cash flows to conform data for prior periods to the current format.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We adopted this guidance in the interim period ending on September 30, 2016. The adoption of this guidance did not have any impact on our statement of cash flows.

In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. This standard requires the use of an expected loss impairment model for instruments measured at amortized cost. For available-for-sale debt securities, an entity is required to recognize an allowance for credit losses rather than as a write-down. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. The adoption of this guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We have not yet determined the timing of adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In March 2016, the FASB issued guidance on contingent put and call options in debt instruments. This standard clarifies that the assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host only requires an analysis of the four-step decision sequence and does not require an entity to separately assess whether the contingency itself is indexed only to interest rates or the credit risk of the entity. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016 using a modified retrospective transition method, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017. We do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows.

In March 2016, the FASB issued guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, impact of forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017 using the modified retrospective approach through a cumulative-effect adjustment to beginning accumulated deficit. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

In February 2016, the FASB issued guidance on leases. This standard requires the recognition of a right-of-use asset and lease liability on the balance sheet for all leases. This standard also requires more detailed disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and early adoption is permitted. We expect to adopt this guidance on January 1, 2019. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This standard requires equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. This standard also requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, early adoption is permitted, and the guidance must be applied prospectively to equity investments that exist as of the adoption date. We expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance related to a customer’s accounting for fees paid in a cloud computing arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, and early adoption is permitted. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows.

In February 2015, the FASB issued guidance relating to the consolidation analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This standard affects both the variable interest entity and voting interest entity consolidation models. All legal entities are subject to reevaluation under the revised consolidation model. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had any impact on our financial position, results of operations or cash flows.

In August 2014, the FASB issued guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern. This standard provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual reporting periods ending after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance for the year ending December 31, 2016. We do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows.

In May 2014, the FASB issued guidance on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. In 2016, the FASB issued final amendments to clarify the implementation guidance for principal versus agent considerations, identifying performance obligations and the accounting for licenses of intellectual property. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows, if any.

Fair Value

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash equivalents — Cash equivalents are comprised of highly liquid investments, including money market funds and certificates of deposit, with original maturities of less than three months. The fair value measurement of these assets is based on quoted market prices in active markets and these assets are recorded at fair value.

Investments — Our investments consist of fixed income securities, which include U.S. and foreign government agency securities, corporate notes and bonds, municipal securities and certificates of deposit. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period. In the calculation of basic net income (loss) per share, undistributed earnings are allocated assuming all earnings during the period were distributed.

Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period and potentially dilutive Class A common stock and Class C capital stock equivalents, except in cases where the effect of the Class A common stock or Class C capital stock equivalent would be antidilutive. Potential Class A common stock and Class C capital stock equivalents consist of Class A common stock and Class C capital stock issuable upon exercise of stock options and stock appreciation rights and Class A common stock and Class C capital stock underlying unvested restricted stock awards and unvested restricted stock units using the treasury stock method. Potential Class A common stock equivalents also include Class A common stock issuable upon conversion of the 2020 Notes using the if-converted method.

Segment Information and Revenue

We have one reportable segment. Our reportable segment has been identified based on how our chief operating decision-maker manages our business, makes operating decisions and evaluates operating performance. The chief executive officer acts as the chief operating decision-maker and reviews financial and operational information on an entity-wide basis. We have one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components. Accordingly, we have determined that we have a single reporting segment and operating unit structure.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Summary of Balances of Cash Equivalents and Investments

The following tables present the balances of assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

	September 30, 2016
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	121,087	$	121,087	$	—
Certificates of deposit		498		—		498
Short-term investments:
U.S. government agency securities		146,914		—		146,914
Corporate notes and bonds		61,658		—		61,658
Municipal securities		29,798		—		29,798
Certificates of deposit		6,477		—		6,477
Foreign government securities		6,008		—		6,008
Commercial paper		2,990		—		2,990
Restricted cash		1,053		—		1,053
Total	$	376,483	$	121,087	$	255,396

	December 31, 2015
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	195,870	$	195,870	$	—
Certificates of deposit		1,622		—		1,622
Short-term investments:
U.S. government agency securities		193,168		—		193,168
Corporate notes and bonds		41,314		—		41,314
Municipal securities		39,853		—		39,853
Certificates of deposit		11,837		—		11,837
Foreign government securities		4,979		—		4,979
Restricted cash		3,015		—		3,015
Total	$	491,658	$	195,870	$	295,788

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Cash, Cash Equivalents, Investments and Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents, Available-for-Sale Investments and Restricted Cash

The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash and cash equivalents, available-for-sale investments and restricted cash as of the dates presented (in thousands):

	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	69,175	$	—	$	—		$	69,175
Cash equivalents:
Money market funds		121,087		—		—			121,087
Certificates of deposit		498		—		—			498
Short-term investments:
U.S government agency securities		146,814		117		(17	)		146,914
Corporate notes and bonds		61,650		22		(14	)		61,658
Municipal securities		29,816		1		(19	)		29,798
Certificates of deposit		6,476		1		—			6,477
Foreign government securities		5,994		14		—			6,008
Commercial paper		2,990		—		—			2,990
Restricted cash		1,053		—		—			1,053
Total	$	445,553	$	155	$	(50	)	$	445,658

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	31,646	$	—	$	—		$	31,646
Cash equivalents:
Money market funds		195,870		—		—			195,870
Certificates of deposit		1,622		—		—			1,622
Short-term investments:
U.S government agency securities		193,623		1		(456	)		193,168
Corporate notes and bonds		41,390		1		(77	)		41,314
Municipal securities		39,878		11		(36	)		39,853
Certificates of deposit		11,839		1		(3	)		11,837
Foreign government securities		4,985		—		(6	)		4,979
Restricted cash		3,015		—		—			3,015
Total	$	523,868	$	14	$	(578	)	$	523,304

