10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

_____________________________________________________

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

For the quarterly period ended June 30, 2020

☐ 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	(I.R.S. Employer
incorporation or organization)	Identification No.)

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)

 _____________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	ZG	The Nasdaq Global Select Market
Class C Capital Stock, par value $0.0001 per share	Z	The Nasdaq Global Select Market

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

As of July 30, 2020, 60,002,842 shares of Class A common stock, 6,217,447 shares of Class B common stock, and 160,765,729 shares of Class C capital stock were outstanding.

ZILLOW GROUP, INC.

Quarterly Report on Form 10-Q

For the Three Months Ended June 30, 2020

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Shareholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	61
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	63
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 6.	Exhibits	65
	Signatures	66

i

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 those risks, uncertainties and assumptions described in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2019 and in Part II, Item 1A (Risk Factors) in this Quarterly Report on Form 10-Q, including, but not limited to:

•the impact of the novel coronavirus (“COVID-19”) pandemic and any associated economic downturn on our future financial position, operations and financial performance;

•the magnitude, duration and severity of the COVID-19 pandemic;

•the impact of actions taken by governments, businesses, and individuals in response to the COVID-19 pandemic;

•the current and future health and stability of the economy and residential housing market, including any extended slowdown in the real estate markets as a result of COVID-19;

•changes in laws or regulations applicable to our business, employees, products or services, including current and future laws, regulations and orders that limit our ability to operate in light of COVID-19;

•changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit;

•actual or anticipated fluctuations in our financial condition and results of operations;

•changes in projected operational and financial results;

•addition or loss of significant customers;

•actual or anticipated changes in our growth rate relative to that of our competitors;

•acquisitions, strategic partnerships, joint ventures, capital-raising activities, or other corporate transactions or commitments by us or our competitors;

•actual or anticipated changes in technology, products, markets or services by us or our competitors;

•ability to obtain or maintain licenses and permits to support our current and future businesses;

•actual or anticipated changes to our products and services;

•ability to maintain or establish relationships with listings and data providers;

•fluctuations in the valuation of companies perceived by investors to be comparable to us;

•the impact of pending or future litigation; and

•issuance of new or updated research or reports by securities analysts.

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.

1

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.

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data, unaudited)

	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	2,045,474	$	1,141,263
Short-term investments	1,491,167		1,280,989
Accounts receivable, net of allowance for doubtful accounts of $2,282 and $4,522 at June 30, 2020 and December 31, 2019, respectively	66,878		67,005
Mortgage loans held for sale	75,021		36,507
Inventory	135,401		836,627
Prepaid expenses and other current assets	56,373		58,117
Restricted cash	33,620		89,646
Total current assets	3,903,934		3,510,154
Contract cost assets	47,747		45,209
Property and equipment, net	195,747		170,489
Right of use assets	199,422		212,153
Goodwill	1,984,907		1,984,907
Intangible assets, net	106,990		190,567
Other assets	11,041		18,494
Total assets	$	6,449,788	$	6,131,973
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	14,307	$	8,343
Accrued expenses and other current liabilities	74,646		85,442
Accrued compensation and benefits	34,520		37,805
Borrowings under credit facilities	187,032		721,951
Deferred revenue	44,514		39,747
Lease liabilities, current portion	22,789		17,592
Convertible senior notes, current portion	9,637		9,637
Total current liabilities	387,445		920,517
Lease liabilities, net of current portion	214,752		220,445
Convertible senior notes, net of current portion	1,810,341		1,543,402
Deferred tax liabilities and other long-term liabilities	14,192		12,188
Total liabilities	2,426,730		2,696,552
Commitments and contingencies (Note 17)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized; no shares issued and outstanding	—		—
Class A common stock, $0.0001 par value; 1,245,000,000 shares authorized; 59,850,004 and 58,739,989 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	6		6
Class B common stock, $0.0001 par value; 15,000,000 shares authorized; 6,217,447 shares issued and outstanding	1		1
Class C capital stock, $0.0001 par value; 600,000,000 shares authorized; 159,974,485 and 144,109,419 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	16		14
Additional paid-in capital	5,246,371		4,412,200
Accumulated other comprehensive income	1,525		340
Accumulated deficit	(1,224,861)		(977,140)
Total shareholders’ equity	4,023,058		3,435,421
Total liabilities and shareholders’ equity	$	6,449,788	$	6,131,973

See accompanying notes to the condensed consolidated financial statements.

3

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenue:
Homes	$	454,252	$	248,924	$	1,224,125	$	377,396
IMT	280,339		323,669		611,005		621,941
Mortgages	33,761		26,985		59,043		54,345
Total revenue	768,352		599,578		1,894,173		1,053,682
Cost of revenue (exclusive of amortization) (1):
Homes	431,788		240,732		1,163,987		363,151
IMT	23,387		26,059		47,705		50,310
Mortgages	5,896		4,430		11,051		9,108
Total cost of revenue	461,071		271,221		1,222,743		422,569
Sales and marketing	155,598		187,433		360,246		349,020
Technology and development	128,857		120,330		263,775		228,100
General and administrative	85,511		82,839		177,796		178,613
Impairment costs	—		—		76,800		—
Integration costs	—		293		—		645
Total costs and expenses	831,037		662,116		2,101,360		1,178,947
Loss from operations	(62,685)		(62,538)		(207,187)		(125,265)
Gain on partial extinguishment of 2021 Notes	6,391		—		6,391		—
Other income	10,115		9,458		19,708		18,626
Interest expense	(37,590)		(18,897)		(75,182)		(35,363)
Loss before income taxes	(83,769)		(71,977)		(256,270)		(142,002)
Income tax benefit (expense)	(679)		—		8,549		2,500
Net loss	$	(84,448)	$	(71,977)	$	(247,721)	$	(139,502)
Net loss per share — basic and diluted	$	(0.38)	$	(0.35)	$	(1.15)	$	(0.68)
Weighted-average shares outstanding — basic and diluted	219,467		205,754		215,070		205,137
____________________ (1) Amortization of website development costs and intangible assets included in technology and development	$	18,857	$	14,656	$	36,041	$	29,056

See accompanying notes to the condensed consolidated financial statements.

4

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net loss	$	(84,448)	$	(71,977)	$	(247,721)	$	(139,502)
Other comprehensive income (loss):
Unrealized gains (losses) on investments	(2,806)		751		796		1,895
Reclassification adjustment for net investment (gains) losses included in net loss	(62)		—		372		—
Net unrealized gains (losses) on investments	(2,868)		751		1,168		1,895
Currency translation adjustments	107		(52)		17		(94)
Total other comprehensive income (loss)	(2,761)		699		1,185		1,801
Comprehensive loss	$	(87,209)	$	(71,278)	$	(246,536)	$	(137,701)

See accompanying notes to the condensed consolidated financial statements.

5

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share data, unaudited)

	Class A Common Stock, Class B Common Stock and Class C Capital Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders’ Equity
	Shares	Amount
Balance at April 1, 2020	212,913,139	$	22	$	4,551,866	$	(1,140,413)	$	4,286	$	3,415,761
Issuance of common and capital stock upon exercise of stock options	3,117,483	—		92,783		—		—		92,783
Vesting of restricted stock units	775,249	—		—		—		—		—
Shares and value of restricted stock units withheld for tax liability	(6)	—		—		—		—		—
Share-based compensation expense	—	—		57,171		—		—		57,171
Issuance of Class C capital stock in connection with equity offering, net of issuance costs of $10,877	8,800,000	1		411,522		—		—		411,523
Equity component of issuance of 2025 Notes, net of issuance costs of $3,279	—	—		154,813		—		—		154,813
Partial repurchase of 2021 Notes	753,936	—		(21,784)		—		—		(21,784)
Partial unwind of capped call transactions for 2021 Notes	(317,865)	—		—		—		—		—
Net loss	—	—		—		(84,448)		—		(84,448)
Other comprehensive loss	—	—		—		—		(2,761)		(2,761)
Balance at June 30, 2020	226,041,936	$	23	$	5,246,371	$	(1,224,861)	$	1,525	$	4,023,058

	Class A Common Stock, Class B Common Stock and Class C Capital Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders’ Equity
	Shares	Amount
Balance at April 1, 2019	205,130,332	$	21	$	4,022,218	$	(739,304)	$	197	$	3,283,132
Issuance of common and capital stock upon exercise of stock options	814,062	—		19,433		—		—		19,433
Vesting of restricted stock units	569,260	—		—		—		—		—
Shares and value of restricted stock units withheld for tax liability	(18)	—		(1)		—		—		(1)
Share-based compensation expense	—	—		46,820		—		—		46,820
Net loss	—	—		—		(71,977)		—		(71,977)
Other comprehensive income	—	—		—		—		699		699
Balance at June 30, 2019	206,513,636	$	21	$	4,088,470	$	(811,281)	$	896	$	3,278,106

6

	Class A Common Stock, Class B Common Stock and Class C Capital Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders’ Equity
	Shares	Amount
Balance at January 1, 2020	209,066,855	$	21	$	4,412,200	$	(977,140)	$	340	$	3,435,421
Issuance of common and capital stock upon exercise of stock options	6,324,858	1		184,984		—		—		184,985
Vesting of restricted stock units	1,414,158	—		—		—		—		—
Shares and value of restricted stock units withheld for tax liability	(6)	—		—		—		—		—
Share-based compensation expense	—	—		104,636		—		—		104,636
Issuance of Class C capital stock in connection with equity offering, net of issuance costs of $10,877	8,800,000	1		411,522		—		—		411,523
Equity component of issuance of 2025 Notes, net of issuance costs of $3,279	—	—		154,813		—		—		154,813
Partial repurchase of 2021 Notes	753,936	—		(21,784)		—		—		(21,784)
Partial unwind of capped call transactions for 2021 Notes	(317,865)	—		—		—		—		—
Net loss	—	—		—		(247,721)		—		(247,721)
Other comprehensive income	—	—		—		—		1,185		1,185
Balance at June 30, 2020	226,041,936	$	23	$	5,246,371	$	(1,224,861)	$	1,525	$	4,023,058

	Class A Common Stock, Class B Common Stock and Class C Capital Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Shares	Amount
Balance at January 1, 2019	203,904,265	$	21	$	3,939,842	$	(671,779)	$	(905)	$	3,267,179
Issuance of common and capital stock upon exercise of stock options	1,543,850	—		32,997		—		—		32,997
Vesting of restricted stock units	1,065,607	—		—		—		—		—
Shares and value of restricted stock units withheld for tax liability	(86)	—		(3)		—		—		(3)
Share-based compensation expense	—	—		115,634		—		—		115,634
Net loss	—	—		—		(139,502)		—		(139,502)
Other comprehensive income	—	—		—		—		1,801		1,801
Balance at June 30, 2019	206,513,636	$	21	$	4,088,470	$	(811,281)	$	896	$	3,278,106

See accompanying notes to the condensed consolidated financial statements.

7

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Six Months Ended June 30,
	2020		2019
Operating activities
Net loss	$	(247,721)	$	(139,502)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	55,199		41,728
Share-based compensation expense	96,146		109,756
Amortization of right of use assets	12,731		10,572
Amortization of contract cost assets	17,070		17,880
Amortization of discount and issuance costs on convertible senior notes maturing in 2021, 2023, 2024, 2025 and 2026	47,746		17,799
Gain on partial extinguishment of 2021 Notes	(6,391)		—
Impairment costs	76,800		—
Deferred income taxes	(8,549)		(2,500)
(Gain) loss on disposal of property and equipment and other assets	(2,658)		3,878
Credit loss expense	1,614		706
Net loss on investment securities	372		—
Accretion of bond discount	(303)		(3,695)
Changes in operating assets and liabilities:
Accounts receivable	(1,487)		(16,884)
Mortgage loans held for sale	(38,514)		(3,244)
Inventory	701,145		(389,994)
Prepaid expenses and other assets	(771)		(2,015)
Lease liabilities	(495)		(11,946)
Contract cost assets	(19,608)		(18,332)
Accounts payable	7,504		1,256
Accrued expenses and other current liabilities	(8,741)		6,952
Accrued compensation and benefits	(3,285)		613
Deferred revenue	4,767		3,000
Other long-term liabilities	10,049		149
Net cash provided by (used in) operating activities	692,620		(373,823)
Investing activities
Proceeds from maturities of investments	701,266		539,312
Proceeds from sales of investments	116,394		—
Purchases of investments	(1,026,233)		(302,891)
Purchases of property and equipment	(54,653)		(29,672)
Purchases of intangible assets	(11,408)		(8,927)
Proceeds from sale of equity investment	10,000		—
Net cash provided by (used in) investing activities	(264,634)		197,822
Financing activities
Proceeds from issuance of 2025 Notes, net of issuance costs	553,282		—
Proceeds from issuance of Class C capital stock, net of issuance costs	411,522		—
Partial extinguishment of 2021 Notes	(194,670)		—
Proceeds from borrowings on credit facilities	43,200		293,099
Repayments of borrowings on credit facilities	(617,506)		—
Net borrowings (repayments) on warehouse lines of credit and repurchase agreement	39,387		(2,961)
Proceeds from exercise of stock options	184,984		32,997
Value of equity awards withheld for tax liability	—		3
Net cash provided by financing activities	420,199		323,138
Net increase in cash, cash equivalents and restricted cash during period	848,185		147,137
Cash, cash equivalents and restricted cash at beginning of period	1,230,909		663,443
Cash, cash equivalents and restricted cash at end of period	$	2,079,094	$	810,580
Supplemental disclosures of cash flow information
Cash paid for interest	$	29,201	$	16,616
Noncash transactions:
Capitalized share-based compensation	$	8,490	$	5,878
Write-off of fully depreciated property and equipment	$	6,942	$	9,867
Write-off of fully amortized intangible assets	$	—	$	3,311
Property and equipment purchased on account	$	5,305	$	2,408

See accompanying notes to the condensed consolidated financial statements.

8

ZILLOW GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Organization and Description of Business

Zillow Group, Inc., the largest portfolio of real estate brands on mobile and the web, is building a trusted, on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to the Zillow family of businesses to find and get into their next home with speed, certainty and ease.

In addition to Zillow’s for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Closing Services offers customers title and escrow services to support a more seamless transaction experience. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions which include Mortech, dotloop, Bridge Interactive and New Home Feed. Zillow, Inc. was incorporated as a Washington corporation in December 2004, and we launched the initial version of our website, Zillow.com, in February 2006. Zillow Group, Inc. was incorporated as a Washington corporation in July 2014 in connection with our acquisition of Trulia, Inc. (“Trulia”). Upon the closing of the Trulia acquisition in February 2015, each of Zillow, Inc. and Trulia became wholly owned subsidiaries of Zillow Group.

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: public health crises, like the COVID-19 pandemic; rates of revenue growth; our ability to manage advertising inventory or pricing; engagement and usage of our products; our investment of resources to pursue strategies that may not prove effective; competition in our market; the stability of the residential real estate market and the impact of interest rate changes; changes in technology, products, markets or services by us or our competitors; addition or loss of significant customers; our ability to maintain or establish relationships with listings and data providers; our ability to obtain or maintain licenses and permits to support our current and future businesses; actual or anticipated changes to our products and services; changes in government regulation affecting our business; outcomes of legal proceedings; natural disasters and catastrophic events; scaling and adaptation of existing technology and network infrastructure; management of our growth; our ability to attract and retain qualified employees and key personnel; our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; protection of customers’ information and other privacy concerns; protection of our brand and intellectual property; and intellectual property infringement and other claims, 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 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 included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 19, 2020. The condensed consolidated balance sheet as of December 31, 2019, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

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 June 30, 2020, our results of operations, comprehensive loss and shareholders’ equity for the three and six month periods ended June 30, 2020 and 2019, and our cash flows for the six month periods ended June 30, 2020 and 2019. The results of the three and six month periods ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any interim period or for any other future year.

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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 the net realizable value of inventory, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and the recoverability of 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. The COVID-19 pandemic has introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed, among others.

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We expect to apply some of the expedients and exceptions provided in this guidance to our credit facilities, warehouse line of credit and master repurchase agreement, all of which reference LIBOR in the applicable interest rate. While the goal of the reference rate reform transition is for it to be economically neutral to entities, we have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

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 — The fair value measurement of money market funds is based on quoted market prices in active markets. The fair value measurement of treasury bills are based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Short-term investments — The fair value measurement of our short-term investments 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.

Restricted cash — Restricted cash consists of cash received from the resale of homes through Zillow Offers which may be used to repay amounts borrowed on our credit facilities (see Note 12) and amounts held in escrow related to funding home purchases in our mortgage origination business. The carrying value of restricted cash approximates fair value due to the short period of time amounts borrowed on the credit facilities are outstanding and amounts are held in escrow.

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Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics.

Interest rate lock commitments — The fair value of interest rate lock commitments (“IRLCs”) is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. We generally only issue IRLCs for products that meet specific purchaser guidelines. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close. This adjustment is effected through the pull-through rate, which represents the probability that an interest rate lock commitment will ultimately result in a closed loan.

The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our condensed consolidated statements of operations.

The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the periods presented:

	June 30, 2020	December 31, 2019
Range	40% - 100%	56% - 100%
Weighted average	70%	78%

Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as economic hedging instruments are calculated by reference to quoted prices for similar assets.

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

	June 30, 2020
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,784,896	$	1,784,896	$	—	$	—
Treasury bills	70,189		—		70,189		—
Short-term investments:
Treasury bills	963,231		—		963,231		—
U.S. government agency securities	465,715		—		465,715		—
Corporate notes and bonds	30,213		—		30,213		—
Municipal securities	16,538		—		16,538		—
Commercial paper	14,972		—		14,972		—
Certificates of deposit	498		—		498		—
Mortgage origination-related:
Mortgage loans held for sale	75,021		—		75,021		—
IRLCs	5,091		—		—		5,091
Forward contracts - other current liabilities	961		—		961		—
Total	$	3,427,325	$	1,784,896	$	1,637,338	$	5,091

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	December 31, 2019
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	872,431	$	872,431	$	—
U.S. government agency securities	35,009		—		35,009
Commercial paper	31,113		—		31,113
Treasury bills	6,441		—		6,441
Corporate notes and bonds	1,065		—		1,065
Certificates of deposit	249		—		249
Short-term investments:
U.S. government agency securities	862,154		—		862,154
Corporate notes and bonds	159,431		—		159,431
Commercial paper	150,267		—		150,267
Treasury bills	80,003		—		80,003
Municipal securities	27,889		—		27,889
Certificates of deposit	1,245		—		1,245
Mortgage origination-related:
Mortgage loans held for sale	36,507		—		36,507
IRLCs	937		—		937
Forward contracts - other current assets	7		—		7
Forward contracts - other current liabilities	(60)		—		(60)
Total	$	2,264,688	$	872,431	$	1,392,257

The following table presents the changes in our IRLCs during the three and six month periods ended June 30, 2020 (in thousands):

	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020 (1)
Balance, beginning of the period	$	2,225	$	937
Issuances	10,142		15,507
Transfers	(8,586)		(13,142)
Fair value changes recognized in earnings	1,310		1,789
Balance, end of period	$	5,091	$	5,091
(1) Beginning balance represents transfers of IRLCs from Level 2 to Level 3 within the fair value hierarchy as of January 1, 2020.

At June 30, 2020, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $168.9 million and $214.9 million for our IRLCs and forward contracts, respectively. At December 31, 2019, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $34.3 million and $64.7 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 12 for the carrying amount and estimated fair value of our convertible senior notes.

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Note 4. Cash and Cash Equivalents, Short-term 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):

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	190,389	$	—	$	—	$	190,389
Cash equivalents:
Money market funds	1,784,896		—		—		1,784,896
Treasury bills	70,189		—		—		70,189
Short-term investments:
Treasury bills	963,200		41		(10)		963,231
U.S. government agency securities	463,806		1,909		—		465,715
Corporate notes and bonds	30,094		119		—		30,213
Municipal securities	16,519		19		—		16,538
Commercial paper	14,972		—		—		14,972
Certificates of deposit	498		—		—		498
Restricted cash	33,620		—		—		33,620
Total	$	3,568,183	$	2,088	$	(10)	$	3,570,261

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	194,955	$	—	$	—	$	194,955
Cash equivalents:
Money market funds	872,431		—		—		872,431
U.S. government agency securities	35,011		—		(2)		35,009
Commercial paper	31,113		—		—		31,113
Treasury bills	6,441		—		—		6,441
Corporate notes and bonds	1,065		—		—		1,065
Certificates of deposit	249		—		—		249
Short-term investments:
U.S. government agency securities	861,862		365		(73)		862,154
Corporate notes and bonds	159,382		91		(42)		159,431
Commercial paper	150,267		—		—		150,267
Treasury bills	79,989		14		—		80,003
Municipal securities	27,836		56		(3)		27,889
Certificates of deposit	1,245		—		—		1,245
Restricted cash	89,646		—		—		89,646
Total	$	2,511,492	$	526	$	(120)	$	2,511,898

All available-for-sale investments as of June 30, 2020 have a contractual maturity date of one year or less.

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Note 5. Accounts Receivable, net

The following table presents the changes in the allowance for doubtful accounts for the six months ended June 30, 2020 (in thousands):

Balance as of January 1, 2020	$	4,522
Credit loss expense	1,614
Less: write-offs, net of recoveries and other adjustments	(3,854)
Balance as of June 30, 2020	$	2,282

Note 6. Inventory

The following table presents the components of inventory, net of applicable lower of cost or net realizable value adjustments, as of the dates presented (in thousands):

	June 30, 2020		December 31, 2019
Work-in-process	$	12,164	$	152,171
Finished goods	123,237		684,456
Inventory	$	135,401	$	836,627

Note 7. Contract Cost Assets

During the three and six month periods ended June 30, 2020 and 2019, we did not incur any impairment losses to our contract cost assets. We recorded amortization expense related to contract cost assets of $8.7 million and $9.2 million during the three months ended June 30, 2020 and 2019, respectively, and $17.1 million and $17.9 million during the six months ended June 30, 2020 and 2019, respectively.

Note 8. Property and Equipment, net

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

	June 30, 2020		December 31, 2019
Website development costs	$	157,468	$	149,648
Leasehold improvements	107,139		81,981
Construction-in-progress	51,482		45,337
Office equipment, furniture and fixtures	42,236		36,582
Computer equipment	31,801		31,942
Property and equipment	390,126		345,490
Less: accumulated amortization and depreciation	(194,379)		(175,001)
Property and equipment, net	$	195,747	$	170,489

We recorded depreciation expense related to property and equipment (other than website development costs) of $7.1 million and $6.4 million during the three months ended June 30, 2020 and 2019, respectively, and $18.9 million and $12.4 million during the six months ended June 30, 2020 and 2019, respectively.

We capitalized $15.4 million and $10.3 million in website development costs during the three months ended June 30, 2020 and 2019, respectively, and $27.9 million and $20.3 million during the six months ended June 30, 2020 and 2019, respectively. Amortization expense for website development costs included in technology and development expenses was $6.0 million and $3.6 million during the three months ended June 30, 2020 and 2019, respectively, and $11.4 million and $7.0 million during the six months ended June 30, 2020 and 2019, respectively.

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Note 9. Equity Investment

In October 2016, we purchased a 10% equity interest in a privately held variable interest entity within the real estate industry for $10.0 million. In March 2020, we recognized a non-cash impairment charge of $5.3 million related to this investment. The impairment charge is included in Impairment costs within our IMT segment for the six months ended June 30, 2020. In connection with our assessment of the investment for impairment indicators as a result of COVID-19’s significant adverse impact on the real estate industry, we identified factors that led us to conclude that the investment was impaired and the fair value of the investment was less than the carrying value. The most significant of such factors related to the future expected cash flows of the investee. Accordingly, we performed an analysis to determine the fair value of the investment and concluded that our best estimate of its fair value was $4.7 million. In June 2020, we sold our 10% equity interest for $10.0 million in cash. We recorded a gain on the sale of the investment of $5.3 million for the three and six month periods ended June 30, 2020 which is classified within Other income in our condensed consolidated statements of operations.

Note 10. Intangible Assets, net

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

	June 30, 2020
	Cost		Accumulated Amortization		Net
Trade names and trademarks	$	36,500	$	(1,274)	$	35,226
Customer relationships	102,600		(81,372)		21,228
Developed technology	107,200		(87,340)		19,860
Software	40,744		(25,031)		15,713
Intangibles-in-progress	10,054		—		10,054
Purchased content	50,552		(45,726)		4,826
Lender licenses	400		(317)		83
Total	$	348,050	$	(241,060)	$	106,990

	December 31, 2019
	Cost		Accumulated Amortization		Net
Customer relationships	$	102,600	$	(73,770)	$	28,830
Developed technology	107,200		(81,383)		25,817
Software	35,527		(20,843)		14,684
Purchased content	47,298		(40,636)		6,662
Intangibles-in-progress	6,391		—		6,391
Lender licenses	400		(217)		183
Total	$	299,416	$	(216,849)	$	82,567

Amortization expense recorded for intangible assets for the three months ended June 30, 2020 and 2019 was $13.1 million and $11.0 million, respectively, and $24.9 million and $22.0 million for the six months ended June 30, 2020 and 2019, respectively. These amounts are included in technology and development expenses.

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During March 2020, we recognized a non-cash impairment charge of $71.5 million related to our Trulia trade names and trademarks intangible asset, which historically had not been subject to amortization. The impairment charge is included in Impairment costs within our IMT and Mortgages segments for the six months ended June 30, 2020. In March 2020, we identified factors directly related to the COVID-19 pandemic that led us to conclude it was more likely than not that the $108.0 million carrying value of the asset exceeded its fair value. The most significant of such factors was a shortfall in projected revenue related to the Trulia brand compared to previous projections used to determine the carrying value of the intangible asset, primarily driven by a reduction in expected future marketing and advertising spend for Trulia. Accordingly, with the assistance of a third-party valuation specialist, we performed a quantitative analysis to determine the fair value of the intangible asset and concluded that our best estimate of its fair value was $36.5 million. The valuation was prepared using an income approach based on the relief-from-royalty method and relied on inputs with unobservable market prices including projected revenue, royalty rate, discount rate, and estimated tax rate, and therefore is considered a Level 3 measurement under the fair value hierarchy. In connection with this impairment analysis, we evaluated our expected future reduced marketing and advertising spend related to the Trulia trade names and trademarks intangible asset and concluded that this asset no longer has an indefinite life. During the three months ended June 30, 2020 we began amortizing the remaining $36.5 million carrying value on an accelerated basis commensurate with the projected cash flows expected to be generated by the intangible asset over a useful life of 10 years. The carrying value of the Trulia trade names and trademarks intangible asset was $35.2 million as of June 30, 2020 and $108.0 million as of December 31, 2019.

Note 11. Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2020
Balance as of April 1, 2020	$	35,347
Deferral of revenue	222,895
Less: Revenue recognized	(213,728)
Balance as of June 30, 2020	$	44,514

	Six Months Ended June 30, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	476,624
Less: Revenue recognized	(471,857)
Balance as of June 30, 2020	$	44,514

During the three months ended June 30, 2020 we recognized as revenue a total of $33.8 million pertaining to amounts that were recorded in deferred revenue as of April 1, 2020. During the six months ended June 30, 2020 we recognized as revenue a total of $36.6 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2020.

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Note 12. Debt

The following table presents the carrying values of Zillow Group’s debt as of the periods presented (in thousands):

	June 30, 2020		December 31, 2019
Homes Segment
Credit facilities:
Goldman Sachs Bank USA	$	19,632	$	39,244
Citibank, N.A.	33,037		296,369
Credit Suisse AG, Cayman Islands	64,549		355,911
Total Homes Segment debt	117,218		691,524
Mortgages Segment
Repurchase agreement:
Citibank, N.A.	33,918		394
Warehouse line of credit:
Comerica Bank	35,896		30,033
Total Mortgages Segment debt	69,814		30,427
Convertible Senior Notes
1.375% convertible senior notes due 2026	337,171		327,187
2.75% convertible senior notes due 2025	401,786		—
0.75% convertible senior notes due 2024	507,039		490,538
1.50% convertible senior notes due 2023	318,348		310,175
2.00% convertible senior notes due 2021	245,997		415,502
2.75% convertible senior notes due 2020	9,637		9,637
Total convertible senior notes	1,819,978		1,553,039
Total	$	2,007,010	$	2,274,990

Homes Segment

To provide capital for Zillow Offers, we utilize credit facilities that are classified as current liabilities in our condensed consolidated balance sheets. We classify these credit facilities as current liabilities as amounts drawn to purchase homes are typically repaid as homes are sold, which we expect to be within one year. The following table summarizes certain details related to our credit facilities (in thousands, except interest rates):

Lender	Final Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Goldman Sachs Bank USA	April 20, 2022	$	500,000	3.91	%
Citibank, N.A.	January 31, 2022	500,000		4.69	%
Credit Suisse AG, Cayman Islands	July 31, 2021	500,000		4.62	%
	Total	$	1,500,000

Undrawn amounts available under the credit facilities included in the table above are not committed, meaning the applicable lender is not committed to, but may in its discretion, advance loan funds in excess of the outstanding borrowings. The final maturity dates are inclusive of extensions which are subject to agreement by the respective lender.

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Zillow Group formed certain special purpose entities (each, an “SPE”) to purchase and sell residential properties through Zillow Offers. Each SPE is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such SPE are available to satisfy the debts and other obligations of any affiliate or other entity. The credit facilities are secured by the assets and equity of one or more SPEs. These SPEs are variable interest entities and Zillow Group is the primary beneficiary as it has the power to control the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses of the SPEs or the right to receive benefits from the SPEs that could potentially be significant to the SPEs. The SPEs are consolidated within Zillow Group’s condensed consolidated financial statements. The collective inventory and credit facility borrowings of the SPEs were $135.4 million and $117.2 million, respectively, as of June 30, 2020, and $836.6 million and $691.5 million, respectively, as of December 31, 2019.

Outstanding amounts drawn under each credit facility are required to be repaid on the facility maturity date or earlier if accelerated due to an event of default. Further, each SPE is required to repay any resulting shortfall if the value of the eligible properties owned by such SPE falls below a certain percentage of the principal amount outstanding under the applicable credit facility. Continued inclusion of properties in each credit facility is subject to various eligibility criteria. For example, aging criteria limit the inclusion in the borrowing base of properties owned longer than a specified number of days, and properties owned for longer than one year are generally ineligible.

The stated interest rate on our credit facilities is one-month LIBOR plus an applicable margin as defined in the respective credit agreements. Our credit facilities include customary representations and warranties, provisions regarding events of default and covenants. The terms of these credit facilities and related financing documents require Zillow Group and certain of its subsidiaries, as applicable, to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth and leverage ratios. As of June 30, 2020, Zillow Group was in compliance with all financial covenants and no event of default had occurred. Except for certain limited circumstances, the credit facilities are non-recourse to Zillow Group. Our credit facilities require that we establish, maintain and in certain circumstances that Zillow Group fund specified reserve accounts. These reserve accounts include, but are not limited to, interest reserves, insurance reserves, tax reserves, renovation cost reserves and reserves for specially permitted liens. Amounts funded to these reserve accounts and the collection accounts have been classified within our condensed consolidated balance sheets as restricted cash.

Mortgages Segment

To provide capital for Zillow Home Loans, we utilize a warehouse line of credit and a master repurchase agreement which are classified as current liabilities in our condensed consolidated balance sheets. The warehouse line of credit and repurchase agreement provide short-term financing between the issuance of a mortgage loan and when Zillow Home Loans sells the loan to an investor. The following table summarizes certain details related to our warehouse line of credit and repurchase agreement (in thousands, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Citibank, N.A.	October 27, 2020	$	75,000	1.88	%
Comerica Bank	June 26, 2021	50,000		2.81	%
	Total	$	125,000

On June 27, 2020, Zillow Home Loans amended its warehouse line of credit with Comerica Bank previously maturing on June 27, 2020 to extend the term of the original agreement for one year through June 26, 2021.

The warehouse line of credit with Comerica Bank is committed. The repurchase agreement with Citibank, N.A. includes a committed amount of $25.0 million. As of June 30, 2020 and December 31, 2019, $33.9 million and $0.4 million, respectively, in mortgage loans held for sale were pledged as collateral under the facility.

Borrowings on the warehouse line of credit and repurchase agreement bear interest at the one-month LIBOR plus an applicable margin, and in certain cases include a LIBOR floor, as defined in the governing agreements, and are secured by residential mortgage loans held for sale. The repurchase agreement contains margin call provisions that provide Citibank, N.A. with certain rights in the event of a decline in the market value of the assets purchased under the repurchase agreement.

The warehouse line of credit and repurchase agreement include customary representations and warranties, covenants and provisions regarding events of default. As of June 30, 2020, Zillow Home Loans was in compliance with all financial covenants and no event of default had occurred. The warehouse line of credit and repurchase agreement are recourse to Zillow Home Loans, and have no recourse to Zillow Group or any of its other subsidiaries.

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For additional details related to our warehouse line of credit and repurchase agreement, see Note 15 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Convertible Senior Notes

The following tables summarize certain details related to our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

									June 30, 2020				December 31, 2019
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		First Interest Payment Date	Semi-Annual Interest Payment Dates	Unamortized Debt Discount and Debt Issuance Costs		Fair Value		Unamortized Debt Discount and Debt Issuance Costs		Fair Value
September 1, 2026	$	500,000	1.375	%	8.10	%	March 1, 2020	March 1; September 1	$	162,829	$	705,000	$	172,813	$	597,380
May 15, 2025	565,000		2.75	%	10.32	%	November 15, 2020	May 15; November 15	163,214		659,756		—		—
September 1, 2024	673,000		0.75	%	7.68	%	March 1, 2020	March 1; September 1	165,961		957,659		182,462		819,378
July 1, 2023	373,750		1.50	%	6.99	%	January 1, 2019	January 1; July 1	55,402		388,113		63,575		356,464
December 1, 2021	265,330		2.00	%	7.43	%	June 1, 2017	June 1; December 1	19,333		326,688		44,498		514,312
December 15, 2020	9,637		2.75	%	N/A		N/A	June 15; December 15	—		16,842		—		16,842
Total	$	2,386,717							$	566,739	$	3,054,058	$	463,348	$	2,304,376

	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	1,719	$	4,922	$	120	$	6,761	$	—	$	—	$	—	$	—
May 15, 2025	2,007		3,148		168		5,323		—		—		—		—
September 1, 2024	1,262		8,095		278		9,635		—		—		—		—
July 1, 2023	1,402		3,749		366		5,517		1,402		3,496		342		5,240
December 1, 2021	1,803		3,945		408		6,156		2,300		4,677		484		7,461
December 15, 2020	66		—		—		66		66		—		—		66
Total	$	8,259	$	23,859	$	1,340	$	33,458	$	3,768	$	8,173	$	826	$	12,767

	Six Months Ended June 30, 2020								Six Months Ended June 30, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	3,438	$	9,746	$	238	$	13,422	$	—	$	—	$	—	$	—
May 15, 2025	2,007		3,148		168		5,323		—		—		—		—
September 1, 2024	2,510		15,956		545		19,011		—		—		—		—
July 1, 2023	2,804		7,446		727		10,977		2,804		6,933		678		10,415
December 1, 2021	4,103		8,856		916		13,875		4,600		9,268		959		14,827
December 15, 2020	132		—		—		132		132		—		—		132
Total	$	14,994	$	45,152	$	2,594	$	62,740	$	7,536	$	16,201	$	1,637	$	25,374

The convertible notes are senior unsecured obligations. The convertible senior notes maturing in 2026, 2025, 2024, 2023 and 2021 (the “Notes”) are classified as long-term debt based on their contractual maturity dates in our condensed consolidated balance sheets. The convertible senior notes maturing in 2020 are classified within current liabilities.

