10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

_____________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-36853

_____________________________________________________

ZILLOW GROUP, INC.

(Exact name of registrant as specified in its charter)

_____________________________________________________

Washington	47-1645716
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1301 Second Avenue, Floor 31,

Seattle, Washington 98101

(Address of principal executive offices) (Zip Code)

(206) 470-7000

@ZillowGroup

(Registrant’s telephone number, including area code)

 _____________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	ZG	The Nasdaq Global Select Market
Class C Capital Stock, par value $0.0001 per share	Z	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 31, 2019, 58,486,480 shares of Class A common stock, 6,217,447 shares of Class B common stock, and 141,903,904 shares of Class C capital stock were outstanding.

ZILLOW GROUP, INC.

Quarterly Report on Form 10-Q

For the Three Months Ended June 30, 2019

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Shareholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6.	Exhibits	53
	Signatures	54

i

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

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those risks, uncertainties and assumptions described in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2018. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements, and we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.

WHERE YOU CAN FIND MORE INFORMATION

Our filings with the Securities and Exchange Commission, or SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available on our website at www.zillowgroup.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with the SEC. The information contained on our website is not a part of this quarterly report on Form 10-Q or any other document we file with the SEC.

Investors and others should note that Zillow Group announces material financial information to its investors using its press releases, SEC filings and public conference calls and webcasts. Zillow Group intends to also use the following channels as a means of disclosing information about Zillow Group, its services and other matters and for complying with its disclosure obligations under Regulation FD:

• Zillow Group Investor Relations Webpage (http://investors.zillowgroup.com)

• Zillow Group Investor Relations Blog (http://www.zillowgroup.com/ir-blog)

• Zillow Group Twitter Account (https://twitter.com/zillowgroup)

The information Zillow Group posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following Zillow Group’s press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this quarterly report on Form 10-Q or any other document we file with the SEC, and the inclusion of our website addresses and Twitter account are as inactive textual references only.

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data, unaudited)

	June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	766,698		$	651,058
Short-term investments	673,029			903,867
Accounts receivable, net of allowance for doubtful accounts of $4,809 and $4,838 at June 30, 2019 and December 31, 2018, respectively	82,261			66,083
Mortgage loans held for sale	38,653			35,409
Inventory	552,823			162,829
Prepaid expenses and other current assets	62,062			61,067
Restricted cash	43,882			12,385
Total current assets	2,219,408			1,892,698
Contract cost assets	46,271			45,819
Property and equipment, net	145,932			135,172
Right of use assets	210,080			—
Goodwill	1,984,907			1,984,907
Intangible assets, net	202,824			215,904
Other assets	16,498			16,616
Total assets	$	4,825,920		$	4,291,116
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	8,028		$	7,471
Accrued expenses and other current liabilities	68,520			63,101
Accrued compensation and benefits	32,001			31,388
Revolving credit facilities	409,799			116,700
Warehouse lines of credit	30,057			33,018
Deferred revenue	37,080			34,080
Deferred rent, current portion	—			1,740
Lease liabilities, current portion	18,794			—
Total current liabilities	604,279			287,498
Deferred rent, net of current portion	—			19,945
Lease liabilities, net of current portion	211,593			—
Long-term debt	716,819			699,020
Deferred tax liabilities and other long-term liabilities	15,123			17,474
Total liabilities	1,547,814			1,023,937
Commitments and contingencies (Note 17)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized; no shares issued and outstanding	—			—
Class A common stock, $0.0001 par value; 1,245,000,000 shares authorized; 58,474,815 and 58,051,448 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	6			6
Class B common stock, $0.0001 par value; 15,000,000 shares authorized; 6,217,447 shares issued and outstanding as of June 30, 2019 and December 31, 2018	1			1
Class C capital stock, $0.0001 par value; 600,000,000 shares authorized; 141,821,374 and 139,635,370 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	14			14
Additional paid-in capital	4,088,470			3,939,842
Accumulated other comprehensive income (loss)	896			(905		)
Accumulated deficit	(811,281		)	(671,779		)
Total shareholders’ equity	3,278,106			3,267,179
Total liabilities and shareholders’ equity	$	4,825,920		$	4,291,116

See accompanying notes to condensed consolidated financial statements.

2

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
IMT	$	323,669		$	305,941		$	621,941		$	586,797
Homes	248,924			—			377,396			—
Mortgages	26,985			19,305			54,345			38,328
Total revenue	599,578			325,246			1,053,682			625,125
Cost of revenue (exclusive of amortization) (1):
IMT	26,059			24,290			50,310			46,884
Homes	240,732			—			363,151			86
Mortgages	4,430			1,237			9,108			2,476
Total cost of revenue	271,221			25,527			422,569			49,446
Sales and marketing	187,433			147,727			349,020			285,018
Technology and development	120,330			100,376			228,100			194,309
General and administrative	82,839			60,579			178,613			116,652
Acquisition-related costs	—			632			—			659
Integration costs	293			—			645			—
Total costs and expenses	662,116			334,841			1,178,947			646,084
Loss from operations	(62,538		)	(9,595		)	(125,265		)	(20,959		)
Other income	9,458			3,089			18,626			5,535
Interest expense	(18,897		)	(7,187		)	(35,363		)	(14,260		)
Loss before income taxes	(71,977		)	(13,693		)	(142,002		)	(29,684		)
Income tax benefit	—			10,600			2,500			8,000
Net loss	$	(71,977	)	$	(3,093	)	$	(139,502	)	$	(21,684	)
Net loss per share — basic and diluted	$	(0.35	)	$	(0.02	)	$	(0.68	)	$	(0.11	)
Weighted-average shares outstanding — basic and diluted	205,754			194,155			205,137			192,807
____________________ (1) Amortization of website development costs and intangible assets included in technology and development	$	14,656		$	21,020		$	29,056		$	43,569

See accompanying notes to condensed consolidated financial statements.

3

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net loss	$	(71,977	)	$	(3,093	)	$	(139,502	)	$	(21,684	)
Other comprehensive income (loss):
Unrealized gains (losses) on investments	751			223			1,895			(109		)
Currency translation adjustments	(52		)	(44		)	(94		)	(66		)
Total other comprehensive income (loss)	699			179			1,801			(175		)
Comprehensive loss	$	(71,278	)	$	(2,914	)	$	(137,701	)	$	(21,859	)

See accompanying notes to condensed consolidated financial statements.

4

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share data, unaudited)

	Class A Common Stock, Class B Common Stock and Class C Capital Stock				Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income		Total Shareholders’ Equity
	Shares		Amount
Balance at April 1, 2019	205,130,332		$	21	$	4,022,218		$	(739,304	)	$	197	$	3,283,132
Issuance of common and capital stock upon exercise of stock options	814,062		—		19,433			—			—		19,433
Vesting of restricted stock units	569,260		—		—			—			—		—
Shares and value of restricted stock units withheld for tax liability	(18	)	—		(1		)	—			—		(1		)
Share-based compensation expense	—		—		46,820			—			—		46,820
Net loss	—		—		—			(71,977		)	—		(71,977		)
Other comprehensive income	—		—		—			—			699		699
Balance at June 30, 2019	206,513,636		$	21	$	4,088,470		$	(811,281	)	$	896	$	3,278,106

	Class A Common Stock, Class B Common Stock and Class C Capital Stock				Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares		Amount
Balance at April 1, 2018	192,944,326		$	20	$	3,340,387		$	(570,512	)	$	(1,454	)	$	2,768,441
Issuance of common and capital stock upon exercise of stock options	2,065,545		—		46,747			—			—			46,747
Vesting of restricted stock units	439,944		—		—			—			—			—
Shares and value of restricted stock units withheld for tax liability	(711	)	—		(37		)	—			—			(37		)
Share-based compensation expense	—		—		41,444			—			—			41,444
Net loss	—		—		—			(3,093		)	—			(3,093		)
Other comprehensive income	—		—		—			—			179			179
Balance at June 30, 2018	195,449,104		$	20	$	3,428,541		$	(573,605	)	$	(1,275	)	$	2,853,681

5

	Class A Common Stock, Class B Common Stock and Class C Capital Stock				Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares		Amount
Balance at January 1, 2019	203,904,265		$	21	$	3,939,842		$	(671,779	)	$	(905	)	$	3,267,179
Issuance of common and capital stock upon exercise of stock options	1,543,850		—		32,997			—			—			32,997
Vesting of restricted stock units	1,065,607		—		—			—			—			—
Shares and value of restricted stock units withheld for tax liability	(86	)	—		(3		)	—			—			(3		)
Share-based compensation expense	—		—		115,634			—			—			115,634
Net loss	—		—		—			(139,502		)	—			(139,502		)
Other comprehensive income	—		—		—			—			1,801			1,801
Balance at June 30, 2019	206,513,636		$	21	$	4,088,470		$	(811,281	)	$	896		$	3,278,106

	Class A Common Stock, Class B Common Stock and Class C Capital Stock				Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares		Amount
Balance at January 1, 2018	190,115,148		$	20	$	3,254,146		$	(592,243	)	$	(1,100	)	$	2,660,823
Cumulative-effect adjustment from adoption of guidance on revenue from contracts with customers	—		—		—			40,322			—			40,322
Issuance of common and capital stock upon exercise of stock options	4,479,759		—		99,653			—			—			99,653
Vesting of restricted stock units	834,788		—		—			—			—			—
Shares and value of restricted stock units withheld for tax liability	(1,318	)	—		(65		)	—			—			(65		)
Share-based compensation expense	—		—		74,307			—			—			74,307
Portion of conversion recorded in additional paid-in-capital in connection with partial conversion of convertible notes maturing in 2020	20,727		—		500			—			—			500
Net loss	—		—		—			(21,684		)	—			(21,684		)
Other comprehensive loss	—		—		—			—			(175		)	(175		)
Balance at June 30, 2018	195,449,104		$	20	$	3,428,541		$	(573,605	)	$	(1,275	)	$	2,853,681

See accompanying notes to condensed consolidated financial statements.

6

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Six Months Ended June 30,
	2019			2018
Operating activities
Net loss	$	(139,502	)	$	(21,684	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	41,728			52,926
Share-based compensation expense	109,756			69,684
Amortization of right of use assets	10,572			—
Amortization of contract cost assets	17,880			18,309
Amortization of discount and issuance costs on convertible notes maturing in 2023 and 2021	17,799			9,504
Deferred income taxes	(2,500		)	(8,000		)
Loss on disposal of property and equipment	3,878			2,106
Bad debt expense	706			(352		)
Deferred rent	—			(2,845		)
Accretion of bond discount	(3,695		)	(504		)
Changes in operating assets and liabilities:
Accounts receivable	(16,884		)	(9,335		)
Mortgage loans held for sale	(3,244		)	—
Inventory	(389,994		)	(5,666		)
Prepaid expenses and other assets	(2,015		)	(14,697		)
Lease liabilities	(11,946		)	—
Contract cost assets	(18,332		)	(21,371		)
Accounts payable	1,256			1,855
Accrued expenses and other current liabilities	6,952			(5,189		)
Accrued compensation and benefits	613			4,309
Deferred revenue	3,000			4,002
Other long-term liabilities	149			—
Net cash provided by (used in) operating activities	(373,823		)	73,052
Investing activities
Proceeds from maturities of investments	539,312			172,573
Purchases of investments	(302,891		)	(230,276		)
Purchases of property and equipment	(29,672		)	(31,212		)
Purchases of intangible assets	(8,927		)	(4,777		)
Net cash provided by (used in) investing activities	197,822			(93,692		)
Financing activities
Proceeds from borrowing on revolving credit facilities	293,099			—
Net repayments on warehouse lines of credit	(2,961		)	—
Proceeds from exercise of stock options	32,997			99,656
Value of equity awards withheld for tax liability	3			(66		)
Net cash provided by financing activities	323,138			99,590
Net increase in cash, cash equivalents and restricted cash during period	147,137			78,950
Cash, cash equivalents and restricted cash at beginning of period	663,443			352,095
Cash, cash equivalents and restricted cash at end of period	$	810,580		$	431,045
Supplemental disclosures of cash flow information
Cash paid for interest	$	16,616		$	4,733
Noncash transactions:
Capitalized share-based compensation	$	5,878		$	4,623
Write-off of fully depreciated property and equipment	$	9,867		$	13,293
Write-off of fully amortized intangible assets	$	3,311		$	10,797

See accompanying notes to condensed consolidated financial statements.

7

ZILLOW GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Organization and Description of Business

Zillow Group, Inc. houses one of the largest portfolios of real estate brands on mobile and the web. Zillow Group is committed to leveraging its proprietary data, technology and innovations to make home buying, selling, financing and renting a seamless, on-demand experience for consumers. As its flagship brand, Zillow now offers a fully integrated home shopping experience that includes access to for sale and rental listings, Zillow Offers, which provides a new, hassle-free way to buy and sell homes directly through Zillow, and Zillow Home Loans, Zillow’s affiliated lender that provides an easy way to receive mortgage pre-approvals and financing. Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments, RealEstate.com and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions to help real estate professionals maximize business opportunities and connect with millions of consumers. Zillow Group also operates a number of business brands for real estate, rental and mortgage professionals, including Mortech, dotloop, Bridge Interactive and New Home Feed. 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, Inc. 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: rates of revenue growth; our ability to manage advertising inventory or pricing; engagement and usage of our products; our investment of resources to pursue strategies that may not prove effective; competition in our market; the stability of the residential real estate market and the impact of interest rate changes; changes in government regulation affecting our business; outcomes of legal proceedings; natural disasters and catastrophic events; scaling and adaptation of existing technology and network infrastructure; management of our growth; our ability to attract and retain qualified employees and key personnel; our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; protection of customers’ information and other privacy concerns; protection of our brand and intellectual property; and intellectual property infringement and other claims, among other things.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 21, 2019. The condensed consolidated balance sheet as of December 31, 2018, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2019, our results of operations, comprehensive loss and shareholders’ equity for the three and six month periods ended June 30, 2019 and 2018, and our cash flows for the six month periods ended June 30, 2019 and 2018. The results of the three and six month periods ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any interim period or for any other future year.

8

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to the net realizable value of inventory, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations, and the recoverability of goodwill and indefinite-lived intangible assets, among others. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.

Recently Issued Accounting Standards Not Yet Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance related to a customer’s accounting for implementation costs incurred in hosting arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in cloud computing arrangements with the requirements for capitalizing costs to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. This guidance may be applied either retrospectively or prospectively. 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 August 2018, the FASB issued guidance related to disclosure requirements for fair value measurements. This guidance removes, modifies and adds disclosures related to fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim and annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. 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 statement disclosures.

In June 2016, and subsequently amended in April 2019 and May 2019, the FASB issued guidance on the measurement of credit losses on financial instruments. This guidance will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. This guidance requires an entity to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument on initial recognition and at each reporting period. 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.

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 — The fair value measurement of money market funds is based on quoted market prices in active markets. The fair value measurement of commercial paper is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

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Short-term investments — The fair value measurement of our short-term investments is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Restricted cash — Restricted cash consists of cash received from the resale of homes through Zillow Offers which may be used to repay amounts borrowed on our revolving credit facilities (see Note 13) and amounts held in escrow related to funding home purchases in our mortgage origination business. The carrying value of restricted cash approximates fair value due to the short period of time amounts borrowed on the revolving credit facilities are outstanding.

Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics.

Interest rate lock commitments — The fair value of interest rate lock commitments (“IRLCs”) is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. We generally only issue IRLCs for products that meet specific purchaser guidelines. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close.

Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as hedging instruments are calculated by reference to quoted prices for similar assets.

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

	June 30, 2019
	Total			Level 1		Level 2
Cash equivalents:
Money market funds	$	641,436		$	641,436	$	—
Short-term investments:
U.S. government agency securities	446,736			—		446,736
Corporate notes and bonds	94,922			—		94,922
Commercial paper	87,062			—		87,062
Municipal securities	33,352			—		33,352
Foreign government securities	5,997			—		5,997
Certificates of deposit	1,481			—		1,481
Treasury bills	3,479			—		3,479
Mortgage origination-related:
Mortgage loans held for sale	38,653			—		38,653
IRLCs	1,186			—		1,186
Forward contracts - other current assets	32			—		32
Forward contracts - other current liabilities	(225		)	—		(225		)
Total	$	1,354,111		$	641,436	$	712,675

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	December 31, 2018
	Total			Level 1		Level 2
Cash equivalents:
Money market funds	$	541,575		$	541,575	$	—
Commercial paper	3,999			—		3,999
Short-term investments:
U.S. government agency securities	646,496			—		646,496
Corporate notes and bonds	112,933			—		112,933
Commercial paper	85,506			—		85,506
Municipal securities	39,306			—		39,306
Foreign government securities	14,915			—		14,915
Certificates of deposit	4,711			—		4,711
Mortgage origination-related:
Mortgage loans held for sale	35,409			—		35,409
IRLCs	847			—		847
Forward contracts - other current liabilities	(125		)	—		(125		)
Total	$	1,485,572		$	541,575	$	943,997

At June 30, 2019, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $45.7 million and $80.6 million for our IRLCs and forward contracts, respectively. At December 31, 2018, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $26.7 million and $28.8 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 13 for the carrying amount and estimated fair value of the Company’s convertible senior notes.

We did not have material Level 3 assets or liabilities as of June 30, 2019 or December 31, 2018.