Available-for-Sale Investments by Contractual Maturity

The following table presents available-for-sale investments by contractual maturity date as of September 30, 2016 (in thousands):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	199,026	$	199,100
Due after one year through two years		54,714		54,745
Total	$	253,740	$	253,845

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Detail of Property and Equipment

The following table presents the detail of property and equipment as of the dates presented (in thousands):

	September 30, 2016			December 31, 2015
Website development costs	$	93,792		$	74,750
Computer equipment		26,848			20,965
Leasehold improvements		34,991			32,918
Construction-in-progress		18,888			15,630
Office equipment, furniture and fixtures		17,264			13,495
Property and equipment		191,783			157,758
Less: accumulated amortization and depreciation		(97,738	)		(72,235	)
Property and equipment, net	$	94,045		$	85,523

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2016

Naked Apartments Inc

Purchase Price Allocation

Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands):

Current assets	$	371
Identifiable intangible assets		3,700
Goodwill		10,610
Current liabilities		(101	)
Deferred tax liabilities		(1,416	)
Total preliminary estimated purchase price	$	13,164

Trulia

Purchase Price Allocation

Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands):

Cash and cash equivalents	$	173,447
Accounts receivable		13,093
Prepaid expenses and other current assets		20,833
Restricted cash		6,946
Property and equipment		30,189
Other assets		434
Identifiable intangible assets		549,000
Goodwill		1,736,362
Accounts payable, accrued expenses and other current liabilities		(51,258	)
Accrued compensation and benefits		(8,324	)
Deferred revenue		(8,300	)
Long-term debt		(230,000	)
Debt premium recorded in additional paid-in capital		(126,386	)
Deferred tax liabilities and other long-term liabilities		(139,616	)
Total purchase price	$	1,966,420

Summary of Purchase Price

 The purchase price to effect the acquisition of Trulia of approximately $2.0 billion is summarized in the following table (in thousands):

Value of Class A common stock issued	$	1,883,728
Substituted stock options and stock appreciation rights assumed by Zillow Group attributable to pre-combination service		54,853
Substituted restricted stock units assumed by Zillow Group attributable to pre-combination service		27,798
Cash paid in lieu of fractional outstanding shares		41
Total purchase price	$	1,966,420

Fair Value of Identifiable Intangible Assets Acquired

The fair value of identifiable intangible assets acquired consisted of the following (in thousands):

	Estimated Fair Value		Estimated Useful Life (in years)
Trulia trade names and trademarks	$	351,000		Indefinite
Market Leader trade names and trademarks		2,000		2
Customer relationships		92,000		3-7
Developed technology		91,000		3-7
Advertising relationships		9,000		3
MLS home data feeds		4,000		3
Total	$	549,000

Pro Forma Condensed Combined Financial Information

The following table presents the unaudited pro forma condensed combined financial information for the periods presented, except for the financial information presented for the three and nine month periods ended September 30, 2016 and revenue for the three months ended September 30, 2015, which are presented on an as-reported basis (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015 (1)			2016			2015 (2)
Revenue	$	224,592	$	176,765		$	618,977		$	510,565
Net income (loss)	$	6,807	$	(21,393	)		(196,947	)	$	(65,978	)

(1) The pro forma net loss for the three months ended September 30, 2015 includes pro forma adjustments for $3.4 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements and $1.2 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements.

(2) The pro forma net loss for the nine months ended September 30, 2015 includes pro forma adjustments for $49.1 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $37.3 million to eliminate share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $35.3 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements, $2.4 million to record additional amortization expense for acquired intangible assets and $1.1 million to eliminate Trulia’s historical amortization of capitalized website development costs.

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Goodwill (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Change in Goodwill

The following table presents the change in goodwill from December 31, 2015 through September 30, 2016 (in thousands):

Balance as of December 31, 2015	$	1,909,167
Goodwill recorded in connection with the acquisition of Naked Apartments		10,610
Goodwill recorded in connection with the acquisition of Bridge Interactive		4,899
Reduction of goodwill in connection with the divestiture of a business		(1,196	)
Balance as of September 30, 2016	$	1,923,480

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands):

	September 30, 2016
	Cost		Accumulated Amortization			Net
Purchased content	$	40,544	$	(21,491	)	$	19,053
Software		9,971		(4,315	)		5,656
Customer relationships		103,200		(27,110	)		76,090
Developed technology		110,080		(31,652	)		78,428
Trade names and trademarks		4,960		(2,669	)		2,291
Advertising relationships		9,000		(4,848	)		4,152
MLS home data feeds		1,100		(593	)		507
Total	$	278,855	$	(92,678	)	$	186,177

	December 31, 2015
	Cost		Accumulated Amortization			Net
Purchased content	$	37,581	$	(19,649	)	$	17,932
Software		6,961		(2,845	)		4,116
Customer relationships		103,425		(16,204	)		87,221
Developed technology		108,295		(19,515	)		88,780
Trade names and trademarks		4,860		(2,212	)		2,648
Advertising relationships		9,000		(2,598	)		6,402
MLS home data feeds		1,100		(318	)		782
Total	$	271,222	$	(63,341	)	$	207,881

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Share-Based Awards (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Option Award and Stock Appreciation Rights Activity

Option Awards and Stock Appreciation Rights

The following table summarizes option award and stock appreciation rights activity for the year ended December 31, 2015 and the nine months ended September 30, 2016:

