Exhibit 99.2
Reported Consolidated Results
ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions) | | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 1,973 | | | $ | 2,315 | |
| Short-term investments | 1,516 | | | 514 | |
| Accounts receivable, net | 78 | | | 77 | |
| Mortgage loans held for sale | 49 | | | 107 | |
| Prepaid expenses and other current assets | 153 | | | 140 | |
| Restricted cash | 2 | | | 1 | |
| Current assets of discontinued operations | — | | | 4,526 | |
| Total current assets | 3,771 | | | 7,680 | |
| Contract cost assets | 25 | | | 35 | |
| Property and equipment, net | 261 | | | 215 | |
| Right of use assets | 127 | | | 130 | |
| Goodwill | 2,374 | | | 2,374 | |
| Intangible assets, net | 149 | | | 176 | |
| Other assets | 11 | | | 3 | |
| Noncurrent assets of discontinued operations | — | | | 82 | |
| Total assets | $ | 6,718 | | | $ | 10,695 | |
| Liabilities and shareholders’ equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 19 | | | $ | 11 | |
| Accrued expenses and other current liabilities | 112 | | | 89 | |
| Accrued compensation and benefits | 56 | | | 61 | |
| Borrowings under credit facilities | 45 | | | 113 | |
| Deferred revenue | 50 | | | 51 | |
| Lease liabilities, current portion | 30 | | | 24 | |
| Current liabilities of discontinued operations | — | | | 3,533 | |
| Total current liabilities | 312 | | | 3,882 | |
| Lease liabilities, net of current portion | 141 | | | 148 | |
| Convertible senior notes | 1,659 | | | 1,319 | |
| Other long-term liabilities | 11 | | | 5 | |
| Total liabilities | 2,123 | | | 5,354 | |
| Shareholders’ equity: | | | |
| Class A common stock | — | | | — | |
| Class B common stock | — | | | — | |
| Class C capital stock | — | | | — | |
| Additional paid-in capital | 6,154 | | | 7,001 | |
| Accumulated other comprehensive income (loss) | (19) | | | 7 | |
| Accumulated deficit | (1,540) | | | (1,667) | |
| Total shareholders’ equity | 4,595 | | | 5,341 | |
| Total liabilities and shareholders’ equity | $ | 6,718 | | | $ | 10,695 | |
ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share data, which are presented in thousands, and per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | |
| | 2022 | | 2021 | | 2022 | | 2021 | | | | |
| Revenue | $ | 483 | | | $ | 550 | | | $ | 1,523 | | | $ | 1,597 | | | | | |
| Cost of revenue (1) | 89 | | | 82 | | | 278 | | | 228 | | | | | |
| Gross profit | 394 | | | 468 | | | 1,245 | | | 1,369 | | | | | |
| Operating expenses: | | | | | | | | | | | |
| Sales and marketing (1) | 165 | | | 205 | | | 502 | | | 532 | | | | | |
| Technology and development (1) | 142 | | | 101 | | | 369 | | | 319 | | | | | |
| General and administrative (1) | 138 | | | 104 | | | 370 | | | 303 | | | | | |
| Restructuring costs (1) | — | | | — | | | 14 | | | — | | | | | |
| Acquisition-related costs | — | | | 3 | | | — | | | 8 | | | | | |
| Total operating expenses | 445 | | | 413 | | | 1,255 | | | 1,162 | | | | | |
| Income (loss) from continuing operations | (51) | | | 55 | | | (10) | | | 207 | | | | | |
| Loss on extinguishment of debt | — | | | (15) | | | — | | | (17) | | | | | |
| Other income, net | 12 | | | 2 | | | 19 | | | 5 | | | | | |
| Interest expense | (9) | | | (29) | | | (26) | | | (99) | | | | | |
| Income (loss) from continuing operations before income taxes | (48) | | | 13 | | | (17) | | | 96 | | | | | |
| Income tax benefit (expense) | (3) | | | 5 | | | 1 | | | — | | | | | |
| Net income (loss) from continuing operations | (51) | | | 18 | | | (16) | | | 96 | | | | | |
| Net loss from discontinued operations, net of income taxes | (2) | | | (347) | | | (13) | | | (363) | | | | | |