Note 4. Cash and Cash Equivalents, Short-term 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):

	June 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	125,262	$	—	$	—		$	125,262
Cash equivalents:
Money market funds	641,436		—		—			641,436
Short-term investments:
U.S. government agency securities	446,098		668		(30		)	446,736
Corporate notes and bonds	94,739		184		(1		)	94,922
Commercial paper	87,062		—		—			87,062
Municipal securities	33,253		99		—			33,352
Foreign government securities	5,996		1		—			5,997
Certificates of deposit	1,481		—		—			1,481
Treasury bills	3,475		4		—			3,479
Restricted cash	43,882		—		—			43,882
Total	$	1,482,684	$	956	$	(31	)	$	1,483,609

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	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	105,484	$	—	$	—		$	105,484
Cash equivalents:
Money market funds	541,575		—		—			541,575
Commercial paper	3,999		—		—			3,999
Short-term investments:
U.S. government agency securities	647,266		51		(821		)	646,496
Corporate notes and bonds	113,109		1		(177		)	112,933
Commercial paper	85,506		—		—			85,506
Municipal securities	39,316		23		(33		)	39,306
Foreign government securities	14,929		—		(14		)	14,915
Certificates of deposit	4,711		1		(1		)	4,711
Restricted cash	12,385		—		—			12,385
Total	$	1,568,280	$	76	$	(1,046	)	$	1,567,310

The following table presents available-for-sale investments by contractual maturity date as of June 30, 2019 (in thousands):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	651,437	$	652,206
Due after one year through two years	20,667		20,823
Total	$	672,104	$	673,029

Note 5. Accounts Receivable, net

The opening balance of accounts receivable, net was $66.1 million as of January 1, 2019.

The following table presents the changes in the allowance for doubtful accounts (in thousands):

Balance as of January 1, 2019	$	4,838
Bad debt expense	706
Less: write-offs, net of recoveries and other adjustments	(735		)
Balance as of June 30, 2019	$	4,809

Note 6. Inventory

The following table presents the components of inventory, net of applicable lower of cost or net realizable value adjustments, as of the dates presented (in thousands):

	June 30, 2019		December 31, 2018
Work-in-progress	$	174,272	$	45,943
Finished goods	378,551		116,886
Inventory	$	552,823	$	162,829

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Note 7. Contract Cost Assets

As of June 30, 2019 and December 31, 2018, we had $46.3 million and $45.8 million, respectively, of contract cost assets. During the three and six month periods ended June 30, 2019 and 2018, we recorded no impairment losses. We recorded amortization expense related to contract cost assets of $9.2 million and $9.0 million during the three months ended June 30, 2019 and 2018, respectively, and $17.9 million and $18.3 million during the six months ended June 30, 2019 and 2018, respectively.

Note 8. Property and Equipment, net

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

	June 30, 2019			December 31, 2018
Website development costs	$	153,905		$	149,891
Leasehold improvements	77,737			65,012
Office equipment, furniture and fixtures	43,484			39,510
Construction-in-progress	27,293			29,037
Computer equipment	23,024			22,477
Property and equipment	325,443			305,927
Less: accumulated amortization and depreciation	(179,511		)	(170,755		)
Property and equipment, net	$	145,932		$	135,172

We recorded depreciation expense related to property and equipment (other than website development costs) of $6.4 million and $4.9 million during the three months ended June 30, 2019 and 2018, respectively, and $12.4 million and $9.1 million during the six months ended June 30, 2019 and 2018, respectively.

We capitalized $10.3 million and $10.0 million in website development costs during the three months ended June 30, 2019 and 2018, respectively, and $20.3 million and $18.6 million during the six months ended June 30, 2019 and 2018, respectively. Amortization expense for website development costs included in technology and development expenses was $3.6 million and $8.4 million during the three months ended June 30, 2019 and 2018, respectively, and $7.0 million and $18.0 million during the six months ended June 30, 2019 and 2018, respectively.

Note 9. Equity Investment

In October 2016, we purchased a 10% equity interest in a privately held variable interest entity within the real estate industry for $10.0 million. 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 June 30, 2019.

This investment is an equity security without a readily determinable fair value which we account for at cost minus any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. There has been no impairment or upward or downward adjustments to our equity investment as of June 30, 2019 that would impact the carrying amount of the investment. The equity investment is classified within other assets in the condensed consolidated balance sheet.

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Note 10. Intangible Assets, net

The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands):

	June 30, 2019
	Cost		Accumulated Amortization			Net
Purchased content	$	43,886	$	(35,555	)	$	8,331
Software	28,807		(16,850		)	11,957
Customer relationships	103,600		(67,257		)	36,343
Developed technology	109,080		(76,869		)	32,211
Trade names and trademarks	4,400		(4,400		)	—
Lender licenses	400		(117		)	283
Intangibles-in-progress	5,699		—			5,699
Total	$	295,872	$	(201,048	)	$	94,824

	December 31, 2018
	Cost		Accumulated Amortization			Net
Purchased content	$	42,110	$	(30,477	)	$	11,633
Software	24,296		(13,925		)	10,371
Customer relationships	103,900		(60,733		)	43,167
Developed technology	111,980		(72,788		)	39,192
Trade names and trademarks	4,900		(4,683		)	217
Lender licenses	400		(17		)	383
Intangibles-in-progress	2,941		—			2,941
Total	$	290,527	$	(182,623	)	$	107,904

Amortization expense recorded for intangible assets for the three months ended June 30, 2019 and 2018 was $11.0 million and $12.6 million, respectively. Amortization expense recorded for intangible assets for the six months ended June 30, 2019 and 2018 was $22.0 million and $25.6 million, respectively. These amounts are included in technology and development expenses.

We have an indefinite-lived intangible asset 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. The carrying value of the Trulia trade names and trademarks intangible asset was $108.0 million as of June 30, 2019 and December 31, 2018.

Intangibles-in-progress consists of software that is capitalizable but has not been placed in service.

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Note 11. Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2019
Balance as of April 1, 2019	$	36,105
Deferral of revenue	259,132
Less: Revenue recognized	(258,157		)
Balance as of June 30, 2019	$	37,080

	Six Months Ended June 30, 2019
Balance as of January 1, 2019	$	34,080
Deferral of revenue	501,984
Less: Revenue recognized	(498,984		)
Balance as of June 30, 2019	$	37,080

During the three months ended June 30, 2019 we recognized as revenue a total of $33.0 million pertaining to amounts that were recorded in deferred revenue as of April 1, 2019. During the six months ended June 30, 2019, we recognized as revenue a total of $30.9 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2019.

Note 12. Leases

Our lease portfolio is primarily composed of operating leases for our office space. We have lease agreements that include lease components (e.g., fixed rent) and non-lease components (e.g., common area maintenance), which are accounted for as a single component, as we have elected the practical expedient to group lease and non-lease components. We also elected the practical expedient to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term.

Our leases have remaining lease terms ranging from less than one year to twelve years, some of which include options to extend the lease term for up to an additional ten years. For example, our largest leases, which include our corporate headquarters in Seattle, Washington and office space in New York, New York and San Francisco, California, include options to renew the existing leases for either one or two periods of five years. When determining if a renewal option is reasonably certain of being exercised at lease commencement, we consider several factors, including but not limited to, contract-based, asset-based and entity-based factors. We reassess the term of existing leases if there is a significant event or change in circumstances within our control that affects whether we are reasonably certain to exercise an option to extend a lease. Examples of such events or changes include construction of significant leasehold improvements or other modifications or customizations to the underlying asset, relevant business decisions or subleases. In most cases, we have concluded that renewal options are not reasonably certain of being exercised, therefore, such renewals are not included in the right of use asset and lease liability.

During the three months ended June 30, 2019, it became reasonably certain that in a future period we would exercise the first of two five years renewal options related to the office space lease for our corporate headquarters in Seattle, Washington, due to the construction of significant leasehold improvements. Therefore, the payments associated with the renewal are now included in the measurement of the lease liability and right of use asset.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. For those leases that existed as of January 1, 2019, we used our incremental borrowing rate based on information available at that date. We apply a portfolio approach for determining the incremental borrowing rate based on the applicable lease terms and the current economic environment, and we utilize the assistance of third-party specialists to assist us in determining our yield curve.

The components of our operating lease expense were as follows for the periods presented (in thousands):

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	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost	$	9,004	$	15,527
Variable lease cost	4,965		9,746
Total lease cost	$	13,969	$	25,273

Cash paid for amounts included in the measurement of lease liabilities for the three and six month periods ended June 30, 2019 was $7.2 million and $16.3 million, respectively. Right of use assets obtained in exchange for new operating lease obligations for the three and six month periods ended June 30, 2019 were $113.7 million. The weighted average remaining term for our leases as of June 30, 2019 was 9 years. The weighted average discount rate for our leases as of June 30, 2019 was 6.5%.

Maturities of our operating lease liabilities by fiscal year were as follows as of June 30, 2019 (in thousands):

Remainder of 2019	$	15,106
2020	37,558
2021	41,089
2022	37,173
2023	34,990
All future years	164,992
Total lease payments	330,908
Less: Imputed interest	(100,521		)
Present value of lease liabilities	$	230,387

Operating lease expense for the three and six month periods ended June 30, 2018, was $5.6 million and $11.4 million, respectively. The following table presents our future minimum payments for all operating leases as of December 31, 2018, including future minimum payments for operating leases that had not yet commenced as of December 31, 2018 totaling $112.9 million (in thousands):

2019	$	29,085
2020	38,060
2021	40,099
2022	37,721
2023	36,458
All future years	85,462
Total future minimum lease payments	$	266,885

Note 13. Debt

Revolving Credit Facilities

To provide capital for Zillow Offers, we utilize revolving credit facilities that are classified as current liabilities in our condensed consolidated balance sheets. The following table summarizes our revolving credit facilities as of the periods presented (in thousands, except interest rates):

Effective Date	Maximum Borrowing Capacity		Outstanding Borrowings at June 30, 2019		Outstanding Borrowings at December 31, 2018		Weighted Average Interest Rate
July 31, 2018	$	500,000	$	265,097	$	116,700	5.97	%
January 31, 2019	500,000		144,702		—		5.95	%
Total	$	1,000,000	$	409,799	$	116,700

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On January 31, 2019, certain wholly owned subsidiaries of Zillow Group entered into a revolving credit agreement with Citibank, N.A., as the directing lender, and certain other parties thereto. The credit agreement provides for a maximum borrowing capacity of $500.0 million (the “Maximum Amount”) with a current borrowing capacity of $145.0 million as of June 30, 2019, which amount may be increased up to the Maximum Amount subject to the satisfaction of certain conditions, through a non-recourse credit facility secured by a pledge of the equity of certain Zillow Group subsidiaries that purchase and sell select residential properties through Zillow Offers. The credit agreement has an initial term of two years and may be extended for up to two additional periods of six months each, subject to agreement by the directing lender. Zillow Group formed certain special purpose entities to effectuate the transactions contemplated by the January 31, 2019 revolving credit facility. Each special purpose entity is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such entity are available to satisfy the debts and other obligations of any affiliate or other entity.

The July 31, 2018 revolving credit facility has an initial term of one year and automatically renews on a monthly basis as of July 31, 2019 for up to 24 additional months, subject to agreement by the directing lender. The revolving credit facility has a current borrowing capacity of $275.1 million as of June 30, 2019. Zillow Group formed certain special purpose entities to effectuate the transactions contemplated by the July 31, 2018 revolving credit facility. Each special purpose entity is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such entity are available to satisfy the debts and other obligations of any affiliate or other entity.

The stated interest rate on our revolving credit facilities is one-month LIBOR plus an applicable margin as defined in the respective credit agreements. Our revolving credit facilities include customary representations and warranties, covenants (including financial covenants applicable to Zillow Group) and provisions regarding events of default. As of June 30, 2019, Zillow Group was in compliance with all financial covenants and no event of default had occurred. In certain circumstances Zillow Group may be obligated to fund some or all of the payment obligations under the credit agreement. Further, borrowings against any eligible property are due upon its sale or at maturity of the applicable facility, or if the property’s ownership period exceeds the agreed aging criteria. Each of the credit facilities permits only a portion of the financed properties to be owned longer than 180 days, and no financed properties may be owned for longer than one year. Any financed property excluded by such aging criteria will drop out of the borrowing base, and the applicable borrower will be required to repay any resulting overadvance. Our revolving credit facilities also require that we establish, maintain and in certain circumstances fund, certain specified reserve accounts. These reserve accounts include, but are not limited to, interest reserves, insurance, tax reserves, renovation cost reserves and special reserves. Amounts funded to these reserve accounts and the collection accounts have been classified within our consolidated balance sheets as restricted cash.

For additional details related to our revolving credit facilities, see Note 14 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Warehouse Lines of Credit

To provide capital for Zillow Home Loans, we utilize warehouse lines of credit that are classified as current liabilities in our condensed consolidated balance sheets. The following table summarizes our warehouse lines of credit as of the periods presented (in thousands, except interest rates):

Maturity Date	Maximum Borrowing Capacity		Outstanding Borrowings at June 30, 2019		Outstanding Borrowings at December 31, 2018		Weighted Average Interest Rate
July 15, 2019	$	50,000	$	15,722	$	14,125	4.95	%
June 27, 2020	50,000		14,335		18,892		4.95	%
Total	$	100,000	$	30,057	$	33,017

On June 28, 2019, Zillow Home Loans amended and restated its warehouse line of credit previously maturing on June 29, 2019. The amended and restated credit agreement extends the term of the original agreement for one year, through June 27, 2020, and continues to provide for a maximum borrowing capacity of $50.0 million with availability under the warehouse line of credit limited depending on the types of loans originated.

Borrowings on the warehouse lines of credit bear interest at the one-month LIBOR plus an applicable margin, as defined in the credit agreements governing the warehouse lines of credit. The warehouse lines of credit include customary representations and warranties, covenants and provisions regarding events of default. As of June 30, 2019, Zillow Group was in compliance with all financial covenants and no event of default had occurred.

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Convertible Senior Notes

The following table summarizes our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

Maturity Date	Aggregate Principal Amount		Fair Value at June 30, 2019		Fair Value at December 31, 2018		Stated Interest Rate		Effective Interest Rate
July 1, 2023	$	373,750	$	370,095	$	321,855	1.50	%	6.99	%
December 1, 2021	460,000		521,318		446,200		2.00	%	7.44	%
December 15, 2020	9,637		16,842		16,744		2.75	%	N/A
Total	$	843,387	$	908,255	$	784,799

The convertible notes are senior unsecured obligations and are classified as long-term debt in our condensed consolidated balance sheets. Interest on the convertible notes is paid semi-annually. As of June 30, 2019 and December 31, 2018, respectively, the total unamortized debt discount and debt issuance costs for our outstanding senior convertible notes were $126.6 million and $144.4 million. The convertible senior notes maturing in 2023 and 2021 are not redeemable or convertible as of June 30, 2019. The convertible senior notes maturing in 2020 are convertible, at the option of the holder, and redeemable, at our option, as of June 30, 2019.

For additional details related to our convertible senior notes, see Note 14 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Note 14. Income Taxes

We are subject to federal and state income taxes in the United States and in Canada. As of June 30, 2019 and December 31, 2018, we have provided a valuation allowance against our net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized. Therefore, no material current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $1,081.7 million as of December 31, 2018, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $32.5 million (tax effected) as of December 31, 2018.

Note 15. Share-Based Awards

Option Awards

The following table summarizes option award activity for the six months ended June 30, 2019:

	Number of Shares Subject to Existing Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2019	27,310,110		$	34.04	6.23	$	97,941
Granted	6,721,428		40.05
Exercised	(1,543,850	)	21.37
Forfeited or cancelled	(1,419,750	)	41.10
Outstanding at June 30, 2019	31,067,938		35.65		6.62	367,905
Vested and exercisable at June 30, 2019	17,363,786		31.63		4.87	266,575

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The fair value of options granted is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:

	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Expected volatility	45%	43%	45%-47%	43%-45%
Expected dividend yield	—	—	—	—
Risk-free interest rate	2.00%	2.70%	2.00%-2.53%	2.52%-2.70%
Weighted-average expected life	5.00 years	4.50 years	4.75-5.25 years	4.50-5.00 years
Weighted-average fair value of options granted	$16.96	$23.30	$16.79	$21.07

As of June 30, 2019, there was a total of $210.7 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the six months ended June 30, 2019:

	Restricted Stock Units		Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2019	5,266,324		$	42.19
Granted	3,638,550		39.32
Vested	(1,065,607	)	39.46
Forfeited or cancelled	(601,829	)	41.23
Unvested outstanding at June 30, 2019	7,237,438		41.23

As of June 30, 2019, there was a total of $277.0 million in unrecognized compensation cost related to unvested restricted stock units.

Share-Based Compensation Expense

The following table presents the effects of share-based compensation expense in our condensed consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cost of revenue	$	936	$	1,256	$	1,816	$	2,211
Sales and marketing	6,801		6,340		12,451		11,502
Technology and development	18,399		14,347		33,908		25,889
General and administrative	17,496		17,000		61,581		30,082
Total	$	43,632	$	38,943	$	109,756	$	69,684

On February 21, 2019, Zillow Group announced the appointment of Richard N. Barton as Zillow Group’s Chief Executive Officer, effective February 21, 2019. Mr. Barton succeeds Spencer Rascoff, who served as Zillow Group’s Chief Executive Officer since 2010 and who remains a member of Zillow Group’s board of directors. In connection with Mr. Rascoff’s resignation as Chief Executive Officer, Zillow Group entered into an Executive Departure Agreement and Release (the “Agreement”) with Mr. Rascoff. Pursuant to the Agreement, Mr. Rascoff remained a full-time employee of Zillow Group until March 22, 2019 (the “Departure Date”) in order to provide transition services until such date. Pursuant to the Agreement, Mr. Rascoff received, among other things, accelerated vesting of outstanding stock options held by Mr. Rascoff as of the Departure Date by an additional eighteen months from the Departure Date. Options not vested as of the Departure Date, taking into account the foregoing vesting acceleration, were terminated. Each of Mr. Rascoff’s vested stock options outstanding as of the Departure Date will remain exercisable until, except for any later date contemplated by the following proviso, the earlier of (x) the third anniversary of the Departure Date and (y) the latest day upon which the option would have expired by its original

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terms under any circumstances (the “Option Expiration Outside Date”); provided, however, that the options will remain exercisable for so long as Mr. Rascoff serves on Zillow Group’s board of directors (but not later than any applicable Option Expiration Outside Date), and if Mr. Rascoff ceases to serve on Zillow Group’s board of directors on or after the third anniversary of the Departure Date, each option will remain exercisable until the earlier of (i) ninety days from the final date of Mr. Rascoff’s service on Zillow Group’s board of directors and (ii) the applicable Option Expiration Outside Date. The change in the exercise period of the options as well as the vesting acceleration pursuant to the Agreement have been accounted for as equity modifications, and we recorded $26.4 million of share-based compensation expense associated with the modifications in the six months ended June 30, 2019. We measured the modification charge by calculating the incremental fair value of the modified award compared to the fair value of the original award immediately prior to the modification. The value of the modified awards as of the modification date was estimated using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 46%-47%, a risk-free interest rate of 2.47%-2.49% and a weighted-average expected life of 3.84-5.25 years.

