Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 30, 2017 | Jun. 30, 2016 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | ZG | ||
Entity Registrant Name | Zillow Group, Inc. | ||
Entity Central Index Key | 1,617,640 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 5,870,516,058 | ||
Class A Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 54,467,247 | ||
Class B Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 6,217,447 | ||
Class C Capital Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 122,042,763 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 243,592 | $ 229,138 |
Short-term investments | 262,870 | 291,151 |
Accounts receivable, net of allowance for doubtful accounts of $1,337 and $3,378 at December 31, 2016 and 2015, respectively | 40,527 | 29,789 |
Prepaid expenses and other current assets | 34,817 | 24,016 |
Total current assets | 581,806 | 574,094 |
Restricted cash | 1,053 | 3,015 |
Property and equipment, net | 98,288 | 85,523 |
Goodwill | 1,923,480 | 1,909,167 |
Intangible assets, net | 527,464 | 558,881 |
Other assets | 17,586 | 5,020 |
Total assets | 3,149,677 | 3,135,700 |
Current liabilities: | ||
Accounts payable | 4,257 | 3,361 |
Accrued expenses and other current liabilities | 38,427 | 43,047 |
Accrued compensation and benefits | 24,057 | 11,392 |
Deferred revenue | 29,154 | 21,450 |
Deferred rent, current portion | 1,347 | 1,172 |
Total current liabilities | 97,242 | 80,422 |
Deferred rent, net of current portion | 15,298 | 13,743 |
Long-term debt | 367,404 | 230,000 |
Deferred tax liabilities and other long-term liabilities | 136,146 | 132,482 |
Total liabilities | 616,090 | 456,647 |
Commitments and contingencies (Note 16) | ||
Shareholders' equity: | ||
Preferred stock, $0.0001 par value; 30,000,000 shares authorized as of December 31, 2016 and 2015; no shares issued and outstanding as of December 31, 2016 and 2015 | ||
Additional paid-in capital | 3,030,854 | 2,956,111 |
Accumulated other comprehensive loss | (242) | (471) |
Accumulated deficit | (497,043) | (276,605) |
Total shareholders' equity | 2,533,587 | 2,679,053 |
Total liabilities and shareholders' equity | 3,149,677 | 3,135,700 |
Class A Common Stock | ||
Shareholders' equity: | ||
Common stock | 5 | 5 |
Class B Common Stock | ||
Shareholders' equity: | ||
Common stock | 1 | 1 |
Class C Capital Stock | ||
Shareholders' equity: | ||
Common stock | $ 12 | $ 12 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts receivable, allowance for doubtful accounts | $ 1,337 | $ 3,378 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 30,000,000 | 30,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,245,000,000 | 1,245,000,000 |
Common stock, shares issued | 54,402,809 | 53,299,111 |
Common stock, shares outstanding | 54,402,809 | 53,299,111 |
Class B Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 6,217,447 | 6,217,447 |
Common stock, shares outstanding | 6,217,447 | 6,217,447 |
Class C Capital Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 121,838,462 | 118,958,359 |
Common stock, shares outstanding | 121,838,462 | 118,958,359 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Income Statement [Abstract] | ||||
Revenue | $ 846,589 | $ 644,677 | $ 325,893 | |
Costs and expenses: | ||||
Cost of revenue (exclusive of amortization) | [1] | 71,591 | 61,614 | 29,461 |
Sales and marketing | 380,919 | 307,089 | 169,462 | |
Technology and development | 273,066 | 198,565 | 84,669 | |
General and administrative | 313,695 | 170,445 | 65,503 | |
Acquisition-related costs | 1,423 | 16,576 | 21,493 | |
Restructuring costs | 35,551 | |||
Loss (gain) on divestiture of businesses | (1,251) | 4,368 | ||
Total costs and expenses | 1,039,443 | 794,208 | 370,588 | |
Loss from operations | (192,854) | (149,531) | (44,695) | |
Loss on debt extinguishment | (22,757) | |||
Other income | 2,711 | 1,501 | 1,085 | |
Interest expense | (7,408) | (5,489) | ||
Loss before income taxes | (220,308) | (153,519) | (43,610) | |
Income tax benefit (expense) | (130) | 4,645 | ||
Net loss | $ (220,438) | $ (148,874) | $ (43,610) | |
Net loss per share-basic and diluted | $ (1.22) | $ (0.88) | $ (0.36) | |
Weighted-average shares outstanding-basic and diluted | 180,149 | 169,767 | 120,027 | |
[1] | Amortization of website development costs and intangible assets included in technology and development |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Amortization of website development costs and intangible assets included in technology and development | $ 84,951 | $ 63,189 | $ 29,487 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (220,438) | $ (148,874) | $ (43,610) |
Other comprehensive income (loss): | |||
Unrealized gains (losses) on investments | 210 | (448) | |
Reclassification adjustment for net gains (losses) from investments included in net loss | 19 | (23) | |
Net unrealized gains (losses) on investments | 229 | (471) | |
Total other comprehensive income (loss) | 229 | (471) | |
Comprehensive loss | $ (220,209) | $ (149,345) | $ (43,610) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock: Class A Common Stock, Class B Common Stock and Class C Capital Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Beginning Balance at Dec. 31, 2013 | $ 567,796 | $ 12 | $ 651,905 | $ (84,121) | |
Beginning Balance (in shares) at Dec. 31, 2013 | 118,208,898 | ||||
Issuance of common and capital stock upon exercise of stock options | 23,923 | 23,923 | |||
Issuance of common and capital stock upon exercise of stock options (in shares) | 3,970,527 | ||||
Issuance of common and capital stock related to vesting of restricted stock units | 208,095 | ||||
Share-based compensation expense | 40,670 | 40,670 | |||
Net loss | (43,610) | (43,610) | |||
Ending Balance at Dec. 31, 2014 | 588,779 | $ 12 | 716,498 | (127,731) | |
Ending Balance (in shares) at Dec. 31, 2014 | 122,387,520 | ||||
Issuance of common and capital stock in connection with an acquisition | 1,883,728 | $ 5 | 1,883,723 | ||
Issuance of common and capital stock in connection with an acquisition (in shares) | 51,779,112 | ||||
Equity award vesting acceleration in connection with restructuring | 14,859 | 14,859 | |||
Fair value of equity awards assumed in connection with an acquisition | 82,840 | 82,840 | |||
Debt premium recorded in additional paid-in capital in connection with an acquisition | 126,386 | 126,386 | |||
Issuance of common and capital stock upon exercise of stock options | 24,423 | $ 1 | 24,422 | ||
Issuance of common and capital stock upon exercise of stock options (in shares) | 2,732,767 | ||||
Issuance of common and capital stock related to vesting of restricted stock units | 1,899,531 | ||||
Shares and value of restricted stock units withheld for tax liability | (8,150) | (8,150) | |||
Shares and value of restricted stock units withheld for tax liability (in shares) | (324,013) | ||||
Share-based compensation expense | 115,533 | 115,533 | |||
Net loss | (148,874) | (148,874) | |||
Other comprehensive income (loss) | (471) | $ (471) | |||
Ending Balance at Dec. 31, 2015 | 2,679,053 | $ 18 | 2,956,111 | (276,605) | (471) |
Ending Balance (in shares) at Dec. 31, 2015 | 178,474,917 | ||||
Issuance of common and capital stock upon exercise of stock options | 31,211 | 31,211 | |||
Issuance of common and capital stock upon exercise of stock options (in shares) | 2,518,172 | ||||
Issuance of common and capital stock related to vesting of restricted stock units | 1,487,263 | ||||
Shares and value of restricted stock units withheld for tax liability | (616) | (616) | |||
Shares and value of restricted stock units withheld for tax liability (in shares) | (21,634) | ||||
Share-based compensation expense | 116,979 | 116,979 | |||
Portion of repurchase price recorded in additional paid-in capital in connection with partial repurchase of 2020 Notes | (127,615) | (127,615) | |||
Equity component of issuance of 2021 Notes, net of issuance costs of $2,494 | 91,400 | 91,400 | |||
Premiums paid for Capped Call Confirmations | (36,616) | (36,616) | |||
Net loss | (220,438) | (220,438) | |||
Other comprehensive income (loss) | 229 | 229 | |||
Ending Balance at Dec. 31, 2016 | $ 2,533,587 | $ 18 | $ 3,030,854 | $ (497,043) | $ (242) |
Ending Balance (in shares) at Dec. 31, 2016 | 182,458,718 |
Consolidated Statements of Sha8
Consolidated Statements of Shareholders' Equity (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Equity component of issuance of 2021 Notes, net of issuance costs | $ 2,494 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | |||
Net loss | $ (220,438) | $ (148,874) | $ (43,610) |
Adjustments to reconcile net loss to net cash provided by operating activities, net of amounts assumed in connection with acquisitions: | |||
Depreciation and amortization | 100,590 | 75,386 | 35,624 |
Share-based compensation expense | 106,918 | 105,214 | 34,085 |
Loss on debt extinguishment | 22,757 | ||
Amortization of discount and issuance costs on 2021 Notes | 883 | ||
Restructuring costs | 19,001 | ||
Release of valuation allowance on certain deferred tax assets | (1,370) | (2,853) | |
Loss on disposal of property and equipment | 3,689 | 1,384 | 505 |
Loss (gain) on divestiture of businesses, net | (1,360) | 3,899 | |
Bad debt expense | 2,681 | 3,235 | 2,529 |
Deferred rent | 1,730 | 2,553 | 4,415 |
Amortization of bond premium | 1,489 | 2,487 | 3,506 |
Impairment of certain acquired intangible assets | 3,259 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (13,324) | (1,051) | (5,979) |
Prepaid expenses and other assets | (13,260) | (761) | (5,084) |
Accounts payable | 856 | (11,158) | 4,634 |
Accrued expenses and other current liabilities | (5,065) | (18,384) | 6,282 |
Accrued compensation and benefits | 12,463 | (4,020) | 2,295 |
Deferred revenue | 7,794 | (2,434) | 3,058 |
Other long-term liabilities | 1,612 | (965) | |
Net cash provided by operating activities | 8,645 | 22,659 | 45,519 |
Investing activities | |||
Proceeds from maturities of investments | 197,407 | 335,443 | 174,949 |
Purchases of investments | (175,210) | (307,658) | (272,644) |
Proceeds from sales of investments | 4,963 | 8,260 | |
Decrease in restricted cash, net of amounts assumed in connection with an acquisition | 1,962 | 3,931 | |
Purchases of property and equipment | (62,060) | (52,685) | (31,515) |
Purchases of intangible assets | (9,662) | (15,423) | (12,727) |
Purchase of cost method investment | (10,000) | ||
Proceeds from divestiture of businesses | 3,200 | 23,359 | |
Cash acquired in acquisition, net | 173,406 | ||
Cash paid for acquisitions, net | (16,319) | (104,192) | (3,500) |
Net cash provided by (used in) investing activities | (65,719) | 64,441 | (145,437) |
Financing activities | |||
Proceeds from issuance of 2021 Notes, net of issuance costs | 447,784 | ||
Premiums paid for Capped Call Confirmations | (36,616) | ||
Partial repurchase of 2020 Notes | (370,235) | ||
Proceeds from exercise of stock options | 31,211 | 24,423 | 23,923 |
Value of equity awards withheld for tax liability | (616) | (8,150) | |
Net cash provided by financing activities | 71,528 | 16,273 | 23,923 |
Net increase (decrease) in cash and cash equivalents during period | 14,454 | 103,373 | (75,995) |
Cash and cash equivalents at beginning of period | 229,138 | 125,765 | 201,760 |
Cash and cash equivalents at end of period | 243,592 | 229,138 | 125,765 |
Supplemental disclosures of cash flow information | |||
Cash paid for interest | 6,325 | 6,325 | |
Noncash transactions: | |||
Value of Class A common stock issued in connection with an acquisition | 1,883,728 | ||
Capitalized share-based compensation | 10,061 | 10,319 | 6,585 |
Write-off of fully depreciated property and equipment | 14,564 | $ 26,242 | $ 4,749 |
Write-off of fully amortized intangible assets | $ 9,293 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Note 1. Organization and Description of Business Zillow Group, Inc. operates the leading real estate and home-related information marketplaces on mobile and the web, with a complementary portfolio of brands and products to help people find vital information about homes and connect with local professionals. Zillow Group’s brands focus on all stages of the home lifecycle: renting, buying, selling and financing. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow, Trulia, StreetEasy, HotPads and Naked Apartments. In addition, Zillow Group works with tens of thousands of real estate agents, lenders and rental professionals, helping maximize business opportunities and connect to millions of consumers. We also own and operate a number of brands for real estate, rental and mortgage professionals, including Mortech, dotloop, Bridge Interactive and Retsly. Zillow, Inc. was incorporated as a Washington corporation in December 2004, and we launched the initial version of our website, Zillow.com, in February 2006. Zillow Group, Inc. was incorporated as a Washington corporation in July 2014 in connection with our acquisition of Trulia, Inc. (“Trulia”). Upon the closing of the Trulia acquisition in February 2015, each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. Certain Significant Risks and Uncertainties We operate in a dynamic industry and, accordingly, can be affected by a variety of factors. For example, we believe that changes in any of the following areas could have a significant negative effect on us in terms of our future financial position, results of operations or cash flows: our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; rates of revenue growth; engagement and usage of our products; competition in our market; scaling and adaptation of existing technology and network infrastructure; management of our growth; our ability to attract and retain qualified employees and key personnel; protection of our brand and intellectual property; changes in government regulation affecting our business; intellectual property infringement and other claims; and protection of customers’ information and other privacy concerns, among other things. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Effective February 17, 2015, Zillow Group acquired Trulia, and each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. For financial reporting and accounting purposes, Zillow was the acquirer of Trulia. The results presented in the Consolidated Financial Statements and the Notes to Consolidated Financial Statements reflect those of Zillow prior to the completion of the acquisition of Trulia on February 17, 2015, and Trulia’s results of operations have been included prospectively after February 17, 2015. Market Leader revenue is included in our results of operations from February 17, 2015 through the date of divestiture of September 30, 2015. We have given retroactive effect to prior period share and per share amounts in our consolidated financial statements for the effect of the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common stock shareholders so that prior periods are comparable to current period presentation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, website development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and goodwill, among others. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected. Reclassifications Certain immaterial reclassifications have been made in the consolidated balance sheets and statements of cash flows to conform data for prior periods to the current format. Concentrations of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents, investments and accounts receivable. We place cash and cash equivalents and investments with major financial institutions, which management assesses to be of high credit quality, in order to limit exposure of our investments. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. Further, our credit risk on accounts receivable is mitigated by the relatively short payment terms that we offer. Collateral is not required for accounts receivable. We maintain an allowance for doubtful accounts such that receivables are stated at net realizable value. Cash and Cash Equivalents Cash includes demand deposits with banks or financial institutions. Cash equivalents include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Our cash equivalents include only investments with original maturities of three months or less. We regularly maintain cash in excess of federally insured limits at financial institutions. Restricted Cash Restricted cash consists of certificates of deposit held as collateral in our name at a financial institution related to certain of our operating leases. Investments Our investments consist of fixed income securities, which include U.S. and foreign government agency securities, corporate notes and bonds, municipal securities, commercial paper and certificates of deposit, and are classified as available-for-sale securities beginning on January 1, 2015. As the investments are available to support current operations, our available-for-sale securities are classified as short-term investments. Available-for-sale securities are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive loss in shareholders’ equity, while realized gains and losses and other-than-temporary impairments are reported as a component of net loss based on specific identification. An impairment charge is recorded in the consolidated statements of operations for declines in fair value below the cost of an individual investment that are deemed to be other than temporary. We assess whether a decline in value is temporary based on the length of time that the fair market value has been below cost, the severity of the decline and the intent and ability to hold or sell the investment. We did not identify any investments as other-than-temporarily impaired as of December 31, 2016 or 2015. Prior to January 1, 2015 our investments were classified as held-to-maturity and were recorded at amortized cost (see Note 4). Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are generally due within 30 days and are recorded net of the allowance for doubtful accounts. We consider accounts outstanding longer than the contractual terms past due. We review accounts receivable on a regular basis and estimate an amount of losses for uncollectible accounts based on our historical collections experience, age of the receivable, knowledge of the customer and the condition of the general economy and industry as a whole. We record changes in our estimate to the allowance for doubtful accounts through bad debt expense and relieve the allowance when accounts are ultimately determined to be uncollectible. Bad debt expense is included in general and administrative expenses. Property and Equipment Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. The useful lives are as follows: Computer equipment 3 years Office equipment, furniture and fixtures 5 to 7 years Leasehold improvements Shorter of expected useful life or lease term Maintenance and repair costs are charged to expense as incurred. Major improvements, which extend the useful life of the related asset, are capitalized. Upon disposal of a fixed asset, we record a gain or loss based on the differences between the proceeds received and the net book value of the disposed asset. Website and Software Development Costs The costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental and deemed by management to be significant, are capitalized in property and equipment and amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs, including those costs in the post-implementation stages, are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the website or software that result in added functionality, in which case the costs are capitalized and amortized on a straight-line basis over the estimated useful lives. Amortization expense related to capitalized website and software development costs is included in technology and development expense. Capitalized development activities placed in service are amortized over the expected useful lives of those releases, currently estimated at one year. The estimated useful lives of website and software development activities are reviewed frequently and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades and/or enhancements to the existing functionality. Goodwill Goodwill represents the excess of the cost of an acquired business over the fair value of the assets acquired at the date of acquisition. We assess the impairment of goodwill on an annual basis, in our fourth quarter, or whenever events or changes in circumstances indicate that goodwill may be impaired. We assess goodwill for possible impairment by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we determine that it is not more likely than not that the fair value of our reporting unit is less than its carrying amount, then the first and second steps of the goodwill impairment test are unnecessary. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we perform the two-step goodwill impairment test. The first step of the goodwill impairment test identifies if there is potential goodwill impairment. If step one indicates that an impairment may exist, a second step is performed to measure the amount of the goodwill impairment, if any. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced to fair value through an impairment charge recorded in our statements of operations. Intangible Assets We purchase and license data content from multiple data providers. This data content consists of U.S. county data about home details (e.g., the number of bedrooms, bathrooms, square footage) and other information relating to the purchase price of homes, both current and historical, as well as imagery, mapping and parcel data that is displayed on our mobile applications and websites. Our home details data not only provides information about a home and its related transactions which is displayed on our mobile applications and websites, but is also used in our proprietary valuation algorithms to produce Zestimates, Rent Zestimates and Zillow Home Value Indexes. License agreement terms vary by vendor. In some instances, we retain perpetual rights to this information after the contract ends; in other instances, the information and data are licensed only during the fixed term of the agreement. Additionally, certain data license agreements provide for uneven payment amounts throughout the life of the contract term. We capitalize payments made to third parties for data licenses that we expect to provide future economic benefit through the recovery of the costs of these arrangements via the generation of our revenue and margins. For data license contracts that include uneven payment amounts, we capitalize the payments as they are made as an intangible asset and amortize the total contract value over the estimated useful life. For contracts in which we have perpetual rights to the data, the total contract value is amortized on a straight-line basis over the life of the contract plus two years, which is equivalent to the estimated useful life of the asset. For contracts in which we do not have access to the data beyond the contractual term, the total contract value is amortized on a straight line basis over the term of the contract. We evaluate data content contracts for potential capitalization at the inception of the arrangement as well as each time periodic payments to third parties are made. The amortization period for the capitalized purchased content is based on our best estimate of the useful life of the asset, which ranges from approximately 4.5 to nine years. The determination of the useful life includes consideration of a variety of factors including, but not limited to, our assessment of the expected use of the asset and contractual provisions that may limit the useful life, as well as an assessment of when the data is expected to become obsolete based on our estimates of the diminishing value of the data over time. We evaluate the useful life of the capitalized purchased data content each reporting period to determine whether events and circumstances warrant a revision to the remaining useful life. If we determine the estimate of the asset’s useful life requires modification, the carrying amount of the asset is amortized prospectively over the revised useful life. The capitalized purchased data content is amortized on a straight-line basis as the pattern of delivery of the economic benefits of the data cannot reliably be determined because we do not have the ability to reliably predict future traffic to our websites and mobile applications. Under certain other data agreements, the underlying data is obtained on a subscription basis with consistent monthly or quarterly recurring payment terms over the contractual period. Upon the expiration of such arrangements, we no longer have the right to access the related data, and therefore, the costs incurred under such contracts are not capitalized and are expensed as payments are made. We would immediately lose rights to data under these arrangements if we were to cancel the subscription and/or cease making payments under the subscription arrangements. We also capitalize costs related to the license of certain internal-use software from third parties, including certain licenses of software in cloud computing arrangements. Additionally, we capitalize costs incurred during the application development stage related to the development of internal-use software and enterprise cloud computing services. We expense costs as incurred related to the planning and post-implementation phases of development. Capitalized internal-use software costs are amortized over the estimated useful life of the asset, which is currently three years, on a straight-line basis. We also have intangible assets for developed technology, customer relationships, trade names and trademarks, advertising relationships and MLS home data feeds which we recorded in connection with acquisitions. Purchased intangible assets with a determinable economic life are carried at cost, less accumulated amortization. These intangible assets are amortized over the estimated useful life of the asset on a straight-line basis. Recoverability of Intangible Assets with Definite Lives and Other Long-Lived Assets We evaluate intangible assets and other long-lived assets for impairment whenever events or circumstances indicate that they may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset group to future undiscounted net cash flows expected to be generated. We group assets for purposes of such review at the lowest level for which identifiable cash flows of the asset group are largely independent of the cash flows of the other groups of assets and liabilities. If this comparison indicates impairment, the amount of impairment to be recognized is calculated as the difference between the carrying value and the fair value of the asset group. Deferred Revenue Deferred revenue consists of prepaid advertising fees received or billed in advance of the delivery or completion of the services, prepaid but unrecognized subscription revenue, and for amounts received in instances when revenue recognition criteria have not been met. Deferred revenue is recognized when the services are provided and all revenue recognition criteria have been met. Deferred Rent For our operating leases, we recognize rent expense on a straight-line basis over the terms of the leases and, accordingly, we record the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. For office space under an operating lease that is subleased to a third party for which we intend to reoccupy the space at a future date, rent expense is recognized net of sublease income. Landlord-funded leasehold improvements are also recorded as deferred rent liabilities and are amortized as a reduction of rent expense over the non-cancelable term of the related operating lease. Business Combinations We recognize identifiable assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions for the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent that we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. We recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Revenue Recognition In general, we recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. We consider a signed agreement, a binding insertion order or other similar documentation reflecting the terms and conditions under which products or services will be provided to be persuasive evidence of an arrangement. Collectability is assessed based on a number of factors, including payment history and the creditworthiness of a customer. If it is determined that collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. We generate revenue from the sale of advertising services and our suite of tools to businesses and professionals primarily associated with the real estate and mortgage industries. These professionals include local real estate professionals, mortgage professionals and brand advertisers. Our two revenue categories are marketplace revenue and display revenue. Incremental direct costs incurred related to the acquisition or origination of a customer contract in a transaction that results in the deferral of revenue are expensed as incurred. Marketplace Revenue. Premier Agent revenue is derived from our Premier Agent program. Our Premier Agent program offers a suite of marketing and business technology products and services to help real estate achieve their advertising