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For more than 20 trading days during the 30 consecutive trading days ended June 30, 2020, the last reported sale price of our Class C capital stock exceeded 130% of the conversion price of the convertible senior notes due in 2024 and 2026 (the “2024 Notes” and “2026 Notes”, respectively). Accordingly, the 2024 Notes and 2026 Notes became convertible at the option of the holders from July 1 through September 30, 2020. The convertible senior notes maturing in 2025, 2023 and 2021 are not redeemable or convertible as of June 30, 2020. The convertible senior notes maturing in 2020 are convertible, at the option of the holder, and redeemable, at our option, as of June 30, 2020.

Interest on the convertible notes is paid semi-annually in arrears. The estimated fair value of the convertible senior notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for each of the convertible senior notes.

The Notes are convertible into cash, shares of Class C capital stock or a combination thereof, at our election, and may be settled as described below. The Notes will mature on their respective maturity date, unless earlier repurchased, redeemed or converted in accordance with their terms.

The following table summarizes the conversion and redemption options with respect to the Notes:

Maturity Date	Early Conversion Date	Conversion Rate	Conversion Price		Optional Redemption Date
September 1, 2026	March 1, 2026	22.9830	$	43.51	September 5, 2023
May 15, 2025	November 15, 2024	14.8810	67.20		May 22, 2023
September 1, 2024	March 1, 2024	22.9830	43.51		September 5, 2022
July 1, 2023	April 1, 2023	12.7592	78.37		July 6, 2021
December 1, 2021	September 1, 2021	19.0985	52.36		December 6, 2019

The following table summarizes certain details related to the capped call confirmations with respect to certain of the convertible senior notes:

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%
July 1, 2023	105.45		85	%
December 1, 2021	69.19		85	%

On May 15, 2020, we issued $500.0 million aggregate principal amount of 2.75% Convertible Senior Notes due 2025 (the “Initial 2025 Notes”) and on May 19, 2020 we issued $65.0 million aggregate principal amount of 2.75% Convertible Senior Notes due 2025 (the “Additional Notes” and, together with the Initial 2025 Notes, the “2025 Notes”). The Additional Notes were sold pursuant to the underwriters’ option to purchase additional 2025 Notes granted in connection with the offering of the Initial 2025 Notes.

The net proceeds from the issuance of the 2025 Notes were approximately $553.3 million, after deducting underwriting discounts and commissions and offering expenses paid by Zillow Group. We used a portion of the net proceeds from the issuance of the 2025 Notes to repurchase $194.7 million aggregate principal of the convertible senior notes due 2021 (the “2021 Notes”) in privately negotiated transactions. The 2021 Notes were repurchased for $194.7 million in cash and 753,936 shares of Class C capital stock for an aggregate purchase price of $230.9 million. The repurchase of the 2021 Notes was accounted for as a debt extinguishment. We allocated $172.9 million of the repurchase price to the liability component based on the fair value of the liability component immediately prior to settlement. The fair value of the liability component was calculated using a discounted cash flow analysis with a market interest rate of a similar liability that does not have an associated convertible feature. The remaining consideration of $58.0 million was allocated to the equity component. As a result, we recognized a $179.3 million reduction to long-term debt representing the carrying value of the liability component as of the date of the partial repurchase of the 2021 Notes, a $58.0 million reduction to additional paid-in capital representing the equity component of the partially repurchased 2021 Notes and a $6.4 million gain on partial extinguishment of 2021 Notes representing the excess of the carrying value of the liability component over the fair value of the liability component of the repurchased 2021 Notes.

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In connection with the repurchase of a portion of the 2021 Notes, we partially terminated the capped call transactions entered into in connection with the issuance of the 2021 Notes for an amount corresponding to the aggregate principal amount of the 2021 Notes that were repurchased. As a result of the partial settlement of the capped call transactions, we received 317,865 shares of our Class C capital stock equal to a value of approximately $14.8 million based on the trading price of our Class C capital stock at the time of the unwind. Under applicable Washington State law, the acquisition of a corporation’s own shares is not disclosed separately as treasury stock in the financial statements and such shares are treated as authorized but unissued shares. We record acquisitions of our shares of capital stock as a reduction to capital stock at the par value of the shares reacquired, then to additional paid-in capital until it is depleted to a nominal amount, with any further excess recorded to retained earnings. We recorded an offsetting increase to additional paid-in capital for the partial unwind of the capped call transactions.

We intend to use the remainder of the net proceeds from the 2025 Notes for general corporate purposes, which may include general and administrative matters and capital expenditures.

Prior to the close of business on the business day immediately preceding November 15, 2024, the 2025 Notes are convertible at the option of the holders of the 2025 Notes only under certain conditions. On or after November 15, 2024, until the close of business on the second scheduled trading day immediately preceding May 15, 2025, holders of the 2025 Notes may convert the 2025 Notes at their option at the conversion rate then in effect, irrespective of these conditions. Zillow Group will settle conversions of the 2025 Notes by paying or delivering, as the case may be, cash, shares of its Class C capital stock, or a combination of cash and shares of its Class C capital stock, at its election. The conversion rate will initially be 14.8810 shares of Class C capital stock per $1,000 principal amount of 2025 Notes (equivalent to an initial conversion price of approximately $67.20 per share of Class C capital stock). The conversion rate and the corresponding initial conversion price are subject to customary adjustments upon the occurrence of certain events. Zillow Group may redeem for cash all or part of the 2025 Notes, at its option, on or after May 22, 2023, under certain circumstances, at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date (as defined in the indenture governing the 2025 Notes, the “Indenture”). We may not redeem the 2025 Notes prior to May 22, 2023. We may redeem, for cash, all or any portion of the 2025 Notes, at our option, on or after May 22, 2023 if the last reported sale price per share of our Class C capital 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. The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock.

If Zillow Group undergoes a fundamental change (as defined in the Indenture), holders of the 2025 Notes may require us to repurchase for cash all or part of their 2025 Notes at a repurchase price equal to 100% of the principal amount of the 2025 Notes to be purchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (as defined in the Indenture). In addition, if certain fundamental changes occur or if Zillow Group delivers a notice of redemption, we may be required, in certain circumstances, to increase the conversion rate for any 2025 Notes converted in connection with such fundamental changes or notice of redemption by a specified number of shares of our Class C capital stock. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2025 Notes, as described in the Indenture. There are no financial covenants associated with the 2025 Notes.

In accounting for the issuance of the 2025 Notes, we separated the 2025 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2025 Notes. The difference between the principal amount of the 2025 Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the condensed consolidated balance sheet and amortized to interest expense using the effective interest method over the term of the 2025 Notes. The equity component of the 2025 Notes of approximately $154.8 million, net of issuance costs of $3.3 million, is included in additional paid-in capital in the condensed consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification.

For additional details related to our convertible senior notes, see Note 15 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Note 13. Income Taxes

We are subject to federal and state income taxes in the United States and federal and provincial income taxes in Canada. As of June 30, 2020 and December 31, 2019, we have provided a valuation allowance against our net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized. Therefore, no material current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $1,137.6 million as of December 31, 2019, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $34.3 million (tax effected) as of December 31, 2019.

We recorded income tax expense of $0.7 million for the three months ended June 30, 2020 and an income tax benefit of $8.5 million for the six months ended June 30, 2020. The income tax benefit for the six months ended June 30, 2020 was primarily a result of a $9.7 million income tax benefit related to the $71.5 million non-cash impairment we recorded during the three months ended March 31, 2020 related to the Trulia trade names and trademarks intangible asset. For additional information about the non-cash impairment, see Note 10 to our condensed consolidated financial statements. This income tax benefit was partially offset by an immaterial amount of state income tax expense recorded for the six months ended June 30, 2020.

Note 14. 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 June 30, 2020 or December 31, 2019.

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. 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.

On May 15, 2020, Zillow Group issued and sold 8,000,000 shares of Class C capital stock, and on May 19, 2020, issued and sold an additional 800,000 shares of Class C capital stock pursuant to the exercise of the underwriters’ option to purchase additional shares. The 8,800,000 shares of Class C capital stock were issued and sold at a public offering price of $48.00 per share. We received net proceeds of $411.5 million after deducting underwriting discounts and commissions and offering expenses paid by us.

In connection with the partial repurchase of the 2021 Notes, we issued 753,936 shares of Class C capital stock at a price of $48.00 per share with a total value of $36.2 million to settle the conversion spread for the notes repurchased. Additionally, we unwound a portion of the capped call transactions related to the 2021 Notes whereby we received 317,865 shares of our Class C capital stock equal to a value of approximately $14.8 million based on the trading price of our Class C capital stock at the time of the unwind. See Note 12 for further discussion of the partial repurchase of the 2021 Notes and the corresponding capped call unwind.

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Note 15. Share-Based Awards

Zillow Group, Inc. 2020 Incentive Plan

On June 9, 2020, the Zillow Group, Inc. 2020 Incentive Plan (the “2020 Plan”) became effective, which replaces the Zillow Group, Inc. Amended and Restated 2011 Incentive Plan (the “2011 Plan”). 12,400,000 shares of Class C capital stock are authorized and available for issuance under the 2020 Plan. In addition, shares previously available for new grants under the 2011 Plan as of June 9, 2020 and shares subject to outstanding awards under the 2011 Plan as of June 9, 2020 that on or after that date cease to be subject to such awards (other than by reason of exercise or settlement of the awards in vested or nonforfeitable shares) are also available for issuance under the 2020 Plan. The number of shares authorized under the 2020 Plan will be increased on the first day of each calendar year, beginning January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to the lesser of (a) 5% of our outstanding Class A common stock, Class B common stock and Class C capital stock on a fully diluted basis as of the end of the immediately preceding calendar year and (b) a number of shares determined by our board of directors. The 2020 Plan is administered by the compensation committee of the board of directors. Under the terms of the 2020 Plan, the compensation committee may grant equity awards, including incentive stock options, nonqualified stock options, restricted stock, restricted stock units, restricted units, stock appreciation rights, performance shares or performance units to employees, officers, directors, consultants, agents, advisors and independent contractors of Zillow Group and its subsidiaries. The board of directors has also authorized certain senior executive officers to grant equity awards under the 2020 Plan, within limits prescribed by our board of directors. The 2020 Plan provides that in the event of a stock dividend, stock split or similar event, the maximum number and kind of securities available for issuance under the plan will be proportionally adjusted.

Options under the 2020 Plan are granted with an exercise price per share not less than 100% of the fair market value of our Class C capital stock on the grant date, 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. 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 3 months following their termination of employment or 12 months following termination by reason of death, disability or retirement. Options granted under the 2020 Plan expire no later than ten years from the grant date and typically vest either 25% after 12 months and quarterly thereafter over the next three years or quarterly over a period of four years.

Restricted stock units granted under the 2020 Plan typically vest either 25% after 12 months and quarterly thereafter over the next three years or quarterly over a period of four years. Any portion of a restricted stock unit that is not vested on the date of a participant’s termination of service expires on such date.

Options and restricted stock units that remain outstanding under the 2011 Plan have vesting and exercisability terms consistent with those described above for awards granted under the 2020 Plan.

Option Awards

The following table summarizes option award activity for the six months ended June 30, 2020:

	Number of Shares Subject to Existing Options	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2020	29,634,296	$	35.95	6.28	$	331,107
Granted	4,833,605	49.24
Exercised	(6,324,858)	29.25
Forfeited or cancelled	(674,462)	40.76
Outstanding at June 30, 2020	27,468,581	39.71		6.74	493,801
Vested and exercisable at June 30, 2020	14,708,916	35.84		4.96	320,951

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The fair value of options granted 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 June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Expected volatility	51%	45%	45%-51%	45%-47%
Expected dividend yield	—	—	—	—
Risk-free interest rate	0.33%	2.00%	0.33%-0.93%	2.00%-2.53%
Weighted-average expected life	5.00 years	5.00 years	5.00-5.50 years	4.75-5.25 years
Weighted-average fair value of options granted	$20.21	$16.96	$20.69	$16.79

As of June 30, 2020, there was a total of $218.2 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the six months ended June 30, 2020:

	Restricted Stock Units	Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2020	7,052,767	$	40.01
Granted	3,665,016	49.30
Vested	(1,414,158)	40.65
Forfeited	(513,401)	41.62
Unvested outstanding at June 30, 2020	8,790,224	43.69

As of June 30, 2020, there was a total of $356.6 million in unrecognized compensation cost related to unvested restricted stock units.

Share-Based Compensation Expense

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of revenue	$	1,119	$	936	$	2,292	$	1,816
Sales and marketing	9,116		6,801		16,109		12,451
Technology and development	21,666		18,399		40,583		33,908
General and administrative	20,450		17,496		37,162		61,581
Total	$	52,351	$	43,632	$	96,146	$	109,756

On February 21, 2019, Zillow Group announced the appointment of Richard N. Barton as Zillow Group’s Chief Executive Officer, effective February 21, 2019. Mr. Barton succeeds Spencer Rascoff, who served as Zillow Group’s Chief Executive Officer since 2010. In connection with Mr. Rascoff’s resignation as Chief Executive Officer, Zillow Group entered into an Executive Departure Agreement and Release (the “Agreement”) with Mr. Rascoff. Pursuant to the Agreement, Mr. Rascoff received, among other things, a change in the exercise period of his vested stock options outstanding as well as accelerated vesting of outstanding stock options, which have been accounted for as equity modifications. We recorded $26.4 million of share-based compensation expense associated with the modifications during the six months ended June 30, 2019. For additional details, see Note 18 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Note 16. Net Loss 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 loss per share because their effect would have been antidilutive (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Weighted-average Class A common stock and Class C capital stock option awards outstanding	25,202	19,502	22,649	19,656
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	9,086	7,230	8,354	6,548
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	400	411	400	411
Class C capital stock issuable upon conversion of the convertible notes maturing in 2021, 2024 and 2026	7,232	—	7,316	—
Total Class A common stock and Class C capital stock equivalents	41,920	27,143	38,719	26,615

Since we expect to settle the principal amount of the outstanding Notes in cash, we use the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread for each of the notes has a dilutive impact on diluted net income per share when the market price of the Company’s Class C capital stock at the end of the period exceeds the conversion price per share. The following table presents the conversion spread and conversion price per share of Class C capital stock for each of the convertible senior notes (in thousands, except per share amounts):

Maturity Date	Conversion Spread	Conversion Price per Share
September 1, 2026	11,492	$	43.51
May 15, 2025	8,408	67.20
September 1, 2024	15,468	43.51
July 1, 2023	4,769	78.37
December 1, 2021	5,067	52.36

Note 17. 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 2020 and 2030. For additional information regarding our lease agreements, see Note 14 in our Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019.

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Purchase Commitments

Purchase commitments primarily include various non-cancelable agreements to purchase content related to our mobile applications and websites and certain cloud computing services as well as homes we are under contract to purchase through Zillow Offers but that have not closed as of the respective date. The amounts due for non-cancelable purchase commitments, excluding homes under contract, as of June 30, 2020, are as follows (in thousands):

	Purchase Obligations
2020	$	8,254
2021	17,627
2022	3,043
2023	507
Total future purchase commitments	$	29,431

As of June 30, 2020, the value of homes under contract that have not closed was $51.9 million.

Letters of Credit

As of June 30, 2020, we have outstanding letters of credit of approximately $16.9 million, which secure our lease obligations in connection with certain of our office space operating leases.

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 $9.8 million and $10.2 million, respectively, as of June 30, 2020 and December 31, 2019.

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. For the matters discussed below, we have not recorded any material accruals as of June 30, 2020 or December 31, 2019.

In July 2015, VHT, Inc. (“VHT”) filed a complaint against us in the United States District Court for the Western District of Washington alleging copyright infringement of VHT’s images on the Zillow Digs site. In January 2016, VHT filed an amended complaint alleging copyright infringement of VHT’s images on the Zillow Digs site as well as the Zillow listing site. In December 2016, the court granted a motion for partial summary judgment that dismissed VHT’s claims with respect to the Zillow listing site. A federal jury trial began on January 23, 2017, and on February 9, 2017, the jury returned a verdict finding that the Company had infringed VHT’s copyrights in images displayed or saved to the Digs site. The jury awarded VHT $79,875 in actual damages and approximately $8.2 million in statutory damages. In March 2017, the Company filed motions in the district court seeking judgment for the Company on certain claims that are the subject of the verdict, and for a new trial on others. On June 20, 2017, the judge ruled and granted in part our motions, finding that VHT failed to present sufficient evidence to prove direct copyright infringement for a portion of the images, reducing the total damages to approximately $4.1 million. On March 15, 2019, after we filed an appeal with the Ninth Circuit Court of Appeals seeking review of the final judgment and certain prior rulings entered by the District Court, the Ninth Circuit Court of Appeals issued an opinion that, among other things, (i) affirmed the District Court’s grant of summary judgment in favor of Zillow on direct infringement of images on Zillow’s listing site, (ii) affirmed the district court’s grant in favor of Zillow of judgment notwithstanding the verdict on certain images that were displayed on the Zillow Digs site, (iii) remanded consideration of the

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issue whether VHT’s images on the Zillow Digs site were part of a compilation or individual photos, and (iv) vacated the jury’s finding of willful infringement. On October 7, 2019, the United States Supreme Court denied VHT’s petition for writ of certiorari seeking review of certain rulings by the Ninth Circuit Court of Appeals. On December 6, 2019, the Company filed a motion for summary judgment with the District Court seeking a ruling that VHT’s images are a compilation, or in the alternative, seeking a dismissal of the case based on a recent United States Supreme Court ruling. On May 8, 2020, the District Court denied the Company’s motion for summary judgment and granted VHT’s motion for summary judgment on the issue of whether the remaining photos were a compilation. We do not believe there is a reasonable possibility that a material loss will be incurred related to this lawsuit.

In August and September 2017, two purported class action lawsuits were filed against us and certain of our executive officers, alleging, among other things, violations of federal securities laws on behalf of a class of those who purchased our common stock between February 12, 2016 and August 8, 2017. One of those purported class actions, captioned Vargosko v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Central District of California. The other purported class action lawsuit, captioned Shotwell v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Western District of Washington. The complaints allege, among other things, that during the period between February 12, 2016 and August 8, 2017, we issued materially false and misleading statements regarding our business practices. The complaints seek to recover, among other things, alleged damages sustained by the purported class members as a result of the alleged misconduct. In November 2017, an amended complaint was filed against us and certain of our executive officers in the Shotwell v. Zillow Group purported class action lawsuit, extending the beginning of the class period to November 17, 2014. In January 2018, the Vargosko v. Zillow Group purported class action lawsuit was transferred to the U.S. District Court for the Western District of Washington and consolidated with the Shotwell v. Zillow Group purported class action lawsuit. In February 2018, the plaintiffs filed a consolidated amended complaint, and in April 2018, we filed our motion to dismiss the consolidated amended complaint. In October 2018, our motion to dismiss was granted without prejudice, and in November 2018, the plaintiffs filed a second consolidated amended complaint, which we moved to dismiss in December 2018. On April 19, 2019, our motion to dismiss the second consolidated amended complaint was denied, and we filed our answer to the second amended complaint on May 3, 2019. On October 11, 2019, plaintiffs filed a motion for class certification, and we filed our motion in opposition on March 20, 2020. The plaintiffs filed a reply in further support of their motion on May 29, 2020. We have denied the allegations of wrongdoing and intend to vigorously defend the claims in this lawsuit. We do not believe a loss related to this lawsuit is probable.

In October and November 2017 and January and February 2018, four shareholder derivative lawsuits were filed in the U.S. District Court for the Western District of Washington and the Superior Court of the State of Washington, King County, against certain of our executive officers and directors seeking unspecified damages on behalf of the Company and certain other relief, such as reform to corporate governance practices. The plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants breached their fiduciary duties in connection with oversight of the Company’s public statements and legal compliance, and as a result of the breach of such fiduciary duties, the Company was damaged, and defendants were unjustly enriched. Certain of the plaintiffs also allege, among other things, violations of Section 14(a) of the Securities Exchange Act of 1934 and waste of corporate assets. On February 5, 2018, the U.S. District Court for the Western District of Washington consolidated the two federal shareholder derivative lawsuits pending in that court. On February 16, 2018, the Superior Court of the State of Washington, King County, consolidated the two shareholder derivative lawsuits pending in that court. All four of the shareholder derivative lawsuits were stayed until our motion to dismiss the second consolidated amended complaint in the securities class action lawsuit discussed above was denied in April 2019. On July 8, 2019, the plaintiffs in the consolidated federal derivative lawsuit filed a consolidated shareholder derivative complaint, which we moved to dismiss on August 22, 2019. On February 28, 2020, our motion to dismiss the consolidated shareholder derivative complaint was denied. On May 18, 2020 we filed an answer in the consolidated federal derivative lawsuit. Our answer in the consolidated state derivative matter is due on August 24, 2020. We do not believe a loss is probable related to these lawsuits.

On September 17, 2019, International Business Machines Corporation (“IBM”) filed a complaint against us in the United States District Court for the Central District of California, alleging, among other things, that the Company has infringed and continues to willfully infringe seven patents held by IBM and seeks unspecified damages, including a request that the amount of compensatory damages be trebled, injunctive relief and costs and reasonable attorneys’ fees. On December 2, 2019, IBM filed an amended complaint. On December 16, 2019, we filed a motion to transfer venue and/or to dismiss the complaint. The Company’s motion to transfer venue to the United States District Court for the Western District of Washington was granted on May 28, 2020. We filed our answer with counterclaims in response to the amended complaint on June 11, 2020. On July 2, 2020, IBM filed a motion to dismiss our counterclaims. In response to IBM’s motion, on July 22, 2020, we filed an amended answer with counterclaims. We deny the allegations of any wrongdoing and intend to vigorously defend the claims in the lawsuit. There is a reasonable possibility that a loss may be incurred related to this complaint; however, the possible loss or range of loss is not estimable.

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On July 21, 2020, IBM filed a second action against us in the United States District Court for the Western District of Washington, alleging, among other things that the Company has infringed and continues to willfully infringe five patents held by IBM and seeks unspecified damages. We deny the allegations of any wrongdoing and intend to vigorously defend the claims in the lawsuit. We do not believe a loss related to this lawsuit is probable.

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 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.

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 18. Employee Benefit Plan

We have a 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 was $6.4 million and $5.2 million, respectively, for the three months ended June 30, 2020 and 2019, and $12.8 million and $10.1 million, respectively, for the six months ended June 30, 2020 and 2019.

Note 19. Segment Information and Revenue

We have three operating and reportable segments, which have been identified based on the way in which 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 for the Homes, Internet, Media & Technology (“IMT”) and Mortgages segments.

The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through Zillow Offers and the financial results from title and escrow services through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, rentals and new construction marketplaces, dotloop and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. The Mortgages segment includes financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and the sale of mortgages on the secondary market, as well as Mortech mortgage software solutions.

Revenue and costs are directly attributed to our segments when possible. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit the other segments. These costs primarily include headcount-related expenses, general and administrative expenses including executive, finance, accounting, legal, human resources, recruiting and facilities costs, product development and data acquisition costs and marketing and advertising costs. These costs are allocated to each segment based on the estimated benefit each segment receives from such expenditures.

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The chief executive officer reviews information about our revenue categories as well as statement of operations data inclusive of income (loss) before income taxes by segment. This information is included in the following tables for the periods presented (in thousands):

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	453,816	$	—	$	—	$	248,924	$	—	$	—
Premier Agent	—		191,962		—		—		231,961		—
Other	436		88,377		—		—		91,708		—
Mortgages	—		—		33,761		—		—		26,985
Total revenue	454,252		280,339		33,761		248,924		323,669		26,985
Costs and expenses:
Cost of revenue	431,788		23,387		5,896		240,732		26,059		4,430
Sales and marketing	47,877		96,026		11,695		37,409		135,440		14,584
Technology and development	28,918		93,176		6,763		18,198		94,261		7,871
General and administrative	21,902		53,884		9,725		17,808		54,671		10,360
Integration costs	—		—		—		—		—		293
Total costs and expenses	530,485		266,473		34,079		314,147		310,431		37,538
Income (loss) from operations	(76,233)		13,866		(318)		(65,223)		13,238		(10,553)
Segment other income	—		5,300		385		—		—		402
Segment interest expense	(3,825)		—		(307)		(5,899)		—		(287)
Income (loss) before income taxes (1)	$	(80,058)	$	19,166	$	(240)	$	(71,122)	$	13,238	$	(10,438)

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	1,222,928	$	—	$	—	$	377,396	$	—	$	—
Premier Agent	—		434,068		—		—		449,696		—
Other	1,197		176,937		—		—		172,245		—
Mortgages	—		—		59,043		—		—		54,345
Total revenue	1,224,125		611,005		59,043		377,396		621,941		54,345
Costs and expenses:
Cost of revenue	1,163,987		47,705		11,051		363,151		50,310		9,108
Sales and marketing	119,466		216,199		24,581		58,271		262,094		28,655
Technology and development	61,456		188,204		14,115		30,479		182,230		15,391
General and administrative	45,323		112,638		19,835		32,165		125,521		20,927
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		645
Total costs and expenses	1,390,232		638,646		72,482		484,066		620,155		74,726
Income (loss) from operations	(166,107)		(27,641)		(13,439)		(106,670)		1,786		(20,381)
Segment other income	—		5,300		587		—		—		715
Segment interest expense	(11,909)		—		(533)		(9,657)		—		(388)
Income (loss) before income taxes (1)	$	(178,016)	$	(22,341)	$	(13,385)	$	(116,327)	$	1,786	$	(20,054)

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(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Total segment loss before income taxes	$	(61,132)	$	(68,322)	$	(213,742)	$	(134,595)
Corporate interest expense	(33,458)		(12,711)		(62,740)		(25,318)
Corporate other income	4,430		9,056		13,821		17,911
Gain on partial extinguishment of 2021 Notes	6,391		—		6,391		—
Consolidated loss before income taxes	$	(83,769)	$	(71,977)	$	(256,270)	$	(142,002)

Certain corporate items are not directly attributable to any of our segments, including the gain on the partial extinguishment of the 2021 Notes, interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

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

The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included 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. Our actual results may differ materially from those described 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, 2019 as well as in Part II, Item 1A (Risk Factors) of this Quarterly Report on Form 10-Q.

Overview of our Business

Zillow Group, Inc., the largest portfolio of real estate brands on mobile and the web, is building a trusted, on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to the Zillow family of businesses to find and get into their next home with speed, certainty and ease.

In addition to Zillow’s for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Closing Services offers customers title and escrow services to support a more seamless transaction experience. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions which include Mortech, dotloop, Bridge Interactive and New Home Feed.

Reportable Segments and Revenue Overview

Zillow Group has three reportable segments: the Homes segment, the Internet, Media & Technology (“IMT”) segment and the Mortgages segment. The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through the Zillow Offers service and the financial results from the title and escrow services provided through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, Rentals and new construction marketplaces, as well as dotloop, display and other advertising and business software solutions. The Mortgages segment includes the financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and our Mortech mortgage software solutions.

The Homes segment primarily generates revenue through our Zillow Offers service from the resale of homes on the open market. We began buying homes through Zillow Offers in April 2018, and we began selling homes in July 2018. Other Homes revenue relates to revenue associated with title and escrow services provided through Zillow Closing Services which launched in the second half of 2019.

Premier Agent revenue is generated by the sale of advertising services, as well as marketing and technology products and services, to help real estate agents and brokers grow and manage their businesses. We offer these products and services through our Premier Agent and Premier Broker programs. Premier Agent and Premier Broker advertising products, which include the delivery of impressions and validated consumer connections, or leads, are primarily sold on a share of voice basis. Impressions and leads are distributed to Premier Agents and Premier Brokers in proportion to their share of voice, or an agent advertiser’s share of total advertising purchased in a particular zip code. Impressions are delivered when an advertisement of a Premier Agent or Premier Broker appears on pages viewed by users of our mobile applications and websites and connections are delivered when consumer contact information is provided to Premier Agents and Premier Brokers. Connections and impressions are each provided as part of our advertising services for Premier Agent and Premier Brokers; we do not charge a separate fee for these consumer leads.

In October 2018, we began testing a new Flex pricing model for Premier Agent and Premier Broker advertising services in limited markets. We plan to continue testing this pricing model in select markets with high-performing partners in the future, including offering it alongside our legacy market-based pricing model. With the Flex model, Premier Agents and Premier Brokers are provided with impressions and connections at no upfront cost, and they pay a performance advertising fee only when a real estate transaction is closed with one of those leads.

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Other IMT revenue includes revenue generated by rentals, new construction and display advertising, as well as revenue from the sale of various other advertising and business technology solutions for real estate professionals, including dotloop. Rentals revenue includes advertising sold to property managers, landlords and other rental professionals on a cost per lead, cost per click, cost per lease or cost per listing basis. Rentals revenue also includes revenue generated through our rental applications product, whereby potential renters can submit applications to multiple properties for a flat service fee. New construction revenue primarily includes advertising services sold to home builders on a cost per residential community or cost per impression basis. Display revenue consists of graphical mobile and web advertising sold to advertisers promoting their brands on our mobile applications and websites.

In our Mortgages segment, we generate revenue from advertising sold to mortgage lenders and other mortgage professionals on a cost per lead or subscription basis, including our Connect and Custom Quote services, and through mortgage originations and the related sale of mortgages on the secondary market through Zillow Home Loans. We also generate revenue from Mortech, which provides subscription-based mortgage software solutions, including a product and pricing engine and lead management platform.

During the three months ended June 30, 2020, we generated total revenue of $768.4 million, as compared to $599.6 million in the three months ended June 30, 2019, an increase of $168.8 million, or 28%. As further described below, our revenue was negatively impacted by the effects of COVID-19 during the three months ended June 30, 2020. This increase was primarily the result of a $205.3 million, or 82%, increase in Homes segment revenue, and a $6.8 million, or 25%, increase in Mortgages segment revenue. These increases were partially offset by a $43.3 million, or 13%, decrease in IMT segment revenue driven by a $40.0 million, or 17%, decrease in Premier Agent revenue primarily due to temporary discounts offered to support our customers and real estate partners in response to the COVID-19 pandemic, and a $3.3 million, or 4%, decrease in Other IMT revenue. Visits increased 14% to 2,491.1 million for the three months ended June 30, 2020 from 2,181.4 million for the three months ended June 30, 2019. There were approximately 218.1 million average monthly unique users of our mobile applications and websites for the three months ended June 30, 2020, representing year-over-year growth of 12%. The number of homes sold through Zillow Offers increased 83% to 1,437 for the three months ended June 30, 2020 from 786 for the three months ended June 30, 2019.

On May 15, 2020, we issued $500.0 million aggregate principal amount of 2.75% Convertible Senior Notes due 2025 (the “Initial 2025 Notes”) and issued and sold 8,000,000 shares of our Class C capital stock. On May 19, 2020, we issued an additional $65.0 million aggregate principal amount of 2.75% Convertible Senior Notes due 2025 (the “Additional Notes” and, together with the Initial 2025 Notes, the “2025 Notes”) and issued and sold an additional 800,000 shares of our Class C capital stock, both pursuant to the underwriters’ option to purchase additional 2025 Notes and Class C capital stock, respectively. The net proceeds from the issuances of the 2025 Notes and our Class C capital stock were approximately $553.3 million and $411.5 million, respectively, after deducting underwriting discounts and commissions and offering expenses paid by Zillow Group. We used a portion of the net proceeds from the issuance of the 2025 Notes to repurchase $194.7 million aggregate principal of the convertible senior notes due 2021 (the “2021 Notes”) in privately negotiated transactions. The 2021 Notes were repurchased for $194.7 million in cash and 753,936 shares of Class C capital stock. In connection with the repurchase of a portion of the 2021 Notes, we partially terminated the capped call transactions related to the 2021 Notes whereby we received 317,865 shares of our Class C capital stock. We intend to use the remainder of the net proceeds from the 2025 Notes and the net proceeds from the equity issuance for general corporate purposes, which may include general and administrative matters and capital expenditures.

As of June 30, 2020, we had 5,344 full-time employees compared to 5,249 full-time employees as of December 31, 2019.

COVID-19 Impact

In December 2019, a novel strain of coronavirus, COVID-19, was reported and subsequently spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic and resulting global and economic disruptions have affected our business, as well as those of our customers and real estate partners. In response to the COVID-19 pandemic, we have taken certain measures intended to serve the needs of our customers and real estate partners, while also protecting our business and the safety of our employees, our customers and the communities in which we operate.

We have taken meaningful actions to support our customers and partners, including implementing a variety of relief initiatives to help them navigate their financial challenges. Effective March 23, 2020, we began offering Premier Agent advertisers who participate in our market-based pricing program a 50% discount on their subsequent monthly bill. This discount also applied to any new bookings through April 22, 2020. Additionally, we provided other targeted market-based discounts and offered temporary discounts on certain of our other IMT and Mortgage marketplace products throughout the second quarter.

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On March 23, 2020, we announced that Zillow Offers would temporarily pause home buying in all markets in response to local public health orders and to help protect the safety and health of our employees, customers and partners. Where able, we continued to make updates to, list and sell homes in inventory. On May 18, 2020, we resumed home buying in certain Zillow Offers markets with enhanced health and safety protocols and increased usage of virtual technology. For example, buyers can virtually walk through Zillow-owned homes through proprietary 3D home tours, which are available on all listings. In some markets, buyers can use self-tour technology to visit a home unassisted. As of June 30, 2020, we had resumed home buying in 15 of our 24 markets and are now active in all 24 markets beginning in August 2020.

To preserve our liquidity in response to the COVID-19 pandemic, we temporarily paused hiring for non-critical roles, paused the majority of our advertising spending and reduced other discretionary spending. However, we expect to increase our hiring and marketing and advertising activities throughout the remainder of 2020 to support our strategic business initiatives. In May of 2020 we strengthened our financial position through our issuance of $565.0 million aggregate principle amount of 2025 Notes for net proceeds of $553.3 million, of which we used $194.7 million to repurchase certain of our 2021 Notes, and we issued 8,800,000 shares of Class C capital stock for net proceeds of $411.5 million, as further described above. In addition, we expect our liquidity to be positively impacted by certain provisions included in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) that was signed into law on March 27, 2020 and provides tax provisions and other stimulus measures to affected companies. The impact of the CARES Act has not been material to our results of operations for the three and six month periods ended June 30, 2020. However, under the CARES Act we expect to defer certain employer payroll tax payments until 2021 and 2022. We deferred a total of $10.6 million of such payments as of June 30, 2020.

We have also taken action to promote the health and safety of our employees during the COVID-19 pandemic, and we quickly transitioned the vast majority of our employees to work remotely in March 2020 and subsequently announced that most employees will have flexibility to work from home indefinitely. We expect office re-openings to be a gradual process over many months beginning in the second half of 2020 and that our offices will continue to provide our distributed workforce with a place to work, learn and collaborate.

As reflected in the discussion below, the impact of the pandemic and actions taken in response to it had varying effects on our key metrics and results of operations for the three and six month periods ended June 30, 2020. The effect of the COVID-19 pandemic will not be fully reflected in our results of operations and overall financial performance until future periods as the extent of the impact of COVID-19 on our business continues to be uncertain and difficult to predict. While we have begun to see our business and the business of our customers and real estate partners recover from the initial economic effects of the pandemic, we expect the impact of the COVID-19 pandemic to continue to affect our financial results for the foreseeable future. The extent to which COVID-19 continues to impact our results and financial position will depend on future developments, which are uncertain and cannot be predicted, including new information that may emerge concerning the severity of the COVID-19 pandemic and the actions taken to contain it or treat its impact.

Key Metrics

Management has identified visits, unique users and the number of homes sold through Zillow Offers as relevant to investors’ and others’ assessment of our financial condition and results of operations. Although there was an increase in both visits and unique users for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019, both metrics were adversely impacted by the COVID-19 pandemic beginning in March 2020, although they subsequently improved beginning in April 2020. COVID-19 may adversely impact the number of visits and unique users to our mobile applications and websites in future periods.