	Number of Shares Subject to Existing Options and Stock Appreciation Rights			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2015		17,399,292		$	18.12		5.32	$	311,040
Assumed Trulia options and stock appreciation rights in connection with February 2015 acquisition of Trulia		3,159,765			13.79
Granted		11,438,095			31.45
Exercised		(2,732,767	)		8.99
Forfeited or cancelled		(2,138,011	)		28.37
Outstanding at December 31, 2015		27,126,374			23.35		5.96		156,025
Granted		5,972,299			23.46
Exercised		(1,550,486	)		13.22
Forfeited or cancelled		(994,247	)		30.37
Outstanding at September 30, 2016		30,553,940			23.66		6.08		351,927
Vested and exercisable at September 30, 2016		13,500,955			19.22		4.29		214,983

Fair Value of Options Granted, Excluding Stock Option Grant Program of Nonemployee Directors and Executives, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model

The fair value of options granted, excluding options granted under the Stock Option Grant Program for Nonemployee Directors (“Nonemployee Director Awards”) and certain options granted to the Company’s executives in January and February 2015, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
Expected volatility	50%	55%	50%-51%	55%-56%
Expected dividend yield	—	—	—	—
Risk-free interest rate	0.90%-1.06%	1.03%-1.19%	0.89%-1.20%	1.03%-1.48%
Weighted-average expected life	4.00 years	3.5 years	3.78 years	3.5-4.58 years
Weighted-average fair value of options granted	$14.29	$11.11	$9.20	$13.98

Summary of Restricted Stock Units Activity

The following table summarizes activity for restricted stock units for the year ended December 31, 2015 and the nine months ended September 30, 2016:

	Restricted Stock Units			Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2015		376,806		$	28.56
Assumed Trulia restricted stock units in connection with February 2015 acquisition of Trulia		3,798,957			36.38
Granted		1,354,185			28.55
Vested		(1,899,531	)		31.74
Forfeited or cancelled		(1,024,903	)		31.12
Unvested outstanding at December 31, 2015		2,605,514			32.36
Granted		2,814,296			24.99
Vested		(1,202,096	)		31.60
Forfeited or cancelled		(440,757	)		27.40
Unvested outstanding at September 30, 2016		3,776,957			27.69

Effects of Share Based Compensation in Consolidated Statements of Operations

The following table presents the effects of share-based compensation in our condensed consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of revenue	$	1,524	$	1,378	$	4,370	$	3,440
Sales and marketing		5,968		7,446		17,566		20,439
Technology and development		8,035		7,642		23,160		20,413
General and administrative		11,758		11,549		36,056		36,610
Restructuring costs		—		1,059		—		15,063
Total	$	27,285	$	29,074	$	81,152	$	95,965

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Net Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Reconciliation of Denominators Used in Basic and Diluted Net Income (Loss) Per Share

For the periods presented, the following table reconciles the denominators used in the basic and diluted net income (loss) per share calculations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Denominator for basic calculation		180,583		177,098		179,577		166,986
Effect of dilutive securities:
Option awards and stock appreciation rights		7,928		—		—		—
Unvested restricted stock awards and restricted stock units		1,150		—		—		—
Denominator for dilutive calculation		189,661		177,098		179,577		166,986

Antidilutive Securities Excluded from Computation of Earnings Per Share

For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net income (loss) per share because their effect would have been antidilutive (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Weighted-average Class A common stock and Class C capital stock option awards and stock appreciation rights outstanding		8,456		13,142		17,874		17,115
Weighted-average Class A common stock and Class C capital stock unvested restricted stock awards and restricted stock units outstanding		235		3,186		3,559		3,714
Class A common stock issuable upon conversion of the 2020 Notes		10,026		9,535		10,026		9,535
Total Class A common stock and Class C capital stock equivalents		18,717		25,863		31,459		30,364

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Segment Information and Revenue (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Revenue Categories

The chief executive officer reviews information about revenue categories, including marketplace revenue and display revenue. The following table presents our revenue categories during the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Marketplace revenue:
Premier Agent	$	158,322	$	119,448	$	439,957	$	322,526
Other real estate		28,799		10,214		72,847		23,006
Mortgages		19,775		12,624		54,621		32,575
Market Leader		—		10,957		—		29,544
Total Marketplace revenue		206,896		153,243		567,425		407,651
Display revenue		17,696		23,522		51,552		67,656
Total revenue	$	224,592	$	176,765	$	618,977	$	475,307

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Summary of Significant Accounting Policies - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016
Trulia
Schedule Of Significant Accounting Policies [Line Items]
Business acquisition, effective date	Feb. 17, 2015

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Fair Value Measurements - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Original maturities date of money market funds	Less than three months
Liabilities measured at fair value	$ 0	$ 0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on recurring basis	$ 0	$ 0

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Fair Value of Cash Equivalents and Investments (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Restricted cash	$ 1,053	$ 3,015
Short-term investments	445,658	523,304
Total	376,483	491,658
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	121,087	195,870
Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	498	1,622
Short-term investments	6,477	11,837
US Government Agencies Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	146,914	193,168
Corporate Notes and Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	61,658	41,314
Municipal Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	29,798	39,853
Foreign Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	6,008	4,979
Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	2,990
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	121,087	195,870
Fair Value, Inputs, Level 1 | Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	121,087	195,870
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Restricted cash	1,053	3,015
Total	255,396	295,788
Fair Value, Inputs, Level 2 | Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	498	1,622
Short-term investments	6,477	11,837
Fair Value, Inputs, Level 2 | US Government Agencies Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	146,914	193,168
Fair Value, Inputs, Level 2 | Corporate Notes and Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	61,658	41,314
Fair Value, Inputs, Level 2 | Municipal Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	29,798	39,853
Fair Value, Inputs, Level 2 | Foreign Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	6,008	$ 4,979
Fair Value, Inputs, Level 2 | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	$ 2,990

