(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices) | (Zip Code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit Number | Description | |||||||
99.1 | ||||||||
99.2 | ||||||||
99.3 | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
Dated: February 10, 2021 | ZILLOW GROUP, INC. | ||||||||||
By: | /s/ JENNIFER ROCK | ||||||||||
Name: | Jennifer Rock | ||||||||||
Title: | Chief Accounting Officer |
Contacts: | ||
Brad Berning | ||
Investor Relations | ||
ir@zillowgroup.com | ||
Emily Heffter | ||
Public Relations | ||
press@zillow.com |
Three Months Ended December 31, | 2019 to 2020 % Change | Year Ended December 31, | 2019 to 2020 % Change | ||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||
Homes segment | |||||||||||||||||||||||||||||||||||
Zillow Offers | $ | 301,703 | $ | 603,228 | (50)% | $ | 1,710,535 | $ | 1,365,250 | 25% | |||||||||||||||||||||||||
Other (1) | 2,442 | — | N/A | 4,840 | — | N/A | |||||||||||||||||||||||||||||
Total Homes segment revenue | 304,145 | 603,228 | (50)% | 1,715,375 | 1,365,250 | 26% | |||||||||||||||||||||||||||||
IMT segment: | |||||||||||||||||||||||||||||||||||
Premier Agent | 314,213 | 233,482 | 35% | 1,046,954 | 923,876 | 13% | |||||||||||||||||||||||||||||
Other (2) | 109,625 | 86,183 | 27% | 403,278 | 353,020 | 14% | |||||||||||||||||||||||||||||
Total IMT segment revenue | 423,838 | 319,665 | 33% | 1,450,232 | 1,276,896 | 14% | |||||||||||||||||||||||||||||
Mortgages segment | 60,969 | 21,054 | 190% | 174,210 | 100,691 | 73% | |||||||||||||||||||||||||||||
Total revenue | $ | 788,952 | $ | 943,947 | (16)% | $ | 3,339,817 | $ | 2,742,837 | 22% | |||||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||||||||
Segment income (loss) before income taxes: | |||||||||||||||||||||||||||||||||||
Homes segment | $ | (66,621) | $ | (107,923) | $ | (320,254) | $ | (312,120) | |||||||||||||||||||||||||||
IMT segment | 145,369 | 36,221 | 262,984 | 80,060 | |||||||||||||||||||||||||||||||
Mortgages segment | 7,305 | (12,654) | 4,514 | (44,962) | |||||||||||||||||||||||||||||||
Total segment income (loss) before income taxes | $ | 86,053 | $ | (84,356) | $ | (52,756) | $ | (277,022) | |||||||||||||||||||||||||||
Net income (loss) | $ | 46,036 | $ | (101,210) | $ | (162,115) | $ | (305,361) | |||||||||||||||||||||||||||
Adjusted EBITDA (3): | |||||||||||||||||||||||||||||||||||
Homes segment | $ | (46,890) | $ | (82,525) | $ | (241,969) | $ | (241,326) | |||||||||||||||||||||||||||
IMT segment | 203,093 | 87,659 | 556,137 | 303,863 | |||||||||||||||||||||||||||||||
Mortgages segment | 13,648 | (8,311) | 28,825 | (23,653) | |||||||||||||||||||||||||||||||
Total Adjusted EBITDA | $ | 169,851 | $ | (3,177) | $ | 342,993 | $ | 38,884 | |||||||||||||||||||||||||||
Percentage of Revenue: | |||||||||||||||||||||||||||||||||||
Segment income (loss) before income taxes: | |||||||||||||||||||||||||||||||||||
Homes segment | (22) | % | (18) | % | (19) | % | (23) | % | |||||||||||||||||||||||||||
IMT segment | 34 | % | 11 | % | 18 | % | 6 | % | |||||||||||||||||||||||||||
Mortgages segment | 12 | % | (60) | % | 3 | % | (45) | % | |||||||||||||||||||||||||||
Total segment income (loss) before income taxes | 11 | % | (9) | % | (2) | % | (10) | % | |||||||||||||||||||||||||||
Net income (loss) | 6 | % | (11) | % | (5) | % | (11) | % | |||||||||||||||||||||||||||
Adjusted EBITDA: | |||||||||||||||||||||||||||||||||||
Homes segment | (15) | % | (14) | % | (14) | % | (18) | % | |||||||||||||||||||||||||||
IMT segment | 48 | % | 27 | % | 38 | % | 24 | % | |||||||||||||||||||||||||||
Mortgages segment | 22 | % | (39) | % | 17 | % | (23) | % | |||||||||||||||||||||||||||
Total Adjusted EBITDA | 22 | % | — | % | 10 | % | 1 | % | |||||||||||||||||||||||||||
