Zillow® Group, Inc. (NASDAQ:Z) (NASDAQ:ZG), which houses a
portfolio of the largest and most vibrant real estate and
home-related brands on mobile and Web, today announced its
consolidated financial results for the quarter and full year ended
December 31, 2015.
“Last year was a strategically exciting one for
Zillow Group,” said Zillow Group CEO Spencer Rascoff. “Through our
acquisition of Trulia, we formed the largest real estate media
company in the world and have now established the foundation for
our long-term growth and category leadership. This year we’ll be
focused on the strategic priorities of growing our audience,
growing our agent advertiser business, growing our emerging
marketplaces and continuing to maintain our extraordinary company
culture which attracts, retains and motivates extraordinary people
to do their best work. I couldn’t be more excited about what we
plan to accomplish in 2016.”
Fourth Quarter 2015 Financial
Highlights
Throughout this release, financial results are
presented on both a reported and pro forma basis. Reported results
were prepared in accordance with generally accepted accounting
principles (GAAP) unless otherwise noted. Pro forma results exclude
items described in the reconciliation tables below and assume the
February 2015 acquisition of Trulia occurred on January 1, 2014,
the beginning of the comparable prior year reporting period. The
pro forma results are presented in order to provide additional
insights into the underlying trends in the business. Revenue and
Adjusted EBITDA for the three months ended December 31, 2015 are
presented in this release on an as-reported basis. All share and
per share amounts have been retroactively adjusted to give effect
to the August 2015 Class C capital stock split.
- Revenue increased 7% to $169.4 million from pro forma revenue
of $158.5 million in the fourth quarter of 2014. Excluding Market
Leader Revenue, pro forma Revenue increased 18% to $169.4 million
from pro forma Revenue of $143.8 million in the fourth quarter of
2014.
- Marketplace Revenue increased 14% to $148.3 million from pro
forma revenue of $130.5 million in the fourth quarter of 2014.
- Real Estate Revenue grew 27% to $136.6 million from pro forma
revenue of $107.8 million in the fourth quarter of 2014.
- Mortgages Revenue grew 48% to $11.7 million from pro forma
revenue of $7.9 million in the fourth quarter of 2014.
- Display Revenue decreased 25% to $21.1 million from pro forma
revenue of $28.1 million in the fourth quarter of 2014. The
decrease is primarily a result of our strategy to deemphasize
display advertising in the user experience and instead focus on
growth in Marketplace Revenue.
- GAAP net loss was $25.7 million in the fourth quarter of 2015,
which includes the impact of $8.1 million in legal costs related to
our litigation with News Corp.
- Pro forma net loss was $25.1 million in the fourth quarter of
2015 compared to pro forma net loss of $11.3 million in the same
period last year. Pro forma net loss for the fourth quarter of 2015
includes the impact of $8.1 million in legal costs related to our
litigation with News Corp.
- Adjusted EBITDA was $20.4 million in the fourth quarter of
2015, or 12% of Revenue, which was a decrease from pro forma
Adjusted EBITDA of $34.8 million in the fourth quarter of 2014, or
22% of pro forma Revenue. Adjusted EBITDA in the fourth quarter of
2015 includes the impact of $8.1 million in legal costs related to
our litigation with News Corp.
- Basic and diluted GAAP net loss per share was $0.14 in the
fourth quarter of 2015 compared to basic and diluted GAAP net loss
per share of $0.09 in the same period last year.
- Pro forma basic and diluted net loss per share was $0.14 in the
fourth quarter of 2015 compared to pro forma basic and diluted net
loss per share of $0.06 in the same period last year.
- Basic and diluted non-GAAP net loss per share was $0.01 in the
fourth quarter of 2015, compared to basic non-GAAP net income per
share of $0.09 and diluted non-GAAP net income per share of $0.08
in the same period last year. For the fourth quarter of 2015,
non-GAAP net loss per share excludes share-based compensation
expense, acquisition-related costs, restructuring costs and income
taxes.
Full Year 2015 Financial
Highlights
- Full year 2015 Revenue was $644.7 million on an as-reported
basis. Pro forma Revenue increased 18% to $679.9 million from pro
forma revenue of $577.8 million in 2014. Excluding Market Leader
Revenue, pro forma Revenue increased 24% to $642.9 million from pro
forma Revenue of $516.4 million in 2014.
- Marketplace Revenue was $555.9 million on an as-reported basis.
Pro forma Marketplace Revenue increased 26% to $583.9 million from
pro forma revenue of $464.5 million in 2014.
- Real Estate Revenue was $482.1 million on an as-reported basis.
Pro forma Real Estate Revenue grew 35% to $502.2 million from pro
forma revenue of $372.6 million in 2014.
- Mortgages Revenue was $44.3 million on an as-reported basis.
Pro forma Mortgages Revenue grew 47% to $44.7 million from pro
forma revenue of $30.5 million in 2014.
- Market Leader Revenue was $29.5 million on an as-reported
basis. Pro forma Market Leader Revenue decreased 40% to $37.1
million from pro forma revenue of $61.4 million in 2014. As
previously announced, Zillow Group completed the sale of Market
Leader on September 30, 2015.