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Cash, Cash Equivalents, Investments and Restricted Cash - Additional Information (Detail) $ in Millions	Jan. 01, 2015 USD ($)
Cash and Cash Equivalents [Abstract]
Held to maturity transferred to available-for-sale security, unrealized loss	$ 0.1
Amount transferred from held-to-maturity to available-for-sale	$ 440.8

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Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents, Available-for-Sale Investments and Restricted Cash (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Investments [Line Items]
Amortized Cost	$ 445,553	$ 523,868
Gross Unrealized Gains	155	14
Gross Unrealized Losses	(50)	(578)
Estimated Fair Market Value	445,658	523,304
Cash
Schedule of Investments [Line Items]
Amortized Cost	69,175	31,646
Estimated Fair Market Value	69,175	31,646
Certificates of Deposit
Schedule of Investments [Line Items]
Estimated Fair Market Value	6,477	11,837
US Government Agencies Debt Securities
Schedule of Investments [Line Items]
Estimated Fair Market Value	146,914	193,168
Corporate Notes and Bonds
Schedule of Investments [Line Items]
Estimated Fair Market Value	61,658	41,314
Municipal Securities
Schedule of Investments [Line Items]
Estimated Fair Market Value	29,798	39,853
Foreign Government Securities
Schedule of Investments [Line Items]
Estimated Fair Market Value	6,008	4,979
Commercial Paper
Schedule of Investments [Line Items]
Estimated Fair Market Value	2,990
Restricted Cash
Schedule of Investments [Line Items]
Amortized Cost	1,053	3,015
Estimated Fair Market Value	1,053	3,015
Cash Equivalents | Money Market Funds
Schedule of Investments [Line Items]
Amortized Cost	121,087	195,870
Estimated Fair Market Value	121,087	195,870
Cash Equivalents | Certificates of Deposit
Schedule of Investments [Line Items]
Amortized Cost	498	1,622
Estimated Fair Market Value	498	1,622
Short-term Investments | Certificates of Deposit
Schedule of Investments [Line Items]
Amortized Cost	6,476	11,839
Gross Unrealized Gains	1	1
Gross Unrealized Losses		(3)
Estimated Fair Market Value	6,477	11,837
Short-term Investments | US Government Agencies Debt Securities
Schedule of Investments [Line Items]
Amortized Cost	146,814	193,623
Gross Unrealized Gains	117	1
Gross Unrealized Losses	(17)	(456)
Estimated Fair Market Value	146,914	193,168
Short-term Investments | Corporate Notes and Bonds
Schedule of Investments [Line Items]
Amortized Cost	61,650	41,390
Gross Unrealized Gains	22	1
Gross Unrealized Losses	(14)	(77)
Estimated Fair Market Value	61,658	41,314
Short-term Investments | Municipal Securities
Schedule of Investments [Line Items]
Amortized Cost	29,816	39,878
Gross Unrealized Gains	1	11
Gross Unrealized Losses	(19)	(36)
Estimated Fair Market Value	29,798	39,853
Short-term Investments | Foreign Government Securities
Schedule of Investments [Line Items]
Amortized Cost	5,994	4,985
Gross Unrealized Gains	14
Gross Unrealized Losses		(6)
Estimated Fair Market Value	6,008	$ 4,979
Short-term Investments | Commercial Paper
Schedule of Investments [Line Items]
Amortized Cost	2,990
Estimated Fair Market Value	$ 2,990

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Available-for-Sale Investments by Contractual Maturity (Detail) $ in Thousands	Sep. 30, 2016 USD ($)
Available-for-sale Securities, Debt Maturities [Abstract]
Amortized Cost, Due in one year or less	$ 199,026
Amortized Cost, Due after one year through two years	54,714
Total	253,740
Estimated Fair Market Value, Due in one year or less	199,100
Estimated Fair Market Value, Due after one year through two years	54,745
Total	$ 253,845

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Detail of Property and Equipment (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment	$ 191,783	$ 157,758
Less: accumulated amortization and depreciation	(97,738)	(72,235)
Property and equipment, net	94,045	85,523
Website development costs
Property, Plant and Equipment [Line Items]
Property and equipment	93,792	74,750
Computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment	26,848	20,965
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	34,991	32,918
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment	18,888	15,630
Office equipment, furniture, and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment	$ 17,264	$ 13,495

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Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Property, Plant and Equipment [Line Items]
Amortization and depreciation expense related to property and equipment other than website development costs	$ 3,600	$ 3,200	$ 12,000	$ 8,700
Capitalization of website development costs	13,000	13,600	38,100	35,400
Amortization of website development costs and intangible assets included in technology and development	21,917	16,405	62,821	45,304
Technology and Development
Property, Plant and Equipment [Line Items]
Amortization of website development costs and intangible assets included in technology and development	11,600	10,200	33,400	28,500
Technology and Development | Software Development
Property, Plant and Equipment [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 10,400	$ 6,200	$ 29,400	$ 16,800