| Net loss | $ | (53) | | | $ | (329) | | | $ | (29) | | | $ | (267) | | | | | |
| Net income (loss) from continuing operations per share: | | | | | | | | | | | |
| Basic | $ | (0.21) | | | $ | 0.07 | | | $ | (0.07) | | | $ | 0.39 | | | | | |
| Diluted | $ | (0.21) | | | $ | 0.07 | | | $ | (0.07) | | | $ | 0.37 | | | | | |
| Net loss per share: | | | | | | | | | | | |
| Basic | $ | (0.22) | | | $ | (1.29) | | | $ | (0.12) | | | $ | (1.07) | | | | | |
| Diluted | $ | (0.22) | | | $ | (1.24) | | | $ | (0.12) | | | $ | (1.02) | | | | | |
| Weighted-average shares outstanding: | | | | | | | | | | | |
| Basic | 240,080 | | | 254,074 | | | 244,157 | | | 248,564 | | | | | |
| Diluted | 240,080 | | | 265,112 | | | 244,157 | | | 262,043 | | | | | |
| (1) Includes share-based compensation expense as follows: | | | | | | | | | | | |
| Cost of revenue | $ | 5 | | | $ | 2 | | | $ | 12 | | | $ | 7 | | | | | |
| Sales and marketing | 21 | | | 11 | | | 46 | | | 31 | | | | | |
| Technology and development | 57 | | | 25 | | | 123 | | | 78 | | | | | |
| General and administrative | 64 | | | 32 | | | 142 | | | 88 | | | | | |
| Restructuring costs | — | | | — | | | 2 | | | — | | | | | |
| Share-based compensation - continuing operations | $ | 147 | | | $ | 70 | | | $ | 325 | | | $ | 204 | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other Financial Data: | | | | | | | | | | | |
| Income (loss) from continuing operations before income taxes: | | | | | | | | | | | |
| IMT segment | $ | 5 | | | $ | 130 | | | $ | 182 | | | $ | 407 | | | | | |
| Mortgages segment | (51) | | | (6) | | | (116) | | | (26) | | | | | |
| Homes segment | (8) | | | (69) | | | (80) | | | (175) | | | | | |
| Corporate items (2) | 6 | | | (42) | | | (3) | | | (110) | | | | | |
| Total income (loss) from continuing operations before income taxes | $ | (48) | | | $ | 13 | | | $ | (17) | | | $ | 96 | | | | | |
| Adjusted EBITDA (3): | | | | | | | | | | | |
| IMT segment | $ | 164 | | | $ | 206 | | | $ | 559 | | | $ | 633 | | | | | |
| Mortgages segment | (27) | | | 5 | | | (60) | | | 5 | | | | | |
| Homes segment | (7) | | | (55) | | | (58) | | | (138) | | | | | |
| Total Adjusted EBITDA | $ | 130 | | | $ | 156 | | | $ | 441 | | | $ | 500 | | | | | |
(2) Certain corporate items are not directly attributable to any of our segments, including loss on extinguishment of debt, interest income earned on our short-term investments included in other income and interest costs on our convertible senior notes included in interest expense. (3) Adjusted EBITDA is a non-GAAP financial measure; it is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. See Exhibit 99.1 for more information regarding our presentation of Adjusted EBITDA and for a reconciliation of Adjusted EBITDA to net loss on a consolidated basis and income (loss) from continuing operations before income taxes for each segment, the most directly comparable GAAP financial measures, for each of the periods presented. Adjusted EBITDA on a consolidated basis and for each segment excludes the impact of discontinued operations. |
ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) | | | | | | | | | | | |
| | Nine Months Ended
September 30, |
| | 2022 | | 2021 |
| Operating activities | | | |
| Net loss | $ | (29) | | | $ | (267) | |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | |
| Depreciation and amortization | 121 | | | 88 | |
| Share-based compensation | 341 | | | 231 | |
| Amortization of right of use assets | 17 | | | 18 | |
| Amortization of contract cost assets | 23 | | | 32 | |
| Amortization of debt discount and debt issuance costs | 24 | | | 72 | |
| Loss on extinguishment of debt | 21 | | | 17 | |
| Inventory valuation adjustment | 9 | | | 304 | |