- Display Revenue was $88.8 million on an as-reported basis. Pro
forma Display Revenue decreased 15% to $96.0 million from pro forma
revenue of $113.3 million in 2014.
- GAAP net loss was $148.9 million in 2015, which includes the
impact of $35.6 million of restructuring costs and $16.6 million of
acquisition-related costs, primarily due to the company’s February
2015 acquisition of Trulia and the related restructuring plan. GAAP
net loss in 2015 also includes $27.1 million in legal costs related
to our litigation with News Corp. and $4.4 million for the loss
recorded in connection with the sale of Market Leader.
- Pro forma net loss was $91.1 million in 2015 compared to pro
forma net loss of $83.3 million in the same period last year. Pro
forma net loss for 2015 includes $27.1 million in legal costs
related to our litigation with News Corp.
- Pro forma Adjusted EBITDA was $95.4 million in 2015, or 14% of
pro forma Revenue, which was an increase from pro forma Adjusted
EBITDA of $71.2 million in 2014, or 12% of pro forma Revenue. Pro
forma Adjusted EBITDA in 2015 includes the impact of $27.1 million
in legal costs related to our litigation with News Corp.
- Basic and diluted GAAP net loss per share was $0.88 in 2015
compared to basic and diluted GAAP net loss per share of $0.36 in
the same period last year.
- Pro forma basic and diluted net loss per share was $0.52 in
2015 compared to pro forma basic and diluted net loss per share of
$0.49 in the same period last year.
- Basic non-GAAP net income per share of $0.05 and diluted
non-GAAP net income per share of $0.07 in 2015, compared to basic
non-GAAP net income per share of $0.13 and diluted non-GAAP net
income per share of $0.12 in the same period last year. For full
year 2015, non-GAAP net income per share excludes share-based
compensation expense, acquisition-related costs, restructuring
costs, loss on divestiture of business, and income taxes.
Operating and Business Highlights
- During the fourth quarter, nearly 124 million average monthly
unique users visited Zillow Group consumer brands Zillow, Trulia,
StreetEasy and HotPads, up 61% year over year. According to
comScore, Zillow Group brands now represent approximately 70%
market share of all mobile exclusive visitors to the category.
- Zillow Group is benefitting from the combined audience scale of
having several of the largest mobile and online real estate brands
under one roof. Since January 2015, nearly 400 MLSs have signed
agreements to send listings directly to Zillow and Trulia,
providing their members access to the largest audience of home
shoppers on mobile and Web1.
- On February 3, 2016, Zillow Group announced the planned
acquisition of Naked Apartments®, New York City’s leading
rentals-only platform, for $13 million in cash. The acquisition
aligns with the company’s strategic goals, extending Zillow Group’s
hyper-local market leadership in one of the largest and most
important real estate markets in the world. The deal is expected to
close in February 2016.
- In the fourth quarter, Zillow Group’s average monthly revenue
per advertiser, or ARPA, was $438, up 29% from $339 compared to the
same period last year on a pro forma basis. The increase in ARPA
was primarily driven by high-performing agents buying more
advertising inventory from us rather than by increasing the price
for existing advertising inventory.
- Zillow Group’s agent advertisers totaled 92,366 as of December
31, 2015. The current advertiser count reflects the company’s
continued strategic focus on growing participation by
high-performing agents who provide a superior consumer experience.
1 Based on internal tracking and comScore Media Metrix Real
Estate Category Ranking by Unique Visitors, December 2015, US
Data.
Quarterly Conference Call
A quarterly conference call to discuss Zillow Group’s fourth
quarter and full year 2015 financial results and business outlook
will occur today at 2 p.m. Pacific Time (5 p.m. Eastern Time) and
will be webcast live. The live webcast of the conference call will
be available on the investor relations section of Zillow Group’s
website at http://investors.zillowgroup.com. For those without
access to the Internet, the call may be accessed toll-free via
phone at 877-643-7152 with conference ID# 19021080. Callers outside
the United States may dial 443-863-7921 with conference ID#
19021080. Questions submitted via Zillow Group’s Twitter account
(www.twitter.com/zillowgroup) using the hashtag #ZEarnings will be
considered during the Q&A portion of the call, in addition to
questions submitted by those dialed in. Following completion of the
call, a recorded replay of the webcast will be available on the
investor relations section of Zillow Group’s website at
http://investors.zillowgroup.com.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 that
involve risks and uncertainties, including, without limitation,
statements regarding our business outlook, strategic priorities,
and operational plans for 2016. Statements containing words such as
“may,” “believe,” “anticipate,” “expect,” “intend,” “plan,”
“project,” “will,” “projections,” “continue,” “business outlook,”
“estimate,” “outlook,” or similar expressions constitute
forward-looking statements. Differences in Zillow Group’s actual
results from those described in these forward-looking statements
may result from actions taken by Zillow Group as well as from risks
and uncertainties beyond Zillow Group’s control. Factors that may
contribute to such differences include, but are not limited to,
Zillow Group’s ability to successfully integrate and realize the
benefits of our past or future strategic acquisitions or
investments; Zillow Group’s ability to maintain and effectively
manage an adequate rate of growth; Zillow Group’s ability to
maintain or establish relationships with listings and data
providers; the impact of the real estate industry on Zillow Group’s
business; Zillow Group’s ability to innovate and provide products
and services that are attractive to its users and advertisers;
Zillow Group’s ability to increase awareness of the Zillow Group
brands; Zillow Group’s ability to attract consumers to Zillow
Group’s mobile applications and websites; Zillow Group’s ability to
compete successfully against existing or future competitors; the
reliable performance of Zillow Group’s network infrastructure and
content delivery processes; and Zillow Group’s ability to protect
its intellectual property. The foregoing list of risks and
uncertainties is illustrative, but is not exhaustive. For more
information about potential factors that could affect Zillow
Group’s business and financial results, please review the “Risk
Factors” described in Zillow Group’s Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2015 filed with the
Securities and Exchange Commission, or SEC, and in Zillow Group’s
other filings with the SEC. Except as may be required by law,
Zillow Group does not intend, and undertakes no duty, to update
this information to reflect future events or circumstances.