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Acquisitions - Additional Information (Detail)			3 Months Ended		9 Months Ended
	Feb. 22, 2016 USD ($)	Feb. 17, 2015 USD ($) $ / shares shares	Sep. 30, 2016	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015	Dec. 31, 2015 USD ($)
Business Acquisition [Line Items]
Converted share of fully paid					At the effective time of the merger, each share of Trulia common stock was converted into the right to receive 0.444 of a share of fully paid and nonassessable Zillow Group Class A common stock.
Common stock exchange ratio		0.444
Closing price of stock on date of acquisition | $ / shares		$ 109.14
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, expected volatility			50.00%	55.00%
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, dividends			0.00%	0.00%	0.00%	0.00%
Direct and incremental acquisition-related costs
Business Acquisition [Line Items]
Pro forma adjustments				$ 3,400,000	$ 49,100,000
Share-based compensation expense attributable to substituted equity awards
Business Acquisition [Line Items]
Pro forma adjustments					37,300,000
Restructuring costs associated with acquisition
Business Acquisition [Line Items]
Pro forma adjustments				$ 1,200,000	35,300,000
Amortization expense of acquired intangible assets
Business Acquisition [Line Items]
Pro forma adjustments					2,400,000
Amortization of capitalized website development costs
Business Acquisition [Line Items]
Pro forma adjustments					$ 1,100,000
2.75% Convertible Senior Notes Due 2020
Business Acquisition [Line Items]
Fair value of Notes		$ 356,400,000
Debt instrument, aggregate principal amount		230,000,000
Debt premium recorded in additional paid-in capital		126,400,000
2.75% Convertible Senior Notes Due 2020 | Class A Common Stock
Business Acquisition [Line Items]
Common stock exchange ratio					0.444
Trulia
Business Acquisition [Line Items]
Business acquisition purchase price in cash		41,000
Business acquisition, purchase price		$ 1,966,420,000
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, expected volatility		53.00%
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, dividends		0.00%
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, risk-free interest rate		1.10%
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, expected life		3 years
Indefinite-lived intangible asset		$ 549,000,000
Deferred tax liability							$ 139,500,000
Trulia | Class A Common Stock
Business Acquisition [Line Items]
Stock issued for acquisition | shares		17,259,704
Trulia | Trade Names and Trademarks
Business Acquisition [Line Items]
Indefinite-lived intangible asset		$ 351,000,000					$ 351,000,000
Naked Apartments Inc
Business Acquisition [Line Items]
Business acquisition purchase price in cash	$ 13,200,000

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Purchase Price Allocation (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Feb. 22, 2016	Dec. 31, 2015	Feb. 17, 2015
Business Acquisition [Line Items]
Goodwill	$ 1,923,480		$ 1,909,167
Naked Apartments Inc
Business Acquisition [Line Items]
Current assets		$ 371
Identifiable intangible assets		3,700
Goodwill		10,610
Current liabilities		(101)
Deferred tax liabilities		(1,416)
Total preliminary estimated purchase price		$ 13,164
Trulia
Business Acquisition [Line Items]
Cash and cash equivalents				$ 173,447
Accounts receivable				13,093
Prepaid expenses and other current assets				20,833
Restricted cash				6,946
Property and equipment				30,189
Other assets				434
Identifiable intangible assets				549,000
Goodwill				1,736,362
Accounts payable, accrued expenses and other current liabilities				(51,258)
Accrued compensation and benefits				(8,324)
Deferred revenue				(8,300)
Long-term debt				(230,000)
Debt premium recorded in additional paid-in capital				(126,386)
Deferred tax liabilities and other long-term liabilities				(139,616)
Total preliminary estimated purchase price				$ 1,966,420

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Summary of Purchase Price (Detail) - Trulia $ in Thousands	Feb. 17, 2015 USD ($)
Business Acquisition [Line Items]
Cash paid in lieu of fractional outstanding shares	$ 41
Total purchase price	1,966,420
Class A Common Stock
Business Acquisition [Line Items]
Value of stock issued and substituted share awards attributable to pre-combination service	1,883,728
Stock Option and Stock Appreciation Rights
Business Acquisition [Line Items]
Value of stock issued and substituted share awards attributable to pre-combination service	54,853
Restricted Stock Units
Business Acquisition [Line Items]
Value of stock issued and substituted share awards attributable to pre-combination service	$ 27,798

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Fair Value of Identifiable Intangible Assets Acquired (Detail) - USD ($) $ in Thousands		9 Months Ended
	Feb. 17, 2015	Sep. 30, 2016	Dec. 31, 2015
Trulia
Business Acquisition [Line Items]
Total Fair Value	$ 549,000
Trulia | Market Leader Trade Names and Trademarks
Business Acquisition [Line Items]
Total Fair Value	$ 2,000
Estimated Useful Life (in years)	2 years
Trulia | Customer Relationships
Business Acquisition [Line Items]
Total Fair Value	$ 92,000
Trulia | Developed Technology
Business Acquisition [Line Items]
Total Fair Value	91,000
Trulia | Advertising Relationships
Business Acquisition [Line Items]
Total Fair Value	$ 9,000
Estimated Useful Life (in years)	3 years
Trulia | MLS Home Data Feeds
Business Acquisition [Line Items]
Total Fair Value	$ 4,000
Estimated Useful Life (in years)	3 years
Trulia | Trade Names and Trademarks
Business Acquisition [Line Items]
Total Fair Value	$ 351,000		$ 351,000
Minimum
Business Acquisition [Line Items]
Estimated Useful Life (in years)		2 years
Minimum | Trulia | Customer Relationships
Business Acquisition [Line Items]
Estimated Useful Life (in years)	3 years
Minimum | Trulia | Developed Technology
Business Acquisition [Line Items]
Estimated Useful Life (in years)	3 years
Maximum
Business Acquisition [Line Items]
Estimated Useful Life (in years)		9 years
Maximum | Trulia | Customer Relationships
Business Acquisition [Line Items]
Estimated Useful Life (in years)	7 years
Maximum | Trulia | Developed Technology
Business Acquisition [Line Items]
Estimated Useful Life (in years)	7 years

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Pro Forma Condensed Combined Financial Information (Detail) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	[1]	Sep. 30, 2016	Sep. 30, 2015	[2]
Business Acquisition, Pro Forma Information [Abstract]
Revenue	$ 224,592	$ 176,765		$ 618,977	$ 510,565
Net income (loss)	$ 6,807	$ (21,393)		$ (196,947)	$ (65,978)

[1] The pro forma net loss for the three months ended September 30, 2015 includes pro forma adjustments for $3.4 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements and $1.2 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements.