Note 16. Net Loss Per Share

For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net loss per share because their effect would have been antidilutive (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Weighted-average Class A common stock and Class C capital stock option awards outstanding	19,502	27,428	19,656	24,393
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	7,230	5,246	6,548	4,799
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	411	402	411	402
Class C capital stock issuable related to conversion spread on the convertible notes maturing in 2021	—	997	—	997
Total Class A common stock and Class C capital stock equivalents	27,143	34,073	26,615	30,591

Note 17. Commitments and Contingencies

Lease Commitments

We have entered into various non-cancelable operating lease agreements for certain of our office space and equipment with original lease periods expiring between 2019 and 2030. For additional information regarding our lease agreements, see Note 12.

Purchase Commitments

Purchase commitments primarily include various non-cancelable agreements to purchase content related to our mobile applications and websites as well as homes we are under contract to purchase through Zillow Offers but that have not closed as of the respective date. As of June 30, 2019, the value of homes under contract that have not closed was $266.2 million.

Letters of Credit

As of June 30, 2019, we have outstanding letters of credit of approximately $16.9 million, which secure our lease obligations in connection with certain of our office space operating leases.

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 $9.7 million and $8.9 million, respectively, as of June 30, 2019 and December 31, 2018.

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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 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, and on February 9, 2017, the jury returned a verdict finding that the Company had infringed VHT’s copyrights in images displayed or saved to the Digs site. The jury awarded VHT $79,875 in actual damages and approximately $8.2 million in statutory damages. In March 2017, the Company filed motions in the district court seeking judgment for the Company on certain claims that are the subject of the verdict, and for a new trial on others. On June 20, 2017, the judge ruled and granted in part our motions, finding that VHT failed to present sufficient evidence to prove direct copyright infringement for a portion of the images, reducing the total damages to approximately $4.1 million. On March 15, 2019, after the Company had filed an appeal with the Ninth Circuit Court of Appeals seeking review of the final judgment and certain prior rulings entered by the district court, the Ninth Circuit Court of Appeals issued an opinion that, among other things, (i) affirmed the district court’s grant of summary judgment in favor of Zillow on direct infringement of images on Zillow’s listing site, (ii) affirmed the district court’s grant in favor of Zillow of judgment notwithstanding the verdict on certain images that were displayed on the Zillow Digs site, (iii) remanded consideration of the issue whether VHT’s images on the Zillow Digs site were part of a compilation or individual photos, and (iv) vacated the jury’s finding of willful infringement. On June 13, 2019, VHT filed a petition for writ of certiorari with the United States Supreme Court seeking review of certain rulings by the Ninth Circuit Court of Appeals. We have recorded an estimated liability for immaterial amounts related to this matter as of June 30, 2019 and December 31, 2018. We do not believe there is a reasonable possibility that a material loss in excess of amounts accrued may be incurred.

In August and September 2017, two purported class action lawsuits were filed against us and certain of our executive officers, alleging, among other things, violations of federal securities laws on behalf of a class of those who purchased our common stock between February 12, 2016 and August 8, 2017. One of those purported class actions, captioned Vargosko v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Central District of California. The other purported class action lawsuit, captioned Shotwell v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Western District of Washington. The complaints allege, among other things, that during the period between February 12, 2016 and August 8, 2017, we issued materially false and misleading statements regarding our business practices. The complaints seek to recover, among other things, alleged damages sustained by the purported class members as a result of the alleged misconduct. In November 2017, an amended complaint was filed against us and certain of our executive officers in the Shotwell v. Zillow Group class action lawsuit, extending the beginning of the class period to November 17, 2014. In January 2018, the Vargosko v. Zillow Group purported class action lawsuit was transferred to the U.S. District Court for the Western District of Washington and consolidated with the Shotwell v. Zillow Group purported class action lawsuit. In February 2018, the plaintiffs filed a consolidated amended complaint, and in April 2018, we filed our motion to dismiss the consolidated amended complaint. In October 2018, our motion to dismiss was granted without prejudice, and the plaintiffs were given 45 days file a second consolidated amended complaint and attempt to cure the defects in their consolidated amended complaint. In November 2018, the plaintiffs filed a second consolidated amended complaint, which we moved to dismiss in December 2018. On April 19, 2019, our motion to dismiss the second consolidated amended complaint was denied, and we filed our answer to the second amended complaint on May 3, 2019. We have denied the allegations of wrongdoing and intend to vigorously defend the claims in this lawsuit. We have not recorded an accrual related to this lawsuit as of June 30, 2019 and December 31, 2018, as we do not believe a loss is probable.

In October and November 2017 and January and February 2018, four shareholder derivative lawsuits were filed in the U.S. District Court for the Western District of Washington and the Superior Court of the State of Washington, King County,

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against certain of our executive officers and directors seeking unspecified damages on behalf of the Company and certain other relief, such as reform to corporate governance practices. The plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants breached their fiduciary duties in connection with oversight of the Company’s public statements and legal compliance, and as a result of the breach of such fiduciary duties, the Company was damaged, and defendants were unjustly enriched. Certain of the plaintiffs also allege, among other things, violations of Section 14(a) of the Securities Exchange Act of 1934 and waste of corporate assets. On February 5, 2018, the U.S. District Court for the Western District of Washington consolidated the two shareholder derivative lawsuits pending in that court. On February 16, 2018, the Superior Court of the State of Washington, King County, consolidated the two shareholder derivative lawsuits pending in that court. All four of the shareholder derivative lawsuits were stayed until our motion to dismiss the second consolidated amended complaint in the securities class action lawsuit discussed above was denied in April 2019. On July 8, 2019, the plaintiffs in the consolidated federal derivative lawsuit filed a consolidated shareholder derivative complaint, to which the defendants have 45 days to respond. The defendants intend to deny the allegations of wrongdoing and vigorously defend the claims in these lawsuits. We have not recorded an accrual related to these lawsuits as of June 30, 2019 and December 31, 2018, as we do not believe a loss is probable.

In addition to the matters discussed above, from time to time, we are involved in litigation and claims that arise in the ordinary course of business. Although we cannot be certain of the outcome of any such litigation or claims, nor the amount of damages and exposure that we could incur, we currently believe that the final disposition of such matters will not have a material effect on our business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, 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.

Note 18. Related Party Transactions

On April 3, 2019, we entered into a Charter Service Agreement with Executive Jet Management, Inc. for the occasional use by us of an aircraft owned by an entity that is owned by Mr. Lloyd Frink, our Executive Chairman and President, for business travel. We recognized approximately $0.2 million in expenses pursuant to the Charter Service Agreement for the three and six month periods ended June 30, 2019.

Note 19. Self-Insurance

We are self-insured for medical benefits and dental benefits for all qualifying Zillow Group employees. The medical plan carries a stop-loss policy which provides protection when cumulative medical claims exceed 125% of expected claims for the plan year with a limit of $1.0 million and from individual claims during the plan year exceeding $500,000. 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 claims is included within accrued compensation and benefits in our condensed consolidated balance sheets and was $3.6 million and $3.9 million, respectively, as of June 30, 2019 and December 31, 2018.

Note 20. Employee Benefit Plan

We have a 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 $5.2 million and $4.0 million, respectively, for the three months ended June 30, 2019 and 2018, and $10.1 million and $7.8 million, respectively, for the six months ended June 30, 2019 and 2018.

Note 21. Segment Information and Revenue

Beginning January 1, 2019, we have three operating and reportable segments, which have been identified based on the way in which 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 for the Internet, Media & Technology (“IMT”), Homes and Mortgages segments.

The IMT segment includes the financial results for the Premier Agent, Rentals and new construction marketplaces, dotloop, and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly. The Mortgages segment includes financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and the sale of mortgages on the secondary market, as well as Mortech mortgage software solutions.

Revenue and costs are directly attributed to our segments when possible. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit the other segments. These costs primarily include headcount-related expenses, general and administrative expenses including executive, finance, accounting, legal, human resources,

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recruiting, and facilities costs, product development and data acquisition costs and marketing and advertising costs. These costs are allocated to each segment based on the estimated benefit each segment receives from such expenditures.

The chief executive officer reviews information about our revenue categories as well as statement of operations data inclusive of loss before income taxes by segment. This information is included in the following tables for the periods presented (in thousands):

	Three Months Ended June 30, 2019								Three Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT		Homes			Mortgages
Revenue:
Premier Agent	$	231,961	$	—		$	—		$	230,885	$	—		$	—
Rentals	42,670		—			—			33,288		—			—
Other	49,038		—			—			41,768		—			—
Homes	—		248,924			—			—		—			—
Mortgages	—		—			26,985			—		—			19,305
Total revenue	323,669		248,924			26,985			305,941		—			19,305
Costs and expenses:
Cost of revenue	26,059		240,732			4,430			24,290		—			1,237
Sales and marketing	135,440		37,409			14,584			137,972		2,095			7,660
Technology and development	94,261		18,198			7,871			91,131		3,790			5,455
General and administrative	54,671		17,808			10,360			52,438		4,176			3,965
Acquisition-related costs	—		—			—			—		—			632
Integration costs	—		—			293			—		—			—
Total costs and expenses	310,431		314,147			37,538			305,831		10,061			18,949
Income (loss) from operations	13,238		(65,223		)	(10,553		)	110		(10,061		)	356
Segment other income	—		—			402			—		—			—
Segment interest expense	—		(5,899		)	(287		)	—		—			—
Income (loss) before income taxes (1)	$	13,238	$	(71,122	)	$	(10,438	)	$	110	$	(10,061	)	$	356

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	Six Months Ended June 30, 2019								Six Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT			Homes			Mortgages
Revenue:
Premier Agent	$	449,696	$	—		$	—		$	444,617		$	—		$	—
Rentals	80,508		—			—			62,351			—			—
Other	91,737		—			—			79,829			—			—
Homes	—		377,396			—			—			—			—
Mortgages	—		—			54,345			—			—			38,328
Total revenue	621,941		377,396			54,345			586,797			—			38,328
Costs and expenses:
Cost of revenue	50,310		363,151			9,108			46,884			86			2,476
Sales and marketing	262,094		58,271			28,655			266,719			2,385			15,914
Technology and development	182,230		30,479			15,391			177,048			6,026			11,235
General and administrative	125,521		32,165			20,927			102,625			5,954			8,073
Acquisition-related costs	—		—			—			27			—			632
Integration costs	—		—			645			—			—			—
Total costs and expenses	620,155		484,066			74,726			593,303			14,451			38,330
Income (loss) from operations	1,786		(106,670		)	(20,381		)	(6,506		)	(14,451		)	(2		)
Segment other income	—		—			715			—			—			—
Segment interest expense	—		(9,657		)	(388		)	—			—			—
Income (loss) before income taxes (1)	$	1,786	$	(116,327	)	$	(20,054	)	$	(6,506	)	$	(14,451	)	$	(2	)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total segment loss before income taxes	$	(68,322	)	$	(9,595	)	$	(134,595	)	$	(20,959	)
Corporate interest expense	(12,711		)	(7,187		)	(25,318		)	(14,260		)
Corporate other income	9,056			3,089			17,911			5,535
Consolidated loss before income taxes	$	(71,977	)	$	(13,693	)	$	(142,002	)	$	(29,684	)

Certain corporate items are not directly attributable to any of our segments, including 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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Note 22. Subsequent Events

On July 11, 2019, Zillow Home Loans extended the term of its $50.0 million warehouse line of credit previously maturing on July 15, 2019 such that it now matures on October 15, 2019.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those described in or implied by any forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, including in the section titled “Note Regarding Forward-Looking Statements,” and also those factors discussed in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2018.

Overview of our Business

Zillow Group, Inc. houses one of the largest portfolios of real estate brands on mobile and the web. Zillow Group is committed to leveraging its proprietary data, technology and innovations to make home buying, selling, financing and renting a seamless, on-demand experience for consumers. As its flagship brand, Zillow now offers a fully integrated home shopping experience that includes access to for sale and rental listings, Zillow Offers, which provides a new, hassle-free way to buy and sell homes directly through Zillow, and Zillow Home Loans, Zillow’s affiliated lender that provides an easy way to receive mortgage pre-approvals and financing. Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments, RealEstate.com and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions to help real estate professionals maximize business opportunities and connect with millions of consumers. Zillow Group also operates a number of business brands for real estate, rental and mortgage professionals, including Mortech, dotloop, Bridge Interactive and New Home Feed.

Reportable Segments and Revenue Overview

As of January 1, 2019, Zillow Group has three reportable segments: the Internet, Media & Technology (“IMT”) segment, the Homes segment and the Mortgages segment. The IMT segment includes the financial results for the Premier Agent, Rentals and new construction marketplaces, as well as dotloop, display and other advertising and business software solutions. The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through the Zillow Offers service. The Mortgages segment includes the financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and our Mortech mortgage software solutions.

Premier Agent revenue is generated by the sale of advertising services, as well as marketing and technology products and services, to help real estate agents and brokers grow and manage their businesses. We offer these products and services through our Premier Agent and Premier Broker programs. Premier Agent and Premier Broker advertising products, which include the delivery of impressions and validated consumer connections, or leads, are sold on a share of voice basis. Impressions and leads are distributed to Premier Agents and Premier Brokers in proportion to their share of voice, or an agent advertiser’s share of total advertising purchased in a particular zip code. Impressions are delivered when an advertisement of a Premier Agent or Premier Broker appears on pages viewed by users of our mobile applications and websites and connections are delivered when consumer contact information is provided to Premier Agents and Premier Brokers. Connections and impressions are each provided as part of our advertising services for Premier Agent and Premier Brokers; we do not charge a separate fee for these consumer leads.

Rentals revenue primarily includes advertising sold to property managers, landlords and other rental professionals on a cost per lead, cost per click, cost per lease or cost per listing basis. Rentals revenue also includes revenue generated through our rental applications product, whereby potential renters can submit applications to multiple properties over a 30-day period for a flat service fee.

Other revenue primarily includes revenue generated by new construction and display advertising, as well as revenue from the sale of various other advertising and business technology solutions for real estate professionals, including dotloop. New construction revenue primarily includes advertising services sold to home builders on a cost per residential community basis. Display revenue primarily consists of graphical mobile and web advertising sold to advertisers promoting their brands on our mobile applications and websites.

In our Homes segment, we generate revenue from the resale of homes on the open market through our Zillow Offers service. We began buying homes through the Zillow Offers service in April 2018, and we began selling homes in July 2018.

In our Mortgages segment, we generate revenue from advertising sold to mortgage lenders and other mortgage professionals on a cost per lead or subscription basis, including our Connect and Custom Quote services, through mortgage originations and the related sale of mortgages on the secondary market through Zillow Home Loans and from Mortech, which

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provides subscription-based mortgage software solutions, including a product and pricing engine and lead management platform.

During the three months ended June 30, 2019, we generated total revenue of $599.6 million, as compared to $325.2 million in the three months ended June 30, 2018, an increase of 84%. This increase was primarily the result of the addition of $248.9 million in Homes revenue, a $9.4 million, or 28% increase in Rentals revenue, a $7.7 million, or 40% increase in Mortgages revenue, and a $7.3 million, or 17% increase in Other revenue. There were approximately 194.3 million average monthly unique users of our mobile applications and websites for the three months ended June 30, 2019, representing year-over-year growth of 4%. Visits increased 14% to 2,181.4 million for the three months ended June 30, 2019 from 1,920.6 million for the three months ended June 30, 2018.

As of June 30, 2019, we had 4,880 full-time employees compared to 4,336 full-time employees as of December 31, 2018.

Key Metrics

Management has identified unique users and visits as relevant to investors’ and others’ assessment of our financial condition and results of operations.

Unique Users

Measuring unique users is important to us because much of our revenue depends in part on our ability to enable real estate, rental and mortgage professionals to connect with our consumer users - home buyers and sellers, renters, and individuals with or looking for a mortgage. Growth in consumer traffic to our mobile applications and websites increases the number of impressions, clicks, connections, leads and other events we can monetize to generate revenue. For example, Premier Agent revenue and display revenue depend on advertisements being served to users of our mobile applications and websites, and our Homes segment revenue depends in part on users accessing our mobile applications and websites to engage in the sale and purchase of homes with Zillow Group.

We count a unique user the first time an individual accesses one of our mobile applications using a mobile device during a calendar month and the first time an individual accesses one of our websites using a web browser during a calendar month. If an individual accesses our mobile applications using different mobile devices within a given month, the first instance of access by each such mobile device is counted as a separate unique user. If an individual accesses more than one of our mobile applications within a given month, the first access to each mobile application is counted as a separate unique user. If an individual accesses our websites using different web browsers within a given month, the first access by each such web browser is counted as a separate unique user. If an individual accesses more than one of our websites in a single month, the first access to each website is counted as a separate unique user since unique users are tracked separately for each domain. Zillow, StreetEasy, HotPads, Naked Apartments and RealEstate.com measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics.

	Three Months Ended June 30,		2018 to 2019 % Change
	2019	2018
	(in millions)
Average Monthly Unique Users	194.3	186.1	4	%

Visits

The number of visits is an important metric because it is an indicator of consumers’ level of engagement with our mobile applications, websites and other services. We believe highly engaged consumers are more likely to be transaction-ready real estate market participants and therefore more sought-after by our real estate advertisers or more likely to participate in our Zillow Offers program or use Zillow Homes Loans.

