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 September 30, 2023

☐ 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 36,

Seattle, Washington 98101

(Address of principal executive offices) (Zip Code)

(206) 470-7000

(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 October 25, 2023, 55,719,542 shares of Class A common stock, 6,217,447 shares of Class B common stock and 171,666,169 shares of Class C capital stock were outstanding.

Table of Contents

ZILLOW GROUP, INC.

Quarterly Report on Form 10-Q

For the Three Months Ended September 30, 2023

TABLE OF CONTENTS

 

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Shareholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	51
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 5.	Other Information	55
Item 6.	Exhibits	56
	Signatures	57

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

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those risks, uncertainties and assumptions described in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, including, but not limited to risks related to:

•the current and future health and stability of the economy and United States residential real estate industry, including changes in inflationary conditions, interest rates, housing availability and affordability, labor shortages and supply chain issues;

•our ability to manage advertising inventory and pricing and maintain relationships with our real estate partners;

•our ability to establish or maintain relationships with listing and data providers, which affects traffic to our mobile applications and websites;

•our ability to comply with current and future multiple listing service (“MLS”) rules and requirements;

•our ability to continue to innovate and compete successfully to attract customers and real estate partners;

•our ability to operate and grow Zillow Home Loans, our mortgage origination business, including the ability to obtain or maintain sufficient financing to fund its origination of mortgages, meet customers’ financing needs with its product offerings, continue to grow the origination business and resell originated mortgages on the secondary market;

•the duration and impact of natural disasters and other catastrophic events (including public health crises) on our ability to operate, demand for our products or services, or general economic conditions;

•our ability to maintain adequate security measures or technology systems, or those of third parties on which we rely, to protect data integrity and the information and privacy of our customers and other third parties;

•the impact of pending or future litigation and other disputes or enforcement actions;

•our ability to attract and retain a highly skilled workforce;

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

•our ability to continue relying on third-party services to support critical functions of our business;

•our ability to protect and continue using our intellectual property and prevent others from copying, infringing upon, or developing similar intellectual property;

•our ability to comply with domestic and international laws, regulations, rules, contractual obligations, policies and other obligations, or to obtain or maintain required licenses to support our business and operations;

•our ability to pay debt, settle conversions of our convertible senior notes, or repurchase our convertible senior notes upon a fundamental change;

•our ability to raise additional capital or refinance on acceptable terms, or at all;

•actual or anticipated fluctuations in quarterly and annual results of operations and financial position;

•the assumptions, estimates and internal or third-party data that we use to calculate business, performance and operating metrics; and

•volatility of our Class A common stock and Class C capital stock prices.

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.

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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.

In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

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WHERE YOU CAN FIND MORE INFORMATION

Our filings with the Securities and Exchange Commission (“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 the “Investors” section of 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 (https://investors.zillowgroup.com)

•Zillow Group Blog (https://www.zillowgroup.com/news/)

•Zillow Group’s X Account, formerly known as Twitter (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 and reflects current updated channels as of the date of this Quarterly Report on Form 10-Q. 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 X Account are as inactive textual references only.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data, unaudited)

	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	1,846	$	1,466
Short-term investments	1,421		1,896
Accounts receivable, net	97		72
Mortgage loans held for sale	96		41
Prepaid expenses and other current assets	149		126
Restricted cash	3		2
Total current assets	3,612		3,603
Contract cost assets	23		23
Property and equipment, net	324		271
Right of use assets	103		126
Goodwill	2,416		2,374
Intangible assets, net	162		154
Other assets	16		12
Total assets	$	6,656	$	6,563
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	28	$	20
Accrued expenses and other current liabilities	87		90
Accrued compensation and benefits	52		48
Borrowings under credit facilities	91		37
Deferred revenue	48		44
Lease liabilities, current portion	28		31
Convertible senior notes, current portion	607		—
Total current liabilities	941		270
Lease liabilities, net of current portion	119		139
Convertible senior notes, net of current portion	1,057		1,660
Other long-term liabilities	10		12
Total liabilities	2,127		2,081
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.0001 par value; authorized — 30,000,000 shares; no shares issued and outstanding	—		—
Class A common stock, $0.0001 par value; authorized — 1,245,000,000 shares; issued and outstanding — 55,719,542 and 57,494,698 shares as of September 30, 2023 and December 31, 2022, respectively	—		—
Class B common stock, $0.0001 par value; authorized — 15,000,000 shares; issued and outstanding — 6,217,447 shares	—		—
Class C capital stock, $0.0001 par value; authorized — 600,000,000 shares; issued and outstanding — 171,654,263 and 170,555,565 shares as of September 30, 2023 and December 31, 2022, respectively	—		—
Additional paid-in capital	6,247		6,109
Accumulated other comprehensive loss	(21)		(15)
Accumulated deficit	(1,697)		(1,612)
Total shareholders’ equity	4,529		4,482
Total liabilities and shareholders’ equity	$	6,656	$	6,563

See accompanying notes to the condensed consolidated financial statements.

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ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except share data, which are presented in thousands, and per share data, unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	496	$	483	$	1,471	$	1,523
Cost of revenue	110		89		306		278
Gross profit	386		394		1,165		1,245
Operating expenses:
Sales and marketing	164		165		493		502
Technology and development	142		142		419		369
General and administrative	131		138		407		370
Impairment and restructuring costs	1		—		9		14
Acquisition-related costs	1		—		2		—
Total operating expenses	439		445		1,330		1,255
Loss from continuing operations	(53)		(51)		(165)		(10)
Other income, net	34		12		108		19
Interest expense	(9)		(9)		(27)		(26)
Loss from continuing operations before income taxes	(28)		(48)		(84)		(17)
Income tax benefit (expense)	—		(3)		(1)		1
Net loss from continuing operations	(28)		(51)		(85)		(16)
Net loss from discontinued operations, net of income taxes	—		(2)		—		(13)
Net loss	$	(28)	$	(53)	$	(85)	$	(29)
Net loss from continuing operations per share - basic and diluted	$	(0.12)	$	(0.21)	$	(0.36)	$	(0.07)
Net loss per share - basic and diluted	$	(0.12)	$	(0.22)	$	(0.36)	$	(0.12)
Weighted-average shares outstanding - basic and diluted	233,295		240,080		235,560		244,157

See accompanying notes to the condensed consolidated financial statements.

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ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in millions, unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(28)	$	(53)	$	(85)	$	(29)
Other comprehensive loss:
Net unrealized losses on investments	(2)		(6)		(6)		(26)
Total other comprehensive loss	(2)		(6)		(6)		(26)
Comprehensive loss	$	(30)	$	(59)	$	(91)	$	(55)

See accompanying notes to the condensed consolidated financial statements.

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ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in millions, except share data, which are presented in thousands, unaudited)

	Class A Common Stock, Class B Common Stock and Class C Capital Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Balance at July 1, 2023	232,723	$	—	$	6,174	$	(1,669)	$	(19)	$	4,486
Issuance of capital stock upon exercise of stock options	631	—		26		—		—		26
Vesting of restricted stock units	1,754	—		—		—		—		—
Share-based compensation expense	—	—		127		—		—		127
Repurchases of Class A common stock and Class C capital stock	(1,897)	—		(100)		—		—		(100)
Issuance of capital stock in connection with an acquisition	380	—		20		—		—		20
Net loss		—		—		(28)		—		(28)
Other comprehensive loss	—	—		—		—		(2)		(2)
Balance at September 30, 2023	233,591	$	—	$	6,247	$	(1,697)	$	(21)	$	4,529

	Class A Common Stock, Class B Common Stock and Class C Capital Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Balance at July 1, 2022	241,141	$	—	$	6,167	$	(1,487)	$	(13)	$	4,667
Issuance of common and capital stock upon exercise of stock options	83	—		2		—		—		2
Vesting of restricted stock units	1,467	—		—		—		—		—
Share-based compensation expense	—	—		161		—		—		161
Repurchases of Class A common stock and Class C capital stock	(4,997)	—		(176)		—		—		(176)
Net loss	—	—		—		(53)		—		(53)
Other comprehensive loss	—	—		—		—		(6)		(6)
Balance at September 30, 2022	237,694	$	—	$	6,154	$	(1,540)	$	(19)	$	4,595

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	Class A Common Stock, Class B Common Stock and Class C Capital Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Balance at January 1, 2023	234,268	$	—	$	6,109	$	(1,612)	$	(15)	$	4,482
Issuance of capital stock upon exercise of stock options	1,454	—		56		—		—		56
Vesting of restricted stock units	4,675	—		—		—		—		—
Share-based compensation expense	—	—		398		—		—		398
Repurchases of Class A common stock and Class C capital stock	(7,186)	—		(336)		—		—		(336)
Issuance of capital stock in connection with an acquisition	380	—		20		—		—		20
Net loss	—	—		—		(85)		—		(85)
Other comprehensive loss	—	—		—		—		(6)		(6)
Balance at September 30, 2023	233,591	$	—	$	6,247	$	(1,697)	$	(21)	$	4,529

	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, 2022	250,630	$	—	$	7,001	$	(1,667)	$	7	$	5,341
Cumulative-effect adjustment from adoption of guidance on accounting for convertible instruments and contracts in an entity’s own equity	—	—		(492)		156		—		(336)
Issuance of common and capital stock upon exercise of stock options	1,078	—		44		—		—		44
Vesting of restricted stock units	3,278	—		—		—		—		—
Share-based compensation expense	—	—		374		—		—		374
Repurchases of Class A common stock and Class C capital stock	(17,292)	—		(773)		—		—		(773)
Net loss	—	—		—		(29)		—		(29)
Other comprehensive loss	—	—		—		—		(26)		(26)
Balance at September 30, 2022	237,694	$	—	$	6,154	$	(1,540)	$	(19)	$	4,595

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See accompanying notes to the condensed consolidated financial statements.

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ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions, unaudited)

	Nine Months Ended September 30,
	2023		2022
Operating activities
Net loss	$	(85)	$	(29)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	134		121
Share-based compensation	342		341
Amortization of right of use assets	18		17
Amortization of contract cost assets	16		23
Amortization of debt discount and debt issuance costs	4		24
Loss on extinguishment of debt	—		21
Accretion of bond discount	(29)		(11)
Other adjustments to reconcile net loss to net cash provided by operating activities	3		11
Changes in operating assets and liabilities:
Accounts receivable	(26)		76
Mortgage loans held for sale	(55)		58
Inventory	—		3,904
Prepaid expenses and other assets	(22)		(13)
Contract cost assets	(16)		(13)
Lease liabilities	(24)		(15)
Accounts payable	7		1
Accrued expenses and other current liabilities	(3)		(49)
Accrued compensation and benefits	4		(52)
Deferred revenue	4		(1)
Other long-term liabilities	(4)		6
Net cash provided by operating activities	268		4,420
Investing activities
Proceeds from maturities of investments	1,136		455
Purchases of investments	(638)		(1,474)
Purchases of property and equipment	(101)		(87)
Purchases of intangible assets	(24)		(17)
Cash paid for acquisitions, net	(34)		—
Net cash provided by (used in) investing activities	339		(1,123)
Financing activities
Repayments of borrowings on credit facilities	—		(2,205)
Net borrowings (repayments) on warehouse line of credit and repurchase agreements	54		(68)
Repurchases of Class A common stock and Class C capital stock	(336)		(773)
Settlement of long-term debt	—		(1,158)
Proceeds from exercise of stock options	56		44
Net cash used in financing activities	(226)		(4,160)
Net increase (decrease) in cash, cash equivalents and restricted cash during period	381		(863)
Cash, cash equivalents and restricted cash at beginning of period	1,468		2,838
Cash, cash equivalents and restricted cash at end of period	$	1,849	$	1,975
Supplemental disclosures of cash flow information
Noncash transactions:
Capitalized share-based compensation	$	56	$	33
Write-off of fully depreciated property and equipment	29		48
Value of Class C capital stock issued in connection with an acquisition	20		—
Write-off of fully amortized intangible assets	4		200
Recognition of operating right of use assets and lease liabilities	1		14
Settlement of beneficial interests in securitizations	—		(79)

See accompanying notes to the condensed consolidated financial statements.

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ZILLOW GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Index to Notes to Condensed Consolidated Financial Statements

 

		Page
Note 1.	Organization and Description of Business	11
Note 2.	Summary of Significant Accounting Policies	12
Note 3.	Discontinued Operations	15
Note 4.	Fair Value Measurements	16
Note 5.	Cash and Cash Equivalents, Investments and Restricted Cash	18
Note 6.	Property and Equipment, net	19
Note 7.	Acquisitions	19
Note 8.	Intangible Assets, net	20
Note 9.	Debt	21
Note 10.	Income Taxes	23
Note 11.	Share Repurchase Authorizations	23
Note 12.	Share-Based Awards	25
Note 13.	Net Loss Per Share	26
Note 14.	Commitments and Contingencies	27
Note 15.	Revenue and Contract Balances	30
Note 16.	Subsequent Events	31

Note 1. Organization and Description of Business

Zillow Group is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.

Our portfolio of affiliates, subsidiaries and brands includes Zillow Premier Agent, Zillow Home Loans, our mortgage originations business and affiliate lender, Zillow Rentals, Trulia, StreetEasy, HotPads and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions for the real estate industry, including Spruce, Mortech, New Home Feed and ShowingTime+.

In the fourth quarter of 2021, we began to wind down the operations of Zillow Offers, our iBuying business which purchased and sold homes directly in markets across the country. The wind down was completed in the third quarter of 2022, and we have presented the financial results of Zillow Offers as discontinued operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022. No assets or liabilities were classified as discontinued operations as of December 31, 2022. See Note 3 for additional information.

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: current and future health and stability of the economy and United States residential real estate industry, including changes in inflationary conditions, interest rates, housing availability and affordability, labor shortages and supply chain issues; our ability to manage advertising inventory and pricing and maintain relationships with our real estate partners; our compliance with multiple listing service rules and requirements to access and use listing data, and to maintain or establish relationships with listings and data providers; our investment of resources to pursue strategies and develop new products and services that may not prove effective or that are not attractive for customers and real estate partners or that do not allow us to compete successfully; our ability to operate and grow Zillow Home Loans, our mortgage origination business and affiliate lender, including the ability to obtain or maintain sufficient financing and resell originated mortgages on the secondary market; the duration and impact of natural disasters and other catastrophic events (including public health crises) on

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our ability to operate, demand for our products or services or general economic conditions; outcomes of legal proceedings; our ability to attract and retain a highly skilled workforce; protection of Zillow’s information and systems against security breaches or disruptions in operations; reliance on third-party services to support critical functions of our business; protection of our brand and intellectual property; and changes in laws or government regulation affecting our business, 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 United States 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 fiscal year ended December 31, 2022, which was filed with the SEC on February 15, 2023. The condensed consolidated balance sheet as of December 31, 2022, 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 September 30, 2023 and our results of operations, comprehensive loss, and shareholders’ equity for the three and nine month periods ended September 30, 2023 and 2022, and cash flows for the nine month periods ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for any interim period, or for any other future year. Certain reclassifications of prior period amounts have been made to conform to the current period presentation. Unless indicated otherwise, the information in the Notes to Condensed Consolidated Financial Statements relates to our continuing operations and does not include the results of discontinued operations.

There were no significant changes to the significant accounting policies disclosed in Note 2 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except for the updates noted below. Such updates were made due to our determination that we have a single operating and reportable segment, as well as certain changes to how we disaggregate our revenue into categories, beginning in the first quarter of 2023.

Recoverability of Goodwill

Goodwill is measured as the excess of consideration transferred for an acquired business over the net of the acquisition date fair values of the assets acquired and the liabilities assumed, and is not amortized. We assess the impairment of goodwill at the reporting unit level on an annual basis, in our fourth quarter, or whenever events or changes in circumstances indicate that goodwill may be impaired. In our evaluation of goodwill, we initially perform a qualitative assessment to determine whether the existence of events or circumstances indicates that it is more likely than not that the carrying value of each reporting unit is greater than its fair value. If it is more likely than not that the carrying value of a reporting unit is greater than its fair value, we perform a quantitative assessment and an impairment charge is recorded in our statements of operations if the carrying value of the reporting unit exceeds its fair value.

Beginning in 2023, our chief operating decision maker, who is our chief executive officer, manages our business, makes operating decisions and evaluates operating performance on the basis of the company as a whole, instead of on a segment basis as he did prior to 2023. This aligns to our ongoing growth strategy and our intent to provide integrated customer solutions for all tasks and services related to facilitating real estate transactions. This resulted in revisions to the nature and substance of information regularly provided to and used by the chief operating decision maker. Accordingly, we have realigned our operating structure, resulting in a single operating and reportable segment. In line with this, the nature and substance of the information regularly provided to our segment manager similarly changed, and we determined that we have only one reporting unit. Because the segment change impacted the structure of our reporting units, we performed a qualitative goodwill impairment assessment immediately before and immediately after the change in reporting units. Based on those assessments, we determined it was more likely than not that the fair value of our current and legacy reporting units exceeded their respective carrying values. Therefore, we concluded that it was not necessary to perform a quantitative impairment test.

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Revenue Recognition

We recognize revenue when or as we satisfy our performance obligations by transferring control of the 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.

As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component as the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service is generally one year or less.

We do not disclose the transaction price related to remaining performance obligations for (i) contracts with an original expected duration of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for performance completed to date. The remaining duration over which we satisfy our performance obligations is generally less than one year.

We disaggregate our revenue into the following categories: Residential, Rentals, Mortgages and Other, described below.

Residential. Residential revenue includes revenue generated by our Premier Agent and new construction marketplaces, as well as revenue from the sale of advertising and business technology solutions for real estate professionals through StreetEasy for-sale product offerings and ShowingTime+.

Our Premier Agent program offers a suite of marketing and 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 Agent partners receive access to a dashboard portal on our mobile application and website that provides individualized program performance analytics, our customer relationship management tool that captures detailed information about each contact made with a Premier Agent partner through our mobile and web platforms and our account management tools. The marketing and business technology products and services promised to Premier Agent partners are delivered over time, as the customer simultaneously receives and consumes the benefit of the performance obligations.

Premier Agent advertising products, which include the delivery of validated customer connections, or leads, are primarily offered on a share of voice basis. Payment is received prior to the delivery of connections. Connections are delivered when consumer contact information is provided to Premier Agent partners. We do not promise any minimum or maximum number of connections to customers, but instead control when and how many connections to deliver based on a customer’s share of voice. We determine the number of connections to deliver to Premier Agent partners in each zip code using a market-based pricing method in consideration of the total amount spent by Premier Agent partners to purchase connections in the zip code during the month. This results in the delivery of connections over time in proportion to each Premier Agent partners’ share of voice. A Premier Agent partners’ 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 Agent partners in that zip code, and determines the proportion of consumer connections a Premier Agent partner receives. The number of connections delivered for a given spend level is dynamic; as demand for advertising in a zip code increases or decreases, the number of connections delivered to a Premier Agent partner in that zip code decreases or increases accordingly.

We primarily recognize revenue related to the Premier Agent 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 partner typically prepays their monthly spend and the monthly spend is refunded on a pro-rata basis upon cancellation of the contract by a customer, we have determined that Premier Agent partner 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 partner arrangements, as the amounts recognized would be the same irrespective of any allocation.

We also offer a pay for performance pricing model called “Flex” for Premier Agent advertising services in certain markets. Flex is available to select partners alongside our legacy market-based pricing model. With the Flex model, Premier Agent partners are provided with validated leads at no initial cost and pay a performance advertising fee only when a real estate transaction is closed with one of the leads, generally within two years. 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. We estimate variable consideration and record revenue as performance obligations, or validated leads, are transferred. 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 transactions closed is subsequently resolved. We record a contract asset for our estimate of the consideration to which we will be entitled when the right to the consideration is conditional. When the right to consideration becomes unconditional, upon the close of a real estate transaction, we reclassify amounts to accounts receivable.

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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 whereby we recognize revenue 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.

StreetEasy for-sale revenue primarily consists of our pay for performance pricing model available in the New York City market for which agents and brokers are provided with leads at no initial cost and pay a performance referral fee only when a real estate purchase transaction is closed with one of the leads. Under the StreetEasy pricing model, the transaction price represents variable consideration, as the amount to which we expect to be entitled varies based on the number of leads that convert into real estate transactions and the value of those transactions. We estimate variable consideration based on the expected number of closed transactions 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 transactions closed is subsequently resolved. We record a corresponding contract asset for the estimate of variable consideration for StreetEasy Experts when the right to the consideration is conditional. When the right to consideration becomes unconditional upon the close of a real estate transaction, we reclassify amounts to accounts receivable.

Our dotloop real estate transaction management software-as-a-service solution is primarily billed in advance on a monthly basis and revenue is recognized ratably over the contract period which aligns to our satisfaction of performance obligations.

ShowingTime revenue is primarily generated by Appointment Center, a software-as-a-service and call center solution allowing real estate agents, brokerages and multiple listing services to efficiently schedule real estate viewing appointments on behalf of their customers. Appointment Center revenue is primarily billed in advance on a monthly basis and recognized ratably over the contract period which aligns to our satisfaction of performance obligations.

Rentals. Rentals revenue includes the sale of advertising and a suite of tools to rental professionals, landlords and other market participants under the Zillow and StreetEasy brands. Rentals revenue includes revenue generated by advertising sold to property managers, landlords and other rental professionals on a cost per lead, lease, listing or impression basis or for a fixed fee for certain advertising packages. 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. We recognize revenue related to our fixed fee rentals product on a straight-line basis over the contract term as the performance obligations, rental listings on our mobile applications and websites, are satisfied over time based on time elapsed. The number of leases generated through our rentals pay per lease product, Zillow Lease Connect, 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. We record a corresponding contract asset for the estimate of variable consideration for Zillow Lease Connect when the right to the consideration is conditional. When the right to consideration becomes unconditional upon the execution of a lease, we reclassify amounts to accounts receivable. Rentals revenue also includes revenue generated from our rental applications product, through which potential renters can submit applications to multiple properties 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.

Mortgages. Mortgages revenue primarily includes revenue generated by Zillow Home Loans, our affiliated mortgage lender, and marketing products sold to mortgage professionals on a cost per lead basis, including our Custom Quote and Connect services.

Mortgage origination revenue reflects origination fees on purchase or refinance mortgages and the corresponding sale, or expected future sale, of a loan. When an interest rate lock commitment (“IRLC”) 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 purchase or refinance transactions are completed, usually upon the close of escrow and when we fund the purchase or refinance 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. Origination costs associated with originating mortgage loans are recognized as incurred. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers.

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Mortgage loans are sold with limited recourse provisions, which can result in repurchases of loans previously sold to investors or payments to reimburse investors for loan losses. Based on historical experience, discussions with our mortgage purchasers, analysis of the volume of mortgages we originated and current housing and credit market conditions, we estimate and record a loss reserve for mortgage loans held in our portfolio and mortgage loans held for sale, as well as known and projected mortgage loan repurchase requests. These have historically not been significant to our financial statements.

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.

Other. Other revenue primarily includes revenue generated from display products, which consist 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.

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 accounting for certain revenue offerings, restructuring costs, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets, share-based compensation, income taxes, the presentation of discontinued and continuing operations, 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 health of the residential housing market and interest rate environment have 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 June 2022, the Financial Accounting Standards Board issued guidance to improve existing measurement and disclosure requirements for equity securities that are subject to a contractual sale restriction. This guidance is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We expect to adopt this guidance prospectively on January 1, 2024, and we do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

Note 3. Discontinued Operations

Zillow Offers Wind Down

In November 2021, the Board of Directors of Zillow Group (the “Board”) made the determination to wind down Zillow Offers operations. This decision was made in light of home pricing unpredictability, capacity constraints and other operational challenges faced by Zillow Offers that were exacerbated by an unprecedented housing market, a global pandemic and a difficult labor and supply chain environment, all of which led us to conclude that, despite its initial promise in earlier quarters, Zillow Offers was unlikely to be a sufficiently stable line of business to meet our goals going forward.

The wind down of Zillow Offers was completed in the third quarter of 2022, at which time Zillow Offers met the criteria for discontinued operations. Accordingly, we have presented the results of operations, excluding allocation of any general corporate expenses, of Zillow Offers as discontinued operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022. No assets or liabilities were classified as discontinued operations as of December 31, 2022.

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The following table presents the major classes of line items of the discontinued operations included in the condensed consolidated statements of operations for the periods presented (in millions):

	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Revenue	$	23	$	4,249
Cost of revenue	24		4,023
Gross profit (loss)	(1)		226
Operating expenses:
Sales and marketing	1		153
Technology and development	—		6
General and administrative	—		10
Restructuring costs	—		25
Total operating expenses	1		194
Income (loss) from discontinued operations	(2)		32
Loss on extinguishment of debt	—		(21)
Other income	—		13
Interest expense	—		(36)
Loss from discontinued operations before income taxes	(2)		(12)
Income tax expense	—		(1)
Net loss from discontinued operations	$	(2)	$	(13)
Net loss from discontinued operations per share:
Basic	$	(0.01)	$	(0.05)
Diluted	$	(0.01)	$	(0.05)

The following table presents significant non-cash items and capital expenditures of the discontinued operations for the nine months ended September 30, 2022 (in millions):

Amortization of debt discount and debt issuance costs	$	21
Loss on debt extinguishment	21
Share-based compensation	16
Inventory valuation adjustment	9
Depreciation and amortization	7
Settlement of beneficial interests in securitizations	(79)

Restructuring

Restructuring costs totaled $14 million for the nine months ended September 30, 2022, and were related to the Zillow Offers wind down. Cumulative restructuring charges attributable to continuing operations related to the Zillow Offers wind down as of September 30, 2022 totaled $23 million.

Note 4. Fair Value Measurements

We apply 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 (Level 1). The fair value measurement of other cash equivalents is based on observable market-based inputs principally derived from or corroborated by observable market data (Level 2).

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 (Level 2).

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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 (Level 2).

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 is calculated by reference to quoted prices for similar assets (Level 2).

Interest rate lock commitments — The fair value of 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. 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 IRLC will ultimately result in a closed loan. For IRLCs that are cancelled or expire, any recorded gain or loss is reversed at the end of the commitment period (Level 3).

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 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 dates presented:

	September 30, 2023	December 31, 2022
Range	45% - 100%	47% - 100%
Weighted-average	88%	87%

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 millions):

	September 30, 2023
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,736	$	1,736	$	—	$	—
Short-term investments:
U.S. government treasury securities	1,258		—		1,258		—
Corporate bonds	135		—		135		—
Commercial paper	14		—		14		—
U.S. government agency securities	14		—		14		—
Mortgage origination-related:
Mortgage loans held for sale	96		—		96		—
Forward contracts - other current assets	2		—		2		—
IRLCs - other current assets	1		—		—		1
Total	$	3,256	$	1,736	$	1,519	$	1

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	December 31, 2022
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,338	$	1,338	$	—	$	—
Short-term investments:
U.S. government treasury securities	1,716		—		1,716		—
Corporate bonds	161		—		161		—
Commercial paper	10		—		10		—
U.S. government agency securities	9		—		9		—
Mortgage origination-related:
Mortgage loans held for sale	41		—		41		—
Forward contracts - other current assets	1		—		1		—
Total	$	3,276	$	1,338	$	1,938	$	—

At September 30, 2023, the notional amounts of the economic hedging instruments related to our mortgage loans held for sale were $189 million and $232 million for our IRLCs and forward contracts, respectively. At December 31, 2022, the notional amounts of the economic hedging instruments related to our mortgage loans held for sale were $62 million and $90 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 9 for the carrying amounts and estimated fair values of our convertible senior notes.

Note 5. Cash and Cash Equivalents, Investments and Restricted Cash

The following table presents the amortized cost and estimated fair market value of our cash and cash equivalents, investments, and restricted cash as of the dates presented (in millions):

	September 30, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Market Value		Amortized Cost		Estimated Fair Market Value
Cash	$	110	$	110	$	128	$	128
Cash equivalents:
Money market funds	1,736		1,736		1,338		1,338
Short-term investments:
U.S. government treasury securities(1)	1,278		1,258		1,731		1,716
Corporate bonds	136		135		162		161
Commercial paper	14		14		10		10
U.S. government agency securities	14		14		9		9
Restricted cash	3		3		2		2
Total	$	3,291	$	3,270	$	3,380	$	3,364
(1)The estimated fair market value includes $20 million and $15 million of gross unrealized losses as of September 30, 2023 and December 31, 2022, respectively.

The following table presents available-for-sale investments by contractual maturity date as of September 30, 2023 (in millions):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	513	$	509
Due after one year	929		912
Total	$	1,442	$	1,421

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Note 6. Property and Equipment, net

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

	September 30, 2023		December 31, 2022
Website development costs	$	415	$	291
Leasehold improvements	89		90
Office equipment, furniture and fixtures	22		24
Computer equipment	19		18
Construction-in-progress	—		7
Property and equipment	545		430
Less: accumulated amortization and depreciation	(221)		(159)
Property and equipment, net	$	324	$	271

We recorded depreciation expense related to property and equipment (other than website development costs) of $6 million for each of the three months ended September 30, 2023 and 2022, and $18 million and $19 million for the nine months ended September 30, 2023 and 2022, respectively.

We capitalized website development costs of $49 million and $37 million for the three months ended September 30, 2023 and 2022, respectively, and $144 million and $104 million for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense for website development costs included in cost of revenue was $30 million and $17 million for the three months ended September 30, 2023 and 2022, respectively, and $79 million and $48 million for the nine months ended September 30, 2023 and 2022, respectively.

Note 7. Acquisitions

On July 31, 2023, Zillow Group acquired Aryeo, Inc. (“Aryeo”), a software company that serves real estate photographers, in exchange for approximately $15 million in cash, net of cash acquired, and 380,259 shares of our Class C capital stock with a value of $20 million, for total consideration of $35 million, net of cash acquired. On September 11, 2023, Zillow Group acquired substantially all of the assets and liabilities of Spruce Holdings, Inc. and certain affiliated entities (collectively referred to as “Spruce”), a tech-enabled title and escrow platform, in exchange for approximately $19 million in cash, net of cash acquired. The acquisitions of Aryeo and Spruce have been accounted for as business combinations, and assets acquired and liabilities assumed were recorded at their preliminary estimated fair values. Goodwill represents the expected synergies from combining the acquired assets and the operations of the acquirer as well as intangible assets that do not qualify for separate recognition. Goodwill is measured as the excess of consideration transferred over the net of the fair values of the assets acquired and the liabilities assumed. Goodwill recorded in connection with the acquisition of Aryeo is not deductible for tax purposes, and goodwill recorded in connection with the acquisition of Spruce is deductible for tax purposes.

The total preliminary purchase prices have been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date, as follows (in millions):

	Aryeo		Spruce
Cash and cash equivalents	$	3	$	5
Goodwill	26		16
Intangible assets	11		2
Other assets	—		2
Liabilities	(2)		(1)
Total preliminary purchase price	$	38	$	24

The preliminary estimated fair values of the identifiable intangible assets acquired and associated useful lives consisted of the following (in millions):

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	Aryeo			Spruce
	Preliminary Estimated Fair Value		Estimated Useful Life (in years)	Preliminary Estimated Fair Value		Estimated Useful Life (in years)
Customer relationships	$	5	5	$	—	—
Purchased content	4		3	—		—
Developed technology	2		3	2		3
Total	$	11		$	2

We used an income approach to measure the fair value of the customer relationships intangible asset acquired from Aryeo based on the excess earnings method, whereby the fair value is estimated based upon the present value of cash flows that the applicable asset is expected to generate. We used a cost approach to measure the fair value of purchased content acquired from Aryeo. We used an income approach to measure the fair value of the developed technology acquired from Aryeo and Spruce based on the relief-from-royalty method. These fair value measurements were based on Level 3 inputs under the fair value hierarchy.