(1) Other Homes segment revenue relates to revenue associated with the title and escrow services provided through Zillow Closing Services. (2) Other IMT segment 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. (3) Adjusted EBITDA is a non-GAAP financial measure; it is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. See below for more information regarding our presentation of Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, which is net income (loss) on a consolidated basis and income (loss) before income taxes for each segment, for each of the periods presented. |
Three Months Ended December 31, 2020 | |||||||||||||||||||||||||||||
Homes | IMT | Mortgages | Corporate Items (2) | Consolidated | |||||||||||||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income and Income (Loss) Before Income Taxes: | |||||||||||||||||||||||||||||
Net income (1) | N/A | N/A | N/A | N/A | $ | 46,036 | |||||||||||||||||||||||
Income tax expense | N/A | N/A | N/A | N/A | 601 | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | (66,621) | $ | 145,369 | $ | 7,305 | $ | (39,416) | $ | 46,637 | |||||||||||||||||||
Other income | — | — | (1,146) | (1,657) | (2,803) | ||||||||||||||||||||||||
Depreciation and amortization expense | 4,114 | 21,973 | 1,967 | — | 28,054 | ||||||||||||||||||||||||
Share-based compensation expense | 12,319 | 35,751 | 4,375 | — | 52,445 | ||||||||||||||||||||||||
Loss on extinguishment of 2021 Notes | — | — | — | 4,943 | 4,943 | ||||||||||||||||||||||||
Interest expense | 3,298 | — | 1,147 | 36,130 | 40,575 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | (46,890) | $ | 203,093 | $ | 13,648 | $ | — | $ | 169,851 |
Three Months Ended December 31, 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 | $ | (101,210) | |||||||||||||||||||||||
Income tax benefit | N/A | N/A | N/A | N/A | (458) | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | (107,923) | $ | 36,221 | $ | (12,654) | $ | (17,312) | $ | (101,668) | |||||||||||||||||||
Other income | — | — | (350) | (11,683) | (12,033) | ||||||||||||||||||||||||
Depreciation and amortization expense | 3,030 | 19,105 | 1,444 | — | 23,579 | ||||||||||||||||||||||||
Share-based compensation expense | 11,724 | 32,333 | 2,961 | — | 47,018 | ||||||||||||||||||||||||
Interest expense | 10,644 | — | 288 | 28,995 | 39,927 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | (82,525) | $ | 87,659 | $ | (8,311) | $ | — | $ | (3,177) |
Year Ended December 31, 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 | $ | (162,115) | |||||||||||||||||||||||
Income tax benefit | N/A | N/A | N/A | N/A | (7,523) | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | (320,254) | $ | 262,984 | $ | 4,514 | $ | (116,882) | $ | (169,638) | |||||||||||||||||||
Other income | — | (5,300) | (2,369) | (17,860) | (25,529) | ||||||||||||||||||||||||
Depreciation and amortization expense | 13,315 | 89,862 | 6,854 | — | 110,031 | ||||||||||||||||||||||||
Share-based compensation expense | 48,166 | 134,691 | 14,693 | — | 197,550 | ||||||||||||||||||||||||
Gain on extinguishment of 2021 Notes | — | — | — | (1,448) | (1,448) | ||||||||||||||||||||||||
Impairment costs | — | 73,900 | 2,900 | — | 76,800 | ||||||||||||||||||||||||
Interest expense | 16,804 | — | 2,233 | 136,190 | 155,227 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | (241,969) | $ | 556,137 | $ | 28,825 | $ | — | $ | 342,993 |
Year Ended December 31, 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 | $ | (305,361) | |||||||||||||||||||||||
Income tax benefit | N/A | N/A | N/A | N/A | (4,258) | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | (312,120) | $ | 80,060 | $ | (44,962) | $ | (32,597) | $ | (309,619) | |||||||||||||||||||
Other income | — | — | (1,409) | (38,249) | (39,658) | ||||||||||||||||||||||||
Depreciation and amortization expense | 8,414 | 73,369 | 5,684 | — | 87,467 | ||||||||||||||||||||||||
Share-based compensation expense | 32,390 | 150,434 | 16,078 | — | 198,902 | ||||||||||||||||||||||||
Interest expense | 29,990 | — | 956 | 70,846 | 101,792 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | (241,326) | $ | 303,863 | $ | (23,653) | $ | — | $ | 38,884 | |||||||||||||||||||