| Other adjustments to reconcile net loss to cash provided by (used in) operating activities | (9) | | | 10 | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | 76 | | | (89) | |
| Mortgage loans held for sale | 58 | | | 110 | |
| Inventory | 3,904 | | | (3,570) | |
| Prepaid expenses and other assets | (13) | | | (70) | |
| Contract cost assets | (13) | | | (22) | |
| Lease liabilities | (15) | | | (21) | |
| Accounts payable | 1 | | | 17 | |
| Accrued expenses and other current liabilities | (49) | | | 163 | |
| Accrued compensation and benefits | (52) | | | 11 | |
| Deferred revenue | (1) | | | 4 | |
| Other long-term liabilities | 6 | | | — | |
| Net cash provided by (used in) operating activities | 4,420 | | | (2,962) | |
| Investing activities | | | |
| Proceeds from maturities of investments | 455 | | | 1,696 | |
| Purchases of investments | (1,474) | | | (509) | |
| Purchases of property and equipment | (87) | | | (45) | |
| Purchases of intangible assets | (17) | | | (24) | |
| Cash paid for acquisition, net | — | | | (497) | |
| Net cash provided by (used in) investing activities | (1,123) | | | 621 | |
| Financing activities | | | |
| Proceeds from issuance of Class C capital stock, net of issuance costs | — | | | 545 | |
| Proceeds from issuance of term loan, net of issuance costs | — | | | 443 | |
| Proceeds from borrowings on credit facilities | — | | | 2,639 | |
| Repayments of borrowings on credit facilities | (2,205) | | | (535) | |
| Net repayments on warehouse line of credit and repurchase agreements | (68) | | | (101) | |
| Repurchases of Class A common stock and Class C capital stock | (773) | | | — | |
| Settlement of long-term debt | (1,158) | | | (1) | |
| Proceeds from exercise of stock options | 44 | | | 98 | |
| Net cash provided by (used in) financing activities | (4,160) | | | 3,088 | |
| Net increase (decrease) in cash, cash equivalents and restricted cash during period | (863) | | | 747 | |
| Cash, cash equivalents and restricted cash at beginning of period | 2,838 | | | 1,779 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 1,975 | | | $ | 2,526 | |
| Supplemental disclosures of cash flow information | | | |
| Cash paid for interest | $ | 42 | | | $ | 58 | |
| Cash paid for taxes | 5 | | | — | |
| Noncash transactions: | | | |
| Write-off of fully amortized intangible assets | $ | 200 | | | $ | 55 | |
| Write-off of fully depreciated property and equipment | 48 | | | 38 | |
| Capitalized share-based compensation | 33 | | | 19 | |
| Recognition (derecognition) of operating right of use assets and lease liabilities | 14 | | | (12) | |
| Property and equipment purchased on account | 2 | | | 2 | |
| Issuance (settlement) of beneficial interests in securitizations | (79) | | | 25 | |
Non-GAAP Net Income per Share
Our presentation of non-GAAP net income per share excludes the impact of the results of discontinued operations, share-based compensation, restructuring costs, acquisition-related costs, the loss on extinguishment of debt and income taxes. This measure is not a key metric used by our management and board of directors to measure operating performance or otherwise manage the business. However, we provide non-GAAP net income per share as supplemental information to investors, as we believe the exclusion of the results of discontinued operations, share-based compensation, restructuring costs, acquisition-related costs, the loss on extinguishment of debt and income taxes facilitates investors’ operating performance comparisons on a period-to-period basis. You should not consider non-GAAP net income per share in isolation or as a substitute for analysis of our results as reported under GAAP.