Acquisition-related costs incurred, which primarily included legal, accounting and other external costs directly related to the acquisition, are included within acquisition-related costs in our condensed consolidated statements of operations and were expensed as incurred.

Unaudited pro forma earnings information has not been presented as the effects were not material to our condensed consolidated financial statements.

Note 8. Intangible Assets, net

The following tables present the detail of intangible assets as of the dates presented (in millions):

	September 30, 2023
	Cost		Accumulated Amortization		Net
Software	$	78	$	(25)	$	53
Customer relationships	63		(16)		47
Developed technology	53		(25)		28
Trade names and trademarks	45		(18)		27
Purchased content	16		(9)		7
Total	$	255	$	(93)	$	162

	December 31, 2022
	Cost		Accumulated Amortization		Net
Customer relationships	$	59	$	(10)	$	49
Software	54		(15)		39
Developed technology	49		(15)		34
Trade names and trademarks	45		(15)		30
Purchased content	8		(6)		2
Total	$	215	$	(61)	$	154

Amortization expense recorded for intangible assets was $13 million and $11 million for the three months ended September 30, 2023 and 2022, respectively, and $37 million and $47 million for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense for trade names and trademarks and customer relationships intangible assets is included in sales and marketing expenses. Amortization expense for all other intangible assets is included in cost of revenue.

We did not record any impairment costs related to our intangible assets for the three or nine months ended September 30, 2023 or 2022.

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Note 9. Debt

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

	September 30, 2023		December 31, 2022
Credit facilities
Master repurchase agreements:
JPMorgan Chase Bank, N.A.(1)	$	68	$	—
Atlas Securitized Products, L.P.(2)	22		23
Citibank, N.A.(3)	—		3
Warehouse line of credit:
Comerica Bank	1		11
Total credit facilities	91		37
Convertible senior notes
1.375% convertible senior notes due 2026	496		495
2.75% convertible senior notes due 2025	561		560
0.75% convertible senior notes due 2024	607		605
Total convertible senior notes	1,664		1,660
Total debt	$	1,755	$	1,697
(1)Agreement commenced on June 1, 2023 and provides for a total maximum borrowing capacity of $100 million, $25 million of which is committed, until May 30, 2024.
(2)Agreement was reassigned from Credit Suisse AG, Cayman Islands (“Credit Suisse”) on May 25, 2023.
(3)Agreement expired on June 9, 2023 and was not renewed.

Credit Facilities

To provide capital for Zillow Home Loans, we utilize master repurchase agreements and a warehouse line of credit. The following table summarizes certain details related to our outstanding master repurchase agreements and warehouse line of credit as of September 30, 2023 (in millions, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted-Average Interest Rate
JPMorgan Chase Bank, N.A.	May 30, 2024	$	100	7.03	%
Atlas Securitized Products, L.P.	March 11, 2024	50		7.32	%
Comerica Bank	December 29, 2023	50		7.45	%
	Total	$	200

On August 17, 2023, Zillow Home Loans amended its warehouse line of credit with Comerica Bank to extend the date after which Zillow Home Loans is no longer permitted to draw additional amounts on the warehouse line of credit from September 30, 2023 to November 1, 2023.

In accordance with the master repurchase agreements, Atlas Securitized Products, L.P., JPMorgan Chase Bank, N.A and prior to its expiration in June 2023, Citibank, N.A., (together, the “Lenders”) agreed to pay Zillow Home Loans a negotiated purchase price for eligible loans, and Zillow Home Loans simultaneously agreed to repurchase such loans from the Lenders under a specified timeframe at an agreed upon price that includes interest. The master repurchase agreements contain margin call provisions that provide the Lenders with certain rights in the event of a decline in the market value of the assets purchased under the master repurchase agreements. As of September 30, 2023 and December 31, 2022, $93 million and $28 million, respectively, in mortgage loans held for sale were pledged as collateral under the master repurchase agreements.

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Borrowings on the repurchase agreements and warehouse line of credit bear interest either at a floating rate based on Secured Overnight Financing Rate plus an applicable margin, as defined by the governing agreements, or Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin, as defined by the governing agreements. The repurchase agreements and warehouse line of credit include customary representations and warranties, covenants and provisions regarding events of default. As of September 30, 2023, Zillow Home Loans was in compliance with all financial covenants and no event of default had occurred. The repurchase agreements and warehouse line of credit 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 repurchase agreements and warehouse line of credit, see Note 13 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Convertible Senior Notes

Effective January 1, 2022, we adopted guidance which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Refer to Note 2 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for additional information regarding the adoption of this guidance.

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

								September 30, 2023				December 31, 2022
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		Semi-Annual Interest Payment Dates	Unamortized Debt Issuance Costs		Fair Value		Unamortized Debt Issuance Costs		Fair Value
September 1, 2026	$	499	1.375	%	1.57	%	March 1; September 1	$	3	$	598	$	4	$	504
May 15, 2025	565		2.75	%	3.20	%	May 15; November 15	4		571		5		531
September 1, 2024	608		0.75	%	1.02	%	March 1; September 1	1		706		3		629
Total	$	1,672						$	8	$	1,875	$	12	$	1,664

	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
Maturity Date	Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	2	$	—	$	2	$	2	$	—	$	2
May 15, 2025	4		—		4		4		1		5
September 1, 2024	1		1		2		1		1		2
Total	$	7	$	1	$	8	$	7	$	2	$	9

	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
Maturity Date	Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	6	$	1	$	7	$	5	$	—	$	5
May 15, 2025	12		1		13		12		2		14
September 1, 2024	3		2		5		4		1		5
Total	$	21	$	4	$	25	$	21	$	3	$	24

The convertible notes maturing in 2026 (“2026 Notes”), 2025 (“2025 Notes”) and 2024 (“2024 Notes”) (together, the “Notes”) are senior unsecured obligations. The 2026 Notes and 2025 Notes are classified as long-term debt and the 2024 Notes are classified as current liabilities in our condensed consolidated balance sheets based on their contractual maturity dates. Interest on the convertible notes is paid semi-annually in arrears. The estimated fair value of the convertible senior notes is classified as Level 2 and was determined through consideration of quoted market prices in markets that are not active.

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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. They will mature on their respective maturity dates, 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

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

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%

There were no conversions of the Notes during the three and nine months ended September 30, 2023 or 2022.

The last reported sale price of our Class C capital stock did not exceed 130% of the conversion price of each series of the Notes for more than 20 trading days during the 30 consecutive trading days ended September 30, 2023. Accordingly, each series of the Notes is not redeemable or convertible at the option of the holders during the three months ending December 31, 2023.

For additional details related to our convertible senior notes, see Note 13 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Note 10. Income Taxes

We are primarily subject to income taxes in the United States (federal and state), as well as certain foreign jurisdictions. As of September 30, 2023 and December 31, 2022, 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. We have accumulated federal tax losses of approximately $1.8 billion as of December 31, 2022, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $63 million (tax effected) as of December 31, 2022.

Our income tax expense or benefit for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account for the relevant period. We update our estimate of the annual effective tax rate on a quarterly basis and make year-to-date adjustments to the tax provision or benefit, as applicable. Income tax expense (benefit) for the three and nine months ended September 30, 2023 and the nine months ended September 30, 2022 was not material. We recorded income tax expense of $3 million for the three months ended September 30, 2022, primarily related to state income taxes.

Note 11. Share Repurchase Authorizations

Prior to July 31, 2023, the Board authorized the repurchase of up to $1.8 billion of our Class A common stock, Class C capital stock, outstanding convertible senior notes or a combination thereof. For additional information on these authorizations, see Note 13 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. On July 31, 2023, the Board authorized the repurchase of up to an additional $750 million of our Class A common stock, Class C capital stock, outstanding convertible senior notes or a combination thereof. This additional authorization (together with the previous authorizations, the “Repurchase Authorizations”) increased our total cumulative Repurchase Authorizations to $2.5 billion.

Repurchases of stock under the Repurchase Authorizations may be made in open-market transactions or privately negotiated transactions, or in such other manner as deemed appropriate by management, and may be made from time to time as determined by management depending on market conditions, share price, trading volume, cash needs and other business factors,

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in each case as permitted by securities laws and other legal requirements. As of September 30, 2023, $914 million remained available for future repurchases pursuant to the Repurchase Authorizations.

The following table summarizes our Class A common stock and Class C capital stock repurchase activity under the Repurchase Authorizations for the periods presented (in millions, except share data, which are presented in thousands, and per share amounts):

	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
	Class A common stock		Class C capital stock		Class A common stock		Class C capital stock
Shares repurchased	965		932		772		4,225
Weighted-average price per share	$	52.57	$	52.80	$	35.52	$	35.18
Total purchase price	$	50	$	50	$	27	$	149

	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Class A common stock		Class C capital stock		Class A common stock		Class C capital stock
Shares repurchased	1,775		5,411		3,349		13,943
Weighted-average price per share	$	48.71	$	46.15	$	46.13	$	44.40
Total purchase price	$	86	$	250	$	154	$	619

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Note 12. Share-Based Awards

In addition to the option awards and restricted stock units typically granted under the Zillow Group, Inc. 2020 Incentive Plan (the “2020 Plan”) which vest quarterly over four years, during the first quarter of 2023, the Compensation Committee of the Board approved option and restricted stock unit awards granted under the 2020 Plan in connection with the 2022 annual review cycle that vest quarterly over three years. The exercisability terms of these equity awards are otherwise consistent with the terms of the option awards and restricted stock units typically granted under the 2020 Plan. For additional information regarding our share-based awards, see Note 16 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

On August 3, 2022, upon the recommendation of the Compensation Committee, the Board approved adjustments to the exercise price of certain outstanding vested and unvested option awards for eligible employees. The exercise price of eligible option awards was reduced to $38.78, which was the closing market price of our Class C capital stock on August 8, 2022. No other changes were made to the terms and conditions of the eligible option awards. We have accounted for the reprice of the eligible option awards as an equity modification whereby the incremental fair value attributable to the repriced option awards, as measured on the date of reprice, will be recognized as additional share-based compensation expense. The reprice impacted 7 million stock option awards, affected 3,348 employees and was expected to result in incremental share-based compensation expense of $66 million in total over the remaining requisite service period of the original awards. The weighted-average total fair value of options repriced in August 2022 was $67.58.

Option Awards

The following table summarizes option award activity for the nine months ended September 30, 2023:

	Number of Shares Subject to Existing Options (in thousands)	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2023	28,598	$	44.90	7.1	$	15
Granted	6,890	42.63
Exercised	(1,454)	38.84
Forfeited or cancelled	(892)	48.28
Outstanding at September 30, 2023	33,142	44.60		7.0	173
Vested and exercisable at September 30, 2023	19,802	44.96		5.8	113

The following assumptions were used to determine the fair value of option awards granted for the periods presented:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Expected volatility	62%	61%	55% - 62%	55% - 61%
Risk-free interest rate	4.34%	3.38%	3.75% - 4.34%	1.94% - 3.38%
Weighted-average expected life	5.3 years	5.0 years	5.3 - 6.5 years	4.5 - 6.0 years
Weighted-average fair value of options granted	$27.26	$18.06	$24.06	$23.75

As of September 30, 2023, there was a total of $384 million in unrecognized compensation cost related to unvested option awards.

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Restricted Stock Units

The following table summarizes activity for restricted stock units for the nine months ended September 30, 2023:

	Restricted Stock Units (in thousands)	Weighted-Average Grant Date Fair Value
Unvested outstanding at January 1, 2023	10,930	$	46.85
Granted	8,191	43.27
Vested	(4,675)	45.96
Forfeited	(841)	46.58
Unvested outstanding at September 30, 2023	13,605	45.01

As of September 30, 2023, there was a total of $557 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 millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	4	$	5	$	12	$	12
Sales and marketing	18		21		53		46
Technology and development	42		57		123		123
General and administrative	45		64		154		142
Impairment and restructuring costs	—		—		—		2
Share-based compensation - continuing operations	109		147		342		325
Share-based compensation - discontinued operations	—		1		—		16
Total share-based compensation	$	109	$	148	$	342	$	341

Note 13. 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 and net loss from continuing operations per share because their effect would have been antidilutive (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Weighted-average Class A common stock and Class C capital stock option awards outstanding	30,063	2,417	20,924	15,942
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	14,172	9,670	13,890	8,326
Class C capital stock issuable upon conversion of the Notes	33,855	33,855	33,855	33,855
Total Class A common stock and Class C capital stock equivalents	78,090	45,942	68,669	58,123

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Note 14. Commitments and Contingencies

Commitments

During the three and nine months ended September 30, 2023, there were no material changes to the commitments disclosed in Note 18 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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 September 30, 2023 or December 31, 2022.

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. On October 11, 2019, plaintiffs filed a motion for class certification which was granted by the court on October 28, 2020. On February 17, 2021, the Ninth Circuit Court of Appeals denied our petition for review of that decision. On October 21, 2022, the parties jointly filed a notice of settlement with the U.S. District Court for the Western District of Washington to inform the court that the parties have reached an agreement to settle this action. On March 31, 2023, the plaintiffs filed a motion seeking preliminary approval of the parties’ proposed settlement, which motion was granted by the court on April 3, 2023. The terms of the parties’ proposed settlement agreement are contained in the settlement documents filed with the court on March 31, 2023. The court approved the settlement terms on August 8, 2023 and the full amount was paid by our insurance carriers under the applicable insurance policy and pursuant to the terms of the settlement.

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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 (the “Federal Suit”). On February 16, 2018, the Superior Court of the State of Washington, King County, consolidated the two shareholder derivative lawsuits pending in that court (the “State Suit”). The Federal Suit and State Suit 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 Federal Suit filed a consolidated shareholder derivative complaint, which we moved to dismiss on August 22, 2019. On February 28, 2020, our motion to dismiss the Federal Suit was denied. On February 16, 2021, the court in the State Suit matter stayed the action. On March 5, 2021, a new shareholder derivative lawsuit was filed in the U.S. District Court for the Western District of Washington 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, alleging, among other things, violations of federal securities laws. The U.S. District Court for the Western District of Washington formally consolidated the new lawsuit with the other consolidated Federal Suit pending in that court on June 15, 2021. On November 14, 2022, the parties jointly filed a stipulation with the U.S. District Court for the Western District of Washington informing the court that, among other things, they have agreed in principle to all material terms of a settlement. On April 20, 2023, the plaintiffs filed a motion seeking preliminary approval of the parties’ proposed settlement, which motion was granted by the court on April 25, 2023. The terms of the parties’ settlement agreement are contained in the settlement documents filed with the court on April 20, 2023 and found on Zillow’s Investor Relations page at https://investors.zillowgroup.com/investors/resources/investor-faqs/default.aspx. The court issued final approval of the settlement on August 29, 2023. The full amount of plaintiffs’ attorneys’ fees and costs associated with the settlement has been paid by our insurance carriers under the applicable insurance policy and pursuant to the terms of the settlement.

On September 17, 2019, International Business Machines Corporation (“IBM”) filed a complaint against us in the U.S. 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 November 8, 2019, we filed a motion to transfer venue and/or to dismiss the complaint. On December 2, 2019, IBM filed an amended complaint, and on December 16, 2019 we filed a renewed motion to transfer venue and/or to dismiss the complaint. Our motion to transfer venue to the U.S. District Court for the Western District of Washington was granted on May 28, 2020. On August 12, 2020, IBM filed its answer to our counterclaims. On September 18, 2020, we filed four Inter Partes Review (“IPR”) petitions before the U.S. Patent and Trial Appeal Board (“PTAB”) seeking the Board’s review of the patentability with respect to three of the patents asserted by IBM in the lawsuit. On March 15, 2021, the PTAB instituted IPR proceedings with respect to two of the three patents for which we filed petitions. On March 22, 2021, the PTAB denied institution with respect to the last of the three patents. On January 22, 2021, the court partially stayed the action with respect to all patents for which we filed an IPR and set forth a motion schedule. On March 8, 2021, IBM filed its second amended complaint. On March 25, 2021, we filed an amended motion for judgment on the pleadings. On July 15, 2021, the court rendered an order in connection with the motion for judgment on the pleadings finding in our favor on two of the four patents on which we filed our motion. On August 31, 2021, the Court ruled that the parties will proceed with respect to the two patents for which it previously denied judgment, and vacated the stay with respect to one of the three patents for which Zillow filed an IPR, which stay was later reinstated by stipulation of the parties on May 18, 2022. On September 23, 2021, IBM filed a notice of appeal with the United States Court of Appeals for the Federal Circuit with respect to the August 31, 2021 judgment entered, which judgment was affirmed by the Federal Circuit on October 17, 2022. On March 3, 2022, the PTAB ruled on Zillow’s two remaining IPRs finding that Zillow was able to prove certain claims unpatentable, and others it was not. On October 28, 2022, the court found one of the two patents upon which the parties were proceeding in this action as invalid, and dismissed IBM’s claim relating to that patent. Following the court’s ruling, on October 28, 2022, the parties filed a joint stipulation with the court seeking a stay of this action, which was granted by the court on November 1, 2022. On November 25, 2022, Zillow filed a motion to join an IPR petition within Ebates Performance Mktg., Inc. d/b/a Rakuten Rewards v. Int’l Bus. Machs. Corp. (“Rakuten IPR”), IPR2022-00646 concerning the final remaining patent in this action, which the court granted on April 20, 2023. On October 13, 2023, the PTAB ruled on the Rakuten IPR finding the claims of the patent asserted against Zillow unpatentable. 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 matter; 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 U.S. 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. On September 14, 2020, we filed a motion to dismiss the complaint filed in the action, to which IBM responded by the filing of an amended complaint on November 5, 2020. On December 18, 2020, we filed a motion to dismiss IBM’s first amended complaint. On December 23, 2020, the Court issued a written order staying this case in full. On July 23, 2021, we filed an IPR with the PTAB with respect to one patent included in the second lawsuit. On October 6, 2021, the stay of this action was lifted, except for proceedings relating to the one patent for which we filed an IPR. On December 1, 2021, the Court dismissed the fourth claim asserted by IBM in its amended complaint. On December 16, 2021 Zillow filed a motion to dismiss the remaining claims alleged in IBM’s amended complaint. On March 9, 2022, the Court granted Zillow’s motion to dismiss in full, dismissing IBM’s claims related to all the patents asserted by IBM in this action, except for the one patent for which an IPR was still pending. On March 10, 2022, the PTAB rendered its decision denying Zillow’s IPR on the one remaining patent, for which this case continues to remain stayed. On August 1, 2022, IBM filed an appeal of the Court’s ruling with respect to two of the dismissed patents. Zillow’s responsive brief was filed on September 30, 2022, and IBM’s reply brief was filed on November 4, 2022. 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 matter; however, the possible loss or range of loss is not estimable.

On November 16, 2021, November 19, 2021 and January 6, 2022, three 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 stock between August 7, 2020 and November 2, 2021. The three purported class action lawsuits, captioned Barua v. Zillow Group, Inc. et al., Silverberg v. Zillow Group, et al. and Hillier v. Zillow Group, Inc. et al. were brought in the U.S. District Court for the Western District of Washington and were consolidated on February 16, 2022. On May 12, 2022, the plaintiffs filed their amended consolidated complaint which alleges, among other things, that we issued materially false and misleading statements regarding our Zillow Offers business. The complaints seek to recover, among other things, alleged damages sustained by the purported class members as a result of the alleged misconduct. We moved to dismiss the amended consolidated complaint on July 11, 2022, plaintiffs filed their opposition to the motion to dismiss on September 2, 2022, and we filed a reply in support of the motion to dismiss on October 11, 2022. On December 7, 2022, the court rendered its decision granting defendants’ motion to dismiss, in part, and denying the motion, in part. On January 23, 2023, the defendants filed their answer to the consolidated complaint. We intend to deny the allegations of wrongdoing and intend to vigorously defend the claims in this consolidated lawsuit. We do not believe that a loss related to this consolidated lawsuit is probable.

On March 10, 2022, May 5, 2022 and July 20, 2022, shareholder derivative suits were filed in the U.S. District Court for the Western District of Washington (“Federal Court”) and on July 25, 2022, a shareholder derivative suit was filed in the Superior Court of the State of Washington, King County (the “2022 State Suit”), against us and 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 (including the Company as a nominal defendant) allege, among other things, that the defendants breached their fiduciary duties by failing to maintain an effective system of internal controls, which purportedly caused the losses the Company incurred when it decided to wind down Zillow Offers operations. Plaintiffs also allege, among other things, violations of Section 14(a) and Section 20(a) of the Securities Exchange Act of 1934, insider trading and waste of corporate assets. On June 1, 2022 and September 14, 2022, the U.S. District Court for the Western District of Washington issued orders consolidating the three federal derivative suits and staying the consolidated action until further order of the court, which stay was further continued by the Federal Court on September 6, 2023. On September 15, 2022, the Superior Court of the State of Washington entered a temporary stay in the 2022 State Suit. Upon the filing of the defendants’ answer in the related securities class action lawsuit on January 23, 2023, the stay in the 2022 State Suit was lifted. A partial stay was then reentered in the 2022 State Suit on June 26, 2023. On August 23, 2023 a second shareholder derivative suit was filed in the Superior Court of the State of Washington, King County. The defendants intend to deny the allegations of wrongdoing and vigorously defend the claims in these lawsuits. We do not believe that a loss related to these lawsuits 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.

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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. For additional information regarding our indemnifications, see Note 18 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Note 15. Revenue and Contract Balances

We recognize revenue when or as we satisfy our performance obligations by transferring control of the 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.

Beginning in 2023, our chief executive officer, who acts as the chief operating decision maker, manages our business, makes operating decisions and evaluates operating performance on the basis of the company as a whole, instead of on a segment basis as he did prior to 2023. Accordingly, this change resulted in revisions to the nature and substance of information regularly provided to and used by the chief operating decision maker. This serves to align our reported results with our ongoing growth strategy and our intent to provide integrated customer solutions for all tasks and services related to facilitating real estate transactions. As a result, we have determined that we have a single reportable segment. Our revenue is classified into four categories: Residential, Rentals, Mortgages and Other. Certain prior period amounts have been revised to reflect these changes.

The Residential revenue category primarily includes revenue for our Premier Agent and new construction marketplaces, as well as revenue from the sale of other advertising and business technology solutions for real estate professionals, including StreetEasy for-sale product offerings and ShowingTime+. Our Rentals and Mortgages revenue categories remain consistent with our historical presentation, and our Other revenue category primarily includes revenue generated from display advertising.

Disaggregation of Revenue

The following table presents our revenue disaggregated by category for the periods presented (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Residential	$	362	$	372	$	1,103	$	1,182
Rentals	99		74		264		206
Mortgages	24		26		74		101
Other	11		11		30		34
Total revenue	$	496	$	483	$	1,471	$	1,523

Contract Balances

Contract assets represent our right to consideration in exchange for goods and services that we have transferred to the customer when that right is conditional on something other than the passage of time. Contract assets are primarily related to our Premier Agent Flex, Zillow Lease Connect and StreetEasy Experts offerings, whereby we estimate variable consideration based on the expected number of real estate transactions to be closed for Premier Agent Flex and StreetEasy Experts, and qualified leases to be secured for Zillow Lease Connect. The current portion of contract assets is recorded within prepaid expenses and other current assets and the long-term portion of contract assets is recorded within other assets in our condensed consolidated balance sheets and totaled $89 million and $71 million as of September 30, 2023 and December 31, 2022, respectively.

Contract liabilities consist of deferred revenue, which relates to payments received in advance of performance under a revenue contract. Deferred revenue is primarily related to prepaid advertising fees received or billed in advance of satisfying our performance obligations and prepaid but unrecognized subscription revenue. Deferred revenue is recognized when or as we satisfy our obligations under contracts with customers.

For the three months ended September 30, 2023, the opening balance of deferred revenue was $49 million, of which $46 million was recognized as revenue during the period. For the three months ended September 30, 2022, the opening balance of deferred revenue was $52 million, of which $50 million was recognized as revenue during the period.

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For the nine months ended September 30, 2023, the opening balance of deferred revenue was $44 million, of which $43 million was recognized as revenue during the period. For the nine months ended September 30, 2022, the opening balance of deferred revenue was $51 million, of which $51 million was recognized as revenue during the period. As of September 30, 2023 and 2022, deferred revenue was $48 million and $50 million, respectively.

Note 16. Subsequent Events

UBS AG Repurchase Agreement

On October 11, 2023, Zillow Home Loans entered into a master repurchase agreement with UBS AG. The master repurchase agreement provides a total maximum borrowing capacity of $100 million through October 9, 2024. Borrowings on the master repurchase agreement will be classified within current liabilities in our condensed consolidated balance sheets.

Acquisition of Follow Up Boss

On October 28, 2023, Zillow, Inc. and Enchant, LLC, d/b/a Follow Up Boss (“Follow Up Boss”), entered into a Membership Interest Purchase Agreement (the “Agreement”), pursuant to which Zillow, Inc. agreed to acquire Follow Up Boss for $400 million in cash, subject to certain adjustments, payable upon closing of the transaction, and up to $100 million in cash payable over a three-year period upon achievement of certain performance metrics contemplated by the Agreement. Follow Up Boss is a customer relationship management system for real estate professionals. The Agreement contains customary representations, warranties and covenants of the parties as well as conditions to closing, including, among other things, regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Partial Repurchase of 2025 Notes

On October 31, 2023 and November 1, 2023, we repurchased a total of approximately $28 million aggregate principal amount of our 2025 Notes, plus accrued interest, using a 10b5-1 plan, in accordance with the Repurchase Authorizations. These repurchases will reduce our outstanding convertible senior notes, net of current portion in our condensed consolidated balance sheet.

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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 those factors discussed in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2022.

Overview of our Business

Zillow Group is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.

Our portfolio of affiliates, subsidiaries and brands includes Zillow Premier Agent, Zillow Home Loans, our mortgage originations business and affiliate lender, Zillow Rentals, Trulia, StreetEasy, HotPads and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions for the real estate industry, including Spruce, Mortech, New Home Feed and ShowingTime+.

As of September 30, 2023, we had 6,148 employees compared to 5,724 employees as of December 31, 2022.

Health of Housing Market

Our financial performance is impacted by changes in the health of the housing market, which is impacted, in turn, by general economic conditions. Current market factors have been driven by low housing inventory, fewer new for-sale listings, increases and volatility in mortgage interest rates, as well as home price fluctuations and inflationary conditions. These factors may have a negative impact on the number of transactions consumers complete using our products and services and on demand for our advertising services. According to industry data from the National Association of REALTORS®, total residential real estate transaction dollars declined 14% during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 and more than 20% during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Despite the industry headwinds and total residential real estate transaction value declines, we continue to invest in the execution of our strategy to increase customer transactions and revenue per transaction. We believe this continued investment in our strategic priorities has resulted in year over year Residential revenue results, described below, for the three and nine months ended September 30, 2023 as compared to the same periods in the prior year, that exceeded residential real estate industry performance for the same periods. The extent to which market factors impact our results and financial position will depend on future developments, which are uncertain and difficult to predict.

Acquisitions

On July 31, 2023, we acquired Aryeo, Inc. (“Aryeo”), a software company that serves real estate photographers, in exchange for total consideration of $35 million, net of cash acquired. On September 11, 2023, we acquired substantially all of the assets and liabilities of Spruce Holdings, Inc. and certain affiliated entities (collectively referred to as “Spruce”), a tech-enabled title and escrow platform, in exchange for total consideration of $19 million, net of cash acquired. Acquisition-related costs incurred, which primarily included legal, accounting and other external costs directly related to the acquisition, are included within acquisition-related costs in our condensed consolidated statements of operations and were expensed as incurred.

On October 28, 2023, Zillow, Inc. and Enchant, LLC, d/b/a Follow Up Boss (“Follow Up Boss”), entered into a Membership Interest Purchase Agreement (the “Agreement”), pursuant to which Zillow, Inc. agreed to acquire Follow Up Boss for $400 million in cash, subject to certain adjustments, payable upon closing of the transaction, and up to $100 million in cash payable over a three-year period upon achievement of certain performance metrics contemplated by the Agreement. Follow Up Boss is a customer relationship management system for real estate professionals.

Discontinued Operations

In the fourth quarter of 2021, the Board of Directors of Zillow Group (the “Board”) made the determination to wind down the operations of Zillow Offers, our iBuying business which purchased and sold homes directly in certain markets across the United States. The wind down was completed in the third quarter of 2022 and resulted in approximately a 25% reduction of Zillow Group’s workforce. The financial results of Zillow Offers have been presented in the accompanying condensed

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consolidated financial statements as discontinued operations and, therefore, are excluded from the following discussion of the results of our continuing operations. Given the wind down of Zillow Offers and corresponding shift in our strategic plans, financial performance for prior and current periods may not be indicative of future performance. For additional information, see Note 3 in our Notes to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

August 2022 Equity Award Actions

On August 3, 2022, upon the recommendation of the Compensation Committee of the Board, the Board approved adjustments to the exercise price of certain outstanding vested and unvested option awards for eligible employees. The exercise price of eligible option awards was reduced to $38.78, which was the closing market price of our Class C capital stock on August 8, 2022. No other changes were made to the terms and conditions of the eligible option awards. In addition, the Board approved a supplemental grant of restricted stock units to eligible employees that was granted on August 8, 2022 and vests quarterly over a two-year period beginning in August 2022. The repricing of eligible option awards and the issuance of supplemental restricted stock units (collectively the “August 2022 Equity Award Actions”) has and is expected to continue to result in incremental share-based compensation expense over the remaining requisite service period, which is largely through the third quarter of 2024. For additional information regarding the August 2022 Equity Award Actions, see Note 16 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Change in Reportable Segments

Beginning in 2023, our chief operating decision maker manages our business, makes operating decisions, and evaluates operating performance on the basis of the company as a whole, instead of on a segment basis as he did prior to 2023. Accordingly, this change resulted in revisions to the nature and substance of information regularly provided to and used by the chief operating decision maker. This serves to align our reported results with our ongoing growth strategy and our intent to provide integrated customer solutions for all tasks and services related to facilitating real estate transactions. As a result, we have determined that we have a single operating and reportable segment.

Revenue Overview

Our revenue is classified into four categories: Residential, Rentals, Mortgages and Other. Certain prior period amounts have been revised to reflect these changes.

Residential. Residential revenue includes revenue generated by our Premier Agent and new construction marketplaces, as well as revenue from the sale of advertising and business technology solutions for real estate professionals through StreetEasy for-sale product offerings and ShowingTime+.

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 program. Premier Agent products, which include the delivery of validated customer connections, or leads, are primarily offered on a share of voice basis. Connections are distributed to Premier Agent partners in proportion to their share of voice, or an agent advertiser’s share of total advertising purchased in a particular zip code. Connections are delivered when customer contact information is provided to Premier Agent partners. Connections are provided as part of our suite of advertising services for Premier Agent partners; we do not charge a separate fee for these customer leads.

We also offer a pay for performance pricing model called “Flex” for Premier Agent advertising services in certain markets to select partners. With the Flex model, Premier Agent partners are provided with validated leads at no initial cost and pay a performance advertising fee only when a real estate transaction is closed with one of the leads, generally within two years.

New construction revenue primarily includes advertising services sold to home builders on a cost per residential community or cost per impression basis. StreetEasy for-sale revenue includes advertising services sold to real estate professionals serving the New York City for sale market primarily on a cost per listing or performance fee basis. ShowingTime revenue is primarily generated by Appointment Center, a software-as-a-service and call center solution allowing real estate agents, brokerages and multiple listing services to efficiently schedule real estate viewing appointments on behalf of their customers. Appointment Center services also include call center specialists who provide scheduling support to customers. Appointment Center revenue is primarily billed in advance on a monthly basis. Our dotloop real estate transaction management software-as-a-service solution is a monthly subscription service allowing real estate partners to efficiently manage their transactions.