As discussed above, on March 23, 2020, we announced that Zillow Offers would temporarily pause home buying in all markets in response to local public health orders and to help protect the safety and health of our employees, customers and partners. Where able, we continued to make updates to, list and sell homes in inventory. We began resuming the purchase of homes in certain markets in May of 2020, had resumed home buying in 15 of our 24 markets as of June 30, 2020 and are now active in all 24 markets beginning in August 2020. While we have resumed home buying in certain Zillow Offers markets, we expect the decline in home buying and other potential effects of COVID-19 on residential real estate transactions may adversely impact the number of homes sold in future periods, which we expect would result in a decline in revenue in future periods.

Visits

The number of visits is an important metric because it is an indicator of consumers’ level of engagement with our mobile applications, websites and other services. We believe highly engaged consumers are more likely to participate in our Zillow Offers program, use Zillow Homes Loans or be transaction-ready real estate market participants and therefore are more sought-after by our Premier Agent and Premier Broker real estate partners.

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We define a visit as a group of interactions by users with the Zillow, Trulia and StreetEasy mobile applications and websites. A single visit can contain multiple page views and actions, and a single user can open multiple visits across domains, web browsers, desktop or mobile devices. Visits can occur on the same day, or over several days, weeks or months.

Zillow and StreetEasy measure visits with Google Analytics, and Trulia measures visits with Adobe Analytics. Visits to Trulia end after thirty minutes of user inactivity. Visits to Zillow and StreetEasy end either: (i) after thirty minutes of user inactivity or at midnight; or (ii) through a campaign change. A visit ends through a campaign change if a visitor arrives via one campaign or source (for example, via a search engine or referring link on a third-party website), leaves the mobile application or website, and then returns via another campaign or source.

The following table presents the number of visits to our mobile applications and websites for the periods presented (in millions):

	Three Months Ended June 30,		2019 to 2020 % Change
	2020	2019
Visits	2,491.1	2,181.4	14	%

Unique Users

Measuring unique users is important to us because much of our revenue depends in part on our ability to connect home buyers and sellers, renters and individuals with or looking for a mortgage to real estate, rental and mortgage professionals, products and services. Growth in consumer traffic to our mobile applications and websites increases the number of impressions, clicks, connections, leads and other events we can monetize to generate revenue. For example, our Homes segment revenue depends in part on users accessing our mobile applications and websites to engage in the sale and purchase of homes with Zillow Offers, and Premier Agent revenue and display revenue depend on advertisements being served to users of our mobile applications and websites.

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, StreetEasy, HotPads and Naked Apartments measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics.

Due to third-party technological limitations, user software settings, or user behavior, Google Analytics may assign a unique cookie to different instances of access by the same individual to our mobile applications and websites. In such instances, Google Analytics would count different instances of access by the same individual as separate unique users. Accordingly, reliance on the number of unique users counted by Google Analytics may overstate the actual number of unique users who access our mobile applications and websites during the period.

The following table presents our average monthly unique users for the periods presented (in millions):

	Three Months Ended June 30,		2019 to 2020 % Change
	2020	2019
Average Monthly Unique Users	218.1	194.3	12	%

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Homes Sold

The number of homes sold through Zillow Offers is an important metric as it is an indicator of customers’ adoption of the Zillow Offers service as well as our ability to generate revenue through the service. Growth in the number of homes sold through Zillow Offers suggests increased adoption of the service by home buyers and generally results in growth in the amount of our Homes segment revenue.

The following table presents the number of homes sold through Zillow Offers for the periods presented:

	Three Months Ended June 30,		2019 to 2020 % Change
	2020	2019
Number of Homes Sold	1,437	786	83	%

Basis of Presentation

Revenue

We recognize revenue when or as we satisfy our performance obligations by transferring control of promised products or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those products or services.

In our Homes segment, we generate revenue from the resale of homes on the open market and through our title and escrow services. Our two revenue categories within our Homes segment are Zillow Offers and Other.

In our IMT segment, we generate revenue from the sale of advertising services and our suite of marketing software and technology solutions to residential real estate businesses, professionals and consumers. These professionals include real estate, rental and new construction brand advertisers, professionals and consumers. Our two revenue categories within our IMT segment are Premier Agent and Other.

In our Mortgages segment, we generate revenue from the sale of advertising services to mortgage lenders and other mortgage professionals, mortgage originations and the related sale of mortgages on the secondary market through Zillow Home Loans, as well as Mortech mortgage software solutions.

Homes Segment

Zillow Offers Revenue. Zillow Offers revenue is derived from the resale of homes on the open market. We recognize revenue at the time of the closing of the home sale when title to and possession of the property are transferred to the buyer. The amount of revenue recognized for each home sale is equal to the full sale price of the home net of resale concessions and credits to the buyer and does not reflect real estate agent commissions, closing or other costs associated with the transaction.

Other Revenue. Other Homes revenue is primarily generated through Zillow Closing Services, which offers title and escrow services to home buyers and sellers, including title search procedures for title insurance policies, escrow and other closing services. Title search, which is recorded net of amounts remitted to third-party insurance underwriters, and title and escrow closing fees, are recognized as revenue upon closing of the underlying real estate transaction.

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IMT Segment

Premier Agent Revenue. Premier Agent revenue is derived from our Premier Agent and Premier Broker programs. Our Premier Agent and Premier Broker programs offer a suite of marketing and business technology products and services to help real estate agents and brokers achieve their advertising goals, while growing and managing their businesses and brands. All Premier Agents and Premier Brokers receive access to a dashboard portal on our mobile application and website that provides individualized program performance analytics, our customer relationship management, or CRM, tool that captures detailed information about each contact made with a Premier Agent or Premier Broker through our mobile and web platforms and our account management tools. The marketing and business technology products and services promised to Premier Agents and Premier Brokers are delivered over time, as the customer simultaneously receives and consumes the benefit of the performance obligations.

Premier Agent and Premier Broker advertising products, which include the delivery of impressions and validated consumer connections, or leads, are primarily offered on a share of voice basis. Payment is received prior to the delivery of impressions and connections. Impressions are delivered when an advertisement appears on pages viewed by users of our mobile applications and websites and connections are delivered when consumer contact information is provided to Premier Agents and Premier Brokers. We do not promise any minimum or maximum number of impressions or connections to customers, but instead control when and how many impressions and connections to deliver based on a customer’s share of voice. We determine the number of impressions and connections to deliver to Premier Agents and Premier Brokers in each zip code using a market-based pricing method in consideration of the total amount spent by Premier Agents and Premier Brokers to purchase impressions and connections in the zip code during the month. This results in the delivery of impressions and connections over time in proportion to each Premier Agent’s and Premier Broker’s share of voice. A Premier Agent’s or Premier Broker’s share of voice in a zip code is determined by their proportional monthly prepaid spend in that zip code as a percentage of the total monthly prepaid spend of all Premier Agents and Premier Brokers in that zip code, and includes both the share of impressions delivered as advertisements appearing on pages viewed by users of our mobile applications and websites, as well as the proportion of consumer connections a Premier Agent or Premier Broker receives. The number of impressions and connections delivered for a given spend level is dynamic - as demand for advertising in a zip code increases or decreases, the number of impressions and connections delivered to a Premier Agent or Premier Broker in that zip code decreases or increases accordingly.

We primarily recognize revenue related to the Premier Agent and Premier Broker products and services based on the monthly prepaid spend recognized on a straight-line basis during the monthly billing period over which the products and services are provided. This methodology best depicts how we satisfy our performance obligations to customers, as we continuously transfer control of the performance obligations to the customer over time. Given a Premier Agent or Premier Broker typically prepays their monthly spend and the monthly spend is refunded on a pro-rata basis upon cancellation of the contract by a customer at any point in time, we have determined that Premier Agent and Premier Broker contracts are effectively daily contracts, and each performance obligation is satisfied over time as each day lapses. We have not allocated the transaction price to each performance obligation within our Premier Agent and Premier Broker arrangements, as the amounts recognized would be the same irrespective of any allocation.

In October 2018, we began testing a new pricing model, Flex, for Premier Agent and Premier Broker advertising services in limited markets. With the Flex model, Premier Agents and Premier Brokers are provided with validated leads at no upfront cost and pay a performance advertising fee only when a real estate transaction is closed with one of the leads. With this pricing model, the transaction price represents variable consideration, as the amount to which we expect to be entitled varies based on the number of validated leads that convert into real estate transactions and the value of those transactions. During this testing phase, we recognize revenue when we receive payment for a real estate transaction closed with a Flex lead. We will continuously reevaluate this determination and the point at which we may begin to estimate variable consideration and record revenue as performance obligations are transferred.

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Other Revenue. Other IMT revenue primarily includes revenue generated by rentals, new construction and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. Rentals revenue includes the sale of advertising and a suite of tools to rental professionals, landlords and other market participants. Rentals revenue primarily includes revenue generated by advertising sold to property managers, landlords and other rental professionals on a cost per lead, cost per click, cost per lease, cost per listing or cost per impression basis. We recognize revenue as leads, clicks and impressions are provided to rental professionals, or as rental listings are published on our mobile applications and websites, which is the amount for which we have the right to invoice. The number of leases generated through our rentals pay per lease product during the period is accounted for as variable consideration, and we estimate the amount of variable consideration based on the expected number of qualified leases secured during the period. We do not believe that a significant reversal in the amount of cumulative revenue recognized will occur once the uncertainty related to the number of leases secured is subsequently resolved.

Rentals revenue also includes revenue generated from our rental applications product through which potential renters can submit applications to multiple rental properties over a 30-day period for a flat service fee. We recognize revenue for the rental applications product on a straight-line basis during the contractual period over which the customer has the right to access and submit the rental application.

Our new construction marketing solutions allow home builders to showcase their available inventory to home shoppers. New construction revenue primarily includes revenue generated by advertising sold to builders on a cost per residential community basis, and revenue is recognized on a straight-line basis during the contractual period over which the communities are advertised on our mobile applications and websites. New construction revenue also includes revenue generated on a cost per impression basis whereby we recognize revenue as impressions are delivered to users interacting with our mobile applications and websites, which is the amount for which we have the right to invoice. Consideration for new construction products is billed in arrears. 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. We recognize display revenue as clicks occur or as impressions are delivered to users interacting with our mobile applications or websites, which is the amount for which we have the right to invoice.

Mortgages Segment

Mortgages Revenue. Mortgages revenue includes marketing products sold to mortgage professionals on a cost per lead basis, including our Custom Quote and Connect services, revenue generated by Zillow Home Loans, our affiliated mortgage lender, and revenue generated by Mortech. Zillow Group operates Custom Quote and Connect through its wholly owned subsidiary, Zillow Group Marketplace, Inc., a licensed mortgage broker. For our Connect and Custom Quote cost per lead marketing products, participating qualified mortgage professionals typically make a prepayment to gain access to consumers interested in connecting with mortgage professionals. Mortgage professionals who exhaust their initial prepayment prepay additional funds to continue to participate in the marketplace. In Zillow Group’s Connect platform, consumers answer a series of questions to find a local lender, and mortgage professionals receive consumer contact information, or leads, when the consumer chooses to share their information with a lender. Consumers who request rates for mortgage loans in Custom Quotes are presented with customized quotes from participating mortgage professionals. For our cost per lead mortgages products, we recognize revenue when a user contacts a mortgage professional through our mortgages platform, which is the amount for which we have the right to invoice.

Mortgage origination revenue recorded within our Mortgages segment reflects both origination fees and the corresponding sale, or expected future sale, of a loan. When an interest rate lock commitment is made to a customer, we record the expected gain on sale of the mortgage, plus the estimated earnings from the expected sale of the associated servicing rights, adjusted for a pull-through percentage (which is defined as the likelihood that an interest rate lock commitment will be originated), as revenue. Revenue from loan origination fees is recognized at the time the related real estate transactions are completed, usually upon the close of escrow and when we fund mortgage loans. Once funded, mortgage loans held for sale are recorded at fair value based on either sale commitments or current market quotes and are adjusted for subsequent changes in fair value until the loan is sold. Net origination costs and fees associated with mortgage loans are recognized as incurred. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers.

Mortgages revenue also includes 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 provided.

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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, bonuses and share-based compensation expense, as well as revenue-sharing costs related to our commercial business relationships, depreciation expense and costs associated with hosting our mobile applications and websites. For our Homes segment, our cost of revenue also consists of the consideration paid to acquire and make certain repairs and updates to each home, including associated overhead costs, as well as inventory valuation adjustments. For our IMT and Mortgages segments, cost of revenue also includes credit card fees and ad serving costs paid to third parties. For our Mortgages segment, our cost of revenue also consists of direct costs to originate loans, including underwriting and processing costs.

Sales and Marketing. Sales and marketing expenses consist of advertising costs and other sales expenses related to promotional and marketing activities, headcount expenses, including salaries, commissions, benefits, bonuses and share-based compensation expense for sales, sales support, customer support, including the customer connections team, marketing and public relations employees and depreciation expense. For our Homes segment, sales and marketing expenses also consist of selling costs, such as real estate agent commissions, escrow and title fees, and staging costs, as well as holding costs incurred during the period that homes are listed for sale, including utilities, taxes and maintenance. During the six months ended June 30, 2020, Homes segment expenses also include certain expenses attributable to our efforts to pause home buying in response to the COVID-19 pandemic. For our Mortgages segment, sales and marketing expenses include headcount expenses for loan officers and specialists supporting Zillow Home Loans.

Technology and Development. Technology and development expenses consist of headcount expenses, including salaries, benefits, bonuses and share-based compensation expense for individuals engaged in the design, development and testing of our products, mobile applications and websites and the tools and applications that support our products. Technology and development expenses also include amortization costs related to capitalized website and development activities, amortization of software, amortization of certain intangibles and other data agreement costs related to the purchase of data used to populate our mobile applications and websites, amortization of intangible assets recorded in connection with acquisitions, including trade names and trademarks, developed technology and customer relationships, amongst others, equipment and maintenance costs and depreciation expense.

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

Impairment Costs. Impairment costs for the six months ended June 30, 2020 consist of a $71.5 million non-cash impairment related to the Trulia trade names and trademarks intangible asset and a $5.3 million non-cash impairment related to our October 2016 equity investment. For additional information about the impairments, see Note 9 and Note 10 to our condensed consolidated financial statements.

Integration Costs. Integration costs consist of expenses incurred to incorporate operations, systems, technology and rights and responsibilities of acquired companies, during both pre-closing and post-closing periods, into Zillow Group’s business. For the three and six month periods ended June 30, 2019, integration costs primarily include consulting-related expenses incurred in connection with the integration of Zillow Home Loans.

Gain on Partial Extinguishment of 2021 Notes

The gain on the partial extinguishment of the 2021 Notes recorded for the three and six month periods ended June 30, 2020 relates to the partial repurchase of the 2021 Notes in May 2020 in connection with the issuance of the 2025 Notes. For additional information on the repurchase, see Note 12 to our condensed consolidated financial statements.

Other Income

Other income consists primarily of interest income earned on our cash, cash equivalents and short-term investments. For the six months ended June 30, 2020, Other income for our IMT segment included a $5.3 million gain on the sale of our October 2016 equity investment. For additional information on the sale, see Note 9 to our condensed consolidated financial statements. For our Mortgages segment, Other income includes interest income earned on mortgage loans held for sale.

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Interest Expense

Our corporate interest expense consists of interest on Trulia’s convertible senior notes due in 2020 that we guaranteed in connection with our February 2015 acquisition of Trulia and interest on the convertible senior notes due in 2021, 2023, 2024, 2025 and 2026. Our corporate interest expense also includes the amortization of the debt discount and deferred issuance costs for the convertible senior notes due in 2021, 2023, 2024, 2025 and 2026. Refer to Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q for stated interest rates and interest payment dates for each of our convertible senior notes.

For our Homes segment, interest expense includes interest on borrowings, funding fees and other fees, including the amortization of deferred issuance costs, on the credit facilities related to our Zillow Offers business. Borrowings on these credit facilities bear interest at the one-month LIBOR plus an applicable margin as defined in the credit agreements.

For our Mortgages segment, interest expense includes interest on the warehouse lines of credit and beginning in the fourth quarter of 2019, interest on the master repurchase agreement, related to our Zillow Home Loans business. Borrowings on the warehouse lines of credit and master repurchase agreement bear interest at the one-month LIBOR plus an applicable margin, and in certain cases are subject to a LIBOR floor, as defined in the agreements.

Income Taxes

We are subject to federal and state income taxes in the United States and federal and provincial income taxes in Canada. As of June 30, 2020 and December 31, 2019, we have provided a valuation allowance against our net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized. Therefore, no material current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $1,137.6 million as of December 31, 2019, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $34.3 million (tax effected) as of December 31, 2019.

We recorded income tax expense of $0.7 million for the three months ended June 30, 2020 and an income tax benefit of $8.5 million for the six months ended June 30, 2020. The income tax benefit for the six months ended June 30, 2020 was primarily a result of a $9.7 million income tax benefit related to the $71.5 million non-cash impairment we recorded during the three months ended March 31, 2020 related to the Trulia trade names and trademarks intangible asset. For additional information about the non-cash impairment, see Note 10 to our condensed consolidated financial statements. This income tax benefit was partially offset by an immaterial amount of state income tax expense recorded for the six months ended June 30, 2020.

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Results of Operations

Given the uncertainty surrounding COVID-19, including the unknown duration and severity of the pandemic and related economic disruption and the unknown overall impact on customer demand, we are unable to forecast the full impact on our business. As a result, financial performance for prior and current periods may not be indicative of future performance.

The following tables present our results of operations for the periods indicated and as a percentage of total revenue (in thousands, except per share and percentage data, unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Statements of Operations Data:
Revenue:
Homes	$	454,252	$	248,924	$	1,224,125	$	377,396
IMT	280,339		323,669		611,005		621,941
Mortgages	33,761		26,985		59,043		54,345
Total revenue	768,352		599,578		1,894,173		1,053,682
Cost of revenue (exclusive of amortization) (1)(2):
Homes	431,788		240,732		1,163,987		363,151
IMT	23,387		26,059		47,705		50,310
Mortgages	5,896		4,430		11,051		9,108
Total cost of revenue	461,071		271,221		1,222,743		422,569
Sales and marketing (1)	155,598		187,433		360,246		349,020
Technology and development (1)	128,857		120,330		263,775		228,100
General and administrative (1)	85,511		82,839		177,796		178,613
Impairment costs	—		—		76,800		—
Integration costs	—		293		—		645
Total costs and expenses	831,037		662,116		2,101,360		1,178,947
Loss from operations	(62,685)		(62,538)		(207,187)		(125,265)
Gain on partial extinguishment of 2021 Notes	6,391		—		6,391		—
Other income	10,115		9,458		19,708		18,626
Interest expense	(37,590)		(18,897)		(75,182)		(35,363)
Loss before income taxes	(83,769)		(71,977)		(256,270)		(142,002)
Income tax benefit (expense)	(679)		—		8,549		2,500
Net loss	$	(84,448)	$	(71,977)	$	(247,721)	$	(139,502)
Net loss per share — basic and diluted	$	(0.38)	$	(0.35)	$	(1.15)	$	(0.68)
Weighted-average shares outstanding — basic and diluted	219,467		205,754		215,070		205,137
Other Financial Data:
Segment income (loss) before income taxes:
Homes segment	$	(80,058)	$	(71,122)	$	(178,016)	$	(116,327)
IMT segment	19,166		13,238		(22,341)		1,786
Mortgages segment	(240)		(10,438)		(13,385)		(20,054)
Total segment loss before income taxes	$	(61,132)	$	(68,322)	$	(213,742)	$	(134,595)
Adjusted EBITDA (3):
Homes segment	$	(60,908)	$	(56,452)	$	(135,903)	$	(90,976)
IMT segment	71,862		64,055		157,579		125,102
Mortgages segment	4,885		(5,306)		(718)		(7,907)
Total Adjusted EBITDA	$	15,839	$	2,297	$	20,958	$	26,219

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	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
(1) Includes share-based compensation as follows:
Cost of revenue	$	1,119	$	936	$	2,292	$	1,816
Sales and marketing	9,116		6,801		16,109		12,451
Technology and development	21,666		18,399		40,583		33,908
General and administrative	20,450		17,496		37,162		61,581
Total	$	52,351	$	43,632	$	96,146	$	109,756
(2) Amortization of website development costs and intangible assets included in technology and development	$	18,857	$	14,656	$	36,041	$	29,056
(3) See “Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP, which is net loss on a consolidated basis and income (loss) before income taxes for each segment.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Percentage of Revenue:
Revenue:
Homes	59	%	42	%	65	%	36	%
IMT	36		54		32		59
Mortgages	4		5		3		5
Total revenue	100		100		100		100
Cost of revenue (exclusive of amortization):
Homes	56		40		61		34
IMT	3		4		3		5
Mortgages	1		1		1		1
Total cost of revenue	60		45		65		40
Sales and marketing	20		31		19		33
Technology and development	17		20		14		22
General and administrative	11		14		9		17
Impairment costs	0		0		4		0
Integration costs	0		—		0		—
Total costs and expenses	108		110		111		112
Loss from operations	(8)		(10)		(11)		(12)
Gain on partial extinguishment of 2021 Notes	1		0		—		0
Other income	1		2		1		2
Interest expense	(5)		(3)		(4)		(3)
Loss before income taxes	(11)		(12)		(14)		(13)
Income tax benefit (expense)	—		0		—		—
Net loss	(11)	%	(12)	%	(13)	%	(13)	%

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Adjusted EBITDA

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

We have included Adjusted EBITDA in total and for each segment in this Quarterly Report on Form 10-Q as they are key metrics 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 in total and for each segment has limitations as an analytical tool, and you should not consider these measures 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;

•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 impairment costs;

•Adjusted EBITDA does not reflect the gain on the partial extinguishment of the 2021 Notes;

•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 in total and for each segment alongside other financial performance measures, including various cash flow metrics, net loss, income (loss) before income taxes for each segment and our other GAAP results.

The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, which is net loss on a consolidated basis and income (loss) before income taxes for each segment, for each of the periods presented (in thousands, unaudited):

	Three Months Ended June 30, 2020
	Homes		IMT		Mortgages		Corporate Items (2)		Consolidated
Reconciliation of Adjusted EBITDA to Net Loss and Income (Loss) Before Income Taxes:
Net loss (1)	N/A		N/A		N/A		N/A		$	(84,448)
Income tax expense	N/A		N/A		N/A		N/A		679
Income (loss) before income taxes	$	(80,058)	$	19,166	$	(240)	$	(22,637)	$	(83,769)
Other income	—		(5,300)		(385)		(4,430)		(10,115)
Depreciation and amortization expense	2,597		22,038		1,538		—		26,173
Share-based compensation expense	12,728		35,958		3,665		—		52,351
Gain on partial extinguishment of 2021 Notes	—		—		—		(6,391)		(6,391)
Interest expense	3,825		—		307		33,458		37,590
Adjusted EBITDA	$	(60,908)	$	71,862	$	4,885	$	—	$	15,839

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	Three Months Ended June 30, 2019
	Homes		IMT		Mortgages		Corporate Items (2)		Consolidated
Reconciliation of Adjusted EBITDA to Net Loss and Income (Loss) Before Income Taxes:
Net loss (1)	N/A		N/A		N/A		N/A		$	(71,977)
Income tax benefit	N/A		N/A		N/A		N/A		—
Income (loss) before income taxes	$	(71,122)	$	13,238	$	(10,438)	$	(3,655)	$	(71,977)
Other income	—		—		(402)		(9,056)		(9,458)
Depreciation and amortization expense	1,732		18,308		1,163		—		21,203
Share-based compensation expense	7,039		32,509		4,084		—		43,632
Interest expense	5,899		—		287		12,711		18,897
Adjusted EBITDA	$	(56,452)	$	64,055	$	(5,306)	$	—	$	2,297

	Six Months Ended June 30, 2020
	Homes		IMT		Mortgages		Corporate Items (2)		Consolidated
Reconciliation of Adjusted EBITDA to Net Loss and Loss Before Income Taxes:
Net loss (1)	N/A		N/A		N/A		N/A		$	(247,721)
Income tax benefit	N/A		N/A		N/A		N/A		(8,549)
Loss before income taxes	$	(178,016)	$	(22,341)	$	(13,385)	$	(42,528)	$	(256,270)
Other income	—		(5,300)		(587)		(13,821)		(19,708)
Depreciation and amortization expense	6,172		45,815		3,212		—		55,199
Share-based compensation expense	24,032		65,505		6,609		—		96,146
Gain on partial extinguishment of 2021 Notes	—		—		—		(6,391)		(6,391)
Impairment costs	—		73,900		2,900		—		76,800
Interest expense	11,909		—		533		62,740		75,182
Adjusted EBITDA	$	(135,903)	$	157,579	$	(718)	$	—	$	20,958

	Six Months Ended June 30, 2019
	Homes		IMT		Mortgages		Corporate Items (2)		Consolidated
Reconciliation of Adjusted EBITDA to Net Loss and Income (Loss) Before Income Taxes:
Net loss (1)	N/A		N/A		N/A		N/A		$	(139,502)
Income tax benefit	N/A		N/A		N/A		N/A		(2,500)
Income (loss) before income taxes	$	(116,327)	$	1,786	$	(20,054)	$	(7,407)	$	(142,002)
Other income	—		—		(715)		(17,911)		(18,626)
Depreciation and amortization expense	3,053		35,902		2,773		—		41,728
Share-based compensation expense	12,641		87,414		9,701		—		109,756
Interest expense	9,657		—		388		25,318		35,363
Adjusted EBITDA	$	(90,976)	$	125,102	$	(7,907)	$	—	$	26,219

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(1) We use income (loss) before income taxes as our profitability measure in making operating decisions and assessing the performance of our segments, therefore, net loss and income tax benefit (expense) are calculated and presented only on a consolidated basis within our financial statements.

(2) Certain corporate items are not directly attributable to any of our segments, including the gain on the partial extinguishment of the 2021 Notes, interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

Revenue

The following table presents Zillow Group’s revenue by category and by segment for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,				2019 to 2020 % Change
	2020		2019
Homes revenue:
Zillow Offers	$	453,816	$	248,924	82	%
Other	436		—		N/A
Total Homes revenue	454,252		248,924		82	%
IMT revenue:
Premier Agent	191,962		231,961		(17)	%
Other	88,377		91,708		(4)	%
Total IMT revenue	280,339		323,669		(13)	%
Mortgages	33,761		26,985		25	%
Total revenue	$	768,352	$	599,578	28	%

The following table presents Zillow Group’s revenue by category and by segment as percentages of total revenue for the periods presented (unaudited):

	Three Months Ended June 30,
	2020		2019
Percentage of Total Revenue:
Homes revenue:
Zillow Offers	59	%	42	%
Other	—		0
Total Homes revenue	59		42
IMT revenue:
Premier Agent	25		39
Other	12		15
Total IMT revenue	36		54
Mortgages	4		5
Total revenue	100	%	100	%

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Total revenue increased by $168.8 million, or 28%, for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. The increase in total revenue was primarily attributable to our Zillow Offers business. Total Homes segment revenue grew to $454.3 million for the three months ended June 30, 2020 from $248.9 million for the three months ended June 30, 2019, an increase of $205.3 million. This was primarily driven by an increase in the number of homes sold to 1,437 for the three months ended June 30, 2020 compared to 786 for the three months ended June 30, 2019. Visits increased 14% to 2,491.1 million for the three months ended June 30, 2020 from 2,181.4 million for the three months ended June 30, 2019. There were approximately 218.1 million average monthly unique users of our mobile applications and websites for the three months ended June 30, 2020 compared to 194.3 million average monthly unique users for the three months ended June 30, 2019, representing year-over-year growth of 12%. The increases in visits and unique users increased the number of impressions, leads, clicks and other events we monetized across our revenue categories. The increase in Homes segment revenue was partially offset by a $43.3 million decrease in IMT segment revenue for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019, primarily due to temporary discounts offered to support our customers in response to the COVID-19 pandemic.

Homes Segment

Zillow Offers Revenue. Zillow Offers revenue was $453.8 million for the three months ended June 30, 2020 due to the sale of 1,437 homes at an average selling price of $315.8 thousand per home. For the three months ended June 30, 2019, Zillow Offers revenue was $248.9 million due to the sale of 786 homes at an average selling price of $316.7 thousand per home. The increase in Zillow Offers revenue was due to an increase in the number of homes sold in the period as customer adoption of Zillow Offers increased in geographic areas in which it is currently operating and as Zillow Offers expanded into new geographic markets. As of June 30, 2020, Zillow Offers had operations in 24 metropolitan areas.

Beginning on March 23, 2020, we paused home buying activities in all Zillow Offers markets, as of June 30, 2020, we had resumed home buying in 15 of our 24 markets and are now active in all 24 markets beginning in August 2020. Although we have resumed home buying and continue to update, list and sell homes in inventory in all markets, we expect the gradual increase in home buying to result in a significant decrease in Zillow Offers revenue in the future until we grow home acquisition and resale volumes in all Zillow Offers markets. Given the unknown duration and severity of the COVID-19 pandemic and related economic disruption, we do not know whether we will have to make further adjustments to our operations or how quickly the business will re-accelerate now that we have resumed home buying activities.

Other Revenue. Other revenue within the Homes segment was $0.4 million for the three months ended June 30, 2020 and relates to revenue generated by Zillow Closing Services which launched in the second half of 2019.

IMT Segment

Premier Agent Revenue. Premier Agent revenue was $192.0 million for the three months ended June 30, 2020 compared to $232.0 million for the three months ended June 30, 2019, a decrease of $40.0 million, or 17%. Premier Agent revenue was positively impacted by an increase in visits. As discussed above, visits increased 14% to 2,491.1 million for the three months ended June 30, 2020 from 2,181.4 million for the three months ended June 30, 2019. The increase in visits increased the number of impressions and leads we could monetize in our Premier Agent marketplace. However, Premier Agent revenue was negatively impacted for the three months ended June 30, 2020 by temporary discounts offered to our Premier Agent partners in response to the COVID-19 pandemic. We expect Premier Agent revenue to increase in future periods when the discounts are no longer offered related to the COVID-19 pandemic.

Premier Agent revenue per visit decreased by 28% to $0.077 for the three months ended June 30, 2020 from $0.106 for the three months ended June 30, 2019. We calculate Premier Agent revenue per visit by dividing the revenue generated by our Premier Agent and Premier Broker programs in the period by the number of visits in the period. The decline in Premier Agent revenue per visit was primarily a result of the discounts offered in response to the COVID-19 pandemic described above.

Premier Agent revenue for the three months ended June 30, 2020 and June 30, 2019 also included an insignificant amount of revenue generated from our testing of the Flex pricing model, in limited markets. We plan to continue testing this pricing model in select markets with high-performing partners in the future, including offering it alongside our legacy market-based pricing model.

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Other Revenue. Other IMT revenue was $88.4 million for the three months ended June 30, 2020 compared to $91.7 million for the three months ended June 30, 2019, a decrease of $3.3 million, or 4%. The decrease in Other revenue was primarily the result of a 60% decrease in display revenue as customers decreased discretionary marketing spend during the COVID-19 pandemic. In addition, in response to the COVID-19 pandemic, we have offered temporary discounts on certain of our other IMT products throughout the second quarter to help mitigate the impact of the pandemic on our customers. We expect Other revenue to increase in future quarters when the discounts are no longer provided in response to the COVID-19 pandemic. The decrease in other IMT revenue was partially offset by continued adoption of our rental application product.

Mortgages Segment

Mortgages Revenue. Mortgages revenue was $33.8 million for the three months ended June 30, 2020 compared to $27.0 million for the three months ended June 30, 2019, an increase of $6.8 million, or 25%. The majority of the increase in mortgages revenue was a result of an increase in revenue generated by Zillow Home Loans due to increased sales volume reflective of market demand and reduced interest rates. The increase in mortgages revenue was partially offset by insignificant discounts offered during the three months ended June 30, 2020 on our Connect services in response to the COVID-19 pandemic. We expect mortgages revenue to increase in future periods due to higher mortgage origination volumes and low interest rates.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Revenue

The following table presents Zillow Group’s revenue by category and by segment for the periods presented (in thousands, unaudited):

	Six Months Ended June 30,				2019 to 2020 % Change
	2020		2019
Homes revenue:
Zillow Offers	$	1,222,928	$	377,396	224	%
Other	1,197		—		N/A
Total Homes revenue	1,224,125		377,396		224	%
IMT revenue:
Premier Agent	434,068		449,696		(3)	%
Other	176,937		172,245		3	%
Total IMT revenue	611,005		621,941		(2)	%
Mortgages	59,043		54,345		9	%
Total revenue	$	1,894,173	$	1,053,682	80	%

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The following table presents Zillow Group’s revenue by category and by segment as percentages of total revenue for the periods presented (unaudited):

	Six Months Ended June 30,
	2020		2019
Percentage of Total Revenue:
Homes revenue:
Zillow Offers	65	%	36	%
Other	—		0
Total Homes revenue	65		36
IMT revenue:
Premier Agent	23		43
Other	9		16
Total IMT revenue	32		59
Mortgages	3		5
Total revenue	100	%	100	%

Total revenue increased by $840.5 million, or 80%, for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The increase in total revenue was primarily attributable to our Zillow Offers business. Total Homes segment revenue grew to $1,224.1 million for the six months ended June 30, 2020 from $377.4 million for the six months ended June 30, 2019, an increase of $846.7 million. This was primarily driven by an increase in the number of homes sold to 3,831 for the six months ended June 30, 2020 compared to 1,200 for the six months ended June 30, 2019. Visits increased 9% to 4,567.4 million for the six months ended June 30, 2020 from 4,201.2 million for the six months ended June 30, 2019. There were approximately 218.1 million average monthly unique users of our mobile applications and websites for the three months ended June 30, 2020 compared to 194.3 million average monthly unique users for the three months ended June 30, 2019, representing year-over-year growth of 12%. The increases in visits and unique users increased the number of impressions, leads, clicks and other events we monetized across our revenue categories. The increase in Homes segment revenue was partially offset by a $10.9 million decrease in IMT segment revenue for the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to temporary discounts offered during the second quarter of 2020 to support our customers in response to the COVID-19 pandemic.

Homes Segment

Zillow Offers Revenue. Zillow Offers revenue was $1,222.9 million for the six months ended June 30, 2020 due to the sale of 3,831 homes at an average selling price of $319.2 thousand per home. For the six months ended June 30, 2019, Zillow Offers revenue was $377.4 million due to the sale of 1,200 homes at an average selling price of $314.5 thousand per home. The increase in Zillow Offers revenue was due to an increase in the number of homes sold in the period as customer adoption of Zillow Offers increased in geographic areas in which it is currently operating and as Zillow Offers expanded into new geographic markets. As of June 30, 2020, Zillow Offers had operations in 24 metropolitan areas. As discussed above, although Zillow Offers revenue increased for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, revenue for the six months ended June 30, 2020 was negatively impacted by the COVID-19 pandemic. Beginning on March 23, 2020, we paused home buying activities in all Zillow Offers markets, as of June 30, 2020, we had resumed home buying in 15 of our 24 markets and we are now active in all 24 markets beginning in August 2020.

Other Revenue. Other revenue within the Homes segment was $1.2 million for the six months ended June 30, 2020 and relates to revenue generated by Zillow Closing Services which launched in the second half of 2019.

IMT Segment

Premier Agent Revenue. Premier Agent revenue was $434.1 million for the six months ended June 30, 2020 from $449.7 million for the six months ended June 30, 2019, a decrease of $15.6 million, or 3%. Premier Agent revenue was positively impacted by an increase in visits. As discussed above, visits increased 9% to 4,567.4 million for the six months ended June 30, 2020 from 4,201.2 million for the six months ended June 30, 2019. The increase in visits increased the number of impressions and leads we could monetize in our Premier Agent marketplace. However, Premier Agent revenue was negatively impacted for the six months ended June 30, 2020 by discounts offered to our Premier Agent partners in response to the COVID-19 pandemic, as discussed above.

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Premier Agent revenue for the six months ended June 30, 2020 and June 30, 2019 also included an insignificant amount of revenue generated from our testing of the Flex pricing model, in limited markets.