The following table sets forth a reconciliation of non-GAAP net income, adjusted, to net loss, as reported on a GAAP basis, and the calculation of non-GAAP net income per share - basic and diluted, for each of the periods presented (in millions, except share data, which are presented in thousands, and per share data, unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, | | |
| | 2022 | | 2021 | | 2022 | | 2021 | | | | |
| Net loss, as reported | $ | (53) | | | $ | (329) | | | $ | (29) | | | $ | (267) | | | | | |
| Net loss from discontinued operations, net of income taxes | 2 | | | 347 | | | 13 | | | 363 | | | | | |
| Share-based compensation | 147 | | | 70 | | | 323 | | | 204 | | | | | |
| Restructuring costs | — | | | — | | | 14 | | | — | | | | | |
| Acquisition-related costs | — | | | 3 | | | — | | | 8 | | | | | |
| Loss on extinguishment of debt | — | | | 15 | | | — | | | 17 | | | | | |
| Income taxes | 3 | | | (5) | | | (1) | | | — | | | | | |
| Net income, adjusted | $ | 99 | | | $ | 101 | | | $ | 320 | | | $ | 325 | | | | | |
| Non-GAAP net income per share: | | | | | | | | | | | |
| Basic | $ | 0.41 | | | $ | 0.40 | | | $ | 1.31 | | | $ | 1.31 | | | | | |
| Diluted | $ | 0.38 | | | $ | 0.38 | | | $ | 1.22 | | | $ | 1.24 | | | | | |
| Weighted-average shares outstanding: | | | | | | | | | | | |
| Basic | 240,080 | | | 254,074 | | | 244,157 | | | 248,564 | | | | | |
| Diluted | 266,211 | | | 265,112 | | | 271,369 | | | 262,043 | | | | | |
Diluted non-GAAP net income per share for the periods presented is calculated using diluted weighted-average shares outstanding, which includes potential shares of Class A common stock and Class C capital stock for the periods in which their effect would have been dilutive. The potential shares of Class A common stock and Class C capital stock were excluded from the calculation of non-GAAP net income per share for certain periods presented if their effect would have been antidilutive. The following table reconciles the denominators used in the basic and diluted non-GAAP net income per share calculations (in thousands, unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, | | |
| | 2022 | | 2021 | | 2022 | | 2021 | | | | |
| Denominator for basic calculation | 240,080 | | | 254,074 | | | 244,157 | | | 248,564 | | | | | |
| Effect of dilutive securities: | | | | | | | | | | | |
| Option awards | 523 | | | 8,874 | | | 1,341 | | | 10,581 | | | | | |
| Unvested restricted stock units | 162 | | | 2,164 | | | 425 | | | 2,898 | | | | | |
| Convertible senior notes due in 2024 and 2026 | 25,446 | | | — | | | 25,446 | | | — | | | | | |
| Denominator for dilutive calculation | 266,211 | | | 265,112 | | | 271,369 | | | 262,043 | | | | | |
Segment Results of Operations
The following tables present our segment results for the periods presented (in millions, unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, 2022 | | Three Months Ended
September 30, 2021 |
| IMT | | Mortgages | | Homes | | IMT | | Mortgages | | Homes |
| Revenue: | | | | | | | | | | | |
| Premier Agent | $ | 312 | | | $ | — | | | $ | — | | | $ | 359 | | | $ | — | | | $ | — | |
| Rentals | 74 | | | — | | | — | | | 67 | | | — | | | — | |
| Other | 71 | | | — | | | — | | | 54 | | | — | | | — | |
| Mortgages | — | | | 26 | | | — | | | — | | | 70 | | | — | |
| Total revenue | 457 | | | 26 | | | — | | | 480 | | | 70 | | | — | |
| Cost of revenue | 67 | | | 17 | | | 5 | | | 51 | | | 22 | | | 9 | |
| Gross profit | 390 | | | 9 | | | (5) | | | 429 | | | 48 | | | (9) | |
| Operating expenses: | | | | | | | | | | | |
| Sales and marketing | 145 | | | 20 | | | — | | | 159 | | | 29 | | | 17 | |
| Technology and development | 126 | | | 16 | | | — | | | 75 | | | 7 | | | 19 | |
| General and administrative | 110 | | | 25 | | | 3 | | | 62 | | | 18 | | | 24 | |
| Acquisition-related costs | — | | | — | | | — | | | 3 | | | — | | | — | |
| Total operating expenses | 381 | | | 61 | | | 3 | | | 299 | | | 54 | | | 60 | |
| Income (loss) from continuing operations | 9 | | | (52) | | | (8) | | | 130 | | | (6) | | | (69) | |
| Segment other income (expense) | (4) | | | 1 | | | — | | | — | | | 1 | | | — | |