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Rentals. Rentals revenue includes advertising and a suite of tools sold to property managers, landlords and other rental professionals on a cost per lead, lease, listing or impression basis or for a fixed fee for certain advertising packages through both the Zillow and StreetEasy brands. Rentals revenue also includes revenue generated from our rental applications product, through which potential renters can submit applications to multiple properties for a flat service fee.

Mortgages. Mortgages revenue includes revenue generated through mortgage originations and the related sale of mortgages on the secondary market through Zillow Home Loans and from advertising sold to mortgage lenders and other mortgage professionals on a cost per lead basis, including our Custom Quote and Connect services.

Other. Other revenue includes revenue generated primarily by display advertising. Display revenue 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.

For additional information regarding our revenue recognition policies, see Note 2 of our Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Financial Overview

For the three months ended September 30, 2023 and 2022, we generated total revenue of $496 million and $483 million, respectively, an increase of 3%. The increase in total revenue was primarily attributable to the following:

•Rentals revenue increased by $25 million to $99 million for the three months ended September 30, 2023 compared to $74 million for the three months ended September 30, 2022. The increase in Rentals revenue was primarily due to a 20% increase in quarterly revenue per average monthly rentals unique visitor to $3.30 for the three months ended September 30, 2023 as compared to $2.74 for the three months ended September 30, 2022, primarily driven by lower occupancy rates and the corresponding increase in advertising spend from multifamily property managers as well as growth in multifamily property listings. The increase in Rentals revenue was also driven by growth in average monthly rentals unique visitors which increased 11% to 30 million during the three months ended September 30, 2023 from 27 million during the three months ended September 30, 2022.

•Residential revenue decreased by $10 million to $362 million for the three months ended September 30, 2023 compared to $372 million for the three months ended September 30, 2022. The decrease in Residential revenue was primarily driven by a 5% decrease in the number of visits for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, due to macro housing market factors including low housing inventory, fewer new for-sale listings, increases and volatility in mortgage interest rates, as well as home price fluctuations. The impact of the decrease in visits was partially offset by a 3% increase in Residential revenue per visit, driven by continued improvement in our ability to connect high-intent customers to agents.

•Mortgages revenue decreased by $2 million to $24 million for the three months ended September 30, 2023 compared to $26 million for the three months ended September 30, 2022, driven by an $8 million decrease in revenue from Custom Quote and Connect advertising services due to a decrease in demand for mortgages attributable to the higher interest rate environment as compared to the prior year period. This resulted in a 40% decrease in leads generated from marketing products sold to mortgage professionals. The decrease in revenue from Custom Quote and Connect advertising services was offset by an $8 million increase in mortgage originations revenue, as total loan origination volume increased 69%, primarily driven by continued growth in Zillow Home Loans purchase loan originations.

During the three months ended September 30, 2023 and 2022, we generated gross profit of $386 million and $394 million, respectively, a decrease of 2%.

Key Metrics

Management has identified visits, unique users and the volume of loans originated through Zillow Home Loans as relevant to investors’ and others’ assessment of our financial condition and results of operations.

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 use our products and services, including Zillow Homes Loans, or be transaction-ready real estate market participants and therefore are more sought-after by our Premier Agent 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, except percentages):

	Three Months Ended September 30,		2022 to 2023 % Change		Nine Months Ended September 30,		2022 to 2023 % Change
	2023	2022			2023	2022
Visits	2,626	2,767	(5)	%	7,766	8,291	(6)	%

During the three and nine month periods ended September 30, 2023, visits to our mobile applications and websites decreased by 5% and 6%, respectively, compared to the three and nine month periods ended September 30, 2022. These decreases were primarily driven by macro housing market factors including low housing inventory, fewer new for-sale listings, increases and volatility in mortgage interest rates as well as home price fluctuations.

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 revenue depends in part on users accessing our mobile applications and websites to engage in the sale, purchase and financing of homes, including with Zillow Home Loans, and a significant portion of our Residential revenue, Rentals revenue and Other 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 and HotPads 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.

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

	Three Months Ended September 30,		2022 to 2023 % Change		Nine Months Ended September 30,		2022 to 2023 % Change
	2023	2022			2023	2022
Average monthly unique users	224	236	(5)	%	221	227	(3)	%

During the three and nine month periods ended September 30, 2023, average monthly unique users decreased by 5% and 3%, respectively, compared to each of the three and nine month periods ended September 30, 2022. These decreases were primarily driven by macro housing market factors including low housing inventory, fewer new for-sale listings, increases and volatility in mortgage interest rates as well as home price fluctuations.

Loan Origination Volume

Loan origination volume is an important metric as it is a measure of how successful we are at the origination of mortgage loan products through our mortgage origination business, Zillow Home Loans, which directly impacts our Mortgages revenue. Loan origination volume represents the total value of mortgage loan originations closed through Zillow Home Loans during the period.

The following table presents loan origination volume by purpose and in total for Zillow Home Loans for the periods presented (in millions, except percentages):

	Three Months Ended September 30,				2022 to 2023 % Change		Nine Months Ended September 30,				2022 to 2023 % Change
	2023		2022				2023		2022
Purchase loan origination volume	$	452	$	240	88	%	$	1,047	$	557	88	%
Refinance loan origination volume	5		31		(84)	%	12		745		(98)	%
Total loan origination volume	$	457	$	271	69	%	$	1,059	$	1,302	(19)	%

During the three months ended September 30, 2023, total loan origination volume increased 69% compared to the three months ended September 30, 2022. This increase was primarily driven by the continued growth in Zillow Home Loans purchase loan originations, partially offset by a decrease in refinance loan origination volume, which was impacted by interest rate increases. During the nine months ended September 30, 2023, total loan origination volume decreased 19% compared to the nine months ended September 30, 2022. This decrease was primarily driven by a decrease in refinance loan origination volume which was impacted by interest rate increases, partially offset by the continued growth in Zillow Home Loans purchase loan originations.

Results of Operations

Given continued uncertainty surrounding the health of the housing market, interest rate environment and inflationary conditions, financial performance for current and prior periods may not be indicative of future performance.

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Revenue

									% of Total Revenue
	Three Months Ended September 30,				2022 to 2023				Three Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022
	(in millions, except percentages, unaudited)
Residential	$	362	$	372	$	(10)	(3)	%	73	%	77	%
Rentals	99		74		25		34		20		15
Mortgages	24		26		(2)		(8)		5		5
Other	11		11		—		—		2		2
Total revenue	$	496	$	483	$	13	3	%	100	%	100	%

									% of Total Revenue
	Nine Months Ended September 30,				2022 to 2023				Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022
	(in millions, except percentages, unaudited)
Residential	$	1,103	$	1,182	$	(79)	(7)	%	75	%	78	%
Rentals	264		206		58		28		18		14
Mortgages	74		101		(27)		(27)		5		7
Other	30		34		(4)		(12)		2		2
Total revenue	$	1,471	$	1,523	$	(52)	(3)	%	100	%	100	%

Three months ended September 30, 2023 compared to three months ended September 30, 2022

Total revenue increased $13 million, or 3%, to $496 million:

•Rentals revenue increased $25 million, or 34%. The increase in Rentals revenue was primarily due to a 20% increase in quarterly revenue per average monthly rentals unique visitor to $3.30 for the three months ended September 30, 2023 as compared to $2.74 for the three months ended September 30, 2022, primarily driven by lower occupancy rates and the corresponding increase in advertising spend from multifamily property managers as well as growth in multifamily property listings, which drove a 42% increase in multifamily rentals revenue. We calculate quarterly revenue per average monthly rentals unique visitor by dividing total Rentals revenue for the period by the average monthly rentals unique visitors for the period and then dividing by the number of quarters in the period. The increase in Rentals revenue was also driven by growth in average monthly rentals unique visitors which increased 11% to 30 million during the three months ended September 30, 2023 from 27 million during the three months ended September 30, 2022. Average monthly rentals unique visitors are measured with Comscore data, which includes average monthly unique visitors on rental listings on Zillow, Trulia and HotPads mobile apps and websites. We expect Rentals revenue to decrease in absolute dollars during the three months ending December 31, 2023, primarily due to the impact of seasonality on rental property listings and landlord advertising spend.

•Residential revenue decreased $10 million, or 3%. The decrease in Residential revenue was primarily driven by a 5% decrease in the number of visits for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to macro housing market factors including low housing inventory, fewer new for-sale listings, increases and volatility in mortgage interest rates as well as home price fluctuations. The impact of the decrease in visits was partially offset by a 3% increase in Residential revenue per visit to $0.138 for the three months ended September 30, 2023 from $0.134 for the three months ended September 30, 2022, primarily driven by continued improvement in our ability to connect high-intent customers to agents. We calculate Residential revenue per visit by dividing the revenue generated by our Residential offerings by the number of visits in the period. As a result of the housing market factors described above, Premier Agent revenue decreased 3% during the three months ended September 30, 2023 compared to the three months ended September 30, 2022. We expect Residential revenue to decrease in absolute dollars during the three months ending December 31, 2023, primarily due to continued pressure from the macro housing market factors described above and the impact of seasonality on real estate transaction volumes.

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•Mortgages revenue decreased $2 million, or 8%, driven by an $8 million decrease in our Custom Quote and Connect advertising services revenue, offset by an $8 million increase in mortgage originations revenue. The decrease in our Custom Quote and Connect advertising revenue was primarily due to a 40% decrease in leads generated from marketing products sold to mortgage professionals. This decrease in leads was driven by a decrease in demand for mortgages attributable to the higher interest rate environment as compared to the prior year period. The decrease in Custom Quote and Connect advertising services revenue was offset by an $8 million increase in mortgage originations revenue, as total loan origination volume increased 69% from $271 million for the three months ended September 30, 2022 to $457 million for the three months ended September 30, 2023, primarily driven by continued growth in Zillow Home Loans purchase loan origination volume, partially offset by a decrease in refinance loan origination volume due to the impact of interest rate increases. The increase in mortgage originations revenue was also attributable to a 40% increase in gain on sale margin. Gain on sale margin represents the net gain on sale of mortgage loans divided by total loan origination volume for the period. Net gain on sale of mortgage loans includes all components related to the origination and sale of mortgage loans, including the net gain on sale of loans into the secondary market, loan origination fees, unrealized gains and losses associated with changes in fair value of interest rate lock commitments and mortgage loans held for sale, realized and unrealized gains or losses from derivative financial instruments and the provision for losses relating to representations and warranties.

Nine months ended September 30, 2023 compared to nine months ended September 30, 2022

Total revenue decreased $52 million, or 3%, to $1,471 million:

•Residential revenue decreased $79 million, or 7%. This decrease was driven by a 6% decrease in the number of visits for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 due to macro housing market factors including low housing inventory, fewer new for-sale listings, increases and volatility in mortgage interest rates as well as home price fluctuations. These factors also resulted in an 8% decrease in Premier Agent revenue during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

•Mortgages revenue decreased $27 million, or 27%. This decrease was driven by a decline in our Custom Quote and Connect advertising services revenue. The decrease in our Custom Quote and Connect advertising revenue was primarily due to a 35% decrease in leads generated from marketing products sold to mortgage professionals. This decrease in leads was driven by a decrease in demand for mortgages attributable to the higher interest rate environment as compared to the prior year period.

•Rentals revenue increased $58 million, or 28%. The increase in Rentals revenue was primarily due to growth in average monthly rentals unique visitors which increased 15% to 30 million during the nine months ended September 30, 2023 from 26 million during the nine months ended September 30, 2022. The increase in Rentals revenue was also driven by an 11% increase in quarterly revenue per average monthly rentals unique visitor to $2.93 for the nine months ended September 30, 2023 as compared to $2.64 for the nine months ended September 30, 2022, primarily driven by lower occupancy rates and the corresponding increase in advertising spend from multifamily property managers as well as growth in multifamily property listings.

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Adjusted EBITDA

The following table summarizes net loss, which includes the impact of discontinued operations, and Adjusted EBITDA, which excludes the impact of discontinued operations (in millions, except percentages):

									% of Revenue
	Three Months Ended September 30,				2022 to 2023				Three Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022
Net loss	$	(28)	$	(53)	$	25	47	%	(6)	%	(11)	%
Adjusted EBITDA	$	107	$	130	$	(23)	(18)	%	22	%	27	%

									% of Revenue
	Nine Months Ended September 30,				2022 to 2023				Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022
Net loss	$	(85)	$	(29)	$	(56)	(193)	%	(6)	%	(2)	%
Adjusted EBITDA	$	322	$	441	$	(119)	(27)	%	22	%	29	%

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

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

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this measure 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 changes in, or cash requirements for, our working capital needs;

•Adjusted EBITDA does not reflect the results of discontinued operations;

•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 expenditures or contractual commitments;

•Adjusted EBITDA does not reflect impairment and restructuring costs;

•Adjusted EBITDA does not reflect acquisition-related costs;

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

•Adjusted EBITDA does not reflect income taxes; and

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

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

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The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, which is net loss for each of the periods presented (in millions, unaudited):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Reconciliation of Adjusted EBITDA to Net Loss:
Net loss	$	(28)	$	(53)	$	(85)	$	(29)
Loss from discontinued operations, net of income taxes	—		2		—		13
Income taxes	—		3		1		(1)
Other income, net	(34)		(12)		(108)		(19)
Depreciation and amortization	49		34		134		114
Share-based compensation	109		147		342		323
Impairment and restructuring costs	1		—		9		14
Acquisition-related costs	1		—		2		—
Interest expense	9		9		27		26
Adjusted EBITDA	$	107	$	130	$	322	$	441

Costs and Expenses, Gross Profit and Other Items

									% of Total Revenue
	Three Months Ended September 30,				2022 to 2023				Three Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022
	(in millions, except percentages, unaudited)
Cost of revenue	$	110	$	89	$	21	24	%	22	%	18	%
Gross profit	386		394		(8)		(2)		78		82
Operating expenses:
Sales and marketing	164		165		(1)		(1)		33		34
Technology and development	142		142		—		—		29		29
General and administrative	131		138		(7)		(5)		26		29
Impairment and restructuring costs	1		—		1		—		—		—
Acquisition-related costs	1		—		1		—		—		—
Total operating expenses	439		445		(6)		(1)		89		92
Other income, net	34		12		22		183		7		2
Interest expense	(9)		(9)		—		—		(2)		(2)
Income tax expense	—		(3)		3		100		—		(1)

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									% of Total Revenue
	Nine Months Ended September 30,				2022 to 2023				Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022
	(in millions, except percentages, unaudited)
Cost of revenue	$	306	$	278	$	28	10	%	21	%	18	%
Gross profit	1,165		1,245		(80)		(6)		79		82
Operating expenses:
Sales and marketing	493		502		(9)		(2)		34		33
Technology and development	419		369		50		14		28		24
General and administrative	407		370		37		10		28		24
Impairment and restructuring costs	9		14		(5)		(36)		1		1
Acquisition-related costs	2		—		2		—		—		—
Total operating expenses	1,330		1,255		75		6		90		82
Other income, net	108		19		89		468		7		1
Interest expense	(27)		(26)		(1)		(4)		(2)		(2)
Income tax benefit (expense)	(1)		1		(2)		(200)		—		—

Cost of Revenue

Cost of revenue consists of expenses related to operating our mobile applications and websites, including associated headcount-related 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. Cost of revenue also includes amortization costs related to capitalized website and development activities, amortization of software, amortization of certain intangible assets and other costs to obtain data used to populate our mobile applications and websites, and amortization of certain intangible assets recorded in connection with acquisitions, including developed technology. Cost of revenue also includes credit card fees and ad serving costs paid to third parties, and direct costs to originate mortgage loans, including underwriting and processing costs.

Three months ended September 30, 2023 compared to three months ended September 30, 2022

Cost of revenue increased $21 million, or 24%, primarily driven by increases of $15 million in depreciation and amortization expense due to an increase in website development costs, $3 million in ad serving costs and $3 million in software and hardware costs.

Nine months ended September 30, 2023 compared to nine months ended September 30, 2022

Cost of revenue increased $28 million, or 10%, primarily driven by increases of $22 million in depreciation and amortization expense due to an increase in website development costs, $6 million in ad serving costs, $6 million in software and hardware costs and $4 million in mortgage loan processing costs due to increased purchase loan origination volume. These increases were partially offset by a $7 million decrease in lead acquisition costs as we focus on organic growth of our mortgage origination business and a $2 million decrease in credit card processing fees attributable to the previously mentioned decrease in revenue.

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Gross Profit

Gross profit is calculated as revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Our gross profit has and will continue to be affected by a number of factors, including the mix of revenue from our various product offerings.

Three months ended September 30, 2023 compared to three months ended September 30, 2022

Gross profit decreased by $8 million, or 2%, due to increases in cost of revenue, primarily associated with additional depreciation and amortization expenses, which outpaced the growth of revenue. Total gross margin decreased from 82% to 78%.

Nine months ended September 30, 2023 compared to nine months ended September 30, 2022

Gross profit decreased by $80 million, or 6%, primarily due to a decrease in revenue, discussed above. Total gross margin decreased from 82% to 79%.

Sales and Marketing

Sales and marketing expenses consist of advertising costs and other sales expenses related to promotional and marketing activities, headcount-related expenses, including salaries, commissions, benefits, bonuses and share-based compensation expense for sales, sales support, customer support, including the customer connections team and mortgage loan officers and specialists, marketing and public relations employees, depreciation expense and amortization of certain intangible assets recorded in connection with acquisitions, including trade names and trademarks and customer relationships.

Three months ended September 30, 2023 compared to three months ended September 30, 2022

Sales and marketing expenses decreased $1 million, or 1%, due to a decrease of $5 million in headcount-related expenses, including share-based compensation expense, primarily driven by the recognition of incremental share-based compensation expense in the three months ended September 30, 2022 in connection with the repricing of eligible option awards in connection with the August 2022 Equity Award Actions, partially offset by a $2 million increase in marketing and advertising costs.

Nine months ended September 30, 2023 compared to nine months ended September 30, 2022

Sales and marketing expenses decreased $9 million, or 2%, due to decreases of $6 million in marketing and advertising costs and $4 million in third-party professional service fees both driven by active cost management, a $3 million decrease in depreciation and amortization expense, and a $3 million decrease in headcount-related expenses, including share-based compensation expense primarily driven by the recognition of incremental share-based compensation expense in the three months ended September 30, 2022 in connection with the repricing of eligible option awards in connection with the August 2022 Equity Award Actions. The decreases were partially offset by a $6 million increase in travel expenses and a $2 million increase in software and hardware costs.

Technology and Development

Technology and development expenses consist of headcount-related 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 equipment and maintenance costs and depreciation expense.

Three months ended September 30, 2023 compared to three months ended September 30, 2022

Technology and development expenses remained flat, primarily due to a decrease of $3 million in third-party professional service fees, partially offset by a $2 million increase in travel expenses and a $2 million increase in software and hardware costs.

Nine months ended September 30, 2023 compared to nine months ended September 30, 2022

Technology and development expenses increased $50 million, or 14%, primarily due to increases of $41 million in headcount-related expenses, including share-based compensation expense, primarily driven by the August 2022 Equity Award Actions, $5 million in travel expenses and $4 million in software and hardware costs.

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General and Administrative

General and administrative expenses consist of headcount-related 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.

Three months ended September 30, 2023 compared to three months ended September 30, 2022

General and administrative expenses decreased $7 million, or 5%, primarily due to a decrease of $10 million in headcount-related expenses, including share-based compensation expense, primarily driven by the recognition of incremental share-based compensation expense in the three months ended September 30, 2022 in connection with the repricing of eligible option awards in connection with the August 2022 Equity Award Actions, partially offset by an increase of $2 million in third-party professional service fees.

Nine months ended September 30, 2023 compared to nine months ended September 30, 2022

General and administrative expenses increased $37 million, or 10%, primarily due to increases of $34 million in headcount-related expenses, including share-based compensation expense, primarily driven by an $18 million increase in share-based compensation expense associated with the departures of certain personnel, as well as the impact of the August 2022 Equity Award Actions. The increase in general and administrative expenses was also driven by increases of $3 million in third-party professional service fees and $3 million in software and hardware costs.

Impairment and Restructuring Costs

Impairment and restructuring costs were $1 million and $9 million for the three and nine month periods ended September 30, 2023, respectively. The nine months ended September 30, 2023 include impairment costs of $6 million related to reductions in our right of use assets associated with changes in the use of certain office space in our lease portfolio and employee termination costs of $3 million.

There were no impairment and restructuring costs incurred during the three months ended September 30, 2022. Impairment and restructuring costs totaled $14 million for the nine months ended September 30, 2022. These costs do not qualify as discontinued operations and were primarily attributable to employee termination costs associated with the wind down of Zillow Offers operations. For additional information regarding these costs, see Note 3 of our Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Other Income, net

Other income, net consists primarily of interest income earned on our cash, cash equivalents and investments, and fair value adjustments on an outstanding warrant.

Other income, net increased $22 million and $89 million for the three and nine month periods ended September 30, 2023, respectively. The increase in other income, net was primarily driven by increases in returns on investments due to the higher interest rate environment as compared to the prior year period.

Income Taxes

We are primarily subject to income taxes in the United States (federal and state), as well as certain foreign jurisdictions. As of September 30, 2023 and December 31, 2022, 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. There is a reasonable possibility that within the next several years, sufficient positive evidence will become available to demonstrate that a significant portion of the valuation allowance against our U.S. net deferred tax assets will no longer be required. We have accumulated federal tax losses of approximately $1.8 billion as of December 31, 2022, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $63 million (tax effected) as of December 31, 2022.

Income tax expense (benefit) for the three and nine months ended September 30, 2023 and the nine months ended September 30, 2022 was not material. We recorded income tax expense of $3 million for the three months ended September 30, 2022, primarily related to state income taxes.

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Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash flows from operations, debt financing and equity offerings. Our cash requirements consist principally of working capital, general corporate needs and mortgage loan originations. We generally reinvest available cash flows from operations into our business and to service our debt obligations.

Sources of Liquidity

As of September 30, 2023 and December 31, 2022, we had cash and cash equivalents, investments and restricted cash of $3.3 billion and $3.4 billion, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions and money market funds. Investments consist of fixed income securities, which include U.S. government treasury securities, U.S. government agency securities, investment grade corporate securities, and commercial paper. Restricted cash primarily consists of amounts held in escrow related to funding customer home purchases in our mortgage origination business. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation insurance limits, as applicable. As of September 30, 2023, Zillow Group and its subsidiaries were in compliance with all debt covenants specified in the facilities described below.

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, strategic acquisitions and investments and other capital requirements for at least the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operations, debt financing and equity offerings, as applicable.

Summarized Cash Flow Information

The cash flows related to discontinued operations have not been separated. Accordingly, the condensed consolidated statements of cash flows and the following discussions include the results of continuing and discontinued operations for the nine months ended September 30, 2022. There were no cash flows related to discontinued operations for the nine months ended September 30, 2023. See Note 3 in our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for additional information on discontinued operations, including supplemental cash flow information. The following table presents selected cash flow data for the periods presented (in millions, unaudited):

	Nine Months Ended September 30,
	2023		2022
Cash Flow Data:
Net cash provided by operating activities	$	268	$	4,420
Net cash provided by (used in) investing activities	339		(1,123)
Net cash used in financing activities	(226)		(4,160)

Cash Flows Provided By Operating Activities

Our operating cash flows result primarily from cash received from real estate professionals, rental professionals, mortgage professionals, builders and brand advertisers, as well as cash received from sales of mortgages originated by Zillow Home Loans and, prior to September 30, 2022, from customers for sales of homes through Zillow Offers. Our primary uses of cash from operating activities include 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. Prior to the wind down of Zillow Offers operations, our primary uses of cash from operating activities also included payments for homes purchased through Zillow Offers.

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For the nine months ended September 30, 2023, net cash provided by operating activities was $268 million. This was driven by a net loss of $85 million, adjusted by share-based compensation of $342 million, depreciation and amortization of $134 million, accretion of bond discount of $29 million, amortization of right of use assets of $18 million, amortization of contract cost assets of $16 million and amortization of debt issuance costs of $4 million. Changes in operating assets and liabilities decreased cash provided by operating activities by $135 million. The changes in operating assets and liabilities are primarily related to a $55 million increase in mortgage loans held for sale due to an increase in purchase loan origination volume, a $26 million increase in accounts receivable primarily due to an increase in revenue from products and services billed in arrears, a $24 million decrease in lease liabilities due to contractual lease payments, a $22 million increase in prepaid expenses and other current assets primarily due to an increase in revenue from products and services billed in arrears, a $16 million increase in contract cost assets primarily due to capitalized sales commissions, a $4 million decrease in other long term liabilities, and a $3 million decrease in accrued expenses and other current liabilities. These changes were partially offset by a $7 million increase in accounts payable and a $4 million increase in accrued compensation and benefits both driven by the timing of payments, and a $4 million increase in deferred revenue.

For the nine months ended September 30, 2022, net cash provided by operating activities was $4.4 billion. This was driven by a net loss of $29 million, adjusted by share-based compensation of $341 million, depreciation and amortization of $121 million, amortization of debt discount and debt issuance costs of $24 million, amortization of contract cost assets of $23 million, a loss on extinguishment of debt of $21 million, amortization of right of use assets of $17 million, accretion of bond discount of $11 million, and other adjustments to reconcile net loss to net cash provided by operating activities of $11 million. Changes in operating assets and liabilities increased cash provided by operating activities by $3.9 billion. The changes in operating assets and liabilities are primarily related to a $3.9 billion decrease in inventory and a $76 million decrease in accounts receivable as we wound down Zillow Offers operations, a $58 million decrease in mortgage loans held for sale driven by increased interest rates which decreased demand for mortgages, and a $6 million increase in other long-term liabilities primarily due to our outstanding warrant agreement. These changes were partially offset by a $52 million

decrease in accrued compensation and benefits and a $49 million decrease in accrued expenses and other current liabilities driven primarily by the wind down of Zillow Offers operations, a $15 million decrease in lease liabilities primarily due to lease payments, a $13 million increase in prepaid expenses and other current assets and a $13 million increase in contract cost assets.

Cash Flows Provided By (Used In) Investing Activities

Our primary investing activities include the purchase and sale or maturity of investments, cash outflows for purchases of property and equipment and intangible assets, including capitalized website development costs and internal-use software, and cash paid in connection with acquisitions.

For the nine months ended September 30, 2023, net cash provided by investing activities was $339 million. This was the result of $498 million of net proceeds from the maturity of investments, $125 million of purchases of property and equipment and intangible assets, and $34 million of cash paid for acquisitions, net of cash acquired.

For the nine months ended September 30, 2022, net cash used in investing activities was $1.1 billion. This was the result of $1.0 billion of net purchases of investments and $104 million of purchases of property and equipment and intangible assets.

Cash Flows Used In Financing Activities

Net cash used in financing activities has primarily resulted from repurchases of Class A common stock and Class C capital stock, the exercise of employee option awards, repayments of borrowings on the warehouse line of credit and master repurchase agreements related to Zillow Home Loans, and, prior to September 30, 2022, settlement of long term debt including our Zillow Offers securitization term loans, proceeds from our Zillow Offers securitization transaction, and proceeds from and repayments of borrowings on our credit facilities related to Zillow Offers.

For the nine months ended September 30, 2023, net cash used in financing activities was $226 million, which primarily related to $336 million of cash paid for share repurchases, partially offset by $56 million of proceeds from the exercise of option awards and $54 million of net borrowings on our warehouse line of credit and master repurchase agreements related to Zillow Home Loans.

For the nine months ended September 30, 2022, net cash used in financing activities was $4.2 billion, which was primarily related to $2.2 billion of repayments on borrowings of our credit facilities and $1.2 billion for the repayment of the term loans associated with the wind down of Zillow Offers operations, $773 million of cash paid for share repurchases and $68 million of net repayments on our warehouse line of credit and master repurchase agreements related to Zillow Home Loans. The cash outflows were partially offset by $44 million of proceeds from the exercise of option awards.

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Capital Resources

We continue to invest in the development and expansion of our operations. Ongoing investments include, but are not limited to, improvements in our technology platforms, infrastructure and continued investments in sales and marketing. To finance these investments and ongoing operations, and in the event that we require additional funding to support strategic business opportunities, we have issued convertible senior notes. As of September 30, 2023, we have $1.7 billion aggregate principal of convertible senior notes outstanding. The convertible notes are senior unsecured obligations, and interest on the convertible notes is paid semi-annually. The following table summarizes our convertible senior notes as of the periods presented (in millions, except interest rates):

					September 30, 2023		December 31, 2022
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Carrying Value		Carrying Value
September 1, 2026	$	499	1.375	%	$	496	$	495
May 15, 2025	565		2.75	%	561		560
September 1, 2024	608		0.75	%	607		605
Total	$	1,672			$	1,664	$	1,660

We may from time to time seek to redeem, retire or purchase outstanding debt through cash purchases and/or exchanges for cash, shares of stock or a combination of cash and stock, pursuant to the redemption terms of such debt securities, in open market purchases, privately negotiated transactions or otherwise. In particular, the 2024 Notes and 2026 Notes may be redeemed if the last reported sale price of our Class C capital stock exceeds $56.56 per share for a specified period of trading days. To the extent our Class C capital stock price rises above those levels, we may redeem the 2024 Notes and/or 2026 Notes, in which case, we would expect to settle any conversions in cash up to the principal amount and shares of Class C capital stock for any conversion obligation in excess of the principal amount. Such redemptions, repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material. Refer to Note 9 of our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for additional information regarding our convertible senior notes, including conversion rates, conversion and redemption dates and the related capped call transactions.

On July 31, 2023, we acquired Aryeo, a software company which serves real estate photographers, for approximately $20 million of our Class C capital stock and $15 million in cash, net of cash acquired, subject to certain adjustments. Additionally, on September 11, 2023, we acquired substantially all of the assets and liabilities of Spruce, a tech-enabled title and escrow platform, for approximately $19 million in cash, net of cash acquired, subject to certain adjustments.

On October 28, 2023, Zillow, Inc. and Follow Up Boss entered into an Agreement pursuant to which Zillow, Inc. agreed to acquire Follow Up Boss for $400 million in cash, subject to certain adjustments, payable upon closing of the transaction, and up to $100 million in cash payable over a three-year period upon achievement of certain performance metrics contemplated by the Agreement. Follow Up Boss is a customer relationship management system for real estate professionals. The Agreement contains customary representations, warranties and covenants of the parties as well as conditions to closing, including, among other things, regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Prior to July 31, 2023, the Board authorized the repurchase of up to $1.8 billion of our Class A common stock, Class C capital stock, outstanding convertible senior notes or a combination thereof. For additional information on these authorizations, see Notes 13 and 15 to our Notes to Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. On July 31, 2023, the Board authorized the repurchase of up to an additional $750 million of Class A common stock, Class C capital stock, convertible senior notes or a combination thereof. This additional authorization (together with the previous authorizations, the “Repurchase Authorizations”) increased our total cumulative Repurchase Authorizations to $2.5 billion. During the nine months ended September 30, 2023, we repurchased 1.8 million shares of Class A common stock and 5.4 million shares of Class C capital stock at an average price of $48.71 and $46.15 per share, respectively, for an aggregate purchase price of $86 million and $250 million, respectively. As of September 30, 2023, $914 million remained available for future repurchases pursuant to the Repurchase Authorizations, which repurchases decrease our liquidity and capital resources when effected.