needs, which growing their businesses and personal brands. All Premier Agents receive access to a dashboard portal on our website that provides individualized program performance analytics and our free customer relationship management, or CRM, tool that captures detailed information about each contact made with a Premier Agent through our mobile and web platforms. From 2012 through the end of the third quarter of 2016, we had primarily charged customers for our Premier Agent product based on the number of impressions delivered on our buyer’s agent list in zip codes purchased and a contracted maximum cost per impression. Our Premier Agent product includes multiple deliverables which are accounted for as a single unit of accounting, as the delivery or performance of the undelivered elements is based on traffic to our mobile applications and websites. With this pricing method, we recognized revenue related to our impression-based Premier Agent product based on the lesser of (i) the actual number of impressions delivered on our buyer’s agent list during the period multiplied by the contracted maximum cost per impression, or (ii) the contractual maximum spend on a straight-line basis during the contractual period over which the services are delivered, typically over a period of six months or twelve months and then month-to-month thereafter. In 2016, we began testing and implementation of a new auction-based pricing method for our Premier Agent product by which we determine the cost per impression delivered in each zip code based upon the total amount spent by Premier Agents to purchase impressions in the zip code during the month. The cost per impression that we charge is dynamic—as demand for impressions in a zip code increases or decreases, the cost per impression in that zip code may be increased or decreased. This new auction-based pricing method complements our self-serve account interface, which we introduced to Premier Agents over the course of 2016. The interface includes account management tools that allow agent advertisers to independently control their budgets, impression buys, and the duration of their advertising commitment. We began testing this auction-based pricing method for our Premier Agent product to better align our revenue opportunities with increasing traffic levels to our mobile and web platforms and leveraging increasing demand by real estate agents for access to home shoppers who use our mobile applications and websites. In the fourth quarter of 2016, we applied this method broadly to our existing agent advertisers. With this auction-based pricing method, we recognize revenue related to our dynamic impression-based Premier Agent product based on the contractual maximum spend on a straight-line basis during the contractual period over which the services are delivered. We are unable to predict whether this change to our pricing method will have a material impact on net sales, revenue, or other results of operations. In our history of building our real estate and other marketplaces and product offerings, we have continually evaluated and utilized various pricing and value delivery strategies in order to better align our revenue opportunities with the growth in usage of our mobile and web platforms. We continue to support some legacy Trulia Premier Agent products, which are primarily sold on a fixed fee subscription basis for periods that generally range from six months to 12 months, and include Trulia Seller Ads, which enable real estate professionals to generate leads from consumers interested in selling their homes. Subscription advertising revenue for Trulia’s products included in Premier Agent revenue is recognized on a straight-line basis during the contractual period over which the services are delivered. Other real estate revenue primarily includes revenue generated by Zillow Group Rentals, which includes our rentals marketplace and suite of tools for rental professionals, as well as revenue from the sale of various other marketing products and a suite of tools to real estate professionals. Rentals revenue primarily includes advertising sold to property managers and other rental professionals on a cost per lead and cost per lease generated basis. We recognize revenue as leads are delivered to rental professionals or as qualified leases are confirmed. Mortgages revenue primarily includes marketing products sold to mortgage professionals on a cost per lead basis, including our Long Form and Custom Quote services. Mortgages revenue also includes revenue generated by Mortech, which provides subscription-based mortgage related software solutions, including a product and pricing engine and lead management platform, for which we recognize revenue on a straight-line basis during the contractual period over which the services are delivered. For our Long Form and Custom Quote cost per lead mortgage marketing products, generally participating qualified mortgage professionals make a prepayment to gain access to consumers interested in connecting with mortgage professionals. Through Long Form, consumers answer a series of questions to find a local lender, and mortgage professionals receive consumer contact information. Consumers who request rates for mortgage loans in Custom Quotes are presented with customized quotes from participating mortgage professionals. We only charge mortgage professionals a fee when users contact mortgage professionals through Long Form or when users contact mortgage professionals for more information regarding a mortgage loan quote in Custom Quotes. Mortgage professionals who exhaust their initial prepayment can then prepay additional funds to continue to participate in the marketplace. We recognize revenue when a user contacts a mortgage professional through Zillow Group’s mortgages platform. Market Leader revenue primarily includes revenue from the sale of a comprehensive premium software-as-a-service based marketing product typically sold to real estate professionals as a bundle of products under a fixed fee subscription. Market Leader became part of Zillow Group through Zillow Group’s February 2015 acquisition of Trulia and was divested as of September 30, 2015. Display Revenue. There were no customers that generated 10% or more of our total revenue in the years ended December 31, 2016, 2015 or 2014. Cost of Revenue Our cost of revenue consists of expenses related to operating our mobile applications and websites, including associated headcount expenses, such as salaries and benefits and share-based compensation expense and bonuses, as well as credit card fees, ad serving costs paid to third parties, revenue-sharing costs related to our commercial business relationships, multiple listing services fees and costs associated with the operation of our data center and customer websites. Technology and Development Research and development costs are expensed as incurred and are recorded in technology and development expenses. These costs consist primarily of technology and development headcount expenses, including salaries, bonuses, benefits and share-based compensation expense for employees engaged in the design, development and testing of our mobile applications and websites. For the years ended December 31, 2016, 2015 and 2014, expenses attributable to research and development for our business totaled $224.7 million, $163.8 million and $72.9 million, respectively. Technology and development expenses also include amortization costs related to capitalized website and development activities, amortization of certain intangibles and other data agreement costs related to the purchase of data used to populate our mobile applications and websites, and amortization of intangible assets recorded in connection with acquisitions. Share-Based Compensation We measure compensation expense for all share-based awards at fair value on the date of grant and recognize compensation expense over the service period on a straight-line basis for awards expected to vest. We use the Black-Scholes-Merton option-pricing model to determine the fair value for option awards. In valuing our option awards, we make assumptions about risk-free interest rates, dividend yields, volatility, and weighted-average expected lives, including estimated forfeiture rates. Risk-free interest rates are derived from U.S. Treasury securities as of the option award grant date. Expected dividend yield is based on our historical cash dividend payments, which have been zero to date. The expected volatility for our Class A common stock and Class C capital stock is estimated using our historical volatility. The weighted-average expected life of the option awards is estimated based on our historical exercise data. Forfeiture rates are estimated using historical actual forfeiture trends as well as our judgment of future forfeitures. These rates are evaluated at least quarterly and any change in share-based compensation expense is recognized in the period of the change. The estimation of option awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period the estimates are revised. We consider many factors when estimating expected forfeitures, including employee class and historical experience. Actual results, and future changes in estimates, may differ substantially from management’s current estimates. For issuances of restricted stock awards, restricted stock units and restricted units, we determine the fair value of the award based on the market value of our Class A common stock or Class C capital stock, as applicable, at the date of grant. Advertising Costs Advertising costs are expensed as incurred. For the years ended December 31, 2016, 2015 and 2014, expenses attributable to advertising totaled $120.2 million, $103.4 million, and $73.1 million, respectively. Advertising costs are recorded in sales and marketing expenses. Income Taxes We use the asset and liability approach for accounting and reporting income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. A valuation allowance against deferred tax assets would be established if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets are not expected to be realized. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. Interest and penalties related to unrecognized tax benefits are recorded as income tax expense. Recently Issued Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance simplifying the test for goodwill impairment. This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted. This guidance must be applied on a prospective basis. We expect to adopt this guidance for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows. In December 2016, the FASB issued amendments to address various technical corrections and improvements. Most of the amendments are effective upon issuance, while six of the amendments require transition guidance. The amendments applicable to our business have been adopted for the year ended December 31, 2016. The adoption of these amendments did not have a material impact on our financial position, results of operations or cash flows. In December 2016, the FASB issued guidance to narrow the definition of a business. This standard provides guidance to assist entities with evaluating when a set of transferred assets and activities is a business. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. This guidance must be applied prospectively to transactions occurring within the period of adoption. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows. In November 2016, the FASB issued guidance on the classification and presentation of changes in restricted cash on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our statements of cash flows. In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effecti |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 3. Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require. We applied the following methods and assumptions in estimating our fair value measurements: Cash equivalents— Investments The following tables present the balances of assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands): December 31, 2016 Total Level 1 Level 2 Cash equivalents: Money market funds $ 166,527 $ 166,527 $ — Certificates of deposit 460 — 460 Short-term investments: U.S. government agency securities 162,312 — 162,312 Corporate notes and bonds 61,483 — 61,483 Commercial paper 14,952 — 14,952 Municipal securities 11,912 — 11,912 Certificates of deposit 6,226 — 6,226 Foreign government securities 5,985 — 5,985 Restricted cash 1,053 — 1,053 Total $ 430,910 $ 166,527 $ 264,383 December 31, 2015 Total Level 1 Level 2 Cash equivalents: Money market funds $ 195,870 $ 195,870 $ — Certificates of deposit 1,622 — 1,622 Short-term investments: U.S. government agency securities 193,168 — 193,168 Corporate notes and bonds 41,314 — 41,314 Municipal securities 39,853 — 39,853 Certificates of deposit 11,837 — 11,837 Foreign government securities 4,979 — 4,979 Restricted cash 3,015 — 3,015 Total $ 491,658 $ 195,870 $ 295,788 See Note 11 for the carrying amount and estimated fair value of the Company’s Convertible Senior Notes due in 2021 and Trulia’s Convertible Senior Notes due in 2020. We did not have any Level 3 assets as of December 31, 2016 or 2015. There were no liabilities measured at fair value as of December 31, 2016 or 2015. |
Cash, Cash Equivalents, Investm
Cash, Cash Equivalents, Investments and Restricted Cash | 12 Months Ended |
Dec. 31, 2016 | |
Text Block [Abstract] | |
Cash, Cash Equivalents, Investments and Restricted Cash | Note 4. Cash, Cash Equivalents, Investments and Restricted Cash On January 1, 2015, we transferred our cash equivalent and investment portfolio of approximately $440.8 million from held-to-maturity to available-for-sale, which resulted in the recognition of an immaterial loss. The transfer of the investment portfolio to available-for-sale was made to provide increased flexibility in the use of our investments to support current operations. The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash and cash equivalents, available-for-sale investments and restricted cash as of the dates presented (in thousands): December 31, 2016 Amortized Gross Gross Estimated Cash $ 76,605 $ — $ — $ 76,605 Cash equivalents: Money market funds 166,527 — — 166,527 Certificates of deposit 460 — — 460 Short-term investments: U.S. government agency securities 162,438 31 (157 ) 162,312 Corporate notes and bonds 61,530 3 (50 ) 61,483 Commercial paper 14,952 — — 14,952 Municipal securities 11,925 — (13 ) 11,912 Certificates of deposit 6,226 — — 6,226 Foreign government securities 5,995 — (10 ) 5,985 Restricted cash 1,053 — — 1,053 Total $ 507,711 $ 34 $ (230 ) $ 507,515 December 31, 2015 Amortized Gross Gross Estimated Cash $ 31,646 $ — $ — $ 31,646 Cash equivalents: Money market funds 195,870 — — 195,870 Certificates of deposit 1,622 — — 1,622 Short-term investments: U.S. government agency securities 193,623 1 (456 ) 193,168 Corporate notes and bonds 41,390 1 (77 ) 41,314 Municipal securities 39,878 11 (36 ) 39,853 Certificates of deposit 11,839 1 (3 ) 11,837 Foreign government securities 4,985 — (6 ) 4,979 Restricted cash 3,015 — — 3,015 Total $ 523,868 $ 14 $ (578 ) $ 523,304 The following table presents available-for-sale investments by contractual maturity date as of December 31, 2016 (in thousands): Amortized Cost Estimated Fair Market Value Due in one year or less $ 206,815 $ 206,763 Due after one year through two years 56,251 56,107 Total $ 263,066 $ 262,870 |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Accounts Receivable, Net | Note 5. Accounts Receivable, Net The following table presents the detail of accounts receivable as of the dates presented (in thousands): December 31, 2016 2015 Accounts receivable $ 32,258 $ 30,740 Unbilled accounts receivable 9,606 2,427 Less: allowance for doubtful accounts (1,337 ) (3,378 ) Accounts receivable, net $ 40,527 $ 29,789 The following table presents the changes in the allowance for doubtful accounts for the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Allowance for doubtful accounts: Balance, beginning of period $ 3,378 $ 2,811 $ 1,850 Additions charged to expense 2,681 3,235 2,529 Less: write-offs, net of recoveries and other adjustments (4,722 ) (2,668 ) (1,568 ) Balance, end of period $ 1,337 $ 3,378 $ 2,811 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 6. Property and Equipment, Net The following table presents the detail of property and equipment as of the dates presented (in thousands): December 31, 2016 2015 Website development costs $ 102,130 $ 74,750 Computer equipment 28,175 20,965 Leasehold improvements 37,923 32,918 Construction-in-progress 19,470 15,630 Office equipment, furniture and fixtures 19,254 13,495 Property and equipment 206,952 157,758 Less: accumulated amortization and depreciation (108,664 ) (72,235 ) Property and equipment, net $ 98,288 $ 85,523 We recorded depreciation expense related to property and equipment (other than website development costs) of $15.6 million, $12.2 million and $6.1 million, respectively, during the years ended December 31, 2016, 2015 and 2014. We capitalized $49.5 million, $46.1 million and $22.2 million, respectively, in website development costs during the years ended December 31, 2016, 2015 and 2014. Amortization expense for website development costs included in technology and development expenses was $40.0 million, $23.9 million and $18.3 million, respectively, for the years ended December 31, 2016, 2015 and 2014. Construction-in-progress primarily consists of website development costs that are capitalizable, but for which the associated applications had not been placed in service. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Note 7. Acquisitions Acquisition of Bridge Interactive Group In July 2016, Zillow, Inc., Bridge Interactive Group, LLC, a Georgia limited liability company (“Bridge Interactive”), each of the members of Bridge Interactive, and an individual acting as the seller representative, entered into a Securities Purchase Agreement pursuant to which Zillow, Inc. acquired all of the outstanding ownership interests of Bridge Interactive on August 1, 2016. Bridge Interactive is a creator of broker and multiple listing service (MLS) back-office software. Our acquisition of Bridge Interactive has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of August 1, 2016. Acquisition-related costs incurred, which primarily included legal and accounting fees and other external costs directly related to the acquisition, were expensed as incurred and were not material. The results of operations related to the acquisition of Bridge Interactive have been included in our consolidated financial statements since the date of acquisition, and are not significant. Pro forma financial information for the acquisition accounted for as a business combination has not been presented, as the effects were not material to our consolidated financial statements. Acquisition of Naked Apartments In February 2016, Zillow, Inc., Nectarine Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Zillow, Inc. (“Merger Sub”), Naked Apartments, Inc., a Delaware corporation (“Naked Apartments”), and an individual acting as the stockholder representative, entered into an Agreement and Plan of Merger (the “Naked Apartments Merger Agreement”), pursuant to which Zillow, Inc. acquired Naked Apartments on February 22, 2016 for approximately $13.2 million in cash. Under the terms and subject to the conditions of the Naked Apartments Merger Agreement, Merger Sub merged with and into Naked Apartments, with Naked Apartments remaining as the surviving company and a wholly owned subsidiary of Zillow, Inc. Naked Apartments is New York City’s largest rentals-only platform. Our acquisition of Naked Apartments has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of February 22, 2016. Goodwill, which represents the expected synergies from combining the acquired assets and the operations of the acquirer, as well as intangible assets that do not qualify for separate recognition, is measured as of the acquisition date as the excess of consideration transferred, which is also measured at fair value, and the net of the fair values of the assets acquired and the liabilities assumed as of the acquisition date. The total purchase price has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date. Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands): Current assets $ 371 Identifiable intangible assets 3,700 Goodwill 10,610 Current liabilities (101 ) Deferred tax liabilities (1,416 ) Total preliminary estimated purchase price $ 13,164 Our estimates and assumptions related to the purchase price allocation are preliminary and subject to change during the measurement period (up to one year from the acquisition date) as we finalize the amount of deferred taxes recorded in connection with the acquisition. Acquisition-related costs incurred, which primarily included legal and accounting fees and other external costs directly related to the acquisition, were expensed as incurred and were not material. The results of operations related to the acquisition of Naked Apartments have been included in our consolidated financial statements since the date of acquisition, and are not significant. Pro forma financial information for the acquisition accounted for as a business combination has not been presented, as the effects were not material to our consolidated financial statements. Acquisition of Trulia Effective February 17, 2015, pursuant to the Merger Agreement dated as of July 28, 2014 by and among Zillow, Zillow Group and Trulia, following the consummation of the transactions contemplated by the Merger Agreement, each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. With the addition of Trulia, we expanded our audience and added another consumer brand that offers buyers, sellers, homeowners and renters access to information about homes and real estate for free, and provides advertising and software solutions that help real estate professionals grow their business. At the effective time of the merger, each share of Zillow Class A common stock was converted into the right to receive one share of fully paid and nonassessable Zillow Group Class A common stock, and each share of Zillow Class B common stock was converted into the right to receive one share of fully paid and nonassessable Zillow Group Class B common stock. Generally, each Zillow stock option and restricted stock unit outstanding (whether or not vested or exercisable) as of the effective time of the merger was assumed by Zillow Group and converted into a corresponding equity award to purchase or acquire shares of Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original option or award. Any unvested shares of Zillow Class A common stock subject to a repurchase option, risk of forfeiture or other condition as of the effective time of the merger were exchanged for shares of Zillow Group Class A common stock that were also unvested and subject to the same repurchase option, risk of forfeiture or other condition. Each Zillow restricted unit outstanding as of the effective time of the merger was assumed by Zillow Group and converted into the right to receive Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original restricted unit. At the effective time of the merger, each share of Trulia common stock was converted into the right to receive 0.444 of a share of fully paid and nonassessable Zillow Group Class A common stock. Generally, each Trulia stock option, restricted stock unit, and stock appreciation right outstanding (whether or not vested or exercisable) as of the effective time of the merger was assumed by Zillow Group and converted into a corresponding equity award to purchase, acquire shares of, or participate in the appreciation in the price of Zillow Group Class A common stock, subject to the same terms, conditions and restrictions as the original option or award, subject to specified adjustments to reflect the effect of the Trulia exchange ratio. Each outstanding unvested Trulia stock option and restricted stock unit held by a member of the Trulia board of directors immediately prior to the effective time of the merger who was not an employee of Trulia or any subsidiary of Trulia became fully vested immediately prior to the effective time of the merger in accordance with the terms of the applicable award agreements. Our acquisition of Trulia has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of February 17, 2015. Goodwill, which represents the expected synergies from combining the acquired assets and the operations of the acquirer, as well as intangible assets that do not qualify for separate recognition, is measured as of the acquisition date as the excess of consideration transferred, which is also measured at fair value, and the net of the fair values of the assets acquired and the liabilities assumed as of the acquisition date. In all cases in which Zillow Group’s closing stock price is a determining factor in arriving at the amount of merger consideration, the stock price assumed is the closing price of Zillow Class A common stock on NASDAQ on February 17, 2015 ($109.14 per share, unadjusted for the August 2015 stock split effected in the form of a dividend). The purchase price to effect the acquisition of Trulia of approximately $2.0 billion is summarized in the following table (in thousands): Value of Class A common stock issued $ 1,883,728 Substituted stock options and stock appreciation rights assumed by Zillow Group attributable to pre-combination service 54,853 Substituted restricted stock units assumed by Zillow Group attributable to pre-combination service 27,798 Cash paid in lieu of fractional outstanding shares 41 Total purchase price $ 1,966,420 A total of 17,259,704 shares of Zillow Group Class A common stock were issued in connection with the acquisition of Trulia. Trulia stockholders did not receive any fractional shares of Zillow Group Class A common stock in connection with the acquisition. Instead of receiving any fractional shares, each holder of Trulia common stock was paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ on the last complete trading day prior to the date of the effective time of the merger. A portion of the purchase price has been attributed to the substitution of Trulia’s stock options, restricted stock units and stock appreciation rights outstanding as of February 17, 2015, for corresponding stock options, restricted stock units and stock appreciation rights to purchase, vest in or participate in the appreciation in the price of shares of Zillow Group Class A common stock, all at an exchange ratio of 0.444. The fair value of Trulia’s share-based awards assumed in connection with the acquisition, including stock options, restricted stock units and stock appreciation rights, which relate to post-combination service will be recorded by Zillow Group as share-based compensation expense ratably over the remaining related vesting period of the respective award. The share-based compensation expense related to stock options and stock appreciation rights assumed is estimated at the acquisition date using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 53%, a risk-free interest rate of 1.10%, and an expected life of three years. For restricted stock units assumed, Zillow Group used the market value of Zillow’s Class A common stock on the date of acquisition to determine the fair value of the award. The total purchase price has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date. Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands): Cash and cash equivalents $ 173,447 Accounts receivable 13,093 Prepaid expenses and other current assets 20,833 Restricted cash 6,946 Property and equipment 30,189 Other assets 434 Identifiable intangible assets 549,000 Goodwill 1,736,362 Accounts payable, accrued expenses and other current liabilities (51,258 ) Accrued compensation and benefits (8,324 ) Deferred revenue (8,300 ) Long-term debt (230,000 ) Debt premium recorded in additional paid-in capital (126,386 ) Deferred tax liabilities and other long-term liabilities (139,616 ) Total purchase price $ 1,966,420 The fair value of identifiable intangible assets acquired consisted of the following (in thousands): Estimated Fair Value Estimated Useful Life (in years) Trulia trade names and trademarks $ 351,000 Indefinite Market Leader trade names and trademarks 2,000 2 Customer relationships 92,000 3-7 Developed technology 91,000 3-7 Advertising relationships 9,000 3 MLS home data feeds 4,000 3 Total $ 549,000 The fair value of the intangible assets acquired was determined by Zillow Group, and Zillow Group considered or relied in part upon a valuation report of a third-party expert. Zillow Group used an income approach to measure the fair value of the trade names and trademarks and the developed technology based on the relief-from-royalty method. Zillow Group used an income approach to measure the fair value of the customer relationships based on the excess earnings method, whereby the fair value is estimated based upon the present value of cash flows that the applicable asset is expected to generate. Zillow Group used an income approach to measure the fair value of the advertising relationships based on a with and without analysis, whereby the fair value is estimated based on the present value of cash flows the combined business is expected to generate with and without the advertising relationships. Zillow Group used a cost approach to measure the fair value of the MLS home data feeds based on the estimated cost to replace the data feed library. These fair value measurements were based on Level 3 measurements under the fair value hierarchy. A portion of the total purchase price was allocated to Trulia’s 2020 Notes (see Note 11). In accordance with the accounting guidance related to business combinations, the 2020 Notes are recognized at fair value as of the effective date of the acquisition. The fair value of the 2020 Notes as of the date of acquisition was approximately $356.4 million. The fair value of the 2020 Notes as of the date of acquisition was determined by Zillow Group, and Zillow Group considered or relied in part upon a valuation report of a third-party expert. The fair value of the 2020 Notes was determined through combination of the use of a binomial lattice valuation model and consideration of quoted market prices. The fair value is classified as Level 3 due to the use of significant unobservable inputs such as implied volatility of Zillow Group’s Class A common stock, discount spread and the limited trading activity for the 2020 Notes. Given the fair value of the 2020 Notes as of the date of acquisition of $356.4 million was at a substantial premium to the principal amount of $230.0 million, the premium amount of $126.4 million has been recorded as additional paid-in capital in the consolidated balance sheet as of the effective date of the acquisition. Accordingly, Zillow Group has recognized the liability component of the 2020 Notes at the stated par amount in the consolidated balance sheet as of the effective date of the acquisition. The conversion feature included in the 2020 Notes is not required to be bifurcated and separately accounted for as it meets the equity scope exception given the conversion feature (i) is indexed to Zillow Group’s Class A common stock and (ii) would be classified in shareholder’s equity. Further, the 2020 Notes do not permit or require Zillow Group to settle the debt in cash (in whole or in part) upon conversion. A portion of the total purchase price was allocated to deferred tax liabilities primarily related to an indefinite-lived intangible asset generated in connection with the acquisition. Due to the recognition of a $351.0 million indefinite-lived Trulia trade name and trademark intangible asset as of the effective date of the acquisition, a deferred tax liability of $139.5 million was recognized which cannot be offset by the recognized deferred tax assets. The results of operations related to the acquisition of Trulia have been included in our consolidated financial statements since the date of acquisition of February 17, 2015. However, disclosure of the amounts of revenue and earnings of the acquiree since the acquisition date is impracticable because discrete financial information is not available due to the rapid integration of Zillow’s and Trulia’s operations. Unaudited Pro Forma Financial Information The following unaudited pro forma condensed combined financial information gives effect to the acquisition of Trulia as if it were consummated on January 1, 2014 (the beginning of the comparable prior reporting period in the year of acquisition). The unaudited pro forma condensed combined financial information is presented for informational purposes only. The unaudited pro forma condensed combined financial information does not represent true historical financial information. Further, the unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on January 1, 2014 and should not be taken as representative of future results of operations of the combined company. The following table presents the unaudited pro forma condensed combined financial information for the periods presented, except for the financial information presented for the year ended December 31, 2016 which is presented on an as-reported basis (in thousands): Year Ended December 31, 2016 2015 (1) Revenue $ 846,589 $ 679,935 Net loss $ (220,438 ) $ (91,055 ) (1) The pro forma net loss for the year ended December 31, 2015 includes pro forma adjustments for $49.3 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $37.3 million to eliminate share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $35.7 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements and $2.4 million to record additional amortization expense for acquired intangible assets. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 8. Goodwill The following table presents the change in goodwill from December 31, 2015 through December 31, 2016 (in thousands): Balance as of December 31, 2015 $ 1,909,167 Goodwill recorded in connection with the acquisition of Naked Apartments 10,610 Goodwill recorded in connection with the acquisition of Bridge Interactive 4,899 Reduction of goodwill in connection with the divestiture of a business (1,196 ) Balance as of December 31, 2016 $ 1,923,480 The goodwill recorded in connection with the acquisitions of Naked Apartments and Bridge Interactive, which includes intangible assets that do not qualify for separate recognition, is not deductible for tax purposes. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 9. Intangible Assets The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands): December 31, 2016 Cost Accumulated Net Purchased content $ 35,205 $ (15,508 ) $ 19,697 Software 9,712 (4,773 ) 4,939 Customer relationships 103,200 (30,952 ) 72,248 Developed technology 110,080 (36,341 ) 73,739 Trade names and trademarks 4,900 (2,877 ) 2,023 Advertising relationships 9,000 (5,598 ) 3,402 MLS home data feeds 1,100 (684 ) 416 Total $ 273,197 $ (96,733 ) $ 176,464 December 31, 2015 Cost Accumulated Net Purchased content $ 37,581 $ (19,649 ) $ 17,932 Software 6,961 (2,845 ) 4,116 Customer relationships 103,425 (16,204 ) 87,221 Developed technology 108,295 (19,515 ) 88,780 Trade names and trademarks 4,860 (2,212 ) 2,648 Advertising relationships 9,000 (2,598 ) 6,402 MLS home data feeds 1,100 (318 ) 782 Total $ 271,222 $ (63,341 ) $ 207,881 Amortization expense recorded for intangible assets for the years ended December 31, 2016, 2015 and 2014 was $44.9 million, $39.3 million and $11.1 million, respectively, and these amounts are included in technology and development expenses. Estimated future amortization expense for intangible assets, including amortization related to future commitments (see Note 16), as of December 31, 2016 is as follows (in thousands): 2017 $ 45,608 2018 39,243 2019 33,391 2020 32,525 2021 32,145 All future years 15,717 Total future amortization expense $ 198,629 As of December 31, 2016 and 2015, we have an indefinite-lived intangible asset for $351.0 million that we recorded in connection with our February 2015 acquisition of Trulia for Trulia’s trade names and trademarks that is not subject to amortization. See Note 7 for further details related to the acquisition. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Note 10. Accrued Expenses and Other Current Liabilities The following table presents the detail of accrued expenses and other current liabilities as of as of the dates presented (in thousands): December 31, 2016 2015 Accrued marketing and advertising $ 7,978 $ 9,663 Accrued purchased content 8,382 8,385 Accrued legal fees 2,257 7,784 Merger consideration payable to former stockholders of certain acquired entities 5,904 5,317 Other accrued expenses and other current liabilities 13,906 11,898 Total accrued expenses and other current liabilities $ 38,427 $ 43,047 |
Convertible Senior Notes
Convertible Senior Notes | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Note 11. Convertible Senior Notes Convertible Senior Notes due in 2021 On December 12, 2016, Zillow Group issued $460.0 million aggregate principal amount of 2.00% Convertible Senior Notes due 2021 (the “2021 Notes”), which amount includes the exercise in full of the $60.0 million over-allotment option, to Citigroup Global Markets Inc. as the initial purchaser of the 2021 Notes in a private offering to the initial purchaser in reliance on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) for resale to qualified institutional buyers as defined in, and pursuant to, Rule 144A under the Securities Act. The 2021 Notes bear interest at a fixed rate of 2.00% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2017. The 2021 Notes are convertible into cash, shares of our Class C capital stock or a combination thereof, at the Company’s election. The 2021 Notes will mature on December 1, 2021, unless earlier repurchased, redeemed, or converted in accordance with their terms. The net proceeds from the issuance of the 2021 Notes were approximately $447.8 million, after deducting fees and expenses. The Company used approximately $370.2 million of the net proceeds from the issuance of the 2021 Notes to repurchase a portion of the outstanding 2020 Notes (see additional information below under “Trulia’s Convertible Senior Notes due 2020”) in privately negotiated transactions. In addition, the Company used approximately $36.6 million of the net proceeds from the issuance of the 2021 Notes to pay the cost of the capped call transactions with the initial purchaser of the 2021 Notes and two additional financial institutions (“Capped Call Confirmations”) as discussed further below. The Company intends to use the remainder of the net proceeds for general corporate purposes. Prior to the close of business on the business day immediately preceding September 1, 2021, the 2021 Notes are convertible at the option of the holders of the 2021 Notes only under certain conditions. On or after September 1, 2021, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2021 Notes may convert their 2021 Notes at their option at the conversion rate then in effect, irrespective of these conditions. The Company will settle conversions of the 2021 Notes by paying or delivering, as the case may be, cash, shares of Class C capital stock, or a combination of cash and shares of Class C capital stock, at its election. The conversion rate will initially be 19.0985 shares of Class C capital stock per $1,000 principal amount of 2021 Notes (equivalent to an initial conversion price of approximately $52.36 per share of Class C capital stock). The conversion rate is subject to customary adjustments upon the occurrence of certain events. The Company may redeem for cash all or part of the 2021 Notes, at its option, on or after December 6, 2019, under certain circumstances at a redemption price equal to 100% of the principal amount of the 2021 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date (as defined in the indenture governing the 2021 Notes). The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock. If the Company undergoes a fundamental change (as defined in the indenture governing the 2021 Notes), holders of the 2021 Notes may require the Company to repurchase for cash all or part of their 2021 Notes at a repurchase price equal to 100% of the principal amount of the 2021 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (as defined in the indenture governing the 2021 Notes). In addition, if certain fundamental changes occur, the Company may be required in certain circumstances to increase the conversion rate for any 2021 Notes converted in connection with such fundamental changes by a specified number of shares of its Class C capital stock. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2021 Notes, as described in the indenture governing the notes. There are no financial covenants associated with the 2021 Notes. We may not redeem the 2021 Notes prior to December 6, 2019. We may redeem the 2021 Notes for cash, at our option, in whole or in part on or after December 6, 2019, if the last reported sale price per share of our Class C capital stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period. In accounting for the issuance of the 2021 Notes, the Company separated the 2021 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2021 Notes. The difference between the principal amount of the 2021 Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the consolidated balance sheet and amortized to interest expense using the effective interest method over the term of the 2021 Notes. The equity component of the 2021 Notes of approximately $91.4 million is included in additional paid-in capital in the consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The Company incurred transaction costs of approximately $12.2 million related to the issuance of the 2021 Notes, including approximately $11.5 million in fees to the initial purchaser, which amount was paid out of the gross proceeds from the note offering. In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the 2021 Notes. Transaction costs attributable to the liability component were recorded as a direct deduction from the related debt liability in the consolidated balance sheet and amortized to interest expense over the term of the 2021 Notes, and transaction costs attributable to the equity component were netted with the equity component in shareholders’ equity. Interest expense related to the 2021 Notes for the year ended December 31, 2016 was $1.3 million, which is comprised of approximately $0.9 million related to the amortization of debt discount and debt issuance costs and $0.5 million for the contractual coupon interest. The effective interest rate on the liability component of the 2021 Notes for the year ended December 31, 2016 is 7.44%. Accrued interest related to the 2021 Notes as of December 31, 2016 was $0.5 million, and is recorded in accrued expenses and other current liabilities in our consolidated balance sheet. The following table presents the outstanding principal amount and carrying value of the 2021 Notes as of December 31, 2016 (in thousands): Outstanding Unamortized Carrying 2021 Notes $ 460,000 $ (102,733 ) $ 357,267 As of December 31, 2016, the unamortized debt discount and debt issuance costs for the 2020 Notes will be amortized to interest expense over a remaining period of approximately 59 months. The estimated fair value of the 2021 Notes was $474.2 million as of December 31, 2016. The estimated fair value of the 2021 Notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for the 2021 Notes. The Capped Call Confirmations are expected generally to reduce the potential dilution of our Class C capital stock upon any conversion of 2021 Notes and/or offset the cash payments the Company is required to make in excess of the principal amount of the 2021 Notes in the event that the market price of the Class C capital stock is greater than the strike price of the Capped Call Confirmations (which initially corresponds to the initial conversion price of the 2021 Notes and is subject to certain adjustments under the terms of the Capped Call Confirmations), with such reduction and/or offset subject to a cap based on the cap price of the Capped Call Confirmations. The Capped Call Confirmations have an initial cap price of $69.19 per share, which represents a premium of approximately 85% over the closing price of the Company’s Class C capital stock on The NASDAQ Global Select Market on December 6, 2016, and is subject to certain adjustments under the terms of the Capped Call Confirmations. The Capped Call Confirmations will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2021 Notes, the number of shares of Class C capital stock that will underlie the 2021 Notes. In addition, the Capped Call Confirmations provide for the Company to elect, subject to certain conditions, for the Capped Call Confirmations to remain outstanding (with certain modifications) following its election to redeem the 2021 Notes, notwithstanding any conversions of 2021 Notes in connection with such redemption. The Capped Call Confirmations do not meet the criteria for separate accounting as a derivative as they are indexed to our own stock. The premiums paid for the Capped Call Confirmations have been included as a net reduction to additional paid-in capital within shareholders’ equity. Trulia’s Convertible Senior Notes due in 2020 In connection with the February 2015 acquisition of Trulia (see Note 7), a portion of the total purchase price was allocated to Trulia’s Convertible Senior Notes due in 2020 (the “2020 Notes”), which are unsecured senior obligations. Pursuant to and in accordance with the Merger Agreement, Zillow Group entered into a supplemental indenture in respect of the 2020 Notes in the aggregate principal amount of $230.0 million, which supplemental indenture provides, among other things, that, at the effective time of the Trulia Merger, (i) each outstanding 2020 Note is no longer convertible into shares of Trulia common stock and is convertible solely into shares of Zillow Group Class A common stock, pursuant to, and in accordance with, the terms of the indenture governing the 2020 Notes, and (ii) Zillow Group guaranteed all of the obligations of Trulia under the 2020 Notes and related indenture. The aggregate principal amount of the 2020 Notes is due on December 15, 2020 if not earlier converted or redeemed. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually on June 15 and December 15 of each year. In December 2016, the Company used approximately $370.2 million of the net proceeds from the issuance of the 2021 Notes discussed above to repurchase $219.9 million aggregate principal of the 2020 Notes in privately negotiated transactions. The repurchase of the 2020 Notes was accounted for as a debt extinguishment, and the consideration transferred was allocated between the liability and equity components by determining the intrinsic value of the conversion option immediately prior to the debt extinguishment and allocating that portion of the repurchase price to additional paid-in capital for $127.6 million with the residual repurchase price allocated to the liability component. The partial repurchase of the 2020 Notes resulted in the recognition of a $22.8 million loss on debt extinguishment for the year ended December 31, 2016. Holders of the 2020 Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding the maturity date. In connection with the supplemental indenture in respect of the 2020 Notes, the conversion ratio immediately prior to the effective time of the Trulia Merger of 27.8303 shares of Trulia common stock per $1,000 principal amount of notes was adjusted to 12.3567 shares of our Class A common stock per $1,000 principal amount of notes based on the exchange ratio of 0.444 per the Merger Agreement. This was equivalent to an initial conversion price of approximately $80.93 per share of our Class A common stock. In connection with the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common shareholders, the conversion ratio has been further adjusted to 41.4550 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $24.12 per share of our Class A common stock. The conversion ratio will be adjusted for certain dilutive events and will be increased in the case of corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture governing the notes). The conversion option of the 2020 Notes has no cash settlement provisions. The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock. The holders of the 2020 Notes will have the ability to require us to repurchase the notes in whole or in part upon the occurrence of an event that constitutes a “Fundamental Change” (as defined in the indenture governing the notes, including such events as a “change in control” or “termination of trading”, subject to certain exceptions). In such case, the repurchase price would be 100% of the principal amount of the 2020 Notes plus accrued and unpaid interest, if any, to, but excluding, the Fundamental Change repurchase date. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the notes. There are no financial covenants associated with the 2020 Notes. The 2020 Notes are redeemable, at our option, in whole or in part on or after December 20, 2018, if the last reported sale price per share of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period. Interest expense related to the 2020 Notes for the years ended December 31, 2016 and 2015 was $6.1 million and $5.5 million, respectively. Accrued interest related to the 2020 Notes as of December 31, 2016 was not material. Accrued interest related to the 2020 Notes as of December 31, 2015 was $0.3 million. Accrued interest is recorded in accrued expenses and other current liabilities in our consolidated balance sheet. The carrying value of the 2020 Notes was $10.1 million and $230.0 million, respectively, as of December 31, 2016 and 2015. The estimated fair value of the 2020 Notes was $17.3 million and $ 272.9 million, respectively, as of December 31, 2016 and 2015. The estimated fair value of the 2020 Notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for the 2020 Notes. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 12. Income Taxes We are subject to federal and state income taxes in the United States and in Canada. For the years ended December 31, 2016, 2015 and 2014, we did not have a material amount of current taxable income and, therefore, no material related tax liability or expense has been recorded in the consolidated financial statements. We recorded income tax expense of approximately $0.1 million for the year ended December 31, 2016. We recorded an income tax benefit of $4.6 million for the year ended December 31, 2015 primarily due to a deferred tax liability generated in connection with Zillow Group’s August 20, 2015 acquisition of DotLoop, Inc. that can be used to realize certain deferred tax assets for which we had previously provided a full allowance. The following table summarizes the components of our income tax benefit (expense) for the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Federal $ 1,248 $ 2,838 $ — State (1,378 ) 1,807 — Deferred income tax benefit (expense) $ (130 ) $ 4,645 $ — The following table presents a reconciliation of the federal statutory rate and our effective tax rate for the periods presented: Year Ended December 31, 2016 2015 2014 Tax expense at federal statutory rate (35.0 )% (35.0 )% (34.0 )% State income taxes, net of federal tax benefit (1.9 ) (2.3 ) (1.5 ) Nondeductible expenses 4.9 2.8 15.3 Share-based compensation (0.2 ) 1.2 0.7 Research and development credits (1.5 ) (4.1 ) (3.2 ) Divestiture of businesses — 2.3 — Other (0.9 ) (1.0 ) — Valuation allowance 34.7 33.1 22.7 Effective tax rate 0.1 % (3.0 )% 0.0 % Deferred federal, state and foreign income taxes reflect the net tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and such amounts for tax purposes. The following table presents the significant components of our deferred tax assets and liabilities as of the dates presented (in thousands): December 31, 2016 2015 Deferred tax assets: Federal and state net operating loss carryforwards $ 208,029 $ 162,521 Share-based compensation 67,482 45,969 Goodwill — 825 Depreciation and amortization 3,123 3,090 Start-up and organizational costs 300 369 Research and development credits 24,295 21,157 Other tax credits 1,358 1,358 Accruals and reserves 1,814 3,338 Deferred rent 5,882 5,228 Other deferred tax assets 14,544 550 Total deferred tax assets 326,827 244,405 Deferred tax liabilities: Website and software development costs (15,851 ) (13,851 ) Goodwill . (363 ) — Intangible assets (192,830 ) (200,082 ) Discount on 2021 Notes not deductible for tax (34,384 ) — Other deferred tax liabilities — (52 ) Net deferred tax assets before valuation allowance 83,399 30,420 Less: valuation allowance (217,351 ) (162,715 ) Net deferred tax liabilities $ (133,952 ) $ (132,295 ) Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. We have provided a full valuation allowance against the net deferred tax assets as of December 31, 2016 and 2015 because, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets will not be realized. The valuation allowance increased by $54.6 million and $125.5 million, respectively, during the years ended December 31, 2016 and 2015. We have accumulated federal tax losses of approximately $893.3 million and $735.2 million, respectively, as of December 31, 2016 and 2015, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $13.5 million and $11.6 million (tax effected), respectively, as of December 31, 2016 and 2015. As of December 31, 2016, approximately $337.6 million of our net operating loss carryforwards relate to tax deductible share-based compensation in excess of amounts recognized for financial reporting purposes. To the extent that net operating loss carryforwards, if realized, relate to share-based compensation, the resulting tax benefits will be recorded to shareholders’ equity rather than to the statement of operations. Additionally, we have net research and development credit carryforwards of $24.3 million and $17.2 million, respectively, as of December 31, 2016 and 2015, which are available to reduce future tax liabilities. The tax loss and research and development credit carryforwards begin to expire in 2025. Under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an ownership change, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income or income tax liability may be limited. In connection with our August 2013 public offering of our Class A Common stock, we experienced an ownership change that triggered Sections 382 and 383, which may limit our ability to utilize net operating loss and tax credit carryforwards. In connection with our February 2015 acquisition of Trulia, Trulia experienced an ownership change that triggered Section 382 and 383, which may limit Zillow Group’s ability to utilize Trulia’s net operating loss and tax credit carryforwards. We are currently not under audit in any tax jurisdiction. Tax years from 2013 through 2016 are currently open for audit by federal and state taxing authorities. Changes for unrecognized tax benefits for the periods presented are as follows (in thousands): Balance at January 1, 2014 $ 5,123 Gross increases—current period tax positions 1,946 Gross decreases—prior period tax positions (576 ) Balance at December 31, 2014 $ 6,493 Gross increases—prior and current period tax positions 3,577 Gross increases—assumed in connection with February 2015 acquisition of Trulia 3,910 Balance at December 31, 2015 $ 13,980 Gross increases—current period tax positions 2,619 Gross decreases—prior period tax positions (1,204 ) Balance at December 31, 2016 $ 15,395 At December 31, 2016, the total amount of unrecognized tax benefits of $15.4 million is recorded as a reduction to the deferred tax asset. We do not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. Accrued interest and penalties related to unrecognized tax benefits are recorded as income tax expense and are zero. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Shareholders' Equity | Note 13. Shareholders’ Equity Preferred Stock Our board of directors has the authority to fix and determine and to amend the number of shares of any series of preferred stock that is wholly unissued or to be established and to fix and determine and to amend the designation, preferences, voting powers and limitations, and the relative, participating, optional or other rights, of any series of shares of preferred stock that is wholly unissued or to be established, subject in each case to certain approval rights of holders of our outstanding Class B common stock. There was no preferred stock issued and outstanding as of December 31, 2016 or December 31, 2015. Common and Capital Stock Our Class A common stock has no preferences or privileges and is not redeemable. Holders of Class A common stock are entitled to one vote for each share. Our Class B common stock has no preferences or privileges and is not redeemable. At any time after the date of issuance, each share of Class B common stock, at the option of the holder, may be converted into one share of Class A common stock, or automatically converted into Class A common stock upon the affirmative vote by or written consent of holders of a majority of the shares of the Class B common stock. During the years ended December 31, 2016 and 2015, no shares of Class B common stock were converted into Class A common stock at the option of the holders. During the year ended December 31, 2014, 251,445 shares of Class B common stock were converted into Class A common stock at the option of the holders. Holders of Class B common stock are entitled to 10 votes for each share. Our Class C capital stock has no preferences or privileges, is not redeemable and, except in limited circumstances, is non-voting. The following shares of common and capital stock have been reserved for future issuance as of the dates presented: December 31, 2016 December 31, 2015 Option awards outstanding 29,628,443 27,126,374 Restricted stock units outstanding 3,780,577 2,605,514 Class A common stock and Class C capital stock available for grant under 2011 Plan 2,887,262 688,014 Shares issuable upon conversion of outstanding Class B common stock 6,217,447 6,217,447 Total 42,513,729 36,637,349 Stock Split Effected in Form of Stock Dividend In December 2014 and in connection with the Trulia acquisition, the shareholders of Zillow and the stockholders of Trulia approved amendments to Zillow Group’s amended and restated articles of incorporation to, among other things, create a new class of non-voting Class C capital stock. On July 21, 2015, we announced that our board of directors had approved a distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common shareholders (the “Class C Stock Split”). Holders of Class A common stock and Class B common stock as of the close of business on July 31, 2015, the record date for the Class C Stock Split, received on August 14, 2015 a distribution of two shares of Class C capital stock for each share of Class A and Class B common stock held by them as of the record date. The distribution of shares had the effect of a 3-for-1 stock split. Outstanding equity awards to purchase or acquire shares of Class A common stock were proportionately adjusted to relate to one share of Class A common stock and two shares of Class C capital stock for each share of Class A common stock subject to the awards as of the record date, and the exercise prices of any such awards were also proportionately allocated between Class A common stock and Class C capital stock. The adjustment to outstanding equity awards resulted in an immaterial amount of incremental aggregate fair value associated with the awards outstanding immediately following the Class C Stock Split as compared to just prior to the Class C Stock Split, which did not have a material impact on our consolidated statements of operations for the periods presented. The par value per share of our shares of Class A common stock and Class B common stock has remained unchanged at $0.0001 per share after the Class C Stock Split. On the effective date of the Class C Stock Split, we transferred between additional paid in capital and Class C capital stock an amount equal to the $0.0001 par value of the Class C capital stock that was issued. We have given retroactive effect to prior period share and per share amounts in our consolidated financial statements for the effect of the Class C Stock Split so that prior periods are comparable to current period presentation. |