Other Revenue. Other IMT revenue was $176.9 million for the six months ended June 30, 2020 compared to $172.2 million for the six months ended June 30, 2019, an increase of $4.7 million, or 3%. The increase in Other revenue was primarily a result of an 18% increase in revenue generated by our rentals marketplace. Growth in rentals revenue was primarily attributable to the adoption of our rental application product and increased spend on our cost per lease product. The increase in Other IMT revenue was partially offset by a 51% decrease in display revenue, as customers decreased discretionary marketing spend during the COVID-19 pandemic, as well as the impact of COVID-19-related discounts offered during the six months ended June 30, 2020.

Mortgages Segment

Mortgages Revenue. Mortgages revenue was $59.0 million for the six months ended June 30, 2020 compared to $54.3 million for the six months ended June 30, 2019, an increase of $4.7 million, or 9%. The growth in mortgages revenue was primarily driven by increases in marketplace and Mortech revenue driven by increased demand for our Connect and Mortech services, primarily due to the low interest-rate environment. The increase in mortgages revenue was also a result of an increase in revenue generated by Zillow Home Loans due to increased sales volume reflective of market demand and reduced interest rates.

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

Segment Results of Operations

The following table presents Zillow Group’s segment results for the periods presented (in thousands, unaudited):

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue	$	454,252	$	280,339	$	33,761	$	248,924	$	323,669	$	26,985
Costs and expenses:
Cost of revenue	431,788		23,387		5,896		240,732		26,059		4,430
Sales and marketing	47,877		96,026		11,695		37,409		135,440		14,584
Technology and development	28,918		93,176		6,763		18,198		94,261		7,871
General and administrative	21,902		53,884		9,725		17,808		54,671		10,360
Integration costs	—		—		—		—		—		293
Total costs and expenses	530,485		266,473		34,079		314,147		310,431		37,538
Income (loss) from operations	(76,233)		13,866		(318)		(65,223)		13,238		(10,553)
Other income	—		5,300		385		—		—		402
Interest expense	(3,825)		—		(307)		(5,899)		—		(287)
Income (loss) before income taxes (1)	$	(80,058)	$	19,166	$	(240)	$	(71,122)	$	13,238	$	(10,438)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,
	2020		2019
Total segment loss before income taxes	$	(61,132)	$	(68,322)
Corporate interest expense	(33,458)		(12,711)
Corporate other income	4,430		9,056
Gain on partial extinguishment of 2021 Notes	6,391		—
Consolidated loss before income taxes	$	(83,769)	$	(71,977)

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Homes Segment

Cost of Revenue. Cost of revenue was $431.8 million for the three months ended June 30, 2020 compared to $240.7 million for the three months ended June 30, 2019, an increase of $191.1 million or 79%. The increase in cost of revenue was primarily attributable to home acquisition and renovation costs related to the 1,437 homes that we sold during the period compared to the sale of 786 homes during the three months ended June 30, 2019. Due to the pause in Zillow Offers home buying activities that began on March 23, 2020 in response to the COVID-19 pandemic, we expect cost of revenue to decrease in absolute dollars in the near-term as we expect to resell fewer homes until we grow home acquisition volumes following resuming home buying activities in all Zillow Offers markets. As of June 30, 2020, we had resumed home buying in 15 of our 24 markets and we are now active in all 24 markets beginning in August 2020.

Sales and Marketing. Sales and marketing expenses were $47.9 million for the three months ended June 30, 2020 compared to $37.4 million for the three months ended June 30, 2019, an increase of $10.5 million or 28%. The increase in sales and marketing expenses was primarily attributable to a $9.4 million increase in selling expenses attributable to the resale of homes and a $6.9 million increase in headcount-related expenses, including share-based compensation expense. The increase was partially offset by a $2.6 million decrease in marketing and advertising costs, a $1.7 million decrease in holding costs and a $1.1 million decrease in travel expenses as we paused non-essential travel for employees in response to the COVID-19 pandemic.

Sales and marketing expenses include $2.6 million in holding costs for the three months ended June 30, 2020 and $4.4 million in holding costs for the three months ended June 30, 2019.

Due to the pause in Zillow Offers home buying activities that began on March 23, 2020 in response to the COVID-19 pandemic, we expect sales and marketing expenses to decrease in absolute dollars in the near-term as we expect to hold and resell fewer homes until we grow home acquisition volumes following resuming home buying activities in all Zillow Offers markets.

Technology and Development. Technology and development expenses, which include research and development costs, were $28.9 million for the three months ended June 30, 2020 compared to $18.2 million for the three months ended June 30, 2019, an increase of $10.7 million or 59%. The increase in technology and development expenses was primarily due to a $9.5 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment, and a $1.2 million increase in depreciation and amortization expense.

General and Administrative. General and administrative expenses were $21.9 million for the three months ended June 30, 2020 compared to $17.8 million for the three months ended June 30, 2019, an increase of $4.1 million or 23%. The increase in general and administrative expenses was primarily due to a $3.5 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment.

Interest Expense. Interest expense was $3.8 million for the three months ended June 30, 2020 compared to $5.9 million for the three months ended June 30, 2019, a decrease of $2.1 million, or 35%. The decrease in interest expense was attributable to the reduced number of homes financed on our credit facilities due to the temporary pause of Zillow Offers home buying activities in response to the COVID-19 pandemic.

Due to the pause in Zillow Offers home buying activities, we expect interest expense to decrease in absolute dollars in the near-term as we have reduced the number of homes financed on our credit facilities. Subsequently, we expect interest expense to increase as we increase our homes inventory following resuming home buying in Zillow Offers markets.

IMT Segment

Cost of Revenue. Cost of revenue was $23.4 million for the three months ended June 30, 2020 compared to $26.1 million for the three months ended June 30, 2019, a decrease of $2.7 million, or 10%. The decrease in cost of revenue was primarily related to a $1.3 million decrease in ad serving costs and a $0.8 million decrease in software and hardware costs.

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Sales and Marketing. Sales and marketing expenses were $96.0 million for the three months ended June 30, 2020 compared to $135.4 million for the three months ended June 30, 2019, a decrease of $39.4 million, or 29%. The decrease in sales and marketing expenses was primarily attributable to a $35.6 million decrease in marketing and advertising expenses due to the pause of most advertising spend in response to the COVID-19 pandemic. In addition, there was a $3.5 million decrease in travel expenses as we paused non-essential travel for employees in response to the COVID-19 pandemic and a $3.3 million decrease in related trade show and event expenses. The decrease in sales and marketing expenses was partially offset by a $3.0 million increase in headcount related expenses, including share-based compensation expense, as we continue to grow our team. We expect sales and marketing expenses to increase in absolute dollars in the future as we begin to increase our marketing and advertising activities.

Technology and Development. Technology and development expenses, which include research and development costs, were $93.2 million for the three months ended June 30, 2020 compared to $94.3 million for the three months ended June 30, 2019, a decrease of $1.1 million, or 1%. Technology and development expenses remained relatively consistent due to proactive measures we have taken to reduce costs. We expect technology and development expenses to decrease in absolute dollars in future periods as a result of these cost saving measures.

General and Administrative. General and administrative expenses were $53.9 million for the three months ended June 30, 2020 compared to $54.7 million for the three months ended June 30, 2019, a decrease of $0.8 million, or 1%. General and administrative expenses remained relatively consistent due to proactive measures we have taken to reduce costs.

Mortgages Segment

Cost of Revenue. Cost of revenue was $5.9 million for the three months ended June 30, 2020 compared to $4.4 million for the three months ended June 30, 2019, an increase of $1.5 million, or 33%. The increase in cost of revenue was primarily attributable to a $0.9 million increase in headcount-related expenses, including share-based compensation expense. We expect cost of revenue to increase in absolute dollars in future periods as we continue to incur expenses associated with growth in revenue and expansion of Zillow Home Loans.

Sales and Marketing. Sales and marketing expenses were $11.7 million for the three months ended June 30, 2020 compared to $14.6 million for the three months ended June 30, 2019, a decrease of $2.9 million, or 20%. The decrease in sales and marketing expenses was primarily attributable to a $3.8 million decrease in marketing and advertising expenses due to the pause of most advertising spend in response to the COVID-19 pandemic. We expect our sales and marketing expenses to increase in absolute dollars in future periods due to increased marketing and headcount related spend associated with growth in revenue and expansion of Zillow Home Loans.

Technology and Development. Technology and development expenses, which include research and development costs, were $6.8 million for the three months ended June 30, 2020 compared to $7.9 million for the three months ended June 30, 2019, a decrease of $1.1 million, or 14%. The decrease in technology and development expenses was primarily a result of a $0.7 million decrease in data acquisition costs.

General and Administrative. General and administrative expenses were $9.7 million for the three months ended June 30, 2020 compared to $10.4 million for the three months ended June 30, 2019, a decrease of $0.6 million, or 6%. General and administrative expenses remained relatively consistent due to proactive measures we have taken to reduce costs.

Corporate Items

Certain corporate items are not directly attributable to any of our segments, including the gain on the partial extinguishment of the 2021 Notes, interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

Interest Expense. Interest expense was $33.5 million for the three months ended June 30, 2020 compared to $12.7 million for the three months ended June 30, 2019, an increase of $20.7 million, or 163%. This increase was primarily due to the September 2019 issuance of the convertible senior notes due in 2026, the September 2019 and October 2019 issuances of the convertible senior notes due in 2024, and the May 2020 issuance of the 2025 Notes. We expect interest expense to increase over time in absolute dollars as we incur additional interest related to the May 2020 issuance of the 2025 Notes. For additional information regarding the convertible senior notes, see Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

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Other Income. Other income not directly attributable to any of our segments was $4.4 million for the three months ended June 30, 2020 compared to $9.1 million for the three months ended June 30, 2019, a decrease of $4.6 million, or 51%. The decrease in Other income is largely due to rebalancing our investment portfolio to lower risk, lower yield investments in light of the COVID-19 pandemic. We expect Other income to decrease in the future as interest rates are projected to remain low through 2020.

Gain on Partial Extinguishment of 2021 Notes. We recorded a $6.4 million gain on the partial extinguishment of the 2021 Notes during the three months ended June 30, 2020. For additional information on the repurchase, see Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Segment Results of Operations

The following table presents Zillow Group’s segment results for the periods presented (in thousands, unaudited):

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue	$	1,224,125	$	611,005	$	59,043	$	377,396	$	621,941	$	54,345
Costs and expenses:
Cost of revenue	1,163,987		47,705		11,051		363,151		50,310		9,108
Sales and marketing	119,466		216,199		24,581		58,271		262,094		28,655
Technology and development	61,456		188,204		14,115		30,479		182,230		15,391
General and administrative	45,323		112,638		19,835		32,165		125,521		20,927
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		645
Total costs and expenses	1,390,232		638,646		72,482		484,066		620,155		74,726
Income (loss) from operations	(166,107)		(27,641)		(13,439)		(106,670)		1,786		(20,381)
Other income	—		5,300		587		—		—		715
Interest expense	(11,909)		—		(533)		(9,657)		—		(388)
Income (loss) before income taxes (1)	$	(178,016)	$	(22,341)	$	(13,385)	$	(116,327)	$	1,786	$	(20,054)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands, unaudited):

	Six Months Ended June 30,
	2020		2019
Total segment loss before income taxes	$	(213,742)	$	(134,595)
Corporate interest expense	(62,740)		(25,318)
Corporate other income	13,821		17,911
Gain on partial extinguishment of 2021 Notes	6,391		—
Consolidated loss before income taxes	$	(256,270)	$	(142,002)

Homes Segment

Cost of Revenue. Cost of revenue was $1,164.0 million for the six months ended June 30, 2020 compared to $363.2 million for the six months ended June 30, 2019, an increase of $800.8 million. The increase in cost of revenue was primarily attributable to home acquisition and renovation costs related to the 3,831 homes that we sold during the period compared to the sale of 1,200 homes during the six months ended June 30, 2019.

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Sales and Marketing. Sales and marketing expenses were $119.5 million for the six months ended June 30, 2020 compared to $58.3 million for the six months ended June 30, 2019, an increase of $61.2 million. The increase in sales and marketing expenses was primarily attributable to a $37.0 million increase in selling expenses attributable to the resale of homes, an $18.3 million increase in headcount-related expenses, including share-based compensation expense, as we have grown our team to support our Homes segment, and $5.7 million in expenses attributable to our efforts to pause home buying in response to the COVID-19 pandemic.

Sales and marketing expenses include $7.9 million in holding costs for the six months ended June 30, 2020 and $6.7 million in holding costs for the six months ended June 30, 2019.

Technology and Development. Technology and development expenses, which include research and development costs, were $61.5 million for the six months ended June 30, 2020 compared to $30.5 million for the six months ended June 30, 2019, an increase of $31.0 million. The increase in technology and development expenses was primarily due to a $25.9 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment, and a $3.3 million increase in depreciation and amortization expense.

General and Administrative. General and administrative expenses were $45.3 million for the six months ended June 30, 2020 compared to $32.2 million for the six months ended June 30, 2019, an increase of $13.2 million or 41%. The increase in general and administrative expenses was primarily due to a $9.2 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment. In addition, there was a $1.9 million increase in building lease-related expenses including rent, utilities and insurance and a $0.9 million increase in software and hardware costs.

Interest Expense. Interest expense was $11.9 million for the six months ended June 30, 2020 compared to $9.7 million for the six months ended June 30, 2019, an increase of $2.3 million, or 23%. The increase in interest expense was attributable to borrowings, funding fees and other fees, including the amortization of deferred issuance costs, on our credit facilities.

IMT Segment

Cost of Revenue. Cost of revenue was $47.7 million for the six months ended June 30, 2020 compared to $50.3 million for the six months ended June 30, 2019, a decrease of $2.6 million, or 5%. The decrease in cost of revenue was primarily attributable to a $1.7 million decrease in ad serving costs and a $0.9 million decrease in software and hardware costs. The decreases in cost of revenue were partially offset by a $2.0 million increase in other direct product costs.

Sales and Marketing. Sales and marketing expenses were $216.2 million for the six months ended June 30, 2020 compared to $262.1 million for the six months ended June 30, 2019, a decrease of $45.9 million, or 18%. The decrease in sales and marketing expenses was primarily attributable to a $45.9 million decrease in marketing and advertising expenses due to the pause of most advertising spend in response to the COVID-19 pandemic, a $4.7 million decrease in travel expenses as we paused non-essential travel for workers in response to the COVID-19 pandemic and a $4.0 million decrease in related trade show and event-related costs. The decrease in sales and marketing expenses was partially offset by a $5.0 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams, and a $3.9 million increase in depreciation expense.

Technology and Development. Technology and development expenses, which include research and development costs, were $188.2 million for the six months ended June 30, 2020 compared to $182.2 million for the six months ended June 30, 2019, an increase of $6.0 million, or 3%. The increase in technology and development expenses was primarily attributable to a $6.1 million increase in depreciation and amortization expense and a $3.2 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our engineering teams to support current and future product initiatives. These increases were partially offset by a $2.4 million decrease in professional services fees.

General and Administrative. General and administrative expenses were $112.6 million for the six months ended June 30, 2020 compared to $125.5 million for the six months ended June 30, 2019, a decrease of $12.9 million, or 10%. The decrease in general and administrative expenses for the six months ended June 30, 2020 was primarily due to a $21.5 million decrease in headcount-related expenses driven primarily by the recognition of $23.3 million of share-based compensation expense in the IMT segment in 2019 in connection with the modification of certain outstanding equity awards related to the departure of Spencer Rascoff in February 2019, who served as Zillow Group’s Chief Executive Officer beginning in 2010. For additional information regarding the equity modification, see Note 15 in our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Additionally, there was a $1.3 million decrease in travel expenses as we paused non-essential travel for workers in response to the COVID-19 pandemic. The decreases in general and administrative expenses were

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partially offset by an increase in estimated legal liabilities of approximately $3.5 million, a $2.0 million increase in building lease-related expenses, including rent, utilities and insurance, a $1.8 million increase in business taxes, a $1.0 million increase in credit loss expense and a $0.5 million increase in depreciation and amortization expense.

Impairment Costs. Impairment costs recorded to the IMT segment for the six months ended June 30, 2020 consist of $68.6 million of the total $71.5 million non-cash impairment related to the Trulia trade names and trademarks intangible asset and a $5.3 million non-cash impairment related to our October 2016 equity investment. For additional information about these impairments, see Note 9 and Note 10 in our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Mortgages Segment

Cost of Revenue. Cost of revenue was $11.1 million for the six months ended June 30, 2020 compared to $9.1 million for the six months ended June 30, 2019, an increase of $1.9 million, or 21%. The increase in cost of revenue was primarily attributable to a $1.7 million increase in headcount-related expenses, including share-based compensation expense, as we increased fulfillment hiring to support the increase in volume of loans funded.

Sales and Marketing. Sales and marketing expenses were $24.6 million for the six months ended June 30, 2020 compared to $28.7 million for the six months ended June 30, 2019, a decrease of $4.1 million, or 14%. The decrease in sales and marketing expenses was primarily attributable to a $5.3 million decrease in marketing and advertising expenses due to the pause of most advertising spend in response to the COVID-19 pandemic, partially offset by a $1.3 million increase in headcount-related expenses, including share-based compensation expenses, driven primarily by the expansion of our leadership team as we continue to expand our Zillow Homes Loans business.

Technology and Development. Technology and development expenses, which include research and development costs, were $14.1 million for the six months ended June 30, 2020 compared to $15.4 million for the six months ended June 30, 2019, a decrease of 1.3 million, or 8%. The decrease in technology and development expenses was primarily a result of a $1.3 million decrease in data acquisition costs.

General and Administrative. General and administrative expenses were $19.8 million for the six months ended June 30, 2020 compared to $20.9 million for the six months ended June 30, 2019, a decrease of $1.1 million, or 5%. The decrease in general and administrative expenses was primarily due to a $1.1 million decrease in headcount-related expenses, including share-based compensation expense, due primarily to our temporary pause in most hiring in response to the COVID-19 pandemic.

Impairment Costs. Impairment costs recorded to the Mortgages segment for the six months ended June 30, 2020 consist of $2.9 million of the total $71.5 million impairment related to the Trulia trade names and trademarks intangible asset. For additional information about this impairment, see Note 10 in our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Corporate Items

Certain corporate items are not directly attributable to any of our segments, including the gain on the partial extinguishment of the 2021 Notes, interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

Interest Expense. Interest expense was $62.7 million for the six months ended June 30, 2020 compared to $25.3 million for the six months ended June 30, 2019, an increase of $37.4 million, or 148%. This increase was primarily due to the September 2019 issuance of the convertible senior notes due in 2026, the September 2019 and October 2019 issuances of the convertible senior notes due in 2024 and the May 2020 issuances of the 2025 Notes. For additional information regarding the convertible senior notes, see Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Other Income. Other income not directly attributable to any of our segments was $13.8 million for the six months ended June 30, 2020 compared to $17.9 million for the six months ended June 30, 2019, a decrease of $4.1 million, or 23% The decrease in Other income is largely due to rebalancing our investment portfolio to lower risk investments with lower yields in light of the COVID-19 pandemic. We expect Other income to decrease for the foreseeable future as interest rates are projected to remain low throughout 2020.

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Gain on Partial Extinguishment of 2021 Notes. We recorded a $6.4 million gain on the partial extinguishment of the 2021 Notes during the six months ended June 30, 2020. For additional information on the repurchase, see Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

As of June 30, 2020 and December 31, 2019, we had cash and cash equivalents, investments and restricted cash of $3,570.3 million and $2,511.9 million, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions, money market funds and treasury bills. Investments consist of fixed income securities, which include U.S. government agency securities, corporate notes and bonds, commercial paper, municipal securities, certificates of deposit and treasury bills. Restricted cash consists of amounts funded to the reserve and collection accounts related to our credit facilities and amounts held in escrow related to funding home purchases in our mortgage origination business. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. As of June 30, 2020, Zillow Group and its subsidiaries were in compliance with all debt covenants specified in the facilities described below.

To preserve our liquidity in response to the COVID-19 pandemic, we have paused hiring for non-critical roles, paused the majority of our advertising spending and have focused on scaling our business with discipline and with a reduction in certain discretionary spending. Additionally, we temporarily paused home buying through Zillow Offers in March of 2020 and have since resumed home buying activities in 15 of our 24 markets as of June 30, 2020 and are now active in all 24 markets beginning in August 2020. In May of 2020 we strengthened our financial position through our issuance of $565.0 million aggregate principle amount of 2025 Notes for net proceeds of $553.3 million, with which we repurchased $194.7 million aggregate principle amount of our 2021 Notes, and we issued 8,800,000 shares of Class C capital stock at a public offering price of $48.00 per share for net proceeds of $411.5 million, as further described above. In addition, we expect our liquidity to be positively impacted by certain provisions included in the CARES Act which provides tax provisions and other stimulus measures to affected companies. The impact of the CARES Act has not been material to our results of operations for the three and six month periods ended June 30, 2020. However, under the CARES Act we expect to defer certain employer payroll tax payments until 2021 and 2022. We deferred a total of $10.6 million of such payments as of June 30, 2020. As previously noted, the COVID-19 pandemic and related economic disruptions have resulted in significant uncertainty and the extent of the impact of COVID-19 on our business continues to be difficult to predict. The COVID-19 pandemic has and will continue to disrupt our revenue and operating cash flow levels and may disrupt future access to capital through debt or equity markets.

The expansion of Zillow Group’s purchase of homes through the Zillow Offers program and sale of homes on the open market has continued to have a significant impact on our liquidity and capital resources as a cash and inventory intensive business. We primarily use debt financing through credit facilities to fund a portion of the purchase price of homes and certain related costs. As previously noted, due to the pause in Zillow Offers home buying activities beginning on March 23, 2020 in response to the COVID-19 pandemic, we temporarily expect a decrease in the future amounts drawn on our credit facilities as we have reduced the number of homes financed until we grow home acquisition volumes following resuming home buying activities in all Zillow Offers markets. As of June 30, 2020, we had resumed home buying in 15 of our 24 markets and are now active in all markets beginning in August 2020. As of June 30, 2020, we have $117.2 million of total outstanding borrowings on credit facilities to provide capital for Zillow Offers with a total maximum borrowing capacity of $1,500.0 million.

Zillow Home Loans continues to impact our liquidity and capital resources as a cash intensive business that funds mortgage loans originated for resale in the secondary market. We primarily use debt financing to fund the mortgage loan originations. As of June 30, 2020, we have $69.8 million of total outstanding borrowings on our warehouse line of credit and master repurchase agreement with a total maximum borrowing capacity of $125.0 million.

As of June 30, 2020, we have outstanding a total of $2,386.7 million aggregate principal of convertible senior notes. The convertible notes are senior unsecured obligations, and interest on the convertible notes is paid semi-annually.

For additional information regarding our debt, see Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

We believe that cash from operations and cash and 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.

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The following table presents selected cash flow data for the periods presented (in thousands, unaudited):

	Six Months Ended June 30,
	2020		2019
Cash Flow Data:
Net cash provided by (used in) operating activities	$	692,620	$	(373,823)
Net cash provided by (used in) investing activities	(264,634)		197,822
Net cash provided by financing activities	420,199		323,138

Cash Flows Provided By (Used In) Operating Activities

Our operating cash flows result primarily from cash received from real estate professionals, rental professionals, mortgage professionals and brand advertisers, as well as cash received from customers for sales of homes through Zillow Offers and sales of mortgages originated by Zillow Home Loans. Our primary uses of cash from operating activities include payments for homes purchased through Zillow Offers, marketing and advertising activities, mortgages funded through Zillow Home Loans and employee compensation and benefits. Additionally, uses of cash from operating activities include costs associated with operating our mobile applications and websites and other general corporate expenditures.

For the six months ended June 30, 2020, net cash provided by operating activities was $692.6 million. This was primarily driven by a net loss of $247.7 million, adjusted by share-based compensation expense of $96.1 million, non-cash impairment costs of $76.8 million, depreciation and amortization expense of $55.2 million, amortization of the discount and issuance costs on the convertible notes maturing in 2021, 2023, 2024, 2025 and 2026 of $47.7 million, amortization of contract cost assets of $17.1 million and amortization of right of use assets of $12.7 million. This was offset by an $8.5 million change in deferred income taxes, a gain on the partial extinguishment of the 2021 Notes of $6.4 million and a gain on disposal of property and equipment and other assets of $2.7 million. Changes in operating assets and liabilities increased cash provided by operating activities by $650.6 million. The changes in operating assets and liabilities are primarily related to a $701.1 million decrease in inventory due to the sale of homes and a decrease in home purchases through Zillow Offers during the six months ended June 30, 2020, a $10.0 million increase in other long-term liabilities, a $7.5 million increase in accounts payable and a $4.8 million increase in deferred revenue. These changes were partially offset by a $38.5 million increase in mortgage loans held for sale, a $19.6 million increase in contract cost assets due primarily to the capitalization of sales commissions, an $8.7 million decrease in accrued expenses and other liabilities driven by the timing of payments, a $3.3 million decrease in accrued compensation and benefits, and a $1.5 million increase in accounts receivable due primarily to an increase in revenue from products and services which we bill in arrears.

For the six months ended June 30, 2019, net cash used in operating activities was $373.8 million. This was primarily driven by a net loss of $139.5 million, adjusted by share-based compensation expense of $109.8 million, depreciation and amortization expense of $41.7 million, amortization of contract cost assets of $17.9 million, amortization of the discount and issuance costs on the convertible notes maturing in 2023 and 2021 of $17.8 million, amortization of right of use assets of $10.6 million, a loss on disposal of property and equipment of $3.9 million, accretion of bond discount of $3.7 million and a $2.5 million change in deferred income taxes. Changes in operating assets and liabilities increased cash used in operating activities by $430.4 million. The changes in operating assets and liabilities are primarily due to a $390.0 million increase in inventory due to the purchase of homes through Zillow Offers, an $18.3 million increase in contract cost assets due primarily to the capitalization of sales commissions, a $16.9 million increase in accounts receivable due primarily to an increase in revenue, an $11.9 million decrease in lease liabilities, a $3.2 million increase in mortgage loans held for sale and a $2.0 million increase in prepaid expenses and other assets driven primarily by the timing of payments, partially offset by a $7.0 million increase in accrued expenses and other current liabilities driven primarily by the timing of payments, and a $3.0 million increase in deferred revenue.

Cash Flows Provided By (Used In) Investing Activities

Our primary investing activities include the purchase and sale or maturity of investments and the purchase of property and equipment and intangible assets.

For the six months ended June 30, 2020, net cash used in investing activities was $264.6 million. This was the result of $208.6 million of net purchases of investments in connection with investment of a portion of the net proceeds from our May 2020 issuance of the 2025 Notes and offering of our Class C capital stock, and $66.1 million of purchases for property and equipment and intangible assets, partially offset by $10.0 million in proceeds from the sale of an equity investment.

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For the six months ended June 30, 2019, net cash provided by investing activities was $197.8 million. This was primarily the result of $236.4 million of net proceeds from maturities of investments and $38.6 million of purchases for property and equipment and intangible assets.

Cash Flows Provided By Financing Activities

Net cash provided by financing activities has primarily resulted from net proceeds from the issuance of convertible notes, net proceeds from equity offerings, the exercise of employee option awards and equity awards withheld for tax liabilities, proceeds from and repayments of borrowings on our credit facilities related to Zillow Offers and proceeds from borrowings on warehouse lines of credit and the master repurchase agreement related to Zillow Home Loans.

For the six months ended June 30, 2020, cash provided by financing activities was $420.2 million, which was primarily related to net proceeds from the issuance of the 2025 Notes of $553.3 million, net proceeds from the public offering of our Class C capital stock of $411.5 million, $185.0 million of proceeds from the exercise of option awards and $39.4 million of net borrowings on our warehouse line of credit and master repurchase agreement related to Zillow Home Loans. These cash inflows were partially offset by $617.5 million of net repayments of borrowings on our credit facilities related to Zillow Offers and $194.7 million of cash paid for the partial repurchase of the 2021 Notes.

For the six months ended June 30, 2019, cash provided by financing activities was $323.1 million, including $293.1 million of proceeds from borrowings on our revolving credit facilities related to Zillow Offers and $33.0 million of proceeds from the exercise of option awards, partially offset by $3.0 million of net repayments of borrowings on our warehouse lines of credit related to Zillow Home Loans.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements other than outstanding surety bonds issued for our benefit of approximately $9.8 million as of June 30, 2020. 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 17 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q under the subsection titled “Surety Bonds”.

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Contractual Obligations and Other Commitments

There have been no material changes outside the ordinary course of business in our commitments under contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, except for the categories of contractual obligations included in the table below, which have been updated to reflect our contractual obligations as of June 30, 2020 (in thousands, unaudited):

	Payments Due By Period
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
2025 Notes (1)	$	565,000	$	—	$	—	$	565,000	$	—
Interest on 2025 Notes (2)	75,702		15,537		31,075		29,090		—
2021 Notes (3)	265,330		—		265,330		—		—
Interest on 2021 Notes (4)	7,518		5,307		2,211		—		—
Homes under contract (5)	51,850		51,850		—		—		—
Homes segment credit facilities (6)	117,218		117,218		—		—		—
Purchase obligations (7)	29,431		19,126		10,050		255		—
Mortgages segment credit facilities (8)	69,814		69,814		—		—		—
____________________ (1) The aggregate principal amount of the 2025 Notes is due on May 15, 2025 if not earlier converted or redeemed. (2) The stated interest rate on the 2025 Notes is 2.75%. (3) The aggregate principal amount of the 2021 Notes is due on December 1, 2021 if not earlier converted or redeemed. (4) The stated interest rate on the 2021 Notes is 2.00%. (5) We have obligations to purchase homes under contract through our Zillow Offers business. (6) Includes principal amounts due for amounts borrowed under the credit facilities used to provide capital for our Zillow Offers business. Amounts exclude an immaterial amount of estimated interest payments. (7) We have noncancellable purchase obligations for content related to our mobile applications and websites and certain cloud computing costs. For additional information regarding our purchase obligations, see Note 17 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q. (8) Includes principal amounts due for amounts borrowed under the warehouse line of credit and master repurchase agreement to finance mortgages originated through Zillow Home Loans. Amounts exclude an immaterial amount of estimated interest payments.

As of June 30, 2020, we have outstanding letters of credit of approximately $16.9 million, which secure our lease obligations in connection with certain of the operating leases of our 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 $9.8 million as of June 30, 2020.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or 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 Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of our Quarterly Report on Form 10-Q for the three months ended March 31, 2020. There have been no material changes to our critical accounting policies and estimates as previously disclosed in our Quarterly Report on Form 10-Q for the three months ended March 31, 2020.

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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, treasury bills, commercial paper, 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.

Our convertible senior notes bear interest at fixed rates. Thus, we have no related direct financial statement risk associated with changes in interest rates. However, the fair values of the convertible senior notes change primarily when the market price of our stock fluctuates or interest rates change. The following table summarizes our outstanding convertible senior notes as of June 30, 2020 (in thousands, except interest rates):

Maturity Date	Aggregate Principal Amount		Stated Interest Rate
September 1, 2026	$	500,000	1.375	%
May 15, 2025	565,000		2.75	%
September 1, 2024	673,000		0.75	%
July 1, 2023	373,750		1.50	%
December 1, 2021	265,330		2.00	%
December 15, 2020	9,637		2.75	%
	$	2,386,717

Since the convertible senior notes bear interest at fixed rates, we have no direct financial statement risk associated with changes in interest rates as of June 30, 2020. However, the fair values of the convertible senior notes change primarily when the market price of our stock fluctuates or interest rates change.

We are subject to market risk by way of changes in interest rates on borrowings under our credit facilities that provide capital for Zillow Offers. As of June 30, 2020 and December 31, 2019, we had outstanding $117.2 million and $691.5 million, respectively, of borrowings on these credit facilities which bear interest at a floating rate based on the one-month London Interbank Offered Rate (“LIBOR”) plus an applicable margin. Accordingly, fluctuations in market interest rates may increase or decrease our interest expense. Assuming no change in the outstanding borrowings on our credit facilities, we estimate that a one percentage point increase in LIBOR would increase our annual interest expense by approximately $1.0 million and $6.9 million as of June 30, 2020 and December 31, 2019, respectively.

We are also subject to market risk by way of changes in interest rates on borrowings under our warehouse line of credit and master repurchase agreement that provide capital for Zillow Home Loans. As of June 30, 2020 and December 31, 2019, we had outstanding $69.8 million and $30.4 million, respectively, of borrowings on our warehouse line of credit and master repurchase agreement which bear interest at a floating rate based on LIBOR plus an applicable margin, and in certain cases include a LIBOR floor. We manage the interest rate risk associated with our mortgage loan origination services through the use of forward sales of mortgage-backed securities. Assuming no change in the outstanding borrowings on the warehouse line of credit and master repurchase agreement, we estimate that a one percentage point increase in LIBOR would increase our annual interest expense associated with the warehouse line of credit and master repurchase agreement by $0.5 million as of June 30, 2020 and by an insignificant amount as of December 31, 2019.

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.

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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.

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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 June 30, 2020. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective as of June 30, 2020.

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 June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding legal proceedings in which we are involved, see Note 17 under the subsection titled “Legal Proceedings” in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Item 1A. Risk Factors

Our business is subject to numerous risks. You should carefully consider the following risk factor, in addition to those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2019, as any of these risks could harm our business, results of operations, and future financial performance. Recovery pursuant to our insurance policies may not be available due to policy definitions of covered losses or other factors, and available insurance may be insufficient to compensate for damages, expenses, fines, penalties, and other losses we may incur as a result of these and other risks. In addition, risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially adversely affect our business, financial condition and operating results. If any of these risks occur, the trading price of our common and capital stock could decline, and you could lose all or part of your investment.

Our financial condition and results of operations have been and may continue to be adversely affected by the COVID-19 pandemic.

In December 2019, a novel strain of coronavirus, COVID-19, was reported and has subsequently spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. As a result of COVID-19, significant portions of the United States economy and population shut down and slowed down due to widespread travel and transportation restrictions, shelter in place and stay at home policies and closures of commercial spaces and government facilities, including in locations where we maintain operations and a significant number of employees. The current COVID-19 pandemic, its broad impact and preventive measures taken to contain or mitigate the pandemic have had, and are likely to continue to have, significant negative effects on the United States and global economy, employment levels, employee productivity, residential real estate and financial markets. This, in turn, has and may increasingly have a negative impact on our real estate partners, suppliers, demand for our products and services, the ability of customers to effectuate real estate transactions, profitability, the value of collateral securing loans, our ability to resell loans on the secondary market, access to credit and our ability to operate our business.

In response to these unprecedented circumstances, we temporarily paused home buying through Zillow Offers, provided certain product discounts, temporarily closed offices, paused hiring for non-critical roles, paused the majority of our marketing and advertising activities and reduced discretionary spending. Although, among other things, we have resumed home buying in all Zillow Offers markets as of August 2020, expect to increase our hiring, marketing and advertising activities and plan to reopen offices, we cannot predict whether and to what extent we will have to implement additional operational changes in light of COVID-19 in the future. As a result of these and other consequences, the pandemic has and may continue to adversely affect our business, results of operations and financial condition, likely significantly.

Our ability to fund our liquidity requirements and operate our business depends on our cash flows from operations as well as our ability to access capital markets and borrow on our existing credit facilities. For example, the provision of certain product discounts and pause of home buying through Zillow Offers has and may continue to disrupt our revenue and operating cash flow levels. Further, our access to and the availability of financing on acceptable terms may be adversely impacted by the pandemic. For more information on the impact the COVID-19 pandemic has had on our liquidity position and outlook, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

The extent to which the outbreak will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the magnitude, duration and severity of the outbreak, the actions taken to contain or mitigate the outbreak and any associated economic downturn or extended slowdown in the real estate markets.

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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 June 30, 2020.