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Zillow Home Loans operations 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 mortgage loan originations. The following table summarizes our warehouse line of credit and master repurchase agreements as of the periods presented (in millions, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Outstanding Borrowings at September 30, 2023		Outstanding Borrowings at December 31, 2022		Weighted Average Interest Rate
JPMorgan Chase Bank, N.A.(1)	May 30, 2024	$	100	$	68	$	—	7.03	%
Atlas Securitized Products, L.P.(2)	March 11, 2024	50		22		23		7.32	%
Comerica Bank	December 29, 2023	50		1		11		7.45	%
Citibank, N.A.(3)	June 9, 2023	—		—		3		—	%
	Total	$	200	$	91	$	37

(1)Agreement commenced on June 1, 2023 and provides for a total maximum borrowing capacity of $100 million, $25 million of which is committed, until May 30, 2024.

(2)Agreement was reassigned from Credit Suisse AG, Cayman Islands on May 25, 2023. No other material changes were made to the agreement in connection with the reassignment.

(3)Agreement expired on June 9, 2023 and was not renewed.

On October 11, 2023, Zillow Home Loans entered into a repurchase agreement with UBS AG. The repurchase agreement provides a total maximum borrowing capacity of $100 million until October 9, 2024.

Refer to Note 9 of our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for additional information on Zillow Group’s warehouse line of credit and master repurchase agreements.

Contractual Obligations and Other Commitments

Convertible Senior Notes - Includes the aggregate principal amounts of the 2024 Notes, 2025 Notes and 2026 Notes due on their contractual maturity dates, as well as the associated coupon interest. As of September 30, 2023, we have an outstanding aggregate principal amount of convertible senior notes of $1.7 billion, $608 million of which is payable within 12 months. Future interest payments associated with the convertible senior notes total $55 million, with $27 million payable within 12 months. Refer to Note 9 of our Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for maturity dates, stated interest rates and additional information on our convertible senior notes.

Credit Facilities - Includes principal amounts due for amounts borrowed under the warehouse line of credit and master repurchase agreements to finance mortgages originated through Zillow Home Loans. As of September 30, 2023, we have outstanding principal amounts of $91 million. Amounts exclude an immaterial amount of estimated interest payments.

Operating Lease Obligations - Our lease portfolio primarily comprises operating leases for our office space. During the nine months ended September 30, 2023, there were no material changes to our operating lease obligations disclosed in Note 12 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Additionally, as of September 30, 2023, we had outstanding letters of credit of approximately $12 million, which secure our lease obligations in connection with certain of the operating leases of our office spaces.

Purchase Obligations - We have non-cancellable purchase obligations for content related to our mobile applications and websites and certain cloud computing costs. During the nine months ended September 30, 2023, there were no material changes to the purchase commitments disclosed in Note 18 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures. We evaluate our estimates, judgments 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, and the health of the real estate market and the broader economy have introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact our estimates. For information on our critical accounting policies and estimates, see Part II Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes to our critical accounting policies and estimates as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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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, U.S. government treasury securities, U.S. government agency securities, investment grade corporate securities and commercial paper. Our current investment policy seeks first to preserve capital, second to provide sufficient liquidity for our operating and capital needs and third to maximize yield without putting our principal at risk.

Our short-term 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. For our investment portfolio, we do not believe an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio.

As of September 30, 2023, we had approximately $1.7 billion aggregate principal amount of convertible senior notes outstanding with maturities ranging from September 2024 through September 2026. All outstanding convertible senior notes bear fixed rates of interest and, therefore, do not expose us to financial statement risk associated with changes in interest rates. The fair values of the convertible senior notes change primarily when the market price of our stock fluctuates or interest rates change.

We are also subject to market risk which may impact our mortgage loan origination volume and associated revenue and the net interest margin derived from borrowings under our warehouse line of credit and master repurchase agreements that provide capital for Zillow Home Loans. Market risk occurs in periods where changes in short-term interest rates result in mortgage loans being originated with terms that provide a smaller interest rate spread above the financing terms of our warehouse line of credit and master repurchase agreements, which can negatively impact our results of operations. This risk is primarily mitigated through the expedited sale of our loans. As of September 30, 2023 and December 31, 2022, we had $91 million and $37 million, respectively, of outstanding borrowings on our warehouse line of credit and master repurchase agreements which bear interest either at a floating rate based on Secured Overnight Financing Rate (“SOFR”) plus an applicable margin, as defined by the governing agreements, or Bloomberg Short-Term Bank Yield Index Rate (“BSBY”) plus an applicable margin, as defined by the governing agreements. 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 agreements, we estimate that a one percentage point increase in SOFR or BSBY, as applicable, would not have a material effect on our annual interest expense associated with the warehouse line of credit and master repurchase agreements as of September 30, 2023 and December 31, 2022.

For additional details related to our credit facilities and convertible senior notes, see Note 9 to our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Inflation Risk

The macroeconomic environment in the United States has experienced, and continues to experience inflationary pressures. While it is difficult to accurately measure the impact of these inflationary pressures on our business, we believe these effects have been pervasive throughout our business during the past several quarters. In response to ongoing inflationary pressures in the United States, the Federal Reserve has implemented a number of increases to the federal funds rate in recent quarters. These increases have impacted other market rates derived from this benchmark rate, including mortgage interest rates. The increase in mortgage interest rates across the industry has decreased demand for mortgages overall and, in turn, had an adverse impact on our Mortgages revenue.

If inflationary pressures persist, our costs, in particular labor, marketing and hosting costs, may increase and we may not be able to fully offset such higher costs through price increases. In addition, uncertain or changing economic and market conditions, including inflation or deflation, may continue to affect demand for our products and services and the housing markets in which we operate. Our inability or failure to quickly respond to inflation could harm our business, results of operations and financial condition. We cannot predict the duration or magnitude of these inflationary pressures, or how they may change over time, but we expect to see continued impacts on the residential real estate industry, our customers and our company. Despite these near-term effects, we do not expect these inflationary pressures to have a material impact on our ability to execute our long-term business strategy.

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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 September 30, 2023. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective as of September 30, 2023.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended September 30, 2023 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 14 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

There have not been any material changes to the risk factors affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. However, you should carefully consider the factors discussed in our Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Unregistered Sales of Equity Securities

On July 31, 2023, pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D thereunder, we issued 380,259 shares of Class C capital stock to the stockholders of Aryeo as partial payment for acquisition of the entity by Zillow Group.

There were no other unregistered sales of equity securities during the three months ended September 30, 2023.

Purchase of Equity Securities by the Issuer

The following table summarizes our stock repurchases during the three months ended September 30, 2023 (in millions, except share data which are presented in thousands, and per share amounts):

	Total Number of Shares Purchased		Average Price Paid Per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
Period	Class A common stock	Class C capital stock	Class A common stock		Class C capital stock
July 1 - July 31, 2023	—	—	$	—	$	—	—	$	1,014
August 1 - August 31, 2023	965	932	52.57		52.80		1,897	914
September 1 - September 30, 2023	—	—	—		—		—	914
Total	965	932					1,897
(1) On December 2, 2021, the Board authorized a stock repurchase program granting the authority to repurchase up to $750 million of Class A common stock, Class C capital stock or a combination of both. On May 4, 2022, the Board authorized the repurchase of up to an additional $1 billion of Class A common stock, Class C capital stock or a combination thereof. On November 1, 2022, the Board further expanded these authorizations to allow for the repurchase of a portion of our outstanding convertible senior notes. On July 31, 2023, the Board authorized the repurchase of up to an additional $750 million of Class A common stock, Class C capital stock, outstanding convertible senior notes or a combination thereof (together with the previous authorizations, “Repurchase Authorizations”). The Repurchase Authorizations do not have an expiration date. There were no repurchases of convertible senior notes during the three months ended September 30, 2023.

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Item 5. Other Information

Trading Plans

On August 21, 2023, Brad Owens, General Counsel, entered into a 10b5-1 sales plan (the “10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The 10b5-1 Sales Plan provides for the exercise of option awards and sale of up to 127,625 shares of Class C capital stock and the sale of an indeterminate number of shares of Class C capital stock related to future vesting of restricted stock units. The 10b5-1 Sales Plan will become effective on November 20, 2023 and will terminate on August 18, 2025, subject to earlier termination upon the exercise of option awards and sale of all shares of Class C capital stock subject to the 10b5-1 Sales Plan or as otherwise provided in the 10b5-1 Sales Plan.

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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 Articles of Incorporation of Zillow Group, Inc. (Filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2015, and incorporated herein by reference).
3.2	Amended and Restated Bylaws of Zillow Group, Inc. (Filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2020, and incorporated herein by reference).
10.1	Optional Partial Termination to Lease by and between FSP-RIC, LLC and Zillow, Inc. dated as of August 15, 2023.
10.2*	Amended Zillow Group, Inc. Executive Severance Plan and Summary Plan Description.
31.1	Certification of Chief Executive Officer pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1^	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2^	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	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.
^	The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

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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: November 1, 2023	ZILLOW GROUP, INC.
	By:	/s/ JENNIFER ROCK
	Name:	Jennifer Rock
	Title:	Chief Accounting Officer

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EX-10.1

Exhibit 10.1

OPTIONAL PARTIAL LEASE TERMINATION AGREEMENT

THIS OPTIONAL PARTIAL LEASE TERMINATION AGREEMENT (this “Agreement”) is dated for reference purposes as of August 15, 2023 between FSP-RIC LLC, a Delaware limited liability company (“Landlord”), and ZILLOW, INC., a Washington corporation (“Tenant”). Landlord is authorized to insert the date of its signature in the date blank above.

RECITALS

A.    Landlord, as successor-in-interest to The Northwestern Mutual Life Insurance Company, and Tenant are parties to that certain Office Lease dated March 22, 2011 (the “Initial Lease”), as amended by Amendment to Office Lease dated June 27, 2012 (the “First Amendment”), Second Amendment to Lease dated April 16, 2013 (the “Second Amendment”), Third Amendment to Lease dated January 10, 2014 (the “Third Amendment”), Fourth Amendment to Lease dated May 2, 2014 (the “Fourth Amendment”), Fifth Amendment to Lease dated November 19, 2014 (the “Fifth Amendment”), Sixth Amendment to Lease dated June 21, 2016 (the “Sixth Amendment”), and Seventh Amendment to Lease dated October 19, 2021 (the “Seventh Amendment”, and collectively with all of the foregoing, the “Lease”), pursuant to which Tenant leases certain space (the “Premises”) in the building located at 1301 Second Avenue, Seattle, Washington (the “Building”).

B.    Pursuant to the Lease, Tenant currently leases the 31st through 42nd floors of the Building. The Term of the Lease with respect to the 31st through 35th floors is currently scheduled to expire on December 31, 2024. The Term of the Lease with respect to the 36th through 42nd floors of the Building is currently scheduled to expire on December 31, 2032.

C.    Tenant is currently marketing the 31st through 35th, 41st and 42nd floors of the Premises for sublease, and Landlord and Tenant desire to enter into this Agreement to grant Landlord certain early termination rights with respect to such floors of the Premises.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties agree as follows:

1.    Landlord’s Early Termination Rights. Landlord is hereby granted rights to terminate the Lease with respect to all, but not less than all, of one or more of full floors 31 through 35, 41 and 42 of the Premises (each, an “Early Termination Right” and collectively, the “Early Termination Rights”) effective as of a termination date selected by Landlord for each Early Termination Right exercised by Landlord (each, an “Effective Termination Date”), which Effective Termination Date shall not be earlier than January 1, 2024 nor later than December 31, 2024, time being of the essence. The Early Termination Rights may be exercised separately or in combination with each other, and in one or multiple exercises. Any portion of the Premises as to which Landlord exercises an Early Termination Right is sometimes referred to herein as an “Early Termination Space”.

2.    Exercise of Early Termination Right(s). Each Early Termination Right is exercisable by Landlord providing written notice to Tenant of such exercise, together with e-mail notice sent to the addresses set forth on Schedule 1 attached hereto (collectively, the “Termination Notice”). Each Termination Notice shall specify the Early Termination Space and the Effective Termination Date for such Early Termination Space. Subject to Landlord’s early access rights as set forth in Section 5 below, the Effective Termination Date for an Early Termination Space shall not be earlier than ninety (90) days after the date of Tenant’s receipt of the Termination Notice for such Early Termination Space.

3.    Early Termination Fee. If Landlord exercises an Early Termination Right, then Tenant shall be required to pay Landlord a termination fee in consideration of the early termination of the Lease with respect to the applicable Early Termination Space (an “Early Termination Fee”). Except as expressly provided in Section 4 below, the Early Termination Fee shall be calculated in accordance with the following:

3.1    Floors 31 through 35. The Early Termination Fee for the early termination of the Lease with respect to any of floors 31 through 35 floors shall be an amount equal to ninety percent (90%) of the aggregate Monthly Base Rent and estimated Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes that would have been payable by Tenant under the Lease for the Early Termination Space for the period from the day following the Effective Termination Date for such Early Termination Space through December 31, 2024.

3.2    Floors 41 and 42. The Early Termination Fee for the early termination of the Lease with respect to floors 41 and/or 42 shall be the amount that equals thirty percent (30%) of the aggregate Monthly Base Rent and estimated Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes that would have

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been payable by Tenant under the Lease for the Early Termination Space for the period from the day following the Effective Termination Date for such Early Termination Space through December 31, 2032.

3.3    Calculation and Payment. For purposes of calculating the estimated Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes for the applicable period set forth herein, the estimated Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes for the first calendar year (or partial calendar) of the calculation period shall be based on the estimated Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes for such calendar year (the “First Year Expenses”) and the estimated Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes for each subsequent calendar year (or partial calendar) shall be the First Year Expenses increased three and one-half percent (3.5%) per year (prorated for any partial calendar year). The Early Termination Fee for each Early Termination Space shall be payable by Tenant to Landlord as follows: (a) 50% of the Early Termination Fee shall be paid by Tenant not later than forty-five (45) days after Tenant’s receipt of Landlord’s Termination Notice with respect to such Early Termination Space, and (b) 50% of the Early Termination Fee shall be paid by Tenant not later than the Effective Termination Date with respect to such Early Termination Space. Tenant’s failure to pay an Early Termination Fee by the due date shall constitute an Event of Default under the Lease by Tenant if Tenant does not cure such failure within thirty (30) days after written notice from Landlord, and which failure continues for an additional thirty (30) days after a second written notice is delivered from Landlord to Tenant. In addition to any other Landlord rights or remedies for Tenant’s failure to pay the Early Termination Fee, Landlord shall have the right (but not the obligation) upon written notice to Tenant to rescind the early termination of the Lease with respect to the applicable Early Termination Space for which Tenant does not pay the Early Termination Fee by the due date set forth herein. For the avoidance of doubt, the parties hereto hereby agree that if the Effective Termination Date is January 1, 2024 with respect to all of the Early Termination Space, the Early Termination Fee payable by Tenant to Landlord shall be $16,904,269.00.

4.    New Subleases.

4.1    Landlord’s Election. If, prior to Landlord’s delivery to Tenant of a Termination Notice with respect to a particular potential Early Termination Space, Tenant executes a bona fide arms-length sublease with a non-affiliate third party for such potential Early Termination Space and delivers to Landlord written notice of such sublease and a copy thereof, then as long as there is no uncured Event of Default by Tenant, within ten (10) business days after Landlord’s receipt of Tenant’s sublease notice Landlord shall notify Tenant in writing of its election of one of the following: (a) Landlord’s disapproval of the proposed sublease if Landlord disapproves such proposed sublease in Landlord’s commercially reasonable business judgment in accordance with Section 10.1 of the Lease; (b) Landlord’s approval of the proposed sublease and waiver by Landlord of its Early Termination Right for the term of such sublease with respect to the sublease space under such sublease; (c) Landlord’s election to sublease from Tenant the sublease space set forth in the proposed sublease on the same terms as set forth in such proposed sublease and Landlord’s waiver of its Early Termination Right for the term of such sublease with respect to the sublease space under such sublease; or (d) Landlord’s election to exercise its Early Termination Right effective as of an Effective Termination Date that is the date preceding the commencement date of the term of the proposed sublease, with respect to either (i) all (but not less than all of) the sublease space under the proposed sublease, which, notwithstanding the provisions of Section 1 above, may be for space that constitutes a partial floor, or (ii) in the case of a proposed sublease that includes sublease space that constitutes a partial floor, the sublease space under the proposed sublease plus the entire remainder of the floor of the Premises upon which the partial floor sublease space is located.

4.2    Early Termination Fee. Notwithstanding Section 3 above, the Early Termination Fee in the case of Landlord’s exercise of its Early Termination Right in response to a proposed sublease pursuant to Section 4.1 above shall be calculated as follows:

4.2.1    If the proposed sublease pertains only to less than one full floor of the Premises and Landlord exercises its Early Termination Right with respect to only such partial floor proposed sublease space, then the Early Termination Fee payable by Tenant for such Early Termination Space shall be the Alternative Early Termination Fee (as defined in Section 4.3 below).

4.2.2    If the proposed sublease pertains only to less than one full floor of the Premises and Landlord exercises its Early Termination Right with respect to the entire floor on which the proposed sublease space is located, then the Early Termination Fee payable by Tenant for such Early Termination Space shall be calculated in accordance with Section 3 above.

4.2.3    If the proposed sublease pertains only to one or more full floors of the Premises, then the Early Termination Fee payable by Tenant for such Early Termination Space shall be the Alternative Early Termination Fee.

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4.2.4    If the proposed sublease pertains to one or more full floors of the Premises plus additional space that constitutes less than a full floor of the Premises, and Landlord elects to exercise its Early Termination Right with respect to only the proposed sublease space, then the Early Termination Fee payable by Tenant for such Early Termination Space shall be the Alternative Early Termination Fee.

4.2.5    If the proposed sublease pertains to one or more full floors of the Premises plus additional space that constitutes less than a full floor of the Premises, and Landlord elects to exercise its Early Termination Right with respect to the proposed sublease space plus the remainder of the floor on which the partial floor proposed sublease space is located, then the Early Termination Fee payable by Tenant for such Early Termination Space shall be the sum of the following: (a) the Alternative Early Termination Fee for the full floor(s) of the proposed sublease space, plus (b) the Early Termination Fee calculated in accordance with Section 3 for the floor that contains the partial floor proposed sublease space.

4.3    Alternative Early Termination Fee. For purposes of this Section 4, the “Alternative Early Termination Fee” with respect to particular Early Termination Space means the amount (if any) by which (i) the aggregate Monthly Base Rent and estimated Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes that would have been payable by Tenant under the Lease for such Early Termination Space during the period from the day following the Effective Termination Date for such Early Termination Space through (A) December 31, 2024 in the case of Early Termination Space located on floors 31-35, or (B) December 31, 2032 in the case of Early Termination Space located on floors 41-42, exceeds (ii) (A) the aggregate base rent and operating expenses and real estate taxes that would have been payable by the subtenant under the proposed sublease for such Early Termination Space during the term of such sublease, less (B) the aggregate amounts of any tenant improvement or other allowances or other amounts that would have been payable by Tenant to the subtenant under such proposed sublease for such Early Termination Space and the leasing commissions that would have been payable by Tenant in connection with the proposed sublease of such Early Termination Space.

5.    Effect of Early Termination. If an Early Termination Right is exercised by Landlord, then (a) the Lease shall terminate with respect to the applicable Early Termination Space effective as of the Effective Termination Date for such Early Termination Space, and Tenant shall have no right to extend or renew the Term for such Early Termination Space, including for any Renewal Terms; (b) Tenant shall remain responsible for the performance of all of Tenant’s obligations and liabilities that accrue or arise under the Lease for such Early Termination Space up to and through the Effective Termination Date (including without limitation the payment of Monthly Base Rent and Tenant’s Proportionate Share of Operating Expenses and Real Estate Taxes through the Effective Termination Date, and the payment of the Early Termination Fee hereunder); (c) subject to Tenant’s ongoing maintenance and repair obligations as set forth in the Lease, Tenant shall surrender possession of the Early Termination Space to Landlord on or prior to the applicable Effective Termination Date in its “as-is” condition, with no removal or restoration obligation whatsoever (except as set forth below with respect to the Stairwell Removal Work, and except that Tenant shall remove its proprietary IT and network equipment and the personal items of its employees, with all other personal property of Tenant remaining in the Early Termination Space being considered to have been abandoned by Tenant); and (d) Tenant shall be relieved from any further obligations or liabilities with respect to an Early Termination Space after the Effective Termination Date for such Early Termination Space, except for Tenant’s surrender obligations pertaining to such Early Termination Space, all obligations and liabilities that accrue or arise prior to and through the Effective Termination Date, and all obligations and liabilities with respect to the Early Termination Space that pursuant to the terms of the Lease survive the expiration or termination of the Lease. In consideration of Landlord’s agreement to permit Tenant to leave its personal property in the Premises that is not required to be removed by Tenant under clause (c) above, Tenant agrees to provide Landlord with non-exclusive access to the Early Termination Space up to sixty (60) days prior to the Effective Termination Date to permit Landlord to remove and dispose of such Tenant personal property, so long as Landlord has timely provided the Termination Notice as set forth in Section 2 hereof. During any period of Landlord’s early access as provided herein, Landlord and Tenant shall cooperate reasonably and in good faith in connection with each party’s activities within the Premises. By way of example and for the avoidance of doubt, the parties hereto hereby agree that if and Landlord has timely provided the Termination Notice such that the Effective Termination Date is January 1, 2024 with respect to all of the Early Termination Space, Landlord shall have early access to the Early Termination Space as of November 1, 2023. If Tenant fails to surrender possession of an Early Termination Space to Landlord by the Effective Termination Date for such Early Termination Space, then the provisions of Article 34.11 of the Lease shall be applicable to such Early Termination Space. Notwithstanding any early termination of the Lease with respect to the 31st floor pursuant to this Agreement, Tenant shall remain responsible for the performance of Tenant’s obligations under Section 2 of the Seventh Amendment with respect to the removal of the Stairwell between the 30th and 31st floors; provided, however, that for purposes thereof Landlord shall be the party that performs the Stairwell Removal Work (as defined in Section 2 of the Seventh Amendment). In addition, if an Early Termination Right is exercised with respect to Early Termination Space such that there is an interconnecting stairwell between a floor of the Building that will remain part of the Premises and a floor of the Building that will no longer be part of the Premises, then the parties shall address such interconnecting stairwell in the same manner as set forth in the second paragraph of Section 2 of the Seventh Amendment; provided, however, that for purposes thereof (a) Landlord shall

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be the party that performs the Stairwell Removal Work, and (b) Tenant shall be responsible for reimbursement to Landlord of 50% of the cost of the Stairwell Removal Work for a maximum of two (2) additional interconnecting stairwells and shall pay such reimbursement to Landlord within thirty (30) days after written notice from Landlord together with an invoice reasonably detailing the applicable costs. If an Early Termination Right is exercised, then effective from and after the Effective Termination Date for the applicable Early Termination Space, the number of Parking Spaces to which Tenant is entitled under the Lease shall be reduced to one (1) Parking Space per each 1,600 square feet of Rentable Area of the remaining Premises that are leased by Tenant from time to time, subject to adjustment from time to time in accordance with the provisions of Article 27 of the Lease, as previously modified. If Landlord exercises an Early Termination Right with respect to a floor located on floors 31-35, Tenant shall retain its Right of First Offer set forth in Schedule 2 to the 7th Amendment with respect to such floor, except that Tenant’s Right of First Offer with respect to such floor shall be subordinate to the first lease entered into by Landlord with respect to such floor in connection with or following Landlord’s exercise of its Early Termination Right with respect to such floor (or such first lease entered into by Landlord with respect to each portion of such floor if Landlord leases such floor on a multi-tenant basis) and all expansion or renewal rights granted to the tenant under such lease, and such first lease shall constitute a Superior Right under Schedule 2 of the 7th Amendment. Upon Landlord’s exercise of an Early Termination Right with respect to a floor located on floors 31-35, Tenant’s Flex Space right set forth in Section 9 of the 7th Amendment shall terminate with respect to such floor.

6.    Broker’s Commission. Each of Landlord and Tenant represent and warrant to the other that it has had no dealings with any broker or agent in connection with this Agreement and that no brokerage commission or other fee is payable in connection with this Agreement. Each party shall indemnify, defend and hold harmless the other party from and against any and all claims or liabilities for any commissions or other fees asserted by any broker or agent with respect to this Agreement based on dealings with the indemnifying party.

7.    Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Lease.

8.    Entire Agreement. This Agreement sets forth the entire agreement of the parties as to the subject matter hereof and supersedes all prior discussions and understandings between them.

9.    Miscellaneous. This Agreement may not be amended or rescinded in any manner except by an instrument in writing signed by a duly authorized officer or representative of each party hereto. If any of the provisions of this Agreement are found to be invalid, illegal or unenforceable by any court of competent jurisdiction, such provision shall be stricken and the remainder of this Agreement shall nonetheless remain in full force and effect unless striking such provision shall materially alter the intention of the parties. No waiver of any right under this Agreement shall be effective unless contained in a writing signed by a duly authorized officer or representative of the party sought to be charged with the waiver and no waiver of any rights arising from any breach or failure to perform shall be deemed to be a waiver of any future right or of any other right arising under this Agreement. Tenant waives any rights it may have to require the provisions of this Agreement be construed against the party who drafted it. Time is strictly of the essence with respect to all dates and time periods set forth in this Agreement.

10.    Authority. Each person signing this Agreement on behalf of each respective party represents and warrants that he or she is authorized to execute and deliver this Agreement, and that this Agreement is binding upon Landlord and Tenant, respectively.

11.    Counterparts. This Agreement may be executed in counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same document. Copies of this Agreement, including electronic pdf or Docusign copies shall have the same force and effect as an original of this Agreement.

[Signatures on following pages]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

LANDLORD:                FSP-RIC, LLC,

                    a Delaware limited liability company

                    By:    Fifth Street Properties, LLC,

                        a Delaware limited liability company,

                        Its Sole Member

                        By:    CWP Capital Management LLC,

                            a Delaware limited liability company,

                            Its Manager

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                            By:    /s/ Joseph Corrente        

                            Name:    Joseph Corrente            

                            Title:    Principal / EVP            

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA        )

                    ) ss.

COUNTY OF LOS ANGELES        )

On August 15, 2023, before me, LeAnn Erin Holsapple, a Notary Public, personally appeared Joseph Corrente, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

/s/ LeAnn Erin Holsapple    

Notary Public

Commission Expiration Date: July 15, 2027         [SEAL]

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TENANT:    ZILLOW, INC., a Washington corporation

By:    /s/ Thea Handelman

Name:    Thea Handelman

Title:    VP, Tax

STATE OF WASHINGTON     )

) ss.

COUNTY OF KING    )

On this 15th day of August, 2023, before me, a Notary Public in and for the State of Washington, personally appeared Thea Handelman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated that he/she was authorized to execute the instrument, and acknowledged it as the VP, Taxof Zillow, Inc., to be the free and voluntary act and deed of said corporation for the uses and purposes mentioned in the instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

/s/ Jade Rice

NOTARY PUBLIC in and for the State of Washington, residing at: Kirkland, Washington

My appointment expires: June 23, 2025

Print Name: Jade Rice

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SCHEDULE 1

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EX-10.2

Exhibit 10.2

ZILLOW GROUP, INC.

U.S. EXECUTIVE SEVERANCE PLANAND SUMMARY PLAN DESCRIPTION

1.Introduction. The purpose of this Zillow Group, Inc. U.S. Executive Severance Plan is to provide assurances of specified benefits to certain U.S. based employees of the Company and its wholly-owned subsidiaries whose employment is subject to being involuntarily terminated other than for death, Disability, or Cause or voluntarily terminated for Good Reason under the circumstances described in the Plan (as defined below). This Plan is an “employee welfare benefit plan,” as defined in Section 3(1) of ERISA. This document constitutes both the written instrument under which the Plan is maintained and the required summary plan description for the Plan.

2.Important Terms. The following words and phrases, when the initial letter of the term is capitalized, will have the meanings set forth in this Section 2, unless a different meaning is plainly required by the context:

2.1.     “Administrator” means the Company, acting through the Compensation Committee or another duly constituted committee of members of the Board, or any person to whom the Administrator has delegated any authority or responsibility with respect to the Plan pursuant to Section 11, but only to the extent of such delegation.

2.2.     “Arbitration Agreement” means the Mutual Agreement to Arbitrate Claims or any similar or successor agreement between the Company and a Participant.

2.3.     “Board” means the Board of Directors of the Company.

2.4.     “Cause” means, with respect to a Participant, one or more of the following events:

(1)willful misconduct, insubordination or dishonesty in the performance of Participant’s duties or a knowing and material violation of the Company’s or the Successor Company’s policies and procedures in effect from time to time which results in a material adverse effect on the Company or the Successor Company;

(2)the continued failure of Participant to satisfactorily perform the Participant’s duties after receipt of written notice that identifies the areas in which Participant’s performance is deficient;

(3)willful actions in bad faith or intentional failures to act in good faith by Participant with respect to the Company or the Successor Company that materially impair the Company’s or the Successor Company’s business, goodwill or reputation;

(4)conviction of Participant of a felony or misdemeanor, conduct by Participant that the Company reasonably believes violates any statute, rule or regulation governing the Company, or conduct by Participant that the Company reasonably believes constitutes unethical practices, dishonesty or disloyalty and that results in a material adverse effect on the Company or the Successor Company;

(5)current use by Participant of illegal substances; or

(6)any material violation by Participant of this Agreement or the Confidentiality Agreement.

2.5.    “Confidentiality Agreement” means the Company’s Confidential Information, Inventions, (Noncompetition) and Nonsolicitation Agreement, the Company’s Proprietary Rights Agreement, or any similar or successor agreement between the Company and a Participant.

2.6.    “Code” means the Internal Revenue Code of 1986, as amended.

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2.7.    “Company” means Zillow Group, Inc., a Washington corporation, its wholly-owned subsidiaries and any Successor Company that assumes the obligations of the Company under the Plan, by way of a Company Transaction.

2.8.     “Company Transaction” means consummation of:

(1)a merger or consolidation of the Company with or into any other company;

(2)a statutory share exchange pursuant to which all of the Company’s outstanding shares are acquired or a sale in one transaction or a series of transactions undertaken with a common purpose of all of the Company’s outstanding voting securities; or

(3)a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a common purpose of all or substantially all of the Company’s assets, excluding, however, in each case, any such transaction pursuant to which

(1)the Entities who are the beneficial owners of the Outstanding Company Voting Securities immediately prior to such transaction will beneficially own, directly or indirectly, at least 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Successor Company in substantially the same proportions as their ownership, immediately prior to such transaction, of the Outstanding Company Voting Securities;

(2)no Entity (other than the Company, any employee benefit plan (or related trust) of the Company, a Related Company or a Successor Company) will beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding voting securities of the Successor Company entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to such transaction; and

(3)individuals who were members of the Incumbent Board will immediately after the consummation of such transaction constitute at least a majority of the members of the board of directors of the Successor Company.

Where a series of transactions undertaken with a common purpose is deemed to be a Company Transaction, the date of such Company Transaction shall be the date on which the last of such transactions is consummated.

2.9.    “Compensation Committee” means the Compensation Committee of the Board.

2.10.    “Director”means a member of the Board who is not an employee of the Company. Directors are not eligible for Severance Benefits.

2.11.    “Disability” shall mean, with respect to a Participant, “Disability” as defined in the Company’s long-term disability plan or policy then in effect with respect to that Participant, as such plan or policy may be in effect from time to time, and, if there is no such plan or policy, a total and permanent disability as defined in Code Section 22(e)(3).

2.12.    “Entity” means any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act).

2.13.    “Equity Awards” means a Participant’s outstanding Company stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and any other Company equity compensation awards.