[2] The pro forma net loss for the nine months ended September 30, 2015 includes pro forma adjustments for $49.1 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $37.3 million to eliminate share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $35.3 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements, $2.4 million to record additional amortization expense for acquired intangible assets and $1.1 million to eliminate Trulia's historical amortization of capitalized website development costs.

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Change in Goodwill (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Goodwill [Line Items]
Balance as of December 31, 2015	$ 1,909,167
Reduction of goodwill in connection with the divestiture of a business	(1,196)
Balance as of September 30, 2016	1,923,480
Naked Apartments Inc
Goodwill [Line Items]
Goodwill recorded in connection with the acquisition	10,610
Bridge Interactive
Goodwill [Line Items]
Goodwill recorded in connection with the acquisition	$ 4,899

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Intangible Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Cost	$ 278,855	$ 271,222
Accumulated Amortization	(92,678)	(63,341)
Net	186,177	207,881
Purchased Content
Finite-Lived Intangible Assets [Line Items]
Cost	40,544	37,581
Accumulated Amortization	(21,491)	(19,649)
Net	19,053	17,932
Software
Finite-Lived Intangible Assets [Line Items]
Cost	9,971	6,961
Accumulated Amortization	(4,315)	(2,845)
Net	5,656	4,116
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Cost	103,200	103,425
Accumulated Amortization	(27,110)	(16,204)
Net	76,090	87,221
Developed Technology
Finite-Lived Intangible Assets [Line Items]
Cost	110,080	108,295
Accumulated Amortization	(31,652)	(19,515)
Net	78,428	88,780
Trade Names and Trademarks
Finite-Lived Intangible Assets [Line Items]
Cost	4,960	4,860
Accumulated Amortization	(2,669)	(2,212)
Net	2,291	2,648
Advertising Relationships
Finite-Lived Intangible Assets [Line Items]
Cost	9,000	9,000
Accumulated Amortization	(4,848)	(2,598)
Net	4,152	6,402
MLS Home Data Feeds
Finite-Lived Intangible Assets [Line Items]
Cost	1,100	1,100
Accumulated Amortization	(593)	(318)
Net	$ 507	$ 782

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Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 21,917	$ 16,405	$ 62,821	$ 45,304
Trulia
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible asset			351,000
Technology and Development
Finite-Lived Intangible Assets [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 11,600	$ 10,200	$ 33,400	$ 28,500

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Convertible Senior Notes - Additional Information (Detail)		3 Months Ended		9 Months Ended
	Feb. 17, 2015 USD ($)	Sep. 30, 2016 USD ($) $ / shares	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) d $ / shares	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Common stock exchange ratio	0.444
Interest expense		$ 1,595,000	$ 1,590,000	$ 4,740,000	$ 3,900,000
Class A Common Stock | Stock Split
Debt Instrument [Line Items]
Debt instrument, conversion rate principal amount		$ 1,000		$ 1,000
Debt instrument, conversion rate shares				41.4550
Initial conversion price | $ / shares		$ 24.12		$ 24.12
2.75% Convertible Senior Notes Due 2020
Debt Instrument [Line Items]
Debt instrument carrying value	$ 230,000,000	$ 230,000,000		$ 230,000,000		$ 230,000,000
Debt instrument, due date				Dec. 15, 2020
Debt instrument, interest rate stated percentage	2.75%
Debt instrument, frequency of period payment				Semi-annually on June 15 and December 15
Debt instrument, conversion rate principal amount		1,000		$ 1,000
Debt instrument, conversion rate shares				27.8303
Repurchase price percentage of principal amount				100.00%
Debt instrument, covenant description				There are no financial covenants associated with the 2020 Notes.
Debt instrument, redemption period start date				Dec. 20, 2018
Interest expense		1,600,000	$ 1,600,000	$ 4,700,000	$ 3,900,000
Accrued interest		$ 1,800,000		$ 1,800,000
2.75% Convertible Senior Notes Due 2020 | Class A Common Stock
Debt Instrument [Line Items]
Debt instrument, conversion rate shares				12.3567
Common stock exchange ratio				0.444
Initial conversion price | $ / shares		$ 80.93		$ 80.93
Debt instrument, convertible threshold percentage				130.00%
Debt instrument, convertible threshold trading days | d				20
Debt instrument, convertible threshold consecutive trading days				30 days
Fair Value, Inputs, Level 3 | 2.75% Convertible Senior Notes Due 2020
Debt Instrument [Line Items]
Fair value of convertible notes		$ 346,400,000		$ 346,400,000		$ 272,900,000

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Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Schedule Of Income Tax [Line Items]
Current income tax liability				$ 0
Income tax benefit	$ 2,853,000	$ 1,364,000	$ 2,853,000
Federal
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards				735,200,000
State
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards				$ 11,600,000

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Shareholders' Equity - Additional Information (Detail)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2016 shares	Sep. 30, 2016 Vote shares	Dec. 31, 2015 shares
Class of Stock [Line Items]
Preferred stock, shares issued	0	0	0
Preferred stock, shares outstanding	0	0	0
Class A Common Stock
Class of Stock [Line Items]
Common stock holders voting right | Vote		1
Conversion of common stock conversion ratio		1
Number of common stock issued	0	0	0
Class C Capital Stock
Class of Stock [Line Items]
Common stock holders voting right | Vote		0
Class B Common Stock
Class of Stock [Line Items]
Common stock holders voting right | Vote		10
Number of common stock converted	0	0	0