We define a visit as a group of interactions by users with the Zillow, Trulia, StreetEasy and RealEstate.com mobile applications and websites, as we monetize our Premier Agent and Premier Broker products on these mobile applications and websites. A single visit can contain multiple page views and actions, and a single user can open multiple visits across domains, web browsers, desktop or mobile devices. Visits can occur on the same day, or over several days, weeks or months.

Zillow, StreetEasy and RealEstate.com measure visits with Google Analytics, and Trulia measures visits with Adobe Analytics. Visits to Trulia end after thirty minutes of user inactivity. Visits to Zillow, StreetEasy and RealEstate.com end either:

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(i) after thirty minutes of user inactivity or at midnight; or (ii) through a campaign change. A visit ends through a campaign change if a visitor arrives via one campaign or source (for example, via a search engine or referring link on a third-party website), leaves the mobile application or website, and then returns via another campaign or source.

	Three Months Ended June 30,		2018 to 2019 % Change
	2019	2018
	(in millions)
Visits	2,181.4	1,920.6	14	%

Basis of Presentation

Revenue

We recognize revenue when (or as) we satisfy our performance obligations by transferring control of promised products or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those products or services.

In our IMT segment, we generate revenue from the sale of advertising services and our suite of marketing software and technology solutions to residential real estate businesses and professionals. These professionals include real estate, rental and new construction professionals and brand advertisers. Our three primary revenue categories within our IMT segment are Premier Agent, Rentals and Other.

In our Homes segment, we generate revenue from the resale of homes on the open market through our Zillow Offers program.

In our Mortgages segment, we generate revenue from the sale of advertising services to mortgage lenders and other mortgage professionals, mortgage originations and the related sale of mortgages on the secondary market through Zillow Home Loans, as well as Mortech mortgage software solutions.

Premier Agent Revenue. Premier Agent revenue is derived from our Premier Agent and Premier Broker programs. Our Premier Agent and Premier Broker programs offer a suite of marketing and business technology products and services to help real estate agents and brokers achieve their advertising goals, while growing and managing their businesses and brands. All Premier Agents and Premier Brokers receive access to a dashboard portal on our mobile application or website that provides individualized program performance analytics, our customer relationship management, or CRM, tool that captures detailed information about each contact made with a Premier Agent or Premier Broker through our mobile and web platforms and our account management tools. The marketing and business technology products and services promised to Premier Agents and Premier Brokers are delivered over time, as the customer simultaneously receives and consumes the benefit of the performance obligations.

Premier Agent and Premier Broker advertising products, which include the delivery of impressions and validated consumer connections, or leads, are offered on a share of voice basis. Payment is received prior to the delivery of impressions and connections. Impressions are delivered when an advertisement appears on pages viewed by users of our mobile applications and websites and connections are delivered when consumer contact information is provided to Premier Agents and Premier Brokers. We determine the number of impressions and connections to deliver to Premier Agents and Premier Brokers in each zip code using a market-based pricing method in consideration of the total amount spent by Premier Agents and Premier Brokers to purchase impressions and connections in the zip code during the month. This results in the delivery of impressions and connections over time in proportion to each Premier Agent’s and Premier Broker’s share of voice. A Premier Agent’s or Premier Broker’s share of voice in a zip code is determined by their proportional monthly prepaid spend in that zip code as a percentage of the total monthly prepaid spend of all Premier Agents and Premier Brokers in that zip code, and includes both the share of impressions delivered as advertisements appearing on pages viewed by users of our mobile applications and websites, as well as the proportion of consumer connections a Premier Agent or Premier Broker receives. The number of impressions and connections delivered for a given spend level is dynamic - as demand for advertising in a zip code increases or decreases, the number of impressions and connections delivered to a Premier Agent or Premier Broker in that zip code decreases or increases accordingly.

We recognize revenue related to the Premier Agent and Premier Broker products and services based on the monthly prepaid spend recognized on a straight-line basis during the monthly billing period over which the products and services are provided. This methodology best depicts how we satisfy our performance obligations to customers, as we continuously transfer

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control of the performance obligations to the customer over time. We have not allocated the transaction price to each individual performance obligation within our Premier Agent and Premier Broker arrangements, as the amounts recognized would be the same irrespective of any allocation.

In October 2018, we began testing a new pricing model, Flex, for Premier Agent and Premier Broker advertising services in limited markets. With the Flex model, Premier Agents and Premier Brokers are provided with validated leads at no upfront cost, and they pay a performance advertising fee only when a real estate transaction is closed with one of the leads. With this pricing model, the transaction price represents variable consideration, as the amount to which we expect to be entitled varies based on the number of validated leads that convert into real estate transactions and the value of those transactions. As our experience with this pricing model is limited, we fully constrain the estimated variable consideration. When a real estate transaction is closed with a Flex lead and payment is made, the uncertainty is resolved, and revenue is recognized in the period for the satisfied performance obligations. We will continuously reevaluate this determination and will begin estimating variable consideration and recording revenue as performance obligations are transferred when we have concluded we are able to make a reliable estimate.

Rentals Revenue. Rentals revenue includes the sale of advertising and a suite of tools to rental professionals, landlords and other market participants. Rentals revenue primarily includes revenue generated by advertising sold to property managers, landlords and other rental professionals on a cost per lead, cost per click, cost per lease or cost per listing basis. We recognize revenue as leads or clicks are provided to rental professionals, or as listings from rental professionals are published on our mobile applications and websites, which is the amount for which we have the right to invoice. The number of leases generated through our rentals marketplace during the period is accounted for as variable consideration, and we estimate these amounts based on the expected number of qualified leases secured during the period. We do not believe that a significant reversal in the amount of cumulative revenue recognized will occur once the uncertainty related to the number of leases secured is subsequently resolved.

Beginning in 2018, Rentals revenue also includes revenue generated from our rental applications product through which potential renters can submit applications to multiple rental properties over a 30-day period for a flat service fee. We recognize revenue for the rental applications product on a straight-line basis during the contractual period over which the customer has the right to access and submit the rental application.

Other Revenue. Other revenue primarily includes revenue generated by new construction and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. Our new construction marketing solutions allow home builders to showcase their available inventory to home shoppers. New construction revenue primarily includes revenue generated by advertising sold to builders on a cost per residential community basis, and revenue is recognized on a straight-line basis during the contractual period over which the communities are advertised on our mobile applications and websites. New construction revenue also includes revenue generated on a cost per impression basis whereby revenue is recognized on a straight-line basis during the contractual period over which the advertising impressions are delivered. Consideration for new construction products is billed in arrears. Display revenue primarily consists of graphical mobile and web advertising sold on a cost per thousand impressions or cost per click basis to advertisers promoting their brands on our mobile applications and websites. We recognize display revenue as clicks occur or as impressions are delivered to users interacting with our mobile applications or websites, which is the amount for which we have the right to invoice.

Homes Revenue. Homes revenue is derived from the resale of homes on the open market through our Zillow Offers program. Homes revenue is recognized at the time of the closing of the home sale when title to and possession of the property are transferred to the buyer. The amount of revenue recognized for each home sale is equal to the full sale price of the home net of resale concessions and credits to the buyer and does not reflect real estate agent commissions, closing or other costs associated with the transaction.

Mortgages Revenue. Mortgages revenue primarily includes marketing products sold to mortgage professionals on a cost per lead basis, including our Custom Quote and a portion of our Connect services, and on a subscription basis, including a portion of our Connect service. Zillow Group operates Custom Quote and Connect through its wholly owned subsidiary, Zillow Group Marketplace, Inc., a licensed mortgage broker. For our Connect and Custom Quote cost per lead marketing products, participating qualified mortgage professionals typically make a prepayment to gain access to consumers interested in connecting with mortgage professionals. Mortgage professionals who exhaust their initial prepayment prepay additional funds to continue to participate in the marketplace. For our Connect subscription mortgage marketing product, participating qualified mortgage professionals generally prepay a monthly subscription fee, which they then allocate to desired geographic counties. In Zillow Group’s Connect platform, consumers answer a series of questions to find a local lender, and mortgage professionals receive consumer contact information, or leads, when the consumer chooses to share their information with a lender.

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Consumers who request rates for mortgage loans in Custom Quotes are presented with customized quotes from participating mortgage professionals.

For our cost per lead mortgages products, we recognize revenue when a user contacts a mortgage professional through our mortgages platform, which is the amount for which we have the right to invoice. For our subscription product, the opportunity to receive a consumer contact is based on the mortgage professional’s relative share of voice in a geographic county. When a consumer submits a contact, we contact a group of subscription mortgage professionals via text message, and the first mortgage professional to respond receives the consumer contact information. We recognize revenue based on the contractual spend recognized on a straight-line basis during the contractual period over which the service is provided. This methodology best depicts how we satisfy our performance obligation to subscription customers, as we continuously transfer control of the performance obligation to the customer throughout the contractual period.

Beginning in the fourth quarter of 2018, mortgages revenue also includes revenue generated by Zillow Home Loans, Zillow’s affiliated mortgage lender. We elect the fair value option for our mortgage loans held for sale, which are initially recorded at fair value based on either sale commitments or current market quotes and are adjusted for subsequent changes in fair value until the loans are closed. Net origination costs and fees associated with mortgage loans are recognized as incurred at the time of origination. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers in the secondary mortgage market within a short period of time after origination.

Mortgages revenue also includes revenue generated by Mortech, which provides subscription-based mortgage 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 provided.

Costs and Expenses

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, benefits, bonuses and share-based compensation expense, as well as revenue-sharing costs related to our commercial business relationships, depreciation expense and costs associated with the operation of our data center and mobile applications and websites. For our IMT and Mortgages segment, cost of revenue also includes credit card fees and ad serving costs paid to third parties. For our Homes segment, our cost of revenue also consists of the consideration paid to acquire, make certain repairs and updates to, and sell each home, including associated overhead costs, as well as inventory valuation adjustments. For our Mortgages segment, our cost of revenue consists of lead acquisition costs and direct costs to originate loans, including underwriting and processing costs.

Sales and Marketing. Sales and marketing expenses consist of advertising costs and other sales expenses related to promotional and marketing activities, headcount expenses, including salaries, commissions, benefits, bonuses and share-based compensation expense for sales, sales support, customer support, marketing and public relations employees and depreciation expense. For our Homes segment, sales and marketing expenses also consist of selling costs, such as real estate agent commissions, escrow and title fees, and staging costs, as well as holding costs, including utilities, taxes and maintenance. For our Mortgages segment, sales and marketing expenses also include headcount expenses for loan officers and specialists supporting Zillow Home Loans.

Technology and Development. Technology and development expenses consist of headcount expenses, including salaries, benefits, bonuses and share-based compensation expense for individuals engaged in the design, development and testing of our mobile applications and websites and the tools and applications that support our products. Technology and development expenses also include equipment and maintenance costs. Technology and development expenses also include amortization costs related to capitalized website and development activities, amortization of software, 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, including developed technology and customer relationships, amongst others. Technology and development expenses also include depreciation expense.

General and Administrative. General and administrative expenses consist of headcount expenses, including salaries, benefits, bonuses and share-based compensation expense for executive, finance, accounting, legal, human resources, recruiting, corporate information technology costs and other administrative support. General and administrative expenses also include legal settlement costs and estimated legal liabilities, legal, accounting and other third-party professional service fees, rent expense, depreciation expense and bad debt expense.

Acquisition-related Costs. Acquisition-related costs consist of investment banking, legal, accounting, tax and regulatory filing fees associated with effecting acquisitions.

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Integration Costs. Integration costs consist of expenses incurred to incorporate operations, systems, technology and rights and responsibilities of acquired companies, during both pre-closing and post-closing periods, into Zillow Group’s business. For the three and six month periods ended June 30, 2019, integration costs primarily include consulting-related expenses incurred in connection with the integration of Zillow Home Loans.

Other Income

Other income consists primarily of interest income earned on our cash, cash equivalents and short-term investments. For our Mortgages segment, other income includes interest income earned on mortgage loans held for sale.

Interest Expense

Our corporate interest expense consists of interest on Trulia’s Convertible Senior Notes due in 2020 (the “2020 Notes”) we guaranteed in connection with our February 2015 acquisition of Trulia, interest on the Convertible Senior Notes due in 2021 (the “2021 Notes”) we issued in December 2016 and interest on the Convertible Senior Notes due in 2023 (the “2023 Notes”) we issued in July 2018. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually on June 15 and December 15 of each year. Interest is payable on the 2021 Notes at the rate of 2.00% semi-annually on June 1 and December 1 of each year. Interest is payable on the 2023 Notes at the rate of 1.50% semi-annually on January 1 and July 1 of each year.

For our Homes segment, interest expense includes interest on borrowings, funding fees and other fees, including the amortization of deferred issuance costs, on our revolving credit facilities related to our Zillow Offers business. Borrowings on our revolving credit facilities bear interest at a floating rate based on the one-month LIBOR plus an applicable margin, as defined in the credit agreements.

For our Mortgages segment, interest expense includes interest on the warehouse lines of credit acquired as part of the acquisition of Zillow Home Loans. Each warehouse line of credit provides for a current and maximum borrowing capacity of $50.0 million, or $100.0 million in total. Borrowings on the warehouse lines of credit bear interest at the one-month LIBOR rate plus an applicable margin, as defined in the credit agreements governing the warehouse lines of credit.

Income Taxes

We are subject to federal and state income taxes in the United States and in Canada. As of June 30, 2019 and December 31, 2018, we have provided a valuation allowance against our net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized. Therefore, no material current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $1,081.7 million as of December 31, 2018, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $32.5 million (tax effected) as of December 31, 2018.

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Results of Operations

In 2018, our business model evolved significantly with the launch of Zillow Offers in April and the acquisition of Zillow Home Loans in October. Zillow Offers, for example, is a cash- and inventory-intensive business with a high cost of revenue as compared with other parts of our operations; the cost of revenue includes the amount we pay to purchase homes. Revenue for the Homes segment includes the full sale prices of homes less resale concessions and credits to the buyer, and does not reflect real estate agent commissions, closing or other associated costs. As a result of this evolution of our business model, financial performance for prior year periods may not be indicative of future performance.

The following tables present our results of operations for the periods indicated and as a percentage of total revenue:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(in thousands, except per share data, unaudited)
Statements of Operations Data:
Revenue:
IMT	$	323,669		$	305,941		$	621,941		$	586,797
Homes	248,924			—			377,396			—
Mortgages	26,985			19,305			54,345			38,328
Total revenue	599,578			325,246			1,053,682			625,125
Cost of revenue (exclusive of amortization) (1)(2):
IMT	26,059			24,290			50,310			46,884
Homes	240,732			—			363,151			86
Mortgages	4,430			1,237			9,108			2,476
Total cost of revenue	271,221			25,527			422,569			49,446
Sales and marketing (1)	187,433			147,727			349,020			285,018
Technology and development (1)	120,330			100,376			228,100			194,309
General and administrative (1)	82,839			60,579			178,613			116,652
Acquisition-related costs	—			632			—			659
Integration costs	293			—			645			—
Total costs and expenses	662,116			334,841			1,178,947			646,084
Loss from operations	(62,538		)	(9,595		)	(125,265		)	(20,959		)
Other income	9,458			3,089			18,626			5,535
Interest expense	(18,897		)	(7,187		)	(35,363		)	(14,260		)
Loss before income taxes	(71,977		)	(13,693		)	(142,002		)	(29,684		)
Income tax benefit	—			10,600			2,500			8,000
Net loss	$	(71,977	)	$	(3,093	)	$	(139,502	)	$	(21,684	)
Net loss per share — basic and diluted	$	(0.35	)	$	(0.02	)	$	(0.68	)	$	(0.11	)
Weighted-average shares outstanding — basic and diluted	205,754			194,155			205,137			192,807
Other Financial Data:
Adjusted EBITDA (3)	$	2,297		$	56,000		$	26,219		$	102,310

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	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(in thousands, unaudited)
(1) Includes share-based compensation as follows:
Cost of revenue	$	936	$	1,256	$	1,816	$	2,211
Sales and marketing	6,801		6,340		12,451		11,502
Technology and development	18,399		14,347		33,908		25,889
General and administrative	17,496		17,000		61,581		30,082
Total	$	43,632	$	38,943	$	109,756	$	69,684
(2) Amortization of website development costs and intangible assets included in technology and development	$	14,656	$	21,020	$	29,056	$	43,569
(3) See “Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(unaudited)
Percentage of Revenue:
Revenue:
IMT	54	%	94	%	59	%	94	%
Homes	42		0		36		0
Mortgages	5		6		5		6
Total revenue	100		100		100		100
Cost of revenue (exclusive of amortization):
IMT	4		8		5		8
Homes	40		0		34		—
Mortgages	1		—		1		—
Total cost of revenue	45		8		40		8
Sales and marketing	31		45		33		46
Technology and development	20		31		22		31
General and administrative	14		19		17		19
Acquisition-related costs	0		—		0		—
Integration costs	—		0		—		0
Total costs and expenses	110		103		112		103
Loss from operations	(10	)	(3	)	(12	)	(3	)
Other income	2		1		2		1
Interest expense	(3	)	(2	)	(3	)	(2	)
Loss before income taxes	(12	)	(4	)	(13	)	(5	)
Income tax benefit	0		3		—		1
Net loss	(12	)%	(1	)%	(13	)%	(3	)%

Adjusted EBITDA

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

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We have included Adjusted EBITDA in this Quarterly Report on Form 10-Q as it is a key metric used by our management and board 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 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 alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.