(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 income (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 (loss) on 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. |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,703,130 | $ | 1,141,263 | |||||||
Short-term investments | 2,218,108 | 1,280,989 | |||||||||
Accounts receivable, net | 69,940 | 67,005 | |||||||||
Mortgage loans held for sale | 330,758 | 36,507 | |||||||||
Inventory | 491,293 | 836,627 | |||||||||
Prepaid expenses and other current assets | 75,846 | 58,117 | |||||||||
Restricted cash | 75,805 | 89,646 | |||||||||
Total current assets | 4,964,880 | 3,510,154 | |||||||||
Contract cost assets | 50,719 | 45,209 | |||||||||
Property and equipment, net | 196,152 | 170,489 | |||||||||
Right of use assets | 187,960 | 212,153 | |||||||||
Goodwill | 1,984,907 | 1,984,907 | |||||||||
Intangible assets, net | 94,767 | 190,567 | |||||||||
Other assets | 7,175 | 18,494 | |||||||||
Total assets | $ | 7,486,560 | $ | 6,131,973 | |||||||
Liabilities and shareholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 18,974 | $ | 8,343 | |||||||
Accrued expenses and other current liabilities | 94,487 | 85,442 | |||||||||
Accrued compensation and benefits | 47,666 | 37,805 | |||||||||
Borrowings under credit facilities | 670,209 | 721,951 | |||||||||
Deferred revenue | 48,995 | 39,747 | |||||||||
Lease liabilities, current portion | 28,310 | 17,592 | |||||||||
Convertible senior notes, current portion | — | 9,637 | |||||||||
Total current liabilities | 908,641 | 920,517 | |||||||||
Lease liabilities, net of current portion | 207,723 | 220,445 | |||||||||
Convertible senior notes, net of current portion | 1,613,523 | 1,543,402 | |||||||||
Deferred tax liabilities and other long-term liabilities | 14,857 | 12,188 | |||||||||
Total liabilities | 2,744,744 | 2,696,552 | |||||||||
Shareholders’ equity: | |||||||||||
Class A common stock | 6 | 6 | |||||||||
Class B common stock | 1 | 1 | |||||||||
Class C capital stock | 17 | 14 | |||||||||
Additional paid-in capital | 5,880,883 | 4,412,200 | |||||||||
Accumulated other comprehensive income | 164 | 340 | |||||||||
Accumulated deficit | (1,139,255) | (977,140) | |||||||||
Total shareholders’ equity | 4,741,816 | 3,435,421 | |||||||||
Total liabilities and shareholders’ equity | $ | 7,486,560 | $ | 6,131,973 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Homes | $ | 304,145 | $ | 603,228 | $ | 1,715,375 | $ | 1,365,250 | |||||||||||||||
IMT | 423,838 | 319,665 | 1,450,232 | 1,276,896 | |||||||||||||||||||
Mortgages | 60,969 | 21,054 | 174,210 | 100,691 | |||||||||||||||||||
Total revenue | 788,952 | 943,947 | 3,339,817 | 2,742,837 | |||||||||||||||||||
Cost of revenue (exclusive of amortization) (1)(2): | |||||||||||||||||||||||
Homes | 277,249 | 581,398 | 1,621,040 | 1,315,345 | |||||||||||||||||||
IMT | 27,938 | 23,894 | 104,091 | 98,522 | |||||||||||||||||||
Mortgages | 12,241 | 4,325 | 31,264 | 18,154 | |||||||||||||||||||
Total cost of revenue | 317,428 | 609,617 | 1,756,395 | 1,432,021 | |||||||||||||||||||
Sales and marketing (2) | 161,744 | 183,761 | 672,816 | 714,128 | |||||||||||||||||||
Technology and development (2) | 126,997 | 125,273 | 518,072 | 477,347 | |||||||||||||||||||
General and administrative (2) | 93,431 | 99,070 | 357,122 | 366,176 | |||||||||||||||||||
Impairment costs | — | — | 76,800 | — | |||||||||||||||||||
Integration costs | — | — | — | 650 | |||||||||||||||||||
Total costs and expenses | 699,600 | 1,017,721 | 3,381,205 | 2,990,322 | |||||||||||||||||||
Income (loss) from operations | 89,352 | (73,774) | (41,388) | (247,485) | |||||||||||||||||||
Gain (loss) on extinguishment of 2021 Notes | (4,943) | — | 1,448 | — | |||||||||||||||||||
Other income | 2,803 | 12,033 | 25,529 | 39,658 | |||||||||||||||||||
Interest expense | (40,575) | (39,927) | (155,227) | (101,792) | |||||||||||||||||||
Income (loss) before income taxes | 46,637 | (101,668) | (169,638) | (309,619) | |||||||||||||||||||
Income tax benefit (expense) | (601) | 458 | 7,523 | 4,258 | |||||||||||||||||||
Net income (loss) | $ | 46,036 | $ | (101,210) | $ | (162,115) | $ | (305,361) | |||||||||||||||