Share-Based Awards
Share-Based Awards | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Awards | Note 14. Share-Based Awards In connection with our February 2015 acquisition of Trulia, we assumed the obligations of Zillow and Trulia outstanding under pre-existing stock plans. We intend that future equity grants will be made under Zillow Group’s 2011 Amended and Restated Incentive Plan (as amended and/or restated from time to time, the “2011 Plan”) only (or a successor thereto). Zillow Group, Inc. Amended and Restated 2011 Incentive Plan On July 19, 2011, the 2011 Plan became effective and serves as the successor to Zillow’s 2005 Equity Incentive Plan (the “2005 Plan”). Shareholders last approved the 2011 Plan on June 15, 2016. In addition to the share reserve of 18,400,000 shares, the number of shares available for issuance under the 2011 Plan automatically increases on the first day of each of our fiscal years by a number of shares equal to the least of (a) 3.5% of our outstanding Class A common stock, Class B common stock, and Class C capital stock on a fully diluted basis as of the end of our immediately preceding fiscal year, (b) 10,500,000 shares, and (c) a lesser amount determined by our board of directors; provided, however, that any shares from any increases in previous years that are not actually issued will continue to be available for issuance under the 2011 Plan. In addition, shares previously available for grant under the 2005 Plan, but not issued or subject to outstanding awards under the 2005 Plan as of July 19, 2011, and shares subject to outstanding awards under the 2005 Plan that subsequently cease to be subject to such awards (other than by reason of exercise of the awards) are available for grant under the 2011 Plan. The 2011 Plan is administered by the compensation committee of the board of directors. Under the terms of the 2011 Plan, the compensation committee may grant equity awards, including incentive stock options, nonqualified stock options, restricted stock, restricted stock units or restricted units to employees, officers, directors, consultants, agents, advisors and independent contractors. The board of directors has also authorized certain senior executive officers to grant equity awards under the 2011 Plan, within limits prescribed by our board of directors. The 2011 Plan provides that in the event of a stock dividend, stock split or similar event, the maximum number and kind of securities available for issuance under the plan will be proportionally adjusted. Options under the 2011 Plan are granted with an exercise price per share not less than 100% of the fair market value of our stock on the date of grant, with the exception of substituted option awards granted in connection with acquisitions, and are exercisable at such times and under such conditions as determined by the compensation committee. Under the 2011 Plan, the maximum term of an option is ten years from the date of grant. Any portion of an option that is not vested and exercisable on the date of a participant’s termination of service expires on such date. Employees generally forfeit their rights to exercise vested options after 3 months following their termination of employment or 12 months in the event of termination by reason of death, disability or retirement. Options granted under the 2011 Plan typically expire seven or 10 years from the grant date and typically vest either 25% after 12 months and ratably thereafter over the next 36 months or quarterly over a period of four years, though certain options have been granted with longer vesting schedules. Restricted stock units granted under the 2011 Plan typically vest either 25% after 12 months and quarterly thereafter over the next three years or 12.5% after 6 months and quarterly thereafter for the next 3.5 years. Any portion of a restricted stock unit that is not vested on the date of a participant’s termination of service expires on such date. In March 2016, Zillow Group established an equity choice program pursuant to which Zillow Group grants restricted stock units and option awards to acquire shares of Class C capital stock to certain employees to retain and recognize their efforts on behalf of Zillow Group. Trulia 2005 Stock Incentive Plan Trulia granted options under its 2005 Stock Incentive Plan (as amended, “the 2005 Plan”) until September 2012 when the 2005 Plan was terminated. Stock options issued prior to the plan termination remained outstanding in accordance with their terms. Under the terms of the 2005 Plan, Trulia had the ability to grant incentive and nonqualified stock options, stock appreciation rights, restricted stock awards and restricted stock units. Options granted under the 2005 Plan generally vest at a rate of 25% after 12 months and ratably thereafter over the next 36 months and expire 10 years from the grant date. Certain options vest monthly over two to four years. Trulia 2012 Equity Incentive Plan, as Amended and Restated On September 19, 2012, Trulia’s 2012 Equity Incentive Plan (the “2012 Plan”) became effective. The 2012 Plan provides for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants. Under the 2012 Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The plan administrator determines the vesting period for each option award on the grant date, and the options generally expire 10 years from the grant date or such shorter term as may be determined for the options. As noted above, we intend that future equity grants will be made under the 2011 Plan only. Market Leader Amended and Restated 2004 Equity Incentive Plan In connection with Trulia’s acquisition of Market Leader in 2013, Trulia assumed Market Leader’s Amended and Restated 2004 Equity Incentive Plan (the “2004 Plan”), including all outstanding shares of restricted stock, all outstanding stock appreciation rights, all outstanding options, and all shares available for future issuance under the 2004 Plan. Trulia granted equity awards, to the extent permissible by applicable law and New York Stock Exchange rules, under the 2004 Plan until it expired on December 9, 2014. The equity awards issued prior to the 2004 Plan’s expiration remained outstanding in accordance with their terms. Option Awards and Stock Appreciation Rights The following table summarizes option award and stock appreciation rights activity for the year ended December 31, 2016: Number of Shares Subject to Existing Options and Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2016 27,126,374 $ 23.35 5.96 $ 156,025 Granted 6,235,414 23.99 Exercised (2,518,172 ) 12.41 Forfeited or cancelled (1,215,173 ) 30.79 Outstanding at December 31, 2016 29,628,443 24.11 5.97 376,004 Vested and exercisable at December 31, 2016 14,020,654 20.38 4.36 230,819 The fair value of options granted, excluding options granted under the Stock Option Grant Program for Nonemployee Directors (“Nonemployee Director Awards”) and certain options granted to the Company’s executives in January and February 2015, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model with the following assumptions for the periods presented: Year Ended December 31, 2016 2015 2014 Expected volatility 49% – 51% 54% – 56% 53% – 57% Expected dividend yield — — — Risk-free interest rate 0.89% – 1.89% 1.03% – 1.48% 1.37% – 1.55% Weighted-average expected life 3.80 years 4.26 years 4.58 years Weighted-average fair value of options granted $9.42 $13.77 $14.78 The assumptions included in the table above exclude stock options and stock appreciation rights assumed in connection with the February 17, 2015 acquisition of Trulia (see Note 7) and unvested stock options substituted in connection with the August 20, 2015 acquisition of DotLoop, Inc. In March 2016, option awards for an aggregate of 93,995 shares of Class C capital stock were granted as Nonemployee Director Awards, which are fully vested and exercisable on the date of grant. The fair value of options granted for the Nonemployee Director Awards, $8.91 per share, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming expected volatility of 51%, no dividends, a risk-free interest rate of 1.12%, and a weighted-average expected life of 4.25 years. During the year ended December 31, 2016, share-based compensation expense recognized in our consolidated statement of operations related to Nonemployee Director Awards was $0.8 million, and is included in general and administrative expenses. In March 2015, option awards for an aggregate of 47,175 shares of Class A common stock and Class C capital stock (as adjusted in connection with the Class C Stock Split) were granted as Nonemployee Director Awards, which are fully vested and exercisable on the date of grant. The fair value of options granted for the Nonemployee Director Awards, $15.90 per share, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming expected volatility of 57%, no dividends, a risk-free interest rate of 1.01%, and a weighted-average expected life of 3.5 years. During the year ended December 31, 2015, share-based compensation expense recognized in our statement of operations related to Nonemployee Director Awards was $0.8 million, and is included in general and administrative expenses. In January and February 2015, option awards for a total of 3,450,000 shares of Class A common stock and Class C capital stock (as adjusted in connection with the Class C Stock Split) were granted to certain of the Company’s executive officers. The fair value of the option awards is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming expected volatility of 52%, no dividends, a risk-free interest rate of 1.76% and a weighted-average expected life of 6.8 years. The grant date fair value of the option awards is approximately $62.8 million. One-sixteenth of the total number of shares subject to the option awards vested and became exercisable on the first anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable four years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards vested and became exercisable on the two-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable five years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the three-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable six years from the vesting commencement date. One-sixteenth of the total number of shares subject to the option awards will vest and become exercisable on the four-year anniversary of the vesting commencement date. An additional 1/192nd of the total number of shares subject to the option awards will vest and become exercisable monthly thereafter over the next three years so that this portion of the award will be vested and exercisable seven years from the vesting commencement date. The option awards have a ten-year term. As of December 31, 2016, there was a total of $172.2 million in unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 3.0 years. The total intrinsic value of options and stock appreciation rights exercised during the years ended December 31, 2016, 2015 and 2014 was $51.7 million, $67.3 million and $124.0 million, respectively. The fair value of options and stock appreciation rights vested for the years ended December 31, 2016, 2015 and 2014 was $87.9 million, $59.9 million and $18.9 million, respectively. Restricted Stock Units The following table summarizes activity for restricted stock units for the year ended December 31, 2016: Restricted Stock Units Weighted- Unvested outstanding at January 1, 2016 2,605,514 $ 32.36 Granted 3,208,524 26.37 Vested (1,506,631 ) 30.94 Forfeited or cancelled (526,830 ) 27.35 Unvested outstanding at December 31, 2016 3,780,577 28.54 Pursuant to the terms of the Naked Apartments Merger Agreement, Zillow Group established a retention bonus plan in March 2016 pursuant to which a total of 161,883 restricted stock units for shares of our Class C capital stock have been granted to employees of Naked Apartments who accepted employment with Zillow Group. For 139,075 of the restricted stock units, one-sixth of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 2.5 years. For 22,808 of the restricted stock units, 25% of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 1.5 years. The vesting of the restricted stock units is subject to the recipient’s continued full-time employment or service to Zillow Group. The total grant date fair value of the restricted stock units is approximately $3.6 million. The total fair value of vested restricted stock units was $46.5 million, $67.3 million and $5.1 million, respectively, for the years ended December 31, 2016, 2015 and 2014. The fair value of the outstanding restricted stock units will be recorded as share-based compensation expense over the vesting period. As of December 31, 2016, there was $98.9 million of total unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.9 years. Share-Based Compensation Expense The following table presents the effects of share-based compensation in our consolidated statements of operations during the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Cost of revenue $ 5,923 $ 4,694 $ 1,844 Sales and marketing 23,320 25,391 7,320 Technology and development 31,466 26,849 11,681 General and administrative 46,209 48,280 13,240 Restructuring costs — 14,859 — $ 106,918 $ 120,073 $ 34,085 |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 15. Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period. In the calculation of basic net loss per share, undistributed earnings are allocated assuming all earnings during the period were distributed. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period and potentially dilutive Class A common stock and Class C capital stock equivalents, except in cases where the effect of the Class A common stock or Class C capital stock equivalent would be antidilutive. Potential Class A common stock and Class C capital stock equivalents consist of Class A common stock and Class C capital stock issuable upon exercise of stock options and stock appreciation rights and Class A common stock and Class C capital stock underlying unvested restricted stock awards and unvested restricted stock units using the treasury stock method. Potential Class A common stock equivalents also include Class A common stock issuable upon conversion of the 2020 Notes using the if-converted method. For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net loss per share because their effect would have been antidilutive (in thousands): Year Ended December 31, 2016 2015 2014 Weighted-average Class A common stock and Class C capital stock option awards and stock appreciation rights outstanding 19,993 16,607 12,731 Weighted-average Class A common stock and Class C capital stock unvested restricted stock awards and restricted stock units outstanding 3,607 3,453 600 Class A common stock issuable upon conversion of the 2020 Notes 440 9,535 — Total Class A common stock and Class C capital stock equivalents 24,040 29,595 13,331 Since the Company expects to settle the principal amount of the outstanding 2021 Notes in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread of approximately 8.8 million shares will have a dilutive impact on diluted net income per share when the market price of the Company’s Class C capital stock at the end of a period exceeds the conversion price of $52.36 per share for the 2021 Notes. In the event of liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of all classes of common and capital stock have equal rights to receive all the assets of the Company after the rights of the holders of preferred stock have been satisfied. We have not presented net loss per share under the two-class method for our Class A common stock, Class B common stock and Class C capital stock because it would be the same for each class due to equal dividend and liquidation rights for each class. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 16. Commitments and Contingencies Lease Commitments We have various operating leases for office space and equipment. Seattle, Washington In March 2011, we entered into a lease agreement for office space that houses our corporate headquarters in Seattle (as amended from time to time, the “Seattle Lease”). Pursuant to the terms of the Seattle Lease, we currently lease a total of 200,426 square feet, and we are obligated to make escalating monthly lease payments that began in December 2012 and continue through December 2024. We will continue to take possession of additional office space pursuant to the Seattle Lease as space becomes available through 2017 under the same terms and conditions. San Francisco, California In connection with our February 2015 acquisition of Trulia, we assumed a lease agreement for office space in San Francisco (as amended from time to time, the “San Francisco Lease”), which houses Trulia’s corporate headquarters and Zillow’s personnel located in San Francisco. Pursuant to the terms of the San Francisco Lease, we lease a total of 105,897 square feet, and we are obligated to make escalating monthly lease payments through September 2023. In November 2012, we entered into an operating lease in San Francisco, California for 18,353 square feet under which we are obligated to make escalating monthly lease payments which began in December 2012 and continue through December 2018. In March 2015, we ceased use of this space in connection with our February 2015 acquisition of Trulia, and in May 2015, we sublet this office space to another occupant. Pursuant to the terms of the operating lease and since October 2015, we lease an additional 8,311 square feet of office space under the same terms and conditions, and we also sublet this office space to another occupant. New York, New York In February 2014, we entered into an operating lease in New York (as amended from time to time, the “New York Lease”). Pursuant to the terms of the New York Lease, we lease a total of approximately 39,900 square feet, and we are obligated to make escalating monthly lease payments that began in August 2014 and continue through November 2024. In July 2015, we sublet approximately 6,650 square feet of this office space to another occupant. Denver, Colorado In connection with our February 2015 acquisition of Trulia, we assumed a lease agreement for office space in Denver. Pursuant to the terms of the lease, we lease a total of 64,908 square feet, and we are obligated to make escalating monthly lease payments through October 2021. Irvine, California In April 2012, we entered into a lease agreement for office space in Irvine (as amended from time to time, the “Irvine Lease”). Pursuant to the terms of the Irvine Lease, we lease a total of 60,074 square feet under which we are obligated to make escalating monthly lease payments which began in August 2012 and continue through July 2022. We lease additional office space in Chicago, Illinois, Cincinnati, Ohio, Lincoln, Nebraska, Atlanta, Georgia and Vancouver, British Columbia. Future minimum payments for all operating leases as of December 31, 2016 are as follows (in thousands): 2017 $ 22,122 2018 23,623 2019 22,282 2020 22,712 2021 22,942 All future years 57,780 Total future minimum lease payments $ 171,461 Rent expense for the years ended December 31, 2016, 2015 and 2014, was $16.6 million, $14.9 million and $7.5 million, respectively. Total minimum rentals to be received in the future under noncancelable subleases as of December 31, 2016 is $3.3 million. Purchase Commitments As of December 31, 2016, we had non-cancelable purchase commitments for content related to our mobile applications and websites totaling $120.3 million. The amounts due for this content as of December 31, 2016 are as follows (in thousands): 2017 $ 34,841 2018 32,750 2019 33,500 2020 14,750 2021 4,500 Total future purchase commitments $ 120,341 Letters of Credit As of December 31, 2016, we have outstanding letters of credit of approximately $5.2 million, $1.8 million, $1.1 million and $1.1 million, respectively, which secure our lease obligations in connection with the operating leases of our San Francisco, Seattle, New York and Denver office spaces. Certain of the letters of credit are unsecured obligations, and certain of the letters of credit are secured by certificates of deposit held as collateral in our name at a financial institution. The secured letters of credit are classified as restricted cash in our consolidated balance sheet. Surety Bonds In the course of business, we are required to provide financial commitments in the form of surety bonds to third parties as a guarantee of our performance on and our compliance with certain obligations. If we were to fail to perform or comply with these obligations, any draws upon surety bonds issued on our behalf would then trigger our payment obligation to the surety bond issuer. We have outstanding surety bonds issued for our benefit of approximately $3.6 million and $3.4 million as of December 31, 2016 and 2015, respectively. Legal Proceedings We are involved in a number of legal proceedings concerning matters arising in connection with the conduct of our business activities, some of which are at preliminary stages and some of which seek an indeterminate amount of damages. We regularly evaluate the status of legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made if accruals are not appropriate. For certain cases described below, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damages sought are, in our view, unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories presented. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material effect on our financial position, results of operations or cash flow. In September 2010, LendingTree, LLC (“LendingTree”) filed a complaint against us for patent infringement in the U.S. District Court for the Western District of North Carolina. The complaint alleged, among other things, that our website technology infringes two patents purporting to cover a “Method and computer network for coordinating a loan over the internet.” The complaint sought, among other things, a judgment that we infringed certain patents held by LendingTree, an injunction against the alleged infringing activities and an award for damages. We denied the allegations and asserted defenses and counterclaims seeking declarations that we are not infringing the patents and that the patents are invalid. In March 2014, a federal jury found that Zillow does not infringe the patents and that the patents asserted by LendingTree are invalid. In April, 2014, LendingTree filed two motions for judgment as a matter of law and for a new trial, all of which we opposed. In October 2014, the Court issued an order upholding the jury verdict and denying LendingTree’s motions. In November 2014, LendingTree filed a notice of appeal and, in September 2015, LendingTree filed its opening brief. In December 2015, we filed a response brief to LendingTree’s opening brief. A hearing regarding LendingTree’s appeal occurred in June 2016. In July 2016, the Court of Appeals for the Federal Circuit issued an order in which it found all claims asserted against us invalid under Section 101. In September 2016, LendingTree filed notice that they would be filing to appeal for a rehearing, but failed to file by the deadline. There are no further avenues for appeal or rehearing; the order issued by the Court of Appeals will stand. In March 2014, Move, Inc., the National Association of Realtors and three related entities (collectively, “Plaintiffs”), filed a complaint against us and Errol Samuelson, our Chief Industry Development Officer, in the Superior Court of the State of Washington in King County, alleging, among other things, that Zillow and Mr. Samuelson misappropriated plaintiffs’ trade secrets in connection with Mr. Samuelson joining Zillow in March 2014. The Plaintiffs sought, among other things, an injunction against the alleged misappropriations and Mr. Samuelson working for us, as well as significant monetary damages. In February 2015, Plaintiffs filed an amended complaint that, among other things, added Curt Beardsley, our Vice President of MLS Partnerships, as a defendant in the matter. In August 2015, Zillow filed an amended answer and counterclaim against Plaintiffs that alleged, among other things, that Plaintiffs violated the Washington Trade Secrets Act and aided and abetted a breach of the duty of confidentiality through the public filing of a document that included Zillow’s confidential information and trade secrets. On January 8, 2016, Plaintiffs filed a motion seeking sanctions against defendants for alleged evidence spoliation. The court held a spoliation hearing in April and on May 17, 2016 denied Plaintiffs motion for sanctions as to Zillow and Mr. Samuelson. With respect to Mr. Beardsley, the Court denied the motion as to terminating sanctions but granted the motion ordering a permissive adverse inference instruction with respect to five devices. Defendants each filed multiple motions for partial summary judgment against Plaintiffs regarding, among other things, certain of their claims of alleged misappropriation of trade secrets. Defendants also filed various motions seeking to exclude or limit damages. The court entered various rulings granting and denying these motions in 2016. On June 6, 2016, the Company reached an amicable resolution by way of a settlement agreement and release (the “Settlement Agreement”) with Plaintiffs pursuant to which the Company agreed to pay Plaintiffs $130.0 million in connection with a release of all claims. On June 16, 2016, pursuant to the terms agreed to between the parties, the court dismissed all claims and counterclaims asserted in this matter with prejudice. The Settlement Agreement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. The settlement was paid in June 2016 and was recorded in general and administrative expenses in our consolidated statements of operations for the year ended December 31, 2016. In August 2014, four purported class action lawsuits were filed by plaintiffs against Trulia and its directors, Zillow, and Zebra Holdco, Inc. in connection with Zillow’s proposed acquisition of Trulia. One of those purported class actions, captioned Collier et al. v. Trulia, Inc., et al., was brought in the Superior Court of the State of California for the County of San Francisco, however on October 7, 2014, plaintiff in the Collier action filed a new complaint in the Delaware Court of Chancery alleging substantially the same claims and seeking substantially the same relief as the original complaint filed in California. On October 8, 2014, plaintiff in the Collier action filed a request for dismissal of the California case without prejudice. The other three of the purported class action lawsuits, captioned Shue et al. v. Trulia, Inc., et al., Sciabacucci et al. v. Trulia, Inc., et al., and Steinberg et al. v. Trulia, Inc. et al., were brought in the Delaware Court of Chancery. All four lawsuits allege that Trulia’s directors breached their fiduciary duties to Trulia stockholders, and that the other defendants aided and abetted such breaches, by seeking to sell Trulia through an allegedly unfair process and for an unfair price and on unfair terms. All lawsuits sought, among other things, equitable relief that would have enjoined the