Use of Non-GAAP Financial Measures
To provide investors with additional information
regarding our financial results, this press release includes
references to certain pro forma financial results, Adjusted EBITDA
and non-GAAP net income (loss) per share, all of which are non-GAAP
financial measures. We have provided a reconciliation of pro forma
Adjusted EBITDA to pro forma net loss, Adjusted EBITDA to net loss,
the most directly comparable GAAP financial measure, and a
reconciliation of net income (loss), adjusted, to net loss, as
reported on a GAAP basis, and the calculations of non-GAAP net
income (loss) per share - basic and diluted and pro forma
weighted-average shares outstanding – basic and diluted, within
this earnings release.
The pro forma financial results included in this
press release, although helpful in illustrating the financial
characteristics of Zillow Group under one set of assumptions, are
not true historical financial results. They are provided for
informational purposes and do not attempt to represent Zillow
Group’s actual financial condition if the February 2015 acquisition
of Trulia had been completed on the applicable dates of the
financial statements presented herein or predict or suggest future
results.
Adjusted EBITDA is a key metric used by our
management and board of directors to measure operating performance
and trends, and to prepare and approve our annual budget. In
particular, the exclusion of certain expenses in calculating
Adjusted EBITDA facilitates operating performance comparisons on a
period-to-period basis.
Our use of Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our results as reported under GAAP.
Some of these limitations are:
- Adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive
impact of share-based compensation;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA does not reflect acquisition-related
costs;
- Adjusted EBITDA does not reflect restructuring costs;
- Adjusted EBITDA does not reflect the loss on divestiture of
business;
- Adjusted EBITDA does not reflect the impairment of certain
acquired intangible assets;
- Adjusted EBITDA does not reflect interest expense or other
income;
- Adjusted EBITDA does not reflect the impact of income taxes;
and
- Other companies, including companies in our own industry, may
calculate Adjusted EBITDA differently than we do, limiting its
usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted
EBITDA alongside other financial performance measures, including
various cash flow metrics, net loss and our other GAAP results.
Our presentation of non-GAAP net income (loss) per share
excludes the impact of share-based compensation expense,
acquisition-related costs, impairment of certain acquired
intangible assets, restructuring costs, the loss on divestiture of
business 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 (loss) per share as supplemental information to
investors, as we believe the exclusion of share-based compensation
expense, acquisition-related costs, impairment of certain acquired
intangible assets, restructuring costs, the loss on divestiture of
business and income taxes facilitates investors’ operating
performance comparisons on a period-to-period basis. You should not
consider these metrics in isolation or as substitutes for analysis
of our results as reported under GAAP.
About Zillow Group
Zillow Group (NASDAQ:Z) (NASDAQ:ZG) houses a portfolio of the
largest real estate and home-related brands on the Web and mobile.
The company's brands focus on all stages of the home lifecycle:
renting, buying, selling, financing and home improvement. Zillow
Group is committed to empowering consumers with unparalleled data,
inspiration and knowledge around homes, and connecting them with
the right local professionals to help. The Zillow Group portfolio
of consumer brands includes real estate and rental marketplaces
Zillow®, Trulia®, StreetEasy® and HotPads®. 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. The company operates a number
of business brands for real estate, rental and mortgage
professionals, including Mortech®, Diverse Solutions®, dotloop® and
Retsly®. The company is headquartered in Seattle.
Please visit http://investors.zillowgroup.com,
www.zillowgroup.com/ir-blog, and www.twitter.com/zillowgroup, where
Zillow Group discloses information about the company, its financial
information, and its business which may be deemed material.
The Zillow Group logo is available at
http://zillowgroup.mediaroom.com/logos-photos.