Net income (loss) per share: | |||||||||||||||||||||||
Basic | $ | 0.20 | $ | (0.49) | $ | (0.72) | $ | (1.48) | |||||||||||||||
Diluted | $ | 0.18 | $ | (0.49) | $ | (0.72) | $ | (1.48) | |||||||||||||||
Weighted-average shares outstanding: | |||||||||||||||||||||||
Basic | 235,341 | 208,204 | 223,848 | 206,380 | |||||||||||||||||||
Diluted | 251,499 | 208,204 | 223,848 | 206,380 | |||||||||||||||||||
_________________ (1) Amortization of website development costs and intangible assets included in technology and development | $ | 19,977 | $ | 17,046 | $ | 75,263 | $ | 61,937 | |||||||||||||||
(2) Includes share-based compensation expense as follows: | |||||||||||||||||||||||
Cost of revenue | $ | 1,832 | $ | 1,099 | $ | 5,741 | $ | 3,978 | |||||||||||||||
Sales and marketing | 8,370 | 6,087 | 33,110 | 25,126 | |||||||||||||||||||
Technology and development | 21,444 | 17,980 | 81,820 | 69,921 | |||||||||||||||||||
General and administrative | 20,799 | 21,852 | 76,879 | 99,877 | |||||||||||||||||||
Total | $ | 52,445 | $ | 47,018 | $ | 197,550 | $ | 198,902 | |||||||||||||||
Other Financial Data: | |||||||||||||||||||||||
Segment income (loss) before income taxes: | |||||||||||||||||||||||
Homes segment | $ | (66,621) | $ | (107,923) | $ | (320,254) | $ | (312,120) | |||||||||||||||
IMT segment | 145,369 | 36,221 | 262,984 | 80,060 | |||||||||||||||||||
Mortgages segment | 7,305 | (12,654) | 4,514 | (44,962) | |||||||||||||||||||
Total segment income (loss) before income taxes | $ | 86,053 | $ | (84,356) | $ | (52,756) | $ | (277,022) | |||||||||||||||
Adjusted EBITDA (3): | |||||||||||||||||||||||
Homes segment | $ | (46,890) | $ | (82,525) | $ | (241,969) | $ | (241,326) | |||||||||||||||
IMT segment | 203,093 | 87,659 | 556,137 | 303,863 | |||||||||||||||||||
Mortgages segment | 13,648 | (8,311) | 28,825 | (23,653) | |||||||||||||||||||
Total Adjusted EBITDA | $ | 169,851 | $ | (3,177) | $ | 342,993 | $ | 38,884 | |||||||||||||||
(3) Adjusted EBITDA is a non-GAAP financial measure; it is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. See Exhibit 99.1 for more information regarding our presentation of Adjusted EBITDA and for a reconciliation of Adjusted EBITDA to net income (loss) on a consolidated basis and income (loss) before income taxes for each segment, the most directly comparable GAAP financial measures, for each of the periods presented. |
Year Ended December 31, | |||||||||||
2020 | 2019 | ||||||||||
Operating activities | |||||||||||
Net loss | $ | (162,115) | $ | (305,361) | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | 110,031 | 87,467 | |||||||||
Share-based compensation expense | 197,550 | 198,902 | |||||||||
Amortization of right of use assets | 24,338 | 23,142 | |||||||||
Amortization of contract cost assets | 36,494 | 35,323 | |||||||||
Amortization of discount and issuance costs on 2021 Notes, 2023 Notes, 2024 Notes, 2025 Notes, and 2026 Notes | 102,401 | 52,097 | |||||||||
Gain on extinguishment of 2021 Notes | (1,448) | — | |||||||||
Impairment costs | 76,800 | — | |||||||||
Deferred income taxes | (7,523) | (4,258) | |||||||||
Loss (gain) on disposal of property and equipment and other assets | (402) | 7,231 | |||||||||
Credit loss expense | 2,650 | 2,772 | |||||||||
Net loss (gain) on investment securities | 372 | (57) | |||||||||
Amortization (accretion) of bond premium (discount) | 2,141 | (6,344) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (5,585) | (3,694) | |||||||||
Mortgage loans held for sale | (294,251) | (1,098) | |||||||||
Inventory | 345,277 | (673,798) | |||||||||
Prepaid expenses and other assets | (15,957) | (978) | |||||||||
Contract cost assets | (42,004) | (34,713) | |||||||||
Lease liabilities | (2,149) | (18,940) | |||||||||
Accounts payable | 12,972 | (496) | |||||||||
Accrued expenses and other current liabilities | 15,321 | 19,573 | |||||||||
Accrued compensation and benefits | 9,861 | 6,417 | |||||||||
Deferred revenue | 9,248 | 5,667 | |||||||||
Other long-term liabilities | 10,175 | (1,028) | |||||||||