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Item 6. Exhibits

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

Exhibit Number	Description
3.1	Amended and Restated Bylaws of Zillow Group, Inc. (Filed as Exhibit 3.1 to Zillow Group, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2020, and incorporated herein by reference).
4.1	Indenture dated as of May 15, 2020, by and between Zillow Group, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (Filed as Exhibit 4.1 to Zillow Group, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2020, and incorporated herein by reference).
4.2	Form of 2.75% Convertible Senior Note due 2025 (incorporated by reference from Exhibit A to Exhibit 4.1 hereto).
10.1*	Zillow Group, Inc. 2020 Incentive Plan (Filed as Exhibit 10.1 to Zillow Group, Inc’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 10, 2020, and incorporated herein by reference).
10.2*	Form of Nonqualified Stock Option Grant Notice and Nonqualified Stock Option Agreement under the Zillow Group, Inc. 2020 Incentive Plan.
10.3*	Form of Restricted Stock Unit Award Notice and Restricted Stock Unit Award Agreement under the Zillow Group, Inc. 2020 Incentive Plan.
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	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document).
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the inline XBRL document).
*	Indicates a management contract or compensatory plan or arrangement.

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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: August 6, 2020	ZILLOW GROUP, INC.
	By:	/s/ JENNIFER ROCK
	Name:	Jennifer Rock
	Title:	Chief Accounting Officer

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EX-10.2

EXHIBIT 10.2

ZILLOW GROUP, INC.

2020 INCENTIVE PLAN

NONQUALIFIED STOCK OPTION GRANT NOTICE

Zillow Group, Inc. (the “Company”) hereby grants to you an Option (the “Option”) to purchase shares of the Company’s Class C Capital Stock under the Zillow Group, Inc. 2020 Incentive Plan (the “Plan”). The Option is subject to all the terms and conditions set forth in this Nonqualified Stock Option Grant Notice (this “Grant Notice”) and in the Nonqualified Stock Option Agreement (the “Stock Option Agreement”) and the Plan, which are incorporated into this Grant Notice in their entirety.

Participant:

Grant Number:

Grant Date:

Number of Shares of Class C Capital Stock Subject to Option (the “Shares”):

Vesting Commencement Date:

Exercise Price (per Share):

Option Expiration Date:

Type of Option:

Vesting and Exercisability Schedule (subject to continued employment or service):

Additional Terms/Acknowledgement: You acknowledge receipt of, and understand and agree to, this Grant Notice, the Stock Option Agreement and the Plan. You further acknowledge that as of the Grant Date, this Grant Notice, the Stock Option Agreement and the Plan set forth the entire understanding between you and the Company regarding the Option and supersede all prior oral and written agreements or other communications on the subject. The Option is hereby granted in full satisfaction of the Company’s obligations to grant such Option pursuant to any new hire offer letter, promotion letter or other communication by the Company, if applicable.

Attachment

1. Nonqualified Stock Option Award Agreement (including any appendices thereto)

ZILLOW GROUP, INC.

2020 INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

Pursuant to your Nonqualified Stock Option Grant Notice (the “Grant Notice”) and this Nonqualified Stock Option Agreement (together, this “Agreement”), Zillow Group, Inc. (the “Company”) has granted you an Option under the Zillow Group, Inc. 2020 Incentive Plan (the “Plan”) to purchase the number of shares of Class C Capital Stock indicated in your Grant Notice (the “Shares”) at the exercise price indicated in your Grant Notice. Capitalized terms not explicitly defined in this Agreement but defined in the Plan have the same definitions as in the Plan.

The details of the Option are as follows:

1.Vesting and Exercisability. Subject to the limitations contained herein, the Option will vest and become exercisable as provided in your Grant Notice, provided that vesting will cease upon your Termination of Service and the unvested portion of the Option will terminate.

2.Securities Law Compliance. Notwithstanding any other provision of this Agreement, you may not exercise the Option unless the Shares issuable upon exercise are registered under the Securities Act or, if such Shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of the Option must also comply with other applicable laws and regulations governing the Option, and you may not exercise the Option if the Company determines that such exercise would not be in material compliance with such laws and regulations.

3.Independent Tax Advice. You should obtain tax advice independent from the Company when exercising the Option and prior to the disposition of the Shares.

4.Method of Exercise. You may exercise the Option by giving written notice to the Company, in form and substance satisfactory to the Company, which will state your election to exercise the Option and the number of Shares for which you are exercising the Option. The written notice must be accompanied by full payment of the exercise price for the number of Shares you are purchasing. You may make this payment in any combination of the following: (a) by cash; (b) by wire transfer or check acceptable to the Company; (c) if permitted by the Committee, by having the Company withhold shares of Class C Capital Stock that would otherwise be issued on exercise of the Option; (d) if permitted by the Committee, by tendering already owned shares of Class C Capital Stock; (e) while the Class C Capital Stock is registered under the Exchange Act and to the extent permitted by law, by instructing a broker to deliver to the Company the total payment required; or (f) by any other method permitted by the Committee.

5.Treatment upon Termination of Service. The unvested portion of the Option will terminate automatically and without further notice immediately upon your Termination of Service. You may exercise the vested portion of the Option as follows:

(a)	General Rule. You must exercise the vested portion of the Option on or before the earlier of (i) three months after your Termination of Service and (ii) the Option Expiration Date;
(b)	Retirement or Disability. If your employment or service relationship terminates due to Retirement or Disability, you must exercise the vested portion of the Option on or before the earlier of (i) one year after your Termination of Service and (ii) the Option Expiration Date;
(c)	Death. If your employment or service relationship terminates due to your death, the vested portion of the Option must be exercised on or before the earlier of (i) one year after your Termination of Service and (ii) the Option Expiration Date. If you die after your Termination of Service but while the Option is still exercisable, the vested portion of the Option may be exercised until the earlier of (x) one year after the date of death and (y) the Option Expiration Date; and
(d)	Cause. The vested portion of the Option will automatically expire at the time the Company or a Related Company first notifies you of your Termination of Service for Cause, unless the Committee determines otherwise. If your employment or service relationship is suspended pending an investigation of whether you will be terminated for Cause, all your rights under the Option likewise will be suspended during the period of investigation. If any facts that would constitute termination for Cause are discovered after your Termination of Service, any Option you then hold may be immediately terminated by the Committee.

It is your responsibility to be aware of the date the Option terminates.

6. Limited Transferability. During your lifetime only you can exercise the Option. The Option is not transferable except by will or by the applicable laws of descent and distribution. The Plan provides for exercise of the Option by a beneficiary designated on a Company-approved form. Notwithstanding the foregoing, the Committee, in its sole discretion, may permit you to assign or transfer the Option, subject to such terms and conditions as specified by the Committee.

7.Withholding Taxes.As a condition to the exercise of any portion of an Option, you must make such arrangements as the Company may require for the satisfaction of any federal, state, provincial, local or foreign withholding tax obligations that may arise in connection with such exercise.

8. Option Not an Employment or Service Contract. Nothing in the Plan or this Agreement will be deemed to constitute an employment contract or confer or be deemed to confer any right for you to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate your employment or other service relationship at any time, with or without cause.

9.No Right to Damages. You will have no right to bring a claim or to receive damages if you are required to exercise the vested portion of the Option within three months (one year in the case of Retirement, Disability or death) of your Termination of Service or if any portion of the Option is cancelled or expires unexercised. The loss of existing or potential profit in the Option will not constitute an element of damages in the event of your Termination of Service for any reason even if the termination is in violation of an obligation of the Company or a Related Company to you.

10. Recovery of Compensation. In accordance with Section 17.6 of the Plan, the Option is subject to the requirements of (a) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder, (b) similar rules under the laws of any other jurisdiction, (c) any compensation recovery or clawback policies adopted by the Company to implement any such requirements or (d) any other compensation recovery or clawback policies as may be adopted from time to time by the Company, all to the extent determined by the Committee in its discretion to be applicable to you and/or required by applicable law.

11.Binding Effect. This Agreement will inure to the benefit of the successors and assigns of the Company and be binding upon you and your heirs, executors, administrators, successors and assigns.

12.Section 409A. Notwithstanding any provision of the Plan or this Agreement to the contrary, the Committee may, at any time and without your consent, modify the terms of the Option as it determines appropriate to avoid the imposition of interest or penalties under Section 409A; provided, however, that the Company makes no representations that the Option will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to the Option.

APPENDIX TO ZILLOW GROUP, INC. 2020 INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

(For Canadian Residents)

This Appendix includes country-specific terms that apply if you are residing and/or working in Canada. This Appendix is part of the Agreement. Unless otherwise provided below, capitalized terms not explicitly defined in this Appendix but defined in the Plan have the same definitions as in the Plan.

1. Method of Exercise. This provision supplements Section 4 of the Agreement:

Notwithstanding anything to the contrary in the Plan or the Agreement, you will not be permitted to pay the exercise price of the Option by tendering already owned shares of Class C Capital Stock.

2. Treatment upon Termination of Service. This provision supplements Section 5 of the Agreement.

For purposes of the Option, notwithstanding anything to the contrary in the Plan or the Agreement, and subject to any express minimum requirements pursuant to employment standards legislation (or any other applicable legislation) in the jurisdiction where you are employed, “Termination of Service” means the later of (a) the date you receive written notice of termination from or provide written notice of resignation to the Company or a Related Company, which date will not be extended by any notice period or period of pay in lieu of such notice that may be applicable to you, whether statutory, contractual or otherwise, and (b) the date you are no longer actively providing services to the Company or a Related Company (regardless of the reason for such cessation of employment and whether or not later found to be invalid or in breach of the employment laws in the jurisdiction where you are employed). For greater clarity, including with respect to Section 9 of the Agreement, you are not entitled to damages in lieu of loss of ongoing vesting or loss of unvested Options arising from the cessation of your employment, including, without limitation, during any period of payment in lieu of notice of termination that may be applicable to you and regardless of whether such period of pay in lieu of notice arises from statute, contract, or otherwise.

3. Canadian Tax Non-Qualified Security Designation. The Committee and the Company may, at any time and without your consent, designate any or all of the Shares that may be issued under the Option as non-qualified securities for purposes of the Income Tax Act (Canada).

4. Tax Reporting. You are required to report the value of any securities you hold, such as shares, stock options and restricted stock units, to Canada Revenue Agency in accordance with applicable tax laws.

EX-10.3

EXHIBIT 10.3

ZILLOW GROUP, INC.

2020 INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD NOTICE

Zillow Group, Inc. (the “Company”) hereby grants to you a Restricted Stock Unit Award (the “Award”). The Award is subject to all the terms and conditions set forth in this Restricted Stock Unit Award Notice (the “Award Notice”) and the Restricted Stock Unit Award Agreement (the “Award Agreement”) and the Zillow Group, Inc. 2020 Incentive Plan (the “Plan”), which are incorporated into the Award Notice in their entirety. Subject to the terms and conditions of the Award Notice and the Award Agreement, the Award will be settled in shares of the Company’s Class C Capital Stock upon vesting.

Participant:

Grant Number:

Grant Date:

Number of Restricted Stock Units Subject to Award (the “Units”):

Vesting Commencement Date:

Vesting Schedule (subject to continued employment or service):

Additional Terms/Acknowledgement: You acknowledge receipt of, and understand and agree to, the Award Notice, the Award Agreement and the Plan. You further acknowledge that as of the Grant Date, the Award Notice, the Award Agreement and the Plan set forth the entire understanding between you and the Company regarding the Award and supersede all prior oral and written agreements or other communications on the subject. The Award is hereby granted in full satisfaction of the Company’s obligations to grant such Award pursuant to any new hire offer letter, promotion letter, or other communication by the Company, if applicable.

Attachment

1. Restricted Stock Unit Award Agreement (including any appendices thereto)

ZILLOW GROUP, INC.

2020 INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

Pursuant to your Restricted Stock Unit Award Notice (the “Award Notice”) and this Restricted Stock Unit Award Agreement (together, this “AwardAgreement”), Zillow Group, Inc. (the “Company”) has granted to you a Restricted Stock Unit Award (the “Award”) under the Zillow Group, Inc. 2020 Incentive Plan (the “Plan”) for the number of Restricted Stock Units indicated in your Award Notice. Capitalized terms not explicitly defined in this Award Agreement but defined in the Plan have the same definitions as in the Plan.

The details of the Award are as follows:

1. Vesting

Subject to the terms of this Award Agreement, the Award will vest as set forth in the Award Notice (the “Vesting Schedule”). Restricted Stock Units that have vested and are no longer subject to forfeiture according to the Vesting Schedule are referred to herein as “Vested Units.” Restricted Stock Units that have not vested and remain subject to forfeiture under the Vesting Schedule are referred to herein as “Unvested Units.” The Unvested Units will vest (and to the extent so vested cease to be Unvested Units remaining subject to forfeiture) in accordance with the Vesting Schedule (the Unvested and Vested Units are collectively referred to herein as the “Units”).

As soon as practicable after Unvested Units become Vested Units, but not later than 60 days after vesting, the Company will settle the Vested Units by issuing to you, for each Vested Unit, one share of Class C Capital Stock. If a vesting date falls on a weekend or any other date on which the Nasdaq Stock Market (“NASDAQ”) is not open, affected Units will vest on the next following NASDAQ business day. The Award will terminate and the Unvested Units will be forfeited upon your Termination of Service as set forth in Section 2.

2. Termination of Service

Upon your Termination of Service for any reason, any portion of the Award that has not vested as provided in Section 1 will immediately be forfeited to the Company without payment of any consideration to you. You will have no further rights, and the Company will have no further obligations to you, with respect to such Unvested Units.

3. Securities Law Compliance

3.1 You represent and warrant that you have been furnished with a copy of the Plan and the plan summary for the Plan.

3.2 You hereby agree that you will in no event sell or distribute all or any part of the shares of Class C Capital Stock that you may receive pursuant to settlement of the Units (the “Shares”) unless (a) there is an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws covering any such transaction involving the Shares, or (b) the Company receives an opinion of your legal counsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration. You understand that the Company has no obligation to you to maintain any registration of the Shares with the Securities and Exchange Commission and has not represented to you that it will so maintain registration of the Shares. Any sale of Shares is also subject to the Company’s Insider Trading Policy.

3.3 You hereby agree to indemnify the Company and hold it harmless from and against any loss, claim or liability, including attorneys’ fees or legal expenses, incurred by the Company as a result of any breach by you of, or any inaccuracy in, any representation, warranty or statement made by you in this Award Agreement or the breach by you of any terms or conditions of this Award Agreement.

4. Transfer Restrictions

Units may not be sold, transferred, assigned, encumbered, pledged or otherwise disposed of, whether voluntarily or by operation of law.

5. No Rights as Shareholder

You will not have any voting, dividend or any other rights as a shareholder of the Company with respect to the Units.

6. Independent Tax Advice

You acknowledge that determining the actual tax consequences to you of receiving or disposing of the Units and the Shares may be complicated. These tax consequences will depend, in part, on your specific situation and may also depend on the resolution of currently uncertain tax law and other variables not within the control of the Company. You are aware that you should consult a competent and independent tax advisor for a full understanding of the specific tax consequences to you of receiving the Units and receiving or disposing of the Shares. Prior to executing the Award Notice, you either have consulted with a competent tax advisor independent of the Company to obtain tax advice concerning the receipt of the Units and the receipt or disposition of the Shares in light of your specific situation or you have had the opportunity to consult with such a tax advisor but chose not to do so.

7. Book Entry Registration of Shares

The Company will issue the Shares by registering the Shares in book entry form with the Company’s transfer agent in your name and any applicable restrictions will be noted in the records of the Company’s transfer agent and in the book entry system.

8. Withholding

8.1 You are ultimately responsible for all taxes owed in connection with the Award (e.g., upon vesting and/or upon receipt of the Shares), including any federal, state, provincial, local or foreign taxes of any kind required by law to be withheld by the Company or a Related Company in connection with the Award, including FICA or any other tax obligation (the “Tax Withholding Obligation”), regardless of any action the Company or any Related Company takes with respect to any such Tax Withholding Obligation. The Company makes no representation or undertaking regarding the adequacy of any tax withholding made in connection with the Award. The Company has no obligation to deliver Shares pursuant to the Award until you have satisfied the Tax Withholding Obligation.

8.2 In order to satisfy your obligations set forth in Section 8.1, you previously have or now hereby irrevocably appoint any brokerage firm acceptable to the Company for such purpose (the “Agent”) as your Agent, and authorize the Agent, to:

(a)	Sell on the open market at the then prevailing market price(s), on your behalf, as soon as practicable on or after the settlement date for any Vested Units, the minimum number of Shares (rounded up to the next whole number) sufficient to generate proceeds to cover the amount of any Tax Withholding Obligation and all applicable fees and commissions due to, or required to be collected by, the Agent;
(b)	Remit directly to the Company the cash amount necessary to cover the payment of such Tax Withholding Obligation, as of such date;
(c)	Retain the amount required to cover all applicable brokerage fees, commissions and other costs of sale due to, or required to be collected by, the Agent, relating directly to the sale of Shares referred to in clause (a) above; and
(d)	Remit any remaining funds to you.

Any prior written agreement by you to the foregoing terms with respect to the Units is referred to as the “Tax Withholding Agreement.” As of the date of execution of the Tax Withholding Agreement or the Award Notice, as applicable, you represent and warrant that you are not aware of any material nonpublic information with respect to the Company or any securities of the Company; are not subject to any legal, regulatory or contractual restriction that would prevent the Agent from conducting sales as provided herein; do not have, and will not attempt to exercise, authority, influence or control over any sales of Shares effected pursuant to this Section 8.2; and are entering into this Section 8.2 of this Award Agreement in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 (regarding trading of the Company’s securities on the basis of material nonpublic information) under the Exchange Act. It is the intent of the parties that this Section 8.2 comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and this Award Agreement will be interpreted to comply with the requirements of Rule 10b5-1(c) of the Exchange Act.

You understand that the Agent may effect sales as provided in clause (a) above jointly with sales for other employees of the Company and that the average price for executions resulting from bunched orders will be assigned to your account. You acknowledge that neither the Company nor the Agent is under any obligation to arrange for such sales at any particular price, and that the proceeds of any such sales may not be sufficient to satisfy your Tax Withholding Obligation. In addition, you acknowledge that it may not be possible to sell Shares as provided by this Section 8.2 due to (i) a legal or contractual restriction applicable to you or the Agent, (ii) a market disruption, or (iii) rules governing order execution priority on the NASDAQ Stock Market or other exchange where the Shares may be traded. In the event of the Agent’s inability to sell any Shares or that number of Shares sufficient to cover your personal tax withholding obligation, you will continue to be responsible for payment to the Company of all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld.

You acknowledge that regardless of any other term or condition of this Award Agreement, neither the Agent nor the Company will be liable to you for (a) special, indirect, punitive, exemplary, or consequential damages, or incidental losses or damages of any kind, or (b) any failure to perform or for any delay in performance that results from a cause or circumstance that is beyond the Agent’s reasonable control.

You hereby agree to execute and deliver to the Agent any other agreements or documents as the Agent or the Company reasonably deems necessary or appropriate to carry out the purposes and intent of this Section 8.2. The Agent is a third party beneficiary of this Section 8.2.

Notwithstanding the foregoing terms of this Section 8.2, if you are subject to “blackout trading periods” under the Company’s Insider Trading Policy, your agreement to the terms of this Section 8.2 (whether pursuant to a Tax Withholding Agreement or execution of the Award Notice, as applicable) will only be effective if you agree to the terms of this Section 8.2 at a time that is outside of a “blackout period.”

8.3 Notwithstanding the foregoing, to the maximum extent permitted by law, the Company has the right to retain without notice from Shares issuable under the Award or from salary or other amounts payable to you, a number of whole Shares or cash having a value sufficient to satisfy the Tax Withholding Obligation (which Shares may be withheld up to the applicable minimum required tax withholding rate or up to such other applicable rate permitted by the Company that avoids adverse treatment for financial accounting purposes).

8.4 Furthermore, you acknowledge that the Company (a) makes no representations or undertakings regarding the treatment of any Tax Withholding Obligations or tax treatment in connection with any aspect of the Award, including but not limited to, the grant, vesting, the issuance of Shares upon vesting, the subsequent sale of Shares acquired pursuant to the Award and the receipt of any dividends, and (b) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate your liability for Tax Withholding Obligations or achieve any particular tax result. Further, if you have become subject to tax in more than one jurisdiction, you acknowledge that the Company (or your employer, as applicable) may be required to withhold or account for Tax Withholding Obligations in more than one jurisdiction.

9. General Provisions

9.1 No Right to Damages. You will have no right to bring a claim or to receive damages if any portion of the Award is cancelled or expires unvested. The loss of existing or potential profit in the Award will not constitute an element of damages in the event of your Termination of Service for any reason even if the termination is in violation of an obligation of the Company or a Related Company to you.

9.2Recovery of Compensation. In accordance with Section 17.6 of the Plan, the Award is subject to the requirements of (a) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder, (b) similar rules under the laws of any other jurisdiction, (c) any compensation recovery or clawback policies adopted by the Company to implement any such requirements or (d) any other compensation recovery or clawback policies as may be adopted from time to time by the Company, all to the extent determined by the Committee in its discretion to be applicable to you and/or required by applicable law.

9.3Assignment. The Company may assign its rights under this Award Agreement at any time, whether or not such rights are then exercisable, to any person or entity selected by the Company’s Board of Directors.

9.4 No Waiver. No waiver of any provision of this Award Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.

9.5 Undertaking. You hereby agree to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either you or the Units pursuant to the express provisions of this Award Agreement.

9.6 Agreement Is Entire Contract. This Award Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof and supersede all prior oral or written agreements on the subject. This Award Agreement is made pursuant to the provisions of the Plan and will in all respects be construed in conformity with the express terms and provisions of the Plan.

9.7 Successors and Assigns. The provisions of this Award Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and you and your legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person will have become a party to this Award Agreement and agreed in writing to join herein and be bound by the terms and conditions hereof.

9.8 No Employment or Service Contract. Nothing in the Plan or this Award Agreement will be deemed to constitute an employment contract or confer or be deemed to confer any right for you to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate your employment or other service relationship at any time, with or without cause.

9.9 Section 409A Compliance. This Award and any Shares issuable thereunder are intended to qualify for an exemption from or comply with Section 409A of the Code. Notwithstanding any other provision in this Award Agreement and the Plan to the contrary, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but will not be required, to unilaterally amend or modify this Award Agreement so that the Award qualifies for exemption from or complies with Section 409A of the Code; provided, however, that the Company makes no representations that the Award will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to the Award. No provision of this Award Agreement will be interpreted or construed to transfer any liability for failure to comply with Section 409A of the Code from you or any other individual to the Company. By executing the Award Notice, you agree that you will be deemed to have waived any claim against the Company with respect to any such tax consequences.

APPENDIX TO ZILLOW GROUP, INC. 2020 INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

(For Canadian Residents)

This Appendix includes country-specific terms that apply if you are residing and/or working in Canada. This Appendix is part of the Award Agreement. Unless otherwise provided below, capitalized terms not explicitly defined in this Appendix but defined in the Plan have the same definitions as in the Plan.

1. Termination of Service. This provision supplements Section 2 of the Award Agreement.

For purposes of the Award, notwithstanding anything to the contrary in the Plan or the Award Agreement, and subject to any express minimum requirements pursuant to employment standards legislation (or any other applicable legislation) in the jurisdiction where you are employed, “Termination of Service” means the later of (a) the date you receive written notice of termination from or provide written notice of resignation to the Company or a Related Company, which date will not be extended by any notice period or period of pay in lieu of such notice that may be applicable to you, whether statutory, contractual or otherwise, and (b) the date you are no longer actively providing services to the Company or a Related Company (regardless of the reason for such cessation of employment and whether or not later found to be invalid or in breach of the employment laws in the jurisdiction where you are employed). For greater clarity, including with respect to Section 9.1 of the Award Agreement, you are not entitled to damages in lieu of loss of ongoing vesting or loss of Unvested Units arising from the cessation of your employment, including, without limitation, during any period of payment in lieu of notice of termination that may be applicable to you and regardless of whether such period of pay in lieu of notice arises from statute, contract, or otherwise.

2. Tax Reporting. You are required to report the value of any securities you hold, such as shares, stock options and restricted stock units, to Canada Revenue Agency in accordance with applicable tax laws.

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, Richard Barton, certify that:

1.I have reviewed this report on Form 10-Q of Zillow Group, Inc. for the fiscal quarter ended June 30, 2020;

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/ RICHARD BARTON
Name:	Richard Barton
Title:	Chief Executive Officer
Date:	August 6, 2020

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, Allen Parker, certify that:

1.I have reviewed this report on Form 10-Q of Zillow Group, Inc. for the fiscal quarter ended June 30, 2020;

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/ ALLEN PARKER
Name:	Allen Parker
Title:	Chief Financial Officer
Date:	August 6, 2020

EX-32.1

EXHIBIT 32.1

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 June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Barton, 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/ RICHARD BARTON
Name:	Richard Barton
Title:	Chief Executive Officer
Date:	August 6, 2020

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 June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Allen Parker, Chief Financial 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/ ALLEN PARKER
Name:	Allen Parker
Title:	Chief Financial Officer
Date:	August 6, 2020

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Cover Page - shares	6 Months Ended
	Jun. 30, 2020	Jul. 30, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-36853
Entity Registrant Name	ZILLOW GROUP, INC.
Entity Central Index Key	0001617640
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	47-1645716
Entity Address, Address Line One	1301 Second Avenue
Entity Address, Address Line Two	Floor 31
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98101
City Area Code	206
Local Phone Number	470-7000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Class A Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	ZG
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		60,002,842
Class B Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		6,217,447
Class C Capital Stock
Entity Information [Line Items]
Title of 12(b) Security	Class C Capital Stock, par value $0.0001 per share
Trading Symbol	Z
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		160,765,729

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 2,045,474	$ 1,141,263
Short-term investments	1,491,167	1,280,989
Accounts receivable, net of allowance for doubtful accounts of $2,282 and $4,522 at June 30, 2020 and December 31, 2019, respectively	66,878	67,005
Mortgage loans held for sale	75,021	36,507
Inventory	135,401	836,627
Prepaid expenses and other current assets	56,373	58,117
Restricted cash	33,620	89,646
Total current assets	3,903,934	3,510,154
Contract cost assets	47,747	45,209
Property and equipment, net	195,747	170,489
Right of use assets	199,422	212,153
Goodwill	1,984,907	1,984,907
Intangible assets, net	106,990	190,567
Other assets	11,041	18,494
Total assets	6,449,788	6,131,973
Current liabilities:
Accounts payable	14,307	8,343
Accrued expenses and other current liabilities	74,646	85,442
Accrued compensation and benefits	34,520	37,805
Borrowings under credit facilities	187,032	721,951
Deferred revenue	44,514	39,747
Lease liabilities, current portion	22,789	17,592
Convertible senior notes, current portion	9,637	9,637
Total current liabilities	387,445	920,517
Lease liabilities, net of current portion	214,752	220,445
Convertible senior notes, net of current portion	1,810,341	1,543,402
Deferred tax liabilities and other long-term liabilities	14,192	12,188
Total liabilities	2,426,730	2,696,552
Commitments and contingencies (Note 17)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized; no shares issued and outstanding	0	0
Additional paid-in capital	5,246,371	4,412,200
Accumulated other comprehensive income	1,525	340
Accumulated deficit	(1,224,861)	(977,140)
Total shareholders’ equity	4,023,058	3,435,421
Total liabilities and shareholders’ equity	6,449,788	6,131,973
Class A Common Stock
Shareholders’ equity:
Common stock/capital stock	6	6
Class B Common Stock
Shareholders’ equity:
Common stock/capital stock	1	1
Class C Capital Stock
Shareholders’ equity:
Common stock/capital stock	$ 16	$ 14

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Allowance for doubtful accounts	$ 2,282	$ 4,522
Preferred stock, par value (usd per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized (in shares)	30,000,000	30,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Class A Common Stock
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	1,245,000,000	1,245,000,000
Common stock, issued (in shares)	59,850,004	58,739,989
Common stock, outstanding (in shares)	59,850,004	58,739,989
Class B Common Stock
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	15,000,000	15,000,000
Common stock, issued (in shares)	6,217,447	6,217,447
Common stock, outstanding (in shares)	6,217,447	6,217,447
Class C Capital Stock
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	600,000,000	600,000,000
Common stock, issued (in shares)	159,974,485	144,109,419
Common stock, outstanding (in shares)	159,974,485	144,109,419

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 30, 2020		Jun. 30, 2019		Jun. 30, 2020	Jun. 30, 2019
Revenue:
Revenue		$ 768,352		$ 599,578		$ 1,894,173	$ 1,053,682
Cost of revenue (exclusive of amortization)
Cost of revenue		461,071	[1]	271,221	[1]	1,222,743	422,569
Sales and marketing		155,598		187,433		360,246	349,020
Technology and development		128,857		120,330		263,775	228,100
General and administrative		85,511		82,839		177,796	178,613
Impairment costs		0		0		76,800	0
Integration costs		0		293		0	645
Total costs and expenses		831,037		662,116		2,101,360	1,178,947
Loss from operations		(62,685)		(62,538)		(207,187)	(125,265)
Gain on partial extinguishment of 2021 Notes		6,391		0		6,391	0
Other income		10,115		9,458		19,708	18,626
Interest expense		(37,590)		(18,897)		(75,182)	(35,363)
Loss before income taxes		(83,769)		(71,977)		(256,270)	(142,002)
Income tax benefit (expense)		(679)		0		8,549	2,500
Net loss		$ (84,448)		$ (71,977)		$ (247,721)	$ (139,502)
Net loss per share - basic and diluted (usd per share)		$ (0.38)		$ (0.35)		$ (1.15)	$ (0.68)
Weighted-average shares outstanding - basic and diluted (in shares)		219,467		205,754		215,070	205,137
Amortization of website development costs and intangible assets included in technology and development		$ 13,100		$ 11,000		$ 24,900	$ 22,000
Technology and Development
Cost of revenue (exclusive of amortization)
Amortization of website development costs and intangible assets included in technology and development	[1]	18,857		14,656		36,041	29,056
Homes
Revenue:
Revenue		454,252		248,924		1,224,125	377,396
Cost of revenue (exclusive of amortization)
Cost of revenue		431,788	[1]	240,732	[1]	1,163,987	363,151
Sales and marketing		47,877		37,409		119,466	58,271
Technology and development		28,918		18,198		61,456	30,479
General and administrative		21,902		17,808		45,323	32,165
Impairment costs						0	0
Integration costs		0		0		0	0
Total costs and expenses		530,485		314,147		1,390,232	484,066
Loss from operations		(76,233)		(65,223)		(166,107)	(106,670)
Other income		0		0		0	0
Interest expense		(3,825)		(5,899)		(11,909)	(9,657)
Loss before income taxes		(80,058)		(71,122)		(178,016)	(116,327)
IMT
Revenue:
Revenue		280,339		323,669		611,005	621,941
Cost of revenue (exclusive of amortization)
Cost of revenue		23,387	[1]	26,059	[1]	47,705	50,310
Sales and marketing		96,026		135,440		216,199	262,094
Technology and development		93,176		94,261		188,204	182,230
General and administrative		53,884		54,671		112,638	125,521
Impairment costs						73,900	0
Integration costs		0		0		0	0
Total costs and expenses		266,473		310,431		638,646	620,155
Loss from operations		13,866		13,238		(27,641)	1,786
Other income		5,300		0		5,300	0
Interest expense		0		0		0	0
Loss before income taxes		19,166		13,238		(22,341)	1,786
Mortgages Segment
Revenue:
Revenue		33,761		26,985		59,043	54,345
Cost of revenue (exclusive of amortization)
Cost of revenue		5,896	[1]	4,430	[1]	11,051	9,108
Sales and marketing		11,695		14,584		24,581	28,655
Technology and development		6,763		7,871		14,115	15,391
General and administrative		9,725		10,360		19,835	20,927
Impairment costs						2,900	0
Integration costs		0		293		0	645
Total costs and expenses		34,079		37,538		72,482	74,726
Loss from operations		(318)		(10,553)		(13,439)	(20,381)
Other income		385		402		587	715
Interest expense		(307)		(287)		(533)	(388)
Loss before income taxes		$ (240)		$ (10,438)		$ (13,385)	$ (20,054)

[1] Amortization of website development costs and intangible assets included in technology and development of $18,857 and $14,656 for the three months ended June 30, 2020 and 2019, respectively and $36,041 and $29,056 for the six months ended June 30, 2020 and 2019, respectively.