2.14.    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

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2.15.    “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

2.16.    “Good Reason”means the occurrence of one or more of the following without the Participant’s express written consent:

(1)incurred a material reduction in the Participant’s authority, duties and/or responsibilities at the Company, taken as a whole; provided that if the Company has notified the Participant that the Participant’s employment is being terminated, changes in authority, duties, or responsibilities related to the transition of the Participant’s job responsibilities or the winding down of any business operations shall not be taken into account in determining whether “Good Reason” exists;

(2)incurred a material reduction in Participant’s annual base salary (except for reductions in connection with a general reduction in annual base salary for all Participants of the Company by an average percentage that is not less than the percentage reduction of Participant’s annual base salary);

(3)suffered a material breach of any employment agreement (including an offer letter) by the Company; or

(4)been required to relocate more than fifty (50) miles from Participant’s then current place of residence, in order to continue to perform the duties and responsibilities of Participant’s position (provided that the Company had expressly consented to the Participant’s then current place of residence, and not including expected and customary travel as may be required by the nature of Participant’s position).

Notwithstanding the foregoing, termination of employment by Participant will not be for Good Reason unless (1) Participant notifies the Company in writing of the existence of the condition which Participant believes constitutes Good Reason within thirty (30) days of the initial existence of such condition (which notice specifically identifies such condition), (2) the Company fails to remedy such condition within thirty (30) days after the date on which it receives such notice (the “Remedial Period”), and (3) Participant actually terminates employment within thirty (30) days after the expiration of the Remedial Period and before the Company remedies such condition. If Participant terminates employment before the expiration of the Remedial Period or after the Company remedies the condition (even if after the end of the Remedial Period), then Participant’s termination will not be considered to be for Good Reason.

2.17.    “Incumbent Board” means the composition of the Board during any two-year period such that the individuals who, as of the beginning of such two-year period, constitute the Board.

2.18.    “Involuntary Termination” shall mean (a) a Participant terminates the Participant’s employment with the Company (or any parent or subsidiary of the Company) for Good Reason, or (b) the Company (or any parent or subsidiary of the Company) terminates the Participant’s employment for a reason other than Cause, the Participant’s death or Disability. For the avoidance of doubt, a Participant’s transfer of employment between members of the Company (that is, among the Company, any of its wholly-owned subsidiaries, or the Successor Company) will not constitute an Involuntary Termination.

2.19.    “Outstanding Company Voting Securities” means the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of members of the Board.

2.20.    “Parent Company” means a company or other entity which as a result of a Company Transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more intermediaries.

2.21.    “Participant” means an employee of the Company who is serving in one of the positions included in the definition of Tier as set forth in Section 2.27.

2.22.    “Plan” means the Zillow Group, Inc. Executive Severance Plan, as set forth in this document, and as hereafter amended from time to time.

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2.23.    “Related Company” means any entity that is directly or indirectly controlled by, in control of or under common control with the Company.

2.24.    “Section 409A Limit” means 2 times the lesser of: (i) the Participant’s annualized compensation based upon the annual rate of pay paid to the Participant during the Participant’s taxable year preceding the Participant’s taxable year of the Participant’s termination of employment as determined under, and with such adjustments as are set forth in, Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the Participant’s employment is terminated.

2.25.    “Severance Benefits” means the compensation and other benefits that the Participant will be provided in the circumstances described in Section 4.

2.26.    “Successor Company” means the surviving company, the successor company or Parent Company, as applicable, in connection with a Company Transaction.

2.27.“Tier”means the tier of Severance Benefits a Participant is entitled to receive under the Plan pursuant to Section 4, depending on the rank and title of the Participant on the date the right to Severance Benefits is triggered, as set forth below:

(1)“Tier 1”applies to employees of the Company serving in “Executive 6” level and with the title of “Chief Executive Officer.”

(2)“Tier 2” applies to employees of the Company serving in “Executive 5” level and with a title that starts with “Chief” or “President.”

(3)“Tier 3”applies to employees of the Company serving in “Executive 4” level and with the title of “Senior Vice President”; provided, however, that if such an employee has been employed by the Company in one or more Tier 3 roles for five (5) or more continuous years immediately prior to their date of a Qualifying Termination, the employee shall be treated as a Tier 2 employee.

(4)“Tier 4”applies to employees of the Company serving in “Executive 1-3” levels and with the title of “Vice President”; provided, however, that if such an employee has been employed by the Company in one or more Tier 4 roles for five (5) or more continuous years immediately prior to their date of a Qualifying Termination, the employee shall be treated as a Tier 3 employee.

        For example, if a Participant is serving in Executive 1-3 level with the title of Vice President at the time of a Qualifying Termination, and immediately prior to their Qualifying Termination has been employed by the Company for five (5) or more continuous years in one or more roles in Executive 1-3 level with the title of Vice President, that Participant would qualify for Severance Benefits under Tier 3 instead of Tier 4.

        The Administrator may provide exceptions in writing to the default Tier status set forth above. To the extent there are any ambiguities as to an individual’s role and for what Tier status that individual would qualify, if any, the individual will presumptively be entitled to the higher reasonably-indicated Tier status; provided that the Administrator will make the final determination in good faith as to that individual’s Tier status and that determination will be final and binding on all Participants.

3.Eligibility for Severance Benefits. A Participant is eligible for Severance Benefits, as described in Section 4, only if the Participant experiences an Involuntary Termination. An individual serving solely in the capacity as a Director is not eligible for Severance Benefits.

4.Severance Benefits. Upon an Involuntary Termination, then, subject to the Participant’s compliance with Section 6, the Participant will be eligible to receive the following Severance Benefits:

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4.1.    Cash Severance Benefits. Continuing payments of severance equal to the Participant’s annual base salary as in effect immediately prior to the Participant’s Involuntary Termination payable in cash in accordance with the Company’s normal payroll procedures and the terms and conditions of this Plan, including, without limitation, Section 7 hereof, for the following periods after the Participant’s Involuntary Termination:

Tiers 1 - 4:six (6) months

4.2.    Payments to Assist with Continued Medical Benefits. If a Participant, and any spouse and dependents of that Participant (“Family Members”) has or have coverage on the date of the Participant’s Involuntary Termination under a group health plan sponsored by the Company, the total applicable premium cost for continued group health plan coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) during the period of time following the Participant’s Involuntary Termination as set forth below, regardless of whether the Participant elects COBRA continuation coverage for Participant and Participant’s Family Members (the “COBRA Severance”). The COBRA Severance will be paid ratably each month in an amount equal to the monthly COBRA premium that the Participant would be required to pay to continue the group health coverage in effect on the date of the Participant’s Involuntary Termination (which amount will be based on the premium for the first month of COBRA coverage) over the number of months set forth below following the Involuntary Termination. The period over which the COBRA Severance will be paid following the Participant’s Involuntary Termination is as follows:

Tiers 1 - 4:six (6) months

4.3.    Equity Award Vesting Acceleration Benefit. All or a portion of the Participant’s Equity Awards that are to vest solely based on continued service will vest and, to the extent applicable, become exercisable as to the portion of such awards that were scheduled to vest during the period following the date of such Involuntary Termination as follows :

(1)Tiers 1 - 2: twelve (12) months;

(2)Tier 3: nine (9) months;

(3)Tier 4: six (6) months.

The Equity Award vesting provided pursuant to this Section 4.3 shall become effective on a date determined by the Administrator in its discretion that falls within two and one-half months following the date the Participant’s Release becomes effective and irrevocable. It should be understood that forfeiture of any Equity Awards due to the Participant’s Involuntary Termination will be tolled to the extent necessary to implement this Section 4.3. It should also be understood that all unvested portions of Equity Awards that are not accelerated as provided above will be forfeited upon the Participant’s Involuntary Termination, pursuant to the relevant terms of each Equity Award. If an outstanding Equity Award is to vest and/or the amount of the award to vest is to be determined based on the achievement of performance criteria, then the Equity Award will be treated in accordance with the plan under which it was granted and the award agreement memorializing the Equity Award.

Notwithstanding the foregoing, if the Involuntary Termination occurs on or following a Company Transaction, then 100% of the Participant’s then outstanding and unvested Equity Awards will vest, and if applicable, become exercisable.

4.4.    Extended Post-Termination Exercise Period. The Participant will have until the expiration of the period following the date of the Participant’s Involuntary Termination set forth below in which to exercise any Equity Awards (if applicable); provided, however, that such post-termination exercise period will not extend beyond the original maximum term of the Equity Award.

(1)Tier 1: twenty-four (24) months;

(2)Tier 2: eighteen (18) months;

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(3)Tier 3: twelve (12) months;

(4)Tier 4: nine (9) months

5.Limitation on Payments. In the event that the severance and other benefits provided for in this Plan or otherwise payable to a Participant (i) constitute “parachute payments” within the meaning of Section 280G of the Code (“280G Payments”), and (ii) but for this Section 5, would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the 280G Payments will be either:

(1)delivered in full, or

(2)delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Participant on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. If a reduction in the 280G Payments is necessary so that no portion of such benefits are subject to the Excise Tax, reduction will occur in the following order: (i) cancellation of awards granted “contingent on a change in ownership or control” (within the meaning of Code Section 280G); (ii) a pro rata reduction of (A) cash payments that are subject to Section 409A as deferred compensation and (B) cash payments not subject to Section 409A of the Code; (iii) a pro rata reduction of (A) employee benefits that are subject to Section 409A as deferred compensation and (B) employee benefits not subject to Section 409A; and (iv) a pro rata cancellation of (A) accelerated vesting equity awards that are subject to Section 409A as deferred compensation and (B) equity awards not subject to Section 409A. In the event that acceleration of vesting of equity awards is to be canceled, such acceleration of vesting will be canceled in the reverse order of the date of grant of a Participant’s equity awards.

Unless Participant and the Company otherwise agree in writing, any determination required under this Section 5 will be made in writing by the Company’s independent public accountants immediately prior to the change in control of the Company or such other person or entity to which the parties mutually agree (the “Firm”), whose determination will be conclusive and binding upon Participant and the Company. For purposes of making the calculations required by this Section 5 the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. Participant and the Company will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section 5. The Company will bear all costs the Firm may incur in connection with any calculations contemplated by this Section 5.

6.Conditions to Receipt of Severance.

6.1.    Release Agreement. As a condition to receiving the Severance Benefits, each Participant will be required to sign and not revoke a separation and release of claims agreement in form and substance, and including such terms, as the Administrator determines (the “Release”). In all cases, the Release must become effective and irrevocable the earlier of (1) the date set forth in the Release, or (2) the 120th day following the Participant’s Involuntary Termination (the “Release Deadline Date”). If the Release does not become effective and irrevocable by the Release Deadline Date, the Participant will forfeit any right to the Severance Benefits. In no event will the Severance Benefits be paid or provided until the Release becomes effective and irrevocable.

6.2.    Confidentiality Agreement. Subject to Section 6.4 (“Protected Activity Not Prohibited”), a Participant’s receipt of Severance Benefits will be subject to the Participant continuing to comply with the terms of the Confidentiality Agreement between the Company and the Participant.

6.3.    Non-Disparagement. Subject to Section 6.4 (“Protected Activity Not Prohibited”), it is a condition to receiving Severance Benefits under this Plan that, during the Participant’s employment with the Company, and thereafter, the Participant will not knowingly and materially disparage, libel, slander, or otherwise make any materially derogatory statements regarding the Company or any of its officers or directors.

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6.4.    Protected Activity Not Prohibited. Nothing in this Plan will in any way limit or prohibit the Participant from engaging in any activity in which the Participant is legally privileged to engage despite having entered into a contrary agreement (“Protected Activity”). Protected Activity includes: (i) filing and/or pursuing a charge, complaint, or report with, or otherwise communicating, cooperating, or participating in any investigation or proceeding that may be conducted by any federal, state or local government agency or commission, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, and the National Labor Relations Board (“Government Agencies”); and/or (ii) discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct Participant has reason to believe is unlawful. Notwithstanding the foregoing, the Participant agrees to take all reasonable precautions to prevent any unauthorized use or disclosure of any Company trade secrets, proprietary information, or confidential information that does not involve unlawful acts in the workplace or the activity otherwise protected herein. The Participant further understands that “Protected Activity” does not include the disclosure of any Company attorney-client privileged communications or attorney work product. In addition, pursuant to the Defend Trade Secrets Act of 2016, the Participant is notified that an individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made in confidence to a federal, state, or local government official (directly or indirectly) or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if (and only if) such filing is made under seal. In addition, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the individual’s attorney and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order. Finally, nothing herein constitutes a waiver of any rights Participant may have under the Sarbanes-Oxley Act or Section 7 of the National Labor Relations Act (“NLRA”). For purposes of clarity, nothing herein shall be interpreted to impair or limit Participant’s participation in any legally protected activities, such as (i) forming, joining, or supporting labor unions, (ii) bargaining collectively through representatives of employees’ choosing, (iii) discussing wages, benefits, or terms and conditions of employment, and (iv) discussing, or raising complaints about, working conditions for the purpose of mutual aid or protection of Participant or the Company’s other current or former employees, to the extent such activities are protected by Section 7 of the NLRA. Participant understands that nothing in the Confidentiality Agreement shall limit or prohibit Participant from engaging in any protected activity set forth in this section.

6.5.    Other Requirements. Severance Benefits under this Plan shall terminate immediately for a Participant if such Participant, at any time, violates the provisions of this Section 6.

7.Timing of Severance Benefits.Provided that the Release becomes effective and irrevocable by the Release Deadline Date and subject to Section 9, the Severance Benefits will be paid, or in the case of installments, will commence, on a Company payroll date that is within twenty (20) business days following the date the Release Deadline becomes effective and irrevocable (such payment date, the “Severance Start Date”), and any Severance Benefits otherwise payable to the Participant during the period immediately following the Participant’s Involuntary Termination through the Severance Start Date will be paid in a lump sum to the Participant on the Severance Start Date, with any remaining payments to be made as provided in this Plan.

8.Non-Duplication of Benefits; Survival of Other Benefits. Benefits under this Plan are not intended to duplicate any other severance pay, pay continuation, change in control, or advance notice obligations that may exist under any other plans, programs, policies, agreements or employment contracts, or under applicable federal, state, or local law, including without limitation under the federal Worker Adjustment and Retraining Notification Act or similar state law (the latter federal and state laws are collectively referred to here as “WARN”). If other such obligations exist, the Participant’s benefits under this Plan will be reduced accordingly (but to no less than $250), and/or an appropriate amount of any benefits paid under this Plan (up to the amount paid under this Plan less $250) shall be returned to the Company. For example, when applying this provision to WARN obligations or other advance notice obligations, benefits under this Plan will be reduced to the extent that the Company provides paid leave in connection with satisfying this notice obligation. In all cases, the Administrator will determine how to apply this provision, in its discretion, and may override other provisions of this Plan in doing so. Subject to the foregoing, this Plan is not intended to amend, modify, terminate, or supersede any severance, change in control or similar benefits provided under any contract with any Participant, and to the extent any such contract offers severance, change in control or similar benefits that are more advantageous to the Participant than the terms hereof, the Participant will continue to be entitled to such benefits.

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9.Section 409A.

9.1.    Notwithstanding anything to the contrary in this Plan, no Severance Benefits to be paid or provided to a Participant, if any, under this Plan that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A of the Code, and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Payments”) will be paid or provided until the Participant has a “separation from service” within the meaning of Section 409A. Similarly, no Severance Benefits payable to a Participant, if any, under this Plan that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until the Participant has a “separation from service” within the meaning of Section 409A.

9.2.    It is intended that none of the Severance Benefits will constitute Deferred Payments but rather will be exempt from Section 409A as a payment that would fall within the “short-term deferral period” as described in Section 9.4 or resulting from an involuntary separation from service as described in Section 9.5. In no event will a Participant have discretion to determine the taxable year of payment of any Deferred Payment.

9.3.    Notwithstanding anything to the contrary in this Plan, if a Participant is a “specified employee” within the meaning of Section 409A at the time of the Participant’s separation from service (other than due to death), then the Deferred Payments, if any, that are payable within the first 6 months following the Participant’s separation from service, will become payable on the date 6 months and 1 day following the date of the Participant’s separation from service. All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, in the event of the Participant’s death following the Participant’s separation from service, but before the 6 month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of the Participant’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Plan is intended to constitute a separate payment under Section 1.409A-2(b)(2) of the Treasury Regulations.

9.4.    Any amount paid under this Plan that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments for purposes of this Section 9.

9.5.    Any amount paid under this Plan that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit will not constitute Deferred Payments for purposes of this Section 9.

9.6.    The foregoing provisions are intended to comply with or be exempt from the requirements of Section 409A so that none of the Severance Benefits will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply or be exempt. Notwithstanding anything to the contrary in the Plan, including but not limited to Sections 11 and 13, the Company reserves the right to amend the Plan as it deems necessary or advisable, in its sole discretion and without the consent of the Participants, to comply with Section 409A or to avoid income recognition under Section 409A prior to the actual payment of Severance Benefits or imposition of any additional tax. In no event will the Company reimburse a Participant for any taxes or other costs that may be imposed on the Participant as result of Section 409A.

10.Withholdings. The Company will withhold from any Severance Benefits all applicable U.S. federal, state, local and non-U.S. taxes required to be withheld and any other required payroll deductions.

11.Administration. The Company, acting through its agents specified in Section 2.1, is the administrator of the Plan (within the meaning of section 3(16)(A) of ERISA). The Plan will be administered and interpreted by the Administrator (in the Administrator’s sole discretion). The Administrator is the “named fiduciary” of the Plan for purposes of ERISA and will be subject to the fiduciary standards of ERISA when acting in such capacity. Any decision made or other action taken by the Administrator with respect to the Plan, and any interpretation by the Administrator of any term or condition of the Plan, or any related document, will be conclusive and binding on all persons and be given the maximum

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possible deference allowed by law. In accordance with Section 2.1, the Administrator (a) may, in its sole discretion and on such terms and conditions as it may provide, delegate in writing to one or more persons all or any portion of its authority or responsibility with respect to the Plan, and (b) has the authority to act for the Company (in a non-fiduciary capacity) as to any matter pertaining to the Plan; provided, however, that any Plan amendment or termination or any other action that reasonably could be expected to increase materially the cost of the Plan must be approved by the Board.

12.Eligibility to Participate. To the extent that the Administrator has delegated administrative authority or responsibility to one or more persons in accordance with Sections 2.1 and 11, each such person will not be excluded from participating in the Plan if otherwise eligible, but such individual(s) will not be entitled to act upon or make determinations regarding any matters pertaining specifically to the individual’s own benefit or eligibility under the Plan. The Administrator will act upon and make determinations regarding any matters pertaining specifically to the benefit or eligibility of each such person under the Plan.

13.Amendment or Termination. The Company, by action of the Administrator, reserves the right to amend or terminate the Plan or the benefits provided hereunder at any time, subject to the provisions of this Section 13. Any amendment or termination of the Plan will be in writing. Once a Participant has incurred an Involuntary Termination, no amendment or termination of the Plan may, without that Participant’s written consent, reduce or alter to the detriment of the Participant, the Severance Benefits payable to the Participant. In addition and notwithstanding the preceding provisions of this paragraph, beginning on the date that the Company executes a definitive agreement, which if consummated would result in a Company Transaction, the Company may not, without a Participant’s written consent, amend or terminate the Plan in any way, nor take any other action under the Plan, which (i) prevents that Participant from becoming eligible for Severance Benefits, or (ii) reduces or alters to the detriment of the Participant the Severance Benefits payable, or potentially payable, to the Participant (including, without limitation, imposing additional conditions). The provisions of the preceding sentence will no longer apply if the definitive agreement is terminated without the Company Transaction having been consummated. Any action of the Company in amending or terminating the Plan will be taken in a non-fiduciary capacity.

14.Claims and Appeals.

14.1.    Claims Procedure. Any employee or other person who believes that they are entitled to any Severance Benefits may submit a claim in writing to the Administrator within 90 days of the earlier of (i) the date the claimant learned the amount of the Severance Benefits that are being offered to the claimant, or (ii) the date the claimant learned that claimant would not be offered any Severance Benefits, or (iii) the date that is 120 days after the claimant’s separation from employment. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of the Plan on which the denial is based. The notice also will describe any additional information needed to support the claim and the Plan’s procedures for appealing the denial. The denial notice will be provided within 90 days after the claim is received. If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90 day period. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Administrator expects to render its decision on the claim.

14.2.    Appeal Procedure. If the claimant’s claim is denied, the claimant (or the claimant’s authorized representative) may apply in writing to the Administrator for a review of the decision denying the claim. Review must be requested within 60 days following the date the claimant received the written notice of the claimant’s claim denial or else the claimant loses the right to review. The claimant (or representative) then has the right to review and obtain copies of all documents and other information relevant to the claim, upon request and at no charge, and to submit issues and comments in writing. The Administrator will provide written notice of its decision on review within 60 days after it receives a review request. If additional time (up to 60 days) is needed to review the request, the claimant (or representative) will be given written notice of the reason for the delay. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Administrator expects to render its decision. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of the Plan on which the denial is based. The notice also will include a statement that the claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents and other information relevant to the claim and a statement regarding the claimant’s right to bring an action under Section 502(a) of ERISA.

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14.3    Exhaustion of Plan’s Claims and Appeals Procedures Required; Limitations on Arbitration Actions. The Plan’s claims and appeal procedures set forth in this Section 14 must be exhausted with respect to any Claim before any Claimant may initiate any legal action related to the Claim. A Claimant must initiate any such legal action (a) no later than six (6) months after the Administrator’s denial of such Claim on appeal, and (b) in the U.S. District Court for the Western District of Washington. In any such action, all determinations made by the Administrator (and its authorized delegates) in connection with its review of the Claim will be afforded the maximum possible deference permitted by law.

15.Attorneys’ Fees. The parties shall each bear their own expenses, legal fees and other fees incurred in connection with this Plan.

16.Source of Payments. All payments under the Plan will be paid from the general funds of the Company; no separate fund will be established under the Plan, and the Plan will have no assets. No right of any person to receive any payment under the Plan will be any greater than the right of any other general unsecured creditor of the Company.

17.Inalienability. In no event may any current or former employee of the Company or any of its subsidiaries or affiliates sell, transfer, anticipate, assign or otherwise dispose of any right or interest under the Plan. At no time will any such right or interest be subject to the claims of creditors nor liable to attachment, execution or other legal process.

18.No Enlargement of Employment Rights; Inapplicability of Arbitration. Neither the establishment or maintenance or amendment of the Plan, nor the making of any benefit payment hereunder, will be construed to confer upon any individual any right to continue to be an employee of the Company. The Plan in no way alters Participant’s at will employment arrangement with Company and Company expressly reserves the right to discharge any of its employees, including Participant, at any time, with or without cause. However, as described in the Plan, a Participant may be entitled to Severance Benefits depending upon the circumstances of the Participant’s termination of employment. The Plan is not intended in any way to supersede a Participant’s Confidentiality Agreement. Please note that a Participant’s Arbitration Agreement will not be applicable with respect to claims made with respect to the Plan, which will be handled as set forth in the Plan, but the Arbitration Agreement will continue to apply for all other purposes as set forth in the Arbitration Agreement, including, but not limited to, any claims that may arise with respect to a Release that is executed as a condition to the receipt of Severance Benefits under the Plan.

19.Successors. Any successor to the Company of all or substantially all of the Company’s business and/or assets (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or other transaction) will assume the obligations under the Plan and agree expressly to perform the obligations under the Plan in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under the Plan, the term “Company” will include any successor to the Company’s business and/or assets which become bound by the terms of the Plan by operation of law, or otherwise.

20.Applicable Law. The provisions of the Plan will be construed, administered and enforced in accordance with ERISA and, to the extent applicable, the internal substantive laws of the state of Washington (but not its conflict of laws provisions).

21.Severability. If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

22.Headings. Headings in this Plan document are for purposes of reference only and will not limit or otherwise affect the meaning hereof.

10

23.Indemnification. The Company hereby agrees to indemnify and hold harmless the officers and employees of the Company, and the members of its Board, from all losses, claims, costs or other liabilities arising from their acts or omissions in connection with the administration, amendment or termination of the Plan, to the maximum extent permitted by applicable law. This indemnity will cover all such liabilities, including judgments, settlements and costs of defense. The Company will provide this indemnity from its own funds to the extent that insurance does not cover such liabilities. This indemnity is in addition to and not in lieu of any other indemnity provided to such person by the Company.

24.Additional Information.

Plan Name:	Zillow Group, Inc. U.S. Executive Severance Plan
Plan Sponsor:	Zillow Group, Inc.
	1301 Second Avenue, Floor 36
	Seattle, WA 98101
	(206) 470-7000
Identification Numbers:	EIN:
	PLAN:
Plan Year:	Company’s fiscal year
Plan Administrator:	Zillow Group, Inc.
	Attention: Administrator of the Zillow Group, Inc. Severance Plan
	1301 Second Avenue, Floor 36
	Seattle, WA 98101
	(206) 470-7000
Agent for Service of Legal Process:	Zillow Group, Inc.
	Attention: General Counsel
	1301 Second Avenue, Floor 36
	Seattle, WA 98101
	(206) 470-7000
	Service of process also may be made upon the Administrator.
Type of Plan:	Severance Plan/Employee Welfare Benefit Plan
Plan Costs:	The cost of the Plan is paid by the Company.

25.Statement of ERISA Rights.

11

As a Participant in this Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Participants in the Plan are entitled to:

Receive Information About Your Plan and Benefits

Examine, without charge, at the Plan Administrator’s office and at other specified locations (such as worksites), all documents governing the Plan, including a copy of the latest annual report (Form 5500 Series), if any, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including copies of the latest annual report (Form 5500 Series), if any, and an updated summary plan description. The Plan Administrator may assign a reasonable charge for the copies.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for Participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan (called “fiduciaries” of the Plan) have a duty to do so prudently and in the interest of you and other Participants. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining Severance Benefits, if applicable, or from exercising your rights under ERISA.

Enforce Your Rights

If your claim for a Severance Benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules, as set forth in the Plan. (For more information, see the Plan’s claims and appeal procedures in Section 11 above.)

Under ERISA, there are steps you can take to enforce the above rights. For example, if you request a copy of Plan documents or the Plan’s latest annual report, if any, from the Plan Administrator and do not receive them within thirty (30) days, you may file suit in a state or federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive them, unless the materials were not sent due to reasons beyond the control of the Plan Administrator. If you have a claim for a Severance Benefit that is denied or ignored, in whole or in part, and you have exhausted the Plan’s claims and appeal procedures, you may file suit in a federal court. However, any such legal action must be filed (i) no later than six (6) months after the Plan Administrator’s denial of the claim on appeal, regardless of any state or federal statutes establishing provisions relating to limitations on actions, and (ii) in the U.S. District Court for the Western District of Washington. If it should happen that you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who will pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds that your claim is frivolous. Please note that your Arbitration Agreement will not be applicable with respect to claims made with respect to the Plan, but it will continue to apply for all other purposes as set forth in the Arbitration Agreement, including, but not limited to, any claims that may arise with respect to a Release that is executed as a condition to the receipt of Severance Benefits under the Plan.

Assistance with Your Questions

If you have any questions regarding the Plan, please contact the Plan Administrator (see Section 24 for the Plan Administrator’s contact information). If you have any questions about this statement or about your rights under ERISA, or if you need help in obtaining documents from the Plan Administrator, you should contact the nearest area office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W. Washington, D.C. 20210. You also may obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

12

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 September 30, 2023;

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:	November 1, 2023

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, Jeremy Hofmann, certify that:

1.I have reviewed this report on Form 10-Q of Zillow Group, Inc. for the fiscal quarter ended September 30, 2023;

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/ JEREMY HOFMANN
Name:	Jeremy Hofmann
Title:	Chief Financial Officer
Date:	November 1, 2023

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

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

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Zillow Group, Inc. (the “Company”) for the fiscal quarter ended September 30, 2023 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:	November 1, 2023

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

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

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Zillow Group, Inc. (the “Company”) for the fiscal quarter ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeremy Hofmann, 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/ JEREMY HOFMANN
Name:	Jeremy Hofmann
Title:	Chief Financial Officer
Date:	November 1, 2023

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2023	Oct. 25, 2023
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-36853
Entity Registrant Name	ZILLOW GROUP, INC.
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 36
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
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001617640
Current Fiscal Year End Date	--12-31
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		55,719,542
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		171,666,169

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 1,846	$ 1,466
Short-term investments	1,421	1,896
Accounts receivable, net	97	72
Mortgage loans held for sale	96	41
Prepaid expenses and other current assets	149	126
Restricted cash	3	2
Total current assets	3,612	3,603
Contract cost assets	23	23
Property and equipment, net	324	271
Right of use assets	103	126
Goodwill	2,416	2,374
Intangible assets, net	162	154
Other assets	16	12
Total assets	6,656	6,563
Current liabilities:
Accounts payable	28	20
Accrued expenses and other current liabilities	87	90
Accrued compensation and benefits	52	48
Borrowings under credit facilities	91	37
Deferred revenue	48	44
Lease liabilities, current portion	28	31
Convertible senior notes, current portion	607	0
Total current liabilities	941	270
Lease liabilities, net of current portion	119	139
Convertible senior notes, net of current portion	1,057	1,660
Other long-term liabilities	10	12
Total liabilities	2,127	2,081
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.0001 par value; authorized — 30,000,000 shares; no shares issued and outstanding	0	0
Additional paid-in capital	6,247	6,109
Accumulated other comprehensive loss	(21)	(15)
Accumulated deficit	(1,697)	(1,612)
Total shareholders’ equity	4,529	4,482
Total liabilities and shareholders’ equity	6,656	6,563
Class A common stock
Shareholders’ equity:
Common stock/capital stock	0	0
Class B Common Stock
Shareholders’ equity:
Common stock/capital stock	0	0
Class C capital stock
Shareholders’ equity:
Common stock/capital stock	$ 0	$ 0

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
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)	55,719,542	57,494,698
Common stock, outstanding (in shares)	55,719,542	57,494,698
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)	171,654,263	170,555,565
Common stock, outstanding (in shares)	171,654,263	170,555,565

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenue	$ 496	$ 483	$ 1,471	$ 1,523
Cost of revenue	110	89	306	278
Gross profit	386	394	1,165	1,245
Operating expenses:
Sales and marketing	164	165	493	502
Technology and development	142	142	419	369
General and administrative	131	138	407	370
Impairment and restructuring costs	1	0	9	14
Acquisition-related costs	1	0	2	0
Total operating expenses	439	445	1,330	1,255
Loss from continuing operations	(53)	(51)	(165)	(10)
Other income, net	34	12	108	19
Interest expense	(9)	(9)	(27)	(26)
Loss from continuing operations before income taxes	(28)	(48)	(84)	(17)
Income tax benefit (expense)	0	(3)	(1)	1
Net loss from continuing operations	(28)	(51)	(85)	(16)
Net loss from discontinued operations, net of income taxes	0	(2)	0	(13)
Net loss	$ (28)	$ (53)	$ (85)	$ (29)
Net loss from continuing operations per share - basic (USD per share)	$ (0.12)	$ (0.21)	$ (0.36)	$ (0.07)
Net loss from continuing operations per share - diluted (usd per share)	(0.12)	(0.21)	(0.36)	(0.07)
Net loss per share - basic (usd per share)	(0.12)	(0.22)	(0.36)	(0.12)
Net loss per share - diluted (usd per share)	$ (0.12)	$ (0.22)	$ (0.36)	$ (0.12)
Weighted-average shares outstanding - basic (in shares)	233,295	240,080	235,560	244,157
Weighted-average shares outstanding - diluted (in shares)	233,295	240,080	235,560	244,157

XML

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (28)	$ (53)	$ (85)	$ (29)
Other comprehensive loss:
Net unrealized losses on investments	(2)	(6)	(6)	(26)
Total other comprehensive loss	(2)	(6)	(6)	(26)
Comprehensive loss	$ (30)	$ (59)	$ (91)	$ (55)