Net cash provided by (used in) operating activities | 424,197 | (612,174) | |||||||||
Investing activities | |||||||||||
Proceeds from maturities of investments | 2,230,705 | 1,126,058 | |||||||||
Proceeds from sales of investments | 116,394 | — | |||||||||
Purchases of investments | (3,287,071) | (1,495,477) | |||||||||
Purchases of property and equipment | (84,940) | (67,044) | |||||||||
Purchases of intangible assets | (23,577) | (19,591) | |||||||||
Proceeds from sale of equity investment | 10,000 | — | |||||||||
Net cash used in investing activities | (1,038,489) | (456,054) | |||||||||
Financing activities | |||||||||||
Proceeds from issuance of convertible notes, net of issuance costs | 553,282 | 1,157,675 | |||||||||
Premiums paid for capped call confirmations | — | (159,677) | |||||||||
Proceeds from issuance of Class C capital stock, net of issuance costs | 411,522 | — | |||||||||
Extinguishment of 2021 Notes | (194,768) | — | |||||||||
Proceeds from borrowings on credit facilities | 348,684 | 688,489 | |||||||||
Repayments of borrowings on credit facilities | (679,042) | (113,665) | |||||||||
Net borrowings (repayments) on warehouse lines of credit and repurchase agreements | 278,616 | (2,590) | |||||||||
Proceeds from exercise of stock options | 444,028 | 65,465 | |||||||||
Value of equity awards withheld for tax liability | (4) | (3) | |||||||||
Net cash provided by financing activities | 1,162,318 | 1,635,694 | |||||||||
Net increase in cash, cash equivalents and restricted cash during period | 548,026 | 567,466 | |||||||||
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 | $ | 1,778,935 | $ | 1,230,909 | |||||||
Supplemental disclosures of cash flow information | |||||||||||
Cash paid for interest | $ | 50,755 | $ | 42,156 | |||||||
Noncash transactions: | |||||||||||
Capitalized share-based compensation | $ | 16,557 | $ | 11,947 | |||||||
Write-off of fully depreciated property and equipment | $ | 115,086 | $ | 36,159 | |||||||
Write-off of fully amortized intangible assets | $ | 62,622 | $ | 9,999 | |||||||
Property and equipment purchased on account | $ | 335 | $ | 8,775 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net income (loss), as reported | $ | 46,036 | $ | (101,210) | $ | (162,115) | $ | (305,361) | |||||||||||||||
Share-based compensation expense | 52,445 | 47,018 | 197,550 | 198,902 | |||||||||||||||||||
Impairment costs | — | — | 76,800 | — | |||||||||||||||||||
Loss (gain) on extinguishment of 2021 Notes | 4,943 | — | (1,448) | — | |||||||||||||||||||
Income tax expense (benefit) | 601 | (458) | (7,523) | (4,258) | |||||||||||||||||||
Net income (loss), adjusted | $ | 104,025 | $ | (54,650) | $ | 103,264 | $ | (110,717) | |||||||||||||||
Non-GAAP net income (loss) per share: | |||||||||||||||||||||||
Basic | $ | 0.44 | $ | (0.26) | $ | 0.46 | $ | (0.54) | |||||||||||||||
Diluted | $ | 0.41 | $ | (0.26) | $ | 0.44 | $ | (0.54) | |||||||||||||||
Weighted-average shares outstanding: | |||||||||||||||||||||||
Basic | 235,341 | 208,204 | 223,848 | 206,380 | |||||||||||||||||||
Diluted | 251,499 | 208,204 | 235,499 | 206,380 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Denominator for basic calculation | 235,341 | 208,204 | 223,848 | 206,380 | |||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||
Option awards | 11,203 | — | 8,648 | — | |||||||||||||||||||
Unvested restricted stock units | 4,723 | — | 3,003 | — | |||||||||||||||||||
Class A common stock issuable upon conversion of the convertible notes due in 2020 | 232 | — | — | — | |||||||||||||||||||
Denominator for dilutive calculation | 251,499 | 208,204 | 235,499 | 206,380 |
Three Months Ended December 31, 2020 | Three Months Ended December 31, 2019 | ||||||||||||||||||||||||||||||||||
Homes | IMT | Mortgages | Homes | IMT | Mortgages | ||||||||||||||||||||||||||||||
Revenue | $ | 304,145 | $ | 423,838 | $ | 60,969 | $ | 603,228 | $ | 319,665 | $ | 21,054 | |||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Cost of revenue | 277,249 | 27,938 | 12,241 | 581,398 | 23,894 | 4,325 | |||||||||||||||||||||||||||||