The following table presents a reconciliation of Adjusted EBITDA to net loss for each of the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(in thousands, unaudited)
Reconciliation of Adjusted EBITDA to Net Loss:
Net loss	$	(71,977	)	$	(3,093	)	$	(139,502	)	$	(21,684	)
Other income	(9,458		)	(3,089		)	(18,626		)	(5,535		)
Depreciation and amortization expense	21,203			26,020			41,728			52,926
Share-based compensation expense	43,632			38,943			109,756			69,684
Acquisition-related costs	—			632			—			659
Interest expense	18,897			7,187			35,363			14,260
Income tax benefit	—			(10,600		)	(2,500		)	(8,000		)
Adjusted EBITDA	$	2,297		$	56,000		$	26,219		$	102,310

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Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Revenue

The following table presents Zillow Group’s revenue by category and by segment for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,				2018 to 2019 % Change
	2019		2018
Percentage of Revenue:
IMT Revenue:
Premier Agent	$	231,961	$	230,885	—	%
Rentals	42,670		33,288		28	%
Other	49,038		41,768		17	%
Total IMT revenue	323,669		305,941		6	%
Homes	248,924		—		N/A
Mortgages	26,985		19,305		40	%
Total revenue	$	599,578	$	325,246	84	%

The following table presents Zillow Group’s revenue categories as percentages of total revenue for the periods presented (unaudited):

	Three Months Ended June 30,
	2019		2018
Percentage of Total Revenue:
IMT Revenue:
Premier Agent	39	%	71	%
Rentals	7		10
Other	8		13
Total IMT revenue	54		94
Homes	42		0
Mortgages	5		6
Total revenue	100	%	100	%

Total revenue increased by $274.3 million, or 84%, for the three months ended June 30, 2019 compared to the three months ended June 30, 2018. The increase in total revenue was primarily attributable to our Zillow Offers business, which began selling homes in July of 2018. Homes revenue was $248.9 million for the three months ended June 30, 2019. There were approximately 194.3 million average monthly unique users of our mobile applications and websites for the three months ended June 30, 2019 compared to 186.1 million average monthly unique users for the three months ended June 30, 2018, representing year-over-year growth of 4%. Visits increased 14% to 2,181.4 million for the three months ended June 30, 2019 from 1,920.6 million for the three months ended June 30, 2018. The increases in unique users and visits increased the number of impressions, leads, clicks and other events we monetized across our revenue categories.

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IMT Segment

Premier Agent Revenue. Premier Agent revenue grew to $232.0 million for the three months ended June 30, 2019 from $230.9 million for the three months ended June 30, 2018, an increase of $1.1 million. Premier Agent revenue was positively impacted by an increase in visits. As discussed above, visits increased 14% to 2,181.4 million for the three months ended June 30, 2019 from 1,920.6 million for the three months ended June 30, 2018. The increase in visits increased the number of impressions and leads we could monetize in our Premier Agent marketplace. Year-over-year Premier Agent revenue growth slowed, which we believe was due to changes made to our Premier Agent and Premier Broker advertising programs in 2018 to improve lead quality and consumer connections. We believe these changes contributed to an increase in advertiser churn, or exit from our advertising platform. Advertiser churn has normalized throughout the first half of 2019.

Premier Agent revenue per visit decreased by 12% to $0.106 for the three months ended June 30, 2019 from $0.120 for the three months ended June 30, 2018. We calculate Premier Agent revenue per visit by dividing the revenue generated by our Premier Agent and Premier Broker programs in the period by the number of visits in the period. We believe the decrease in Premier Agent revenue per visit was primarily a result of changes we made to our Premier Agent and Premier Broker programs in 2018. For example, in April 2018, we began testing a new method of consumer lead validation and distribution to our Premier Agent and Premier Broker advertisers. A validated consumer connection is made when a consumer who is interested in connecting with a real estate professional does not select a specific Premier Agent or Premier Broker with whom they want to connect through one of our mobile applications or websites; applying the new model, these validated consumer leads are distributed to Premier Agents and Premier Brokers in proportion to their share of voice, or an agent advertiser’s share of total advertising purchased in a particular zip code. This transition to the new lead validation and distribution process resulted in a decrease in the total number of leads received by some advertisers and increased advertiser churn in the third and fourth quarters of 2018 as current and prospective Premier Agents and Premier Brokers evaluated the value of these higher-quality leads and market-based pricing continued to take effect. We believe we made appropriate adjustments to the Premier Agent and Premier Broker programs to help address this advertiser churn, by, for example, decreasing the number of screening questions posed to consumers during the consumer lead validation process, in an effort to return to prior lead volumes, and setting price caps on the cost per impression and cost per lead paid by Premier Agents and Premier Brokers to help stabilize auction-based pricing dynamics in certain markets, as advertiser churn has normalized throughout the first half of 2019.

In the second quarter of 2019, Premier Agent revenue also included an immaterial amount of revenue generated from our initial testing of a new pricing model for Premier Agent and Premier Broker advertisers, Flex, in limited markets. With the Flex model, Premier Agents and Premiers Brokers are provided with validated leads at no upfront cost, and they pay a performance advertising fee only when a real estate transaction is closed with one of the leads. We expect to continue testing this pricing model in additional regions and may implement it more broadly in the future.

Rentals Revenue. Rentals revenue was $42.7 million for the three months ended June 30, 2019 compared to $33.3 million for the three months ended June 30, 2018, an increase of $9.4 million, or 28%. The increase in Rentals revenue was primarily attributable to an increase in the number of average monthly rental listings on our mobile applications and websites, which increased 6% to 40,336 average monthly rental listings for the three months ended June 30, 2019 from 38,141 average monthly rental listings for the three months ended June 30, 2018. Average monthly rental listings include the average monthly monetized, deduplicated rental listings for the period, which are displayed across all of our mobile applications and websites. An increase in rental listings on our mobile applications and websites increases the likelihood that a consumer will contact a rental professional, which in turn increases the likelihood of a lead, click, lease or listing that we monetize. The quarterly revenue per average monthly rental listing increased 21% to approximately $1,058 for the three months ended June 30, 2019 from approximately $873 for the three months ended June 30, 2018. We calculate quarterly revenue per average monthly rental listing by dividing total Rentals revenue for the period by the average monthly deduplicated rental listings for the period and then dividing by the number of quarters in the period. The increase in quarterly revenue per average monthly rental listing is primarily due to an increase in the adoption of our rental applications product. The increase in Rentals revenue was also driven in part by the 14% increase in visits to 2,181.4 million for the three months ended June 30, 2019, which increases the likelihood a consumer will contact a rental professional and, in turn, increases the likelihood of a lead, click, lease or listing that we monetize.

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Other Revenue. Other revenue was $49.0 million for the three months ended June 30, 2019 compared to $41.8 million for the three months ended June 30, 2018, an increase of $7.3 million, or 17%. The increase in Other revenue was primarily a result of a 32% increase in revenue generated by our new construction marketing solutions. Growth in new construction revenue was primarily attributable to higher spend in our cost per impression product and increases in adoption by and advertising sales to new home builders through our new construction platform.

Homes Segment

Homes revenue was $248.9 million for the three months ended June 30, 2019 due to the sale of 786 homes at an average selling price of $316.7 thousand per home. For the three months ended March 31, 2019, Homes revenue was $128.5 million as a result of the sale of 414 homes. The increase in Homes revenue as compared with the prior quarterly period was primarily a result of an increase in the number of homes sold in the period as consumer adoption of Zillow Offers increases in geographic areas in which it is currently operating, and as Zillow Offers expands into new geographic markets. We did not record any revenue within the Homes Segment for the second quarter of 2018. As of June 30, 2019, Zillow Offers was operating in 11 metropolitan areas.

Mortgages Segment

Mortgages revenue was $27.0 million for the three months ended June 30, 2019 compared to $19.3 million for the three months ended June 30, 2018, an increase of $7.7 million, or 40%. The increase in mortgages revenue was primarily a result of the addition of revenue generated by Zillow Home Loans, Zillow’s affiliated mortgage lender, which we acquired in the fourth quarter of 2018.

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Revenue

The following table presents Zillow Group’s revenue by category and by segment for the periods presented (in thousands, unaudited):

	Six Months Ended June 30,				2018 to 2019 % Change
	2019		2018
Percentage of Revenue:
IMT Revenue:
Premier Agent	$	449,696	$	444,617	1	%
Rentals	80,508		62,351		29	%
Other	91,737		79,829		15	%
Total IMT revenue	621,941		586,797		6	%
Homes	377,396		—		N/A
Mortgages	54,345		38,328		42	%
Total revenue	$	1,053,682	$	625,125	69	%

The following table presents Zillow Group’s revenue categories as percentages of total revenue for the periods presented (unaudited):

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	Six Months Ended June 30,
	2019		2018
Percentage of Total Revenue:
IMT Revenue:
Premier Agent	43	%	71	%
Rentals	8		10
Other	9		13
Total IMT revenue	59		94
Homes	36		0
Mortgages	5		6
Total revenue	100	%	100	%

Total revenue increased by $428.6 million, or 69%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. The increase in total revenue was primarily attributable to our Zillow Offers business, which began selling homes in July of 2018. Homes revenue was $377.4 million for the six months ended June 30, 2019. There were approximately 194.3 million average monthly unique users of our mobile applications and websites for the three months ended June 30, 2019 compared to 186.1 million average monthly unique users for the three months ended June 30, 2018, representing year-over-year growth of 4%. The increase in unique users increased the number of impressions, leads, clicks and other events we monetized across our revenue categories.

IMT Segment

Premier Agent Revenue. Premier Agent revenue grew to $449.7 million for the six months ended June 30, 2019 from $444.6 million for the six months ended June 30, 2018, an increase of $5.1 million, or 1%. Premier Agent revenue was positively impacted by an increase in visits. Visits increased 14% to 4,201.2 million for the six months ended June 30, 2019 from 3,685.4 million for the six months ended June 30, 2018. The increase in visits increased the number of impressions we could monetize in our Premier Agent marketplace. Year-over-year Premier Agent revenue growth slowed, which we believe was due to changes made to our Premier Agent and Premier Broker advertising programs in 2018 to improve lead quality and consumer connections, which led to an increase in advertiser churn, or exit from our advertising platform. Advertiser churn has normalized throughout the first half of 2019.

In the first half of 2019, Premier Agent revenue also included an immaterial amount of revenue generated from our initial testing of a new pricing model for Premier Agent and Premier Broker advertisers, Flex, in limited markets.

Rentals Revenue. Rentals revenue was $80.5 million for the six months ended June 30, 2019 compared to $62.4 million for the six months ended June 30, 2018, an increase of $18.2 million, or 29%. The increase in Rentals revenue was primarily attributable to an increase in the number of average monthly rental listings on our mobile applications and websites, which increased 8% to 39,732 average monthly rental listings for the six months ended June 30, 2019 from 36,706 average monthly rental listings for the six months ended June 30, 2018. The quarterly revenue per average monthly rental listing increased 19% to approximately $1,013 for the six months ended June 30, 2019 from approximately $849 for the six months ended June 30, 2018. The increase in quarterly revenue per average monthly rental listing is primarily due to an increase in the adoption of our rental applications product. The increase in Rentals revenue was also driven in part by the 14% increase in visits to 4,201.2 million for the six months ended June 30, 2019.

Other Revenue. Other revenue was $91.7 million for the six months ended June 30, 2019 compared to $79.8 million for the six months ended June 30, 2018, an increase of $11.9 million, or 15%. The increase in Other revenue was primarily a result of a 32% increase in revenue generated by our new construction marketing solutions. Growth in new construction revenue was primarily attributable to increases in adoption by and advertising sales to new home builders through our new construction platform.

Homes Segment

Homes revenue was $377.4 million for the six months ended June 30, 2019 due to the sale of 1,200 homes at an average selling price of $314.5 thousand per home.

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Mortgages Segment

Mortgages revenue was $54.3 million for the six months ended June 30, 2019 compared to $38.3 million for the six months ended June 30, 2018, an increase of $16.0 million, or 42%. The increase in mortgages revenue was primarily a result of the addition of revenue generated by Zillow Home Loans, Zillow’s affiliated mortgage lender, which we acquired in the fourth quarter of 2018.

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Segment Results of Operations

The following table presents Zillow Group’s segment results for the periods presented (in thousands, unaudited):

	Three Months Ended June 30, 2019								Three Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT		Homes			Mortgages
Revenue	$	323,669	$	248,924		$	26,985		$	305,941	$	—		$	19,305
Costs and expenses:
Cost of revenue	26,059		240,732			4,430			24,290		—			1,237
Sales and marketing	135,440		37,409			14,584			137,972		2,095			7,660
Technology and development	94,261		18,198			7,871			91,131		3,790			5,455
General and administrative	54,671		17,808			10,360			52,438		4,176			3,965
Acquisition-related costs	—		—			—			—		—			632
Integration costs	—		—			293			—		—			—
Total costs and expenses	310,431		314,147			37,538			305,831		10,061			18,949
Income (loss) from operations	13,238		(65,223		)	(10,553		)	110		(10,061		)	356
Other income	—		—			402			—		—			—
Interest expense	—		(5,899		)	(287		)	—		—			—
Income (loss) before income taxes (1)	$	13,238	$	(71,122	)	$	(10,438	)	$	110	$	(10,061	)	$	356

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the period presented (in thousands):

	Three Months Ended June 30,
	2019			2018
Total segment loss before income taxes	$	(68,322	)	$	(9,595	)
Corporate interest expense	(12,711		)	(7,187		)
Corporate other income	9,056			3,089
Consolidated loss before income taxes	$	(71,977	)	$	(13,693	)

IMT Segment

Cost of Revenue. Cost of revenue was $26.1 million for the three months ended June 30, 2019 compared to $24.3 million for the three months ended June 30, 2018, an increase of $1.8 million, or 7%. The increase in cost of revenue was primarily attributable to a $2.1 million increase in data center and connectivity costs.

Sales and Marketing. Sales and marketing expenses were $135.4 million for the three months ended June 30, 2019 compared to $138.0 million for the three months ended June 30, 2018, a decrease of $2.5 million, or 2%. The decrease in sales and marketing expenses was primarily attributable to a $9.9 million decrease in marketing and advertising expenses, partially offset by a $4.0 million increase in professional services fees, a $2.1 million increase in headcount-related expenses, including share-based compensation expense and a $1.3 million increase in miscellaneous expenses.

Technology and Development. Technology and development expenses, which include research and development costs, were $94.3 million for the three months ended June 30, 2019 compared to $91.1 million for the three months ended June 30, 2018,

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an increase of $3.1 million, or 3%. Approximately $5.6 million of the increase related to growth in headcount-related expenses, including share-based compensation expense, as we continue to grow our engineering teams to support current and future product initiatives. In addition, there was a $1.1 million increase in software and hardware costs and a $1.1 million increase in the gain on disposal of assets. These increases were partially offset by a $6.2 million decrease in depreciation and amortization expense. We expect our technology and development expenses to increase in absolute dollars over time as we continue to build new mobile and website functionality and develop new technologies.

General and Administrative. General and administrative expenses were $54.7 million for the three months ended June 30, 2019 compared to $52.4 million for the three months ended June 30, 2018, an increase of $2.2 million, or 4%. The increase in general and administrative expenses was primarily due to a $4.2 million increase in estimated legal liabilities, a $2.3 million increase in building lease-related expenses including rent, utilities and insurance, partially offset by a $1.8 million decrease in headcount-related expenses, including share-based compensation expense, a $1.0 million decrease in business and state taxes and a $0.7 million decrease in professional services fees.

Homes Segment

Cost of Revenue. Cost of revenue was $240.7 million for the three months ended June 30, 2019. Cost of revenue was primarily attributable to home acquisition and renovation costs related to the 786 homes that we sold during the period. We expect cost of revenue to increase in absolute dollars in future years as we continue to incur more expenses that are associated with growth in revenue and expansion of Zillow Offers into new markets.

Sales and Marketing. Sales and marketing expenses were $37.4 million for the three months ended June 30, 2019 compared to $2.1 million for the three months ended June 30, 2018, an increase of $35.3 million. The increase in sales and marketing expenses was primarily attributable to a $12.3 million increase in headcount-related expenses, including share-based compensation expense, a $10.7 million increase in selling expenses directly attributable to the resale of homes, a $5.1 million increase in holding costs, a $4.5 million increase in marketing and advertising expenses and a $2.7 million increase in miscellaneous expenses. We expect our sales and marketing expenses to increase in absolute dollars in future periods as we continue to expand the Homes segment.

Technology and Development. Technology and development expenses, which include research and development costs, were $18.2 million for the three months ended June 30, 2019 compared to $3.8 million for the three months ended June 30, 2018, an increase of $14.4 million. The increase in technology and development expenses was primarily due to an $11.5 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment, a $1.0 million increase in data acquisition costs and a $1.9 million increase in miscellaneous expenses. We expect our technology and development expenses to increase in absolute dollars in future periods as we continue to build new website functionality and other technologies that will facilitate the purchasing and sales processes related to our Homes segment.

General and Administrative. General and administrative expenses were $17.8 million for the three months ended June 30, 2019 compared to $4.2 million for the three months ended June 30, 2018, an increase of $13.6 million. The increase in general and administrative expenses was primarily due to an $8.6 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment. In addition, there was a $2.5 million increase in building lease-related expenses including rent, utilities and insurance, a $0.8 million increase software and hardware costs and a $1.7 million increase in miscellaneous expenses. We expect general and administrative expenses to increase in absolute dollars in future periods as we continue to expand our Homes business.

Interest Expense. Interest expense was $5.9 million for the three months ended June 30, 2019. Interest expense was primarily attributable to borrowings, funding fees and other fees, including the amortization of deferred issuance costs, on our revolving credit facilities. There was no interest expense recorded for the three months ended June 30, 2018. We expect interest expense to increase in absolute dollars in future periods as we continue to expand our Homes business.

Mortgages Segment

Cost of Revenue. Cost of revenue was $4.4 million for the three months ended June 30, 2019 compared to $1.2 million for the three months ended June 30, 2018, an increase of $3.2 million. The increase in cost of revenue was primarily attributable to our October 2018 acquisition of Zillow Home Loans, and includes a $1.9 million increase in headcount-related expenses, including share-based compensation expense and a $0.5 million increase in mortgage loan processing costs. We expect cost of revenue to increase in absolute dollars in future years as we continue to incur more expenses that are associated with growth in revenue and expansion of Zillow Home Loans.