consummation of Zillow’s proposed acquisition of Trulia and attorneys’ fees and costs. The Delaware actions also sought rescission of the Merger Agreement or rescissory damages and orders directing the defendants to account for alleged damages suffered by the plaintiffs and the purported class as a result of the defendants’ alleged wrongdoing. On September 24, 2014, plaintiff in the Sciabacucci action filed (1) a motion for expedited proceedings, (2) a motion for a preliminary injunction, (3) a request for production of documents from defendants, and (4) notice of depositions. On October 13, 2014, the Delaware Court of Chancery issued an order consolidating all of the Delaware actions into one matter captioned In re Trulia, Inc. Stockholder Litigation. On October 13 and 14, 2014, the above-referenced motions were refiled under the consolidated case number. On November 14, 2014, plaintiffs again refiled their motion for a preliminary injunction challenging the proposed acquisition. On November 19, 2014, the parties entered into a Memorandum of Understanding, documenting an agreement-in-principle for the settlement of the consolidated litigation, pursuant to which Trulia agreed to make certain supplemental disclosures in a Form 8-K. The Memorandum of Understanding was filed with the Court of Chancery that same day. Thereafter, the parties negotiated and agreed to a stipulation of settlement, and after notice to the class, the Court of Chancery held a settlement hearing on September 16, 2015 where the Court requested the parties to make further submission in connection with the settlement. By an opinion dated January 22, 2016, the Court denied approval of the settlement, and on April 6, 2016, the Court dismissed the claims brought in the consolidated lawsuit with prejudice. In July 2015, two purported class action lawsuits were filed against us and each of our directors in the Superior Court of the State of Washington in King County, alleging, among other things, that the directors breached their fiduciary duties in connection with the approval of the issuance of non-voting Class C capital stock as a dividend. The complaints seek, among other things, injunctive relief and unspecified monetary damages. A hearing on the plaintiffs’ motion seeking a preliminary injunction to enjoin the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common shareholders was held on August 5, 2015, and the court denied plaintiffs’ motion for a preliminary injunction. Plaintiffs filed a consolidated class action complaint on September 18, 2015 naming and seeking relief from only our co-founders as defendants. On December 4, 2015, defendants filed a motion to dismiss the consolidated class action complaint, and on March 28, 2016, the consolidated class action complaint was dismissed with prejudice. In March 2015, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) notified the Company that it was initiating a compliance review to determine the Company’s compliance with one or more federal labor laws enforced by the DOL. The Company understands that the scope of this review is limited to the review of the Company’s compliance with certain wage and hour laws with respect to Zillow, Inc. inside sales consultants during a two-year period between 2013 and 2015. In October 2015, the DOL orally informed us that the compliance review was ongoing but that, based on its preliminary findings, it believed the Company may have failed to pay overtime to such inside sales consultants. As discussed below, on May 5, 2016, Zillow, Inc. agreed to settle a class action lawsuit which alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. The settlement of the class action lawsuit was contingent on Zillow, Inc.’s complete resolution of the DOL compliance review. On November 28, 2016, Zillow, Inc. entered into a settlement agreement with the DOL that resolved the DOL’s compliance review. Under the terms of the settlement agreement, Zillow, Inc. agreed that it will make the voluntary payments contemplated by the class action lawsuit settlement and establish and maintain certain procedures to promote future compliance with the Fair Labor Standards Act. We expect to make the voluntary payments contemplated by the settlement agreement during 2017. The settlement agreement with the DOL does not require Zillow, Inc. to make any payments which are in addition to those contemplated by the class action lawsuit settlement. Zillow has not admitted liability with respect to either the DOL settlement or the class action lawsuit settlement. In November 2014, a former employee filed a putative class action lawsuit against us in the United States District Court, Central District of California, with the caption Ian Freeman v. Zillow, Inc. In July 2015, VHT, Inc. (“VHT”) filed a complaint against us in the U.S. District Court for the Western District of Washington alleging copyright infringement of VHT’s images on the Zillow Digs site. In January 2016, VHT filed an amended complaint alleging copyright infringement of VHT’s images on the Zillow Digs site as well as the Zillow listing site. In December 2016, the court granted a motion for partial summary judgment that dismissed VHT’s claims with respect to the Zillow listing site. A federal jury trial began on January 23, 2017 that is expected to conclude in February 2017. We have not recorded an accrual related to this complaint as of December 31, 2016, as we do not believe a loss is probable. There is a reasonable possibility that a loss may be incurred; however, the possible loss or range of loss is not estimable. In addition to the matters discussed above, from time to time, we are involved in litigation and claims that arise in the ordinary course of business. Although we cannot be certain of the outcome of any such litigation or claims, nor the amount of damages and exposure that we could incur, we currently believe that the final disposition of such matters will not have a material effect on our business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Indemnifications In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements and out of intellectual property infringement claims made by third parties. In addition, we have agreements that indemnify certain issuers of surety bonds against losses that they may incur as a result of executing surety bonds on our behalf. For our indemnification arrangements, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with certain of our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 17. Related Party Transactions In February 2015, we paid approximately $0.3 million in filing fees directly to the Federal Trade Commission (the “FTC”), on behalf of and in connection with filings made by Mr. Richard Barton, our Executive Chairman, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), which filings were required due to Mr. Barton’s ownership of Zillow, Inc.’s common stock. In April 2016, we paid approximately $0.1 million for a tax “gross-up” payment to Mr. Barton to cover the imputed income associated with one of his HSR Act filings. In February 2016, we paid a total of approximately $0.2 million and $0.2 million, respectively, to Mr. Frink and Mr. Barton for reimbursement of costs incurred by Mr. Frink and Mr. Barton for use of private planes by certain of the Company’s employees and Mr. Frink and Mr. Barton for business travel in prior years. In October 2016, we purchased a 10% equity interest in a variable interest entity within the real estate industry for $10.0 million, which is accounted for as a cost method investment and classified within other assets in the consolidated balance sheet. In October 2016, we also entered into an immaterial commercial agreement with this entity. The entity is financed through its business operations. We are not the primary beneficiary of the entity, as we do not direct the activities that most significantly impact the entity’s economic performance. Therefore, we do not consolidate the entity. Our maximum exposure to loss is $10.0 million, the carrying amount of the investment as of December 31, 2016. As there were no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment as of December 31, 2016, and it is not practicable to estimate the fair value of the investment given the investment’s fair value is not readily determinable, an estimate of the fair value of the cost method investment was not performed. |
Self-Insurance
Self-Insurance | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Self-Insurance | Note 18. Self-Insurance Prior to January 1, 2016, we were self-insured for a portion of our medical and dental benefits for certain employees of Trulia since the date of our acquisition of Trulia in February 2015. Beginning on January 1, 2016, we are self-insured for medical benefits for all qualifying Zillow Group employees. The medical plan carries a stop-loss policy which will protect from individual claims during the plan year exceeding $150,000 or when cumulative medical claims exceed 125% of expected claims for the plan year. We record estimates of the total costs of claims incurred based on an analysis of historical data and independent estimates. Our liability for self-insured medical claims is included within accrued compensation and benefits in our consolidated balance sheet and was $1.7 million as of December 31, 2016 and $0.5 million as of December 31, 2015. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2016 | |
Postemployment Benefits [Abstract] | |
Employee Benefit Plan | Note 19. Employee Benefit Plan Prior to January 1, 2016, we maintained separate defined contribution 401(k) retirement plans for employees of Zillow and Trulia. Effective January 1, 2016, we have a single defined contribution 401(k) retirement plan covering Zillow Group employees who have met certain eligibility requirements (“the Zillow Group 401(k) Plan”). Eligible employees may contribute pretax compensation up to a maximum amount allowable under the Internal Revenue Service limitations. Employee contributions and earnings thereon vest immediately. We currently match up to 4% of employee contributions under the Zillow Group 401(k) Plan. The total expense related to the Zillow Group 401(k) Plan was $10.1 million and $4.2 million, respectively, for the years ended December 31, 2016 and 2015. |
Segment Information and Revenue
Segment Information and Revenue | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information and Revenue | Note 20. Segment Information and Revenue We have one reportable segment. Our reportable segment has been identified based on how our chief operating decision-maker manages our business, makes operating decisions and evaluates operating performance. The chief executive officer acts as the chief operating decision-maker and reviews financial and operational information on an entity-wide basis. We have one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components. Accordingly, we have determined that we have a single reporting segment and operating unit structure. The chief executive officer reviews information about revenue categories, including marketplace revenue and display revenue. The following table presents our revenue categories during the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Marketplace revenue: Premier Agent $ 604,292 $ 446,921 $ 224,248 Other real estate 102,635 35,171 14,791 Mortgages 71,133 44,263 28,203 Market Leader — 29,549 — Total Marketplace revenue 778,060 555,904 267,242 Display revenue 68,529 88,773 58,651 Total revenue $ 846,589 $ 644,677 $ 325,893 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 21. Subsequent Events On January 11, 2017, Zillow, Inc. acquired substantially all of the operating assets of RealNet Solutions, Inc., a New York corporation, RealNetDB, LLC, a New York limited liability company, Hamptons Real Estate Online, Inc., a New York corporation, HREO.com, LLC, a New York limited liability company (collectively, “HREO”), pursuant to an Asset Purchase Agreement entered into by Zillow, Inc., HREO, each of the equity owners of HREO, and an individual acting as representative of the HREO equity holders. HREO is a Hamptons-focused real estate portal which provides buyers and renters with a specialized search experience and access to the area’s most comprehensive for-sale, for-rent, and vacant land listings. HREO’s listing entry and distribution software, RealNet and Open RealNet Exchange, provides real estate professionals with tools to manage and market their listings. Our acquisition of HREO has been accounted for as a business combination, and assets acquired and liabilities assumed were recorded at their estimated fair values as of January 11, 2017. Acquisition-related costs incurred, which primarily included legal and accounting fees and other external costs directly related to the acquisition, were expensed as incurred and were not material. Pro forma financial information for the acquisition accounted for as a business combination has not been presented, as the effects were not material to our consolidated financial statements. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Effective February 17, 2015, Zillow Group acquired Trulia, and each of Zillow and Trulia became wholly owned subsidiaries of Zillow Group. For financial reporting and accounting purposes, Zillow was the acquirer of Trulia. The results presented in the Consolidated Financial Statements and the Notes to Consolidated Financial Statements reflect those of Zillow prior to the completion of the acquisition of Trulia on February 17, 2015, and Trulia’s results of operations have been included prospectively after February 17, 2015. Market Leader revenue is included in our results of operations from February 17, 2015 through the date of divestiture of September 30, 2015. We have given retroactive effect to prior period share and per share amounts in our consolidated financial statements for the effect of the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common stock shareholders so that prior periods are comparable to current period presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, website development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and goodwill, among others. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected. |
Reclassifications | Reclassifications Certain immaterial reclassifications have been made in the consolidated balance sheets and statements of cash flows to conform data for prior periods to the current format. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents, investments and accounts receivable. We place cash and cash equivalents and investments with major financial institutions, which management assesses to be of high credit quality, in order to limit exposure of our investments. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. Further, our credit risk on accounts receivable is mitigated by the relatively short payment terms that we offer. Collateral is not required for accounts receivable. We maintain an allowance for doubtful accounts such that receivables are stated at net realizable value. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash includes demand deposits with banks or financial institutions. Cash equivalents include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Our cash equivalents include only investments with original maturities of three months or less. We regularly maintain cash in excess of federally insured limits at financial institutions. |
Restricted Cash | Restricted Cash Restricted cash consists of certificates of deposit held as collateral in our name at a financial institution related to certain of our operating leases. |
Investments | Investments Our investments consist of fixed income securities, which include U.S. and foreign government agency securities, corporate notes and bonds, municipal securities, commercial paper and certificates of deposit, and are classified as available-for-sale securities beginning on January 1, 2015. As the investments are available to support current operations, our available-for-sale securities are classified as short-term investments. Available-for-sale securities are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive loss in shareholders’ equity, while realized gains and losses and other-than-temporary impairments are reported as a component of net loss based on specific identification. An impairment charge is recorded in the consolidated statements of operations for declines in fair value below the cost of an individual investment that are deemed to be other than temporary. We assess whether a decline in value is temporary based on the length of time that the fair market value has been below cost, the severity of the decline and the intent and ability to hold or sell the investment. We did not identify any investments as other-than-temporarily impaired as of December 31, 2016 or 2015. Prior to January 1, 2015 our investments were classified as held-to-maturity and were recorded at amortized cost (see Note 4). |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are generally due within 30 days and are recorded net of the allowance for doubtful accounts. We consider accounts outstanding longer than the contractual terms past due. We review accounts receivable on a regular basis and estimate an amount of losses for uncollectible accounts based on our historical collections experience, age of the receivable, knowledge of the customer and the condition of the general economy and industry as a whole. We record changes in our estimate to the allowance for doubtful accounts through bad debt expense and relieve the allowance when accounts are ultimately determined to be uncollectible. Bad debt expense is included in general and administrative expenses. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. The useful lives are as follows: Computer equipment 3 years Office equipment, furniture and fixtures 5 to 7 years Leasehold improvements Shorter of expected useful life or lease term Maintenance and repair costs are charged to expense as incurred. Major improvements, which extend the useful life of the related asset, are capitalized. Upon disposal of a fixed asset, we record a gain or loss based on the differences between the proceeds received and the net book value of the disposed asset. |
Website and Software Development Costs | Website and Software Development Costs The costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental and deemed by management to be significant, are capitalized in property and equipment and amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs, including those costs in the post-implementation stages, are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the website or software that result in added functionality, in which case the costs are capitalized and amortized on a straight-line basis over the estimated useful lives. Amortization expense related to capitalized website and software development costs is included in technology and development expense. Capitalized development activities placed in service are amortized over the expected useful lives of those releases, currently estimated at one year. The estimated useful lives of website and software development activities are reviewed frequently and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades and/or enhancements to the existing functionality. |
Goodwill | Goodwill Goodwill represents the excess of the cost of an acquired business over the fair value of the assets acquired at the date of acquisition. We assess the impairment of goodwill on an annual basis, in our fourth quarter, or whenever events or changes in circumstances indicate that goodwill may be impaired. We assess goodwill for possible impairment by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we determine that it is not more likely than not that the fair value of our reporting unit is less than its carrying amount, then the first and second steps of the goodwill impairment test are unnecessary. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we perform the two-step goodwill impairment test. The first step of the goodwill impairment test identifies if there is potential goodwill impairment. If step one indicates that an impairment may exist, a second step is performed to measure the amount of the goodwill impairment, if any. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced to fair value through an impairment charge recorded in our statements of operations. |
Intangible Assets | Intangible Assets We purchase and license data content from multiple data providers. This data content consists of U.S. county data about home details (e.g., the number of bedrooms, bathrooms, square footage) and other information relating to the purchase price of homes, both current and historical, as well as imagery, mapping and parcel data that is displayed on our mobile applications and websites. Our home details data not only provides information about a home and its related transactions which is displayed on our mobile applications and websites, but is also used in our proprietary valuation algorithms to produce Zestimates, Rent Zestimates and Zillow Home Value Indexes. License agreement terms vary by vendor. In some instances, we retain perpetual rights to this information after the contract ends; in other instances, the information and data are licensed only during the fixed term of the agreement. Additionally, certain data license agreements provide for uneven payment amounts throughout the life of the contract term. We capitalize payments made to third parties for data licenses that we expect to provide future economic benefit through the recovery of the costs of these arrangements via the generation of our revenue and margins. For data license contracts that include uneven payment amounts, we capitalize the payments as they are made as an intangible asset and amortize the total contract value over the estimated useful life. For contracts in which we have perpetual rights to the data, the total contract value is amortized on a straight-line basis over the life of the contract plus two years, which is equivalent to the estimated useful life of the asset. For contracts in which we do not have access to the data beyond the contractual term, the total contract value is amortized on a straight line basis over the term of the contract. We evaluate data content contracts for potential capitalization at the inception of the arrangement as well as each time periodic payments to third parties are made. The amortization period for the capitalized purchased content is based on our best estimate of the useful life of the asset, which ranges from approximately 4.5 to nine years. The determination of the useful life includes consideration of a variety of factors including, but not limited to, our assessment of the expected use of the asset and contractual provisions that may limit the useful life, as well as an assessment of when the data is expected to become obsolete based on our estimates of the diminishing value of the data over time. We evaluate the useful life of the capitalized purchased data content each reporting period to determine whether events and circumstances warrant a revision to the remaining useful life. If we determine the estimate of the asset’s useful life requires modification, the carrying amount of the asset is amortized prospectively over the revised useful life. The capitalized purchased data content is amortized on a straight-line basis as the pattern of delivery of the economic benefits of the data cannot reliably be determined because we do not have the ability to reliably predict future traffic to our websites and mobile applications. Under certain other data agreements, the underlying data is obtained on a subscription basis with consistent monthly or quarterly recurring payment terms over the contractual period. Upon the expiration of such arrangements, we no longer have the right to access the related data, and therefore, the costs incurred under such contracts are not capitalized and are expensed as payments are made. We would immediately lose rights to data under these arrangements if we were to cancel the subscription and/or cease making payments under the subscription arrangements. We also capitalize costs related to the license of certain internal-use software from third parties, including certain licenses of software in cloud computing arrangements. Additionally, we capitalize costs incurred during the application development stage related to the development of internal-use software and enterprise cloud computing services. We expense costs as incurred related to the planning and post-implementation phases of development. Capitalized internal-use software costs are amortized over the estimated useful life of the asset, which is currently three years, on a straight-line basis. We also have intangible assets for developed technology, customer relationships, trade names and trademarks, advertising relationships and MLS home data feeds which we recorded in connection with acquisitions. Purchased intangible assets with a determinable economic life are carried at cost, less accumulated amortization. These intangible assets are amortized over the estimated useful life of the asset on a straight-line basis. Recoverability of Intangible Assets with Definite Lives and Other Long-Lived Assets We evaluate intangible assets and other long-lived assets for impairment whenever events or circumstances indicate that they may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset group to future undiscounted net cash flows expected to be generated. We group assets for purposes of such review at the lowest level for which identifiable cash flows of the asset group are largely independent of the cash flows of the other groups of assets and liabilities. If this comparison indicates impairment, the amount of impairment to be recognized is calculated as the difference between the carrying value and the fair value of the asset group. |
Deferred Revenue | Deferred Revenue Deferred revenue consists of prepaid advertising fees received or billed in advance of the delivery or completion of the services, prepaid but unrecognized subscription revenue, and for amounts received in instances when revenue recognition criteria have not been met. Deferred revenue is recognized when the services are provided and all revenue recognition criteria have been met. |
Deferred Rent | Deferred Rent For our operating leases, we recognize rent expense on a straight-line basis over the terms of the leases and, accordingly, we record the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. For office space under an operating lease that is subleased to a third party for which we intend to reoccupy the space at a future date, rent expense is recognized net of sublease income. Landlord-funded leasehold improvements are also recorded as deferred rent liabilities and are amortized as a reduction of rent expense over the non-cancelable term of the related operating lease. |
Business Combinations | Business Combinations We recognize identifiable assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions for the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent that we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. We recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. |