Zillow, Mortech, Diverse Solutions, StreetEasy, Retsly and
HotPads are registered trademarks of Zillow,
Inc. Trulia is a registered trademark of Trulia,
LLC. dotloop is a registered trademark of DotLoop, LLC.
(ZFIN)
Pro Forma Financial Information
The following pro forma financial information gives effect to
the February 2015 acquisition of Trulia as if it were consummated
on January 1, 2014, the beginning of the comparable prior
reporting period (except Revenue and Adjusted EBITDA for the three
months ended December 31, 2015, which are presented on an
as-reported basis) (in thousands, unaudited):
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2015 (1) |
|
2014 (2) |
|
2015 (3) |
|
2014 (4) |
|
|
|
|
|
|
|
|
Pro forma revenue |
$ |
169,370 |
|
|
$ |
158,547 |
|
|
$ |
679,935 |
|
|
$ |
577,830 |
|
Pro forma net loss |
$ |
(25,077 |
) |
|
$ |
(11,266 |
) |
|
$ |
(91,055 |
) |
|
$ |
(83,336 |
) |
Pro forma net loss per
share — basic and diluted |
$ |
(0.14 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.52 |
) |
|
$ |
(0.49 |
) |
Pro forma weighted-average
shares outstanding — basic and diluted |
|
178,020 |
|
|
|
173,580 |
|
|
|
176,434 |
|
|
|
171,807 |
|
_________ |
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Other Financial
Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma Adjusted EBITDA
(5) |
$ |
20,394 |
|
|
$ |
34,778 |
|
|
$ |
95,411 |
|
|
$ |
71,226 |
|
|
|
|
|
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|
(1) The three months ended December 31, 2015 includes pro forma
adjustments for $0.4 million to eliminate restructuring costs
associated with the acquisition of Trulia reflected in the
historical financial statements and $0.2 million to eliminate
direct and incremental acquisition-related costs reflected in the
historical financial statements.
(2) The three months ended December 31, 2014 includes pro forma
adjustments for $15.4 million to eliminate direct and incremental
acquisition-related costs reflected in the historical financial
statements, $7.3 million to eliminate share-based compensation
expense attributable to substituted equity awards and $4.7 million
to record additional amortization expense for acquired intangible
assets.
(3) 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.
(4) The year ended December 31, 2014 includes pro forma
adjustments for $39.5 million to eliminate direct and incremental
acquisition-related costs reflected in the historical financial
statements, $18.7 million to record additional amortization expense
for acquired intangible assets, $10.7 million to eliminate
share-based compensation expense attributable to substituted equity
awards, $6.2 million to eliminate Trulia’s historical amortization
of capitalized website development costs and $2.7 million to record
additional rent expense.
(5) See below for a reconciliation of pro forma Adjusted EBITDA
to pro forma net loss.
The basic and diluted pro forma net loss per share is based on
the weighted-average number of shares of Zillow Group common stock
and Class C capital stock outstanding for the period presented and
adjusted for the number of shares of Class A common stock issued in
connection with the February 2015 acquisition of Trulia, assuming
for the purposes of the unaudited pro forma condensed combined
statements of operations that the closing date of the acquisition
was January 1, 2014. The calculation of the number of shares
used in the computation of pro forma basic and diluted net loss per
share is as follows (in thousands, unaudited):
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding — basic and diluted (1) |
126,240 |
|
121,800 |
|
124,654 |
|
120,027 |
Class A common stock
issued in connection with the acquisition of Trulia |
51,780 |
|
51,780 |
|
51,780 |
|
51,780 |
Pro forma weighted-average
shares outstanding — basic and diluted |
178,020 |
|
173,580 |
|
176,434 |
|
171,807 |
|
|
|
|
|
|
|
|
(1) Amounts
exclude shares of Zillow Group Class A common stock issued in
connection with the acquisition of Trulia. |