Sales and marketing | 38,649 | 103,284 | 19,811 | 64,177 | 108,301 | 11,283 | |||||||||||||||||||||||||||||
Technology and development | 30,156 | 88,330 | 8,511 | 27,864 | 88,883 | 8,526 | |||||||||||||||||||||||||||||
General and administrative | 21,414 | 58,917 | 13,100 | 27,068 | 62,366 | 9,636 | |||||||||||||||||||||||||||||
Total costs and expenses | 367,468 | 278,469 | 53,663 | 700,507 | 283,444 | 33,770 | |||||||||||||||||||||||||||||
Income (loss) from operations | (63,323) | 145,369 | 7,306 | (97,279) | 36,221 | (12,716) | |||||||||||||||||||||||||||||
Segment other income | — | — | 1,146 | — | — | 350 | |||||||||||||||||||||||||||||
Segment interest expense | (3,298) | — | (1,147) | (10,644) | — | (288) | |||||||||||||||||||||||||||||
Income (loss) before income taxes (1) | $ | (66,621) | $ | 145,369 | $ | 7,305 | $ | (107,923) | $ | 36,221 | $ | (12,654) |
Year Ended December 31, 2020 | Year Ended December 31, 2019 | ||||||||||||||||||||||||||||||||||
Homes | IMT | Mortgages | Homes | IMT | Mortgages | ||||||||||||||||||||||||||||||
Revenue | $ | 1,715,375 | $ | 1,450,232 | $ | 174,210 | $ | 1,365,250 | $ | 1,276,896 | $ | 100,691 | |||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Cost of revenue | 1,621,040 | 104,091 | 31,264 | 1,315,345 | 98,522 | 18,154 | |||||||||||||||||||||||||||||
Sales and marketing | 190,829 | 422,385 | 59,602 | 171,634 | 488,909 | 53,585 | |||||||||||||||||||||||||||||
Technology and development | 119,885 | 367,070 | 31,117 | 78,994 | 365,769 | 32,584 | |||||||||||||||||||||||||||||
General and administrative | 87,071 | 225,102 | 44,949 | 81,407 | 243,636 | 41,133 | |||||||||||||||||||||||||||||
Impairment costs | — | 73,900 | 2,900 | — | — | — | |||||||||||||||||||||||||||||
Integration costs | — | — | — | — | — | 650 | |||||||||||||||||||||||||||||
Total costs and expenses | 2,018,825 | 1,192,548 | 169,832 | 1,647,380 | 1,196,836 | 146,106 | |||||||||||||||||||||||||||||
Income (loss) from operations | (303,450) | 257,684 | 4,378 | (282,130) | 80,060 | (45,415) | |||||||||||||||||||||||||||||
Segment other income | — | 5,300 | 2,369 | — | — | 1,409 | |||||||||||||||||||||||||||||
Segment interest expense | (16,804) | — | (2,233) | (29,990) | — | (956) | |||||||||||||||||||||||||||||
Income (loss) before income taxes (1) | $ | (320,254) | $ | 262,984 | $ | 4,514 | $ | (312,120) | $ | 80,060 | $ | (44,962) |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Total segment income (loss) before income taxes | $ | 86,053 | $ | (84,356) | $ | (52,756) | $ | (277,022) | |||||||||||||||
Corporate interest expense | (36,130) | (28,995) | (136,190) | (70,846) | |||||||||||||||||||
Corporate other income | 1,657 | 11,683 | 17,860 | 38,249 | |||||||||||||||||||
Gain (loss) on extinguishment of 2021 Notes | (4,943) | — | 1,448 | — | |||||||||||||||||||
Consolidated income (loss) before income taxes | $ | 46,637 | $ | (101,668) | $ | (169,638) | $ | (309,619) | |||||||||||||||
Certain corporate items are not directly attributable to any of our segments, including the gain (loss) on 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 December 31, | 2019 to 2020 % Change | ||||||||||||||||
2020 | 2019 | ||||||||||||||||
Visits (1) | 2,232.3 | 1,759.5 | 27 | % | |||||||||||||
Average Monthly Unique Users (2) | 200.7 | 172.6 | 16 | % | |||||||||||||
Number of Homes Sold | 923 | 1,902 | (51) | % |
Three Months Ended December 31, 2020 | Three Months Ended December 31, 2019 | ||||||||||||||||||||||
Total | Average Per Home | Total | Average Per Home | ||||||||||||||||||||
Homes sold | 923 | 1,902 | |||||||||||||||||||||
Zillow Offers revenue | $ | 301,703,000 | $ | 326,872 | $ | 603,228,000 | $ | 317,155 | |||||||||||||||
Operating costs: | |||||||||||||||||||||||
Home acquisition costs (1) | 259,285,000 | 280,915 | 544,291,000 | 286,168 | |||||||||||||||||||
Renovation costs (1) | 9,298,000 | 10,074 | 28,264,000 | 14,860 | |||||||||||||||||||
Holding costs (1)(2) | 1,636,000 | 1,772 | 7,424,000 | 3,903 | |||||||||||||||||||