Revenue Recognition | Revenue Recognition In general, we recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. We consider a signed agreement, a binding insertion order or other similar documentation reflecting the terms and conditions under which products or services will be provided to be persuasive evidence of an arrangement. Collectability is assessed based on a number of factors, including payment history and the creditworthiness of a customer. If it is determined that collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. We generate revenue from the sale of advertising services and our suite of tools to businesses and professionals primarily associated with the real estate and mortgage industries. These professionals include local real estate professionals, mortgage professionals and brand advertisers. Our two revenue categories are marketplace revenue and display revenue. Incremental direct costs incurred related to the acquisition or origination of a customer contract in a transaction that results in the deferral of revenue are expensed as incurred. Marketplace Revenue. Premier Agent revenue is derived from our Premier Agent program. Our Premier Agent program offers a suite of marketing and business technology products and services to help real estate achieve their advertising needs, which growing their businesses and personal brands. All Premier Agents receive access to a dashboard portal on our website that provides individualized program performance analytics and our free customer relationship management, or CRM, tool that captures detailed information about each contact made with a Premier Agent through our mobile and web platforms. From 2012 through the end of the third quarter of 2016, we had primarily charged customers for our Premier Agent product based on the number of impressions delivered on our buyer’s agent list in zip codes purchased and a contracted maximum cost per impression. Our Premier Agent product includes multiple deliverables which are accounted for as a single unit of accounting, as the delivery or performance of the undelivered elements is based on traffic to our mobile applications and websites. With this pricing method, we recognized revenue related to our impression-based Premier Agent product based on the lesser of (i) the actual number of impressions delivered on our buyer’s agent list during the period multiplied by the contracted maximum cost per impression, or (ii) the contractual maximum spend on a straight-line basis during the contractual period over which the services are delivered, typically over a period of six months or twelve months and then month-to-month thereafter. In 2016, we began testing and implementation of a new auction-based pricing method for our Premier Agent product by which we determine the cost per impression delivered in each zip code based upon the total amount spent by Premier Agents to purchase impressions in the zip code during the month. The cost per impression that we charge is dynamic—as demand for impressions in a zip code increases or decreases, the cost per impression in that zip code may be increased or decreased. This new auction-based pricing method complements our self-serve account interface, which we introduced to Premier Agents over the course of 2016. The interface includes account management tools that allow agent advertisers to independently control their budgets, impression buys, and the duration of their advertising commitment. We began testing this auction-based pricing method for our Premier Agent product to better align our revenue opportunities with increasing traffic levels to our mobile and web platforms and leveraging increasing demand by real estate agents for access to home shoppers who use our mobile applications and websites. In the fourth quarter of 2016, we applied this method broadly to our existing agent advertisers. With this auction-based pricing method, we recognize revenue related to our dynamic impression-based Premier Agent product based on the contractual maximum spend on a straight-line basis during the contractual period over which the services are delivered. We are unable to predict whether this change to our pricing method will have a material impact on net sales, revenue, or other results of operations. In our history of building our real estate and other marketplaces and product offerings, we have continually evaluated and utilized various pricing and value delivery strategies in order to better align our revenue opportunities with the growth in usage of our mobile and web platforms. We continue to support some legacy Trulia Premier Agent products, which are primarily sold on a fixed fee subscription basis for periods that generally range from six months to 12 months, and include Trulia Seller Ads, which enable real estate professionals to generate leads from consumers interested in selling their homes. Subscription advertising revenue for Trulia’s products included in Premier Agent revenue is recognized on a straight-line basis during the contractual period over which the services are delivered. Other real estate revenue primarily includes revenue generated by Zillow Group Rentals, which includes our rentals marketplace and suite of tools for rental professionals, as well as revenue from the sale of various other marketing products and a suite of tools to real estate professionals. Rentals revenue primarily includes advertising sold to property managers and other rental professionals on a cost per lead and cost per lease generated basis. We recognize revenue as leads are delivered to rental professionals or as qualified leases are confirmed. Mortgages revenue primarily includes marketing products sold to mortgage professionals on a cost per lead basis, including our Long Form and Custom Quote services. Mortgages revenue also includes revenue generated by Mortech, which provides subscription-based mortgage related software solutions, including a product and pricing engine and lead management platform, for which we recognize revenue on a straight-line basis during the contractual period over which the services are delivered. For our Long Form and Custom Quote cost per lead mortgage marketing products, generally participating qualified mortgage professionals make a prepayment to gain access to consumers interested in connecting with mortgage professionals. Through Long Form, consumers answer a series of questions to find a local lender, and mortgage professionals receive consumer contact information. Consumers who request rates for mortgage loans in Custom Quotes are presented with customized quotes from participating mortgage professionals. We only charge mortgage professionals a fee when users contact mortgage professionals through Long Form or when users contact mortgage professionals for more information regarding a mortgage loan quote in Custom Quotes. Mortgage professionals who exhaust their initial prepayment can then prepay additional funds to continue to participate in the marketplace. We recognize revenue when a user contacts a mortgage professional through Zillow Group’s mortgages platform. Market Leader revenue primarily includes revenue from the sale of a comprehensive premium software-as-a-service based marketing product typically sold to real estate professionals as a bundle of products under a fixed fee subscription. Market Leader became part of Zillow Group through Zillow Group’s February 2015 acquisition of Trulia and was divested as of September 30, 2015. Display Revenue. There were no customers that generated 10% or more of our total revenue in the years ended December 31, 2016, 2015 or 2014. |
Cost of Revenue | Cost of Revenue Our cost of revenue consists of expenses related to operating our mobile applications and websites, including associated headcount expenses, such as salaries and benefits and share-based compensation expense and bonuses, as well as credit card fees, ad serving costs paid to third parties, revenue-sharing costs related to our commercial business relationships, multiple listing services fees and costs associated with the operation of our data center and customer websites. |
Technology and Development | Technology and Development Research and development costs are expensed as incurred and are recorded in technology and development expenses. These costs consist primarily of technology and development headcount expenses, including salaries, bonuses, benefits and share-based compensation expense for employees engaged in the design, development and testing of our mobile applications and websites. For the years ended December 31, 2016, 2015 and 2014, expenses attributable to research and development for our business totaled $224.7 million, $163.8 million and $72.9 million, respectively. Technology and development expenses also include amortization costs related to capitalized website and development activities, amortization of certain intangibles and other data agreement costs related to the purchase of data used to populate our mobile applications and websites, and amortization of intangible assets recorded in connection with acquisitions. |
Share-Based Compensation | Share-Based Compensation We measure compensation expense for all share-based awards at fair value on the date of grant and recognize compensation expense over the service period on a straight-line basis for awards expected to vest. We use the Black-Scholes-Merton option-pricing model to determine the fair value for option awards. In valuing our option awards, we make assumptions about risk-free interest rates, dividend yields, volatility, and weighted-average expected lives, including estimated forfeiture rates. Risk-free interest rates are derived from U.S. Treasury securities as of the option award grant date. Expected dividend yield is based on our historical cash dividend payments, which have been zero to date. The expected volatility for our Class A common stock and Class C capital stock is estimated using our historical volatility. The weighted-average expected life of the option awards is estimated based on our historical exercise data. Forfeiture rates are estimated using historical actual forfeiture trends as well as our judgment of future forfeitures. These rates are evaluated at least quarterly and any change in share-based compensation expense is recognized in the period of the change. The estimation of option awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period the estimates are revised. We consider many factors when estimating expected forfeitures, including employee class and historical experience. Actual results, and future changes in estimates, may differ substantially from management’s current estimates. For issuances of restricted stock awards, restricted stock units and restricted units, we determine the fair value of the award based on the market value of our Class A common stock or Class C capital stock, as applicable, at the date of grant. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. For the years ended December 31, 2016, 2015 and 2014, expenses attributable to advertising totaled $120.2 million, $103.4 million, and $73.1 million, respectively. Advertising costs are recorded in sales and marketing expenses. |
Income Taxes | Income Taxes We use the asset and liability approach for accounting and reporting income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities at the applicable enacted tax rates. A valuation allowance against deferred tax assets would be established if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets are not expected to be realized. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. Interest and penalties related to unrecognized tax benefits are recorded as income tax expense. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance simplifying the test for goodwill impairment. This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted. This guidance must be applied on a prospective basis. We expect to adopt this guidance for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows. In December 2016, the FASB issued amendments to address various technical corrections and improvements. Most of the amendments are effective upon issuance, while six of the amendments require transition guidance. The amendments applicable to our business have been adopted for the year ended December 31, 2016. The adoption of these amendments did not have a material impact on our financial position, results of operations or cash flows. In December 2016, the FASB issued guidance to narrow the definition of a business. This standard provides guidance to assist entities with evaluating when a set of transferred assets and activities is a business. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. This guidance must be applied prospectively to transactions occurring within the period of adoption. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows. In November 2016, the FASB issued guidance on the classification and presentation of changes in restricted cash on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our statements of cash flows. In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We adopted this guidance in the interim period ending on September 30, 2016. The adoption of this guidance did not have any impact on our statements of cash flows. In connection with the December 2016 partial repurchase of the 2020 Notes (see Note 11), payments related to the debt extinguishment costs have been classified as a cash outflow for financing activities. In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. This standard requires the use of an expected loss impairment model for instruments measured at amortized cost. For available-for-sale debt securities, an entity is required to recognize an allowance for credit losses rather than as a write-down. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. The adoption of this guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We expect to adopt this guidance on January 1, 2020. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows. In March 2016, the FASB issued guidance on contingent put and call options in debt instruments. This standard clarifies that the assessment of whether an embedded contingent put or call option is clearly and closely related to the debt host only requires an analysis of the four-step decision sequence and does not require an entity to separately assess whether the contingency itself is indexed only to interest rates or the credit risk of the entity. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. The adoption of this guidance requires a modified retrospective transition method. We adopted this guidance on January 1, 2017. The adoption of this guidance did not have any impact on our financial position, results of operations or cash flows. In March 2016, the FASB issued guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, impact of forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted. We adopted this guidance on January 1, 2017 using the modified retrospective approach through a cumulative-effect adjustment to beginning accumulated deficit, and we have elected to account for forfeitures as they occur beginning on January 1, 2017. The adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows. In February 2016, the FASB issued guidance on leases. This standard requires the recognition of a right-of-use asset and lease liability on the balance sheet for all leases. This standard also requires more detailed disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and early adoption is permitted. We expect to adopt this guidance on January 1, 2019. We anticipate this standard will have a material impact on our financial position, primarily due to our office space operating leases, as we will be required to recognize lease assets and lease liabilities on our consolidated balance sheet. We continue to assess the potential impacts of this standard, including the impact the adoption of this guidance will have on our results of operations or cash flows, if any. In January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This standard requires equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. This standard also requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, early adoption is permitted, and the guidance must be applied prospectively to equity investments that exist as of the adoption date. We expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows. In April 2015, the FASB issued guidance related to a customer’s accounting for fees paid in a cloud computing arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, and early adoption is permitted. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows. In April 2015, the FASB issued guidance related to the presentation of debt issuance costs. This standard requires debt issuance costs to be presented as a direct deduction from the related debt liability rather than as an asset. We adopted this guidance on January 1, 2016. The adoption of this guidance impacted our presentation of the debt issuance costs associated with our Convertible Senior Notes due in 2021 issued in December 2016. For additional information regarding the Convertible Senior Notes due in 2021, see Note 11 to our consolidated financial statements. In February 2015, the FASB issued guidance relating to the consolidation analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This standard affects both the variable interest entity and voting interest entity consolidation models. All legal entities are subject to reevaluation under the revised consolidation model. We adopted this guidance on January 1, 2016. The adoption of this guidance has not had any impact on our financial position, results of operations or cash flows. In August 2014, the FASB issued guidance on the disclosure of uncertainties about an entity’s ability to continue as a going concern. This standard provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual reporting periods ending after December 15, 2016, and early adoption is permitted. We adopted this guidance for the year ended December 31, 2016. The adoption of this guidance has not had any impact on our financial position, results of operations or cash flows. In May 2014, the FASB issued guidance on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. We currently plan to adopt this guidance using the modified retrospective transition approach, which would result in an adjustment to accumulated deficit for the cumulative effect, if any, of applying this standard to contracts in process as of the adoption date. Under this approach, we would not restate the prior financial statements presented. This guidance requires us to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018 as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any. While we continue to assess all potential impacts of this new standard, we currently expect a significant impact related to the accounting for the cost of sales commissions. Under this new guidance, the cost of sales commissions will be recorded as an asset and recognized as an operating expense over the period that we expect to recover the costs. Currently we expense the cost of sales commissions as incurred. We continue to assess the impact the adoption of this guidance will have on our financial position, results of operations and cash flows. |
Fair Value | Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require. We applied the following methods and assumptions in estimating our fair value measurements: Cash equivalents— Investments |
Net Loss Per Share | Basic net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period. In the calculation of basic net loss per share, undistributed earnings are allocated assuming all earnings during the period were distributed. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period and potentially dilutive Class A common stock and Class C capital stock equivalents, except in cases where the effect of the Class A common stock or Class C capital stock equivalent would be antidilutive. Potential Class A common stock and Class C capital stock equivalents consist of Class A common stock and Class C capital stock issuable upon exercise of stock options and stock appreciation rights and Class A common stock and Class C capital stock underlying unvested restricted stock awards and unvested restricted stock units using the treasury stock method. Potential Class A common stock equivalents also include Class A common stock issuable upon conversion of the 2020 Notes using the if-converted method. |
Segment Information and Revenue | We have one reportable segment. Our reportable segment has been identified based on how our chief operating decision-maker manages our business, makes operating decisions and evaluates operating performance. The chief executive officer acts as the chief operating decision-maker and reviews financial and operational information on an entity-wide basis. We have one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components. Accordingly, we have determined that we have a single reporting segment and operating unit structure. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Useful Lives | Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. The useful lives are as follows: Computer equipment 3 years Office equipment, furniture and fixtures 5 to 7 years Leasehold improvements Shorter of expected useful life or lease term |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Balances of Cash Equivalents and Investments | The following tables present the balances of assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands): December 31, 2016 Total Level 1 Level 2 Cash equivalents: Money market funds $ 166,527 $ 166,527 $ — Certificates of deposit 460 — 460 Short-term investments: U.S. government agency securities 162,312 — 162,312 Corporate notes and bonds 61,483 — 61,483 Commercial paper 14,952 — 14,952 Municipal securities 11,912 — 11,912 Certificates of deposit 6,226 — 6,226 Foreign government securities 5,985 — 5,985 Restricted cash 1,053 — 1,053 Total $ 430,910 $ 166,527 $ 264,383 December 31, 2015 Total Level 1 Level 2 Cash equivalents: Money market funds $ 195,870 $ 195,870 $ — Certificates of deposit 1,622 — 1,622 Short-term investments: U.S. government agency securities 193,168 — 193,168 Corporate notes and bonds 41,314 — 41,314 Municipal securities 39,853 — 39,853 Certificates of deposit 11,837 — 11,837 Foreign government securities 4,979 — 4,979 Restricted cash 3,015 — 3,015 Total $ 491,658 $ 195,870 $ 295,788 |
Cash, Cash Equivalents, Inves34
Cash, Cash Equivalents, Investments and Restricted Cash (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Text Block [Abstract] | |
Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents, Available-for-Sale Investments and Restricted Cash | The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash and cash equivalents, available-for-sale investments and restricted cash as of the dates presented (in thousands): December 31, 2016 Amortized Gross Gross Estimated Cash $ 76,605 $ — $ — $ 76,605 Cash equivalents: Money market funds 166,527 — — 166,527 Certificates of deposit 460 — — 460 Short-term investments: U.S. government agency securities 162,438 31 (157 ) 162,312 Corporate notes and bonds 61,530 3 (50 ) 61,483 Commercial paper 14,952 — — 14,952 Municipal securities 11,925 — (13 ) 11,912 Certificates of deposit 6,226 — — 6,226 Foreign government securities 5,995 — (10 ) 5,985 Restricted cash 1,053 — — 1,053 Total $ 507,711 $ 34 $ (230 ) $ 507,515 December 31, 2015 Amortized Gross Gross Estimated Cash $ 31,646 $ — $ — $ 31,646 Cash equivalents: Money market funds 195,870 — — 195,870 Certificates of deposit 1,622 — — 1,622 Short-term investments: U.S. government agency securities 193,623 1 (456 ) 193,168 Corporate notes and bonds 41,390 1 (77 ) 41,314 Municipal securities 39,878 11 (36 ) 39,853 Certificates of deposit 11,839 1 (3 ) 11,837 Foreign government securities 4,985 — (6 ) 4,979 Restricted cash 3,015 — — 3,015 Total $ 523,868 $ 14 $ (578 ) $ 523,304 |
Available-for-Sale Investments by Contractual Maturity | The following table presents available-for-sale investments by contractual maturity date as of December 31, 2016 (in thousands): Amortized Cost Estimated Fair Market Value Due in one year or less $ 206,815 $ 206,763 Due after one year through two years 56,251 56,107 Total $ 263,066 $ 262,870 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | The following table presents the detail of accounts receivable as of the dates presented (in thousands): December 31, 2016 2015 Accounts receivable $ 32,258 $ 30,740 Unbilled accounts receivable 9,606 2,427 Less: allowance for doubtful accounts (1,337 ) (3,378 ) Accounts receivable, net $ 40,527 $ 29,789 |
Allowance for Doubtful Accounts | The following table presents the changes in the allowance for doubtful accounts for the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Allowance for doubtful accounts: Balance, beginning of period $ 3,378 $ 2,811 $ 1,850 Additions charged to expense 2,681 3,235 2,529 Less: write-offs, net of recoveries and other adjustments (4,722 ) (2,668 ) (1,568 ) Balance, end of period $ 1,337 $ 3,378 $ 2,811 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Detail of Property and Equipment | The following table presents the detail of property and equipment as of the dates presented (in thousands): December 31, 2016 2015 Website development costs $ 102,130 $ 74,750 Computer equipment 28,175 20,965 Leasehold improvements 37,923 32,918 Construction-in-progress 19,470 15,630 Office equipment, furniture and fixtures 19,254 13,495 Property and equipment 206,952 157,758 Less: accumulated amortization and depreciation (108,664 ) (72,235 ) Property and equipment, net $ 98,288 $ 85,523 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Naked Apartments Inc | |
Purchase Price Allocation | Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands): Current assets $ 371 Identifiable intangible assets 3,700 Goodwill 10,610 Current liabilities (101 ) Deferred tax liabilities (1,416 ) Total preliminary estimated purchase price $ 13,164 |
Trulia | |
Purchase Price Allocation | Based upon the fair values determined by us, in which we considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands): Cash and cash equivalents $ 173,447 Accounts receivable 13,093 Prepaid expenses and other current assets 20,833 Restricted cash 6,946 Property and equipment 30,189 Other assets 434 Identifiable intangible assets 549,000 Goodwill 1,736,362 Accounts payable, accrued expenses and other current liabilities (51,258 ) Accrued compensation and benefits (8,324 ) Deferred revenue (8,300 ) Long-term debt (230,000 ) Debt premium recorded in additional paid-in capital (126,386 ) Deferred tax liabilities and other long-term liabilities (139,616 ) Total purchase price $ 1,966,420 |
Summary of Purchase Price | The purchase price to effect the acquisition of Trulia of approximately $2.0 billion is summarized in the following table (in thousands): Value of Class A common stock issued $ 1,883,728 Substituted stock options and stock appreciation rights assumed by Zillow Group attributable to pre-combination service 54,853 Substituted restricted stock units assumed by Zillow Group attributable to pre-combination service 27,798 Cash paid in lieu of fractional outstanding shares 41 Total purchase price $ 1,966,420 |
Fair Value of Identifiable Intangible Assets Acquired | The fair value of identifiable intangible assets acquired consisted of the following (in thousands): Estimated Fair Value Estimated Useful Life (in years) Trulia trade names and trademarks $ 351,000 Indefinite Market Leader trade names and trademarks 2,000 2 Customer relationships 92,000 3-7 Developed technology 91,000 3-7 Advertising relationships 9,000 3 MLS home data feeds 4,000 3 Total $ 549,000 |
Pro Forma Condensed Combined Financial Information | The following table presents the unaudited pro forma condensed combined financial information for the periods presented, except for the financial information presented for the year ended December 31, 2016 which is presented on an as-reported basis (in thousands): Year Ended December 31, 2016 2015 (1) Revenue $ 846,589 $ 679,935 Net loss $ (220,438 ) $ (91,055 ) (1) The pro forma net loss for the year ended December 31, 2015 includes pro forma adjustments for $49.3 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $37.3 million to eliminate share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $35.7 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements and $2.4 million to record additional amortization expense for acquired intangible assets. |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in Goodwill | The following table presents the change in goodwill from December 31, 2015 through December 31, 2016 (in thousands): Balance as of December 31, 2015 $ 1,909,167 Goodwill recorded in connection with the acquisition of Naked Apartments 10,610 Goodwill recorded in connection with the acquisition of Bridge Interactive 4,899 Reduction of goodwill in connection with the divestiture of a business (1,196 ) Balance as of December 31, 2016 $ 1,923,480 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands): December 31, 2016 Cost Accumulated Net Purchased content $ 35,205 $ (15,508 ) $ 19,697 Software 9,712 (4,773 ) 4,939 Customer relationships 103,200 (30,952 ) 72,248 Developed technology 110,080 (36,341 ) 73,739 Trade names and trademarks 4,900 (2,877 ) 2,023 Advertising relationships 9,000 (5,598 ) 3,402 MLS home data feeds 1,100 (684 ) 416 Total $ 273,197 $ (96,733 ) $ 176,464 December 31, 2015 Cost Accumulated Net Purchased content $ 37,581 $ (19,649 ) $ 17,932 Software 6,961 (2,845 ) 4,116 Customer relationships 103,425 (16,204 ) 87,221 Developed technology 108,295 (19,515 ) 88,780 Trade names and trademarks 4,860 (2,212 ) 2,648 Advertising relationships 9,000 (2,598 ) 6,402 MLS home data feeds 1,100 (318 ) 782 Total $ 271,222 $ (63,341 ) $ 207,881 |
Estimated Future Amortization Expense for Intangible Assets | Estimated future amortization expense for intangible assets, including amortization related to future commitments (see Note 16), as of December 31, 2016 is as follows (in thousands): 2017 $ 45,608 2018 39,243 2019 33,391 2020 32,525 2021 32,145 All future years 15,717 Total future amortization expense $ 198,629 |
Accrued Expenses and Other Cu40
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Summary of accrued expenses and other current liabilities | The following table presents the detail of accrued expenses and other current liabilities as of as of the dates presented (in thousands): December 31, 2016 2015 Accrued marketing and advertising $ 7,978 $ 9,663 Accrued purchased content 8,382 8,385 Accrued legal fees 2,257 7,784 Merger consideration payable to former stockholders of certain acquired entities 5,904 5,317 Other accrued expenses and other current liabilities 13,906 11,898 Total accrued expenses and other current liabilities $ 38,427 $ 43,047 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Outstanding Principal Amount and Carrying Value | The following table presents the outstanding principal amount and carrying value of the 2021 Notes as of December 31, 2016 (in thousands): Outstanding Unamortized Carrying 2021 Notes $ 460,000 $ (102,733 ) $ 357,267 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Benefit (Expense) | The following table summarizes the components of our income tax benefit (expense) for the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Federal $ 1,248 $ 2,838 $ — State (1,378 ) 1,807 — Deferred income tax benefit (expense) $ (130 ) $ 4,645 $ — |