| Segment interest expense | — | | | — | | | — | | | — | | | (1) | | | — | |
| Income (loss) from continuing operations before income taxes (1) | $ | 5 | | | $ | (51) | | | $ | (8) | | | $ | 130 | | | $ | (6) | | | $ | (69) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended
September 30, 2022 | | Nine Months Ended
September 30, 2021 |
| IMT | | Mortgages | | Homes | | IMT | | Mortgages | | Homes |
| Revenue: | | | | | | | | | | | |
| Premier Agent | $ | 1,008 | | | $ | — | | | $ | — | | | $ | 1,042 | | | $ | — | | | $ | — | |
| Rentals | 206 | | | — | | | — | | | 204 | | | — | | | — | |
| Other | 208 | | | — | | | — | | | 156 | | | — | | | — | |
| Mortgages | — | | | 101 | | | — | | | — | | | 195 | | | — | |
| Total revenue | 1,422 | | | 101 | | | — | | | 1,402 | | | 195 | | | — | |
| Cost of revenue | 203 | | | 54 | | | 21 | | | 141 | | | 62 | | | 25 | |
| Gross profit | 1,219 | | | 47 | | | (21) | | | 1,261 | | | 133 | | | (25) | |
| Operating expenses: | | | | | | | | | | | |
| Sales and marketing | 430 | | | 61 | | | 11 | | | 413 | | | 81 | | | 38 | |
| Technology and development | 323 | | | 37 | | | 9 | | | 244 | | | 24 | | | 51 | |
| General and administrative | 274 | | | 63 | | | 33 | | | 189 | | | 53 | | | 61 | |
| Restructuring costs | 6 | | | 2 | | | 6 | | | — | | | — | | | — | |
| Acquisition-related costs | — | | | — | | | — | | | 8 | | | — | | | — | |
| Total operating expenses | 1,033 | | | 163 | | | 59 | | | 854 | | | 158 | | | 150 | |
| Income (loss) from continuing operations | 186 | | | (116) | | | (80) | | | 407 | | | (25) | | | (175) | |
| Segment other income (expense) | (4) | | | 2 | | | — | | | — | | | 3 | | | — | |
| Segment interest expense | — | | | (2) | | | — | | | — | | | (4) | | | — | |
| Income (loss) from continuing operations before income taxes (1) | $ | 182 | | | $ | (116) | | | $ | (80) | | | $ | 407 | | | $ | (26) | | | $ | (175) | |
(1) The following table presents the reconciliation of total segment income (loss) from continuing operations before income taxes to consolidated income (loss) from continuing operations before income taxes for the periods presented (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, | | |
| 2022 | | 2021 | | 2022 | | 2021 | | | | |
| Total segment income (loss) from continuing operations before income taxes | $ | (54) | | | $ | 55 | | | $ | (14) | | | $ | 206 | | | | | |
| Corporate interest expense | (9) | | | (28) | | | (24) | | | (95) | | | | | |
| Corporate other income | 15 | | | 1 | | | 21 | | | 2 | | | | | |
| Loss on extinguishment of debt | — | | | (15) | | | — | | | (17) | | | | | |
| Consolidated income (loss) from continuing operations before income taxes | $ | (48) | | | $ | 13 | | | $ | (17) | | | $ | 96 | | | | | |
| | | | | | | | |
| Certain corporate items are not directly attributable to any of our segments, including loss on extinguishment of debt, interest income earned on our short-term investments included in other income and interest costs on our convertible senior notes included in interest expense. |
Key Metrics
The following table presents our visits and average monthly unique users for each of the periods presented (in millions): | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | 2021 to 2022
% Change |
| | 2022 | | 2021 | |
| Visits (1) | 2,767 | | | 2,662 | | | 4 | % |
| Average monthly unique users (2) | 236 | | | 227 | | | 4 | % |
| | | | | |
| (1) Visits includes visits to the Zillow, Trulia and StreetEasy mobile apps and websites. We measure Zillow and StreetEasy visits with Google Analytics and Trulia visits with Adobe Analytics. |
| (2) Zillow, StreetEasy and HotPads measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics. |
The following table presents loan origination volume by purpose and in total for Zillow Home Loans for the periods presented (in millions): | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | 2021 to 2022
% Change |
| 2022 | | 2021 | |
| Purchase loan origination volume | $ | 240 | | | $ | 359 | | | (33) | % |
| Refinance loan origination volume | 31 | | | 754 | | | (96) | % |
| Total loan origination volume | $ | 271 | | | $ | 1,113 | | | (76) | % |
