SEATTLE, Nov. 5, 2020 /PRNewswire/ -- Zillow Group,
Inc. (NASDAQ: Z) (NASDAQ: ZG), which is transforming the way people
buy, sell, rent and finance homes, today announced its consolidated
financial results for the three months ended September 30, 2020.
Complete financial results and outlook for the fourth quarter of
2020 can be found in the company's shareholder letter on the
investor relations section of Zillow Group's website at
https://investors.zillowgroup.com/investors/financials/quarterly-results/default.aspx.
"Zillow's strong third quarter results reflect impressive
execution during a time of challenge and opportunity," said Zillow
Group co-founder and CEO Rich
Barton. "Many of us are re-evaluating where we live and how
we live, which has kicked off a Great Reshuffling, and we need
safe, digital ways to get to a better place. Given the duration of
this pandemic, the concrete is setting on new digital solutions for
life and work. This is driving record demand for housing and record
engagement with Zillow's leading digital real estate brands. When
combined with level-headed cost decisions, the result has been
profitable growth."
Third quarter 2020 highlights include:
- Total consolidated revenue of $657
million and revenue for all three segments exceeded the high
end of the company's revenue outlook for the third quarter.
- Segment income (loss) before income taxes was $140 million, $(76)
million and $11 million for
the IMT, Homes, and Mortgages segments, respectively, and
consolidated GAAP net income was $40
million.
- Adjusted EBITDA exceeded the high end of the company's outlook
for all three segments, resulting in consolidated Adjusted EBITDA
of $152 million.
- Traffic to Zillow Group's mobile apps and websites reached a
record 236 million average monthly unique users, an increase of 21%
year over year, driving 2.8 billion visits during the quarter, an
increase of 32% year over year.
- The company exited the quarter with the highest cash and
investments balance in its history, growing cash and investments to
$3.8 billion from $3.5 billion at the end of Q2 2020.
Third Quarter 2020 Financial Highlights
The following table sets forth Zillow Group's financial
highlights for the periods presented (in thousands, unaudited):
|
Three Months
Ended
September 30,
|
|
2019 to 2020
% Change
|
|
Nine Months
Ended
September 30,
|
|
2019 to 2020
% Change
|
|
|
2020
|
|
2019
|
|
|
|
2020
|
|
2019
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Zillow
Offers
|
$
|
185,904
|
|
$
|
384,626
|
|
(52)%
|
|
$
|
1,408,832
|
|
$
|
762,022
|
|
85%
|
|
Other (1)
|
1,201
|
|
—
|
|
N/A
|
|
2,398
|
|
—
|
|
N/A
|
|
Total Homes segment
revenue
|
187,105
|
|
384,626
|
|
(51)%
|
|
1,411,230
|
|
762,022
|
|
85%
|
|
IMT
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Premier
Agent
|
298,673
|
|
240,698
|
|
24%
|
|
732,741
|
|
690,394
|
|
6%
|
|
Other (2)
|
116,716
|
|
94,592
|
|
23%
|
|
293,653
|
|
266,837
|
|
10%
|
|
Total IMT segment
revenue
|
415,389
|
|
335,290
|
|
24%
|
|
1,026,394
|
|
957,231
|
|
7%
|
|
Mortgages
segment
|
54,198
|
|
25,292
|
|
114%
|
|
113,241
|
|
79,637
|
|
42%
|
|
Total
revenue
|
$
|
656,692
|
|
$
|
745,208
|
|
(12)%
|
|
$
|
2,550,865
|
|
$
|
1,798,890
|
|
42%
|
|
Other Financial
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss)
before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
segment
|
$
|
(75,617)
|
|
$
|
(87,870)
|
|
|
|
$
|
(253,633)
|
|
$
|
(204,197)
|
|
|
|
IMT segment
|
139,956
|
|
42,053
|
|
|
|
117,615
|
|
43,839
|
|
|
|
Mortgages
segment
|
10,594
|
|
(12,254)
|
|
|
|
(2,791)
|
|
(32,308)
|
|
|
|
Total segment income
(loss) before income taxes
|
$
|
74,933
|
|
$
|
(58,071)
|
|
|
|
$
|
(138,809)
|
|
$
|
(192,666)
|
|
|
|
Net income
(loss)
|
$
|
39,570
|
|
$
|
(64,649)
|
|
|
|
$
|
(208,151)
|
|
$
|
(204,151)
|
|
|
|
Adjusted EBITDA
(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
segment
|
$
|
(59,176)
|
|
$
|
(67,825)
|
|
|
|
$
|
(195,079)
|
|
$
|
(158,801)
|
|
|
|
IMT segment
|
195,465
|
|
91,102
|
|
|
|
353,044
|
|
216,204
|
|
|
|
Mortgages
segment
|
15,895
|
|
(7,435)
|
|
|
|
15,177
|
|
(15,342)
|
|
|
|
Total Adjusted
EBITDA
|
$
|
152,184
|
|
$
|
15,842
|
|
|
|
$
|
173,142
|
|
$
|
42,061
|
|
|
|
Percentage of
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss)
before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
segment
|
(40)%
|
|
(23)%
|
|
|
|
(18)%
|
|
(27)%
|
|
|
|
IMT segment
|
34
|
|
13
|
|
|
|
11
|
|
5
|
|
|
|
Mortgages
segment
|
20
|
|
(48)
|
|
|
|
(2)
|
|
(41)
|
|
|
|
Total segment income
(loss) before income taxes
|
11%
|
|
(8)%
|
|
|
|
(5)%
|
|
(11)%
|
|
|
|
Net income
(loss)
|
6%
|
|
(9)%
|
|
|
|
(8)%
|
|
(11)%
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes
segment
|
(32)%
|
|
(18)%
|
|