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Millions	Total	Cumulative-effect adjustment from adoption of guidance on accounting for convertible instruments and contracts in an entity’s own equity	Class A Common Stock, Class B Common Stock and Class C Capital Stock	Additional Paid-In Capital	Additional Paid-In Capital Cumulative-effect adjustment from adoption of guidance on accounting for convertible instruments and contracts in an entity’s own equity	Accumulated Deficit	Accumulated Deficit Cumulative-effect adjustment from adoption of guidance on accounting for convertible instruments and contracts in an entity’s own equity	Accumulated Other Comprehensive Loss
Beginning Balance at Dec. 31, 2021	$ 5,341	$ (336)	$ 0	$ 7,001	$ (492)	$ (1,667)	$ 156	$ 7
Beginning Balance (in shares) at Dec. 31, 2021			250,630
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of capital stock upon exercise of stock options	44			44
Issuance of capital stock upon exercise of stock options (in shares)			1,078
Vesting of restricted stock units (in shares)			3,278
Share-based compensation expense	374			374
Repurchases of Class A common stock and Class C capital stock	(773)			(773)
Repurchases of Class A common stock and class c capital stock (in shares)			(17,292)
Net loss	(29)					(29)
Other comprehensive loss	(26)							(26)
Ending Balance at Sep. 30, 2022	4,595		$ 0	6,154		(1,540)		(19)
Ending Balance (in shares) at Sep. 30, 2022			237,694
Beginning Balance at Jun. 30, 2022	4,667		$ 0	6,167		(1,487)		(13)
Beginning Balance (in shares) at Jun. 30, 2022			241,141
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of capital stock upon exercise of stock options	2			2
Issuance of capital stock upon exercise of stock options (in shares)			83
Vesting of restricted stock units (in shares)			1,467
Share-based compensation expense	161			161
Repurchases of Class A common stock and Class C capital stock	(176)			(176)
Repurchases of Class A common stock and class c capital stock (in shares)			(4,997)
Net loss	(53)					(53)
Other comprehensive loss	(6)							(6)
Ending Balance at Sep. 30, 2022	4,595		$ 0	6,154		(1,540)		(19)
Ending Balance (in shares) at Sep. 30, 2022			237,694
Beginning Balance at Dec. 31, 2022	4,482		$ 0	6,109		(1,612)		(15)
Beginning Balance (in shares) at Dec. 31, 2022			234,268
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of capital stock upon exercise of stock options	$ 56			56
Issuance of capital stock upon exercise of stock options (in shares)	1,454		1,454
Vesting of restricted stock units (in shares)			4,675
Share-based compensation expense	$ 398			398
Repurchases of Class A common stock and Class C capital stock	(336)			(336)
Repurchases of Class A common stock and class c capital stock (in shares)			(7,186)
Issuance of capital stock in connection with an acquisition	20			20
Issuance of capital stock in connect with an acquisition (shares)			380
Net loss	(85)					(85)
Other comprehensive loss	(6)							(6)
Ending Balance at Sep. 30, 2023	4,529		$ 0	6,247		(1,697)		(21)
Ending Balance (in shares) at Sep. 30, 2023			233,591
Beginning Balance at Jun. 30, 2023	4,486		$ 0	6,174		(1,669)		(19)
Beginning Balance (in shares) at Jun. 30, 2023			232,723
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of capital stock upon exercise of stock options	26			26
Issuance of capital stock upon exercise of stock options (in shares)			631
Vesting of restricted stock units (in shares)			1,754
Share-based compensation expense	127			127
Repurchases of Class A common stock and Class C capital stock	(100)			(100)
Repurchases of Class A common stock and class c capital stock (in shares)			(1,897)
Issuance of capital stock in connection with an acquisition	20			20
Issuance of capital stock in connect with an acquisition (shares)			380
Net loss	(28)					(28)
Other comprehensive loss	(2)							(2)
Ending Balance at Sep. 30, 2023	$ 4,529		$ 0	$ 6,247		$ (1,697)		$ (21)
Ending Balance (in shares) at Sep. 30, 2023			233,591

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities
Net loss	$ (85)	$ (29)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	134	121
Share-based compensation	342	341
Amortization of right of use assets	18	17
Amortization of contract cost assets	16	23
Amortization of debt discount and debt issuance costs	4	24
Loss on extinguishment of debt	0	21
Accretion of bond discount	(29)	(11)
Other adjustments to reconcile net loss to net cash provided by operating activities	3	11
Changes in operating assets and liabilities:
Accounts receivable	(26)	76
Mortgage loans held for sale	(55)	58
Inventory	0	3,904
Prepaid expenses and other assets	(22)	(13)
Contract cost assets	(16)	(13)
Lease liabilities	(24)	(15)
Accounts payable	7	1
Accrued expenses and other current liabilities	(3)	(49)
Accrued compensation and benefits	4	(52)
Deferred revenue	4	(1)
Other long-term liabilities	(4)	6
Net cash provided by operating activities	268	4,420
Investing activities
Proceeds from maturities of investments	1,136	455
Purchases of investments	(638)	(1,474)
Purchases of property and equipment	(101)	(87)
Purchases of intangible assets	(24)	(17)
Cash paid for acquisitions, net	(34)	0
Net cash provided by (used in) investing activities	339	(1,123)
Financing activities
Repayments of borrowings on credit facilities	0	(2,205)
Net borrowings (repayments) on warehouse line of credit and repurchase agreements	54	(68)
Repurchases of Class A common stock and Class C capital stock	(336)	(773)
Settlement of long-term debt	0	(1,158)
Proceeds from exercise of stock options	56	44
Net cash used in financing activities	(226)	(4,160)
Net increase (decrease) in cash, cash equivalents and restricted cash during period	381	(863)
Cash, cash equivalents and restricted cash at beginning of period	1,468	2,838
Cash, cash equivalents and restricted cash at end of period	1,849	1,975
Noncash transactions:
Capitalized share-based compensation	56	33
Write-off of fully depreciated property and equipment	29	48
Issuance of capital stock in connection with an acquisition	20	0
Write-off of fully amortized intangible assets	4	200
Recognition of operating right of use assets and lease liabilities	1	14
Settlement of beneficial interests in securitizations	$ 0	$ (79)

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Organization and Description of Business

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Organization and Description of Business

Organization and Description of Business

Zillow Group is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.

Our portfolio of affiliates, subsidiaries and brands includes Zillow Premier Agent, Zillow Home Loans, our mortgage originations business and affiliate lender, Zillow Rentals, Trulia, StreetEasy, HotPads and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions for the real estate industry, including Spruce, Mortech, New Home Feed and ShowingTime+.

In the fourth quarter of 2021, we began to wind down the operations of Zillow Offers, our iBuying business which purchased and sold homes directly in markets across the country. The wind down was completed in the third quarter of 2022, and we have presented the financial results of Zillow Offers as discontinued operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022. No assets or liabilities were classified as discontinued operations as of December 31, 2022. See Note 3 for additional information.

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: current and future health and stability of the economy and United States residential real estate industry, including changes in inflationary conditions, interest rates, housing availability and affordability, labor shortages and supply chain issues; our ability to manage advertising inventory and pricing and maintain relationships with our real estate partners; our compliance with multiple listing service rules and requirements to access and use listing data, and to maintain or establish relationships with listings and data providers; our investment of resources to pursue strategies and develop new products and services that may not prove effective or that are not attractive for customers and real estate partners or that do not allow us to compete successfully; our ability to operate and grow Zillow Home Loans, our mortgage origination business and affiliate lender, including the ability to obtain or maintain sufficient financing and resell originated mortgages on the secondary market; the duration and impact of natural disasters and other catastrophic events (including public health crises) on

our ability to operate, demand for our products or services or general economic conditions; outcomes of legal proceedings; our ability to attract and retain a highly skilled workforce; protection of Zillow’s information and systems against security breaches or disruptions in operations; reliance on third-party services to support critical functions of our business; protection of our brand and intellectual property; and changes in laws or government regulation affecting our business, among other things.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

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 United States 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 fiscal year ended December 31, 2022, which was filed with the SEC on February 15, 2023. The condensed consolidated balance sheet as of December 31, 2022, 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 September 30, 2023 and our results of operations, comprehensive loss, and shareholders’ equity for the three and nine month periods ended September 30, 2023 and 2022, and cash flows for the nine month periods ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for any interim period, or for any other future year. Certain reclassifications of prior period amounts have been made to conform to the current period presentation. Unless indicated otherwise, the information in the Notes to Condensed Consolidated Financial Statements relates to our continuing operations and does not include the results of discontinued operations.

There were no significant changes to the significant accounting policies disclosed in Note 2 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except for the updates noted below. Such updates were made due to our determination that we have a single operating and reportable segment, as well as certain changes to how we disaggregate our revenue into categories, beginning in the first quarter of 2023.

Recoverability of Goodwill

Goodwill is measured as the excess of consideration transferred for an acquired business over the net of the acquisition date fair values of the assets acquired and the liabilities assumed, and is not amortized. We assess the impairment of goodwill at the reporting unit level on an annual basis, in our fourth quarter, or whenever events or changes in circumstances indicate that goodwill may be impaired. In our evaluation of goodwill, we initially perform a qualitative assessment to determine whether the existence of events or circumstances indicates that it is more likely than not that the carrying value of each reporting unit is greater than its fair value. If it is more likely than not that the carrying value of a reporting unit is greater than its fair value, we perform a quantitative assessment and an impairment charge is recorded in our statements of operations if the carrying value of the reporting unit exceeds its fair value.

Beginning in 2023, our chief operating decision maker, who is our chief executive officer, manages our business, makes operating decisions and evaluates operating performance on the basis of the company as a whole, instead of on a segment basis as he did prior to 2023. This aligns to our ongoing growth strategy and our intent to provide integrated customer solutions for all tasks and services related to facilitating real estate transactions. This resulted in revisions to the nature and substance of information regularly provided to and used by the chief operating decision maker. Accordingly, we have realigned our operating structure, resulting in a single operating and reportable segment. In line with this, the nature and substance of the information regularly provided to our segment manager similarly changed, and we determined that we have only one reporting unit. Because the segment change impacted the structure of our reporting units, we performed a qualitative goodwill impairment assessment immediately before and immediately after the change in reporting units. Based on those assessments, we determined it was more likely than not that the fair value of our current and legacy reporting units exceeded their respective carrying values. Therefore, we concluded that it was not necessary to perform a quantitative impairment test.

Revenue Recognition

We recognize revenue when or as we satisfy our performance obligations by transferring control of the 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.

As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component as the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service is generally one year or less.

We do not disclose the transaction price related to remaining performance obligations for (i) contracts with an original expected duration of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for performance completed to date. The remaining duration over which we satisfy our performance obligations is generally less than one year.

We disaggregate our revenue into the following categories: Residential, Rentals, Mortgages and Other, described below.

Residential. Residential revenue includes revenue generated by our Premier Agent and new construction marketplaces, as well as revenue from the sale of advertising and business technology solutions for real estate professionals through StreetEasy for-sale product offerings and ShowingTime+.

Our Premier Agent program offers a suite of marketing and 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 Agent partners receive access to a dashboard portal on our mobile application and website that provides individualized program performance analytics, our customer relationship management tool that captures detailed information about each contact made with a Premier Agent partner through our mobile and web platforms and our account management tools. The marketing and business technology products and services promised to Premier Agent partners are delivered over time, as the customer simultaneously receives and consumes the benefit of the performance obligations.

Premier Agent advertising products, which include the delivery of validated customer connections, or leads, are primarily offered on a share of voice basis. Payment is received prior to the delivery of connections. Connections are delivered when consumer contact information is provided to Premier Agent partners. We do not promise any minimum or maximum number of connections to customers, but instead control when and how many connections to deliver based on a customer’s share of voice. We determine the number of connections to deliver to Premier Agent partners in each zip code using a market-based pricing method in consideration of the total amount spent by Premier Agent partners to purchase connections in the zip code during the month. This results in the delivery of connections over time in proportion to each Premier Agent partners’ share of voice. A Premier Agent partners’ 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 Agent partners in that zip code, and determines the proportion of consumer connections a Premier Agent partner receives. The number of connections delivered for a given spend level is dynamic; as demand for advertising in a zip code increases or decreases, the number of connections delivered to a Premier Agent partner in that zip code decreases or increases accordingly.

We primarily recognize revenue related to the Premier Agent 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 partner typically prepays their monthly spend and the monthly spend is refunded on a pro-rata basis upon cancellation of the contract by a customer, we have determined that Premier Agent partner 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 partner arrangements, as the amounts recognized would be the same irrespective of any allocation.

We also offer a pay for performance pricing model called “Flex” for Premier Agent advertising services in certain markets. Flex is available to select partners alongside our legacy market-based pricing model. With the Flex model, Premier Agent partners are provided with validated leads at no initial cost and pay a performance advertising fee only when a real estate transaction is closed with one of the leads, generally within two years. 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. We estimate variable consideration and record revenue as performance obligations, or validated leads, are transferred. 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 transactions closed is subsequently resolved. We record a contract asset for our estimate of the consideration to which we will be entitled when the right to the consideration is conditional. When the right to consideration becomes unconditional, upon the close of a real estate transaction, we reclassify amounts to accounts receivable.

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 whereby we recognize revenue 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.

StreetEasy for-sale revenue primarily consists of our pay for performance pricing model available in the New York City market for which agents and brokers are provided with leads at no initial cost and pay a performance referral fee only when a real estate purchase transaction is closed with one of the leads. Under the StreetEasy pricing model, the transaction price represents variable consideration, as the amount to which we expect to be entitled varies based on the number of leads that convert into real estate transactions and the value of those transactions. We estimate variable consideration based on the expected number of closed transactions 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 transactions closed is subsequently resolved. We record a corresponding contract asset for the estimate of variable consideration for StreetEasy Experts when the right to the consideration is conditional. When the right to consideration becomes unconditional upon the close of a real estate transaction, we reclassify amounts to accounts receivable.

Our dotloop real estate transaction management software-as-a-service solution is primarily billed in advance on a monthly basis and revenue is recognized ratably over the contract period which aligns to our satisfaction of performance obligations.

ShowingTime revenue is primarily generated by Appointment Center, a software-as-a-service and call center solution allowing real estate agents, brokerages and multiple listing services to efficiently schedule real estate viewing appointments on behalf of their customers. Appointment Center revenue is primarily billed in advance on a monthly basis and recognized ratably over the contract period which aligns to our satisfaction of performance obligations.

Rentals. Rentals revenue includes the sale of advertising and a suite of tools to rental professionals, landlords and other market participants under the Zillow and StreetEasy brands. Rentals revenue includes revenue generated by advertising sold to property managers, landlords and other rental professionals on a cost per lead, lease, listing or impression basis or for a fixed fee for certain advertising packages. 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. We recognize revenue related to our fixed fee rentals product on a straight-line basis over the contract term as the performance obligations, rental listings on our mobile applications and websites, are satisfied over time based on time elapsed. The number of leases generated through our rentals pay per lease product, Zillow Lease Connect, 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. We record a corresponding contract asset for the estimate of variable consideration for Zillow Lease Connect when the right to the consideration is conditional. When the right to consideration becomes unconditional upon the execution of a lease, we reclassify amounts to accounts receivable. Rentals revenue also includes revenue generated from our rental applications product, through which potential renters can submit applications to multiple properties 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.

Mortgages. Mortgages revenue primarily includes revenue generated by Zillow Home Loans, our affiliated mortgage lender, and marketing products sold to mortgage professionals on a cost per lead basis, including our Custom Quote and Connect services.

Mortgage origination revenue reflects origination fees on purchase or refinance mortgages and the corresponding sale, or expected future sale, of a loan. When an interest rate lock commitment (“IRLC”) 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 purchase or refinance transactions are completed, usually upon the close of escrow and when we fund the purchase or refinance 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. Origination costs associated with originating mortgage loans are recognized as incurred. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers.

Mortgage loans are sold with limited recourse provisions, which can result in repurchases of loans previously sold to investors or payments to reimburse investors for loan losses. Based on historical experience, discussions with our mortgage purchasers, analysis of the volume of mortgages we originated and current housing and credit market conditions, we estimate and record a loss reserve for mortgage loans held in our portfolio and mortgage loans held for sale, as well as known and projected mortgage loan repurchase requests. These have historically not been significant to our financial statements.

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.

Other. Other revenue primarily includes revenue generated from display products, which consist 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.

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 accounting for certain revenue offerings, restructuring costs, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets, share-based compensation, income taxes, the presentation of discontinued and continuing operations, 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 health of the residential housing market and interest rate environment have 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 June 2022, the Financial Accounting Standards Board issued guidance to improve existing measurement and disclosure requirements for equity securities that are subject to a contractual sale restriction. This guidance is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We expect to adopt this guidance prospectively on January 1, 2024, and we do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

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Discontinued Operations

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

Zillow Offers Wind Down

In November 2021, the Board of Directors of Zillow Group (the “Board”) made the determination to wind down Zillow Offers operations. This decision was made in light of home pricing unpredictability, capacity constraints and other operational challenges faced by Zillow Offers that were exacerbated by an unprecedented housing market, a global pandemic and a difficult labor and supply chain environment, all of which led us to conclude that, despite its initial promise in earlier quarters, Zillow Offers was unlikely to be a sufficiently stable line of business to meet our goals going forward.

The wind down of Zillow Offers was completed in the third quarter of 2022, at which time Zillow Offers met the criteria for discontinued operations. Accordingly, we have presented the results of operations, excluding allocation of any general corporate expenses, of Zillow Offers as discontinued operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022. No assets or liabilities were classified as discontinued operations as of December 31, 2022.

The following table presents the major classes of line items of the discontinued operations included in the condensed consolidated statements of operations for the periods presented (in millions):

	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Revenue	$	23	$	4,249
Cost of revenue	24		4,023
Gross profit (loss)	(1)		226
Operating expenses:
Sales and marketing	1		153
Technology and development	—		6
General and administrative	—		10
Restructuring costs	—		25
Total operating expenses	1		194
Income (loss) from discontinued operations	(2)		32
Loss on extinguishment of debt	—		(21)
Other income	—		13
Interest expense	—		(36)
Loss from discontinued operations before income taxes	(2)		(12)
Income tax expense	—		(1)
Net loss from discontinued operations	$	(2)	$	(13)
Net loss from discontinued operations per share:
Basic	$	(0.01)	$	(0.05)
Diluted	$	(0.01)	$	(0.05)

The following table presents significant non-cash items and capital expenditures of the discontinued operations for the nine months ended September 30, 2022 (in millions):

Amortization of debt discount and debt issuance costs	$	21
Loss on debt extinguishment	21
Share-based compensation	16
Inventory valuation adjustment	9
Depreciation and amortization	7
Settlement of beneficial interests in securitizations	(79)

Restructuring

Restructuring costs totaled $14 million for the nine months ended September 30, 2022, and were related to the Zillow Offers wind down. Cumulative restructuring charges attributable to continuing operations related to the Zillow Offers wind down as of September 30, 2022 totaled $23 million.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

We apply 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 (Level 1). The fair value measurement of other cash equivalents is based on observable market-based inputs principally derived from or corroborated by observable market data (Level 2).

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 (Level 2).

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 (Level 2).

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 is calculated by reference to quoted prices for similar assets (Level 2).

Interest rate lock commitments — The fair value of 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. 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 IRLC will ultimately result in a closed loan. For IRLCs that are cancelled or expire, any recorded gain or loss is reversed at the end of the commitment period (Level 3).

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 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 dates presented:

	September 30, 2023	December 31, 2022
Range	45% - 100%	47% - 100%
Weighted-average	88%	87%

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 millions):

	September 30, 2023
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,736	$	1,736	$	—	$	—
Short-term investments:
U.S. government treasury securities	1,258		—		1,258		—
Corporate bonds	135		—		135		—
Commercial paper	14		—		14		—
U.S. government agency securities	14		—		14		—
Mortgage origination-related:
Mortgage loans held for sale	96		—		96		—
Forward contracts - other current assets	2		—		2		—
IRLCs - other current assets	1		—		—		1
Total	$	3,256	$	1,736	$	1,519	$	1

	December 31, 2022
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,338	$	1,338	$	—	$	—
Short-term investments:
U.S. government treasury securities	1,716		—		1,716		—
Corporate bonds	161		—		161		—
Commercial paper	10		—		10		—
U.S. government agency securities	9		—		9		—
Mortgage origination-related:
Mortgage loans held for sale	41		—		41		—
Forward contracts - other current assets	1		—		1		—
Total	$	3,276	$	1,338	$	1,938	$	—

At September 30, 2023, the notional amounts of the economic hedging instruments related to our mortgage loans held for sale were $189 million and $232 million for our IRLCs and forward contracts, respectively. At December 31, 2022, the notional amounts of the economic hedging instruments related to our mortgage loans held for sale were $62 million and $90 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 9 for the carrying amounts and estimated fair values of our convertible senior notes.

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Cash and Cash Equivalents, Investments and Restricted Cash

9 Months Ended

Sep. 30, 2023

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents, Investments and Restricted Cash

Cash and Cash Equivalents, Investments and Restricted Cash

The following table presents the amortized cost and estimated fair market value of our cash and cash equivalents, investments, and restricted cash as of the dates presented (in millions):

	September 30, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Market Value		Amortized Cost		Estimated Fair Market Value
Cash	$	110	$	110	$	128	$	128
Cash equivalents:
Money market funds	1,736		1,736		1,338		1,338
Short-term investments:
U.S. government treasury securities(1)	1,278		1,258		1,731		1,716
Corporate bonds	136		135		162		161
Commercial paper	14		14		10		10
U.S. government agency securities	14		14		9		9
Restricted cash	3		3		2		2
Total	$	3,291	$	3,270	$	3,380	$	3,364
(1)The estimated fair market value includes $20 million and $15 million of gross unrealized losses as of September 30, 2023 and December 31, 2022, respectively.

The following table presents available-for-sale investments by contractual maturity date as of September 30, 2023 (in millions):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	513	$	509
Due after one year	929		912
Total	$	1,442	$	1,421

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Property and Equipment, net

9 Months Ended

Sep. 30, 2023

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 millions):

	September 30, 2023		December 31, 2022
Website development costs	$	415	$	291
Leasehold improvements	89		90
Office equipment, furniture and fixtures	22		24
Computer equipment	19		18
Construction-in-progress	—		7
Property and equipment	545		430
Less: accumulated amortization and depreciation	(221)		(159)
Property and equipment, net	$	324	$	271

We recorded depreciation expense related to property and equipment (other than website development costs) of $6 million for each of the three months ended September 30, 2023 and 2022, and $18 million and $19 million for the nine months ended September 30, 2023 and 2022, respectively.

We capitalized website development costs of $49 million and $37 million for the three months ended September 30, 2023 and 2022, respectively, and $144 million and $104 million for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense for website development costs included in cost of revenue was $30 million and $17 million for the three months ended September 30, 2023 and 2022, respectively, and $79 million and $48 million for the nine months ended September 30, 2023 and 2022, respectively.

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Acquisitions

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisitions

On July 31, 2023, Zillow Group acquired Aryeo, Inc. (“Aryeo”), a software company that serves real estate photographers, in exchange for approximately $15 million in cash, net of cash acquired, and 380,259 shares of our Class C capital stock with a value of $20 million, for total consideration of $35 million, net of cash acquired. On September 11, 2023, Zillow Group acquired substantially all of the assets and liabilities of Spruce Holdings, Inc. and certain affiliated entities (collectively referred to as “Spruce”), a tech-enabled title and escrow platform, in exchange for approximately $19 million in cash, net of cash acquired. The acquisitions of Aryeo and Spruce have been accounted for as business combinations, and assets acquired and liabilities assumed were recorded at their preliminary estimated fair values. Goodwill represents the expected synergies from combining the acquired assets and the operations of the acquirer as well as intangible assets that do not qualify for separate recognition. Goodwill is measured as the excess of consideration transferred over the net of the fair values of the assets acquired and the liabilities assumed. Goodwill recorded in connection with the acquisition of Aryeo is not deductible for tax purposes, and goodwill recorded in connection with the acquisition of Spruce is deductible for tax purposes.

The total preliminary purchase prices have been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date, as follows (in millions):

	Aryeo		Spruce
Cash and cash equivalents	$	3	$	5
Goodwill	26		16
Intangible assets	11		2
Other assets	—		2
Liabilities	(2)		(1)
Total preliminary purchase price	$	38	$	24

The preliminary estimated fair values of the identifiable intangible assets acquired and associated useful lives consisted of the following (in millions):

	Aryeo			Spruce
	Preliminary Estimated Fair Value		Estimated Useful Life (in years)	Preliminary Estimated Fair Value		Estimated Useful Life (in years)
Customer relationships	$	5	5	$	—	—
Purchased content	4		3	—		—
Developed technology	2		3	2		3
Total	$	11		$	2

We used an income approach to measure the fair value of the customer relationships intangible asset acquired from Aryeo based on the excess earnings method, whereby the fair value is estimated based upon the present value of cash flows that the applicable asset is expected to generate. We used a cost approach to measure the fair value of purchased content acquired from Aryeo. We used an income approach to measure the fair value of the developed technology acquired from Aryeo and Spruce based on the relief-from-royalty method. These fair value measurements were based on Level 3 inputs under the fair value hierarchy.

Acquisition-related costs incurred, which primarily included legal, accounting and other external costs directly related to the acquisition, are included within acquisition-related costs in our condensed consolidated statements of operations and were expensed as incurred.

Unaudited pro forma earnings information has not been presented as the effects were not material to our condensed consolidated financial statements.

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Intangible Assets, net

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, net

Intangible Assets, net

The following tables present the detail of intangible assets as of the dates presented (in millions):

	September 30, 2023
	Cost		Accumulated Amortization		Net
Software	$	78	$	(25)	$	53
Customer relationships	63		(16)		47
Developed technology	53		(25)		28
Trade names and trademarks	45		(18)		27
Purchased content	16		(9)		7
Total	$	255	$	(93)	$	162

	December 31, 2022
	Cost		Accumulated Amortization		Net
Customer relationships	$	59	$	(10)	$	49
Software	54		(15)		39
Developed technology	49		(15)		34
Trade names and trademarks	45		(15)		30
Purchased content	8		(6)		2
Total	$	215	$	(61)	$	154

Amortization expense recorded for intangible assets was $13 million and $11 million for the three months ended September 30, 2023 and 2022, respectively, and $37 million and $47 million for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense for trade names and trademarks and customer relationships intangible assets is included in sales and marketing expenses. Amortization expense for all other intangible assets is included in cost of revenue.

We did not record any impairment costs related to our intangible assets for the three or nine months ended September 30, 2023 or 2022.

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Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

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

	September 30, 2023		December 31, 2022
Credit facilities
Master repurchase agreements:
JPMorgan Chase Bank, N.A.(1)	$	68	$	—
Atlas Securitized Products, L.P.(2)	22		23
Citibank, N.A.(3)	—		3
Warehouse line of credit:
Comerica Bank	1		11
Total credit facilities	91		37
Convertible senior notes
1.375% convertible senior notes due 2026	496		495
2.75% convertible senior notes due 2025	561		560
0.75% convertible senior notes due 2024	607		605
Total convertible senior notes	1,664		1,660
Total debt	$	1,755	$	1,697
(1)Agreement commenced on June 1, 2023 and provides for a total maximum borrowing capacity of $100 million, $25 million of which is committed, until May 30, 2024.
(2)Agreement was reassigned from Credit Suisse AG, Cayman Islands (“Credit Suisse”) on May 25, 2023.
(3)Agreement expired on June 9, 2023 and was not renewed.

Credit Facilities

To provide capital for Zillow Home Loans, we utilize master repurchase agreements and a warehouse line of credit. The following table summarizes certain details related to our outstanding master repurchase agreements and warehouse line of credit as of September 30, 2023 (in millions, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted-Average Interest Rate
JPMorgan Chase Bank, N.A.	May 30, 2024	$	100	7.03	%
Atlas Securitized Products, L.P.	March 11, 2024	50		7.32	%
Comerica Bank	December 29, 2023	50		7.45	%
	Total	$	200

On August 17, 2023, Zillow Home Loans amended its warehouse line of credit with Comerica Bank to extend the date after which Zillow Home Loans is no longer permitted to draw additional amounts on the warehouse line of credit from September 30, 2023 to November 1, 2023.

In accordance with the master repurchase agreements, Atlas Securitized Products, L.P., JPMorgan Chase Bank, N.A and prior to its expiration in June 2023, Citibank, N.A., (together, the “Lenders”) agreed to pay Zillow Home Loans a negotiated purchase price for eligible loans, and Zillow Home Loans simultaneously agreed to repurchase such loans from the Lenders under a specified timeframe at an agreed upon price that includes interest. The master repurchase agreements contain margin call provisions that provide the Lenders with certain rights in the event of a decline in the market value of the assets purchased under the master repurchase agreements. As of September 30, 2023 and December 31, 2022, $93 million and $28 million, respectively, in mortgage loans held for sale were pledged as collateral under the master repurchase agreements.

Borrowings on the repurchase agreements and warehouse line of credit bear interest either at a floating rate based on Secured Overnight Financing Rate plus an applicable margin, as defined by the governing agreements, or Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin, as defined by the governing agreements. The repurchase agreements and warehouse line of credit include customary representations and warranties, covenants and provisions regarding events of default. As of September 30, 2023, Zillow Home Loans was in compliance with all financial covenants and no event of default had occurred. The repurchase agreements and warehouse line of credit 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 repurchase agreements and warehouse line of credit, see Note 13 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Convertible Senior Notes

Effective January 1, 2022, we adopted guidance which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Refer to Note 2 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for additional information regarding the adoption of this guidance.

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

								September 30, 2023				December 31, 2022
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		Semi-Annual Interest Payment Dates	Unamortized Debt Issuance Costs		Fair Value		Unamortized Debt Issuance Costs		Fair Value
September 1, 2026	$	499	1.375	%	1.57	%	March 1; September 1	$	3	$	598	$	4	$	504
May 15, 2025	565		2.75	%	3.20	%	May 15; November 15	4		571		5		531
September 1, 2024	608		0.75	%	1.02	%	March 1; September 1	1		706		3		629
Total	$	1,672						$	8	$	1,875	$	12	$	1,664

	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
Maturity Date	Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	2	$	—	$	2	$	2	$	—	$	2
May 15, 2025	4		—		4		4		1		5
September 1, 2024	1		1		2		1		1		2
Total	$	7	$	1	$	8	$	7	$	2	$	9

	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
Maturity Date	Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	6	$	1	$	7	$	5	$	—	$	5
May 15, 2025	12		1		13		12		2		14
September 1, 2024	3		2		5		4		1		5
Total	$	21	$	4	$	25	$	21	$	3	$	24

The convertible notes maturing in 2026 (“2026 Notes”), 2025 (“2025 Notes”) and 2024 (“2024 Notes”) (together, the “Notes”) are senior unsecured obligations. The 2026 Notes and 2025 Notes are classified as long-term debt and the 2024 Notes are classified as current liabilities in our condensed consolidated balance sheets based on their contractual maturity dates. Interest on the convertible notes is paid semi-annually in arrears. The estimated fair value of the convertible senior notes is classified as Level 2 and was determined through consideration of quoted market prices in markets that are not active.

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. They will mature on their respective maturity dates, 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

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

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%

There were no conversions of the Notes during the three and nine months ended September 30, 2023 or 2022.

The last reported sale price of our Class C capital stock did not exceed 130% of the conversion price of each series of the Notes for more than 20 trading days during the 30 consecutive trading days ended September 30, 2023. Accordingly, each series of the Notes is not redeemable or convertible at the option of the holders during the three months ending December 31, 2023.