Reconciliation of Federal Statutory Rate and Effective Tax Rate | The following table presents a reconciliation of the federal statutory rate and our effective tax rate for the periods presented: Year Ended December 31, 2016 2015 2014 Tax expense at federal statutory rate (35.0 )% (35.0 )% (34.0 )% State income taxes, net of federal tax benefit (1.9 ) (2.3 ) (1.5 ) Nondeductible expenses 4.9 2.8 15.3 Share-based compensation (0.2 ) 1.2 0.7 Research and development credits (1.5 ) (4.1 ) (3.2 ) Divestiture of businesses — 2.3 — Other (0.9 ) (1.0 ) — Valuation allowance 34.7 33.1 22.7 Effective tax rate 0.1 % (3.0 )% 0.0 % |
Deferred Tax Assets and Liabilities | The following table presents the significant components of our deferred tax assets and liabilities as of the dates presented (in thousands): December 31, 2016 2015 Deferred tax assets: Federal and state net operating loss carryforwards $ 208,029 $ 162,521 Share-based compensation 67,482 45,969 Goodwill — 825 Depreciation and amortization 3,123 3,090 Start-up and organizational costs 300 369 Research and development credits 24,295 21,157 Other tax credits 1,358 1,358 Accruals and reserves 1,814 3,338 Deferred rent 5,882 5,228 Other deferred tax assets 14,544 550 Total deferred tax assets 326,827 244,405 Deferred tax liabilities: Website and software development costs (15,851 ) (13,851 ) Goodwill . (363 ) — Intangible assets (192,830 ) (200,082 ) Discount on 2021 Notes not deductible for tax (34,384 ) — Other deferred tax liabilities — (52 ) Net deferred tax assets before valuation allowance 83,399 30,420 Less: valuation allowance (217,351 ) (162,715 ) Net deferred tax liabilities $ (133,952 ) $ (132,295 ) |
Changes in Unrecognized Tax Benefits | Changes for unrecognized tax benefits for the periods presented are as follows (in thousands): Balance at January 1, 2014 $ 5,123 Gross increases—current period tax positions 1,946 Gross decreases—prior period tax positions (576 ) Balance at December 31, 2014 $ 6,493 Gross increases—prior and current period tax positions 3,577 Gross increases—assumed in connection with February 2015 acquisition of Trulia 3,910 Balance at December 31, 2015 $ 13,980 Gross increases—current period tax positions 2,619 Gross decreases—prior period tax positions (1,204 ) Balance at December 31, 2016 $ 15,395 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Common and Capital Stock Reserved for Future Issuance | The following shares of common and capital stock have been reserved for future issuance as of the dates presented: December 31, 2016 December 31, 2015 Option awards outstanding 29,628,443 27,126,374 Restricted stock units outstanding 3,780,577 2,605,514 Class A common stock and Class C capital stock available for grant under 2011 Plan 2,887,262 688,014 Shares issuable upon conversion of outstanding Class B common stock 6,217,447 6,217,447 Total 42,513,729 36,637,349 |
Share-Based Awards (Tables)
Share-Based Awards (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Option Award and Stock Appreciation Rights Activity | The following table summarizes option award and stock appreciation rights activity for the year ended December 31, 2016: Number of Shares Subject to Existing Options and Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2016 27,126,374 $ 23.35 5.96 $ 156,025 Granted 6,235,414 23.99 Exercised (2,518,172 ) 12.41 Forfeited or cancelled (1,215,173 ) 30.79 Outstanding at December 31, 2016 29,628,443 24.11 5.97 376,004 Vested and exercisable at December 31, 2016 14,020,654 20.38 4.36 230,819 |
Fair Value of Options Granted, Excluding Stock Option Grant Program of Nonemployee Directors and Executives, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model | The fair value of options granted, excluding options granted under the Stock Option Grant Program for Nonemployee Directors (“Nonemployee Director Awards”) and certain options granted to the Company’s executives in January and February 2015, is estimated at the date of grant using the Black-Scholes-Merton option-pricing model with the following assumptions for the periods presented: Year Ended December 31, 2016 2015 2014 Expected volatility 49% – 51% 54% – 56% 53% – 57% Expected dividend yield — — — Risk-free interest rate 0.89% – 1.89% 1.03% – 1.48% 1.37% – 1.55% Weighted-average expected life 3.80 years 4.26 years 4.58 years Weighted-average fair value of options granted $9.42 $13.77 $14.78 |
Summary of Restricted Stock Units Activity | The following table summarizes activity for restricted stock units for the year ended December 31, 2016: Restricted Stock Units Weighted- Unvested outstanding at January 1, 2016 2,605,514 $ 32.36 Granted 3,208,524 26.37 Vested (1,506,631 ) 30.94 Forfeited or cancelled (526,830 ) 27.35 Unvested outstanding at December 31, 2016 3,780,577 28.54 |
Effects of Share Based Compensation in Consolidated Statements of Operations | The following table presents the effects of share-based compensation in our consolidated statements of operations during the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Cost of revenue $ 5,923 $ 4,694 $ 1,844 Sales and marketing 23,320 25,391 7,320 Technology and development 31,466 26,849 11,681 General and administrative 46,209 48,280 13,240 Restructuring costs — 14,859 — $ 106,918 $ 120,073 $ 34,085 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net loss per share because their effect would have been antidilutive (in thousands): Year Ended December 31, 2016 2015 2014 Weighted-average Class A common stock and Class C capital stock option awards and stock appreciation rights outstanding 19,993 16,607 12,731 Weighted-average Class A common stock and Class C capital stock unvested restricted stock awards and restricted stock units outstanding 3,607 3,453 600 Class A common stock issuable upon conversion of the 2020 Notes 440 9,535 — Total Class A common stock and Class C capital stock equivalents 24,040 29,595 13,331 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Payments for All Operating Leases | Future minimum payments for all operating leases as of December 31, 2016 are as follows (in thousands): 2017 $ 22,122 2018 23,623 2019 22,282 2020 22,712 2021 22,942 All future years 57,780 Total future minimum lease payments $ 171,461 |
Purchase Commitments for Content Related to Mobile Applications and Websites | related to our mobile applications and websites totaling $120.3 million. The amounts due for this content as of December 31, 2016 are as follows (in thousands): 2017 $ 34,841 2018 32,750 2019 33,500 2020 14,750 2021 4,500 Total future purchase commitments $ 120,341 |
Segment Information and Reven47
Segment Information and Revenue (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Revenue Categories | The chief executive officer reviews information about revenue categories, including marketplace revenue and display revenue. The following table presents our revenue categories during the periods presented (in thousands): Year Ended December 31, 2016 2015 2014 Marketplace revenue: Premier Agent $ 604,292 $ 446,921 $ 224,248 Other real estate 102,635 35,171 14,791 Mortgages 71,133 44,263 28,203 Market Leader — 29,549 — Total Marketplace revenue 778,060 555,904 267,242 Display revenue 68,529 88,773 58,651 Total revenue $ 846,589 $ 644,677 $ 325,893 |
Summary of Significant Accoun48
Summary of Significant Accounting Policies - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2016USD ($)CategoriesCustomer | Dec. 31, 2015USD ($)Customer | Dec. 31, 2014USD ($)Customer | |
Schedule Of Significant Accounting Policies [Line Items] | |||
Other than temporary impairment loss | $ 0 | $ 0 | |
Amortization period, spread on perpetual rights contracts | 2 years | ||
Number of revenue categories | Categories | 2 | ||
Sale of product for fixed subscription, description | We continue to support some legacy Trulia Premier Agent products, which are primarily sold on a fixed fee subscription basis for periods that generally range from six months to 12 months, and include Trulia Seller Ads, which enable real estate professionals to generate leads from consumers interested in selling their homes. | ||
Purchase subscriptions to the products, maximum period | 12 months | ||
Purchase subscriptions to the products, minimum period | 6 months | ||
Number of customers generating more than 10% of total revenue | Customer | 0 | 0 | 0 |
Research and development expenses | $ 273,066,000 | $ 198,565,000 | $ 84,669,000 |
Advertising expenses | $ 120,200,000 | $ 103,400,000 | $ 73,100,000 |
Trulia | |||
Schedule Of Significant Accounting Policies [Line Items] | |||
Business acquisition, effective date | Feb. 17, 2015 | ||
Minimum | Customer Concentration Risk | Sales Revenue, Net | |||
Schedule Of Significant Accounting Policies [Line Items] | |||
Percentage of revenue | 10.00% | 10.00% | 10.00% |
Technology and Development | |||
Schedule Of Significant Accounting Policies [Line Items] | |||
Research and development expenses | $ 224,700,000 | $ 163,800,000 | $ 72,900,000 |
Software Development | |||
Schedule Of Significant Accounting Policies [Line Items] | |||
Expected useful lives | 1 year | ||
Purchased Content | Minimum | |||
Schedule Of Significant Accounting Policies [Line Items] | |||
Amortization period | 4 years 6 months | ||
Purchased Content | Maximum | |||
Schedule Of Significant Accounting Policies [Line Items] | |||
Amortization period | 9 years | ||
Software | |||
Schedule Of Significant Accounting Policies [Line Items] | |||
Amortization period | 3 years |
Useful Lives (Detail)
Useful Lives (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Property and equipment | 3 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Property and equipment | Shorter of expected useful life or lease term |
Minimum | Office equipment, furniture, and fixtures | |
Property, Plant and Equipment [Line Items] | |
Property and equipment | 5 years |
Maximum | Office equipment, furniture, and fixtures | |
Property, Plant and Equipment [Line Items] | |
Property and equipment | 7 years |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Original maturities date of money market funds | Less than three months | |
Liabilities measured at fair value | $ 0 | $ 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | $ 0 | $ 0 |
Fair Value of Cash Equivalents
Fair Value of Cash Equivalents and Investments (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted cash | $ 1,053 | $ 3,015 |
Short-term investments | 507,515 | 523,304 |
Total | 430,910 | 491,658 |
Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 166,527 | 195,870 |
Certificates of Deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 460 | 1,622 |
Short-term investments | 6,226 | 11,837 |
US Government Agencies Debt Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 162,312 | 193,168 |
Corporate Notes and Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 61,483 | 41,314 |
Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 14,952 | |
Municipal Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 11,912 | 39,853 |
Foreign Government Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 5,985 | 4,979 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 166,527 | 195,870 |
Fair Value, Inputs, Level 1 | Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 166,527 | 195,870 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Restricted cash | 1,053 | 3,015 |
Total | 264,383 | 295,788 |
Fair Value, Inputs, Level 2 | Certificates of Deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 460 | 1,622 |
Short-term investments | 6,226 | 11,837 |
Fair Value, Inputs, Level 2 | US Government Agencies Debt Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 162,312 | 193,168 |
Fair Value, Inputs, Level 2 | Corporate Notes and Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 61,483 | 41,314 |
Fair Value, Inputs, Level 2 | Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 14,952 | |
Fair Value, Inputs, Level 2 | Municipal Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 11,912 | 39,853 |
Fair Value, Inputs, Level 2 | Foreign Government Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | $ 5,985 | $ 4,979 |
Cash, Cash Equivalents, Inves52
Cash, Cash Equivalents, Investments and Restricted Cash - Additional Information (Detail) $ in Millions | Jan. 01, 2015USD ($) |
Cash and Cash Equivalents [Abstract] | |
Amount transferred from held-to-maturity to available-for-sale | $ 440.8 |
Amortized Cost, Gross Unrealize
Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents, Available-for-Sale Investments and Restricted Cash (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule of Investments [Line Items] | ||
Amortized Cost | $ 507,711 | $ 523,868 |
Gross Unrealized Gains | 34 | 14 |
Gross Unrealized Losses | (230) | (578) |
Estimated Fair Market Value | 507,515 | 523,304 |
Cash | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 76,605 | 31,646 |
Estimated Fair Market Value | 76,605 | 31,646 |
Certificates of Deposit | ||
Schedule of Investments [Line Items] | ||
Estimated Fair Market Value | 6,226 | 11,837 |
US Government Agencies Debt Securities | ||
Schedule of Investments [Line Items] | ||
Estimated Fair Market Value | 162,312 | 193,168 |
Corporate Notes and Bonds | ||
Schedule of Investments [Line Items] | ||
Estimated Fair Market Value | 61,483 | 41,314 |
Municipal Securities | ||
Schedule of Investments [Line Items] | ||
Estimated Fair Market Value | 11,912 | 39,853 |
Commercial Paper | ||
Schedule of Investments [Line Items] | ||
Estimated Fair Market Value | 14,952 | |
Foreign Government Securities | ||
Schedule of Investments [Line Items] | ||
Estimated Fair Market Value | 5,985 | 4,979 |
Restricted Cash | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 1,053 | 3,015 |
Estimated Fair Market Value | 1,053 | 3,015 |
Cash Equivalents | Money Market Funds | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 166,527 | 195,870 |
Estimated Fair Market Value | 166,527 | 195,870 |
Cash Equivalents | Certificates of Deposit | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 460 | 1,622 |
Estimated Fair Market Value | 460 | 1,622 |
Short-term Investments | Certificates of Deposit | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 6,226 | 11,839 |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | (3) | |
Estimated Fair Market Value | 6,226 | 11,837 |
Short-term Investments | US Government Agencies Debt Securities | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 162,438 | 193,623 |
Gross Unrealized Gains | 31 | 1 |
Gross Unrealized Losses | (157) | (456) |
Estimated Fair Market Value | 162,312 | 193,168 |
Short-term Investments | Corporate Notes and Bonds | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 61,530 | 41,390 |
Gross Unrealized Gains | 3 | 1 |
Gross Unrealized Losses | (50) | (77) |
Estimated Fair Market Value | 61,483 | 41,314 |
Short-term Investments | Municipal Securities | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 11,925 | 39,878 |
Gross Unrealized Gains | 11 | |
Gross Unrealized Losses | (13) | (36) |
Estimated Fair Market Value | 11,912 | 39,853 |
Short-term Investments | Commercial Paper | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 14,952 | |
Estimated Fair Market Value | 14,952 | |
Short-term Investments | Foreign Government Securities | ||
Schedule of Investments [Line Items] | ||
Amortized Cost | 5,995 | 4,985 |
Gross Unrealized Losses | (10) | (6) |
Estimated Fair Market Value | $ 5,985 | $ 4,979 |
Available-for-Sale Investments
Available-for-Sale Investments by Contractual Maturity (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Available-for-sale Securities, Debt Maturities [Abstract] | |
Amortized Cost, Due in one year or less | $ 206,815 |
Amortized Cost, Due after one year through two years | 56,251 |
Total | 263,066 |
Estimated Fair Market Value, Due in one year or less | 206,763 |
Estimated Fair Market Value, Due after one year through two years | 56,107 |
Total | $ 262,870 |
Accounts Receivable (Detail)
Accounts Receivable (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Receivables [Abstract] | ||||
Accounts receivable | $ 32,258 | $ 30,740 | ||
Unbilled accounts receivable | 9,606 | 2,427 | ||
Less: allowance for doubtful accounts | (1,337) | (3,378) | $ (2,811) | $ (1,850) |
Accounts receivable, net | $ 40,527 | $ 29,789 |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for doubtful accounts: | |||
Balance, beginning of period | $ 3,378 | $ 2,811 | $ 1,850 |
Additions charged to expense | 2,681 | 3,235 | 2,529 |
Less: write-offs, net of recoveries and other adjustments | (4,722) | (2,668) | (1,568) |
Balance, end of period | $ 1,337 | $ 3,378 | $ 2,811 |
Detail of Property and Equipmen
Detail of Property and Equipment (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 206,952 | $ 157,758 |
Less: accumulated amortization and depreciation | (108,664) | (72,235) |
Property and equipment, net | 98,288 | 85,523 |
Website development costs | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 102,130 | 74,750 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 28,175 | 20,965 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 37,923 | 32,918 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 19,470 | 15,630 |
Office equipment, furniture, and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 19,254 | $ 13,495 |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Amortization and depreciation expense related to property and equipment other than website development costs | $ 15,600 | $ 12,200 | $ 6,100 |
Capitalization of website development costs | 49,500 | 46,100 | 22,200 |
Amortization of website development costs and intangible assets included in technology and development | 84,951 | 63,189 | 29,487 |
Technology and Development | |||
Property, Plant and Equipment [Line Items] | |||
Amortization of website development costs and intangible assets included in technology and development | 44,900 | 39,300 | 11,100 |
Technology and Development | Software Development | |||
Property, Plant and Equipment [Line Items] | |||
Amortization of website development costs and intangible assets included in technology and development | $ 40,000 | $ 23,900 | $ 18,300 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) $ / shares in Units, $ in Thousands | Feb. 22, 2016USD ($) | Feb. 17, 2015USD ($)$ / sharesshares | Dec. 31, 2016 | Dec. 31, 2015USD ($) |
Business Acquisition [Line Items] | ||||
Converted share of fully paid | At the effective time of the merger, each share of Trulia common stock was converted into the right to receive 0.444 of a share of fully paid and nonassessable Zillow Group Class A common stock. | |||
Common stock exchange ratio | 0.444 | |||
Closing price of stock on date of acquisition | $ / shares | $ 109.14 | |||
Direct and incremental acquisition-related costs | ||||
Business Acquisition [Line Items] | ||||
Pro forma adjustments | $ 49,300 | |||
Share-based compensation expense attributable to substituted equity awards | ||||
Business Acquisition [Line Items] | ||||
Pro forma adjustments | 37,300 | |||
Restructuring costs associated with acquisition | ||||
Business Acquisition [Line Items] | ||||
Pro forma adjustments | 35,700 | |||
Amortization expense of acquired intangible assets | ||||
Business Acquisition [Line Items] | ||||
Pro forma adjustments | 2,400 | |||
2.75% Convertible Senior Notes Due 2020 | ||||
Business Acquisition [Line Items] | ||||
Fair value of Notes | $ 356,400 | |||
Debt instrument, aggregate principal amount | 230,000 | |||
Debt premium recorded in additional paid-in capital | 126,400 | |||
2.75% Convertible Senior Notes Due 2020 | Class A Common Stock | ||||
Business Acquisition [Line Items] | ||||
Common stock exchange ratio | 0.444 | |||
Trulia | ||||
Business Acquisition [Line Items] | ||||
Business acquisition purchase price in cash | 41 | |||
Business acquisition, purchase price | $ 1,966,420 | |||
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, expected volatility | 53.00% | |||
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, dividends | 0.00% | |||
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, risk-free interest rate | 1.10% | |||
Stock option and stock appreciation rights assumed of grant using the Black-Scholes-Merton option-pricing model, expected life | 3 years | |||
Indefinite-lived intangible asset | $ 549,000 | |||
Deferred tax liability | 139,500 | |||
Trulia | Class A Common Stock | ||||
Business Acquisition [Line Items] | ||||
Stock issued for acquisition | shares | 17,259,704 | |||
Trulia | Trade Names and Trademarks | ||||
Business Acquisition [Line Items] | ||||
Indefinite-lived intangible asset | $ 351,000 | $ 351,000 | ||
Naked Apartments Inc | ||||
Business Acquisition [Line Items] | ||||
Business acquisition purchase price in cash | $ 13,200 |
Purchase Price Allocation (Deta
Purchase Price Allocation (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Feb. 22, 2016 | Dec. 31, 2015 | Feb. 17, 2015 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 1,923,480 | $ 1,909,167 | ||
Naked Apartments Inc | ||||
Business Acquisition [Line Items] | ||||
Current assets | $ 371 | |||
Identifiable intangible assets | 3,700 | |||
Goodwill | 10,610 | |||
Current liabilities | (101) | |||
Deferred tax liabilities | (1,416) | |||
Total preliminary estimated purchase price | $ 13,164 | |||
Trulia | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 173,447 | |||
Accounts receivable | 13,093 | |||
Prepaid expenses and other current assets | 20,833 | |||
Restricted cash | 6,946 | |||
Property and equipment | 30,189 | |||
Other assets | 434 | |||
Identifiable intangible assets | 549,000 | |||
Goodwill | 1,736,362 | |||
Accounts payable, accrued expenses and other current liabilities | (51,258) | |||
Accrued compensation and benefits | (8,324) | |||
Deferred revenue | (8,300) | |||
Long-term debt | (230,000) | |||
Debt premium recorded in additional paid-in capital | (126,386) | |||
Deferred tax liabilities and other long-term liabilities | (139,616) | |||
Total preliminary estimated purchase price | $ 1,966,420 |
Summary of Purchase Price (Deta
Summary of Purchase Price (Detail) - Trulia $ in Thousands | Feb. 17, 2015USD ($) |
Business Acquisition [Line Items] | |
Cash paid in lieu of fractional outstanding shares | $ 41 |
Total purchase price | 1,966,420 |
Class A Common Stock | |
Business Acquisition [Line Items] | |
Value of stock issued and substituted share awards attributable to pre-combination service | 1,883,728 |
Stock Option and Stock Appreciation Rights | |
Business Acquisition [Line Items] | |
Value of stock issued and substituted share awards attributable to pre-combination service | 54,853 |
Restricted Stock Units | |
Business Acquisition [Line Items] | |
Value of stock issued and substituted share awards attributable to pre-combination service | $ 27,798 |
Fair Value of Identifiable Inta
Fair Value of Identifiable Intangible Assets Acquired (Detail) - Trulia - USD ($) $ in Thousands | Feb. 17, 2015 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||
Total Fair Value | $ 549,000 | |
Market Leader Trade Names and Trademarks | ||
Business Acquisition [Line Items] | ||
Total Fair Value | $ 2,000 | |
Estimated Useful Life (in years) | 2 years | |
Customer Relationships | ||
Business Acquisition [Line Items] | ||
Total Fair Value | $ 92,000 | |
Developed Technology | ||
Business Acquisition [Line Items] | ||
Total Fair Value | 91,000 | |
Advertising Relationships | ||
Business Acquisition [Line Items] | ||
Total Fair Value | $ 9,000 | |
Estimated Useful Life (in years) | 3 years | |
MLS Home Data Feeds | ||
Business Acquisition [Line Items] | ||
Total Fair Value | $ 4,000 | |
Estimated Useful Life (in years) | 3 years | |
Trade Names and Trademarks | ||
Business Acquisition [Line Items] | ||
Total Fair Value | $ 351,000 | $ 351,000 |
Minimum | Customer Relationships | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life (in years) | 3 years | |
Minimum | Developed Technology | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life (in years) | 3 years | |
Maximum | Customer Relationships | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life (in years) | 7 years | |
Maximum | Developed Technology | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life (in years) | 7 years |
Pro Forma Condensed Combined Fi
Pro Forma Condensed Combined Financial Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | [1] | |
Business Acquisition, Pro Forma Information [Abstract] | |||
Revenue | $ 846,589 | $ 679,935 | |
Net loss | $ (220,438) | $ (91,055) | |
[1] | The pro forma net loss for the year ended December 31, 2015 includes pro forma adjustments for $49.3 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $37.3 million to eliminate share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $35.7 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements and $2.4 million to record additional amortization expense for acquired intangible assets. |
Change in Goodwill (Detail)
Change in Goodwill (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Goodwill [Line Items] | |
Balance as of December 31, 2015 | $ 1,909,167 |
Reduction of goodwill in connection with the divestiture of a business | (1,196) |
Balance as of December 31, 2016 | 1,923,480 |
Naked Apartments Inc | |
Goodwill [Line Items] | |
Goodwill recorded in connection with the acquisition | 10,610 |
Bridge Interactive | |
Goodwill [Line Items] | |
Goodwill recorded in connection with the acquisition | $ 4,899 |
Intangible Assets (Detail)
Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 273,197 | $ 271,222 |
Accumulated Amortization | (96,733) | (63,341) |
Net | 176,464 | 207,881 |
Purchased Content | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 35,205 | 37,581 |
Accumulated Amortization | (15,508) | (19,649) |
Net | 19,697 | 17,932 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 9,712 | 6,961 |
Accumulated Amortization | (4,773) | (2,845) |
Net | 4,939 | 4,116 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 103,200 | 103,425 |
Accumulated Amortization | (30,952) | (16,204) |
Net | 72,248 | 87,221 |
Developed Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 110,080 | 108,295 |
Accumulated Amortization | (36,341) | (19,515) |
Net | 73,739 | 88,780 |
Trade Names and Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 4,900 | 4,860 |
Accumulated Amortization | (2,877) | (2,212) |
Net | 2,023 | 2,648 |
Advertising Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 9,000 | 9,000 |
Accumulated Amortization | (5,598) | (2,598) |
Net | 3,402 | 6,402 |
MLS Home Data Feeds | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,100 | 1,100 |
Accumulated Amortization | (684) | (318) |
Net | $ 416 | $ 782 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of website development costs and intangible assets included in technology and development | $ 84,951 | $ 63,189 | $ 29,487 |
Trulia | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite-lived intangible asset | 351,000 | 351,000 | |
Technology and Development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of website development costs and intangible assets included in technology and development | $ 44,900 | $ 39,300 | $ 11,100 |
Estimated Future Amortization E
Estimated Future Amortization Expense for Intangible Assets (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 45,608 |
2,018 | 39,243 |
2,019 | 33,391 |
2,020 | 32,525 |
2,021 | 32,145 |
All future years | 15,717 |
Total future amortization expense | $ 198,629 |
Summary of accrued expenses and
Summary of accrued expenses and other current liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Total accrued expenses and other current liabilities | $ 38,427 | $ 43,047 |
Accrued marketing and advertising | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Total accrued expenses and other current liabilities | 7,978 | 9,663 |
Accrued purchased content | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Total accrued expenses and other current liabilities | 8,382 | 8,385 |
Accrued legal fees | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Total accrued expenses and other current liabilities | 2,257 | 7,784 |
Merger consideration payable to former stockholders of certain acquired entities | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Total accrued expenses and other current liabilities | 5,904 | 5,317 |
Other accrued expenses and other current liabilities | ||
Accrued Expenses and Other Current Liabilities [Line Items] | ||
Total accrued expenses and other current liabilities | $ 13,906 | $ 11,898 |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional Information (Detail) | Dec. 12, 2016USD ($) | Feb. 17, 2015USD ($) | Dec. 31, 2016USD ($)d$ / shares | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | ||||
Proceeds from issuance of 2021 Notes, net of issuance costs | $ 447,784,000 | |||
Partial repurchase of 2020 Notes | 370,235,000 | |||
Premiums paid for Capped Call Confirmations | 36,616,000 | |||
Equity component of issuance of 2021 Notes | 91,400,000 | |||