|
|
(14)%
|
|
(21)%
|
|
|
|
IMT segment
|
47
|
|
27
|
|
|
|
34
|
|
23
|
|
|
|
Mortgages
segment
|
29
|
|
(29)
|
|
|
|
13
|
|
(19)
|
|
|
|
Total Adjusted
EBITDA
|
23%
|
|
2%
|
|
|
|
7%
|
|
2%
|
|
|
|
|
|
(1)
|
Other Homes segment
revenue includes revenue generated through Zillow Closing
Services.
|
(2)
|
Other IMT segment
revenue includes revenue generated by rentals, new construction and
display, as well as revenue from the sale of various other
marketing and business products and services to real estate
professionals.
|
(3)
|
Adjusted EBITDA is a
non-GAAP financial measure; it is not calculated or presented in
accordance with U.S. generally accepted accounting principles, or
GAAP. See below for more information regarding our presentation of
Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to
the most directly comparable GAAP financial measure, which is net
income (loss) on a consolidated basis and income (loss) before
income taxes for each segment, for each of the periods
presented.
|
Conference Call and Webcast Information
Zillow Group CEO & co-founder Rich
Barton and CFO Allen Parker
will host a live conference call to discuss the results today at
2 p.m. Pacific Time (5 p.m. Eastern Time). A shareholder letter and
link to both the live webcast and recorded replay of the call may
be accessed on the Quarterly Results section of Zillow Group's
investor relations website. Participants must register in advance
at: http://www.directeventreg.com/registration/event/8927298 using
conference ID 8927298 to receive emailed instructions. This process
is designed to reduce delays due to operator congestion when
accessing the live call.
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 the future performance and operation of our business and
the current and future health and stability of the residential
housing market and economy and our expectations regarding future
shifts in behavior by consumers and employees. Statements
containing words such as "may," "believe," "anticipate," "expect,"
"intend," "plan," "project," "predict," "will," "projections,"
"continue," "estimate," "outlook," "guidance," or similar
expressions constitute forward-looking statements. Forward-looking
statements are made based on assumptions as of November 5, 2020, and although we believe the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee these results. 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, the impact of the COVID-19 pandemic or
other public health crises and any associated economic downturn on
Zillow Group's future financial position, operations and financial
performance; the magnitude, duration and severity of the COVID-19
pandemic; the current and future health and stability of the
economy and residential housing market, including any extended
slowdown in the real estate markets as a result of COVID-19; Zillow
Group's ability to execute on strategy; Zillow Group's ability to
maintain and effectively manage an adequate rate of growth; Zillow
Group's ability to innovate and provide products and services that
are attractive to its users and advertisers; Zillow Group's
investment of resources to pursue strategies that may not prove
effective; Zillow Group's ability to compete successfully against
existing or future competitors; the impact of pending or future
legal proceedings, including those described in Zillow Group's
filings with the Securities and Exchange Commission, or SEC; Zillow
Group's ability to successfully integrate and realize the benefits
of its past or future strategic acquisitions or investments; Zillow
Group's ability to maintain or establish relationships with
listings and data providers; the reliable performance of Zillow
Group's network infrastructure and content delivery processes;
Zillow Group's ability to obtain or maintain licenses and permits
to support our current and future businesses; actual or anticipated
changes to our products and services; the impact of natural
disasters and other catastrophic events; and Zillow Group's ability
to protect its intellectual property. The foregoing list of risks
and uncertainties is illustrative but 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 Annual Report on Form 10-K for
the year ended December 31, 2019 and
in Zillow Group's Quarterly Report on Form 10-Q for the three
months ended September 30, 2020 filed
with the 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
Adjusted EBITDA in total and for each segment, each a non-GAAP
financial measure. We have provided a reconciliation within this
earnings release of Adjusted EBITDA in total to net income (loss)
and Adjusted EBITDA by segment to income (loss) before income taxes
for each segment, the most directly comparable GAAP financial
measures.