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|
The following table presents a reconciliation of pro forma
Adjusted EBITDA to pro forma net loss for each of the periods
presented (other than Adjusted EBITDA for the three months ended
December 31, 2015, which is presented on an as-reported basis) (in
thousands, unaudited):
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Reconciliation of
Pro Forma Adjusted EBITDA to Pro Forma Net Loss: |
|
|
|
|
|
|
|
|
Pro forma net loss |
|
$ |
(25,077 |
) |
|
$ |
(11,266 |
) |
|
$ |
(91,055 |
) |
|
$ |
(83,336 |
) |
Pro forma
other (income) expense |
|
(416 |
) |
|
|
514 |
|
|
|
(1,534 |
) |
|
|
(654 |
) |
Pro forma
depreciation and amortization expense |
|
21,355 |
|
|
|
22,141 |
|
|
|
81,220 |
|
|
|
76,837 |
|
Impairment of
certain acquired intangible assets |
|
- |
|
|
|
3,259 |
|
|
|
- |
|
|
|
3,259 |
|
Pro forma
share-based compensation expense |
|
24,312 |
|
|
|
18,478 |
|
|
|
99,784 |
|
|
|
68,361 |
|
Pro forma
acquisition-related costs |
|
198 |
|
|
|
- |
|
|
|
955 |
|
|
|
- |
|
Loss on divestiture of
business |
|
|
225 |
|
|
|
- |
|
|
|
4,368 |
|
|
|
- |
|
Pro forma interest
expense |
|
|
1,589 |
|
|
|
1,588 |
|
|
|
6,318 |
|
|
|
6,332 |
|
Pro forma
income tax provision (benefit) |
|
(1,792 |
) |
|
|
64 |
|
|
|
(4,645 |
) |
|
|
427 |
|
Pro
forma Adjusted EBITDA |
$ |
20,394 |
|
|
$ |
34,778 |
|
|
$ |
95,411 |
|
|
$ |
71,226 |
|
|
|
|
|
|
|
|
|
|
The following table presents our pro forma revenue by type for
each of the periods presented (other than revenue for the three
months ended December 31, 2015, which is presented on an
as-reported basis) (in thousands, unaudited):
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Pro Forma
Revenue: |
|
|
|
|
|
|
|
Pro forma Marketplace
revenue: |
|
|
|
|
|
|
|
Real
estate |
$ |
136,560 |
|
|
$ |
107,839 |
|
|
$ |
502,176 |
|
|
$ |
372,602 |
|
Mortgages |
|
11,688 |
|
|
|
7,892 |
|
|
|
44,655 |
|
|
|
30,469 |
|
Market
Leader |
|
5 |
|
|
|
14,742 |
|
|
|
37,073 |
|
|
|
61,439 |
|
Total pro forma
Marketplace revenue |
|
148,253 |
|
|
|
130,473 |
|
|
|
583,904 |
|
|
|
464,510 |
|
Pro forma Display
revenue |
|
21,117 |
|
|
|
28,074 |
|
|
|
96,031 |
|
|
|
113,320 |
|
Total pro forma revenue |
$ |
169,370 |
|
|
$ |
158,547 |
|
|
$ |
679,935 |
|
|
$ |
577,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Reported Consolidated Results
ZILLOW GROUP, INC. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands) |
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|
|
December 31 , 2015 |
|
December 31, 2014 |
Assets |
|
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|
Current assets: |
|
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|
Cash and cash
equivalents |
|
$ |
229,138 |
|
|
$ |
125,765 |
|
Short-term investments |
|
|
291,151 |
|
|
|
246,829 |
|
Accounts receivable,
net |
|
|
29,789 |
|
|
|
18,684 |
|
Prepaid expenses
and other current assets |
|
24,016 |
|
|
|
10,059 |
|
Total current assets |
|
|
574,094 |
|
|
|
401,337 |
|
Restricted cash |
|
|
3,015 |
|
|
|
- |
|
Long-term investments |
|
|
- |
|
|
|
83,326 |
|
Property and equipment,
net |
|
|
89,639 |
|
|
|
41,600 |
|
Goodwill |
|
|
1,909,167 |
|
|
|
96,352 |
|
Intangible assets,
net |
|
|
554,765 |
|
|
|
26,757 |
|
Other assets |
|
|
5,020 |
|
|
|
358 |
|
Total assets |
|
$ |
3,135,700 |
|
|
$ |
649,730 |
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
3,361 |
|
|
$ |
9,358 |
|
Accrued expenses
and other current liabilities |
|
43,047 |
|
|
|
16,883 |
|
Accrued
compensation and benefits |
|
11,392 |
|
|
|
6,735 |
|
Deferred revenue |
|
|
21,450 |
|
|
|
15,356 |
|
Deferred rent, current
portion |
|
|
1,172 |
|
|
|
864 |
|
Total current
liabilities |
|
|
80,422 |
|
|
|
49,196 |
|
Deferred rent,
net of current portion |
|
13,743 |
|
|
|
11,755 |
|
Long-term debt |
|
|
230,000 |
|
|
|
- |
|
Deferred tax
liabilities and other long-term liabilities |
|
132,482 |
|
|
|
- |
|
Total liabilities |
|
|
456,647 |
|
|
|
60,951 |
|
Shareholders’ equity: |
|
|
|
|
Class A common stock |
|
|
5 |
|
|
|
3 |
|
Class B common stock |
|
|
1 |
|
|