Selling costs | 11,335,000 | 12,281 | 26,125,000 | 13,736 | |||||||||||||||||||
Total operating costs | 281,554,000 | 305,042 | 606,104,000 | 318,667 | |||||||||||||||||||
Interest expense (1)(2) | 2,422,000 | 2,624 | 9,310,000 | 4,895 | |||||||||||||||||||
Return on homes sold after interest expense | $ | 17,727,000 | $ | 19,206 | $ | (12,186,000) | $ | (6,407) | |||||||||||||||
(1) Amount excludes expenses incurred during the period that are not related to homes sold during the period. (2) Holding costs and interest expense include $1.4 million and $0.6 million, respectively, of costs incurred in prior periods associated with homes sold in the fourth quarter of 2020 and $4.4 million and $5.1 million, respectively, of costs incurred in prior periods associated with homes sold in the fourth quarter of 2019. |
Three Months Ended December 31, | |||||||||||
Calculation of Average Gross Profit per Home | 2020 | 2019 | |||||||||
Zillow Offers revenue | $ | 301,703,000 | $ | 603,228,000 | |||||||
Zillow Offers cost of revenue | 274,431,000 | 581,398,000 | |||||||||
Zillow Offers gross profit | $ | 27,272,000 | $ | 21,830,000 | |||||||
Homes sold | 923 | 1,902 | |||||||||
Average Zillow Offers gross profit per home | $ | 29,547 | $ | 11,477 | |||||||
Reconciliation of Non-GAAP Measure to Nearest GAAP Measure | |||||||||||
Zillow Offers gross profit | $ | 27,272,000 | $ | 21,830,000 | |||||||
Holding costs included in sales and marketing (1) | (986,000) | (7,424,000) | |||||||||
Selling costs included in sales and marketing (2) | (11,335,000) | (26,125,000) | |||||||||
Interest expense (3) | (2,422,000) | (9,310,000) | |||||||||
Direct and indirect expenses included in cost of revenue (4) | 4,773,000 | 8,339,000 | |||||||||
Share-based compensation expense and depreciation and amortization expense included in cost of revenue | 425,000 | 504,000 | |||||||||
Return on homes sold after interest expense | $ | 17,727,000 | $ | (12,186,000) | |||||||
Homes sold | 923 | 1,902 | |||||||||
Average return on homes sold after interest expense | $ | 19,206 | $ | (6,407) | |||||||
(1) Amount represents holding costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period and prior periods. These costs primarily include homeowners association dues, property taxes, insurance, utilities, and cleaning and maintenance costs incurred during the time a home is held for sale after the renovation period is complete. On a GAAP basis, the Company incurred a total of $2.4 million and $8.3 million of holding costs included in sales and marketing expense for the three months ended December 31, 2020 and 2019, respectively. (2) Amount represents selling costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period. These costs primarily include agent commissions paid upon the sale of a home. (3) Amount represents interest expense incurred related to homes sold in the presented period that was not eligible for inventory capitalization and was therefore expensed as a period cost in the presented period and prior periods. (4) Amount includes inventory valuation adjustments recorded during the period associated with homes that remain in inventory at period end, net of inventory valuation adjustments recorded in prior periods related to homes sold in the presented period, holding costs incurred in the renovation period that are eligible for inventory capitalization and are expensed in the period presented when the associated home is sold, as well as corporate costs allocated to Zillow Offers such as headcount expenses and hosting-related costs related to the operation of our website. |
Year Ended December 31, 2020 | Year Ended December 31, 2019 | ||||||||||||||||||||||
Total | Average Per Home | Total | Average Per Home | ||||||||||||||||||||
Homes sold | 5,337 | 4,313 | |||||||||||||||||||||
Zillow Offers revenue | $ | 1,710,535,000 | $ | 320,505 | $ | 1,365,250,000 | $ | 316,543 | |||||||||||||||
Operating costs: | |||||||||||||||||||||||