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 in total and for each segment has
limitations as an analytical tool, and you should not consider
these measures 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 impairment costs;
- Adjusted EBITDA does not reflect the gain on the partial
extinguishment of the 2021 Notes;
- Adjusted EBITDA does not reflect interest expense or other
income;
- Adjusted EBITDA does not reflect 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 in total and for each segment alongside other financial
performance measures, including various cash flow metrics, net
income (loss), and income (loss) before income taxes for each
segment and our other GAAP results.
About Zillow Group, Inc.
Zillow Group, Inc. (NASDAQ:Z) (NASDAQ:ZG) is reimagining real
estate to make it easier to unlock life's next chapter.
As the most visited real estate website in the U.S., Zillow® and
its affiliates offer customers an on-demand experience for selling,
buying, renting or financing with transparency and nearly seamless
end-to-end service. Zillow Offers® buys and sells homes directly in
dozens of markets across the country, allowing sellers control over
their timeline. Zillow Home Loans™, our affiliate lender, provides
our customers with an easy option to get pre-approved and secure
financing for their next home purchase. Zillow recently
launched Zillow Homes, Inc., a licensed brokerage entity, to
streamline Zillow Offers transactions.
Zillow Group's affiliates and other brands include: Zillow®,
Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow
Closing Services™, Zillow Homes, Inc., Trulia®, Out East®,
StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal
Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). The
company is headquartered in Seattle,
Washington.
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.
(ZFIN)
Adjusted EBITDA
The following tables present a reconciliation of Adjusted EBITDA
to the most directly comparable GAAP financial measure, which is
net income (loss) on a consolidated basis and income (loss) before
income taxes for each segment, for each of the periods presented
(in thousands, unaudited):
|
Three Months
Ended
September 30, 2020
|
|
|
Homes
|
|
IMT
|
|
Mortgages
|
|
Corporate
Items (2)
|
|
Consolidated
|
|
Reconciliation of
Adjusted EBITDA to Net
Income and Income (Loss)
Before Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
Net income
(1)
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
39,570
|
|
|
Income tax
expense
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
425
|
|
|
Income (loss) before
income taxes
|
$
|
(75,617)
|
|
|
$
|
139,956
|
|
|
$
|
10,594
|
|
|
$
|
(34,938)
|
|
|
$
|
39,995
|
|
|
Other
income
|
—
|
|
|
—
|
|
|
(636)
|
|
|
(2,382)
|
|
|
(3,018)
|
|
|
Depreciation and
amortization expense
|
3,029
|
|
|
22,074
|
|
|
1,675
|
|
|
—
|
|
|
26,778
|
|
|
Share-based
compensation expense
|
11,815
|
|
|
33,435
|
|
|
3,709
|
|
|
—
|
|
|
48,959
|
|
|
Interest
expense
|
1,597
|
|
|
—
|
|
|
553
|
|
|
37,320
|
|
|
39,470
|
|
|
Adjusted
EBITDA
|
$
|
(59,176)
|
|
|
$
|
195,465
|
|
|
$
|
15,895
|
|
|
$
|
—
|
|
|
$
|
152,184
|
|
|
|
Three Months
Ended
September 30, 2019
|
|
Homes
|
|
IMT
|
|
Mortgages
|
|
Corporate
Items (2)
|
|
Consolidated
|
Reconciliation of
Adjusted EBITDA to Net
Loss and Income (Loss) Before
Income Taxes:
|
|
|
|
|
|
|
|
|
|
Net loss
(1)
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
(64,649)
|
|
Income tax
benefit