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Share-Based Awards - Zillow Group, Inc. Incentive Plan - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016 shares
Amended and Restated 2011 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance	18,400,000
Increase in number of shares of common and capital stock available for issuance percentage	3.50%
Increase in number of shares of common and capital stock available for issuance	10,500,000
2011 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price per share fixed	100.00%
2011 Plan | Option Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation arrangement by share based payment, award minimum exercisable period	3 months
Share based compensation arrangement by share based payment, award maximum exercisable period	12 months
Options vesting rights	Options granted under the 2011 Plan typically expire seven or 10 years from the grant date and typically vest either 25% after 12 months and ratably thereafter over the next 36 months or quarterly over a period of four years, though certain options have been granted with longer vesting schedules.
2011 Plan | Option Awards | Vesting After 12 Months
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	25.00%
Vesting period	12 months
2011 Plan | Option Awards | Vesting After 36 Months
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	36 months
2011 Plan | Option Awards | Quarterly Vesting Over 4 Years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
2011 Plan | Option Awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	7 years
2011 Plan | Option Awards | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	10 years

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Summary of Option Award and Stock Appreciation Rights Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Beginning Balance	27,126,374	17,399,292
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Assumed Trulia options and stock appreciation rights in connection with February 2015 acquisition of Trulia		3,159,765
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Granted	5,972,299	11,438,095
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Exercised	(1,550,486)	(2,732,767)
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Forfeited or cancelled	(994,247)	(2,138,011)
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Ending Balance	30,553,940	27,126,374	17,399,292
Weighted-Average Exercise Price Per Share, Beginning Balance	$ 23.35	$ 18.12
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Vested and exercisable, Ending balance	13,500,955
Weighted-Average Exercise Price Per Share, Assumed Trulia options and stock appreciation rights in connection with February 2015 acquisition of Trulia		13.79
Weighted-Average Exercise Price Per Share, Granted	$ 23.46	31.45
Weighted-Average Exercise Price Per Share, Exercised	13.22	8.99
Weighted-Average Exercise Price Per Share, Forfeited or cancelled	30.37	28.37
Weighted-Average Exercise Price Per Share, Ending Balance	23.66	$ 23.35	$ 18.12
Weighted-Average Exercise Price Per Share, Vested and exercisable	$ 19.22
Weighted-Average Remaining Contractual Life (Years)	6 years 29 days	5 years 11 months 16 days	5 years 3 months 26 days
Weighted-Average Remaining Contractual Life (Years), Vested and exercisable	4 years 3 months 15 days
Aggregate Intrinsic Value	$ 351,927	$ 156,025	$ 311,040
Aggregate Intrinsic Value Vested, and exercisable	$ 214,983

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Share-Based Awards - Option Awards and Stock Appreciation Rights - Additional Information (Detail) - USD ($)	1 Months Ended	2 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2016	Feb. 28, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted					5,972,299		11,438,095
Number of options granted, weighted-average exercise price					$ 23.46		$ 31.45
Fair value of options granted			$ 14.29	$ 11.11	$ 9.20	$ 13.98
Expected volatility			50.00%	55.00%
Share-based compensation			$ 27,285,000	$ 29,074,000	$ 81,152,000	$ 95,965,000
DotLoop Inc
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted							199,779
Number of options granted, weighted-average exercise price							$ 9.29
Stock Option and Stock Appreciation Rights
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized cost of unvested share-based compensation awards			189,500,000		$ 189,500,000
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option awards of Class A common stock and Class C capital stock granted	93,995
Fair value of options granted	$ 8.91
Expected volatility	51.00%
Risk-free interest rate	1.12%
Weighted-average expected life	4 years 3 months
Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option awards of Class A common stock and Class C capital stock granted		3,450,000
Expected volatility		52.00%
Risk-free interest rate		1.76%
Weighted-average expected life		6 years 9 months 18 days
Fair value of option awards granted		$ 62,800,000
Expected dividend		$ 0
Options vesting rights					One-sixteenth of the total number of shares subject to the option awards vested and became exercisable on the first anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable four years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the two-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable five years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the three-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable six years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the four-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable seven years from the vesting commencement date.
Expiration period		10 years
General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 11,758,000	$ 11,549,000	$ 36,056,000	36,610,000
General and Administrative | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation					$ 800,000	$ 800,000

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Fair Value of Options Granted, Excluding Stock Option Grant Program of Nonemployee Directors and Executives, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model (Detail) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	50.00%	55.00%
Expected volatility, minimum			50.00%	55.00%
Expected volatility, maximum			51.00%	56.00%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate, minimum	0.90%	1.03%	0.89%	1.03%
Risk-free interest rate, maximum	1.06%	1.19%	1.20%	1.48%
Weighted-average fair value of options granted	$ 14.29	$ 11.11	$ 9.20	$ 13.98
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average expected life	4 years	3 years 6 months	3 years 9 months 11 days	3 years 6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average expected life				4 years 6 months 29 days

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Summary of Restricted Stock Units Activity (Detail) - Restricted Stock Units - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Restricted Stock Units
Unvested outstanding, beginning balance	2,605,514	376,806
Assumed Trulia restricted stock units in connection with February 2015 acquisition of Trulia		3,798,957
Granted	2,814,296	1,354,185
Vested	(1,202,096)	(1,899,531)
Forfeited or cancelled	(440,757)	(1,024,903)
Unvested outstanding, ending balance	3,776,957	2,605,514
Weighted-Average Grant-Date Fair Value
Unvested outstanding, beginning balance	$ 32.36	$ 28.56
Assumed Trulia restricted stock units in connection with February 2015 acquisition of Trulia		36.38
Granted	24.99	28.55
Vested	31.60	31.74
Forfeited or cancelled	27.40	31.12
Unvested outstanding, ending balance	$ 27.69	$ 32.36