|
1 |
|
Class C capital stock |
|
|
12 |
|
|
|
8 |
|
Additional paid-in
capital |
|
|
2,956,111 |
|
|
|
716,498 |
|
Accumulated other
comprehensive loss |
|
|
(471 |
) |
|
|
- |
|
Accumulated deficit |
|
|
(276,605 |
) |
|
|
(127,731 |
) |
Total shareholders’
equity |
|
|
2,679,053 |
|
|
|
588,779 |
|
Total
liabilities and shareholders’ equity |
$ |
3,135,700 |
|
|
$ |
649,730 |
|
|
|
|
|
|
ZILLOW GROUP, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
169,370 |
|
|
$ |
92,329 |
|
|
$ |
644,677 |
|
|
$ |
325,893 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive
of amortization) (1)(2) |
|
15,105 |
|
|
|
8,825 |
|
|
|
61,614 |
|
|
|
29,461 |
|
Sales and marketing (2) |
|
77,817 |
|
|
|
38,437 |
|
|
|
307,089 |
|
|
|
169,462 |
|
Technology and development
(2) |
|
55,782 |
|
|
|
27,637 |
|
|
|
198,565 |
|
|
|
84,669 |
|
General and administrative
(2) |
|
45,939 |
|
|
|
20,535 |
|
|
|
170,445 |
|
|
|
65,503 |
|
Acquisition-related
costs |
|
432 |
|
|
|
8,109 |
|
|
|
16,576 |
|
|
|
21,493 |
|
Restructuring costs (2) |
|
409 |
|
|
|
- |
|
|
|
35,551 |
|
|
|
- |
|
Loss on divestiture of
business |
|
225 |
|
|
|
- |
|
|
|
4,368 |
|
|
|
- |
|
Total costs and
expenses |
|
195,709 |
|
|
|
103,543 |
|
|
|
794,208 |
|
|
|
370,588 |
|
Loss from operations |
|
(26,339 |
) |
|
|
(11,214 |
) |
|
|
(149,531 |
) |
|
|
(44,695 |
) |
Other income |
|
416 |
|
|
|
317 |
|
|
|
1,501 |
|
|
|
1,085 |
|
Interest expense |
|
(1,589 |
) |
|
|
- |
|
|
|
(5,489 |
) |
|
|
- |
|
Loss before income
taxes |
|
(27,512 |
) |
|
|
(10,897 |
) |
|
|
(153,519 |
) |
|
|
(43,610 |
) |
Income tax benefit |
|
1,792 |
|
|
|
- |
|
|
|
4,645 |
|
|
|
- |
|
Net loss |
$ |
(25,720 |
) |
|
$ |
(10,897 |
) |
|
$ |
(148,874 |
) |
|
$ |
(43,610 |
) |
Net loss per share — basic
and diluted |
$ |
(0.14 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.88 |
) |
|
$ |
(0.36 |
) |
Weighted-average shares
outstanding — basic and diluted |
|
178,020 |
|
|
|
121,800 |
|
|
|
169,767 |
|
|
|
120,027 |
|
_________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amortization of
website development costs and intangible assets included in
technology and development |
$ |
17,885 |
|
|
$ |
8,374 |
|
|
$ |
63,189 |
|
|
$ |
29,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes
share-based compensation expense as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
$ |
1,254 |
|
|
$ |
564 |
|
|
$ |
4,694 |
|
|
$ |
1,844 |
|
Sales and marketing |
|
4,952 |
|
|
|
2,434 |
|
|
|
25,391 |
|
|
|
7,320 |
|
Technology and
development |
|
6,436 |
|
|
|
3,852 |
|
|
|
26,849 |
|
|
|
11,681 |
|
General and
administrative |
|
11,670 |
|
|
|
3,059 |
|
|
|
48,280 |
|
|
|
13,240 |
|
Restructuring costs |
|
(204 |
) |
|
|
- |
|
|
|
14,859 |
|
|
|
- |
|
Total |
$ |
24,108 |
|
|
$ |
9,909 |
|
|
$ |
120,073 |
|
|
$ |
34,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (3) |
$ |
20,394 |
|
|
$ |
19,978 |
|
|
$ |
87,564 |
|
|
$ |
49,766 |
|
|
|
|
|
|
|
|
|
(3) See
above for more information regarding our presentation of Adjusted
EBITDA. |
|
|
|
|
|
|
|
|
ZILLOW GROUP, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in thousands) |
|
|
|
|
|
|
|
Year Ended |
|
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
Operating
activities |
|
|
|
|
Net loss |
|
$ |
(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 |
|
|
75,386 |
|
|
|
35,624 |
|
Share-based compensation
expense |
|
|
105,214 |
|
|
|
34,085 |
|
Restructuring costs |
|
|
19,001 |
|
|
|
- |
|
Release of
valuation allowance on certain deferred tax assets |
|
(2,853 |
) |
|
|
- |
|
Loss on disposal of property
and equipment |
|
|
1,384 |
|
|
|
505 |
|
Loss on divestiture of
businesses, net |
|
|
3,899 |
|
|
|
- |
|
Bad debt expense |
|
|
3,235 |
|
|
|
2,529 |
|
Deferred rent |
|
|
2,553 |
|
|
|
4,415 |
|
Amortization of bond
premium |
|
|
2,487 |
|
|
|
3,506 |
|
Impairment of certain
acquired intangible assets |
|
|
- |
|
|
|
3,259 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(1,051 |
) |
|
|
(5,979 |
) |
Prepaid expenses and other
assets |
|
|
(761 |
) |
|
|
(5,084 |
) |