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Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (84,448)	$ (71,977)	$ (247,721)	$ (139,502)
Other comprehensive income (loss):
Unrealized gains (losses) on investments	(2,806)	751	796	1,895
Reclassification adjustment for net investment (gains) losses included in net loss	(62)	0	372	0
Net unrealized gains (losses) on investments	(2,868)	751	1,168	1,895
Currency translation adjustments	107	(52)	17	(94)
Total other comprehensive income (loss)	(2,761)	699	1,185	1,801
Comprehensive loss	$ (87,209)	$ (71,278)	$ (246,536)	$ (137,701)

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Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Class A Common Stock, Class B Common Stock and Class C Capital Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income
Beginning Balance at Dec. 31, 2018	$ 3,267,179	$ 21	$ 3,939,842	$ (671,779)	$ (905)
Beginning Balance (in shares) at Dec. 31, 2018		203,904,265
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	32,997		32,997
Issuance of common and capital stock upon exercise of stock options (in shares)		1,543,850
Vesting of restricted stock units (in shares)		1,065,607
Shares and value of restricted stock units withheld for tax liability	(3)		(3)
Shares and value of restricted stock units withheld for tax liability (in shares)		(86)
Share-based compensation expense	115,634		115,634
Net loss	(139,502)			(139,502)
Other comprehensive income (loss)	1,801				1,801
Ending Balance at Jun. 30, 2019	3,278,106	$ 21	4,088,470	(811,281)	896
Ending Balance (in shares) at Jun. 30, 2019		206,513,636
Beginning Balance at Mar. 31, 2019	3,283,132	$ 21	4,022,218	(739,304)	197
Beginning Balance (in shares) at Mar. 31, 2019		205,130,332
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	19,433		19,433
Issuance of common and capital stock upon exercise of stock options (in shares)		814,062
Vesting of restricted stock units (in shares)		569,260
Shares and value of restricted stock units withheld for tax liability	(1)		(1)
Shares and value of restricted stock units withheld for tax liability (in shares)		(18)
Share-based compensation expense	46,820		46,820
Net loss	(71,977)			(71,977)
Other comprehensive income (loss)	699				699
Ending Balance at Jun. 30, 2019	3,278,106	$ 21	4,088,470	(811,281)	896
Ending Balance (in shares) at Jun. 30, 2019		206,513,636
Beginning Balance at Dec. 31, 2019	3,435,421	$ 21	4,412,200	(977,140)	340
Beginning Balance (in shares) at Dec. 31, 2019		209,066,855
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	$ 184,985	$ 1	184,984
Issuance of common and capital stock upon exercise of stock options (in shares)	6,324,858	6,324,858
Vesting of restricted stock units (in shares)		1,414,158
Shares and value of restricted stock units withheld for tax liability	$ 0		0
Shares and value of restricted stock units withheld for tax liability (in shares)		(6)
Share-based compensation expense	104,636		104,636
Issuance of Class C capital stock in connection with equity offering, net of issuance costs	411,523	$ 1	411,522
Issuance of Class C capital stock in connection with equity offering, net of issuance costs (in shares)		8,800,000
Equity component of issuance of 2025 Notes, net of issuance costs	154,813		154,813
Partial repurchase of 2021 Notes	(21,784)		(21,784)
Partial repurchase of 2021 Notes (in shares)		753,936
Partial unwind of capped call transactions (in shares)		(317,865)
Net loss	(247,721)			(247,721)
Other comprehensive income (loss)	1,185				1,185
Ending Balance at Jun. 30, 2020	4,023,058	$ 23	5,246,371	(1,224,861)	1,525
Ending Balance (in shares) at Jun. 30, 2020		226,041,936
Beginning Balance at Mar. 31, 2020	3,415,761	$ 22	4,551,866	(1,140,413)	4,286
Beginning Balance (in shares) at Mar. 31, 2020		212,913,139
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	92,783		92,783
Issuance of common and capital stock upon exercise of stock options (in shares)		3,117,483
Vesting of restricted stock units (in shares)		775,249
Shares and value of restricted stock units withheld for tax liability (in shares)		(6)
Share-based compensation expense	57,171		57,171
Issuance of Class C capital stock in connection with equity offering, net of issuance costs	411,523	$ 1	411,522
Issuance of Class C capital stock in connection with equity offering, net of issuance costs (in shares)		8,800,000
Equity component of issuance of 2025 Notes, net of issuance costs	154,813		154,813
Partial repurchase of 2021 Notes	(21,784)		(21,784)
Partial repurchase of 2021 Notes (in shares)		753,936
Partial unwind of capped call transactions (in shares)		(317,865)
Net loss	(84,448)			(84,448)
Other comprehensive income (loss)	(2,761)				(2,761)
Ending Balance at Jun. 30, 2020	$ 4,023,058	$ 23	$ 5,246,371	$ (1,224,861)	$ 1,525
Ending Balance (in shares) at Jun. 30, 2020		226,041,936

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Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)
Statement of Stockholders' Equity [Abstract]
Capital stock, issuance costs	$ 10,877	$ 10,877
Senior notes, issuance costs	$ 3,279	$ 3,279

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating activities
Net loss	$ (247,721)	$ (139,502)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	55,199	41,728
Share-based compensation expense	96,146	109,756
Amortization of right of use assets	12,731	10,572
Amortization of contract cost assets	17,070	17,880
Amortization of discount and issuance costs on convertible senior notes maturing in 2021, 2023, 2024, 2025 and 2026	47,746	17,799
Gain on partial extinguishment of 2021 Notes	(6,391)	0
Impairment costs	76,800	0
Deferred income taxes	(8,549)	(2,500)
(Gain) loss on disposal of property and equipment and other assets	(2,658)	3,878
Credit loss expense	1,614	706
Net loss on investment securities	372	0
Accretion of bond discount	(303)	(3,695)
Changes in operating assets and liabilities:
Accounts receivable	(1,487)	(16,884)
Mortgage loans held for sale	(38,514)	(3,244)
Inventory	701,145	(389,994)
Prepaid expenses and other assets	(771)	(2,015)
Lease liabilities	(495)	(11,946)
Contract cost assets	(19,608)	(18,332)
Accounts payable	7,504	1,256
Accrued expenses and other current liabilities	(8,741)	6,952
Accrued compensation and benefits	(3,285)	613
Deferred revenue	4,767	3,000
Other long-term liabilities	10,049	149
Net cash provided by (used in) operating activities	692,620	(373,823)
Investing activities
Proceeds from maturities of investments	701,266	539,312
Proceeds from sales of investments	116,394	0
Purchases of investments	(1,026,233)	(302,891)
Purchases of property and equipment	(54,653)	(29,672)
Purchases of intangible assets	(11,408)	(8,927)
Proceeds from sale of equity investment	10,000	0
Net cash provided by (used in) investing activities	(264,634)	197,822
Financing activities
Proceeds from issuance of 2025 Notes, net of issuance costs	553,282	0
Proceeds from Issuance of Common Stock	411,522	0
Partial extinguishment of 2021 Notes	(194,670)	0
Proceeds from borrowings on credit facilities	43,200	293,099
Repayments of borrowings on credit facilities	(617,506)	0
Net borrowings (repayments) on warehouse lines of credit and repurchase agreement	39,387	(2,961)
Proceeds from exercise of stock options	184,984	32,997
Value of equity awards withheld for tax liability	0	3
Net cash provided by financing activities	420,199	323,138
Net increase in cash, cash equivalents and restricted cash during period	848,185	147,137
Cash, cash equivalents and restricted cash at beginning of period	1,230,909	663,443
Cash, cash equivalents and restricted cash at end of period	2,079,094	810,580
Supplemental disclosures of cash flow information
Cash paid for interest	29,201	16,616
Noncash transactions:
Capitalized share-based compensation	8,490	5,878
Write-off of fully depreciated property and equipment	6,942	9,867
Write-off of fully amortized intangible assets	0	3,311
Property and equipment purchased on account	$ 5,305	$ 2,408

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Organization and Description of Business

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Organization and Description of Business

Organization and Description of Business

Zillow Group, Inc., the largest portfolio of real estate brands on mobile and the web, is building a trusted, on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to the Zillow family of businesses to find and get into their next home with speed, certainty and ease.

In addition to Zillow’s for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Closing Services offers customers title and escrow services to support a more seamless transaction experience. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions which include Mortech, dotloop, Bridge Interactive and New Home Feed. Zillow, Inc. was incorporated as a Washington corporation in December 2004, and we launched the initial version of our website, Zillow.com, in February 2006. Zillow Group, Inc. was incorporated as a Washington corporation in July 2014 in connection with our acquisition of Trulia, Inc. (“Trulia”). Upon the closing of the Trulia acquisition in February 2015, each of Zillow, Inc. and Trulia became wholly owned subsidiaries of Zillow Group.

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: public health crises, like the COVID-19 pandemic; rates of revenue growth; our ability to manage advertising inventory or pricing; engagement and usage of our products; our investment of resources to pursue strategies that may not prove effective; competition in our market; the stability of the residential real estate market and the impact of interest rate changes; changes in technology, products, markets or services by us or our competitors; addition or loss of significant customers; our ability to maintain or establish relationships with listings and data providers; our ability to obtain or maintain licenses and permits to support our current and future businesses; actual or anticipated changes to our products and services; changes in government regulation affecting our business; outcomes of legal proceedings; natural disasters and catastrophic events; scaling and adaptation of existing technology and network infrastructure; management of our growth; our ability to attract and retain qualified employees and key personnel; our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; protection of customers’ information and other privacy concerns; protection of our brand and intellectual property; and intellectual property infringement and other claims, among other things.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All 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 included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 19, 2020. The condensed consolidated balance sheet as of December 31, 2019, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

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 June 30, 2020, our results of operations, comprehensive loss and shareholders’ equity for the three and six month periods ended June 30, 2020 and 2019, and our cash flows for the six month periods ended June 30, 2020 and 2019. The results of the three and six month periods ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 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 the net realizable value of inventory, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and the recoverability of 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. The COVID-19 pandemic has introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed, among others.

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We expect to apply some of the expedients and exceptions provided in this guidance to our credit facilities, warehouse line of credit and master repurchase agreement, all of which reference LIBOR in the applicable interest rate. While the goal of the reference rate reform transition is for it to be economically neutral to entities, we have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

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 — The fair value measurement of money market funds is based on quoted market prices in active markets. The fair value measurement of treasury bills are based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Short-term investments — The fair value measurement of our short-term investments 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.

Restricted cash — Restricted cash consists of cash received from the resale of homes through Zillow Offers which may be used to repay amounts borrowed on our credit facilities (see Note 12) and amounts held in escrow related to funding home purchases in our mortgage origination business. The carrying value of restricted cash approximates fair value due to the short period of time amounts borrowed on the credit facilities are outstanding and amounts are held in escrow.

Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics.

Interest rate lock commitments — The fair value of interest rate lock commitments (“IRLCs”) is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. We generally only issue IRLCs for products that meet specific purchaser guidelines. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close. This adjustment is effected through the pull-through rate, which represents the probability that an interest rate lock commitment will ultimately result in a closed loan.

The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our condensed consolidated statements of operations.

The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the periods presented:

	June 30, 2020	December 31, 2019
Range	40% - 100%	56% - 100%
Weighted average	70%	78%

Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as economic hedging instruments are calculated by reference to quoted prices for similar assets.

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

	June 30, 2020
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,784,896	$	1,784,896	$	—	$	—
Treasury bills	70,189		—		70,189		—
Short-term investments:
Treasury bills	963,231		—		963,231		—
U.S. government agency securities	465,715		—		465,715		—
Corporate notes and bonds	30,213		—		30,213		—
Municipal securities	16,538		—		16,538		—
Commercial paper	14,972		—		14,972		—
Certificates of deposit	498		—		498		—
Mortgage origination-related:
Mortgage loans held for sale	75,021		—		75,021		—
IRLCs	5,091		—		—		5,091
Forward contracts - other current liabilities	961		—		961		—
Total	$	3,427,325	$	1,784,896	$	1,637,338	$	5,091

	December 31, 2019
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	872,431	$	872,431	$	—
U.S. government agency securities	35,009		—		35,009
Commercial paper	31,113		—		31,113
Treasury bills	6,441		—		6,441
Corporate notes and bonds	1,065		—		1,065
Certificates of deposit	249		—		249
Short-term investments:
U.S. government agency securities	862,154		—		862,154
Corporate notes and bonds	159,431		—		159,431
Commercial paper	150,267		—		150,267
Treasury bills	80,003		—		80,003
Municipal securities	27,889		—		27,889
Certificates of deposit	1,245		—		1,245
Mortgage origination-related:
Mortgage loans held for sale	36,507		—		36,507
IRLCs	937		—		937
Forward contracts - other current assets	7		—		7
Forward contracts - other current liabilities	(60)		—		(60)
Total	$	2,264,688	$	872,431	$	1,392,257

The following table presents the changes in our IRLCs during the three and six month periods ended June 30, 2020 (in thousands):

	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020 (1)
Balance, beginning of the period	$	2,225	$	937
Issuances	10,142		15,507
Transfers	(8,586)		(13,142)
Fair value changes recognized in earnings	1,310		1,789
Balance, end of period	$	5,091	$	5,091
(1) Beginning balance represents transfers of IRLCs from Level 2 to Level 3 within the fair value hierarchy as of January 1, 2020.

At June 30, 2020, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $168.9 million and $214.9 million for our IRLCs and forward contracts, respectively. At December 31, 2019, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $34.3 million and $64.7 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 12 for the carrying amount and estimated fair value of our convertible senior notes.

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Cash and Cash Equivalents, Short-term Investments and Restricted Cash

6 Months Ended

Jun. 30, 2020

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents, Short-term Investments and Restricted Cash

Cash and Cash Equivalents, Short-term 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):

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	190,389	$	—	$	—	$	190,389
Cash equivalents:
Money market funds	1,784,896		—		—		1,784,896
Treasury bills	70,189		—		—		70,189
Short-term investments:
Treasury bills	963,200		41		(10)		963,231
U.S. government agency securities	463,806		1,909		—		465,715
Corporate notes and bonds	30,094		119		—		30,213
Municipal securities	16,519		19		—		16,538
Commercial paper	14,972		—		—		14,972
Certificates of deposit	498		—		—		498
Restricted cash	33,620		—		—		33,620
Total	$	3,568,183	$	2,088	$	(10)	$	3,570,261

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	194,955	$	—	$	—	$	194,955
Cash equivalents:
Money market funds	872,431		—		—		872,431
U.S. government agency securities	35,011		—		(2)		35,009
Commercial paper	31,113		—		—		31,113
Treasury bills	6,441		—		—		6,441
Corporate notes and bonds	1,065		—		—		1,065
Certificates of deposit	249		—		—		249
Short-term investments:
U.S. government agency securities	861,862		365		(73)		862,154
Corporate notes and bonds	159,382		91		(42)		159,431
Commercial paper	150,267		—		—		150,267
Treasury bills	79,989		14		—		80,003
Municipal securities	27,836		56		(3)		27,889
Certificates of deposit	1,245		—		—		1,245
Restricted cash	89,646		—		—		89,646
Total	$	2,511,492	$	526	$	(120)	$	2,511,898

All available-for-sale investments as of June 30, 2020 have a contractual maturity date of one year or less.

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Accounts Receivable, net

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Accounts Receivable, net

Accounts Receivable, net

The following table presents the changes in the allowance for doubtful accounts for the six months ended June 30, 2020 (in thousands):

Balance as of January 1, 2020	$	4,522
Credit loss expense	1,614
Less: write-offs, net of recoveries and other adjustments	(3,854)
Balance as of June 30, 2020	$	2,282

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Inventory

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventory

Inventory

The following table presents the components of inventory, net of applicable lower of cost or net realizable value adjustments, as of the dates presented (in thousands):

	June 30, 2020		December 31, 2019
Work-in-process	$	12,164	$	152,171
Finished goods	123,237		684,456
Inventory	$	135,401	$	836,627

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Contract Cost Assets

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Contract Cost Assets

Contract Cost AssetsDuring the three and six month periods ended June 30, 2020 and 2019, we did not incur any impairment losses to our contract cost assets. We recorded amortization expense related to contract cost assets of $8.7 million and $9.2 million during the three months ended June 30, 2020 and 2019, respectively, and $17.1 million and $17.9 million during the six months ended June 30, 2020 and 2019, respectively.Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2020
Balance as of April 1, 2020	$	35,347
Deferral of revenue	222,895
Less: Revenue recognized	(213,728)
Balance as of June 30, 2020	$	44,514

	Six Months Ended June 30, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	476,624
Less: Revenue recognized	(471,857)
Balance as of June 30, 2020	$	44,514

During the three months ended June 30, 2020 we recognized as revenue a total of $33.8 million pertaining to amounts that were recorded in deferred revenue as of April 1, 2020. During the six months ended June 30, 2020 we recognized as revenue a total of $36.6 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2020.

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Property and Equipment, net

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

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

	June 30, 2020		December 31, 2019
Website development costs	$	157,468	$	149,648
Leasehold improvements	107,139		81,981
Construction-in-progress	51,482		45,337
Office equipment, furniture and fixtures	42,236		36,582
Computer equipment	31,801		31,942
Property and equipment	390,126		345,490
Less: accumulated amortization and depreciation	(194,379)		(175,001)
Property and equipment, net	$	195,747	$	170,489

We recorded depreciation expense related to property and equipment (other than website development costs) of $7.1 million and $6.4 million during the three months ended June 30, 2020 and 2019, respectively, and $18.9 million and $12.4 million during the six months ended June 30, 2020 and 2019, respectively.

We capitalized $15.4 million and $10.3 million in website development costs during the three months ended June 30, 2020 and 2019, respectively, and $27.9 million and $20.3 million during the six months ended June 30, 2020 and 2019, respectively. Amortization expense for website development costs included in technology and development expenses was $6.0 million and $3.6 million during the three months ended June 30, 2020 and 2019, respectively, and $11.4 million and $7.0 million during the six months ended June 30, 2020 and 2019, respectively.

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Equity Investment	6 Months Ended
	Jun. 30, 2020
Equity Method Investments and Joint Ventures [Abstract]
Equity Investment	Equity InvestmentIn October 2016, we purchased a 10% equity interest in a privately held variable interest entity within the real estate industry for $10.0 million. In March 2020, we recognized a non-cash impairment charge of $5.3 million related to this investment. The impairment charge is included in Impairment costs within our IMT segment for the six months ended June 30, 2020. In connection with our assessment of the investment for impairment indicators as a result of COVID-19’s significant adverse impact on the real estate industry, we identified factors that led us to conclude that the investment was impaired and the fair value of the investment was less than the carrying value. The most significant of such factors related to the future expected cash flows of the investee. Accordingly, we performed an analysis to determine the fair value of the investment and concluded that our best estimate of its fair value was $4.7 million. In June 2020, we sold our 10% equity interest for $10.0 million in cash. We recorded a gain on the sale of the investment of $5.3 million for the three and six month periods ended June 30, 2020 which is classified within Other income in our condensed consolidated statements of operations.

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Intangible Assets, net

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, net

Intangible Assets, net

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

	June 30, 2020
	Cost		Accumulated Amortization		Net
Trade names and trademarks	$	36,500	$	(1,274)	$	35,226
Customer relationships	102,600		(81,372)		21,228
Developed technology	107,200		(87,340)		19,860
Software	40,744		(25,031)		15,713
Intangibles-in-progress	10,054		—		10,054
Purchased content	50,552		(45,726)		4,826
Lender licenses	400		(317)		83
Total	$	348,050	$	(241,060)	$	106,990

	December 31, 2019
	Cost		Accumulated Amortization		Net
Customer relationships	$	102,600	$	(73,770)	$	28,830
Developed technology	107,200		(81,383)		25,817
Software	35,527		(20,843)		14,684
Purchased content	47,298		(40,636)		6,662
Intangibles-in-progress	6,391		—		6,391
Lender licenses	400		(217)		183
Total	$	299,416	$	(216,849)	$	82,567

Amortization expense recorded for intangible assets for the three months ended June 30, 2020 and 2019 was $13.1 million and $11.0 million, respectively, and $24.9 million and $22.0 million for the six months ended June 30, 2020 and 2019, respectively. These amounts are included in technology and development expenses.

During March 2020, we recognized a non-cash impairment charge of $71.5 million related to our Trulia trade names and trademarks intangible asset, which historically had not been subject to amortization. The impairment charge is included in Impairment costs within our IMT and Mortgages segments for the six months ended June 30, 2020. In March 2020, we identified factors directly related to the COVID-19 pandemic that led us to conclude it was more likely than not that the $108.0 million carrying value of the asset exceeded its fair value. The most significant of such factors was a shortfall in projected revenue related to the Trulia brand compared to previous projections used to determine the carrying value of the intangible asset, primarily driven by a reduction in expected future marketing and advertising spend for Trulia. Accordingly, with the assistance of a third-party valuation specialist, we performed a quantitative analysis to determine the fair value of the intangible asset and concluded that our best estimate of its fair value was $36.5 million. The valuation was prepared using an income approach based on the relief-from-royalty method and relied on inputs with unobservable market prices including projected revenue, royalty rate, discount rate, and estimated tax rate, and therefore is considered a Level 3 measurement under the fair value hierarchy. In connection with this impairment analysis, we evaluated our expected future reduced marketing and advertising spend related to the Trulia trade names and trademarks intangible asset and concluded that this asset no longer has an indefinite life. During the three months ended June 30, 2020 we began amortizing the remaining $36.5 million carrying value on an accelerated basis commensurate with the projected cash flows expected to be generated by the intangible asset over a useful life of 10 years. The carrying value of the Trulia trade names and trademarks intangible asset was $35.2 million as of June 30, 2020 and $108.0 million as of December 31, 2019.

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Deferred Revenue

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Deferred Revenue

Contract Cost AssetsDuring the three and six month periods ended June 30, 2020 and 2019, we did not incur any impairment losses to our contract cost assets. We recorded amortization expense related to contract cost assets of $8.7 million and $9.2 million during the three months ended June 30, 2020 and 2019, respectively, and $17.1 million and $17.9 million during the six months ended June 30, 2020 and 2019, respectively.Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2020
Balance as of April 1, 2020	$	35,347
Deferral of revenue	222,895
Less: Revenue recognized	(213,728)
Balance as of June 30, 2020	$	44,514

	Six Months Ended June 30, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	476,624
Less: Revenue recognized	(471,857)
Balance as of June 30, 2020	$	44,514

During the three months ended June 30, 2020 we recognized as revenue a total of $33.8 million pertaining to amounts that were recorded in deferred revenue as of April 1, 2020. During the six months ended June 30, 2020 we recognized as revenue a total of $36.6 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2020.

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Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt

Debt

The following table presents the carrying values of Zillow Group’s debt as of the periods presented (in thousands):

	June 30, 2020		December 31, 2019
Homes Segment
Credit facilities:
Goldman Sachs Bank USA	$	19,632	$	39,244
Citibank, N.A.	33,037		296,369
Credit Suisse AG, Cayman Islands	64,549		355,911
Total Homes Segment debt	117,218		691,524
Mortgages Segment
Repurchase agreement:
Citibank, N.A.	33,918		394
Warehouse line of credit:
Comerica Bank	35,896		30,033
Total Mortgages Segment debt	69,814		30,427
Convertible Senior Notes
1.375% convertible senior notes due 2026	337,171		327,187
2.75% convertible senior notes due 2025	401,786		—
0.75% convertible senior notes due 2024	507,039		490,538
1.50% convertible senior notes due 2023	318,348		310,175
2.00% convertible senior notes due 2021	245,997		415,502
2.75% convertible senior notes due 2020	9,637		9,637
Total convertible senior notes	1,819,978		1,553,039
Total	$	2,007,010	$	2,274,990

Homes Segment

To provide capital for Zillow Offers, we utilize credit facilities that are classified as current liabilities in our condensed consolidated balance sheets. We classify these credit facilities as current liabilities as amounts drawn to purchase homes are typically repaid as homes are sold, which we expect to be within one year. The following table summarizes certain details related to our credit facilities (in thousands, except interest rates):

Lender	Final Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Goldman Sachs Bank USA	April 20, 2022	$	500,000	3.91	%
Citibank, N.A.	January 31, 2022	500,000		4.69	%
Credit Suisse AG, Cayman Islands	July 31, 2021	500,000		4.62	%
	Total	$	1,500,000

Undrawn amounts available under the credit facilities included in the table above are not committed, meaning the applicable lender is not committed to, but may in its discretion, advance loan funds in excess of the outstanding borrowings. The final maturity dates are inclusive of extensions which are subject to agreement by the respective lender.

Zillow Group formed certain special purpose entities (each, an “SPE”) to purchase and sell residential properties through Zillow Offers. Each SPE is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such SPE are available to satisfy the debts and other obligations of any affiliate or other entity. The credit facilities are secured by the assets and equity of one or more SPEs. These SPEs are variable interest entities and Zillow Group is the primary beneficiary as it has the power to control the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses of the SPEs or the right to receive benefits from the SPEs that could potentially be significant to the SPEs. The SPEs are consolidated within Zillow Group’s condensed consolidated financial statements. The collective inventory and credit facility borrowings of the SPEs were $135.4 million and $117.2 million, respectively, as of June 30, 2020, and $836.6 million and $691.5 million, respectively, as of December 31, 2019.

Outstanding amounts drawn under each credit facility are required to be repaid on the facility maturity date or earlier if accelerated due to an event of default. Further, each SPE is required to repay any resulting shortfall if the value of the eligible properties owned by such SPE falls below a certain percentage of the principal amount outstanding under the applicable credit facility. Continued inclusion of properties in each credit facility is subject to various eligibility criteria. For example, aging criteria limit the inclusion in the borrowing base of properties owned longer than a specified number of days, and properties owned for longer than one year are generally ineligible.

The stated interest rate on our credit facilities is one-month LIBOR plus an applicable margin as defined in the respective credit agreements. Our credit facilities include customary representations and warranties, provisions regarding events of default and covenants. The terms of these credit facilities and related financing documents require Zillow Group and certain of its subsidiaries, as applicable, to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth and leverage ratios. As of June 30, 2020, Zillow Group was in compliance with all financial covenants and no event of default had occurred. Except for certain limited circumstances, the credit facilities are non-recourse to Zillow Group. Our credit facilities require that we establish, maintain and in certain circumstances that Zillow Group fund specified reserve accounts. These reserve accounts include, but are not limited to, interest reserves, insurance reserves, tax reserves, renovation cost reserves and reserves for specially permitted liens. Amounts funded to these reserve accounts and the collection accounts have been classified within our condensed consolidated balance sheets as restricted cash.

Mortgages Segment

To provide capital for Zillow Home Loans, we utilize a warehouse line of credit and a master repurchase agreement which are classified as current liabilities in our condensed consolidated balance sheets. The warehouse line of credit and repurchase agreement provide short-term financing between the issuance of a mortgage loan and when Zillow Home Loans sells the loan to an investor. The following table summarizes certain details related to our warehouse line of credit and repurchase agreement (in thousands, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Citibank, N.A.	October 27, 2020	$	75,000	1.88	%
Comerica Bank	June 26, 2021	50,000		2.81	%
	Total	$	125,000

On June 27, 2020, Zillow Home Loans amended its warehouse line of credit with Comerica Bank previously maturing on June 27, 2020 to extend the term of the original agreement for one year through June 26, 2021.

The warehouse line of credit with Comerica Bank is committed. The repurchase agreement with Citibank, N.A. includes a committed amount of $25.0 million. As of June 30, 2020 and December 31, 2019, $33.9 million and $0.4 million, respectively, in mortgage loans held for sale were pledged as collateral under the facility.

Borrowings on the warehouse line of credit and repurchase agreement bear interest at the one-month LIBOR plus an applicable margin, and in certain cases include a LIBOR floor, as defined in the governing agreements, and are secured by residential mortgage loans held for sale. The repurchase agreement contains margin call provisions that provide Citibank, N.A. with certain rights in the event of a decline in the market value of the assets purchased under the repurchase agreement.

The warehouse line of credit and repurchase agreement include customary representations and warranties, covenants and provisions regarding events of default. As of June 30, 2020, Zillow Home Loans was in compliance with all financial covenants and no event of default had occurred. The warehouse line of credit and repurchase agreement are recourse to Zillow Home Loans, and have no recourse to Zillow Group or any of its other subsidiaries.

For additional details related to our warehouse line of credit and repurchase agreement, see Note 15 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Convertible Senior Notes

The following tables summarize certain details related to our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

									June 30, 2020				December 31, 2019
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		First Interest Payment Date	Semi-Annual Interest Payment Dates	Unamortized Debt Discount and Debt Issuance Costs		Fair Value		Unamortized Debt Discount and Debt Issuance Costs		Fair Value
September 1, 2026	$	500,000	1.375	%	8.10	%	March 1, 2020	March 1; September 1	$	162,829	$	705,000	$	172,813	$	597,380
May 15, 2025	565,000		2.75	%	10.32	%	November 15, 2020	May 15; November 15	163,214		659,756		—		—
September 1, 2024	673,000		0.75	%	7.68	%	March 1, 2020	March 1; September 1	165,961		957,659		182,462		819,378
July 1, 2023	373,750		1.50	%	6.99	%	January 1, 2019	January 1; July 1	55,402		388,113		63,575		356,464
December 1, 2021	265,330		2.00	%	7.43	%	June 1, 2017	June 1; December 1	19,333		326,688		44,498		514,312
December 15, 2020	9,637		2.75	%	N/A		N/A	June 15; December 15	—		16,842		—		16,842
Total	$	2,386,717							$	566,739	$	3,054,058	$	463,348	$	2,304,376

	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	1,719	$	4,922	$	120	$	6,761	$	—	$	—	$	—	$	—
May 15, 2025	2,007		3,148		168		5,323		—		—		—		—
September 1, 2024	1,262		8,095		278		9,635		—		—		—		—
July 1, 2023	1,402		3,749		366		5,517		1,402		3,496		342		5,240
December 1, 2021	1,803		3,945		408		6,156		2,300		4,677		484		7,461
December 15, 2020	66		—		—		66		66		—		—		66
Total	$	8,259	$	23,859	$	1,340	$	33,458	$	3,768	$	8,173	$	826	$	12,767

	Six Months Ended June 30, 2020								Six Months Ended June 30, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	3,438	$	9,746	$	238	$	13,422	$	—	$	—	$	—	$	—
May 15, 2025	2,007		3,148		168		5,323		—		—		—		—
September 1, 2024	2,510		15,956		545		19,011		—		—		—		—
July 1, 2023	2,804		7,446		727		10,977		2,804		6,933		678		10,415
December 1, 2021	4,103		8,856		916		13,875		4,600		9,268		959		14,827
December 15, 2020	132		—		—		132		132		—		—		132
Total	$	14,994	$	45,152	$	2,594	$	62,740	$	7,536	$	16,201	$	1,637	$	25,374

The convertible notes are senior unsecured obligations. The convertible senior notes maturing in 2026, 2025, 2024, 2023 and 2021 (the “Notes”) are classified as long-term debt based on their contractual maturity dates in our condensed consolidated balance sheets. The convertible senior notes maturing in 2020 are classified within current liabilities.

For more than 20 trading days during the 30 consecutive trading days ended June 30, 2020, the last reported sale price of our Class C capital stock exceeded 130% of the conversion price of the convertible senior notes due in 2024 and 2026 (the “2024 Notes” and “2026 Notes”, respectively). Accordingly, the 2024 Notes and 2026 Notes became convertible at the option of the holders from July 1 through September 30, 2020. The convertible senior notes maturing in 2025, 2023 and 2021 are not redeemable or convertible as of June 30, 2020. The convertible senior notes maturing in 2020 are convertible, at the option of the holder, and redeemable, at our option, as of June 30, 2020.

Interest on the convertible notes is paid semi-annually in arrears. The estimated fair value of the convertible senior notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for each of the convertible senior notes.

The Notes are convertible into cash, shares of Class C capital stock or a combination thereof, at our election, and may be settled as described below. The Notes will mature on their respective maturity date, unless earlier repurchased, redeemed or converted in accordance with their terms.

The following table summarizes the conversion and redemption options with respect to the Notes:

Maturity Date	Early Conversion Date	Conversion Rate	Conversion Price		Optional Redemption Date
September 1, 2026	March 1, 2026	22.9830	$	43.51	September 5, 2023
May 15, 2025	November 15, 2024	14.8810	67.20		May 22, 2023
September 1, 2024	March 1, 2024	22.9830	43.51		September 5, 2022
July 1, 2023	April 1, 2023	12.7592	78.37		July 6, 2021
December 1, 2021	September 1, 2021	19.0985	52.36		December 6, 2019

The following table summarizes certain details related to the capped call confirmations with respect to certain of the convertible senior notes:

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%
July 1, 2023	105.45		85	%
December 1, 2021	69.19		85	%

On May 15, 2020, we issued $500.0 million aggregate principal amount of 2.75% Convertible Senior Notes due 2025 (the “Initial 2025 Notes”) and on May 19, 2020 we issued $65.0 million aggregate principal amount of 2.75% Convertible Senior Notes due 2025 (the “Additional Notes” and, together with the Initial 2025 Notes, the “2025 Notes”). The Additional Notes were sold pursuant to the underwriters’ option to purchase additional 2025 Notes granted in connection with the offering of the Initial 2025 Notes.

The net proceeds from the issuance of the 2025 Notes were approximately $553.3 million, after deducting underwriting discounts and commissions and offering expenses paid by Zillow Group. We used a portion of the net proceeds from the issuance of the 2025 Notes to repurchase $194.7 million aggregate principal of the convertible senior notes due 2021 (the “2021 Notes”) in privately negotiated transactions. The 2021 Notes were repurchased for $194.7 million in cash and 753,936 shares of Class C capital stock for an aggregate purchase price of $230.9 million. The repurchase of the 2021 Notes was accounted for as a debt extinguishment. We allocated $172.9 million of the repurchase price to the liability component based on the fair value of the liability component immediately prior to settlement. The fair value of the liability component was calculated using a discounted cash flow analysis with a market interest rate of a similar liability that does not have an associated convertible feature. The remaining consideration of $58.0 million was allocated to the equity component. As a result, we recognized a $179.3 million reduction to long-term debt representing the carrying value of the liability component as of the date of the partial repurchase of the 2021 Notes, a $58.0 million reduction to additional paid-in capital representing the equity component of the partially repurchased 2021 Notes and a $6.4 million gain on partial extinguishment of 2021 Notes representing the excess of the carrying value of the liability component over the fair value of the liability component of the repurchased 2021 Notes.

In connection with the repurchase of a portion of the 2021 Notes, we partially terminated the capped call transactions entered into in connection with the issuance of the 2021 Notes for an amount corresponding to the aggregate principal amount of the 2021 Notes that were repurchased. As a result of the partial settlement of the capped call transactions, we received 317,865 shares of our Class C capital stock equal to a value of approximately $14.8 million based on the trading price of our Class C capital stock at the time of the unwind. Under applicable Washington State law, the acquisition of a corporation’s own shares is not disclosed separately as treasury stock in the financial statements and such shares are treated as authorized but unissued shares. We record acquisitions of our shares of capital stock as a reduction to capital stock at the par value of the shares reacquired, then to additional paid-in capital until it is depleted to a nominal amount, with any further excess recorded to retained earnings. We recorded an offsetting increase to additional paid-in capital for the partial unwind of the capped call transactions.

We intend to use the remainder of the net proceeds from the 2025 Notes for general corporate purposes, which may include general and administrative matters and capital expenditures.

Prior to the close of business on the business day immediately preceding November 15, 2024, the 2025 Notes are convertible at the option of the holders of the 2025 Notes only under certain conditions. On or after November 15, 2024, until the close of business on the second scheduled trading day immediately preceding May 15, 2025, holders of the 2025 Notes may convert the 2025 Notes at their option at the conversion rate then in effect, irrespective of these conditions. Zillow Group will settle conversions of the 2025 Notes by paying or delivering, as the case may be, cash, shares of its Class C capital stock, or a combination of cash and shares of its Class C capital stock, at its election. The conversion rate will initially be 14.8810 shares of Class C capital stock per $1,000 principal amount of 2025 Notes (equivalent to an initial conversion price of approximately $67.20 per share of Class C capital stock). The conversion rate and the corresponding initial conversion price are subject to customary adjustments upon the occurrence of certain events. Zillow Group may redeem for cash all or part of the 2025 Notes, at its option, on or after May 22, 2023, under certain circumstances, at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date (as defined in the indenture governing the 2025 Notes, the “Indenture”). We may not redeem the 2025 Notes prior to May 22, 2023. We may redeem, for cash, all or any portion of the 2025 Notes, at our option, on or after May 22, 2023 if the last reported sale price per share of our Class C capital 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. The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock.

If Zillow Group undergoes a fundamental change (as defined in the Indenture), holders of the 2025 Notes may require us to repurchase for cash all or part of their 2025 Notes at a repurchase price equal to 100% of the principal amount of the 2025 Notes to be purchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (as defined in the Indenture). In addition, if certain fundamental changes occur or if Zillow Group delivers a notice of redemption, we may be required, in certain circumstances, to increase the conversion rate for any 2025 Notes converted in connection with such fundamental changes or notice of redemption by a specified number of shares of our Class C capital stock. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2025 Notes, as described in the Indenture. There are no financial covenants associated with the 2025 Notes.

In accounting for the issuance of the 2025 Notes, we separated the 2025 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2025 Notes. The difference between the principal amount of the 2025 Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the condensed consolidated balance sheet and amortized to interest expense using the effective interest method over the term of the 2025 Notes. The equity component of the 2025 Notes of approximately $154.8 million, net of issuance costs of $3.3 million, is included in additional paid-in capital in the condensed consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification.

For additional details related to our convertible senior notes, see Note 15 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to federal and state income taxes in the United States and federal and provincial income taxes in Canada. As of June 30, 2020 and December 31, 2019, we have provided a valuation allowance against our net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized. Therefore, no material current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $1,137.6 million as of December 31, 2019, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $34.3 million (tax effected) as of December 31, 2019.

We recorded income tax expense of $0.7 million for the three months ended June 30, 2020 and an income tax benefit of $8.5 million for the six months ended June 30, 2020. The income tax benefit for the six months ended June 30, 2020 was primarily a result of a $9.7 million income tax benefit related to the $71.5 million non-cash impairment we recorded during the three months ended March 31, 2020 related to the Trulia trade names and trademarks intangible asset. For additional information about the non-cash impairment, see Note 10 to our condensed consolidated financial statements. This income tax benefit was partially offset by an immaterial amount of state income tax expense recorded for the six months ended June 30, 2020.

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Shareholders' Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Shareholders' Equity

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 June 30, 2020 or December 31, 2019.

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. 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.

On May 15, 2020, Zillow Group issued and sold 8,000,000 shares of Class C capital stock, and on May 19, 2020, issued and sold an additional 800,000 shares of Class C capital stock pursuant to the exercise of the underwriters’ option to purchase additional shares. The 8,800,000 shares of Class C capital stock were issued and sold at a public offering price of $48.00 per share. We received net proceeds of $411.5 million after deducting underwriting discounts and commissions and offering expenses paid by us.