Interest expense | 7,408,000 | $ 5,489,000 | ||
Amortization of discount and issuance costs | $ 883,000 | |||
Debt instrument amortization period | 59 months | |||
Portion of repurchase price recorded in additional paid-in capital | $ 127,615,000 | |||
Loss on debt extinguishment | $ 22,757,000 | |||
Common stock exchange ratio | 0.444 | |||
Class A Common Stock | Stock Split | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, conversion rate shares | 41.4550 | |||
Debt instrument, conversion rate principal amount | $ 1,000 | |||
Initial conversion price | $ / shares | $ 24.12 | |||
2.75% Convertible Senior Notes Due 2020 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate stated percentage | 2.75% | |||
Debt instrument, frequency of period payment | Semi-annually on June 15 and December 15 | |||
Debt instrument, due date | Dec. 15, 2020 | |||
Debt instrument, conversion rate shares | 27.8303 | |||
Debt instrument, conversion rate principal amount | $ 1,000 | |||
Debt instrument, redemption period start date | Dec. 20, 2018 | |||
Repurchase price percentage of principal amount | 100.00% | |||
Debt instrument, covenant description | There are no financial covenants associated with the 2020 Notes. | |||
Interest expense | $ 6,100,000 | 5,500,000 | ||
Accrued interest | 300,000 | |||
Fair value of convertible notes | $ 356,400,000 | |||
Debt instrument carrying value | $ 230,000,000 | 10,100,000 | 230,000,000 | |
Debt repurchase aggregate principal amount | 219,900,000 | |||
Portion of repurchase price recorded in additional paid-in capital | 127,600,000 | |||
Loss on debt extinguishment | $ 22,800,000 | |||
2.75% Convertible Senior Notes Due 2020 | Class A Common Stock | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, conversion rate shares | 12.3567 | |||
Initial conversion price | $ / shares | $ 80.93 | |||
Debt instrument, convertible threshold percentage | 130.00% | |||
Debt instrument, convertible threshold trading days | d | 20 | |||
Debt instrument, convertible threshold consecutive trading days | 30 days | |||
Common stock exchange ratio | 0.444 | |||
2.00% Convertible Senior Notes Due 2021 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, principal amount issued | $ 460,000,000 | |||
Debt instrument, interest rate stated percentage | 2.00% | |||
Debt instrument, frequency of period payment | Semiannually in arrears on June 1 and December 1 | |||
Debt instrument, date of first payment | Jun. 1, 2017 | |||
Debt instrument, due date | Dec. 1, 2021 | |||
Proceeds from issuance of 2021 Notes, net of issuance costs | $ 447,800,000 | |||
Partial repurchase of 2020 Notes | 370,200,000 | $ 370,200,000 | ||
Premiums paid for Capped Call Confirmations | 36,600,000 | |||
Debt instrument, earliest conversion date | Sep. 1, 2021 | |||
Debt instrument, redemption period start date | Dec. 6, 2019 | |||
Repurchase price percentage of principal amount | 100.00% | |||
Debt instrument, covenant description | There are no financial covenants associated with the 2021 Notes. | |||
Equity component of issuance of 2021 Notes | $ 91,400,000 | |||
Issuance of Convertible Senior notes, transaction costs | 12,200,000 | |||
Amount of fees paid | 11,500,000 | |||
Interest expense | 1,300,000 | |||
Amortization of discount and issuance costs | 900,000 | |||
Contractual coupon interest | $ 500,000 | |||
Effective interest rate | 7.44% | |||
Accrued interest | $ 500,000 | |||
Initial cap price | $ / shares | $ 69.19 | |||
Capped call confirmation premium percentage | 85.00% | |||
Debt instrument carrying value | $ 357,267,000 | |||
2.00% Convertible Senior Notes Due 2021 | Class C Capital Stock | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, conversion rate shares | 19.0985 | |||
Debt instrument, conversion rate principal amount | $ 1,000 | |||
Initial conversion price | $ / shares | $ 52.36 | |||
Debt instrument, convertible threshold percentage | 130.00% | |||
Debt instrument, convertible threshold trading days | d | 20 | |||
Debt instrument, convertible threshold consecutive trading days | 30 days | |||
2.00% Convertible Senior Notes Due 2021, Over-Allotment Option | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, principal amount issued | $ 60,000,000 | |||
Fair Value, Inputs, Level 3 | 2.75% Convertible Senior Notes Due 2020 | ||||
Debt Instrument [Line Items] | ||||
Fair value of convertible notes | $ 17,300,000 | $ 272,900,000 | ||
Fair Value, Inputs, Level 3 | 2.00% Convertible Senior Notes Due 2021 | ||||
Debt Instrument [Line Items] | ||||
Fair value of convertible notes | $ 474,200,000 |
Convertible Senior Notes - Outs
Convertible Senior Notes - Outstanding Principal Amount and Carrying Value (Detail) - 2.00% Convertible Senior Notes Due 2021 $ in Thousands | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | |
Outstanding Principal Amount | $ 460,000 |
Unamortized Debt Discount and Debt Issuance Costs | (102,733) |
Carrying Value | $ 357,267 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule Of Income Tax [Line Items] | ||||
Related income tax liability | $ 0 | $ 0 | $ 0 | |
Income tax benefit | 130,000 | (4,645,000) | ||
Increase/decrease in valuation allowance | 54,600,000 | 125,500,000 | ||
Unrecognized income tax accrued interest and penalties | 0 | |||
Unrecognized tax benefits | $ 15,395,000 | 13,980,000 | $ 6,493,000 | $ 5,123,000 |
Earliest Tax Year | ||||
Schedule Of Income Tax [Line Items] | ||||
Income tax year open for audit | 2,013 | |||
Latest Tax Year | ||||
Schedule Of Income Tax [Line Items] | ||||
Income tax year open for audit | 2,016 | |||
Share Based Compensation Liability | ||||
Schedule Of Income Tax [Line Items] | ||||
Net operating loss carryforwards | $ 337,600,000 | |||
Research And Development | ||||
Schedule Of Income Tax [Line Items] | ||||
Net operating loss carryforwards | $ 24,300,000 | 17,200,000 | ||
Tax credit carryforwards expiration year | 2,025 | |||
Federal | ||||
Schedule Of Income Tax [Line Items] | ||||
Net operating loss carryforwards | $ 893,300,000 | 735,200,000 | ||
State | ||||
Schedule Of Income Tax [Line Items] | ||||
Net operating loss carryforwards | $ 13,500,000 | $ 11,600,000 |
Components of Income Tax Benefi
Components of Income Tax Benefit (Expense) (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal | $ 1,248 | $ 2,838 |
State | (1,378) | 1,807 |
Deferred income tax benefit (expense) | $ (130) | $ 4,645 |
Reconciliation of Federal Statu
Reconciliation of Federal Statutory Rate and Effective Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Tax expense at federal statutory rate | (35.00%) | (35.00%) | (34.00%) |
State income taxes, net of federal tax benefit | (1.90%) | (2.30%) | (1.50%) |
Nondeductible expenses | 4.90% | 2.80% | 15.30% |
Share-based compensation | (0.20%) | 1.20% | 0.70% |
Research and development credits | (1.50%) | (4.10%) | (3.20%) |
Divestiture of businesses | 2.30% | ||
Other | (0.90%) | (1.00%) | |
Valuation allowance | 34.70% | 33.10% | 22.70% |
Effective tax rate | 0.10% | (3.00%) | (0.00%) |
Deferred Tax Assets and Liabili
Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Federal and state net operating loss carryforwards | $ 208,029 | $ 162,521 |
Share-based compensation | 67,482 | 45,969 |
Goodwill | 825 | |
Depreciation and amortization | 3,123 | 3,090 |
Start-up and organizational costs | 300 | 369 |
Research and development credits | 24,295 | 21,157 |
Other tax credits | 1,358 | 1,358 |
Accruals and reserves | 1,814 | 3,338 |
Deferred rent | 5,882 | 5,228 |
Other deferred tax assets | 14,544 | 550 |
Total deferred tax assets | 326,827 | 244,405 |
Deferred tax liabilities: | ||
Website and software development costs | (15,851) | (13,851) |
Goodwill | (363) | |
Intangible assets | (192,830) | (200,082) |
Discount on 2021 Notes not deductible for tax | (34,384) | |
Other deferred tax liabilities | (52) | |
Net deferred tax assets before valuation allowance | 83,399 | 30,420 |
Less: valuation allowance | (217,351) | (162,715) |
Net deferred tax liabilities | $ (133,952) | $ (132,295) |
Changes in Unrecognized Tax Ben
Changes in Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefits beginning balance | $ 13,980 | $ 6,493 | $ 5,123 |
Gross increases - prior and current period tax positions | 3,577 | ||
Gross increases - current period tax positions | 2,619 | 1,946 | |
Gross increases - assumed in connection with February 2015 acquisition of Trulia | 3,910 | ||
Gross decreases - prior period tax positions | (1,204) | (576) | |
Unrecognized tax benefits ending balance | $ 15,395 | $ 13,980 | $ 6,493 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) | Aug. 14, 2015shares | Dec. 31, 2016Vote$ / sharesshares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2014shares |
Class of Stock [Line Items] | ||||
Preferred stock, shares issued | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Stock split description | Outstanding equity awards to purchase or acquire shares of Class A common stock were proportionately adjusted to relate to one share of Class A common stock and two shares of Class C capital stock for each share of Class A common stock subject to the awards as of the record date, and the exercise prices of any such awards were also proportionately allocated between Class A common stock and Class C capital stock. | |||
Stock split ratio | 3 | |||
Class A Common Stock | ||||
Class of Stock [Line Items] | ||||
Common stock holders voting right | Vote | 1 | |||
Conversion of common stock conversion ratio | 1 | |||
Number of common stock issued | 0 | |||
Common stock, par value after Class C Stock Split | $ / shares | $ 0.0001 | $ 0.0001 | ||
Class B Common Stock | ||||
Class of Stock [Line Items] | ||||
Common stock holders voting right | Vote | 10 | |||
Number of common stock converted | 0 | 0 | 251,445 | |
Common stock, par value after Class C Stock Split | $ / shares | $ 0.0001 | $ 0.0001 | ||
Class C Capital Stock | ||||
Class of Stock [Line Items] | ||||
Common stock holders voting right | Vote | 0 | |||
Dividend declaration date | Jul. 21, 2015 | |||
Dividend record date | Jul. 31, 2015 | |||
Dividend payable date | Aug. 14, 2015 | |||
Distribution of shares for each class of common stock held as of record date | 2 | |||
Common stock, par value after Class C Stock Split | $ / shares | $ 0.0001 | $ 0.0001 |
Common and Capital Stock Reserv
Common and Capital Stock Reserved for Future Issuance (Detail) - shares | Dec. 31, 2016 | Dec. 31, 2015 |
Class of Stock [Line Items] | ||
Total | 42,513,729 | 36,637,349 |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Shares issuable upon conversion of outstanding Class B common stock | 6,217,447 | 6,217,447 |
Option Awards | ||
Class of Stock [Line Items] | ||
Option awards outstanding | 29,628,443 | 27,126,374 |
Option Awards | 2011 Plan | ||
Class of Stock [Line Items] | ||
Class A common stock and Class C capital stock available for grant under 2011 Plan | 2,887,262 | 688,014 |
Restricted Stock Units | ||
Class of Stock [Line Items] | ||
Restricted stock units outstanding | 3,780,577 | 2,605,514 |
Share-Based Awards - Zillow Gro
Share-Based Awards - Zillow Group, Inc. Incentive Plan - Additional Information (Detail) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock reserved for future issuance | 42,513,729 | 36,637,349 |
Amended and Restated 2011 Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock reserved for future issuance | 18,400,000 | |
Increase in number of shares of common and capital stock available for issuance percentage | 3.50% | |
Increase in number of shares of common and capital stock available for issuance | 10,500,000 | |
2011 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price per share fixed | 100.00% | |
2011 Plan | Option Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation arrangement by share based payment, award minimum exercisable period | 3 months | |
Share based compensation arrangement by share based payment, award maximum exercisable period | 12 months | |
Options vesting rights | Options granted under the 2011 Plan typically expire seven or 10 years from the grant date and typically vest either 25% after 12 months and ratably thereafter over the next 36 months or quarterly over a period of four years, though certain options have been granted with longer vesting schedules. | |
2011 Plan | Option Awards | Vesting After 12 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 25.00% | |
Vesting period | 12 months | |
2011 Plan | Option Awards | Vesting After 36 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 36 months | |
2011 Plan | Option Awards | Quarterly Vesting Over 4 Years | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
2011 Plan | Option Awards | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period | 7 years | |
2011 Plan | Option Awards | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period | 10 years | |
2011 Plan | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options vesting rights | Vest either 25% after 12 months and quarterly thereafter over the next three years or 12.5% after 6 months and quarterly thereafter for the next 3.5 years. | |
2011 Plan | Restricted Stock Units | Vesting After 12 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 25.00% | |
2011 Plan | Restricted Stock Units | Vesting After 36 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 12.50% | |
2011 Plan | Restricted Stock Units | Minimum | Vesting After 12 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 12 months | |
2011 Plan | Restricted Stock Units | Minimum | Vesting After 36 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 6 months | |
2011 Plan | Restricted Stock Units | Maximum | Vesting After 12 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
2011 Plan | Restricted Stock Units | Maximum | Vesting After 36 Months | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years 6 months |
Share-Based Awards - Trulia Sto
Share-Based Awards - Trulia Stock Incentive Plan - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
Trulia 2012 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period | 10 years |
Exercise price per share fixed | 100.00% |
Trulia 2005 Stock Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period | 10 years |
Options vesting rights | Certain options vest monthly over two to four years |
Trulia 2005 Stock Incentive Plan | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 12 months |
Trulia 2005 Stock Incentive Plan | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 36 months |
Trulia 2005 Stock Incentive Plan | Vesting After 12 Months | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 25.00% |
Summary of Option Award and Sto
Summary of Option Award and Stock Appreciation Rights Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Beginning Balance | 27,126,374 | |
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Granted | 6,235,414 | |
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Exercised | (2,518,172) | |
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Forfeited or cancelled | (1,215,173) | |
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Ending Balance | 29,628,443 | 27,126,374 |
Number of Shares Subject to Existing Option Awards and Stock Appreciation Rights, Vested and exercisable, Ending balance | 14,020,654 | |
Weighted-Average Exercise Price Per Share, Beginning Balance | $ 23.35 | |
Weighted-Average Exercise Price Per Share, Granted | 23.99 | |
Weighted-Average Exercise Price Per Share, Exercised | 12.41 | |
Weighted-Average Exercise Price Per Share, Forfeited or cancelled | 30.79 | |
Weighted-Average Exercise Price Per Share, Ending Balance | 24.11 | $ 23.35 |
Weighted-Average Exercise Price Per Share, Vested and exercisable | $ 20.38 | |
Weighted-Average Remaining Contractual Life (Years) | 5 years 11 months 19 days | 5 years 11 months 16 days |
Weighted-Average Remaining Contractual Life (Years), Vested and exercisable | 4 years 4 months 10 days | |
Aggregate Intrinsic Value | $ 376,004 | $ 156,025 |
Aggregate Intrinsic Value Vested, and exercisable | $ 230,819 |
Fair Value of Options Granted,
Fair Value of Options Granted, Excluding Stock Option Grant Program of Nonemployee Directors and Executives, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model (Detail) - Option Awards - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility, minimum | 49.00% | 54.00% | 53.00% |
Expected volatility, maximum | 51.00% | 56.00% | 57.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate, minimum | 0.89% | 1.03% | 1.37% |
Risk-free interest rate, maximum | 1.89% | 1.48% | 1.55% |
Weighted-average expected life | 3 years 9 months 18 days | 4 years 3 months 4 days | 4 years 6 months 29 days |
Weighted-average fair value of options granted | $ 9.42 | $ 13.77 | $ 14.78 |
Share-Based Awards - Option Awa
Share-Based Awards - Option Awards and Stock Appreciation Rights - Additional Information (Detail) - USD ($) | 1 Months Ended | 2 Months Ended | 12 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Feb. 28, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | $ 106,918,000 | $ 120,073,000 | $ 34,085,000 | |||
Share-based compensation arrangement by share-based payment award, option awards, exercises in period, total intrinsic value | 51,700,000 | $ 67,300,000 | $ 124,000,000 | |||
Stock Option and Stock Appreciation Rights | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized cost of unvested share-based compensation awards | $ 172,200,000 | |||||
Unrecognized compensation cost expected recognition period | 3 years | |||||
Option Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Fair value of options granted | $ 9.42 | $ 13.77 | $ 14.78 | |||
Weighted-average expected life | 3 years 9 months 18 days | 4 years 3 months 4 days | 4 years 6 months 29 days | |||
Fair value of options | $ 87,900,000 | $ 59,900,000 | $ 18,900,000 | |||
Stock Appreciation Rights | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total grant date fair value | $ 87,900,000 | 59,900,000 | 18,900,000 | |||
Director | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Option awards of Class A common stock and Class C capital stock granted | 93,995 | 47,175 | ||||
Fair value of options granted | $ 8.91 | $ 15.90 | ||||
Expected volatility | 51.00% | 57.00% | ||||
Risk-free interest rate | 1.12% | 1.01% | ||||
Weighted-average expected life | 4 years 3 months | 3 years 6 months | ||||
Executive Officer | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Option awards of Class A common stock and Class C capital stock granted | 3,450,000 | |||||
Expected volatility | 52.00% | |||||
Risk-free interest rate | 1.76% | |||||
Weighted-average expected life | 6 years 9 months 18 days | |||||
Fair value of option awards granted | $ 62,800,000 | |||||
Expected dividend | $ 0 | |||||
Options vesting rights | One-sixteenth of the total number of shares subject to the option awards vested and became exercisable on the first anniversary of the vesting commencement date. | |||||
Expiration period | 10 years | |||||
General and Administrative | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | $ 46,209,000 | 48,280,000 | $ 13,240,000 | |||
General and Administrative | Director | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation | $ 800,000 | $ 800,000 |
Summary of Restricted Stock Uni
Summary of Restricted Stock Units Activity (Detail) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Restricted Stock Units | |
Unvested outstanding, beginning balance | shares | 2,605,514 |
Granted | shares | 3,208,524 |
Vested | shares | (1,506,631) |
Forfeited or cancelled | shares | (526,830) |
Unvested outstanding, ending balance | shares | 3,780,577 |
Weighted-Average Grant-Date Fair Value | |
Unvested outstanding, beginning balance | $ / shares | $ 32.36 |
Granted | $ / shares | 26.37 |
Vested | $ / shares | 30.94 |
Forfeited or cancelled | $ / shares | 27.35 |
Unvested outstanding, ending balance | $ / shares | $ 28.54 |
Share-Based Awards - Restricted
Share-Based Awards - Restricted Stock Units - Additional Information (Detail) - Restricted Stock Units - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 3,208,524 | |||
Total fair value of restricted stock vested | $ 46.5 | $ 67.3 | $ 5.1 | |
Total unrecognized compensation cost | $ 98.9 | |||
Unrecognized compensation cost expected recognition period | 2 years 10 months 24 days | |||
Naked Apartments Inc | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value of restricted shares issued | $ 3.6 | |||
Naked Apartments Inc | Retention Bonus Plan Member | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 161,883 | |||
Naked Apartments Inc | Retention Bonus Plan Member | Vesting After 2.5 Years | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 139,075 | |||
Award vesting rights | One-sixth of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 2.5 years. | |||
Vesting percentage | 16.67% | |||
Vesting commencement date of restricted shares | Aug. 22, 2016 | |||
Vesting period | 2 years 6 months | |||
Naked Apartments Inc | Retention Bonus Plan Member | Vesting After 1.5 Years | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 22,808 | |||
Award vesting rights | 25% of the restricted stock units vested on August 22, 2016, and the remaining restricted stock units vest quarterly thereafter over the next 1.5 years. | |||
Vesting percentage | 25.00% | |||
Vesting commencement date of restricted shares | Aug. 22, 2016 | |||
Vesting period | 1 year 6 months |
Effects of Share Based Compensa
Effects of Share Based Compensation in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | $ 106,918 | $ 120,073 | $ 34,085 |
Cost of Revenue | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | 5,923 | 4,694 | 1,844 |
Sales and Marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | 23,320 | 25,391 | 7,320 |
Technology and Development | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | 31,466 | 26,849 | 11,681 |
General and Administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | $ 46,209 | 48,280 | $ 13,240 |
Restructuring Costs | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation | $ 14,859 |
Antidilutive Securities Exclude
Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Class A Common Stock and Class C Capital Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share | 24,040 | 29,595 | 13,331 |
Class A Common Stock and Class C Capital Stock | Option Awards | Weighted Average | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share | 19,993 | 16,607 | 12,731 |
Class A Common Stock and Class C Capital Stock | Restricted Stock Awards and Restricted Stock Units | Weighted Average | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share | 3,607 | 3,453 | 600 |
Class A Common Stock | 2.75% Convertible Senior Notes Due 2020 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Class A common stock and Class C capital stock equivalents excluded from calculations of diluted net income (loss) per share | 440 | 9,535 |
Net Loss Per Share - Additional
Net Loss Per Share - Additional Information (Detail) - 2.00% Convertible Senior Notes Due 2021 shares in Millions | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |
Conversion spread, shares | shares | 8.8 |
Class C Capital Stock | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |
Conversion price | $ / shares | $ 52.36 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Thousands | Jun. 06, 2016USD ($) | Nov. 30, 2012ft² | May 31, 2015ft² | Sep. 30, 2010Patent | Dec. 31, 2016USD ($)ft² | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Jul. 31, 2015ft² | Feb. 17, 2015ft² | Feb. 28, 2014ft² | Apr. 30, 2012ft² | Mar. 01, 2011ft² |
Other Commitments [Line Items] | ||||||||||||
Rent expense | $ 16,600 | $ 14,900 | $ 7,500 | |||||||||
Minimum rentals to be received in future under noncancelable subleases | 3,300 | |||||||||||
Non-cancelable purchase commitments | 120,341 | |||||||||||
Outstanding surety bonds | 3,600 | $ 3,400 | ||||||||||
Payment for settlement of claims | $ 130,000 | |||||||||||
Loss contingency accrual | 6,000 | |||||||||||
Seattle, Washington | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Outstanding letters of credit | $ 1,800 | |||||||||||
Seattle, Washington | Operating Lease | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Rentable area of the premises | ft² | 200,426 | |||||||||||
Lease agreement term | 145 months | |||||||||||
New York | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Outstanding letters of credit | $ 1,100 | |||||||||||
New York | Operating Lease | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Rentable area of the premises | ft² | 39,900 | |||||||||||
Lease agreement term | 124 months | |||||||||||
New York | Sublet | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Rentable area of the premises | ft² | 6,650 | |||||||||||
Denver, Colorado | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Outstanding letters of credit | $ 1,100 | |||||||||||
Denver, Colorado | Operating Lease | Trulia | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Rentable area of the premises | ft² | 64,908 | |||||||||||
Lease agreement term | 79 months | |||||||||||
Irvine, California | Operating Lease | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Rentable area of the premises | ft² | 60,074 | |||||||||||
Lease agreement term | 120 months | |||||||||||
San Francisco, California | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Outstanding letters of credit | $ 5,200 | |||||||||||
San Francisco, California | Operating Lease | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Rentable area of the premises | ft² | 18,353 | 105,897 | ||||||||||
Lease agreement term | 72 months | 107 months | ||||||||||
Additional area of office space leased | ft² | 8,311 | |||||||||||
LendingTree, LLC | ||||||||||||
Other Commitments [Line Items] | ||||||||||||
Number of patents infringed | Patent | 2 | |||||||||||
Allegations and asserted defenses | In March 2014, a federal jury found that Zillow does not infringe the patents and that the patents asserted by LendingTree are invalid. |
Future Minimum Payments for All
Future Minimum Payments for All Operating Leases (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 22,122 |
2,018 | 23,623 |
2,019 | 22,282 |
2,020 | 22,712 |
2,021 | 22,942 |
All future years | 57,780 |
Total future minimum lease payments | $ 171,461 |
Purchase Commitments for Conten
Purchase Commitments for Content Related to Mobile Applications and Websites (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 34,841 |
2,018 | 32,750 |
2,019 | 33,500 |
2,020 | 14,750 |
2,021 | 4,500 |
Total future purchase commitments | $ 120,341 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) | 1 Months Ended | ||||
Oct. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2015 | Dec. 31, 2016 | Apr. 30, 2016 | |
Mr.Richard Barton | |||||
Related Party Transaction [Line Items] | |||||
Payment of filing fees | $ 300,000 | ||||
Accrual gross-up payment | $ 100,000 | ||||
Reimbursement of costs incurred | $ 200,000 | ||||
Mr.Lloyd Frink | |||||
Related Party Transaction [Line Items] | |||||
Reimbursement of costs incurred | $ 200,000 | ||||
Variable Interest Entity, Not Primary Beneficiary | |||||
Related Party Transaction [Line Items] | |||||
Percentage of equity interest in variable interest entity | 10.00% | ||||
Maximum exposure to loss in variable interest entity | $ 10,000,000 | ||||
Other Assets | Variable Interest Entity, Not Primary Beneficiary | |||||
Related Party Transaction [Line Items] | |||||
Cost method investment | $ 10,000,000 |
Self-Insurance - Additional Inf
Self-Insurance - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Insurance [Line Items] | ||
Minimum amount of individual claim under self insurance plan | $ 150,000 | |
Liability for self-insured claims included in accrued compensation and benefits | $ 1,700,000 | $ 500,000 |
Minimum | ||
Insurance [Line Items] | ||
Percentage of cumulative medical claim under self insurance plan | 125.00% |
Employee Benefit Plan - Additio
Employee Benefit Plan - Additional Information (Detail) - Zillow Merger - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Contribution Plan Disclosure [Line Items] | ||
Company's expense related to its defined contribution 401(k) retirement plans | $ 10.1 | $ 4.2 |
Maximum | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Company's contribution based on employee contribution | 4.00% |
Segment Information and Reven94
Segment Information and Revenue - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2016Segment | |
Segment Reporting [Abstract] | |
Number of reportable segment | 1 |
Revenue Categories (Detail)
Revenue Categories (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | |||
Total Marketplace revenue | $ 778,060 | $ 555,904 | $ 267,242 |
Display revenue | 68,529 | 88,773 | 58,651 |
Total revenue | 846,589 | 644,677 | 325,893 |
Premier Agent | |||
Revenues: | |||
Total Marketplace revenue | 604,292 | 446,921 | 224,248 |
Other Real Estate | |||
Revenues: | |||
Total Marketplace revenue | 102,635 | 35,171 | 14,791 |
Mortgages Revenue | |||
Revenues: | |||
Total Marketplace revenue | $ 71,133 | 44,263 | $ 28,203 |
Market Leader Revenue | |||
Revenues: | |||
Total Marketplace revenue | $ 29,549 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
HREO | |
Subsequent Event [Line Items] | |
Business acquisition, effective date | Jan. 11, 2017 |