For additional details related to our convertible senior notes, see Note 13 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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Income Taxes	9 Months Ended
	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesWe are primarily subject to income taxes in the United States (federal and state), as well as certain foreign jurisdictions. As of September 30, 2023 and December 31, 2022, 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. We have accumulated federal tax losses of approximately $1.8 billion as of December 31, 2022, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $63 million (tax effected) as of December 31, 2022.Our income tax expense or benefit for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account for the relevant period. We update our estimate of the annual effective tax rate on a quarterly basis and make year-to-date adjustments to the tax provision or benefit, as applicable. Income tax expense (benefit) for the three and nine months ended September 30, 2023 and the nine months ended September 30, 2022 was not material. We recorded income tax expense of $3 million for the three months ended September 30, 2022, primarily related to state income taxes.

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Share Repurchase Authorizations

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Share Repurchase Authorizations

Share Repurchase Authorizations

Prior to July 31, 2023, the Board authorized the repurchase of up to $1.8 billion of our Class A common stock, Class C capital stock, outstanding convertible senior notes or a combination thereof. For additional information on these authorizations, see Note 13 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. On July 31, 2023, the Board authorized the repurchase of up to an additional $750 million of our Class A common stock, Class C capital stock, outstanding convertible senior notes or a combination thereof. This additional authorization (together with the previous authorizations, the “Repurchase Authorizations”) increased our total cumulative Repurchase Authorizations to $2.5 billion.

Repurchases of stock under the Repurchase Authorizations may be made in open-market transactions or privately negotiated transactions, or in such other manner as deemed appropriate by management, and may be made from time to time as determined by management depending on market conditions, share price, trading volume, cash needs and other business factors,

in each case as permitted by securities laws and other legal requirements. As of September 30, 2023, $914 million remained available for future repurchases pursuant to the Repurchase Authorizations.

The following table summarizes our Class A common stock and Class C capital stock repurchase activity under the Repurchase Authorizations for the periods presented (in millions, except share data, which are presented in thousands, and per share amounts):

	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
	Class A common stock		Class C capital stock		Class A common stock		Class C capital stock
Shares repurchased	965		932		772		4,225
Weighted-average price per share	$	52.57	$	52.80	$	35.52	$	35.18
Total purchase price	$	50	$	50	$	27	$	149

	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Class A common stock		Class C capital stock		Class A common stock		Class C capital stock
Shares repurchased	1,775		5,411		3,349		13,943
Weighted-average price per share	$	48.71	$	46.15	$	46.13	$	44.40
Total purchase price	$	86	$	250	$	154	$	619

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Share-Based Awards

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Awards

Share-Based Awards

In addition to the option awards and restricted stock units typically granted under the Zillow Group, Inc. 2020 Incentive Plan (the “2020 Plan”) which vest quarterly over four years, during the first quarter of 2023, the Compensation Committee of the Board approved option and restricted stock unit awards granted under the 2020 Plan in connection with the 2022 annual review cycle that vest quarterly over three years. The exercisability terms of these equity awards are otherwise consistent with the terms of the option awards and restricted stock units typically granted under the 2020 Plan. For additional information regarding our share-based awards, see Note 16 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

On August 3, 2022, upon the recommendation of the Compensation Committee, the Board approved adjustments to the exercise price of certain outstanding vested and unvested option awards for eligible employees. The exercise price of eligible option awards was reduced to $38.78, which was the closing market price of our Class C capital stock on August 8, 2022. No other changes were made to the terms and conditions of the eligible option awards. We have accounted for the reprice of the eligible option awards as an equity modification whereby the incremental fair value attributable to the repriced option awards, as measured on the date of reprice, will be recognized as additional share-based compensation expense. The reprice impacted 7 million stock option awards, affected 3,348 employees and was expected to result in incremental share-based compensation expense of $66 million in total over the remaining requisite service period of the original awards. The weighted-average total fair value of options repriced in August 2022 was $67.58.

Option Awards

The following table summarizes option award activity for the nine months ended September 30, 2023:

	Number of Shares Subject to Existing Options (in thousands)	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2023	28,598	$	44.90	7.1	$	15
Granted	6,890	42.63
Exercised	(1,454)	38.84
Forfeited or cancelled	(892)	48.28
Outstanding at September 30, 2023	33,142	44.60		7.0	173
Vested and exercisable at September 30, 2023	19,802	44.96		5.8	113

The following assumptions were used to determine the fair value of option awards granted for the periods presented:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Expected volatility	62%	61%	55% - 62%	55% - 61%
Risk-free interest rate	4.34%	3.38%	3.75% - 4.34%	1.94% - 3.38%
Weighted-average expected life	5.3 years	5.0 years	5.3 - 6.5 years	4.5 - 6.0 years
Weighted-average fair value of options granted	$27.26	$18.06	$24.06	$23.75

As of September 30, 2023, there was a total of $384 million in unrecognized compensation cost related to unvested option awards.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the nine months ended September 30, 2023:

	Restricted Stock Units (in thousands)	Weighted-Average Grant Date Fair Value
Unvested outstanding at January 1, 2023	10,930	$	46.85
Granted	8,191	43.27
Vested	(4,675)	45.96
Forfeited	(841)	46.58
Unvested outstanding at September 30, 2023	13,605	45.01

As of September 30, 2023, there was a total of $557 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 millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	4	$	5	$	12	$	12
Sales and marketing	18		21		53		46
Technology and development	42		57		123		123
General and administrative	45		64		154		142
Impairment and restructuring costs	—		—		—		2
Share-based compensation - continuing operations	109		147		342		325
Share-based compensation - discontinued operations	—		1		—		16
Total share-based compensation	$	109	$	148	$	342	$	341

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Net Loss Per Share

9 Months Ended

Sep. 30, 2023

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 and net loss from continuing operations per share because their effect would have been antidilutive (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Weighted-average Class A common stock and Class C capital stock option awards outstanding	30,063	2,417	20,924	15,942
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	14,172	9,670	13,890	8,326
Class C capital stock issuable upon conversion of the Notes	33,855	33,855	33,855	33,855
Total Class A common stock and Class C capital stock equivalents	78,090	45,942	68,669	58,123

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Commitments

During the three and nine months ended September 30, 2023, there were no material changes to the commitments disclosed in Note 18 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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 September 30, 2023 or December 31, 2022.

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. On October 11, 2019, plaintiffs filed a motion for class certification which was granted by the court on October 28, 2020. On February 17, 2021, the Ninth Circuit Court of Appeals denied our petition for review of that decision. On October 21, 2022, the parties jointly filed a notice of settlement with the U.S. District Court for the Western District of Washington to inform the court that the parties have reached an agreement to settle this action. On March 31, 2023, the plaintiffs filed a motion seeking preliminary approval of the parties’ proposed settlement, which motion was granted by the court on April 3, 2023. The terms of the parties’ proposed settlement agreement are contained in the settlement documents filed with the court on March 31, 2023. The court approved the settlement terms on August 8, 2023 and the full amount was paid by our insurance carriers under the applicable insurance policy and pursuant to the terms of the settlement.

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 (the “Federal Suit”). On February 16, 2018, the Superior Court of the State of Washington, King County, consolidated the two shareholder derivative lawsuits pending in that court (the “State Suit”). The Federal Suit and State Suit 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 Federal Suit filed a consolidated shareholder derivative complaint, which we moved to dismiss on August 22, 2019. On February 28, 2020, our motion to dismiss the Federal Suit was denied. On February 16, 2021, the court in the State Suit matter stayed the action. On March 5, 2021, a new shareholder derivative lawsuit was filed in the U.S. District Court for the Western District of Washington 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, alleging, among other things, violations of federal securities laws. The U.S. District Court for the Western District of Washington formally consolidated the new lawsuit with the other consolidated Federal Suit pending in that court on June 15, 2021. On November 14, 2022, the parties jointly filed a stipulation with the U.S. District Court for the Western District of Washington informing the court that, among other things, they have agreed in principle to all material terms of a settlement. On April 20, 2023, the plaintiffs filed a motion seeking preliminary approval of the parties’ proposed settlement, which motion was granted by the court on April 25, 2023. The terms of the parties’ settlement agreement are contained in the settlement documents filed with the court on April 20, 2023 and found on Zillow’s Investor Relations page at https://investors.zillowgroup.com/investors/resources/investor-faqs/default.aspx. The court issued final approval of the settlement on August 29, 2023. The full amount of plaintiffs’ attorneys’ fees and costs associated with the settlement has been paid by our insurance carriers under the applicable insurance policy and pursuant to the terms of the settlement.

On September 17, 2019, International Business Machines Corporation (“IBM”) filed a complaint against us in the U.S. 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 November 8, 2019, we filed a motion to transfer venue and/or to dismiss the complaint. On December 2, 2019, IBM filed an amended complaint, and on December 16, 2019 we filed a renewed motion to transfer venue and/or to dismiss the complaint. Our motion to transfer venue to the U.S. District Court for the Western District of Washington was granted on May 28, 2020. On August 12, 2020, IBM filed its answer to our counterclaims. On September 18, 2020, we filed four Inter Partes Review (“IPR”) petitions before the U.S. Patent and Trial Appeal Board (“PTAB”) seeking the Board’s review of the patentability with respect to three of the patents asserted by IBM in the lawsuit. On March 15, 2021, the PTAB instituted IPR proceedings with respect to two of the three patents for which we filed petitions. On March 22, 2021, the PTAB denied institution with respect to the last of the three patents. On January 22, 2021, the court partially stayed the action with respect to all patents for which we filed an IPR and set forth a motion schedule. On March 8, 2021, IBM filed its second amended complaint. On March 25, 2021, we filed an amended motion for judgment on the pleadings. On July 15, 2021, the court rendered an order in connection with the motion for judgment on the pleadings finding in our favor on two of the four patents on which we filed our motion. On August 31, 2021, the Court ruled that the parties will proceed with respect to the two patents for which it previously denied judgment, and vacated the stay with respect to one of the three patents for which Zillow filed an IPR, which stay was later reinstated by stipulation of the parties on May 18, 2022. On September 23, 2021, IBM filed a notice of appeal with the United States Court of Appeals for the Federal Circuit with respect to the August 31, 2021 judgment entered, which judgment was affirmed by the Federal Circuit on October 17, 2022. On March 3, 2022, the PTAB ruled on Zillow’s two remaining IPRs finding that Zillow was able to prove certain claims unpatentable, and others it was not. On October 28, 2022, the court found one of the two patents upon which the parties were proceeding in this action as invalid, and dismissed IBM’s claim relating to that patent. Following the court’s ruling, on October 28, 2022, the parties filed a joint stipulation with the court seeking a stay of this action, which was granted by the court on November 1, 2022. On November 25, 2022, Zillow filed a motion to join an IPR petition within Ebates Performance Mktg., Inc. d/b/a Rakuten Rewards v. Int’l Bus. Machs. Corp. (“Rakuten IPR”), IPR2022-00646 concerning the final remaining patent in this action, which the court granted on April 20, 2023. On October 13, 2023, the PTAB ruled on the Rakuten IPR finding the claims of the patent asserted against Zillow unpatentable. 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 matter; however, the possible loss or range of loss is not estimable.

On July 21, 2020, IBM filed a second action against us in the U.S. 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. On September 14, 2020, we filed a motion to dismiss the complaint filed in the action, to which IBM responded by the filing of an amended complaint on November 5, 2020. On December 18, 2020, we filed a motion to dismiss IBM’s first amended complaint. On December 23, 2020, the Court issued a written order staying this case in full. On July 23, 2021, we filed an IPR with the PTAB with respect to one patent included in the second lawsuit. On October 6, 2021, the stay of this action was lifted, except for proceedings relating to the one patent for which we filed an IPR. On December 1, 2021, the Court dismissed the fourth claim asserted by IBM in its amended complaint. On December 16, 2021 Zillow filed a motion to dismiss the remaining claims alleged in IBM’s amended complaint. On March 9, 2022, the Court granted Zillow’s motion to dismiss in full, dismissing IBM’s claims related to all the patents asserted by IBM in this action, except for the one patent for which an IPR was still pending. On March 10, 2022, the PTAB rendered its decision denying Zillow’s IPR on the one remaining patent, for which this case continues to remain stayed. On August 1, 2022, IBM filed an appeal of the Court’s ruling with respect to two of the dismissed patents. Zillow’s responsive brief was filed on September 30, 2022, and IBM’s reply brief was filed on November 4, 2022. 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 matter; however, the possible loss or range of loss is not estimable.

On November 16, 2021, November 19, 2021 and January 6, 2022, three 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 stock between August 7, 2020 and November 2, 2021. The three purported class action lawsuits, captioned Barua v. Zillow Group, Inc. et al., Silverberg v. Zillow Group, et al. and Hillier v. Zillow Group, Inc. et al. were brought in the U.S. District Court for the Western District of Washington and were consolidated on February 16, 2022. On May 12, 2022, the plaintiffs filed their amended consolidated complaint which alleges, among other things, that we issued materially false and misleading statements regarding our Zillow Offers business. The complaints seek to recover, among other things, alleged damages sustained by the purported class members as a result of the alleged misconduct. We moved to dismiss the amended consolidated complaint on July 11, 2022, plaintiffs filed their opposition to the motion to dismiss on September 2, 2022, and we filed a reply in support of the motion to dismiss on October 11, 2022. On December 7, 2022, the court rendered its decision granting defendants’ motion to dismiss, in part, and denying the motion, in part. On January 23, 2023, the defendants filed their answer to the consolidated complaint. We intend to deny the allegations of wrongdoing and intend to vigorously defend the claims in this consolidated lawsuit. We do not believe that a loss related to this consolidated lawsuit is probable.

On March 10, 2022, May 5, 2022 and July 20, 2022, shareholder derivative suits were filed in the U.S. District Court for the Western District of Washington (“Federal Court”) and on July 25, 2022, a shareholder derivative suit was filed in the Superior Court of the State of Washington, King County (the “2022 State Suit”), against us and 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 (including the Company as a nominal defendant) allege, among other things, that the defendants breached their fiduciary duties by failing to maintain an effective system of internal controls, which purportedly caused the losses the Company incurred when it decided to wind down Zillow Offers operations. Plaintiffs also allege, among other things, violations of Section 14(a) and Section 20(a) of the Securities Exchange Act of 1934, insider trading and waste of corporate assets. On June 1, 2022 and September 14, 2022, the U.S. District Court for the Western District of Washington issued orders consolidating the three federal derivative suits and staying the consolidated action until further order of the court, which stay was further continued by the Federal Court on September 6, 2023. On September 15, 2022, the Superior Court of the State of Washington entered a temporary stay in the 2022 State Suit. Upon the filing of the defendants’ answer in the related securities class action lawsuit on January 23, 2023, the stay in the 2022 State Suit was lifted. A partial stay was then reentered in the 2022 State Suit on June 26, 2023. On August 23, 2023 a second shareholder derivative suit was filed in the Superior Court of the State of Washington, King County. The defendants intend to deny the allegations of wrongdoing and vigorously defend the claims in these lawsuits. We do not believe that a loss related to these lawsuits 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. For additional information regarding our indemnifications, see Note 18 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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Revenue and Contract Balances

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue and Contract Balances

Revenue and Contract Balances

We recognize revenue when or as we satisfy our performance obligations by transferring control of the 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.

Beginning in 2023, our chief executive officer, who acts as the chief operating decision maker, manages our business, makes operating decisions and evaluates operating performance on the basis of the company as a whole, instead of on a segment basis as he did prior to 2023. Accordingly, this change resulted in revisions to the nature and substance of information regularly provided to and used by the chief operating decision maker. This serves to align our reported results with our ongoing growth strategy and our intent to provide integrated customer solutions for all tasks and services related to facilitating real estate transactions. As a result, we have determined that we have a single reportable segment. Our revenue is classified into four categories: Residential, Rentals, Mortgages and Other. Certain prior period amounts have been revised to reflect these changes.

The Residential revenue category primarily includes revenue for our Premier Agent and new construction marketplaces, as well as revenue from the sale of other advertising and business technology solutions for real estate professionals, including StreetEasy for-sale product offerings and ShowingTime+. Our Rentals and Mortgages revenue categories remain consistent with our historical presentation, and our Other revenue category primarily includes revenue generated from display advertising.

Disaggregation of Revenue

The following table presents our revenue disaggregated by category for the periods presented (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Residential	$	362	$	372	$	1,103	$	1,182
Rentals	99		74		264		206
Mortgages	24		26		74		101
Other	11		11		30		34
Total revenue	$	496	$	483	$	1,471	$	1,523

Contract Balances

Contract assets represent our right to consideration in exchange for goods and services that we have transferred to the customer when that right is conditional on something other than the passage of time. Contract assets are primarily related to our Premier Agent Flex, Zillow Lease Connect and StreetEasy Experts offerings, whereby we estimate variable consideration based on the expected number of real estate transactions to be closed for Premier Agent Flex and StreetEasy Experts, and qualified leases to be secured for Zillow Lease Connect. The current portion of contract assets is recorded within prepaid expenses and other current assets and the long-term portion of contract assets is recorded within other assets in our condensed consolidated balance sheets and totaled $89 million and $71 million as of September 30, 2023 and December 31, 2022, respectively.

Contract liabilities consist of deferred revenue, which relates to payments received in advance of performance under a revenue contract. Deferred revenue is primarily related to prepaid advertising fees received or billed in advance of satisfying our performance obligations and prepaid but unrecognized subscription revenue. Deferred revenue is recognized when or as we satisfy our obligations under contracts with customers.

For the three months ended September 30, 2023, the opening balance of deferred revenue was $49 million, of which $46 million was recognized as revenue during the period. For the three months ended September 30, 2022, the opening balance of deferred revenue was $52 million, of which $50 million was recognized as revenue during the period.

For the nine months ended September 30, 2023, the opening balance of deferred revenue was $44 million, of which $43 million was recognized as revenue during the period. For the nine months ended September 30, 2022, the opening balance of deferred revenue was $51 million, of which $51 million was recognized as revenue during the period. As of September 30, 2023 and 2022, deferred revenue was $48 million and $50 million, respectively.

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Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

UBS AG Repurchase Agreement

On October 11, 2023, Zillow Home Loans entered into a master repurchase agreement with UBS AG. The master repurchase agreement provides a total maximum borrowing capacity of $100 million through October 9, 2024. Borrowings on the master repurchase agreement will be classified within current liabilities in our condensed consolidated balance sheets.

Acquisition of Follow Up Boss

On October 28, 2023, Zillow, Inc. and Enchant, LLC, d/b/a Follow Up Boss (“Follow Up Boss”), entered into a Membership Interest Purchase Agreement (the “Agreement”), pursuant to which Zillow, Inc. agreed to acquire Follow Up Boss for $400 million in cash, subject to certain adjustments, payable upon closing of the transaction, and up to $100 million in cash payable over a three-year period upon achievement of certain performance metrics contemplated by the Agreement. Follow Up Boss is a customer relationship management system for real estate professionals. The Agreement contains customary representations, warranties and covenants of the parties as well as conditions to closing, including, among other things, regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Partial Repurchase of 2025 Notes

On October 31, 2023 and November 1, 2023, we repurchased a total of approximately $28 million aggregate principal amount of our 2025 Notes, plus accrued interest, using a 10b5-1 plan, in accordance with the Repurchase Authorizations. These repurchases will reduce our outstanding convertible senior notes, net of current portion in our condensed consolidated balance sheet.

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Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net loss	$ (28)	$ (53)	$ (85)	$ (29)

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Insider Trading Arrangements	3 Months Ended	9 Months Ended
	Sep. 30, 2023 shares	Sep. 30, 2023 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Brad Owens [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On August 21, 2023, Brad Owens, General Counsel, entered into a 10b5-1 sales plan (the “10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The 10b5-1 Sales Plan provides for the exercise of option awards and sale of up to 127,625 shares of Class C capital stock and the sale of an indeterminate number of shares of Class C capital stock related to future vesting of restricted stock units. The 10b5-1 Sales Plan will become effective on November 20, 2023 and will terminate on August 18, 2025, subject to earlier termination upon the exercise of option awards and sale of all shares of Class C capital stock subject to the 10b5-1 Sales Plan or as otherwise provided in the 10b5-1 Sales Plan.
Name	Brad Owens
Title	General Counsel
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	August 21, 2023
Arrangement Duration	637 days
Aggregate Available	127,625	127,625

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

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 United States 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 fiscal year ended December 31, 2022, which was filed with the SEC on February 15, 2023. The condensed consolidated balance sheet as of December 31, 2022, 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 September 30, 2023 and our results of operations, comprehensive loss, and shareholders’ equity for the three and nine month periods ended September 30, 2023 and 2022, and cash flows for the nine month periods ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for any interim period, or for any other future year. Certain reclassifications of prior period amounts have been made to conform to the current period presentation. Unless indicated otherwise, the information in the Notes to Condensed Consolidated Financial Statements relates to our continuing operations and does not include the results of discontinued operations.

There were no significant changes to the significant accounting policies disclosed in Note 2 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except for the updates noted below. Such updates were made due to our determination that we have a single operating and reportable segment, as well as certain changes to how we disaggregate our revenue into categories, beginning in the first quarter of 2023.

Recoverability of Goodwill

Recoverability of Goodwill

Goodwill is measured as the excess of consideration transferred for an acquired business over the net of the acquisition date fair values of the assets acquired and the liabilities assumed, and is not amortized. We assess the impairment of goodwill at the reporting unit level on an annual basis, in our fourth quarter, or whenever events or changes in circumstances indicate that goodwill may be impaired. In our evaluation of goodwill, we initially perform a qualitative assessment to determine whether the existence of events or circumstances indicates that it is more likely than not that the carrying value of each reporting unit is greater than its fair value. If it is more likely than not that the carrying value of a reporting unit is greater than its fair value, we perform a quantitative assessment and an impairment charge is recorded in our statements of operations if the carrying value of the reporting unit exceeds its fair value.

Beginning in 2023, our chief operating decision maker, who is our chief executive officer, manages our business, makes operating decisions and evaluates operating performance on the basis of the company as a whole, instead of on a segment basis as he did prior to 2023. This aligns to our ongoing growth strategy and our intent to provide integrated customer solutions for all tasks and services related to facilitating real estate transactions. This resulted in revisions to the nature and substance of information regularly provided to and used by the chief operating decision maker. Accordingly, we have realigned our operating structure, resulting in a single operating and reportable segment. In line with this, the nature and substance of the information regularly provided to our segment manager similarly changed, and we determined that we have only one reporting unit. Because the segment change impacted the structure of our reporting units, we performed a qualitative goodwill impairment assessment immediately before and immediately after the change in reporting units. Based on those assessments, we determined it was more likely than not that the fair value of our current and legacy reporting units exceeded their respective carrying values. Therefore, we concluded that it was not necessary to perform a quantitative impairment test.

Revenue Recognition

Revenue Recognition

We recognize revenue when or as we satisfy our performance obligations by transferring control of the 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.

As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component as the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service is generally one year or less.

We do not disclose the transaction price related to remaining performance obligations for (i) contracts with an original expected duration of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for performance completed to date. The remaining duration over which we satisfy our performance obligations is generally less than one year.

We disaggregate our revenue into the following categories: Residential, Rentals, Mortgages and Other, described below.

Residential. Residential revenue includes revenue generated by our Premier Agent and new construction marketplaces, as well as revenue from the sale of advertising and business technology solutions for real estate professionals through StreetEasy for-sale product offerings and ShowingTime+.

Our Premier Agent program offers a suite of marketing and 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 Agent partners receive access to a dashboard portal on our mobile application and website that provides individualized program performance analytics, our customer relationship management tool that captures detailed information about each contact made with a Premier Agent partner through our mobile and web platforms and our account management tools. The marketing and business technology products and services promised to Premier Agent partners are delivered over time, as the customer simultaneously receives and consumes the benefit of the performance obligations.

Premier Agent advertising products, which include the delivery of validated customer connections, or leads, are primarily offered on a share of voice basis. Payment is received prior to the delivery of connections. Connections are delivered when consumer contact information is provided to Premier Agent partners. We do not promise any minimum or maximum number of connections to customers, but instead control when and how many connections to deliver based on a customer’s share of voice. We determine the number of connections to deliver to Premier Agent partners in each zip code using a market-based pricing method in consideration of the total amount spent by Premier Agent partners to purchase connections in the zip code during the month. This results in the delivery of connections over time in proportion to each Premier Agent partners’ share of voice. A Premier Agent partners’ 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 Agent partners in that zip code, and determines the proportion of consumer connections a Premier Agent partner receives. The number of connections delivered for a given spend level is dynamic; as demand for advertising in a zip code increases or decreases, the number of connections delivered to a Premier Agent partner in that zip code decreases or increases accordingly.

We primarily recognize revenue related to the Premier Agent 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 partner typically prepays their monthly spend and the monthly spend is refunded on a pro-rata basis upon cancellation of the contract by a customer, we have determined that Premier Agent partner 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 partner arrangements, as the amounts recognized would be the same irrespective of any allocation.

We also offer a pay for performance pricing model called “Flex” for Premier Agent advertising services in certain markets. Flex is available to select partners alongside our legacy market-based pricing model. With the Flex model, Premier Agent partners are provided with validated leads at no initial cost and pay a performance advertising fee only when a real estate transaction is closed with one of the leads, generally within two years. 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. We estimate variable consideration and record revenue as performance obligations, or validated leads, are transferred. 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 transactions closed is subsequently resolved. We record a contract asset for our estimate of the consideration to which we will be entitled when the right to the consideration is conditional. When the right to consideration becomes unconditional, upon the close of a real estate transaction, we reclassify amounts to accounts receivable.

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 whereby we recognize revenue 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.

StreetEasy for-sale revenue primarily consists of our pay for performance pricing model available in the New York City market for which agents and brokers are provided with leads at no initial cost and pay a performance referral fee only when a real estate purchase transaction is closed with one of the leads. Under the StreetEasy pricing model, the transaction price represents variable consideration, as the amount to which we expect to be entitled varies based on the number of leads that convert into real estate transactions and the value of those transactions. We estimate variable consideration based on the expected number of closed transactions 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 transactions closed is subsequently resolved. We record a corresponding contract asset for the estimate of variable consideration for StreetEasy Experts when the right to the consideration is conditional. When the right to consideration becomes unconditional upon the close of a real estate transaction, we reclassify amounts to accounts receivable.

Our dotloop real estate transaction management software-as-a-service solution is primarily billed in advance on a monthly basis and revenue is recognized ratably over the contract period which aligns to our satisfaction of performance obligations.

ShowingTime revenue is primarily generated by Appointment Center, a software-as-a-service and call center solution allowing real estate agents, brokerages and multiple listing services to efficiently schedule real estate viewing appointments on behalf of their customers. Appointment Center revenue is primarily billed in advance on a monthly basis and recognized ratably over the contract period which aligns to our satisfaction of performance obligations.

Rentals. Rentals revenue includes the sale of advertising and a suite of tools to rental professionals, landlords and other market participants under the Zillow and StreetEasy brands. Rentals revenue includes revenue generated by advertising sold to property managers, landlords and other rental professionals on a cost per lead, lease, listing or impression basis or for a fixed fee for certain advertising packages. 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. We recognize revenue related to our fixed fee rentals product on a straight-line basis over the contract term as the performance obligations, rental listings on our mobile applications and websites, are satisfied over time based on time elapsed. The number of leases generated through our rentals pay per lease product, Zillow Lease Connect, 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. We record a corresponding contract asset for the estimate of variable consideration for Zillow Lease Connect when the right to the consideration is conditional. When the right to consideration becomes unconditional upon the execution of a lease, we reclassify amounts to accounts receivable. Rentals revenue also includes revenue generated from our rental applications product, through which potential renters can submit applications to multiple properties 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.

Mortgages. Mortgages revenue primarily includes revenue generated by Zillow Home Loans, our affiliated mortgage lender, and marketing products sold to mortgage professionals on a cost per lead basis, including our Custom Quote and Connect services.

Mortgage origination revenue reflects origination fees on purchase or refinance mortgages and the corresponding sale, or expected future sale, of a loan. When an interest rate lock commitment (“IRLC”) 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 purchase or refinance transactions are completed, usually upon the close of escrow and when we fund the purchase or refinance 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. Origination costs associated with originating mortgage loans are recognized as incurred. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers.

Mortgage loans are sold with limited recourse provisions, which can result in repurchases of loans previously sold to investors or payments to reimburse investors for loan losses. Based on historical experience, discussions with our mortgage purchasers, analysis of the volume of mortgages we originated and current housing and credit market conditions, we estimate and record a loss reserve for mortgage loans held in our portfolio and mortgage loans held for sale, as well as known and projected mortgage loan repurchase requests. These have historically not been significant to our financial statements.

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.

Other. Other revenue primarily includes revenue generated from display products, which consist 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.

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 accounting for certain revenue offerings, restructuring costs, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets, share-based compensation, income taxes, the presentation of discontinued and continuing operations, 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 health of the residential housing market and interest rate environment have 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 June 2022, the Financial Accounting Standards Board issued guidance to improve existing measurement and disclosure requirements for equity securities that are subject to a contractual sale restriction. This guidance is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We expect to adopt this guidance prospectively on January 1, 2024, and we do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

Fair Value Measurements

We apply 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 (Level 1). The fair value measurement of other cash equivalents is based on observable market-based inputs principally derived from or corroborated by observable market data (Level 2).

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 (Level 2).

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 (Level 2).

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 is calculated by reference to quoted prices for similar assets (Level 2).

Interest rate lock commitments — The fair value of 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. 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 IRLC will ultimately result in a closed loan. For IRLCs that are cancelled or expire, any recorded gain or loss is reversed at the end of the commitment period (Level 3).

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 revenue in our condensed consolidated statements of operations.

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

The following table presents the major classes of line items of the discontinued operations included in the condensed consolidated statements of operations for the periods presented (in millions):

	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Revenue	$	23	$	4,249
Cost of revenue	24		4,023
Gross profit (loss)	(1)		226
Operating expenses:
Sales and marketing	1		153
Technology and development	—		6
General and administrative	—		10
Restructuring costs	—		25
Total operating expenses	1		194
Income (loss) from discontinued operations	(2)		32
Loss on extinguishment of debt	—		(21)
Other income	—		13
Interest expense	—		(36)
Loss from discontinued operations before income taxes	(2)		(12)
Income tax expense	—		(1)
Net loss from discontinued operations	$	(2)	$	(13)
Net loss from discontinued operations per share:
Basic	$	(0.01)	$	(0.05)
Diluted	$	(0.01)	$	(0.05)

The following table presents significant non-cash items and capital expenditures of the discontinued operations for the nine months ended September 30, 2022 (in millions):

Amortization of debt discount and debt issuance costs	$	21
Loss on debt extinguishment	21
Share-based compensation	16
Inventory valuation adjustment	9
Depreciation and amortization	7
Settlement of beneficial interests in securitizations	(79)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

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 dates presented:

	September 30, 2023	December 31, 2022
Range	45% - 100%	47% - 100%
Weighted-average	88%	87%

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 millions):

	September 30, 2023
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,736	$	1,736	$	—	$	—
Short-term investments:
U.S. government treasury securities	1,258		—		1,258		—
Corporate bonds	135		—		135		—
Commercial paper	14		—		14		—
U.S. government agency securities	14		—		14		—
Mortgage origination-related:
Mortgage loans held for sale	96		—		96		—
Forward contracts - other current assets	2		—		2		—
IRLCs - other current assets	1		—		—		1
Total	$	3,256	$	1,736	$	1,519	$	1

	December 31, 2022
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,338	$	1,338	$	—	$	—
Short-term investments:
U.S. government treasury securities	1,716		—		1,716		—
Corporate bonds	161		—		161		—
Commercial paper	10		—		10		—
U.S. government agency securities	9		—		9		—
Mortgage origination-related:
Mortgage loans held for sale	41		—		41		—
Forward contracts - other current assets	1		—		1		—
Total	$	3,276	$	1,338	$	1,938	$	—

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

9 Months Ended

Sep. 30, 2023

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 table presents the amortized cost and estimated fair market value of our cash and cash equivalents, investments, and restricted cash as of the dates presented (in millions):

	September 30, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Market Value		Amortized Cost		Estimated Fair Market Value
Cash	$	110	$	110	$	128	$	128
Cash equivalents:
Money market funds	1,736		1,736		1,338		1,338
Short-term investments:
U.S. government treasury securities(1)	1,278		1,258		1,731		1,716
Corporate bonds	136		135		162		161
Commercial paper	14		14		10		10
U.S. government agency securities	14		14		9		9
Restricted cash	3		3		2		2
Total	$	3,291	$	3,270	$	3,380	$	3,364
(1)The estimated fair market value includes $20 million and $15 million of gross unrealized losses as of September 30, 2023 and December 31, 2022, respectively.