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Sales and Marketing. Sales and marketing expenses were $14.6 million for the three months ended June 30, 2019 compared to $7.7 million for the three months ended June 30, 2018, an increase of $6.9 million, or 90%. The increase in sales and marketing expenses was primarily attributable to a $5.3 million increase in headcount-related expenses, including share-based compensation expense, primarily related to our October 2018 acquisition of Zillow Home Loans, and a $0.9 million increase in marketing and advertising expenses. We expect our sales and marketing expenses to increase in absolute dollars in future periods as we continue to expand the Mortgages segment.

Technology and Development. Technology and development expenses, which include research and development costs, were $7.9 million for the three months ended June 30, 2019 compared to $5.5 million for the three months ended June 30, 2018, an increase of $2.4 million, or 44%. The increase in technology and development expenses was primarily a result of a $2.1 million increase in headcount-related expenses, including share-based compensation expense, primarily related to our October 2018 acquisition of Zillow Home Loans. We expect our technology and development expenses to increase in absolute dollars in future periods as we continue to build new website functionality and other technologies that will facilitate the origination of mortgages in Zillow Home Loans.

General and Administrative. General and administrative expenses were $10.4 million for the three months ended June 30, 2019 compared to $4.0 million for the three months ended June 30, 2018, an increase of $6.4 million. The increase in general and administrative expenses was primarily due to a $4.3 million increase in headcount-related expenses, including share-based compensation expense, primarily related to our October 2018 acquisition of Zillow Home Loans. In addition, there was a $0.6 million increase in building lease-related expenses including rent, utilities and insurance and a $1.5 million increase in miscellaneous expenses. We expect general and administrative expenses to increase over time in absolute dollars as we continue to expand our mortgage business.

Corporate Items

Certain corporate items are not directly attributable to any of our segments, including interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

Interest Expense. Interest expense on our convertible senior notes was $12.7 million for the three months ended June 30, 2019 compared to $7.2 million for the three months ended June 30, 2018, an increase of $5.5 million, or 77%. This increase was primarily due to the July 2018 issuance of our convertible senior notes maturing in 2023. For additional information regarding the convertible senior notes, see Note 13 to our condensed consolidated financial statements.

Other Income. Other income not directly attributable to any of our segments was $9.1 million for the three months ended June 30, 2019 compared to $3.1 million for the three months ended June 30, 2018, an increase of $6.0 million. This increase was primarily due to an increase in the balance of our short-term investment portfolio generating an increase in interest income.

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Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Segment Results of Operations

The following table presents Zillow Group’s segment results for the periods presented (in thousands, unaudited):

	Six Months Ended June 30, 2019								Six Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT			Homes			Mortgages
Revenue	$	621,941	$	377,396		$	54,345		$	586,797		$	—		$	38,328
Costs and expenses:
Cost of revenue	50,310		363,151			9,108			46,884			86			2,476
Sales and marketing	262,094		58,271			28,655			266,719			2,385			15,914
Technology and development	182,230		30,479			15,391			177,048			6,026			11,235
General and administrative	125,521		32,165			20,927			102,625			5,954			8,073
Acquisition-related costs	—		—			—			27			—			632
Integration costs	—		—			645			—			—			—
Total costs and expenses	620,155		484,066			74,726			593,303			14,451			38,330
Income (loss) from operations	1,786		(106,670		)	(20,381		)	(6,506		)	(14,451		)	(2		)
Other income	—		—			715			—			—			—
Interest expense	—		(9,657		)	(388		)	—			—			—
Income (loss) before income taxes (1)	$	1,786	$	(116,327	)	$	(20,054	)	$	(6,506	)	$	(14,451	)	$	(2	)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands):

	Six Months Ended June 30,
	2019			2018
Total segment loss before income taxes	$	(134,595	)	$	(20,959	)
Corporate interest expense	(25,318		)	(14,260		)
Corporate other income	17,911			5,535
Consolidated loss before income taxes	$	(142,002	)	$	(29,684	)

IMT Segment

Cost of Revenue. Cost of revenue was $50.3 million for the six months ended June 30, 2019 compared to $46.9 million for the six months ended June 30, 2018, an increase of $3.4 million, or 7%. The increase in cost of revenue was primarily attributable to a $4.4 million increase in data center and connectivity costs.

Sales and Marketing. Sales and marketing expenses were $262.1 million for the six months ended June 30, 2019 compared to $266.7 million for the six months ended June 30, 2018, a decrease of $4.6 million, or 2%. The decrease in sales and marketing expenses was primarily attributable to a $17.2 million decrease in marketing and advertising expenses, partially offset by a $7.0 million increase in professional services fees and a $5.0 million increase in headcount-related expenses, including share-based compensation expense.

Technology and Development. Technology and development expenses, which include research and development costs, were $182.2 million for the six months ended June 30, 2019 compared to $177.0 million for the six months ended June 30, 2018, an increase of $5.2 million, or 3%. Approximately $12.8 million of the increase related to growth in headcount-related expenses, including share-based compensation expense, as we continue to grow our engineering teams to support current and future product initiatives. In addition, there was a $2.2 million increase in software and hardware costs, a $1.6 million increase in other non-capitalizable data content expense, a $1.6 million increase in professional services fees and a $1.3 million increase in miscellaneous expenses. These increases were partially offset by a $14.3 million decrease in depreciation and amortization expense.

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General and Administrative. General and administrative expenses were $125.5 million for the six months ended June 30, 2019 compared to $102.6 million for the six months ended June 30, 2018, an increase of $22.9 million, or 22%. The increase in general and administrative expenses was primarily due to a $23.5 million increase in headcount-related expenses driven primarily by the recognition of a total of $23.3 million of share-based compensation expense in the IMT segment during the six months ended June 30, 2019 in connection with the modification of certain outstanding equity awards related to the departure of Spencer Rascoff, who served as Zillow Group’s Chief Executive Officer since 2010 and who remains a member of Zillow Group’s board of directors. For additional information regarding the equity modification, see Note 15 to our condensed consolidated financial statements.

Homes Segment

Cost of Revenue. Cost of revenue was $363.2 million for the six months ended June 30, 2019 compared to $0.1 million for the six months ended June 30, 2018. Cost of revenue for the six months ended June 30, 2019 was primarily attributable to home acquisition and renovation costs related to the 1,200 homes that we sold during the period.

Sales and Marketing. Sales and marketing expenses were $58.3 million for the six months ended June 30, 2019 compared to $2.4 million for the six months ended June 30, 2018, an increase of $55.9 million. The increase in sales and marketing expenses was primarily attributable to a $19.8 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment, a $16.2 million increase in selling expenses directly attributable to the resale of homes, a $7.9 million increase in holding costs, a $7.5 million increase in marketing and advertising expenses and a $4.5 million increase in miscellaneous expenses.

Technology and Development. Technology and development expenses, which include research and development costs, were $30.5 million for the six months ended June 30, 2019 compared to $6.0 million for the six months ended June 30, 2018, an increase of $24.5 million. The increase in technology and development expenses was primarily due to a $19.7 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment, a $1.5 million increase in data acquisition costs, a $1.4 million increase in depreciation and amortization expense and a $1.9 million increase in miscellaneous expenses.

General and Administrative. General and administrative expenses were $32.2 million for the six months ended June 30, 2019 compared to $6.0 million for the six months ended June 30, 2018, an increase of $26.2 million. The increase in general and administrative expenses was primarily due to a $15.9 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment. In addition, there was a $4.7 million increase in building lease-related expenses including rent, utilities and insurance, a $1.7 million increase in professional services fees, a $1.5 million increase in software and hardware costs and a $2.4 million increase in miscellaneous expenses.

Interest Expense. Interest expense was $9.7 million for the six months ended June 30, 2019 and was primarily attributable to borrowings, funding fees and other fees, including the amortization of deferred issuance costs, on our revolving credit facilities. There was no interest expense recorded for the six months ended June 30, 2018.

Mortgages Segment

Cost of Revenue. Cost of revenue was $9.1 million for the six months ended June 30, 2019 compared to $2.5 million for the six months ended June 30, 2018, an increase of $6.6 million. The increase in cost of revenue was primarily attributable to our October 2018 acquisition of Zillow Home Loans, and includes a $3.4 million increase in headcount-related expenses, including share-based compensation expense, a $1.1 million increase in mortgage loan processing costs, a $0.9 million increase in lead acquisition costs and a $1.2 million increase in miscellaneous expenses.

Sales and Marketing. Sales and marketing expenses were $28.7 million for the six months ended June 30, 2019 compared to $15.9 million for the six months ended June 30, 2018, an increase of $12.7 million, or 80%. The increase in sales and marketing expenses was primarily attributable to a $10.1 million increase in headcount-related expenses, including share-based compensation expense, primarily related to our October 2018 acquisition of Zillow Home Loans, a $1.2 million increase in marketing and advertising expenses and a $1.4 million increase in miscellaneous expenses.

Technology and Development. Technology and development expenses, which include research and development costs, were $15.4 million for the six months ended June 30, 2019 compared to $11.2 million for the six months ended June 30, 2018, an increase of $4.2 million, or 37%. The increase in technology and development expenses was primarily a result of a $3.5 million increase in headcount-related expenses, including share-based compensation expense, related to our October 2018 acquisition of Zillow Home Loans.

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General and Administrative. General and administrative expenses were $20.9 million for the six months ended June 30, 2019 compared to $8.1 million for the six months ended June 30, 2018, an increase of $12.9 million. The increase in general and administrative expenses was primarily due to a $9.4 million increase in headcount-related expenses, including share-based compensation expense, primarily related to our October 2018 acquisition of Zillow Home Loans. In addition, there was a $1.1 million increase in building lease-related expenses including rent, utilities and insurance, a $0.7 million increase in professional services fees, a $0.7 million increase in software and hardware costs and a $1.0 million increase in miscellaneous expenses.

Corporate Items

Certain corporate items are not directly attributable to any of our segments, including interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

Interest Expense. Interest expense on our convertible senior notes was $25.3 million for the six months ended June 30, 2019 compared to $14.3 million for the six months ended June 30, 2018, an increase of $11.1 million, or 78%. This increase was primarily due to the July 2018 issuance of our convertible senior notes maturing in 2023. For additional information regarding the convertible senior notes, see Note 13 to our condensed consolidated financial statements.

Other Income. Other income not directly attributable to any of our segments was $17.9 million for the six months ended June 30, 2019 compared to $5.5 million for the six months ended June 30, 2018, an increase of $12.4 million. This increase is primarily due to an increase in the balance of our short-term investment portfolio generating an increase in interest income.

Liquidity and Capital Resources

As of June 30, 2019 and December 31, 2018, we had cash and cash equivalents, investments and restricted cash of $1,483.6 million and $1,567.3 million, respectively. Cash and cash equivalents balances consist of operating cash on deposit with financial institutions, money market funds and commercial paper. Investments consist of fixed income securities, which include U.S. government agency securities, corporate notes and bonds, commercial paper, municipal securities, foreign government securities, certificates of deposit and treasury bills. Restricted cash consists of amounts funded to the reserve and collection accounts related to our revolving credit facilities and amounts held in escrow related to funding home purchases in our mortgage origination business. Amounts on deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. We believe that cash from operations and cash and cash equivalents and investment balances will be sufficient to meet our ongoing operating activities, working capital, capital expenditures and other capital requirements for at least the next 12 months.

The expansion of Zillow Group’s purchase of homes in the Zillow Offers program and sale of homes on the open market continues to have a significant impact on our liquidity and capital resources as a cash and inventory intensive initiative. We primarily use debt financing to fund a portion of the purchase price of homes and certain related costs. As of June 30, 2019, we have $409.8 million of total outstanding borrowings on revolving credit facilities to provide capital for Zillow Offers with a total maximum borrowing capacity of $1,000.0 million. For additional information regarding the revolving credit facilities, see Note 13 to our condensed consolidated financial statements.

The October 31, 2018 acquisition of Zillow Home Loans also continues to have a significant impact on our liquidity and capital resources as a cash intensive business that funds mortgage loans originated for resale in the secondary market. We primarily use debt financing to fund the mortgage loan originations. On June 28, 2019, Zillow Home Loans amended and restated the warehouse line of credit previously maturing on June 29, 2019. The amended and restated credit agreement extends the term of the original agreement for one year through June 27, 2020, and continues to provide for a maximum borrowing capacity of $50.0 million with availability under the warehouse line of credit limited depending on the types of loans originated. As of June 30, 2019, we have $30.1 million of total outstanding borrowings on warehouse lines of credit to provide capital for Zillow Home Loans with a total maximum borrowing capacity of $100.0 million. For additional information regarding our warehouse lines of credit, see Note 13 to our condensed consolidated financial statements.

As of June 30, 2019, we have outstanding a total of $843.4 million aggregate principal of senior convertible notes. The convertible notes are senior unsecured obligations, and interest on the convertible notes is paid semi-annually. For additional information regarding the senior convertible notes, see Note 13 to our condensed consolidated financial statements.

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The following table presents selected cash flow data for the periods presented:

	Six Months Ended June 30,
	2019			2018
	(in thousands, unaudited)
Cash Flow Data:
Net cash provided by (used in) operating activities	$	(373,823	)	$	73,052
Net cash provided by (used in) investing activities	197,822			(93,692		)
Net cash provided by financing activities	323,138			99,590

Cash Flows Provided By (Used In) Operating Activities

Our operating cash flows result primarily from cash received from real estate professionals, rental professionals, mortgage professionals and brand advertisers, as well as cash received from consumers for sales of homes through Zillow Offers and sales of mortgages originated by Zillow to third parties. Our primary uses of cash from operating activities include payments for homes purchased through Zillow Offers, marketing and advertising activities, mortgages funded through Zillow Home Loans and employee compensation and benefits. Additionally, uses of cash from operating activities include costs associated with operating our mobile applications and websites and other general corporate expenditures.

For the six months ended June 30, 2019, net cash used in operating activities was $373.8 million. This was primarily driven by a net loss of $139.5 million, adjusted by share-based compensation expense of $109.8 million, depreciation and amortization expense of $41.7 million, amortization of contract cost assets of $17.9 million, amortization of the discount and issuance costs on the convertible notes maturing in 2023 and 2021 of $17.8 million, amortization of right of use assets of $10.6 million, a loss on disposal of property and equipment of $3.9 million, accretion of bond discount of $3.7 million and a $2.5 million change in deferred income taxes. Changes in operating assets and liabilities increased cash used in operating activities by $430.4 million. The changes in operating assets and liabilities are primarily due to a $390.0 million increase in inventory due to the purchase of homes through Zillow Offers, an $18.3 million increase in contract cost assets due primarily to the capitalization of sales commissions, a $16.9 million increase in accounts receivable due primarily to an increase in revenue, an $11.9 million decrease in lease liabilities, a $3.2 million increase in mortgage loans held for sale and a $2.0 million increase in prepaid expenses and other assets driven primarily by the timing of payments, partially offset by a $7.0 million increase in accrued expenses and other current liabilities driven primarily by the timing of payments, and a $3.0 million increase in deferred revenue.

For the six months ended June 30, 2018, net cash provided by operating activities was $73.1 million. This was primarily driven by a net loss of $21.7 million, adjusted by share-based compensation expense of $69.7 million, depreciation and amortization expense of $52.9 million, amortization of contract cost assets of $18.3 million, amortization of the discount and issuance costs on the 2021 Notes of $9.5 million, a non-cash change in our deferred income taxes of $8.0 million, a change in deferred rent of $2.8 million, and a loss on disposal of property and equipment of $2.1 million. Changes in operating assets and liabilities decreased cash provided by operating activities by $46.1 million. The changes in operating assets and liabilities are primarily due to a $21.4 million increase in contract cost assets due primarily to the capitalization of sales commissions, a $14.7 million increase in prepaid expenses and other assets driven primarily by the timing of payments, a $9.3 million increase in accounts receivable due primarily to an increase in revenue, a $5.7 million increase in inventory due to the purchase of homes through Zillow Offers, and a $5.2 million decrease in accrued expenses and other current liabilities driven primarily by the timing of payments.

Cash Flows Provided By (Used In) Investing Activities

Our primary investing activities include the purchase and sale or maturity of investments, the purchase of property and equipment and intangible assets and cash paid in connection with acquisitions.

For the six months ended June 30, 2019, net cash provided by investing activities was $197.8 million. This was primarily the result of $236.4 million of net proceeds from maturities of investments and $38.6 million of purchases for property and equipment and intangible assets.

For the six months ended June 30, 2018, net cash used in investing activities was $93.7 million. This was primarily the result of $57.7 million of net purchases of investments and $36.0 million of purchases for property and equipment and intangible assets.

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Cash Flows Provided By Financing Activities

For the six months ended June 30, 2019, cash provided by financing activities was $323.1 million, including $293.1 million of proceeds from borrowings on our revolving credit facilities related to Zillow Offers and $33.0 million of proceeds from the exercise of option awards, partially offset by $3.0 million of net repayments of borrowings on our warehouse lines of credit related to Zillow Home Loans.

For the six months ended June 30, 2018, our financing activities included $99.7 million of proceeds from the exercise of option awards.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements other than outstanding surety bonds issued for our benefit of approximately $9.7 million as of June 30, 2019. We do not believe that the surety bonds will have a material effect on our liquidity, capital resources, market risk support or credit risk support. For additional information regarding the surety bonds, see Note 17 to our condensed consolidated financial statements under the subsection titled “Surety Bonds”.

Contractual Obligations and Other Commitments

There have been no material changes outside the ordinary course of business in our commitments under contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, except for the categories of contractual obligations listed below, which have been updated to reflect our obligations as of June 30, 2019.