Accounts payable |
|
|
(11,158 |
) |
|
|
4,634 |
|
Accrued expenses
and other current liabilities |
|
(18,384 |
) |
|
|
6,282 |
|
Accrued compensation and
benefits |
|
|
(4,020 |
) |
|
|
2,295 |
|
Deferred revenue |
|
|
(2,434 |
) |
|
|
3,058 |
|
Other long-term
liabilities |
|
|
(965 |
) |
|
|
- |
|
Net cash provided by
operating activities |
|
|
22,659 |
|
|
|
45,519 |
|
|
|
|
|
|
Investing
activities |
|
|
|
|
Proceeds from maturities
of investments |
|
|
335,443 |
|
|
|
174,949 |
|
Purchases of
investments |
|
|
(307,658 |
) |
|
|
(272,644 |
) |
Proceeds from sales of
investments |
|
|
8,260 |
|
|
|
- |
|
Decrease in
restricted cash, net of amounts assumed in connection with an
acquisition |
|
3,931 |
|
|
|
- |
|
Purchases of property and
equipment |
|
|
(54,981 |
) |
|
|
(32,595 |
) |
Purchases of intangible
assets |
|
|
(13,127 |
) |
|
|
(11,647 |
) |
Proceeds from divestiture
of businesses |
|
|
23,359 |
|
|
|
- |
|
Cash acquired in
acquisition, net |
|
|
173,406 |
|
|
|
- |
|
Cash paid for
acquisitions, net |
|
|
(104,192 |
) |
|
|
(3,500 |
) |
Net cash provided by (used
in) investing activities |
|
|
64,441 |
|
|
|
(145,437 |
) |
|
|
|
|
|
Financing
activities |
|
|
|
|
Proceeds from exercise of
stock options |
|
|
24,423 |
|
|
|
23,923 |
|
Value of equity awards
withheld for tax liability |
|
|
(8,150 |
) |
|
|
- |
|
Net cash provided by
financing activities |
|
|
16,273 |
|
|
|
23,923 |
|
Net increase (decrease) in
cash and cash equivalents during period |
|
|
103,373 |
|
|
|
(75,995 |
) |
Cash and cash equivalents
at beginning of period |
|
|
125,765 |
|
|
|
201,760 |
|
Cash and cash equivalents
at end of period |
|
$ |
229,138 |
|
|
$ |
125,765 |
|
|
|
|
|
|
Supplemental disclosures of cash flow
information |
|
|
|
Cash paid for interest |
|
$ |
6,325 |
|
|
$ |
- |
|
Noncash transactions: |
|
|
|
|
Value of Class A
common stock issued in connection with an acquisition |
$ |
1,883,728 |
|
|
$ |
- |
|
Capitalized share-based
compensation |
|
$ |
10,319 |
|
|
$ |
6,585 |
|
Write-off of
fully depreciated property and equipment |
$ |
26,242 |
|
|
$ |
4,749 |
|
|
|
|
|
|
Adjusted EBITDA
The following table presents a reconciliation of Adjusted EBITDA
to net loss, the most directly comparable GAAP financial measure,
for each of the periods presented (in thousands, unaudited):
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Reconciliation of
Adjusted EBITDA to Net Loss: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(25,720 |
) |
|
$ |
(10,897 |
) |
|
$ |
(148,874 |
) |
|
$ |
(43,610 |
) |
Other income |
|
|
(416 |
) |
|
|
(317 |
) |
|
|
(1,501 |
) |
|
|
(1,085 |
) |
Depreciation and
amortization expense |
|
|
21,355 |
|
|
|
9,915 |
|
|
|
75,386 |
|
|
|
35,624 |
|
Share-based compensation
expense |
|
|
24,312 |
|
|
|
9,909 |
|
|
|
105,214 |
|
|
|
34,085 |
|
Acquisition-related
costs |
|
|
432 |
|
|
|
8,109 |
|
|
|
16,576 |
|
|
|
21,493 |
|
Restructuring costs |
|
|
409 |
|
|
|
- |
|
|
|
35,551 |
|
|
|
- |
|
Loss on divestiture of
business |
|
|
225 |
|
|
|
- |
|
|
|
4,368 |
|
|
|
- |
|
Interest expense |
|
|
1,589 |
|
|
|
- |
|
|
|
5,489 |
|
|
|
- |
|
Impairment of
certain acquired intangible assets |
|
- |
|
|
|
3,259 |
|
|
|
- |
|
|
|
3,259 |
|
Income tax benefit |
|
|
(1,792 |
) |
|
|
- |
|
|
|
(4,645 |
) |
|
|
- |
|
Adjusted EBITDA |
|
$ |
20,394 |
|
|
$ |
19,978 |
|
|
$ |
87,564 |
|
|
$ |
49,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income (Loss) per Share The
following table presents a reconciliation of net income (loss),
adjusted, to net loss, as reported on a GAAP basis, and the
calculation of non-GAAP net income (loss) per share - basic and
diluted, for each of the periods presented (in thousands, except
per share data, unaudited):
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Net loss, as reported |
|
$ |
(25,720 |
) |
|
$ |
(10,897 |
) |
|
$ |
(148,874 |
) |
|
$ |
(43,610 |
) |
Share-based compensation
expense |
|
|
24,312 |
|
|
|
9,909 |
|
|
|
105,214 |
|
|
|
34,085 |
|
Acquisition-related
costs |
|
|
432 |
|
|
|
8,109 |
|
|
|
16,576 |
|
|
|