Debt Securities, Available-for-sale

The following table presents available-for-sale investments by contractual maturity date as of September 30, 2023 (in millions):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	513	$	509
Due after one year	929		912
Total	$	1,442	$	1,421

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Property and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2023

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 millions):

	September 30, 2023		December 31, 2022
Website development costs	$	415	$	291
Leasehold improvements	89		90
Office equipment, furniture and fixtures	22		24
Computer equipment	19		18
Construction-in-progress	—		7
Property and equipment	545		430
Less: accumulated amortization and depreciation	(221)		(159)
Property and equipment, net	$	324	$	271

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The total preliminary purchase prices have been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date, as follows (in millions):

	Aryeo		Spruce
Cash and cash equivalents	$	3	$	5
Goodwill	26		16
Intangible assets	11		2
Other assets	—		2
Liabilities	(2)		(1)
Total preliminary purchase price	$	38	$	24

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination

The preliminary estimated fair values of the identifiable intangible assets acquired and associated useful lives consisted of the following (in millions):

	Aryeo			Spruce
	Preliminary Estimated Fair Value		Estimated Useful Life (in years)	Preliminary Estimated Fair Value		Estimated Useful Life (in years)
Customer relationships	$	5	5	$	—	—
Purchased content	4		3	—		—
Developed technology	2		3	2		3
Total	$	11		$	2

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Intangible Assets, net (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

The following tables present the detail of intangible assets as of the dates presented (in millions):

	September 30, 2023
	Cost		Accumulated Amortization		Net
Software	$	78	$	(25)	$	53
Customer relationships	63		(16)		47
Developed technology	53		(25)		28
Trade names and trademarks	45		(18)		27
Purchased content	16		(9)		7
Total	$	255	$	(93)	$	162

	December 31, 2022
	Cost		Accumulated Amortization		Net
Customer relationships	$	59	$	(10)	$	49
Software	54		(15)		39
Developed technology	49		(15)		34
Trade names and trademarks	45		(15)		30
Purchased content	8		(6)		2
Total	$	215	$	(61)	$	154

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Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Carrying Value of Debt

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

	September 30, 2023		December 31, 2022
Credit facilities
Master repurchase agreements:
JPMorgan Chase Bank, N.A.(1)	$	68	$	—
Atlas Securitized Products, L.P.(2)	22		23
Citibank, N.A.(3)	—		3
Warehouse line of credit:
Comerica Bank	1		11
Total credit facilities	91		37
Convertible senior notes
1.375% convertible senior notes due 2026	496		495
2.75% convertible senior notes due 2025	561		560
0.75% convertible senior notes due 2024	607		605
Total convertible senior notes	1,664		1,660
Total debt	$	1,755	$	1,697
(1)Agreement commenced on June 1, 2023 and provides for a total maximum borrowing capacity of $100 million, $25 million of which is committed, until May 30, 2024.
(2)Agreement was reassigned from Credit Suisse AG, Cayman Islands (“Credit Suisse”) on May 25, 2023.
(3)Agreement expired on June 9, 2023 and was not renewed.

Schedule of Revolving Credit Facilities and Lines of Credit

The following table summarizes certain details related to our outstanding master repurchase agreements and warehouse line of credit as of September 30, 2023 (in millions, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted-Average Interest Rate
JPMorgan Chase Bank, N.A.	May 30, 2024	$	100	7.03	%
Atlas Securitized Products, L.P.	March 11, 2024	50		7.32	%
Comerica Bank	December 29, 2023	50		7.45	%
	Total	$	200

Schedule of Convertible Senior Notes

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

								September 30, 2023				December 31, 2022
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		Semi-Annual Interest Payment Dates	Unamortized Debt Issuance Costs		Fair Value		Unamortized Debt Issuance Costs		Fair Value
September 1, 2026	$	499	1.375	%	1.57	%	March 1; September 1	$	3	$	598	$	4	$	504
May 15, 2025	565		2.75	%	3.20	%	May 15; November 15	4		571		5		531
September 1, 2024	608		0.75	%	1.02	%	March 1; September 1	1		706		3		629
Total	$	1,672						$	8	$	1,875	$	12	$	1,664

	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
Maturity Date	Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	2	$	—	$	2	$	2	$	—	$	2
May 15, 2025	4		—		4		4		1		5
September 1, 2024	1		1		2		1		1		2
Total	$	7	$	1	$	8	$	7	$	2	$	9

	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
Maturity Date	Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	6	$	1	$	7	$	5	$	—	$	5
May 15, 2025	12		1		13		12		2		14
September 1, 2024	3		2		5		4		1		5
Total	$	21	$	4	$	25	$	21	$	3	$	24

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

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

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%

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Share Repurchase Authorizations (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Class of Treasury Stock

The following table summarizes our Class A common stock and Class C capital stock repurchase activity under the Repurchase Authorizations for the periods presented (in millions, except share data, which are presented in thousands, and per share amounts):

	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
	Class A common stock		Class C capital stock		Class A common stock		Class C capital stock
Shares repurchased	965		932		772		4,225
Weighted-average price per share	$	52.57	$	52.80	$	35.52	$	35.18
Total purchase price	$	50	$	50	$	27	$	149

	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Class A common stock		Class C capital stock		Class A common stock		Class C capital stock
Shares repurchased	1,775		5,411		3,349		13,943
Weighted-average price per share	$	48.71	$	46.15	$	46.13	$	44.40
Total purchase price	$	86	$	250	$	154	$	619

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Share-Based Awards (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Option Award Activity

The following table summarizes option award activity for the nine months ended September 30, 2023:

	Number of Shares Subject to Existing Options (in thousands)	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2023	28,598	$	44.90	7.1	$	15
Granted	6,890	42.63
Exercised	(1,454)	38.84
Forfeited or cancelled	(892)	48.28
Outstanding at September 30, 2023	33,142	44.60		7.0	173
Vested and exercisable at September 30, 2023	19,802	44.96		5.8	113

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

The following assumptions were used to determine the fair value of option awards granted for the periods presented:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Expected volatility	62%	61%	55% - 62%	55% - 61%
Risk-free interest rate	4.34%	3.38%	3.75% - 4.34%	1.94% - 3.38%
Weighted-average expected life	5.3 years	5.0 years	5.3 - 6.5 years	4.5 - 6.0 years
Weighted-average fair value of options granted	$27.26	$18.06	$24.06	$23.75

Summary of Restricted Stock Units Activity

The following table summarizes activity for restricted stock units for the nine months ended September 30, 2023:

	Restricted Stock Units (in thousands)	Weighted-Average Grant Date Fair Value
Unvested outstanding at January 1, 2023	10,930	$	46.85
Granted	8,191	43.27
Vested	(4,675)	45.96
Forfeited	(841)	46.58
Unvested outstanding at September 30, 2023	13,605	45.01

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 millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	4	$	5	$	12	$	12
Sales and marketing	18		21		53		46
Technology and development	42		57		123		123
General and administrative	45		64		154		142
Impairment and restructuring costs	—		—		—		2
Share-based compensation - continuing operations	109		147		342		325
Share-based compensation - discontinued operations	—		1		—		16
Total share-based compensation	$	109	$	148	$	342	$	341

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2023

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 and net loss from continuing operations per share because their effect would have been antidilutive (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Weighted-average Class A common stock and Class C capital stock option awards outstanding	30,063	2,417	20,924	15,942
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	14,172	9,670	13,890	8,326
Class C capital stock issuable upon conversion of the Notes	33,855	33,855	33,855	33,855
Total Class A common stock and Class C capital stock equivalents	78,090	45,942	68,669	58,123

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Revenue and Contract Balances (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents our revenue disaggregated by category for the periods presented (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Residential	$	362	$	372	$	1,103	$	1,182
Rentals	99		74		264		206
Mortgages	24		26		74		101
Other	11		11		30		34
Total revenue	$	496	$	483	$	1,471	$	1,523

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Summary of Significant Accounting Policies - Narrative (Details)	9 Months Ended
	Sep. 30, 2023 reporting_unit
Accounting Policies [Abstract]
Number of reporting units	1

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Discontinued Operations - Major Line Items Included in Statement of Operations (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating expenses:
Net loss from discontinued operations	$ 0	$ (2)	$ 0	$ (13)
Discontinued Operations, Disposed Of By Means Other Than Sale, Wind Down | Zillow Offers Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue		23		4,249
Cost of revenue		24		4,023
Gross profit (loss)		(1)		226
Operating expenses:
Sales and marketing		1		153
Technology and development		0		6
General and administrative		0		10
Restructuring costs		0		25
Total operating expenses		1		194
Income (loss) from discontinued operations		(2)		32
Loss on extinguishment of debt		0		(21)
Other income		0		13
Interest expense		0		(36)
Loss from discontinued operations before income taxes		(2)		(12)
Income tax expense		0		(1)
Net loss from discontinued operations		$ (2)		$ (13)
Net loss from discontinued operations per share:
Basic (usd per share)		$ (0.01)		$ (0.05)
Diluted (usd per share)		$ (0.01)		$ (0.05)

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Discontinued Operations - Non-Cash Items and Capital Expenditures (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Settlement of beneficial interests in securitizations		$ 0	$ (79)
Discontinued Operations, Disposed Of By Means Other Than Sale, Wind Down | Zillow Offers Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Amortization of debt discount and debt issuance costs			21
Loss on debt extinguishment	$ 0		21
Share-based compensation			16
Inventory valuation adjustment			9
Depreciation and amortization			$ 7

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Discontinued Operations - Narrative (Details) - Employee Severance $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Restructuring charges	$ 14
Cumulative restructuring charges	$ 23

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Fair Value Measurements - Fair Value Measurement Inputs and Valuation Techniques (Details) - IRLCs - Not Designated as Hedging Instrument	Sep. 30, 2023	Dec. 31, 2022
Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value rates, IRLCs	0.45	0.47
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	0.88	0.87

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Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
IRLCs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	$ 189	$ 62
Forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	$ 232	$ 90

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Fair Value Measurements - Fair Value of Cash Equivalents and Investments (Detail) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	$ 1,421
Mortgage loans held for sale	96	$ 41
Total	3,256	3,276
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0	0
Total	1,736	1,338
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	96	41
Total	1,519	1,938
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0	0
Total	1	0
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,736	1,338
Money market funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,736	1,338
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	0
U.S. government treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	1,258	1,716
U.S. government treasury securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
U.S. government treasury securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	1,258	1,716
U.S. government treasury securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	135	161
Corporate bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Corporate bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	135	161
Corporate bonds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	14	10
Commercial paper | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Commercial paper | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	14	10
Commercial paper | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
U.S. government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	14	9
U.S. government agency securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
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]
Short-term investments	14	9
U.S. government agency securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Forward contracts | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	2	1
Forward contracts | Level 1 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	0	0
Forward contracts | Level 2 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	2	1
Forward contracts | Level 3 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	0	$ 0
IRLCs | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	1
IRLCs | Level 1 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	0
IRLCs | Level 2 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	0
IRLCs | Level 3 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Forward contracts - other current assets	$ 1

XML

Cash and Cash Equivalents, 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 Millions	Sep. 30, 2023	Dec. 31, 2022
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 1,846	$ 1,466
Short-term investments:
Amortized Cost	1,442
Estimated Fair Market Value	1,421
Restricted cash	3	2
Estimated Fair Market Value, Total	3,270	3,364
Cash, Cash Equivalents, and Short-Term Investments, Amortized Cost	3,291	3,380
U.S. government treasury securities
Short-term investments:
Amortized Cost	1,278	1,731
Estimated Fair Market Value	1,258	1,716
Corporate bonds
Short-term investments:
Amortized Cost	136	162
Estimated Fair Market Value	135	161
Commercial paper
Short-term investments:
Amortized Cost	14	10
Estimated Fair Market Value	14	10
U.S. government agency securities
Short-term investments:
Amortized Cost	14	9
Estimated Fair Market Value	14	9
Debt securities, available-for-sale, accumulated gross unrealized loss, before tax	20	15
Cash
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	110	128
Money market funds
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 1,736	$ 1,338

XML

Cash and Cash Equivalents, Investments and Restricted Cash - Available-for-sale Investments By Contractual Maturity Date (Details) $ in Millions	Sep. 30, 2023 USD ($)
Amortized Cost
Due in one year or less	$ 513
Due after one year	929
Amortized Cost	1,442
Estimated Fair Market Value
Due in one year or less	509
Due after one year	912
Estimated Fair Market Value	$ 1,421

XML

Property and Equipment, net - Detail of Property and Equipment (Detail) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Less: accumulated amortization and depreciation	$ 545	$ 430
Less: accumulated amortization and depreciation	(221)	(159)
Property and equipment, net	324	271
Website development costs
Property, Plant and Equipment [Line Items]
Less: accumulated amortization and depreciation	415	291
Leasehold improvements
Property, Plant and Equipment [Line Items]
Less: accumulated amortization and depreciation	89	90
Office equipment, furniture and fixtures
Property, Plant and Equipment [Line Items]
Less: accumulated amortization and depreciation	22	24
Computer equipment
Property, Plant and Equipment [Line Items]
Less: accumulated amortization and depreciation	19	18
Construction-in-progress
Property, Plant and Equipment [Line Items]
Less: accumulated amortization and depreciation	$ 0	$ 7

XML

Property and Equipment, net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Line Items]
Amortization and depreciation expense related to property and equipment other than website development costs	$ 6	$ 6	$ 18	$ 19
Capitalization of website development costs	49	37	144	104
Amortization of website development costs and intangible assets included in technology and development	13	11	37	47
Technology and development | Software Development
Property, Plant and Equipment [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 30	$ 17	$ 79	$ 48

XML

Acquisitions - Narrative (Details) - USD ($) $ in Millions			9 Months Ended
	Sep. 11, 2023	Jul. 31, 2023	Sep. 30, 2023	Sep. 30, 2022
Schedule of Equity Method Investments [Line Items]
Payments to acquire businesses, net of cash acquired			$ 34	$ 0
Aryeo
Schedule of Equity Method Investments [Line Items]
Payments to acquire businesses, net of cash acquired		$ 15
Business acquisition, equity interest issued or issuable, number of shares (in shares)		380,259
Business combination, consideration transferred, equity interests issued and issuable		$ 20
Business combination, consideration transferred		$ 35
Spruce
Schedule of Equity Method Investments [Line Items]
Payments to acquire businesses, net of cash acquired	$ 19

XML

Acquisitions - Preliminary Purchase Price (Details) - USD ($) $ in Millions	Sep. 30, 2023	Sep. 11, 2023	Jul. 31, 2023	Dec. 31, 2022
Schedule of Equity Method Investments [Line Items]
Goodwill	$ 2,416			$ 2,374
Aryeo
Schedule of Equity Method Investments [Line Items]
Cash and cash equivalents			$ 3
Goodwill			26
Intangible assets			11
Other assets			0
Liabilities			(2)
Total preliminary purchase price			$ 38
Spruce
Schedule of Equity Method Investments [Line Items]
Cash and cash equivalents		$ 5
Goodwill		16
Intangible assets		2
Other assets		2
Liabilities		(1)
Total preliminary purchase price		$ 24

XML

Acquisitions - Preliminary Estimated Fair Value and Useful Lives (Details) - USD ($) $ in Millions	Sep. 11, 2023	Jul. 31, 2023
Aryeo
Finite-Lived Intangible Assets Acquired as Part of Business Combination [Line Items]
Preliminary Estimated Fair Value		$ 11
Aryeo | Customer relationships
Finite-Lived Intangible Assets Acquired as Part of Business Combination [Line Items]
Preliminary Estimated Fair Value		$ 5
Estimated Useful Life (in years)		5 years
Aryeo | Purchased content
Finite-Lived Intangible Assets Acquired as Part of Business Combination [Line Items]
Preliminary Estimated Fair Value		$ 4
Estimated Useful Life (in years)		3 years
Aryeo | Developed technology
Finite-Lived Intangible Assets Acquired as Part of Business Combination [Line Items]
Preliminary Estimated Fair Value		$ 2
Estimated Useful Life (in years)		3 years
Spruce
Finite-Lived Intangible Assets Acquired as Part of Business Combination [Line Items]
Preliminary Estimated Fair Value	$ 2
Spruce | Developed technology
Finite-Lived Intangible Assets Acquired as Part of Business Combination [Line Items]
Preliminary Estimated Fair Value	$ 2
Estimated Useful Life (in years)	3 years

XML

Intangible Assets, net - Intangible Assets (Detail) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Cost	$ 255	$ 215
Accumulated Amortization	(93)	(61)
Net	162	154
Software
Finite-Lived Intangible Assets [Line Items]
Cost	78	54
Accumulated Amortization	(25)	(15)
Net	53	39
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Cost	63	59
Accumulated Amortization	(16)	(10)
Net	47	49
Developed technology
Finite-Lived Intangible Assets [Line Items]
Cost	53	49
Accumulated Amortization	(25)	(15)
Net	28	34
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Cost	45	45
Accumulated Amortization	(18)	(15)
Net	27	30
Purchased content
Finite-Lived Intangible Assets [Line Items]
Cost	16	8
Accumulated Amortization	(9)	(6)
Net	$ 7	$ 2

XML

Intangible Assets, net - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of website development costs and intangible assets included in technology and development	$ 13,000,000	$ 11,000,000	$ 37,000,000	$ 47,000,000
Non-cash impairment charge	$ 0	$ 0	$ 0	$ 0

XML

Debt - Schedule of Carrying Value of Debt (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Total debt	$ 1,755,000,000	$ 1,697,000,000
Convertible senior notes
Debt Instrument [Line Items]
Total convertible senior notes	1,664,000,000	1,660,000,000
Convertible senior notes | 1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Total convertible senior notes	$ 496,000,000	495,000,000
Stated Interest Rate	1.375%
Convertible senior notes | 2.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Total convertible senior notes	$ 561,000,000	560,000,000
Stated Interest Rate	2.75%
Convertible senior notes | 0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Total convertible senior notes	$ 607,000,000	605,000,000
Stated Interest Rate	0.75%
Credit facilities
Debt Instrument [Line Items]
Warehouse line of credit	$ 91,000,000	37,000,000
Line of Credit | Credit facilities
Debt Instrument [Line Items]
Maximum Borrowing Capacity	200,000,000
JPMorgan Chase Bank, N.A. | Credit facilities
Debt Instrument [Line Items]
Repurchase agreements	68,000,000	0
JPMorgan Chase Bank, N.A. | Line of Credit | Credit facilities
Debt Instrument [Line Items]
Maximum Borrowing Capacity	100,000,000
Repurchase agreement committed amount	25,000,000
Atlas Securitized Products, L.P. | Credit facilities
Debt Instrument [Line Items]
Repurchase agreements	22,000,000	23,000,000
Atlas Securitized Products, L.P. | Line of Credit | Credit facilities
Debt Instrument [Line Items]
Maximum Borrowing Capacity	50,000,000
Citibank, N.A. | Credit facilities
Debt Instrument [Line Items]
Repurchase agreements	0	3,000,000
Comerica Bank | Line of Credit | Credit facilities
Debt Instrument [Line Items]
Warehouse line of credit	1,000,000	$ 11,000,000
Maximum Borrowing Capacity	$ 50,000,000

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Debt - Mortgages Segment, Schedule of Warehouse Lines of Credit (Details) - Line of Credit - Credit facilities	Sep. 30, 2023 USD ($)
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 200,000,000
JPMorgan Chase Bank, N.A.
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 100,000,000
Weighted-Average Interest Rate	7.03%
Atlas Securitized Products, L.P.
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 50,000,000
Weighted-Average Interest Rate	7.32%
Comerica Bank
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 50,000,000
Weighted-Average Interest Rate	7.45%

XML

Debt - Credit Facilities - Narrative (Detail) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Atlas Securitized Products, L.P., JPMorgan Chase Bank, N.A, Citibank, N.A. | Credit facilities
Debt Instrument [Line Items]
Short-term debt	$ 93	$ 28

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Debt - Schedule of Convertible Senior Notes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Interest Expense	$ 9,000,000	$ 9,000,000	$ 27,000,000	$ 26,000,000
Convertible senior notes
Debt Instrument [Line Items]
Aggregate Principal Amount	1,672,000,000		1,672,000,000
Unamortized Debt Issuance Costs	8,000,000		8,000,000		$ 12,000,000
Fair Value	1,875,000,000		1,875,000,000		1,664,000,000
Contractual Coupon Interest	7,000,000	7,000,000	21,000,000	21,000,000
Amortization of Debt Issuance Costs	1,000,000	2,000,000	4,000,000	3,000,000
Interest Expense	8,000,000	9,000,000	25,000,000	24,000,000
Convertible senior notes | 1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 499,000,000		$ 499,000,000
Stated Interest Rate	1.375%		1.375%
Effective Interest Rate	1.57%		1.57%
Unamortized Debt Issuance Costs	$ 3,000,000		$ 3,000,000		4,000,000
Fair Value	598,000,000		598,000,000		504,000,000
Contractual Coupon Interest	2,000,000	2,000,000	6,000,000	5,000,000
Amortization of Debt Issuance Costs	0	0	1,000,000	0
Interest Expense	2,000,000	2,000,000	7,000,000	5,000,000
Convertible senior notes | 2.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 565,000,000		$ 565,000,000
Stated Interest Rate	2.75%		2.75%
Effective Interest Rate	3.20%		3.20%
Unamortized Debt Issuance Costs	$ 4,000,000		$ 4,000,000		5,000,000
Fair Value	571,000,000		571,000,000		531,000,000
Contractual Coupon Interest	4,000,000	4,000,000	12,000,000	12,000,000
Amortization of Debt Issuance Costs	0	1,000,000	1,000,000	2,000,000
Interest Expense	4,000,000	5,000,000	13,000,000	14,000,000
Convertible senior notes | 0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 608,000,000		$ 608,000,000
Stated Interest Rate	0.75%		0.75%
Effective Interest Rate	1.02%		1.02%
Unamortized Debt Issuance Costs	$ 1,000,000		$ 1,000,000		3,000,000
Fair Value	706,000,000		706,000,000		$ 629,000,000
Contractual Coupon Interest	1,000,000	1,000,000	3,000,000	4,000,000
Amortization of Debt Issuance Costs	1,000,000	1,000,000	2,000,000	1,000,000
Interest Expense	$ 2,000,000	$ 2,000,000	$ 5,000,000	$ 5,000,000

XML

Debt - Summary of Conversion and Redemption (Details) - Convertible senior notes	9 Months Ended
	Sep. 30, 2023 $ / shares
1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Conversion Rate	0.0229830
Conversion price per share (usd per share)	$ 43.51
2.75% convertible senior notes due 2025
Debt Instrument [Line Items]
Conversion Rate	0.0148810
Conversion price per share (usd per share)	$ 67.20
0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Conversion Rate	0.0229830
Conversion price per share (usd per share)	$ 43.51

XML

Debt - Capped Call Confirmations (Details) - Convertible senior notes	9 Months Ended
	Sep. 30, 2023 $ / shares
1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Initial cap price (usd per share)	$ 80.5750
Cap Price Premium	150.00%
0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Initial cap price (usd per share)	$ 72.5175
Cap Price Premium	125.00%

XML

Debt - Convertible Senior Notes Narrative (Details) - Convertible senior notes	9 Months Ended
	Sep. 30, 2023 day
Debt Instrument [Line Items]
Debt instrument, convertible threshold percentage	130.00%
Debt instrument, convertible threshold trading days	20
Debt instrument, threshold consecutive trading days	30

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Income Taxes - Narrative (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Schedule Of Income Tax [Line Items]
Income tax expense (benefit)	$ 0	$ 3	$ 1	$ (1)
Federal
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards					$ 1,800
State
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards					$ 63

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Share Repurchase Authorizations - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2023	Jul. 31, 2023	Jul. 30, 2023
Equity [Abstract]
Stock repurchase program, authorized amount		$ 2,500	$ 1,800
Stock repurchase program, additional authorized amount		$ 750
Stock repurchase program, remaining authorized repurchase amount	$ 914

XML

Share Repurchase Authorizations - Repurchase Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Class A common stock
Class of Stock [Line Items]
Shares repurchased (in shares)	965	772	1,775	3,349
Weighted-average price per share (in USD per share)	$ 52.57	$ 35.52	$ 48.71	$ 46.13
Total purchase price	$ 50	$ 27	$ 86	$ 154
Class C capital stock
Class of Stock [Line Items]
Shares repurchased (in shares)	932	4,225	5,411	13,943
Weighted-average price per share (in USD per share)	$ 52.80	$ 35.18	$ 46.15	$ 44.40
Total purchase price	$ 50	$ 149	$ 250	$ 619

XML

Share-Based Awards - Additional Information (Details) $ / shares in Units, shares in Millions, $ in Millions		1 Months Ended	3 Months Ended	9 Months Ended
	Aug. 03, 2022 USD ($) employees $ / shares shares	Aug. 31, 2022 $ / shares	Mar. 31, 2023	Sep. 30, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years	4 years
Share-based payment arrangement, plan modification, incremental cost, aggregate amount	$ 66
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, fair value assumptions, exercise price (in usd per share) | $ / shares	$ 38.78
Share-based payment arrangement, plan modification, number of awards impacted | shares	7
Share-based payment arrangement, plan modification, number of grantees affected | employees	3,348
Weighted average grant date fair value (in dollars per share) | $ / shares		$ 67.58
Unrecognized cost of unvested share-based compensation awards				$ 384
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost				$ 557

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Share-Based Awards - Summary of Option Award (Detail) $ / shares in Units, shares in Thousands, $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares
Number of Shares Subject to Existing Options (in thousands)
Beginning Balance (in shares) | shares	28,598
Granted (in shares) | shares	6,890
Exercised (in shares) | shares	(1,454)
Forfeited or cancelled (in shares) | shares	(892)
Ending Balance (in shares) | shares	33,142	28,598
Vested and exercisable (in shares) | shares	19,802
Weighted- Average Exercise Price Per Share
Beginning Balance (usd per share) | $ / shares	$ 44.90
Granted (usd per share) | $ / shares	42.63
Exercised (usd per share) | $ / shares	38.84
Forfeited or cancelled (usd per share) | $ / shares	48.28
Ending Balance (usd per share) | $ / shares	44.60	$ 44.90
Vested and exercisable (usd per share) | $ / shares	$ 44.96
Weighted- Average Remaining Contractual Life (Years)
Weighted-Average Remaining Contractual Life, Outstanding	7 years	7 years 1 month 6 days
Weighted-Average Remaining Contractual Life, Vested and exercisable	5 years 9 months 18 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value, Outstanding | $	$ 173	$ 15
Aggregate Intrinsic Value, Vested and exercisable | $	$ 113

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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) - Employee Stock Option - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	62.00%	61.00%
Weighted-average fair value of options granted (usd per share)	$ 27.26	$ 18.06	$ 24.06	$ 23.75
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			55.00%	55.00%
Risk-free interest rate	4.34%	3.38%	3.75%	1.94%
Weighted-average expected life	5 years 3 months 18 days	5 years	5 years 3 months 18 days	4 years 6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			62.00%	61.00%
Risk-free interest rate			4.34%	3.38%
Weighted-average expected life			6 years 6 months	6 years

XML

Share-Based Awards - Summary of Restricted Stock Units Activity (Detail) - Restricted Stock Units (RSUs) shares in Thousands	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Restricted Stock Units (in thousands)
Beginning balance (in shares) | shares	10,930
Granted (in shares) | shares	8,191
Vested (in shares) | shares	(4,675)
Forfeited (in shares) | shares	(841)
Ending balance (in shares) | shares	13,605
Weighted-Average Grant Date Fair Value
Unvested outstanding, beginning balance (usd per share) | $ / shares	$ 46.85
Granted (usd per share) | $ / shares	43.27
Vested (usd per share) | $ / shares	45.96
Forfeited (usd per share) | $ / shares	46.58
Unvested outstanding, ending balance (usd per share) | $ / shares	$ 45.01

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Share-Based Awards - Effects of Share Based Compensation in Consolidated Statements of Operations (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 109	$ 148	$ 342	$ 341
Share-based compensation - continuing operations
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	109	147	342	325
Share-based compensation - discontinued operations
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	0	1	0	16
Cost of revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	4	5	12	12
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	18	21	53	46
Technology and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	42	57	123	123
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	45	64	154	142
Impairment and restructuring costs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 0	$ 0	$ 0	$ 2

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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		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
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)	78,090	45,942	68,669	58,123
Class A Common Stock and Class C Capital Stock | Weighted-average | Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	30,063	2,417	20,924	15,942
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)	14,172	9,670	13,890	8,326
Common Class C | Class C capital stock issuable upon conversion of the Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	33,855	33,855	33,855	33,855

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Commitments and Contingencies - Additional Information (Detail)	Oct. 28, 2022 patent	Sep. 14, 2022 claim	Aug. 31, 2022 patent	Aug. 01, 2022 patent	Jul. 15, 2022 patent	Mar. 02, 2022 patent	Jan. 06, 2022 claim	Jul. 23, 2021 patent	Mar. 22, 2021 patent	Mar. 15, 2021 patent	Sep. 18, 2020 petition patent	Jul. 21, 2020 patent	Sep. 17, 2019 patent	Feb. 28, 2018 claim	Feb. 16, 2018 claim	Feb. 05, 2018 claim	Sep. 30, 2017 claim
Other Commitments [Line Items]
Number of patents infringed									3	2	3	5	7
Number of petitions filed								1			4
Number of patents in favor					2
Number of petitions previously denied			2
Number of patents vacated			1
Number of remaining inter parties review						2
Loss contingency, number of patents invalid	1
Loss contingency, number of appeals filed on dismissed patents				2
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		3					3							4	2	2

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Revenue and Contract Balances - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 496	$ 483	$ 1,471	$ 1,523
Residential
Disaggregation of Revenue [Line Items]
Total revenue	362	372	1,103	1,182
Rentals
Disaggregation of Revenue [Line Items]
Total revenue	99	74	264	206
Mortgages
Disaggregation of Revenue [Line Items]
Total revenue	24	26	74	101
Other
Disaggregation of Revenue [Line Items]
Total revenue	$ 11	$ 11	$ 30	$ 34

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Revenue and Contract Balances - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Contract asset	$ 89		$ 89			$ 71
Revenue recognized, recorded in deferred revenue as of prior period	46	$ 50	43	$ 51
Deferred revenue	$ 48	$ 50	$ 48	$ 50	$ 49	$ 44	$ 52	$ 51

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Subsequent Events (Details) - Subsequent Event - USD ($) $ in Millions	Oct. 28, 2023	Oct. 31, 2023	Oct. 11, 2023
2.75% convertible senior notes due 2025
Subsequent Event [Line Items]
Debt instrument, repurchased face amount		$ 28
Follow Up Boss
Subsequent Event [Line Items]
Payments to acquire businesses, gross	$ 400
Business combination, contingent consideration, liability	$ 100
Business combination, contingent consideration, term	3 years
UBS AG
Subsequent Event [Line Items]
Maximum borrowing capacity			$ 100