Home acquisition costs (1) | 1,527,733,000 | 286,253 | 1,233,799,000 | 286,065 | |||||||||||||||||||
Renovation costs (1) | 76,691,000 | 14,370 | 57,878,000 | 13,419 | |||||||||||||||||||
Holding costs (1)(2) | 19,977,000 | 3,743 | 15,865,000 | 3,678 | |||||||||||||||||||
Selling costs | 71,344,000 | 13,368 | 59,178,000 | 13,722 | |||||||||||||||||||
Total operating costs | 1,695,745,000 | 317,734 | 1,366,720,000 | 316,884 | |||||||||||||||||||
Interest expense (1)(2) | 22,130,000 | 4,146 | 20,205,000 | 4,685 | |||||||||||||||||||
Return on homes sold after interest expense | $ | (7,340,000) | $ | (1,375) | $ | (21,675,000) | $ | (5,026) | |||||||||||||||
(1) Amount excludes expenses incurred during the period that are not related to homes sold during the period. (2) Holding costs and interest expense include $7.6 million and $8.6 million, respectively, of costs incurred in prior periods associated with homes sold in the year ended December 31, 2020 and $0.9 million and $1.0 million, respectively, of costs incurred in prior periods associated with homes sold in the year ended December 31, 2019. |
Year Ended December 31, | |||||||||||
Calculation of Average Gross Profit per Home | 2020 | 2019 | |||||||||
Zillow Offers revenue | $ | 1,710,535,000 | $ | 1,365,250,000 | |||||||
Zillow Offers cost of revenue | 1,612,317,000 | 1,315,345,000 | |||||||||
Zillow Offers gross profit | $ | 98,218,000 | $ | 49,905,000 | |||||||
Homes sold | 5,337 | 4,313 | |||||||||
Average Zillow Offers gross profit per home | $ | 18,403 | $ | 11,571 | |||||||
Reconciliation of Non-GAAP Measure to Nearest GAAP Measure | |||||||||||
Zillow Offers gross profit | $ | 98,218,000 | $ | 49,905,000 | |||||||
Holding costs included in sales and marketing (1) | (18,994,000) | (15,865,000) | |||||||||
Selling costs included in sales and marketing (2) | (71,344,000) | (59,178,000) | |||||||||
Interest expense (3) | (22,130,000) | (20,205,000) | |||||||||
Direct and indirect expenses included in cost of revenue (4) | 5,279,000 | 22,513,000 | |||||||||
Share-based compensation expense and depreciation and amortization expense included in cost of revenue | 1,631,000 | 1,155,000 | |||||||||
Return on homes sold after interest expense | $ | (7,340,000) | $ | (21,675,000) | |||||||
Homes sold | 5,337 | 4,313 | |||||||||
Average return on homes sold after interest expense | $ | (1,375) | $ | (5,026) | |||||||
(1) Amount represents holding costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period and prior periods. These costs primarily include homeowners association dues, property taxes, insurance, utilities, and cleaning and maintenance costs incurred during the time a home is held for sale after the renovation period is complete. On a GAAP basis, the Company incurred a total of $11.3 million and $22.6 million of holding costs included in sales and marketing expense for the years ended December 31, 2020 and 2019, respectively. (2) Amount represents selling costs incurred related to homes sold in the presented period that were not eligible for inventory capitalization and were therefore expensed as period costs in the presented period. These costs primarily include agent commissions paid upon the sale of a home. (3) Amount represents interest expense incurred related to homes sold in the presented period that was not eligible for inventory capitalization and was therefore expensed as a period cost in the presented period and prior periods. (4) Amount includes inventory valuation adjustments recorded during the period associated with homes that remain in inventory at period end, net of inventory valuation adjustments recorded in prior periods related to homes sold in the presented period, holding costs incurred in the renovation period that are eligible for inventory capitalization and are expensed in the period presented when the associated home is sold, as well as corporate costs allocated to Zillow Offers such as headcount expenses and hosting-related costs related to the operation of our website. |
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