In connection with the partial repurchase of the 2021 Notes, we issued 753,936 shares of Class C capital stock at a price of $48.00 per share with a total value of $36.2 million to settle the conversion spread for the notes repurchased. Additionally, we unwound a portion of the capped call transactions related to the 2021 Notes whereby we received 317,865 shares of our Class C capital stock equal to a value of approximately $14.8 million based on the trading price of our Class C capital stock at the time of the unwind. See Note 12 for further discussion of the partial repurchase of the 2021 Notes and the corresponding capped call unwind.

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Share-Based Awards

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Share-Based Awards

Share-Based Awards

Zillow Group, Inc. 2020 Incentive Plan

On June 9, 2020, the Zillow Group, Inc. 2020 Incentive Plan (the “2020 Plan”) became effective, which replaces the Zillow Group, Inc. Amended and Restated 2011 Incentive Plan (the “2011 Plan”). 12,400,000 shares of Class C capital stock are authorized and available for issuance under the 2020 Plan. In addition, shares previously available for new grants under the 2011 Plan as of June 9, 2020 and shares subject to outstanding awards under the 2011 Plan as of June 9, 2020 that on or after that date cease to be subject to such awards (other than by reason of exercise or settlement of the awards in vested or nonforfeitable shares) are also available for issuance under the 2020 Plan. The number of shares authorized under the 2020 Plan will be increased on the first day of each calendar year, beginning January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to the lesser of (a) 5% of our outstanding Class A common stock, Class B common stock and Class C capital stock on a fully diluted basis as of the end of the immediately preceding calendar year and (b) a number of shares determined by our board of directors. The 2020 Plan is administered by the compensation committee of the board of directors. Under the terms of the 2020 Plan, the compensation committee may grant equity awards, including incentive stock options, nonqualified stock options, restricted stock, restricted stock units, restricted units, stock appreciation rights, performance shares or performance units to employees, officers, directors, consultants, agents, advisors and independent contractors of Zillow Group and its subsidiaries. The board of directors has also authorized certain senior executive officers to grant equity awards under the 2020 Plan, within limits prescribed by our board of directors. The 2020 Plan provides that in the event of a stock dividend, stock split or similar event, the maximum number and kind of securities available for issuance under the plan will be proportionally adjusted.

Options under the 2020 Plan are granted with an exercise price per share not less than 100% of the fair market value of our Class C capital stock on the grant date, 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. 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 3 months following their termination of employment or 12 months following termination by reason of death, disability or retirement. Options granted under the 2020 Plan expire no later than ten years from the grant date and typically vest either 25% after 12 months and quarterly thereafter over the next three years or quarterly over a period of four years.

Restricted stock units granted under the 2020 Plan typically vest either 25% after 12 months and quarterly thereafter over the next three years or quarterly over a period of four years. Any portion of a restricted stock unit that is not vested on the date of a participant’s termination of service expires on such date.

Options and restricted stock units that remain outstanding under the 2011 Plan have vesting and exercisability terms consistent with those described above for awards granted under the 2020 Plan.

Option Awards

The following table summarizes option award activity for the six months ended June 30, 2020:

	Number of Shares Subject to Existing Options	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2020	29,634,296	$	35.95	6.28	$	331,107
Granted	4,833,605	49.24
Exercised	(6,324,858)	29.25
Forfeited or cancelled	(674,462)	40.76
Outstanding at June 30, 2020	27,468,581	39.71		6.74	493,801
Vested and exercisable at June 30, 2020	14,708,916	35.84		4.96	320,951

The fair value of options granted 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 June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Expected volatility	51%	45%	45%-51%	45%-47%
Expected dividend yield	—	—	—	—
Risk-free interest rate	0.33%	2.00%	0.33%-0.93%	2.00%-2.53%
Weighted-average expected life	5.00 years	5.00 years	5.00-5.50 years	4.75-5.25 years
Weighted-average fair value of options granted	$20.21	$16.96	$20.69	$16.79

As of June 30, 2020, there was a total of $218.2 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the six months ended June 30, 2020:

	Restricted Stock Units	Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2020	7,052,767	$	40.01
Granted	3,665,016	49.30
Vested	(1,414,158)	40.65
Forfeited	(513,401)	41.62
Unvested outstanding at June 30, 2020	8,790,224	43.69

As of June 30, 2020, there was a total of $356.6 million in unrecognized compensation cost related to unvested restricted stock units.

Share-Based Compensation Expense

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of revenue	$	1,119	$	936	$	2,292	$	1,816
Sales and marketing	9,116		6,801		16,109		12,451
Technology and development	21,666		18,399		40,583		33,908
General and administrative	20,450		17,496		37,162		61,581
Total	$	52,351	$	43,632	$	96,146	$	109,756

On February 21, 2019, Zillow Group announced the appointment of Richard N. Barton as Zillow Group’s Chief Executive Officer, effective February 21, 2019. Mr. Barton succeeds Spencer Rascoff, who served as Zillow Group’s Chief Executive Officer since 2010. In connection with Mr. Rascoff’s resignation as Chief Executive Officer, Zillow Group entered into an Executive Departure Agreement and Release (the “Agreement”) with Mr. Rascoff. Pursuant to the Agreement, Mr. Rascoff received, among other things, a change in the exercise period of his vested stock options outstanding as well as accelerated vesting of outstanding stock options, which have been accounted for as equity modifications. We recorded $26.4 million of share-based compensation expense associated with the modifications during the six months ended June 30, 2019. For additional details, see Note 18 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss 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 loss per share because their effect would have been antidilutive (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Weighted-average Class A common stock and Class C capital stock option awards outstanding	25,202	19,502	22,649	19,656
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	9,086	7,230	8,354	6,548
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	400	411	400	411
Class C capital stock issuable upon conversion of the convertible notes maturing in 2021, 2024 and 2026	7,232	—	7,316	—
Total Class A common stock and Class C capital stock equivalents	41,920	27,143	38,719	26,615

Since we expect to settle the principal amount of the outstanding Notes in cash, we use the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread for each of the notes has a dilutive impact on diluted net income per share when the market price of the Company’s Class C capital stock at the end of the period exceeds the conversion price per share. The following table presents the conversion spread and conversion price per share of Class C capital stock for each of the convertible senior notes (in thousands, except per share amounts):

Maturity Date	Conversion Spread	Conversion Price per Share
September 1, 2026	11,492	$	43.51
May 15, 2025	8,408	67.20
September 1, 2024	15,468	43.51
July 1, 2023	4,769	78.37
December 1, 2021	5,067	52.36

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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 2020 and 2030. For additional information regarding our lease agreements, see Note 14 in our Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019.

Purchase Commitments

Purchase commitments primarily include various non-cancelable agreements to purchase content related to our mobile applications and websites and certain cloud computing services as well as homes we are under contract to purchase through Zillow Offers but that have not closed as of the respective date. The amounts due for non-cancelable purchase commitments, excluding homes under contract, as of June 30, 2020, are as follows (in thousands):

	Purchase Obligations
2020	$	8,254
2021	17,627
2022	3,043
2023	507
Total future purchase commitments	$	29,431

As of June 30, 2020, the value of homes under contract that have not closed was $51.9 million.

Letters of Credit

As of June 30, 2020, we have outstanding letters of credit of approximately $16.9 million, which secure our lease obligations in connection with certain of our office space operating leases.

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 $9.8 million and $10.2 million, respectively, as of June 30, 2020 and December 31, 2019.

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. For the matters discussed below, we have not recorded any material accruals as of June 30, 2020 or December 31, 2019.

In July 2015, VHT, Inc. (“VHT”) filed a complaint against us in the United States District Court for the Western District of Washington alleging copyright infringement of VHT’s images on the Zillow Digs site. In January 2016, VHT filed an amended complaint alleging copyright infringement of VHT’s images on the Zillow Digs site as well as the Zillow listing site. In December 2016, the court granted a motion for partial summary judgment that dismissed VHT’s claims with respect to the Zillow listing site. A federal jury trial began on January 23, 2017, and on February 9, 2017, the jury returned a verdict finding that the Company had infringed VHT’s copyrights in images displayed or saved to the Digs site. The jury awarded VHT $79,875 in actual damages and approximately $8.2 million in statutory damages. In March 2017, the Company filed motions in the district court seeking judgment for the Company on certain claims that are the subject of the verdict, and for a new trial on others. On June 20, 2017, the judge ruled and granted in part our motions, finding that VHT failed to present sufficient evidence to prove direct copyright infringement for a portion of the images, reducing the total damages to approximately $4.1 million. On March 15, 2019, after we filed an appeal with the Ninth Circuit Court of Appeals seeking review of the final judgment and certain prior rulings entered by the District Court, the Ninth Circuit Court of Appeals issued an opinion that, among other things, (i) affirmed the District Court’s grant of summary judgment in favor of Zillow on direct infringement of images on Zillow’s listing site, (ii) affirmed the district court’s grant in favor of Zillow of judgment notwithstanding the verdict on certain images that were displayed on the Zillow Digs site, (iii) remanded consideration of the

issue whether VHT’s images on the Zillow Digs site were part of a compilation or individual photos, and (iv) vacated the jury’s finding of willful infringement. On October 7, 2019, the United States Supreme Court denied VHT’s petition for writ of certiorari seeking review of certain rulings by the Ninth Circuit Court of Appeals. On December 6, 2019, the Company filed a motion for summary judgment with the District Court seeking a ruling that VHT’s images are a compilation, or in the alternative, seeking a dismissal of the case based on a recent United States Supreme Court ruling. On May 8, 2020, the District Court denied the Company’s motion for summary judgment and granted VHT’s motion for summary judgment on the issue of whether the remaining photos were a compilation. We do not believe there is a reasonable possibility that a material loss will be incurred related to this lawsuit.

In August and September 2017, two purported class action lawsuits were filed against us and certain of our executive officers, alleging, among other things, violations of federal securities laws on behalf of a class of those who purchased our common stock between February 12, 2016 and August 8, 2017. One of those purported class actions, captioned Vargosko v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Central District of California. The other purported class action lawsuit, captioned Shotwell v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Western District of Washington. The complaints allege, among other things, that during the period between February 12, 2016 and August 8, 2017, we issued materially false and misleading statements regarding our business practices. The complaints seek to recover, among other things, alleged damages sustained by the purported class members as a result of the alleged misconduct. In November 2017, an amended complaint was filed against us and certain of our executive officers in the Shotwell v. Zillow Group purported class action lawsuit, extending the beginning of the class period to November 17, 2014. In January 2018, the Vargosko v. Zillow Group purported class action lawsuit was transferred to the U.S. District Court for the Western District of Washington and consolidated with the Shotwell v. Zillow Group purported class action lawsuit. In February 2018, the plaintiffs filed a consolidated amended complaint, and in April 2018, we filed our motion to dismiss the consolidated amended complaint. In October 2018, our motion to dismiss was granted without prejudice, and in November 2018, the plaintiffs filed a second consolidated amended complaint, which we moved to dismiss in December 2018. On April 19, 2019, our motion to dismiss the second consolidated amended complaint was denied, and we filed our answer to the second amended complaint on May 3, 2019. On October 11, 2019, plaintiffs filed a motion for class certification, and we filed our motion in opposition on March 20, 2020. The plaintiffs filed a reply in further support of their motion on May 29, 2020. We have denied the allegations of wrongdoing and intend to vigorously defend the claims in this lawsuit. We do not believe a loss related to this lawsuit is probable.

In October and November 2017 and January and February 2018, four shareholder derivative lawsuits were filed in the U.S. District Court for the Western District of Washington and the Superior Court of the State of Washington, King County, against certain of our executive officers and directors seeking unspecified damages on behalf of the Company and certain other relief, such as reform to corporate governance practices. The plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants breached their fiduciary duties in connection with oversight of the Company’s public statements and legal compliance, and as a result of the breach of such fiduciary duties, the Company was damaged, and defendants were unjustly enriched. Certain of the plaintiffs also allege, among other things, violations of Section 14(a) of the Securities Exchange Act of 1934 and waste of corporate assets. On February 5, 2018, the U.S. District Court for the Western District of Washington consolidated the two federal shareholder derivative lawsuits pending in that court. On February 16, 2018, the Superior Court of the State of Washington, King County, consolidated the two shareholder derivative lawsuits pending in that court. All four of the shareholder derivative lawsuits were stayed until our motion to dismiss the second consolidated amended complaint in the securities class action lawsuit discussed above was denied in April 2019. On July 8, 2019, the plaintiffs in the consolidated federal derivative lawsuit filed a consolidated shareholder derivative complaint, which we moved to dismiss on August 22, 2019. On February 28, 2020, our motion to dismiss the consolidated shareholder derivative complaint was denied. On May 18, 2020 we filed an answer in the consolidated federal derivative lawsuit. Our answer in the consolidated state derivative matter is due on August 24, 2020. We do not believe a loss is probable related to these lawsuits.

On September 17, 2019, International Business Machines Corporation (“IBM”) filed a complaint against us in the United States District Court for the Central District of California, alleging, among other things, that the Company has infringed and continues to willfully infringe seven patents held by IBM and seeks unspecified damages, including a request that the amount of compensatory damages be trebled, injunctive relief and costs and reasonable attorneys’ fees. On December 2, 2019, IBM filed an amended complaint. On December 16, 2019, we filed a motion to transfer venue and/or to dismiss the complaint. The Company’s motion to transfer venue to the United States District Court for the Western District of Washington was granted on May 28, 2020. We filed our answer with counterclaims in response to the amended complaint on June 11, 2020. On July 2, 2020, IBM filed a motion to dismiss our counterclaims. In response to IBM’s motion, on July 22, 2020, we filed an amended answer with counterclaims. We deny the allegations of any wrongdoing and intend to vigorously defend the claims in the lawsuit. There is a reasonable possibility that a loss may be incurred related to this complaint; however, the possible loss or range of loss is not estimable.

On July 21, 2020, IBM filed a second action against us in the United States District Court for the Western District of Washington, alleging, among other things that the Company has infringed and continues to willfully infringe five patents held by IBM and seeks unspecified damages. We deny the allegations of any wrongdoing and intend to vigorously defend the claims in the lawsuit. We do not believe a loss related to this lawsuit is probable.

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 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.

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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Employee Benefit Plan	6 Months Ended
	Jun. 30, 2020
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit PlanWe have a 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 was $6.4 million and $5.2 million, respectively, for the three months ended June 30, 2020 and 2019, and $12.8 million and $10.1 million, respectively, for the six months ended June 30, 2020 and 2019.

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Segment Information and Revenue

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Information and Revenue

Segment Information and Revenue

We have three operating and reportable segments, which have been identified based on the way in which 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 for the Homes, Internet, Media & Technology (“IMT”) and Mortgages segments.

The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through Zillow Offers and the financial results from title and escrow services through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, rentals and new construction marketplaces, dotloop and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. The Mortgages segment includes financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and the sale of mortgages on the secondary market, as well as Mortech mortgage software solutions.

Revenue and costs are directly attributed to our segments when possible. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit the other segments. These costs primarily include headcount-related expenses, general and administrative expenses including executive, finance, accounting, legal, human resources, recruiting and facilities costs, product development and data acquisition costs and marketing and advertising costs. These costs are allocated to each segment based on the estimated benefit each segment receives from such expenditures.

The chief executive officer reviews information about our revenue categories as well as statement of operations data inclusive of income (loss) before income taxes by segment. This information is included in the following tables for the periods presented (in thousands):

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	453,816	$	—	$	—	$	248,924	$	—	$	—
Premier Agent	—		191,962		—		—		231,961		—
Other	436		88,377		—		—		91,708		—
Mortgages	—		—		33,761		—		—		26,985
Total revenue	454,252		280,339		33,761		248,924		323,669		26,985
Costs and expenses:
Cost of revenue	431,788		23,387		5,896		240,732		26,059		4,430
Sales and marketing	47,877		96,026		11,695		37,409		135,440		14,584
Technology and development	28,918		93,176		6,763		18,198		94,261		7,871
General and administrative	21,902		53,884		9,725		17,808		54,671		10,360
Integration costs	—		—		—		—		—		293
Total costs and expenses	530,485		266,473		34,079		314,147		310,431		37,538
Income (loss) from operations	(76,233)		13,866		(318)		(65,223)		13,238		(10,553)
Segment other income	—		5,300		385		—		—		402
Segment interest expense	(3,825)		—		(307)		(5,899)		—		(287)
Income (loss) before income taxes (1)	$	(80,058)	$	19,166	$	(240)	$	(71,122)	$	13,238	$	(10,438)

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	1,222,928	$	—	$	—	$	377,396	$	—	$	—
Premier Agent	—		434,068		—		—		449,696		—
Other	1,197		176,937		—		—		172,245		—
Mortgages	—		—		59,043		—		—		54,345
Total revenue	1,224,125		611,005		59,043		377,396		621,941		54,345
Costs and expenses:
Cost of revenue	1,163,987		47,705		11,051		363,151		50,310		9,108
Sales and marketing	119,466		216,199		24,581		58,271		262,094		28,655
Technology and development	61,456		188,204		14,115		30,479		182,230		15,391
General and administrative	45,323		112,638		19,835		32,165		125,521		20,927
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		645
Total costs and expenses	1,390,232		638,646		72,482		484,066		620,155		74,726
Income (loss) from operations	(166,107)		(27,641)		(13,439)		(106,670)		1,786		(20,381)
Segment other income	—		5,300		587		—		—		715
Segment interest expense	(11,909)		—		(533)		(9,657)		—		(388)
Income (loss) before income taxes (1)	$	(178,016)	$	(22,341)	$	(13,385)	$	(116,327)	$	1,786	$	(20,054)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Total segment loss before income taxes	$	(61,132)	$	(68,322)	$	(213,742)	$	(134,595)
Corporate interest expense	(33,458)		(12,711)		(62,740)		(25,318)
Corporate other income	4,430		9,056		13,821		17,911
Gain on partial extinguishment of 2021 Notes	6,391		—		6,391		—
Consolidated loss before income taxes	$	(83,769)	$	(71,977)	$	(256,270)	$	(142,002)

Certain corporate items are not directly attributable to any of our segments, including the gain on the partial extinguishment of the 2021 Notes, interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

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 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 included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 19, 2020. The condensed consolidated balance sheet as of December 31, 2019, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

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 June 30, 2020, our results of operations, comprehensive loss and shareholders’ equity for the three and six month periods ended June 30, 2020 and 2019, and our cash flows for the six month periods ended June 30, 2020 and 2019. The results of the three and six month periods ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 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 the net realizable value of inventory, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and the recoverability of 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. The COVID-19 pandemic has introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed, among others.

Recently Issued Accounting Standards Not Yet Adopted

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We expect to apply some of the expedients and exceptions provided in this guidance to our credit facilities, warehouse line of credit and master repurchase agreement, all of which reference LIBOR in the applicable interest rate. While the goal of the reference rate reform transition is for it to be economically neutral to entities, we have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

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 — The fair value measurement of money market funds is based on quoted market prices in active markets. The fair value measurement of treasury bills are based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Short-term investments — The fair value measurement of our short-term investments 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.

Restricted cash — Restricted cash consists of cash received from the resale of homes through Zillow Offers which may be used to repay amounts borrowed on our credit facilities (see Note 12) and amounts held in escrow related to funding home purchases in our mortgage origination business. The carrying value of restricted cash approximates fair value due to the short period of time amounts borrowed on the credit facilities are outstanding and amounts are held in escrow.

Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics.

Interest rate lock commitments — The fair value of interest rate lock commitments (“IRLCs”) is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. We generally only issue IRLCs for products that meet specific purchaser guidelines. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close. This adjustment is effected through the pull-through rate, which represents the probability that an interest rate lock commitment will ultimately result in a closed loan.

The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our condensed consolidated statements of operations.

Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as economic hedging instruments are calculated by reference to quoted prices for similar assets.

Segment Reporting

We have three operating and reportable segments, which have been identified based on the way in which 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 for the Homes, Internet, Media & Technology (“IMT”) and Mortgages segments.

The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through Zillow Offers and the financial results from title and escrow services through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, rentals and new construction marketplaces, dotloop and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. The Mortgages segment includes financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and the sale of mortgages on the secondary market, as well as Mortech mortgage software solutions.

Revenue and costs are directly attributed to our segments when possible. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit the other segments. These costs primarily include headcount-related expenses, general and administrative expenses including executive, finance, accounting, legal, human resources, recruiting and facilities costs, product development and data acquisition costs and marketing and advertising costs. These costs are allocated to each segment based on the estimated benefit each segment receives from such expenditures.

The chief executive officer reviews information about our revenue categories as well as statement of operations data inclusive of income (loss) before income taxes by segment.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurement Inputs and Valuation Techniques

The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the periods presented:

	June 30, 2020	December 31, 2019
Range	40% - 100%	56% - 100%
Weighted average	70%	78%

Summary of Balances of Cash Equivalents and Investments

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

	June 30, 2020
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,784,896	$	1,784,896	$	—	$	—
Treasury bills	70,189		—		70,189		—
Short-term investments:
Treasury bills	963,231		—		963,231		—
U.S. government agency securities	465,715		—		465,715		—
Corporate notes and bonds	30,213		—		30,213		—
Municipal securities	16,538		—		16,538		—
Commercial paper	14,972		—		14,972		—
Certificates of deposit	498		—		498		—
Mortgage origination-related:
Mortgage loans held for sale	75,021		—		75,021		—
IRLCs	5,091		—		—		5,091
Forward contracts - other current liabilities	961		—		961		—
Total	$	3,427,325	$	1,784,896	$	1,637,338	$	5,091

	December 31, 2019
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	872,431	$	872,431	$	—
U.S. government agency securities	35,009		—		35,009
Commercial paper	31,113		—		31,113
Treasury bills	6,441		—		6,441
Corporate notes and bonds	1,065		—		1,065
Certificates of deposit	249		—		249
Short-term investments:
U.S. government agency securities	862,154		—		862,154
Corporate notes and bonds	159,431		—		159,431
Commercial paper	150,267		—		150,267
Treasury bills	80,003		—		80,003
Municipal securities	27,889		—		27,889
Certificates of deposit	1,245		—		1,245
Mortgage origination-related:
Mortgage loans held for sale	36,507		—		36,507
IRLCs	937		—		937
Forward contracts - other current assets	7		—		7
Forward contracts - other current liabilities	(60)		—		(60)
Total	$	2,264,688	$	872,431	$	1,392,257

Schedule of Changes in IRLCs

The following table presents the changes in our IRLCs during the three and six month periods ended June 30, 2020 (in thousands):

	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020 (1)
Balance, beginning of the period	$	2,225	$	937
Issuances	10,142		15,507
Transfers	(8,586)		(13,142)
Fair value changes recognized in earnings	1,310		1,789
Balance, end of period	$	5,091	$	5,091
(1) Beginning balance represents transfers of IRLCs from Level 2 to Level 3 within the fair value hierarchy as of January 1, 2020.

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Cash and Cash Equivalents, Short-term Investments and Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2020

Cash and Cash Equivalents [Abstract]

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

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):

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	190,389	$	—	$	—	$	190,389
Cash equivalents:
Money market funds	1,784,896		—		—		1,784,896
Treasury bills	70,189		—		—		70,189
Short-term investments:
Treasury bills	963,200		41		(10)		963,231
U.S. government agency securities	463,806		1,909		—		465,715
Corporate notes and bonds	30,094		119		—		30,213
Municipal securities	16,519		19		—		16,538
Commercial paper	14,972		—		—		14,972
Certificates of deposit	498		—		—		498
Restricted cash	33,620		—		—		33,620
Total	$	3,568,183	$	2,088	$	(10)	$	3,570,261

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	194,955	$	—	$	—	$	194,955
Cash equivalents:
Money market funds	872,431		—		—		872,431
U.S. government agency securities	35,011		—		(2)		35,009
Commercial paper	31,113		—		—		31,113
Treasury bills	6,441		—		—		6,441
Corporate notes and bonds	1,065		—		—		1,065
Certificates of deposit	249		—		—		249
Short-term investments:
U.S. government agency securities	861,862		365		(73)		862,154
Corporate notes and bonds	159,382		91		(42)		159,431
Commercial paper	150,267		—		—		150,267
Treasury bills	79,989		14		—		80,003
Municipal securities	27,836		56		(3)		27,889
Certificates of deposit	1,245		—		—		1,245
Restricted cash	89,646		—		—		89,646
Total	$	2,511,492	$	526	$	(120)	$	2,511,898

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Accounts Receivable, net (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Schedule of Accounts Receivable, Net

The following table presents the changes in the allowance for doubtful accounts for the six months ended June 30, 2020 (in thousands):

Balance as of January 1, 2020	$	4,522
Credit loss expense	1,614
Less: write-offs, net of recoveries and other adjustments	(3,854)
Balance as of June 30, 2020	$	2,282

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Inventory (Tables)

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Components of Net Inventory

The following table presents the components of inventory, net of applicable lower of cost or net realizable value adjustments, as of the dates presented (in thousands):

	June 30, 2020		December 31, 2019
Work-in-process	$	12,164	$	152,171
Finished goods	123,237		684,456
Inventory	$	135,401	$	836,627

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Property and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2020

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):

	June 30, 2020		December 31, 2019
Website development costs	$	157,468	$	149,648
Leasehold improvements	107,139		81,981
Construction-in-progress	51,482		45,337
Office equipment, furniture and fixtures	42,236		36,582
Computer equipment	31,801		31,942
Property and equipment	390,126		345,490
Less: accumulated amortization and depreciation	(194,379)		(175,001)
Property and equipment, net	$	195,747	$	170,489

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Intangible Assets, net (Tables)

6 Months Ended

Jun. 30, 2020

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):

	June 30, 2020
	Cost		Accumulated Amortization		Net
Trade names and trademarks	$	36,500	$	(1,274)	$	35,226
Customer relationships	102,600		(81,372)		21,228
Developed technology	107,200		(87,340)		19,860
Software	40,744		(25,031)		15,713
Intangibles-in-progress	10,054		—		10,054
Purchased content	50,552		(45,726)		4,826
Lender licenses	400		(317)		83
Total	$	348,050	$	(241,060)	$	106,990

	December 31, 2019
	Cost		Accumulated Amortization		Net
Customer relationships	$	102,600	$	(73,770)	$	28,830
Developed technology	107,200		(81,383)		25,817
Software	35,527		(20,843)		14,684
Purchased content	47,298		(40,636)		6,662
Intangibles-in-progress	6,391		—		6,391
Lender licenses	400		(217)		183
Total	$	299,416	$	(216,849)	$	82,567

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Deferred Revenue (Tables)

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Change in Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2020
Balance as of April 1, 2020	$	35,347
Deferral of revenue	222,895
Less: Revenue recognized	(213,728)
Balance as of June 30, 2020	$	44,514

	Six Months Ended June 30, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	476,624
Less: Revenue recognized	(471,857)
Balance as of June 30, 2020	$	44,514

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Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of Carrying Value of Debt

The following table presents the carrying values of Zillow Group’s debt as of the periods presented (in thousands):

	June 30, 2020		December 31, 2019
Homes Segment
Credit facilities:
Goldman Sachs Bank USA	$	19,632	$	39,244
Citibank, N.A.	33,037		296,369
Credit Suisse AG, Cayman Islands	64,549		355,911
Total Homes Segment debt	117,218		691,524
Mortgages Segment
Repurchase agreement:
Citibank, N.A.	33,918		394
Warehouse line of credit:
Comerica Bank	35,896		30,033
Total Mortgages Segment debt	69,814		30,427
Convertible Senior Notes
1.375% convertible senior notes due 2026	337,171		327,187
2.75% convertible senior notes due 2025	401,786		—
0.75% convertible senior notes due 2024	507,039		490,538
1.50% convertible senior notes due 2023	318,348		310,175
2.00% convertible senior notes due 2021	245,997		415,502
2.75% convertible senior notes due 2020	9,637		9,637
Total convertible senior notes	1,819,978		1,553,039
Total	$	2,007,010	$	2,274,990

Schedule of Revolving Credit Facilities and Lines of Credit

The following table summarizes certain details related to our credit facilities (in thousands, except interest rates):

Lender	Final Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Goldman Sachs Bank USA	April 20, 2022	$	500,000	3.91	%
Citibank, N.A.	January 31, 2022	500,000		4.69	%
Credit Suisse AG, Cayman Islands	July 31, 2021	500,000		4.62	%
	Total	$	1,500,000

The following table summarizes certain details related to our warehouse line of credit and repurchase agreement (in thousands, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Citibank, N.A.	October 27, 2020	$	75,000	1.88	%
Comerica Bank	June 26, 2021	50,000		2.81	%
	Total	$	125,000

Schedule of Convertible Senior Notes

The following tables summarize certain details related to our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

									June 30, 2020				December 31, 2019
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		First Interest Payment Date	Semi-Annual Interest Payment Dates	Unamortized Debt Discount and Debt Issuance Costs		Fair Value		Unamortized Debt Discount and Debt Issuance Costs		Fair Value
September 1, 2026	$	500,000	1.375	%	8.10	%	March 1, 2020	March 1; September 1	$	162,829	$	705,000	$	172,813	$	597,380
May 15, 2025	565,000		2.75	%	10.32	%	November 15, 2020	May 15; November 15	163,214		659,756		—		—
September 1, 2024	673,000		0.75	%	7.68	%	March 1, 2020	March 1; September 1	165,961		957,659		182,462		819,378
July 1, 2023	373,750		1.50	%	6.99	%	January 1, 2019	January 1; July 1	55,402		388,113		63,575		356,464
December 1, 2021	265,330		2.00	%	7.43	%	June 1, 2017	June 1; December 1	19,333		326,688		44,498		514,312
December 15, 2020	9,637		2.75	%	N/A		N/A	June 15; December 15	—		16,842		—		16,842
Total	$	2,386,717							$	566,739	$	3,054,058	$	463,348	$	2,304,376

	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	1,719	$	4,922	$	120	$	6,761	$	—	$	—	$	—	$	—
May 15, 2025	2,007		3,148		168		5,323		—		—		—		—
September 1, 2024	1,262		8,095		278		9,635		—		—		—		—
July 1, 2023	1,402		3,749		366		5,517		1,402		3,496		342		5,240
December 1, 2021	1,803		3,945		408		6,156		2,300		4,677		484		7,461
December 15, 2020	66		—		—		66		66		—		—		66
Total	$	8,259	$	23,859	$	1,340	$	33,458	$	3,768	$	8,173	$	826	$	12,767

	Six Months Ended June 30, 2020								Six Months Ended June 30, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	3,438	$	9,746	$	238	$	13,422	$	—	$	—	$	—	$	—
May 15, 2025	2,007		3,148		168		5,323		—		—		—		—
September 1, 2024	2,510		15,956		545		19,011		—		—		—		—
July 1, 2023	2,804		7,446		727		10,977		2,804		6,933		678		10,415
December 1, 2021	4,103		8,856		916		13,875		4,600		9,268		959		14,827
December 15, 2020	132		—		—		132		132		—		—		132
Total	$	14,994	$	45,152	$	2,594	$	62,740	$	7,536	$	16,201	$	1,637	$	25,374

The following table summarizes the conversion and redemption options with respect to the Notes:

Maturity Date	Early Conversion Date	Conversion Rate	Conversion Price		Optional Redemption Date
September 1, 2026	March 1, 2026	22.9830	$	43.51	September 5, 2023
May 15, 2025	November 15, 2024	14.8810	67.20		May 22, 2023
September 1, 2024	March 1, 2024	22.9830	43.51		September 5, 2022
July 1, 2023	April 1, 2023	12.7592	78.37		July 6, 2021
December 1, 2021	September 1, 2021	19.0985	52.36		December 6, 2019

The following table summarizes certain details related to the capped call confirmations with respect to certain of the convertible senior notes:

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%
July 1, 2023	105.45		85	%
December 1, 2021	69.19		85	%

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Share-Based Awards (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of Option Award Activity

The following table summarizes option award activity for the six months ended June 30, 2020:

	Number of Shares Subject to Existing Options	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2020	29,634,296	$	35.95	6.28	$	331,107
Granted	4,833,605	49.24
Exercised	(6,324,858)	29.25
Forfeited or cancelled	(674,462)	40.76
Outstanding at June 30, 2020	27,468,581	39.71		6.74	493,801
Vested and exercisable at June 30, 2020	14,708,916	35.84		4.96	320,951

Fair Value of Options Granted, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model

The fair value of options granted 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 June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Expected volatility	51%	45%	45%-51%	45%-47%
Expected dividend yield	—	—	—	—
Risk-free interest rate	0.33%	2.00%	0.33%-0.93%	2.00%-2.53%
Weighted-average expected life	5.00 years	5.00 years	5.00-5.50 years	4.75-5.25 years
Weighted-average fair value of options granted	$20.21	$16.96	$20.69	$16.79

Summary of Restricted Stock Units Activity

The following table summarizes activity for restricted stock units for the six months ended June 30, 2020:

	Restricted Stock Units	Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2020	7,052,767	$	40.01
Granted	3,665,016	49.30
Vested	(1,414,158)	40.65
Forfeited	(513,401)	41.62
Unvested outstanding at June 30, 2020	8,790,224	43.69

Effects of Share Based Compensation in Consolidated Statements of Operations

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of revenue	$	1,119	$	936	$	2,292	$	1,816
Sales and marketing	9,116		6,801		16,109		12,451
Technology and development	21,666		18,399		40,583		33,908
General and administrative	20,450		17,496		37,162		61,581
Total	$	52,351	$	43,632	$	96,146	$	109,756

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

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 loss per share because their effect would have been antidilutive (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Weighted-average Class A common stock and Class C capital stock option awards outstanding	25,202	19,502	22,649	19,656
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	9,086	7,230	8,354	6,548
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	400	411	400	411
Class C capital stock issuable upon conversion of the convertible notes maturing in 2021, 2024 and 2026	7,232	—	7,316	—
Total Class A common stock and Class C capital stock equivalents	41,920	27,143	38,719	26,615

The following table presents the conversion spread and conversion price per share of Class C capital stock for each of the convertible senior notes (in thousands, except per share amounts):

Maturity Date	Conversion Spread	Conversion Price per Share
September 1, 2026	11,492	$	43.51
May 15, 2025	8,408	67.20
September 1, 2024	15,468	43.51
July 1, 2023	4,769	78.37
December 1, 2021	5,067	52.36

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Commitment and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Purchase Commitments for Content Related to Mobile Applications and Websites

The amounts due for non-cancelable purchase commitments, excluding homes under contract, as of June 30, 2020, are as follows (in thousands):

	Purchase Obligations
2020	$	8,254
2021	17,627
2022	3,043
2023	507
Total future purchase commitments	$	29,431

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Segment Information and Revenue (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Revenue Categories

This information is included in the following tables for the periods presented (in thousands):

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	453,816	$	—	$	—	$	248,924	$	—	$	—
Premier Agent	—		191,962		—		—		231,961		—
Other	436		88,377		—		—		91,708		—
Mortgages	—		—		33,761		—		—		26,985
Total revenue	454,252		280,339		33,761		248,924		323,669		26,985
Costs and expenses:
Cost of revenue	431,788		23,387		5,896		240,732		26,059		4,430
Sales and marketing	47,877		96,026		11,695		37,409		135,440		14,584
Technology and development	28,918		93,176		6,763		18,198		94,261		7,871
General and administrative	21,902		53,884		9,725		17,808		54,671		10,360
Integration costs	—		—		—		—		—		293
Total costs and expenses	530,485		266,473		34,079		314,147		310,431		37,538
Income (loss) from operations	(76,233)		13,866		(318)		(65,223)		13,238		(10,553)
Segment other income	—		5,300		385		—		—		402
Segment interest expense	(3,825)		—		(307)		(5,899)		—		(287)
Income (loss) before income taxes (1)	$	(80,058)	$	19,166	$	(240)	$	(71,122)	$	13,238	$	(10,438)