21,493 |
|
Impairment of certain
acquired intangible assets |
|
|
- |
|
|
|
3,259 |
|
|
|
- |
|
|
|
3,259 |
|
Restructuring costs |
|
|
409 |
|
|
|
- |
|
|
|
35,551 |
|
|
|
- |
|
Loss on divestiture of
business |
|
|
225 |
|
|
|
- |
|
|
|
4,368 |
|
|
|
- |
|
Income tax benefit |
|
|
(1,792 |
) |
|
|
- |
|
|
|
(4,645 |
) |
|
|
- |
|
Net income (loss),
adjusted |
|
$ |
(2,134 |
) |
|
$ |
10,380 |
|
|
$ |
8,190 |
|
|
$ |
15,227 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss)
per share - basic |
|
$ |
(0.01 |
) |
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
$ |
0.13 |
|
Non-GAAP net
income (loss) per share - diluted |
$ |
(0.01 |
) |
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.12 |
|
Weighted-average shares
outstanding - basic |
|
|
178,020 |
|
|
|
121,800 |
|
|
|
169,767 |
|
|
|
120,027 |
|
Weighted-average shares
outstanding - diluted |
|
|
178,020 |
|
|
|
129,483 |
|
|
|
186,691 |
|
|
|
129,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Type
The following tables present our revenue by type and as a
percentage of total revenue for each of the periods presented (in
thousands, unaudited):
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Revenue: |
|
|
|
|
|
|
|
Marketplace
revenue: |
|
|
|
|
|
|
|
Real estate |
$ |
136,560 |
|
|
$ |
70,807 |
|
|
$ |
482,092 |
|
|
$ |
239,039 |
|
Mortgages |
|
11,688 |
|
|
|
7,403 |
|
|
|
44,263 |
|
|
|
28,203 |
|
Market Leader |
|
5 |
|
|
|
- |
|
|
|
29,549 |
|
|
|
- |
|
Total Marketplace
revenue |
|
148,253 |
|
|
|
78,210 |
|
|
|
555,904 |
|
|
|
267,242 |
|
Display revenue |
|
21,117 |
|
|
|
14,119 |
|
|
|
88,773 |
|
|
|
58,651 |
|
Total revenue |
$ |
169,370 |
|
|
$ |
92,329 |
|
|
$ |
644,677 |
|
|
$ |
325,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Percentage of
Total Revenue: |
|
|
|
|
|
|
|
Marketplace
revenue: |
|
|
|
|
|
|
|
Real estate |
|
81 |
% |
|
|
77 |
% |
|
|
75 |
% |
|
|
73 |
% |
Mortgages |
|
7 |
% |
|
|
8 |
% |
|
|
7 |
% |
|
|
9 |
% |
Market Leader |
|
0 |
% |
|
|
0 |
% |
|
|
5 |
% |
|
|
0 |
% |
Total Marketplace
revenue |
|
88 |
% |
|
|
85 |
% |
|
|
86 |
% |
|
|
82 |
% |
Display revenue |
|
12 |
% |
|
|
15 |
% |
|
|
14 |
% |
|
|
18 |
% |
Total revenue |
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Growth Drivers
The following tables set forth our key growth drivers for each
of the periods presented. Zillow Group’s strategy is to focus on
growing revenue from high-producing agents, and not by increasing
the overall number of new advertisers. Real Estate Revenue
increased 27% to $136.6 million in the fourth quarter compared to
pro forma Real Estate Revenue in the prior year period.
|
|
|
|
|
Average Monthly Unique Users for the |
|
|
|
Three Months Ended December 31, |
|
2014 to 2015 |
|
2015 |
|
2014 |
|
% Change |
|
(in thousands) |
|
|
Unique Users |
123,658 |
|
76,713* |
|
|
61 |
% |
|
|
|
|
|
|
Unique users source: We measure Zillow unique users with Google
Analytics and Trulia unique users with Omniture analytical tools.
Beginning on February 17, 2015, the reported monthly unique users
reflect the effect of Zillow Group’s February 17, 2015 acquisition
of Trulia.
* For December 2014, the reported monthly unique user metric was
estimated by Zillow based on historical trends by calculating the
percentage change in monthly unique users from November 2013 to
December 2013 and multiplying that percentage change by the
reported November 2014 monthly unique users. Zillow transitioned to
an upgraded version of the Google Analytics measurement service,
Universal Analytics, in the month of December 2014 on both its
mobile application and website platforms. As a result, Zillow is
not able to provide an accurate count of the monthly unique users
as reported by the service for December 2014.
|
At December 31, |
|
2014 to 2015 |
|
2015 |
|
2014 |
|
% Change |
Agent Advertisers
|
92,366 |
|
62,305 |
|
|
48 |
% |
Contacts:
Raymond Jones
Investor Relations
206-470-7137
ir@zillow.com
Katie Curnutte
Public Relations
206-757-2701
press@zillow.com
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