	Payments Due By Period
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	(in thousands, unaudited)
Homes under contract (1)	$	266,210	$	266,210	$	—	$	—	$	—
Revolving credit facilities (2)	409,799		409,799		—		—		—
Warehouse lines of credit (3)	30,057		30,057		—		—		—
Operating lease obligations (4)	120,592		4,439		27,026		26,768		62,359
Total contractual obligations	$	826,658	$	710,505	$	27,026	$	26,768	$	62,359
____________________ (1) We have obligations to purchase homes under contract through our Zillow Offers business. (2) Includes principal amounts due for amounts borrowed under the revolving credit facilities used to provide capital for our Zillow Offers business. Amounts exclude an immaterial amount of estimated interest payments. (3) Includes principal amounts due for amounts borrowed under the warehouse lines of credit used to finance Zillow Home Loans. Amounts exclude an immaterial amount of estimated interest payments. (4) Our operating lease obligations consist of new office space in New York, New York, Seattle, Washington, Atlanta, Georgia, Dallas, Texas, and Scottsdale, Arizona. For additional information regarding our operating leases, see Note 12 to our condensed consolidated financial statements.

As of June 30, 2019, we have outstanding letters of credit of approximately $16.9 million, which secure our lease obligations in connection with certain of the operating leases of our office spaces.

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 $9.7 million as of June 30, 2019.

46

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. For information on our critical accounting policies and estimates, see Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of our Annual Report on Form 10-K for the year ended December 31, 2018. There have been no material changes to our critical accounting policies and estimates as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.

47

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily consist of fluctuations in interest rates.

Interest Rate Risk

Under our current investment policy, we invest our excess cash in money market funds, certificates of deposit, U.S. government agency securities, commercial paper, foreign government securities, municipal securities and corporate notes and bonds. Our current investment policy seeks first to preserve principal, second to provide liquidity for our operating and capital needs and third to maximize yield without putting our principal at risk.

Our investments are exposed to market risk due to the fluctuation of prevailing interest rates that may reduce the yield on our investments or their fair value. As our investment portfolio is short-term in nature, we do not believe an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio.

As of June 30, 2019, we have outstanding $373.8 million aggregate principal Convertible Senior Notes due in 2023 (the “2023 Notes”), $460.0 million aggregate principal Convertible Senior Notes due in 2021 (the “2021 Notes”) and $9.6 million aggregate principal Convertible Senior Notes due in 2020 (the “2020 Notes”). The 2023 Notes were issued in July 2018 and carry a fixed interest rate of 1.50% per year. The 2021 Notes were issued in December 2016 and carry a fixed interest rate of 2.00% per year. The 2020 Notes were guaranteed by Zillow Group in connection with our February 2015 acquisition of Trulia, Inc. and carry a fixed interest rate of 2.75% per year.

Since the 2023 Notes, 2021 Notes and 2020 Notes bear interest at fixed rates, we have no direct financial statement risk associated with changes in interest rates as of June 30, 2019. However, the fair values of the 2023 Notes, 2021 Notes and 2020 Notes change primarily when the market price of our stock fluctuates or interest rates change.

We are subject to market risk by way of changes in interest rates on borrowings under our revolving credit facilities that provide capital for Zillow Offers. As of June 30, 2019, we have outstanding $409.8 million of borrowings on our revolving credit facilities which bear interest at a floating rate based on the one-month London Interbank Offered Rate (“LIBOR”) plus an applicable margin. Accordingly, fluctuations in market interest rates may increase or decrease our interest expense. Assuming no change in the outstanding borrowings on our revolving credit facilities, we estimate that a 1% increase in LIBOR would increase our annual interest expense by approximately $4.1 million.

We are also subject to market risk by way of changes in interest rates on borrowings under our warehouse lines of credit that provide capital for Zillow Home Loans. As of June 30, 2019, we have outstanding $30.1 million of borrowings on our warehouse lines of credit which bear interest at a floating rate based on LIBOR plus an applicable margin. We manage the interest rate risk associated with our mortgage loan origination services through the use of forward sales of mortgage-backed securities. Assuming no change in the outstanding borrowings on the warehouse lines of credit, we estimate that a 1.0% increase in LIBOR would increase our annual interest expense associated with the warehouse lines of credit by approximately $0.3 million.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations or financial condition. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations and financial condition.

Foreign Currency Exchange Risk

We do not believe that foreign currency exchange risk has had a material effect on our business, results of operations or financial condition. As we do not maintain a significant balance of foreign currency, we do not believe an immediate 10% increase or decrease in foreign currency exchange rates relative to the U.S. dollar would have a material effect on our business, results of operations or financial condition.

48

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of June 30, 2019. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective as of June 30, 2019.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

49

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding legal proceedings in which we are involved, see Note 17 under the subsection titled “Legal Proceedings” in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

50

Item 1A. Risk Factors

There have not been any material changes to the risk factors affecting our business, financial condition or future results from those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2018. However, you should carefully consider the factors discussed in our Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

51

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

Unregistered Sales of Equity Securities

There were no unregistered sales of equity securities during the three months ended June 30, 2019.

52

Item 6. Exhibits

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document).
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

53

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 7, 2019	ZILLOW GROUP, INC.
	By:	/s/ JENNIFER ROCK
	Name:	Jennifer Rock
	Title:	Chief Accounting Officer

54

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13-14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard Barton, certify that:

1. I have reviewed this report on Form 10-Q of Zillow Group, Inc. for the fiscal quarter ended June 30, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ RICHARD BARTON
Name:	Richard Barton
Title:	Chief Executive Officer
Date:	August 7, 2019

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13-14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Allen Parker, certify that:

1. I have reviewed this report on Form 10-Q of Zillow Group, Inc. for the fiscal quarter ended June 30, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ ALLEN PARKER
Name:	Allen Parker
Title:	Chief Financial Officer
Date:	August 7, 2019

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF FINANCIAL OFFICER

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

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Zillow Group, Inc. (the “Company”) for the fiscal quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Barton, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ RICHARD BARTON
Name:	Richard Barton
Title:	Chief Executive Officer
Date:	August 7, 2019

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

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

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Zillow Group, Inc. (the “Company”) for the fiscal quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Allen Parker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ ALLEN PARKER
Name:	Allen Parker
Title:	Chief Financial Officer
Date:	August 7, 2019

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2019	Jul. 31, 2019
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2019
Entity File Number	001-36853
Entity Registrant Name	ZILLOW GROUP, INC.
Entity Central Index Key	0001617640
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	47-1645716
Entity Address, Address Line One	1301 Second Avenue
Entity Address, Address Line Two	Floor 31
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98101
City Area Code	206
Local Phone Number	470-7000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Class A Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	ZG
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		58,486,480
Class B Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		6,217,447
Class C Capital Stock
Entity Information [Line Items]
Title of 12(b) Security	Class C Capital Stock, par value $0.0001 per share
Trading Symbol	Z
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		141,903,904

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 766,698	$ 651,058
Short-term investments	673,029	903,867
Accounts receivable, net of allowance for doubtful accounts of $4,809 and $4,838 at June 30, 2019 and December 31, 2018, respectively	82,261	66,083
Mortgage loans held for sale	38,653	35,409
Inventory	552,823	162,829
Prepaid expenses and other current assets	62,062	61,067
Restricted cash	43,882	12,385
Total current assets	2,219,408	1,892,698
Contract cost assets	46,271	45,819
Property and equipment, net	145,932	135,172
Right of use assets	210,080
Goodwill	1,984,907	1,984,907
Intangible assets, net	202,824	215,904
Other assets	16,498	16,616
Total assets	4,825,920	4,291,116
Current liabilities:
Accounts payable	8,028	7,471
Accrued expenses and other current liabilities	68,520	63,101
Accrued compensation and benefits	32,001	31,388
Revolving credit facilities	409,799	116,700
Warehouse lines of credit	30,057	33,018
Deferred revenue	37,080	34,080
Deferred rent, current portion		1,740
Lease liabilities, current portion	18,794
Total current liabilities	604,279	287,498
Deferred rent, net of current portion		19,945
Lease liabilities, net of current portion	211,593
Long-term debt	716,819	699,020
Deferred tax liabilities and other long-term liabilities	15,123	17,474
Total liabilities	1,547,814	1,023,937
Commitments and contingencies (Note 17)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized; no shares issued and outstanding	0	0
Additional paid-in capital	4,088,470	3,939,842
Accumulated other comprehensive income (loss)	896	(905)
Accumulated deficit	(811,281)	(671,779)
Total shareholders’ equity	3,278,106	3,267,179
Total liabilities and shareholders’ equity	4,825,920	4,291,116
Class A Common Stock
Shareholders’ equity:
Common stock/capital stock	6	6
Class B Common Stock
Shareholders’ equity:
Common stock/capital stock	1	1
Class C Capital Stock
Shareholders’ equity:
Common stock/capital stock	$ 14	$ 14

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 4,809	$ 4,838
Preferred stock, par value (usd per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized (in shares)	30,000,000	30,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Class A Common Stock
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	1,245,000,000	1,245,000,000
Common stock, issued (in shares)	58,474,815	58,051,448
Common stock, outstanding (in shares)	58,474,815	58,051,448
Class B Common Stock
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	15,000,000	15,000,000
Common stock, issued (in shares)	6,217,447	6,217,447
Common stock, outstanding (in shares)	6,217,447	6,217,447
Class C Capital Stock
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	600,000,000	600,000,000
Common stock, issued (in shares)	141,821,374	139,635,370
Common stock, outstanding (in shares)	141,821,374	139,635,370

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue:
Revenue		$ 599,578	$ 325,246	$ 1,053,682	$ 625,125
Cost of revenue (exclusive of amortization)
Cost of revenue		271,221	25,527	422,569	49,446
Sales and marketing		187,433	147,727	349,020	285,018
Technology and development		120,330	100,376	228,100	194,309
General and administrative		82,839	60,579	178,613	116,652
Acquisition-related costs		0	632	0	659
Integration costs		293	0	645	0
Total costs and expenses		662,116	334,841	1,178,947	646,084
Loss from operations		(62,538)	(9,595)	(125,265)	(20,959)
Other income		9,458	3,089	18,626	5,535
Interest expense		(18,897)	(7,187)	(35,363)	(14,260)
Loss before income taxes		(71,977)	(13,693)	(142,002)	(29,684)
Income tax benefit		0	10,600	2,500	8,000
Net loss		$ (71,977)	$ (3,093)	$ (139,502)	$ (21,684)
Net loss per share - basic and diluted (usd per share)		$ (0.35)	$ (0.02)	$ (0.68)	$ (0.11)
Weighted-average shares outstanding - basic and diluted (in shares)		205,754	194,155	205,137	192,807
Amortization of website development costs and intangible assets included in technology and development		$ 11,000	$ 12,600	$ 22,000	$ 25,600
Technology and Development
Cost of revenue (exclusive of amortization)
Amortization of website development costs and intangible assets included in technology and development		14,656	21,020	29,056	43,569
IMT
Revenue:
Revenue		323,669	305,941	621,941	586,797
Cost of revenue (exclusive of amortization)
Cost of revenue	[1]	26,059	24,290	50,310	46,884
Sales and marketing		135,440	137,972	262,094	266,719
Technology and development		94,261	91,131	182,230	177,048
General and administrative		54,671	52,438	125,521	102,625
Acquisition-related costs		0	0	0	27
Integration costs		0	0	0	0
Total costs and expenses		310,431	305,831	620,155	593,303
Loss from operations		13,238	110	1,786	(6,506)
Other income		0	0	0	0
Interest expense		0	0	0	0
Loss before income taxes		13,238	110	1,786	(6,506)
Homes
Revenue:
Revenue		248,924	0	377,396	0
Cost of revenue (exclusive of amortization)
Cost of revenue	[1]	240,732	0	363,151	86
Sales and marketing		37,409	2,095	58,271	2,385
Technology and development		18,198	3,790	30,479	6,026
General and administrative		17,808	4,176	32,165	5,954
Acquisition-related costs		0	0	0	0
Integration costs		0	0	0	0
Total costs and expenses		314,147	10,061	484,066	14,451
Loss from operations		(65,223)	(10,061)	(106,670)	(14,451)
Other income		0	0	0	0
Interest expense		(5,899)	0	(9,657)	0
Loss before income taxes		(71,122)	(10,061)	(116,327)	(14,451)
Mortgages
Revenue:
Revenue		26,985	19,305	54,345	38,328
Cost of revenue (exclusive of amortization)
Cost of revenue	[1]	4,430	1,237	9,108	2,476
Sales and marketing		14,584	7,660	28,655	15,914
Technology and development		7,871	5,455	15,391	11,235
General and administrative		10,360	3,965	20,927	8,073
Acquisition-related costs		0	632	0	632
Integration costs		293	0	645	0
Total costs and expenses		37,538	18,949	74,726	38,330
Loss from operations		(10,553)	356	(20,381)	(2)
Other income		402	0	715	0
Interest expense		(287)	0	(388)	0
Loss before income taxes		$ (10,438)	$ 356	$ (20,054)	$ (2)

[1] Amortization of website development costs and intangible assets included in technology and development of $14,656 and $21,020 for the three months ended June 30, 2019 and 2018, respectively and $29,056 and $43,569 for the six months ended June 30, 2019 and 2018, respectively.

XML

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net loss	$ (71,977)	$ (3,093)	$ (139,502)	$ (21,684)
Other comprehensive income (loss):
Unrealized gains (losses) on investments	751	223	1,895	(109)
Currency translation adjustments	(52)	(44)	(94)	(66)
Total other comprehensive income (loss)	699	179	1,801	(175)
Comprehensive loss	$ (71,278)	$ (2,914)	$ (137,701)	$ (21,859)

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Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Class A Common Stock, Class B Common Stock and Class C Capital Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2017	$ 2,660,823	$ 20	$ 3,254,146	$ (592,243)	$ (1,100)
Beginning Balance (in shares) at Dec. 31, 2017		190,115,148,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	99,653		99,653
Issuance of common and capital stock upon exercise of stock options (in shares)		4,479,759,000
Vesting of restricted stock units	0
Vesting of restricted stock units (in shares)		834,788,000
Shares and value of restricted stock units withheld for tax liability	(65)		(65)
Shares and value of restricted stock units withheld for tax liability (in shares)		(1,318,000)
Share-based compensation expense	74,307		74,307
Portion of conversion recorded in additional paid-in-capital in connection with partial conversion of convertible notes maturing in 2020	500		500
Portion of conversion recorded in additional paid-in-capital in connection with partial conversion of convertible notes maturing in 2020 (in shares)		20,727,000
Net loss	(21,684)			(21,684)
Other comprehensive income (loss)	(175)				(175)
Ending Balance at Jun. 30, 2018	2,853,681	$ 20	3,428,541	(573,605)	(1,275)
Ending Balance (in shares) at Jun. 30, 2018		195,449,104,000
Beginning Balance at Mar. 31, 2018	2,768,441	$ 20	3,340,387	(570,512)	(1,454)
Beginning Balance (in shares) at Mar. 31, 2018		192,944,326,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	46,747		46,747
Issuance of common and capital stock upon exercise of stock options (in shares)		2,065,545,000
Vesting of restricted stock units	0
Vesting of restricted stock units (in shares)		439,944,000
Shares and value of restricted stock units withheld for tax liability	(37)		(37)
Shares and value of restricted stock units withheld for tax liability (in shares)		(711,000)
Share-based compensation expense	41,444		41,444
Net loss	(3,093)			(3,093)
Other comprehensive income (loss)	179				179
Ending Balance at Jun. 30, 2018	2,853,681	$ 20	3,428,541	(573,605)	(1,275)
Ending Balance (in shares) at Jun. 30, 2018		195,449,104,000
Beginning Balance at Dec. 31, 2018	3,267,179	$ 21	3,939,842	(671,779)	(905)
Beginning Balance (in shares) at Dec. 31, 2018		203,904,265,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	$ 32,997		32,997
Issuance of common and capital stock upon exercise of stock options (in shares)	1,543,850	1,543,850,000
Vesting of restricted stock units	$ 0
Vesting of restricted stock units (in shares)		1,065,607,000
Shares and value of restricted stock units withheld for tax liability	(3)		(3)
Shares and value of restricted stock units withheld for tax liability (in shares)		(86,000)
Share-based compensation expense	115,634		115,634
Net loss	(139,502)			(139,502)
Other comprehensive income (loss)	1,801				1,801
Ending Balance at Jun. 30, 2019	3,278,106	$ 21	4,088,470	(811,281)	896
Ending Balance (in shares) at Jun. 30, 2019		206,513,636,000
Beginning Balance at Mar. 31, 2019	3,283,132	$ 21	4,022,218	(739,304)	197
Beginning Balance (in shares) at Mar. 31, 2019		205,130,332,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	19,433		19,433
Issuance of common and capital stock upon exercise of stock options (in shares)		814,062,000
Vesting of restricted stock units	0
Vesting of restricted stock units (in shares)		569,260,000
Shares and value of restricted stock units withheld for tax liability	(1)		(1)
Shares and value of restricted stock units withheld for tax liability (in shares)		(18,000)
Share-based compensation expense	46,820		46,820
Net loss	(71,977)			(71,977)
Other comprehensive income (loss)	699				699
Ending Balance at Jun. 30, 2019	$ 3,278,106	$ 21	$ 4,088,470	$ (811,281)	$ 896
Ending Balance (in shares) at Jun. 30, 2019		206,513,636,000