	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	1,222,928	$	—	$	—	$	377,396	$	—	$	—
Premier Agent	—		434,068		—		—		449,696		—
Other	1,197		176,937		—		—		172,245		—
Mortgages	—		—		59,043		—		—		54,345
Total revenue	1,224,125		611,005		59,043		377,396		621,941		54,345
Costs and expenses:
Cost of revenue	1,163,987		47,705		11,051		363,151		50,310		9,108
Sales and marketing	119,466		216,199		24,581		58,271		262,094		28,655
Technology and development	61,456		188,204		14,115		30,479		182,230		15,391
General and administrative	45,323		112,638		19,835		32,165		125,521		20,927
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		645
Total costs and expenses	1,390,232		638,646		72,482		484,066		620,155		74,726
Income (loss) from operations	(166,107)		(27,641)		(13,439)		(106,670)		1,786		(20,381)
Segment other income	—		5,300		587		—		—		715
Segment interest expense	(11,909)		—		(533)		(9,657)		—		(388)
Income (loss) before income taxes (1)	$	(178,016)	$	(22,341)	$	(13,385)	$	(116,327)	$	1,786	$	(20,054)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Total segment loss before income taxes	$	(61,132)	$	(68,322)	$	(213,742)	$	(134,595)
Corporate interest expense	(33,458)		(12,711)		(62,740)		(25,318)
Corporate other income	4,430		9,056		13,821		17,911
Gain on partial extinguishment of 2021 Notes	6,391		—		6,391		—
Consolidated loss before income taxes	$	(83,769)	$	(71,977)	$	(256,270)	$	(142,002)

Reconciliation of Segment Gross Profit and Loss

The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Total segment loss before income taxes	$	(61,132)	$	(68,322)	$	(213,742)	$	(134,595)
Corporate interest expense	(33,458)		(12,711)		(62,740)		(25,318)
Corporate other income	4,430		9,056		13,821		17,911
Gain on partial extinguishment of 2021 Notes	6,391		—		6,391		—
Consolidated loss before income taxes	$	(83,769)	$	(71,977)	$	(256,270)	$	(142,002)

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Fair Value Measurements - Fair Value Measurement Inputs and Valuation Techniques (Details) - IRLCs - Not Designated as Hedging Instrument	Jun. 30, 2020	Dec. 31, 2019
Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value rates, IRLCs	0.40	0.56
Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value rates, IRLCs	1	1
Weighted average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value rates, IRLCs	0.70	0.78

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Fair Value Measurements - Fair Value of Cash Equivalents and Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	$ 75,021	$ 36,507
Total	3,427,325	2,264,688
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0	0
Total	1,784,896	872,431
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	75,021	36,507
Total	1,637,338	1,392,257
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0
Total	5,091
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,784,896	872,431
Money market funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,784,896	872,431
Money market funds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Money market funds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
U.S. government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		35,009
Short-term investments	465,715	862,154
U.S. government agency securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
U.S. government agency securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		35,009
Short-term investments	465,715	862,154
U.S. government agency securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		31,113
Short-term investments	14,972	150,267
Commercial paper | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
Commercial paper | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		31,113
Short-term investments	14,972	150,267
Commercial paper | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	70,189	6,441
Short-term investments	963,231	80,003
Treasury bills | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Short-term investments	0	0
Treasury bills | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	70,189	6,441
Short-term investments	963,231	80,003
Treasury bills | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
Short-term investments	0
Corporate notes and bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		1,065
Short-term investments	30,213	159,431
Corporate notes and bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
Corporate notes and bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		1,065
Short-term investments	30,213	159,431
Corporate notes and bonds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		249
Short-term investments	498	1,245
Certificates of deposit | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
Certificates of deposit | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		249
Short-term investments	498	1,245
Certificates of deposit | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Municipal securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	16,538	27,889
Municipal securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Municipal securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	16,538	27,889
Municipal securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
IRLCs | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	5,091	937
IRLCs | Level 1 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
IRLCs | Level 2 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	937
IRLCs | Level 3 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	5,091
Forward contracts | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		7
Derivative liability	961	(60)
Forward contracts | Level 1 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		0
Derivative liability	0	0
Forward contracts | Level 2 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		7
Derivative liability	961	$ (60)
Forward contracts | Level 3 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 0

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Fair Value Measurements - Schedule of Changes in IRLCs (Details) - IRLCs - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Derivative Asset, Rollforward [Roll Forward]
Balance, beginning of the period	$ 2,225	$ 937
Issuances	10,142	15,507
Transfers	(8,586)	(13,142)
Fair value changes recognized in earnings	1,310	1,789
Balance, end of period	$ 5,091	$ 5,091

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Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Mortgage Loans Held For Sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	$ 168.9	$ 34.3
IRLCs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	$ 214.9	$ 64.7

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Cash and Cash Equivalents, Short-term Investments and Restricted Cash - Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents and Available-for-Sale Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 2,045,474	$ 1,141,263
Short-term investments:
Gross Unrealized Gains	2,088	526
Gross Unrealized Losses	(10)	(120)
Restricted cash	33,620	89,646
Cash, cash equivalents, short-term investments, and restricted cash, amortized cost	3,568,183	2,511,492
Cash, cash equivalents, short-term investments, and restricted cash, estimated fair market value	3,570,261	2,511,898
U.S. government agency securities
Short-term investments:
Amortized Cost	463,806	861,862
Gross Unrealized Gains	1,909	365
Gross Unrealized Losses	0	(73)
Estimated Fair Market Value	465,715	862,154
Corporate notes and bonds
Short-term investments:
Amortized Cost	30,094	159,382
Gross Unrealized Gains	119	91
Gross Unrealized Losses	0	(42)
Estimated Fair Market Value	30,213	159,431
Commercial paper
Short-term investments:
Amortized Cost	14,972	150,267
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Market Value	14,972	150,267
Treasury bills
Short-term investments:
Amortized Cost	963,200	79,989
Gross Unrealized Gains	41	14
Gross Unrealized Losses	(10)	0
Estimated Fair Market Value	963,231	80,003
Municipal securities
Short-term investments:
Amortized Cost	16,519	27,836
Gross Unrealized Gains	19	56
Gross Unrealized Losses	0	(3)
Estimated Fair Market Value	16,538	27,889
Certificates of deposit
Short-term investments:
Amortized Cost	498	1,245
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Market Value	498	1,245
Cash
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	190,389	194,955
Money market funds
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	1,784,896	872,431
U.S. government agency securities
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents, at cost		35,011
Cash and cash equivalents, gross unrealized losses		(2)
Cash and cash equivalents		35,009
Commercial paper
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents		31,113
Treasury bills
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 70,189	6,441
Corporate notes and bonds
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents		1,065
Certificates of deposit
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents		$ 249

XML

Accounts Receivable, net (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Receivables [Abstract]
Accounts receivable, net	$ 66,878		$ 67,005
Allowance for Doubtful Accounts Receivable [Roll Forward]
Beginning balance	4,522
Credit loss expense	1,614	$ 706
Less: write-offs, net of recoveries and other adjustments	(3,854)
Ending balance	$ 2,282	$ 2,282

XML

Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Work-in-process	$ 12,164	$ 152,171
Finished goods	123,237	684,456
Inventory	$ 135,401	$ 836,627

XML

Contract Cost Assets (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Contract cost assets	$ 47,747,000		$ 47,747,000		$ 45,209,000
Impairment of contract cost assets	0	$ 0	0	$ 0
Amortization of contract cost assets	$ 8,700,000	$ 9,200,000	$ 17,070,000	$ 17,880,000

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Property and Equipment, net - Detail of Property and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property and equipment	$ 390,126	$ 345,490
Less: accumulated amortization and depreciation	(194,379)	(175,001)
Property and equipment, net	195,747	170,489
Website development costs
Property, Plant and Equipment [Line Items]
Property and equipment	157,468	149,648
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	107,139	81,981
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment	51,482	45,337
Office equipment, furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment	42,236	36,582
Computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment	$ 31,801	$ 31,942

XML

Property and Equipment, net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment [Line Items]
Amortization and depreciation expense related to property and equipment other than website development costs	$ 7.1	$ 6.4	$ 18.9	$ 12.4
Capitalization of website development costs	15.4	10.3	27.9	20.3
Amortization of website development costs and intangible assets included in technology and development	13.1	11.0	24.9	22.0
Technology and development | Software Development
Property, Plant and Equipment [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 6.0	$ 3.6	$ 11.4	$ 7.0

XML

Equity Investment - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended		6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Oct. 31, 2016	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Schedule of Equity Method Investments [Line Items]
Non-cash impairment charge				$ 0	$ 0	$ 76,800	$ 0
Proceeds from sale of equity investment						10,000	$ 0
October 2016 Investment | Variable Interest Entity, Not Primary Beneficiary
Schedule of Equity Method Investments [Line Items]
Percentage of equity interest held	10.00%		10.00%
Equity investments			$ 10,000
Non-cash impairment charge		$ 5,300
Fair value of investment	$ 4,700			4,700		4,700
Proceeds from sale of equity investment	$ 10,000
Gain on sale of investment				$ 5,300		$ 5,300

XML

Intangible Assets, net - Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Cost	$ 348,050	$ 299,416
Accumulated Amortization	(241,060)	(216,849)
Net	106,990	82,567
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Cost	36,500
Accumulated Amortization	(1,274)
Net	35,226	108,000
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Cost	102,600	102,600
Accumulated Amortization	(81,372)	(73,770)
Net	21,228	28,830
Developed technology
Finite-Lived Intangible Assets [Line Items]
Cost	107,200	107,200
Accumulated Amortization	(87,340)	(81,383)
Net	19,860	25,817
Software
Finite-Lived Intangible Assets [Line Items]
Cost	40,744	35,527
Accumulated Amortization	(25,031)	(20,843)
Net	15,713	14,684
Intangibles-in-progress
Finite-Lived Intangible Assets [Line Items]
Cost	10,054	6,391
Accumulated Amortization	0	0
Net	10,054	6,391
Purchased content
Finite-Lived Intangible Assets [Line Items]
Cost	50,552	47,298
Accumulated Amortization	(45,726)	(40,636)
Net	4,826	6,662
Lender licenses
Finite-Lived Intangible Assets [Line Items]
Cost	400	400
Accumulated Amortization	(317)	(217)
Net	$ 83	$ 183

XML

Intangible Assets, net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Indefinite-lived Intangible Assets [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 13,100		$ 11,000	$ 24,900	$ 22,000
Non-cash impairment charge				76,800	$ 0
Trade names and trademarks | Trulia
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible asset		$ 108,000
Non-cash impairment charge		71,500
Fair value of the intangible asset	$ 36,500	$ 36,500		$ 36,500
Useful life				10 years

XML

Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Change in Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 35,347	$ 39,747
Deferral of revenue	222,895	476,624
Less: Revenue recognized	(213,728)	(471,857)
Ending balance	44,514	44,514
Revenue recognized, recorded in deferred revenue as of prior period	$ 33,800	$ 36,600

XML

Debt - Schedule of Carrying Value of Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2020	May 19, 2020	May 15, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Total	$ 2,007,010			$ 2,274,990
Convertible Debt
Debt Instrument [Line Items]
Convertible senior notes	$ 1,819,978			1,553,039
Convertible Debt | 1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Stated Interest Rate	1.375%
Convertible senior notes	$ 337,171			327,187
Convertible Debt | 2.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Stated Interest Rate	2.75%	2.75%	2.75%
Convertible senior notes	$ 401,786			0
Convertible Debt | 0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Stated Interest Rate	0.75%
Convertible senior notes	$ 507,039			490,538
Convertible Debt | 1.50% convertible senior notes due 2023
Debt Instrument [Line Items]
Stated Interest Rate	1.50%
Convertible senior notes	$ 318,348			310,175
Convertible Debt | 2.00% convertible senior notes due 2021
Debt Instrument [Line Items]
Stated Interest Rate	2.00%
Convertible senior notes	$ 245,997			415,502
Convertible Debt | 2.75% convertible senior notes due 2020
Debt Instrument [Line Items]
Stated Interest Rate	2.75%
Convertible senior notes	$ 9,637			9,637
Mortgages Segment
Debt Instrument [Line Items]
Warehouse line of credit	69,814			30,427
Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	117,218			691,524
Goldman Sachs Bank USA | Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	19,632			39,244
Citibank, N.A. | Mortgages Segment
Debt Instrument [Line Items]
Short-term debt	33,918			394
Citibank, N.A. | Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	33,037			296,369
Credit Suisse AG, Cayman Islands | Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	64,549			355,911
Comerica Bank | Line of Credit | Mortgages Segment
Debt Instrument [Line Items]
Warehouse line of credit	$ 35,896			$ 30,033

XML

Debt - Schedule of Credit Facilities (Details) - Homes Segment - Line of Credit	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 1,500,000,000
Goldman Sachs Bank USA | Final Maturity Date, April 20, 2022
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 500,000,000
Weighted Average Interest Rate	3.91%
Citibank, N.A. | Final Maturity Date, January 31, 2022
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 500,000,000
Weighted Average Interest Rate	4.69%
Credit Suisse AG, Cayman Islands | Final Maturity Date, July 31, 2021
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 500,000,000
Weighted Average Interest Rate	4.62%

XML

Debt - Narrative (Detail)		3 Months Ended		6 Months Ended
	May 15, 2020 USD ($) day $ / shares shares	Jun. 30, 2020 USD ($) $ / shares	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) day $ / shares	Jun. 30, 2019 USD ($)	May 19, 2020 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Increased inventory under credit facilities		$ 135,400,000		$ 135,400,000			$ 836,600,000
Increased borrowings under credit facilities		117,200,000		117,200,000			691,500,000
Gain on partial extinguishment		6,391,000	$ 0	6,391,000	$ 0
Class C Capital Stock
Debt Instrument [Line Items]
Shares received in unwinding of capped call transactions | shares	317,865
Value based on trading price of Class C capital stock at time of unwind	$ 14,800,000
Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount		2,386,717,000		2,386,717,000
Unamortized Debt Discount and Debt Issuance Costs		566,739,000		$ 566,739,000			463,348,000
2024 and 2026 Notes | Convertible Debt
Debt Instrument [Line Items]
Debt instrument, threshold consecutive trading days | day				30
Debt Instrument, convertible threshold percentage				130.00%
2.75% convertible senior notes due 2025 | Convertible Debt
Debt Instrument [Line Items]
Debt instrument, convertible threshold trading days | day	20
Debt instrument, threshold consecutive trading days | day	30
Debt Instrument, convertible threshold percentage	130.00%
Aggregate Principal Amount	$ 500,000,000.0	$ 565,000,000		$ 565,000,000		$ 65,000,000.0
Stated Interest Rate	2.75%	2.75%		2.75%		2.75%
Net proceeds from issuance	$ 553,300,000
Remaining consideration allocated to equity component	$ 154,800,000
Conversion Price per Share (usd per share) | $ / shares	$ 67.20	$ 67.20		$ 67.20
Unamortized Debt Discount and Debt Issuance Costs	$ 3,300,000	$ 163,214,000		$ 163,214,000			0
2.75% convertible senior notes due 2025 | Convertible Debt | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Repurchase price percentage of principal amount	100.00%
2.75% convertible senior notes due 2025 | Convertible Debt | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Repurchase price percentage of principal amount	100.00%
2.00% convertible senior notes due 2021 | Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount		$ 265,330,000		$ 265,330,000
Stated Interest Rate		2.00%		2.00%
Repurchased amount	$ 194,700,000
Cash paid for repurchase	194,700,000
Aggregate purchase price	230,900,000
Fair value of liability component	172,900,000
Remaining consideration allocated to equity component	58,000,000.0
Reduction to long-term debt	179,300,000
Reduction to additional paid-in capital	58,000,000.0
Gain on partial extinguishment	$ 6,400,000
Conversion Price per Share (usd per share) | $ / shares		$ 52.36		$ 52.36
Unamortized Debt Discount and Debt Issuance Costs		$ 19,333,000		$ 19,333,000			44,498,000
2.00% convertible senior notes due 2021 | Convertible Debt | Class C Capital Stock
Debt Instrument [Line Items]
Shares issued in debt conversion | shares	753,936
Citibank, N.A.
Debt Instrument [Line Items]
Repurchase agreement, committed amount		25,000,000.0		25,000,000.0
Citibank, N.A. | Mortgages Segment
Debt Instrument [Line Items]
Short-term debt		$ 33,918,000		$ 33,918,000			$ 394,000

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Debt - Schedule of Warehouse Lines of Credit (Details) - Line of Credit - Mortgages Segment	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 125,000,000
Citibank, N.A.
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 75,000,000
Weighted Average Interest Rate	1.88%
Comerica Bank
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 50,000,000
Weighted Average Interest Rate	2.81%

XML

Debt - Schedule of Convertible Senior Notes (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	May 19, 2020	May 15, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Interest Expense	$ 37,590,000	$ 18,897,000	$ 75,182,000	$ 35,363,000
Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	2,386,717,000		2,386,717,000
Unamortized Debt Discount and Debt Issuance Costs	566,739,000		566,739,000				$ 463,348,000
Fair Value	3,054,058,000		3,054,058,000				2,304,376,000
Contractual Coupon Interest	8,259,000	3,768,000	14,994,000	7,536,000
Accretion of bond discount	23,859,000	8,173,000	45,152,000	16,201,000
Amortization of Debt Issuance Costs	1,340,000	826,000	2,594,000	1,637,000
Interest Expense	33,458,000	12,767,000	62,740,000	25,374,000
Convertible Debt | 1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 500,000,000		$ 500,000,000
Stated Interest Rate	1.375%		1.375%
Effective Interest Rate	8.10%		8.10%
Unamortized Debt Discount and Debt Issuance Costs	$ 162,829,000		$ 162,829,000				172,813,000
Fair Value	705,000,000		705,000,000				597,380,000
Contractual Coupon Interest	1,719,000	0	3,438,000	0
Accretion of bond discount	4,922,000	0	9,746,000	0
Amortization of Debt Issuance Costs	120,000	0	238,000	0
Interest Expense	6,761,000	0	13,422,000	0
Convertible Debt | 2.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 565,000,000		$ 565,000,000		$ 65,000,000.0	$ 500,000,000.0
Stated Interest Rate	2.75%		2.75%		2.75%	2.75%
Effective Interest Rate	10.32%		10.32%
Unamortized Debt Discount and Debt Issuance Costs	$ 163,214,000		$ 163,214,000			$ 3,300,000	0
Fair Value	659,756,000		659,756,000				0
Contractual Coupon Interest	2,007,000	0	2,007,000	0
Accretion of bond discount	3,148,000	0	3,148,000	0
Amortization of Debt Issuance Costs	168,000	0	168,000	0
Interest Expense	5,323,000	0	5,323,000	0
Convertible Debt | 0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 673,000,000		$ 673,000,000
Stated Interest Rate	0.75%		0.75%
Effective Interest Rate	7.68%		7.68%
Unamortized Debt Discount and Debt Issuance Costs	$ 165,961,000		$ 165,961,000				182,462,000
Fair Value	957,659,000		957,659,000				819,378,000
Contractual Coupon Interest	1,262,000	0	2,510,000	0
Accretion of bond discount	8,095,000	0	15,956,000	0
Amortization of Debt Issuance Costs	278,000	0	545,000	0
Interest Expense	9,635,000	0	19,011,000	0
Convertible Debt | 1.50% convertible senior notes due 2023
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 373,750,000		$ 373,750,000
Stated Interest Rate	1.50%		1.50%
Effective Interest Rate	6.99%		6.99%
Unamortized Debt Discount and Debt Issuance Costs	$ 55,402,000		$ 55,402,000				63,575,000
Fair Value	388,113,000		388,113,000				356,464,000
Contractual Coupon Interest	1,402,000	1,402,000	2,804,000	2,804,000
Accretion of bond discount	3,749,000	3,496,000	7,446,000	6,933,000
Amortization of Debt Issuance Costs	366,000	342,000	727,000	678,000
Interest Expense	5,517,000	5,240,000	10,977,000	10,415,000
Convertible Debt | 2.00% convertible senior notes due 2021
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 265,330,000		$ 265,330,000
Stated Interest Rate	2.00%		2.00%
Effective Interest Rate	7.43%		7.43%
Unamortized Debt Discount and Debt Issuance Costs	$ 19,333,000		$ 19,333,000				44,498,000
Fair Value	326,688,000		326,688,000				514,312,000
Contractual Coupon Interest	1,803,000	2,300,000	4,103,000	4,600,000
Accretion of bond discount	3,945,000	4,677,000	8,856,000	9,268,000
Amortization of Debt Issuance Costs	408,000	484,000	916,000	959,000
Interest Expense	6,156,000	7,461,000	13,875,000	14,827,000
Convertible Debt | 2.75% convertible senior notes due 2020
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 9,637,000		$ 9,637,000
Stated Interest Rate	2.75%		2.75%
Unamortized Debt Discount and Debt Issuance Costs	$ 0		$ 0				0
Fair Value	16,842,000		16,842,000				$ 16,842,000
Contractual Coupon Interest	66,000	66,000	132,000	132,000
Accretion of bond discount	0	0	0	0
Amortization of Debt Issuance Costs	0	0	0	0
Interest Expense	$ 66,000	$ 66,000	$ 132,000	$ 132,000

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Debt - Summary of Conversion and Redemption Options and Details Related to Capped Call Confirmations (Details) - Convertible Debt	6 Months Ended
	Jun. 30, 2020 $ / shares	May 15, 2020 $ / shares
1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Debt instrument, conversion rate shares	0.0229830
Conversion Price per Share (usd per share)	$ 43.51
Initial cap price (usd per share)	$ 80.5750
Cap Price Premium	150.00%
2.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Debt instrument, conversion rate shares	0.0148810
Conversion Price per Share (usd per share)	$ 67.20	$ 67.20
0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Debt instrument, conversion rate shares	0.0229830
Conversion Price per Share (usd per share)	$ 43.51
Initial cap price (usd per share)	$ 72.5175
Cap Price Premium	125.00%
1.50% convertible senior notes due 2023
Debt Instrument [Line Items]
Debt instrument, conversion rate shares	0.0127592
Conversion Price per Share (usd per share)	$ 78.37
Initial cap price (usd per share)	$ 105.45
Cap Price Premium	85.00%
2.00% convertible senior notes due 2021
Debt Instrument [Line Items]
Debt instrument, conversion rate shares	0.0190985
Conversion Price per Share (usd per share)	$ 52.36
Initial cap price (usd per share)	$ 69.19
Cap Price Premium	85.00%

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Schedule Of Income Tax [Line Items]
Income tax benefit (expense)	$ (679)		$ 0	$ 8,549	$ 2,500
Non-cash impairment charge				76,800	$ 0
Trulia | Trade names and trademarks
Schedule Of Income Tax [Line Items]
Income tax benefit (expense)				$ 9,700
Non-cash impairment charge		$ 71,500
Federal
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards						$ 1,137,600
State
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards						$ 34,300

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Shareholders' Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands			3 Months Ended	6 Months Ended
	May 19, 2020 shares	May 15, 2020 USD ($) $ / shares shares	Jun. 30, 2020 USD ($) shares	Jun. 30, 2020 USD ($) Vote shares	Dec. 31, 2019 shares
Class of Stock [Line Items]
Preferred stock, issued (in shares)			0	0	0
Preferred stock, outstanding (in shares)			0	0	0
Value of capital stock issuance | $			$ 411,523	$ 411,523
Over-Allotment Option
Class of Stock [Line Items]
Shares issued and sold (in shares)	800,000
Class A Common Stock
Class of Stock [Line Items]
Common stock holders voting right | Vote				1
Conversion of common stock conversion ratio				1
Class B Common Stock
Class of Stock [Line Items]
Common stock holders voting right | Vote				10
Class C Capital Stock
Class of Stock [Line Items]
Shares issued and sold (in shares)		8,000,000
Shares issued		753,936
Shares issued (usd per share) | $ / shares		$ 48.00
Value of capital stock issuance | $		$ 36,200
Shares received in unwinding of capped call transactions		317,865
Value based on trading price of Class C capital stock at time of unwind | $		$ 14,800
Class C Capital Stock | Public Stock Offering
Class of Stock [Line Items]
Shares issued and sold (in shares)		8,800,000
Public offering price (usd per share) | $ / shares		$ 48.00
Net proceeds from public offering | $		$ 411,500

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Share-Based Awards - Additional Information (Details) - 2020 Plan - shares		6 Months Ended
	Jun. 09, 2020	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance (in shares)	12,400,000
Increase in number of shares of common and capital stock available for issuance, percentage	5.00%
Exercise price per share fixed	100.00%
Share based compensation arrangement by share based payment, award minimum exercisable period		3 months
Option Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation arrangement by share based payment, award maximum exercisable period		12 months
Expiration period		10 years
Vesting percentage		25.00%
Option Awards | Vesting, Option One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		12 months
Option Awards | Vesting, Option Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Option Awards | Vesting, Option Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		4 years
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		25.00%
Restricted Stock Units | Vesting, Option One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		12 months
Restricted Stock Units | Vesting, Option Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Restricted Stock Units | Vesting, Option Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		4 years

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Share-Based Awards - Summary of Option Award (Detail) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares
Number of Shares Subject to Existing Options
Beginning Balance (in shares) | shares	29,634,296
Granted (in shares) | shares	4,833,605
Exercised (in shares) | shares	(6,324,858)
Forfeited or cancelled (in shares) | shares	(674,462)
Ending Balance (in shares) | shares	27,468,581	29,634,296
Vested and exercisable ending balance (in shares) | shares	14,708,916
Weighted- Average Exercise Price Per Share
Beginning Balance (usd per share) | $ / shares	$ 35.95
Granted (usd per share) | $ / shares	49.24
Exercised (usd per share) | $ / shares	29.25
Forfeited or cancelled (usd per share) | $ / shares	40.76
Ending Balance (usd per share) | $ / shares	39.71	$ 35.95
Vested and exercisable (usd per share) | $ / shares	$ 35.84
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted-Average Remaining Contractual Life, Outstanding	6 years 8 months 26 days	6 years 3 months 10 days
Weighted-Average Remaining Contractual Life, Vested and exercisable	4 years 11 months 15 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract]
Aggregate Intrinsic Value, Outstanding | $	$ 493,801	$ 331,107
Aggregate Intrinsic Value Vested, and exercisable | $	$ 320,951

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Share-Based Awards - Fair Value of Options Granted, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model (Detail) - Option Awards - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	51.00%	45.00%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate	0.33%	2.00%
Weighted-average expected life	5 years	5 years
Weighted-average fair value of options granted (usd per share)	$ 20.21	$ 16.96	$ 20.69	$ 16.79
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			45.00%	45.00%
Risk-free interest rate			0.33%	2.00%
Weighted-average expected life			5 years	4 years 9 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			51.00%	47.00%
Risk-free interest rate			0.93%	2.53%
Weighted-average expected life			5 years 6 months	5 years 3 months

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Share-Based Awards - Option Awards - Additional Information (Detail) $ in Millions	Jun. 30, 2020 USD ($)
Option Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized cost of unvested share-based compensation awards	$ 218.2

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Share-Based Awards - Summary of Restricted Stock Units Activity (Detail) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2020 $ / shares shares
Restricted Stock Units
Beginning balance (in shares) | shares	7,052,767
Granted (in shares) | shares	3,665,016
Vested (in shares) | shares	(1,414,158)
Forfeited or cancelled (in shares) | shares	(513,401)
Ending balance (in shares) | shares	8,790,224
Weighted- Average Grant- Date Fair Value
Unvested outstanding, beginning balance (usd per share) | $ / shares	$ 40.01
Granted (usd per share) | $ / shares	49.30
Vested (usd per share) | $ / shares	40.65
Forfeited or cancelled (usd per share) | $ / shares	41.62
Unvested outstanding, ending balance (usd per share) | $ / shares	$ 43.69

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Share-Based Awards - Restricted Stock Units - Additional Information (Detail) $ in Millions	Jun. 30, 2020 USD ($)
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost	$ 356.6

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Share-Based Awards - Effects of Share Based Compensation in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 52,351	$ 43,632	$ 96,146	$ 109,756
Chief Executive Officer
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation			26,400
Cost of revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	1,119	936	2,292	1,816
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	9,116	6,801	16,109	12,451
Technology and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	21,666	18,399	40,583	33,908
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 20,450	$ 17,496	$ 37,162	$ 61,581

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Net Loss Per Share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	May 15, 2020
September 1, 2026 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)			11,492
Conversion Price per Share (usd per share)	$ 43.51		$ 43.51
May 15, 2025 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)			8,408
Conversion Price per Share (usd per share)	67.20		$ 67.20		$ 67.20
September 1, 2024 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)			15,468
Conversion Price per Share (usd per share)	43.51		$ 43.51
July 1, 2023 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)			4,769
Conversion Price per Share (usd per share)	78.37		$ 78.37
December 1, 2021 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)			5,067
Conversion Price per Share (usd per share)	$ 52.36		$ 52.36
Class A Common Stock and Class C Capital Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	41,920	27,143	38,719	26,615
Class A Common Stock and Class C Capital Stock | Weighted average | Option Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	25,202	19,502	22,649	19,656
Class A Common Stock and Class C Capital Stock | Weighted average | Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	9,086	7,230	8,354	6,548
Class A Common Stock | December 15, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	400	411	400	411
Class C Capital Stock | December 15, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	7,232	0	7,316	0

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Commitments and Contingencies - Purchase Commitments for Content Related to Mobile Applications and Websites (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 8,254
2021	17,627
2022	3,043
2023	507
Total future purchase commitments	$ 29,431

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Commitments and Contingencies - Additional Information (Detail)	Jun. 20, 2017 USD ($)	Feb. 09, 2017 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 30, 2018 claim	Feb. 28, 2018 claim	Feb. 05, 2018 claim
Other Commitments [Line Items]
Outstanding letters of credit			$ 16,900,000
Outstanding surety bonds			9,800,000	$ 10,200,000
VHT Vs Zillow Group Inc.
Other Commitments [Line Items]
Jury awarded damages	$ 4,100,000
VHT Vs Zillow Group Inc. | Actual Damages
Other Commitments [Line Items]
Jury awarded damages		$ 79,875
VHT Vs Zillow Group Inc. | Statutory Damages
Other Commitments [Line Items]
Jury awarded damages		$ 8,200,000
Class Action Lawsuits
Other Commitments [Line Items]
Number of pending claims | claim					2
Shareholder Derivative Lawsuits
Other Commitments [Line Items]
Number of pending claims | claim						4	2
Homes under contract to purchase that have not closed
Other Commitments [Line Items]
Value of homes under contract that have not closed			$ 51,900,000

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Employee Benefit Plan - Additional Information (Detail) - Zillow Merger - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Defined Contribution Plan Disclosure [Line Items]
Company's contribution based on employee contribution (up to)			4.00%
Company's expense related to its defined contribution 401(k) retirement plans	$ 6.4	$ 5.2	$ 12.8	$ 10.1

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Segment Information and Revenue - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2020 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

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Segment Information and Revenue - Revenue Categories (Detail) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020		Jun. 30, 2019		Jun. 30, 2020	Jun. 30, 2019
Revenue:
Total revenue	$ 768,352		$ 599,578		$ 1,894,173	$ 1,053,682
Costs and expenses:
Cost of revenue	461,071	[1]	271,221	[1]	1,222,743	422,569
Sales and marketing	155,598		187,433		360,246	349,020
Technology and development	128,857		120,330		263,775	228,100
General and administrative	85,511		82,839		177,796	178,613
Impairment costs	0		0		76,800	0
Integration costs	0		293		0	645
Total costs and expenses	831,037		662,116		2,101,360	1,178,947
Loss from operations	(62,685)		(62,538)		(207,187)	(125,265)
Other income	10,115		9,458		19,708	18,626
Interest expense	(37,590)		(18,897)		(75,182)	(35,363)
Loss before income taxes	(83,769)		(71,977)		(256,270)	(142,002)
Homes
Revenue:
Total revenue	454,252		248,924		1,224,125	377,396
Costs and expenses:
Cost of revenue	431,788	[1]	240,732	[1]	1,163,987	363,151
Sales and marketing	47,877		37,409		119,466	58,271
Technology and development	28,918		18,198		61,456	30,479
General and administrative	21,902		17,808		45,323	32,165
Impairment costs					0	0
Integration costs	0		0		0	0
Total costs and expenses	530,485		314,147		1,390,232	484,066
Loss from operations	(76,233)		(65,223)		(166,107)	(106,670)
Other income	0		0		0	0
Interest expense	(3,825)		(5,899)		(11,909)	(9,657)
Loss before income taxes	(80,058)		(71,122)		(178,016)	(116,327)
Homes | Zillow Offers
Revenue:
Total revenue	453,816		248,924		1,222,928	377,396
Homes | Premier Agent
Revenue:
Total revenue	0		0		0	0
Homes | Other
Revenue:
Total revenue	436		0		1,197	0
Homes | Mortgages
Revenue:
Total revenue	0		0		0	0
IMT
Revenue:
Total revenue	280,339		323,669		611,005	621,941
Costs and expenses:
Cost of revenue	23,387	[1]	26,059	[1]	47,705	50,310
Sales and marketing	96,026		135,440		216,199	262,094
Technology and development	93,176		94,261		188,204	182,230
General and administrative	53,884		54,671		112,638	125,521
Impairment costs					73,900	0
Integration costs	0		0		0	0
Total costs and expenses	266,473		310,431		638,646	620,155
Loss from operations	13,866		13,238		(27,641)	1,786
Other income	5,300		0		5,300	0
Interest expense	0		0		0	0
Loss before income taxes	19,166		13,238		(22,341)	1,786
IMT | Zillow Offers
Revenue:
Total revenue	0		0		0	0
IMT | Premier Agent
Revenue:
Total revenue	191,962		231,961		434,068	449,696
IMT | Other
Revenue:
Total revenue	88,377		91,708		176,937	172,245
IMT | Mortgages
Revenue:
Total revenue	0		0		0	0
Mortgages Segment
Revenue:
Total revenue	33,761		26,985		59,043	54,345
Costs and expenses:
Cost of revenue	5,896	[1]	4,430	[1]	11,051	9,108
Sales and marketing	11,695		14,584		24,581	28,655
Technology and development	6,763		7,871		14,115	15,391
General and administrative	9,725		10,360		19,835	20,927
Impairment costs					2,900	0
Integration costs	0		293		0	645
Total costs and expenses	34,079		37,538		72,482	74,726
Loss from operations	(318)		(10,553)		(13,439)	(20,381)
Other income	385		402		587	715
Interest expense	(307)		(287)		(533)	(388)
Loss before income taxes	(240)		(10,438)		(13,385)	(20,054)
Mortgages Segment | Zillow Offers
Revenue:
Total revenue	0		0		0	0
Mortgages Segment | Premier Agent
Revenue:
Total revenue	0		0		0	0
Mortgages Segment | Other
Revenue:
Total revenue	0		0		0	0
Mortgages Segment | Mortgages
Revenue:
Total revenue	$ 33,761		$ 26,985		$ 59,043	$ 54,345

[1] Amortization of website development costs and intangible assets included in technology and development of $18,857 and $14,656 for the three months ended June 30, 2020 and 2019, respectively and $36,041 and $29,056 for the six months ended June 30, 2020 and 2019, respectively.

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Segment Information and Revenue - Reconciliation of Segment Gross Profit and Loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting, Revenue Reconciling Item [Line Items]
Loss before income taxes	$ (83,769)	$ (71,977)	$ (256,270)	$ (142,002)
Corporate interest expense	(37,590)	(18,897)	(75,182)	(35,363)
Corporate other income	10,115	9,458	19,708	18,626
Gain on partial extinguishment of 2021 Notes	6,391	0	6,391	0
Consolidated loss before income taxes	(83,769)	(71,977)	(256,270)	(142,002)
Operating Segments
Segment Reporting, Revenue Reconciling Item [Line Items]
Loss before income taxes	(61,132)	(68,322)	(213,742)	(134,595)
Consolidated loss before income taxes	(61,132)	(68,322)	(213,742)	(134,595)
Corporate
Segment Reporting, Revenue Reconciling Item [Line Items]
Corporate interest expense	(33,458)	(12,711)	(62,740)	(25,318)
Corporate other income	$ 4,430	$ 9,056	$ 13,821	$ 17,911