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Share-Based Awards - Restricted Stock Units - Additional Information (Detail) - Restricted Stock Units - USD ($) $ in Millions	1 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted		2,814,296	1,354,185
Total unrecognized compensation cost		$ 96.3
Naked Apartments Inc
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of restricted shares issued		$ 3.6
Naked Apartments Inc | Retention Bonus Plan Member
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	161,883
Naked Apartments Inc | Retention Bonus Plan Member | Vesting After 2.5 Years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	139,075
Award vesting rights		One-sixth of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 2.5 years.
Vesting percentage	16.67%
Vesting commencement date of restricted shares	Aug. 22, 2016
Vesting period	2 years 6 months
Naked Apartments Inc | Retention Bonus Plan Member | Vesting After 1.5 Years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	22,808
Award vesting rights		25% of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 1.5 years.
Vesting percentage	25.00%
Vesting commencement date of restricted shares	Aug. 22, 2016
Vesting period	1 year 6 months

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Effects of Share Based Compensation in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 27,285	$ 29,074	$ 81,152	$ 95,965
Cost of Revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	1,524	1,378	4,370	3,440
Sales and Marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	5,968	7,446	17,566	20,439
Technology and Development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	8,035	7,642	23,160	20,413
General and Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 11,758	11,549	$ 36,056	36,610
Restructuring Costs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		$ 1,059		$ 15,063

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Reconciliation of Denominators Used in Basic and Diluted Net Income (Loss) Per Share (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share Reconciliation [Abstract]
Denominator for basic calculation	180,583	177,098	179,577	166,986
Effect of dilutive securities:
Option awards and stock appreciation rights	7,928
Unvested restricted stock awards and restricted stock units	1,150
Denominator for dilutive calculation	189,661	177,098	179,577	166,986

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Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Class A Common Stock and Class C Capital Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share	18,717	25,863	31,459	30,364
Class A Common Stock and Class C Capital Stock | Option Awards | Weighted Average
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share	8,456	13,142	17,874	17,115
Class A Common Stock and Class C Capital Stock | Restricted Stock Awards and Restricted Stock Units | Weighted Average
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share	235	3,186	3,559	3,714
Class A Common Stock | 2.75% Convertible Senior Notes Due 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share	10,026	9,535	10,026	9,535

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Commitments and Contingencies - Additional Information (Detail)		1 Months Ended	3 Months Ended		9 Months Ended
	Jun. 06, 2016 USD ($)	Sep. 30, 2010 Patent	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Other Commitments [Line Items]
Operating lease expense			$ 4,300,000	$ 3,800,000	$ 12,100,000	$ 11,200,000
Amortization periods description					For contracts in which we have perpetual rights to the data, the total contract value is amortized on a straight-line basis over the life of the contract plus two years, which is equivalent to the estimated useful life of the asset.
Outstanding surety bonds			3,600,000		$ 3,600,000		$ 3,400,000
Loss contingency accrual			0		$ 0
Payment for settlement of claims	$ 130,000,000
Minimum
Other Commitments [Line Items]
Estimate useful life of the asset					2 years
Maximum
Other Commitments [Line Items]
Estimate useful life of the asset					9 years
Seattle, Washington
Other Commitments [Line Items]
Outstanding letters of credit			1,800,000		$ 1,800,000
San Francisco, California
Other Commitments [Line Items]
Outstanding letters of credit			5,200,000		5,200,000
New York
Other Commitments [Line Items]
Outstanding letters of credit			1,100,000		1,100,000
Denver, Colorado
Other Commitments [Line Items]
Outstanding letters of credit			1,100,000		$ 1,100,000
LendingTree, LLC
Other Commitments [Line Items]
Number of patents infringed | Patent		2
Allegations and asserted defenses					In March 2014, a federal jury found that Zillow does not infringe the patents and that the patents asserted by LendingTree are invalid.
Loss contingency accrual			$ 0		$ 0		$ 0

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Related Party Transactions - Additional Information (Detail) - Mr.Richard Barton - USD ($) $ in Millions	1 Months Ended
	Feb. 28, 2015	Apr. 30, 2016
Related Party Transaction [Line Items]
Payment of filing fees	$ 0.3
Accrual gross-up payment		$ 0.1

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Self-Insurance - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Insurance [Line Items]
Minimum amount of individual claim under self insurance plan	$ 150,000
Liability for self-insured claims included in accrued compensation and benefits	$ 1,800,000	$ 500,000
Minimum
Insurance [Line Items]
Percentage of cumulative medical claim under self insurance plan	125.00%

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Employee Benefit Plan - Additional Information (Detail) - Zillow Merger - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Defined Contribution Plan Disclosure [Line Items]
Company's expense related to its defined contribution 401(k) retirement plans	$ 2.4	$ 1.0	$ 7.1	$ 3.1
Maximum
Defined Contribution Plan Disclosure [Line Items]
Company's contribution based on employee contribution			4.00%

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Segment Information and Revenue - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016 Segment
Segment Reporting [Abstract]
Number of reportable segment	1

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Revenue Categories (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues:
Total Marketplace revenue	$ 206,896	$ 153,243	$ 567,425	$ 407,651
Display revenue	17,696	23,522	51,552	67,656
Total revenue	224,592	176,765	618,977	475,307
Premier Agent
Revenues:
Total Marketplace revenue	158,322	119,448	439,957	322,526
Other Real Estate
Revenues:
Total Marketplace revenue	28,799	10,214	72,847	23,006
Mortgages Revenue
Revenues:
Total Marketplace revenue	$ 19,775	12,624	$ 54,621	32,575
Market Leader Revenue
Revenues:
Total Marketplace revenue		$ 10,957		$ 29,544

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Subsequent Events - Additional Information (Detail) - Subsequent Event $ in Millions	Oct. 07, 2016 USD ($)
Other Assets [Member]
Subsequent Event [Line Items]
Cost method investment	$ 10.0
Variable Interest Entity, Not Primary Beneficiary [Member]
Subsequent Event [Line Items]
Percentage of equity interest in variable interest entity	10.00%