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(1,300)
|
|
Income (loss) before
income taxes
|
$
|
(87,870)
|
|
|
$
|
42,053
|
|
|
$
|
(12,254)
|
|
|
$
|
(7,878)
|
|
|
$
|
(65,949)
|
|
Other
income
|
—
|
|
|
—
|
|
|
(344)
|
|
|
(8,655)
|
|
|
(8,999)
|
|
Depreciation and
amortization expense
|
2,331
|
|
|
18,362
|
|
|
1,467
|
|
|
—
|
|
|
22,160
|
|
Share-based
compensation expense
|
8,025
|
|
|
30,687
|
|
|
3,416
|
|
|
—
|
|
|
42,128
|
|
Interest
expense
|
9,689
|
|
|
—
|
|
|
280
|
|
|
16,533
|
|
|
26,502
|
|
Adjusted
EBITDA
|
$
|
(67,825)
|
|
|
$
|
91,102
|
|
|
$
|
(7,435)
|
|
|
$
|
—
|
|
|
$
|
15,842
|
|
|
Nine Months
Ended
September 30, 2020
|
|
|
|
Homes
|
|
IMT
|
|
Mortgages
|
|
Corporate
Items (2)
|
|
Consolidated
|
|
|
Reconciliation of
Adjusted EBITDA to
Net Loss and Income (Loss) Before
Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
(1)
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
(208,151)
|
|
|
|
Income tax
benefit
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(8,124)
|
|
|
|
Income (loss) before
income taxes
|
$
|
(253,633)
|
|
|
$
|
117,615
|
|
|
$
|
(2,791)
|
|
|
$
|
(77,466)
|
|
|
$
|
(216,275)
|
|
|
|
Other
income
|
—
|
|
|
(5,300)
|
|
|
(1,223)
|
|
|
(16,203)
|
|
|
(22,726)
|
|
|
|
Depreciation and
amortization expense
|
9,201
|
|
|
67,889
|
|
|
4,887
|
|
|
—
|
|
|
81,977
|
|
|
|
Share-based
compensation expense
|
35,847
|
|
|
98,940
|
|
|
10,318
|
|
|
—
|
|
|
145,105
|
|
|
|
Gain on partial
extinguishment of 2021 Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,391)
|
|
|
(6,391)
|
|
|
|
Impairment
costs
|
—
|
|
|
73,900
|
|
|
2,900
|
|
|
—
|
|
|
76,800
|
|
|
|
Interest
expense
|
13,506
|
|
|
—
|
|
|
1,086
|
|
|
100,060
|
|
|
114,652
|
|
|
|
Adjusted
EBITDA
|
$
|
(195,079)
|
|
|
$
|
353,044
|
|
|
$
|
15,177
|
|
|
$
|
—
|
|
|
$
|
173,142
|
|
|
|
|
Nine Months
Ended
September 30, 2019
|
|
|
Homes
|
|
IMT
|
|
Mortgages
|
|
Corporate
Items (2)
|
|
Consolidated
|
|
Reconciliation of
Adjusted EBITDA to Net
Loss and Income (Loss) Before
Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
Net loss
(1)
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
(204,151)
|
|
|
Income tax
benefit
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(3,800)
|
|
|
Income (loss) before
income taxes
|
$
|
(204,197)
|
|
|
$
|
43,839
|
|
|
$
|
(32,308)
|
|
|
$
|
(15,285)
|
|
|
$
|
(207,951)
|
|
|
Other
income
|
—
|
|
|
—
|
|
|
(1,059)
|
|
|
(26,566)
|
|
|
(27,625)
|
|
|
Depreciation and
amortization expense
|
5,384
|
|
|
54,264
|
|
|
4,240
|
|
|
—
|
|
|
63,888
|
|
|
Share-based
compensation expense
|
20,666
|
|
|
118,101
|
|
|
13,117
|
|
|
—
|
|
|
151,884
|
|
|
Interest
expense
|
19,346
|
|
|
—
|
|
|
668
|
|
|
41,851
|
|
|
61,865
|
|
|
Adjusted
EBITDA
|
$
|
(158,801)
|
|
|
$
|
216,204
|
|
|
$
|
(15,342)
|
|
|
$
|
—
|
|
|
$
|
42,061
|
|
|
|
(1)
|
We use income (loss)
before income taxes as our profitability measure in making
operating decisions and assessing the performance of our segments,
therefore, net income (loss) and income tax benefit (expense) are
calculated and presented only on a consolidated basis within our
financial statements.
|
(2)
|
Certain corporate
items are not directly attributable to any of our segments,
including the gain on the partial extinguishment of the 2021 Notes,
interest income earned on our short-term investments included in
Other income and interest costs on our convertible senior notes
included in Interest expense.
|
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SOURCE Zillow