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net loss	$ (139,502)	$ (21,684)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	41,728	52,926
Share-based compensation expense	109,756	69,684
Amortization of right of use assets	10,572
Amortization of contract cost assets	17,880	18,309
Amortization of discount and issuance costs on convertible notes maturing in 2023 and 2021	17,799	9,504
Deferred income taxes	(2,500)	(8,000)
Loss on disposal of property and equipment	3,878	2,106
Bad debt expense	706	(352)
Deferred rent	0	(2,845)
Accretion of bond discount	(3,695)	(504)
Changes in operating assets and liabilities:
Accounts receivable	(16,884)	(9,335)
Mortgage loans held for sale	(3,244)	0
Inventory	(389,994)	(5,666)
Prepaid expenses and other assets	(2,015)	(14,697)
Lease liabilities	(11,946)
Contract cost assets	(18,332)	(21,371)
Accounts payable	1,256	1,855
Accrued expenses and other current liabilities	6,952	(5,189)
Accrued compensation and benefits	613	4,309
Deferred revenue	3,000	4,002
Other long-term liabilities	149	0
Net cash provided by (used in) operating activities	(373,823)	73,052
Investing activities
Proceeds from maturities of investments	539,312	172,573
Purchases of investments	(302,891)	(230,276)
Purchases of property and equipment	(29,672)	(31,212)
Purchases of intangible assets	(8,927)	(4,777)
Net cash provided by (used in) investing activities	197,822	(93,692)
Financing activities
Proceeds from borrowing on revolving credit facilities	293,099	0
Net repayments on warehouse lines of credit	(2,961)	0
Proceeds from exercise of stock options	32,997	99,656
Value of equity awards withheld for tax liability	3	(66)
Net cash provided by financing activities	323,138	99,590
Net increase in cash, cash equivalents and restricted cash during period	147,137	78,950
Cash, cash equivalents and restricted cash at beginning of period	663,443	352,095
Cash, cash equivalents and restricted cash at end of period	810,580	431,045
Supplemental disclosures of cash flow information
Cash paid for interest	16,616	4,733
Noncash transactions:
Capitalized share-based compensation	5,878	4,623
Write-off of fully depreciated property and equipment	9,867	13,293
Write-off of fully amortized intangible assets	$ 3,311	$ 10,797

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Organization and Description of Business

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Organization and Description of Business

Organization and Description of Business

Zillow Group, Inc. houses one of the largest portfolios of real estate brands on mobile and the web. Zillow Group is committed to leveraging its proprietary data, technology and innovations to make home buying, selling, financing and renting a seamless, on-demand experience for consumers. As its flagship brand, Zillow now offers a fully integrated home shopping experience that includes access to for sale and rental listings, Zillow Offers, which provides a new, hassle-free way to buy and sell homes directly through Zillow, and Zillow Home Loans, Zillow’s affiliated lender that provides an easy way to receive mortgage pre-approvals and financing. Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments, RealEstate.com and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions to help real estate professionals maximize business opportunities and connect with millions of consumers. Zillow Group also operates a number of business brands for real estate, rental and mortgage professionals, including Mortech, dotloop, Bridge Interactive and New Home Feed. 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, Inc. 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: rates of revenue growth; our ability to manage advertising inventory or pricing; engagement and usage of our products; our investment of resources to pursue strategies that may not prove effective; competition in our market; the stability of the residential real estate market and the impact of interest rate changes; changes in government regulation affecting our business; outcomes of legal proceedings; natural disasters and catastrophic events; scaling and adaptation of existing technology and network infrastructure; management of our growth; our ability to attract and retain qualified employees and key personnel; our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; protection of customers’ information and other privacy concerns; protection of our brand and intellectual property; and intellectual property infringement and other claims, among other things.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 21, 2019. The condensed consolidated balance sheet as of December 31, 2018, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2019, our results of operations, comprehensive loss and shareholders’ equity for the three and six month periods ended June 30, 2019 and 2018, and our cash flows for the six month periods ended June 30, 2019 and 2018. The results of the three and six month periods ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any interim period or for any other future year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to the net realizable value of inventory, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations, and the recoverability of goodwill and indefinite-lived intangible assets, among others. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.

Recently Issued Accounting Standards Not Yet Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance related to a customer’s accounting for implementation costs incurred in hosting arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in cloud computing arrangements with the requirements for capitalizing costs to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. This guidance may be applied either retrospectively or prospectively. 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 August 2018, the FASB issued guidance related to disclosure requirements for fair value measurements. This guidance removes, modifies and adds disclosures related to fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim and annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. 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 statement disclosures.

In June 2016, and subsequently amended in April 2019 and May 2019, the FASB issued guidance on the measurement of credit losses on financial instruments. This guidance will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. This guidance requires an entity to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument on initial recognition and at each reporting period. 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.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

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 — The fair value measurement of money market funds is based on quoted market prices in active markets. The fair value measurement of commercial paper is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Short-term investments — The fair value measurement of our short-term investments is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Restricted cash — Restricted cash consists of cash received from the resale of homes through Zillow Offers which may be used to repay amounts borrowed on our revolving credit facilities (see Note 13) and amounts held in escrow related to funding home purchases in our mortgage origination business. The carrying value of restricted cash approximates fair value due to the short period of time amounts borrowed on the revolving credit facilities are outstanding.

Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics.

Interest rate lock commitments — The fair value of interest rate lock commitments (“IRLCs”) is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. We generally only issue IRLCs for products that meet specific purchaser guidelines. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close.

Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as hedging instruments are calculated by reference to quoted prices for similar assets.

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

	June 30, 2019
	Total			Level 1		Level 2
Cash equivalents:
Money market funds	$	641,436		$	641,436	$	—
Short-term investments:
U.S. government agency securities	446,736			—		446,736
Corporate notes and bonds	94,922			—		94,922
Commercial paper	87,062			—		87,062
Municipal securities	33,352			—		33,352
Foreign government securities	5,997			—		5,997
Certificates of deposit	1,481			—		1,481
Treasury bills	3,479			—		3,479
Mortgage origination-related:
Mortgage loans held for sale	38,653			—		38,653
IRLCs	1,186			—		1,186
Forward contracts - other current assets	32			—		32
Forward contracts - other current liabilities	(225		)	—		(225		)
Total	$	1,354,111		$	641,436	$	712,675

	December 31, 2018
	Total			Level 1		Level 2
Cash equivalents:
Money market funds	$	541,575		$	541,575	$	—
Commercial paper	3,999			—		3,999
Short-term investments:
U.S. government agency securities	646,496			—		646,496
Corporate notes and bonds	112,933			—		112,933
Commercial paper	85,506			—		85,506
Municipal securities	39,306			—		39,306
Foreign government securities	14,915			—		14,915
Certificates of deposit	4,711			—		4,711
Mortgage origination-related:
Mortgage loans held for sale	35,409			—		35,409
IRLCs	847			—		847
Forward contracts - other current liabilities	(125		)	—		(125		)
Total	$	1,485,572		$	541,575	$	943,997

At June 30, 2019, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $45.7 million and $80.6 million for our IRLCs and forward contracts, respectively. At December 31, 2018, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $26.7 million and $28.8 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 13 for the carrying amount and estimated fair value of the Company’s convertible senior notes.

We did not have material Level 3 assets or liabilities as of June 30, 2019 or December 31, 2018.

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Cash and Cash Equivalents, Short-term Investments and Restricted Cash

6 Months Ended

Jun. 30, 2019

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents, Short-term Investments and Restricted Cash

Cash and Cash Equivalents, Short-term 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):

	June 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	125,262	$	—	$	—		$	125,262
Cash equivalents:
Money market funds	641,436		—		—			641,436
Short-term investments:
U.S. government agency securities	446,098		668		(30		)	446,736
Corporate notes and bonds	94,739		184		(1		)	94,922
Commercial paper	87,062		—		—			87,062
Municipal securities	33,253		99		—			33,352
Foreign government securities	5,996		1		—			5,997
Certificates of deposit	1,481		—		—			1,481
Treasury bills	3,475		4		—			3,479
Restricted cash	43,882		—		—			43,882
Total	$	1,482,684	$	956	$	(31	)	$	1,483,609

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	105,484	$	—	$	—		$	105,484
Cash equivalents:
Money market funds	541,575		—		—			541,575
Commercial paper	3,999		—		—			3,999
Short-term investments:
U.S. government agency securities	647,266		51		(821		)	646,496
Corporate notes and bonds	113,109		1		(177		)	112,933
Commercial paper	85,506		—		—			85,506
Municipal securities	39,316		23		(33		)	39,306
Foreign government securities	14,929		—		(14		)	14,915
Certificates of deposit	4,711		1		(1		)	4,711
Restricted cash	12,385		—		—			12,385
Total	$	1,568,280	$	76	$	(1,046	)	$	1,567,310

The following table presents available-for-sale investments by contractual maturity date as of June 30, 2019 (in thousands):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	651,437	$	652,206
Due after one year through two years	20,667		20,823
Total	$	672,104	$	673,029

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Accounts Receivable, net

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Accounts Receivable, net

Accounts Receivable, net

The opening balance of accounts receivable, net was $66.1 million as of January 1, 2019.

The following table presents the changes in the allowance for doubtful accounts (in thousands):

Balance as of January 1, 2019	$	4,838
Bad debt expense	706
Less: write-offs, net of recoveries and other adjustments	(735		)
Balance as of June 30, 2019	$	4,809

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Inventory

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventory

Inventory

The following table presents the components of inventory, net of applicable lower of cost or net realizable value adjustments, as of the dates presented (in thousands):

	June 30, 2019		December 31, 2018
Work-in-progress	$	174,272	$	45,943
Finished goods	378,551		116,886
Inventory	$	552,823	$	162,829

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Contract Cost Assets

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Contract Cost Assets

Contract Cost Assets

As of June 30, 2019 and December 31, 2018, we had $46.3 million and $45.8 million, respectively, of contract cost assets. During the three and six month periods ended June 30, 2019 and 2018, we recorded no impairment losses. We recorded amortization expense related to contract cost assets of $9.2 million and $9.0 million during the three months ended June 30, 2019 and 2018, respectively, and $17.9 million and $18.3 million during the six months ended June 30, 2019 and 2018, respectively.

Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2019
Balance as of April 1, 2019	$	36,105
Deferral of revenue	259,132
Less: Revenue recognized	(258,157		)
Balance as of June 30, 2019	$	37,080

	Six Months Ended June 30, 2019
Balance as of January 1, 2019	$	34,080
Deferral of revenue	501,984
Less: Revenue recognized	(498,984		)
Balance as of June 30, 2019	$	37,080

During the three months ended June 30, 2019 we recognized as revenue a total of $33.0 million pertaining to amounts that were recorded in deferred revenue as of April 1, 2019. During the six months ended June 30, 2019, we recognized as revenue a total of $30.9 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2019.

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Property and Equipment, net

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

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

	June 30, 2019			December 31, 2018
Website development costs	$	153,905		$	149,891
Leasehold improvements	77,737			65,012
Office equipment, furniture and fixtures	43,484			39,510
Construction-in-progress	27,293			29,037
Computer equipment	23,024			22,477
Property and equipment	325,443			305,927
Less: accumulated amortization and depreciation	(179,511		)	(170,755		)
Property and equipment, net	$	145,932		$	135,172

We recorded depreciation expense related to property and equipment (other than website development costs) of $6.4 million and $4.9 million during the three months ended June 30, 2019 and 2018, respectively, and $12.4 million and $9.1 million during the six months ended June 30, 2019 and 2018, respectively.

We capitalized $10.3 million and $10.0 million in website development costs during the three months ended June 30, 2019 and 2018, respectively, and $20.3 million and $18.6 million during the six months ended June 30, 2019 and 2018, respectively. Amortization expense for website development costs included in technology and development expenses was $3.6 million and $8.4 million during the three months ended June 30, 2019 and 2018, respectively, and $7.0 million and $18.0 million during the six months ended June 30, 2019 and 2018, respectively.

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Equity Investment

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Equity Investment

Equity Investment

In October 2016, we purchased a 10% equity interest in a privately held variable interest entity within the real estate industry for $10.0 million. 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 June 30, 2019.

This investment is an equity security without a readily determinable fair value which we account for at cost minus any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. There has been no impairment or upward or downward adjustments to our equity investment as of June 30, 2019 that would impact the carrying amount of the investment. The equity investment is classified within other assets in the condensed consolidated balance sheet.

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Intangible Assets, net

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, net

Intangible Assets, net

The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands):

	June 30, 2019
	Cost		Accumulated Amortization			Net
Purchased content	$	43,886	$	(35,555	)	$	8,331
Software	28,807		(16,850		)	11,957
Customer relationships	103,600		(67,257		)	36,343
Developed technology	109,080		(76,869		)	32,211
Trade names and trademarks	4,400		(4,400		)	—
Lender licenses	400		(117		)	283
Intangibles-in-progress	5,699		—			5,699
Total	$	295,872	$	(201,048	)	$	94,824

	December 31, 2018
	Cost		Accumulated Amortization			Net
Purchased content	$	42,110	$	(30,477	)	$	11,633
Software	24,296		(13,925		)	10,371
Customer relationships	103,900		(60,733		)	43,167
Developed technology	111,980		(72,788		)	39,192
Trade names and trademarks	4,900		(4,683		)	217
Lender licenses	400		(17		)	383
Intangibles-in-progress	2,941		—			2,941
Total	$	290,527	$	(182,623	)	$	107,904

Amortization expense recorded for intangible assets for the three months ended June 30, 2019 and 2018 was $11.0 million and $12.6 million, respectively. Amortization expense recorded for intangible assets for the six months ended June 30, 2019 and 2018 was $22.0 million and $25.6 million, respectively. These amounts are included in technology and development expenses.

We have an indefinite-lived intangible asset 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. The carrying value of the Trulia trade names and trademarks intangible asset was $108.0 million as of June 30, 2019 and December 31, 2018.

Intangibles-in-progress consists of software that is capitalizable but has not been placed in service.

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Deferred Revenue

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Deferred Revenue

Contract Cost Assets

As of June 30, 2019 and December 31, 2018, we had $46.3 million and $45.8 million, respectively, of contract cost assets. During the three and six month periods ended June 30, 2019 and 2018, we recorded no impairment losses. We recorded amortization expense related to contract cost assets of $9.2 million and $9.0 million during the three months ended June 30, 2019 and 2018, respectively, and $17.9 million and $18.3 million during the six months ended June 30, 2019 and 2018, respectively.

Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2019
Balance as of April 1, 2019	$	36,105
Deferral of revenue	259,132
Less: Revenue recognized	(258,157		)
Balance as of June 30, 2019	$	37,080

	Six Months Ended June 30, 2019
Balance as of January 1, 2019	$	34,080
Deferral of revenue	501,984
Less: Revenue recognized	(498,984		)
Balance as of June 30, 2019	$	37,080

During the three months ended June 30, 2019 we recognized as revenue a total of $33.0 million pertaining to amounts that were recorded in deferred revenue as of April 1, 2019. During the six months ended June 30, 2019, we recognized as revenue a total of $30.9 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2019.

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

Our lease portfolio is primarily composed of operating leases for our office space. We have lease agreements that include lease components (e.g., fixed rent) and non-lease components (e.g., common area maintenance), which are accounted for as a single component, as we have elected the practical expedient to group lease and non-lease components. We also elected the practical expedient to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term.

Our leases have remaining lease terms ranging from less than one year to twelve years, some of which include options to extend the lease term for up to an additional ten years. For example, our largest leases, which include our corporate headquarters in Seattle, Washington and office space in New York, New York and San Francisco, California, include options to renew the existing leases for either one or two periods of five years. When determining if a renewal option is reasonably certain of being exercised at lease commencement, we consider several factors, including but not limited to, contract-based, asset-based and entity-based factors. We reassess the term of existing leases if there is a significant event or change in circumstances within our control that affects whether we are reasonably certain to exercise an option to extend a lease. Examples of such events or changes include construction of significant leasehold improvements or other modifications or customizations to the underlying asset, relevant business decisions or subleases. In most cases, we have concluded that renewal options are not reasonably certain of being exercised, therefore, such renewals are not included in the right of use asset and lease liability.

During the three months ended June 30, 2019, it became reasonably certain that in a future period we would exercise the first of two five years renewal options related to the office space lease for our corporate headquarters in Seattle, Washington, due to the construction of significant leasehold improvements. Therefore, the payments associated with the renewal are now included in the measurement of the lease liability and right of use asset.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. For those leases that existed as of January 1, 2019, we used our incremental borrowing rate based on information available at that date. We apply a portfolio approach for determining the incremental borrowing rate based on the applicable lease terms and the current economic environment, and we utilize the assistance of third-party specialists to assist us in determining our yield curve.

The components of our operating lease expense were as follows for the periods presented (in thousands):

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost	$	9,004	$	15,527
Variable lease cost	4,965		9,746
Total lease cost	$	13,969	$	25,273

Cash paid for amounts included in the measurement of lease liabilities for the three and six month periods ended June 30, 2019 was $7.2 million and $16.3 million, respectively. Right of use assets obtained in exchange for new operating lease obligations for the three and six month periods ended June 30, 2019 were $113.7 million. The weighted average remaining term for our leases as of June 30, 2019 was 9 years. The weighted average discount rate for our leases as of June 30, 2019 was 6.5%.

Maturities of our operating lease liabilities by fiscal year were as follows as of June 30, 2019 (in thousands):

Remainder of 2019	$	15,106
2020	37,558
2021	41,089
2022	37,173
2023	34,990
All future years	164,992
Total lease payments	330,908
Less: Imputed interest	(100,521		)
Present value of lease liabilities	$	230,387

Operating lease expense for the three and six month periods ended June 30, 2018, was $5.6 million and $11.4 million, respectively. The following table presents our future minimum payments for all operating leases as of December 31, 2018, including future minimum payments for operating leases that had not yet commenced as of December 31, 2018 totaling $112.9 million (in thousands):

2019	$	29,085
2020	38,060
2021	40,099
2022	37,721
2023	36,458
All future years	85,462
Total future minimum lease payments	$	266,885

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Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

Revolving Credit Facilities

To provide capital for Zillow Offers, we utilize revolving credit facilities that are classified as current liabilities in our condensed consolidated balance sheets. The following table summarizes our revolving credit facilities as of the periods presented (in thousands, except interest rates):

Effective Date	Maximum Borrowing Capacity		Outstanding Borrowings at June 30, 2019		Outstanding Borrowings at December 31, 2018		Weighted Average Interest Rate
July 31, 2018	$	500,000	$	265,097	$	116,700	5.97	%
January 31, 2019	500,000		144,702		—		5.95	%
Total	$	1,000,000	$	409,799	$	116,700

On January 31, 2019, certain wholly owned subsidiaries of Zillow Group entered into a revolving credit agreement with Citibank, N.A., as the directing lender, and certain other parties thereto. The credit agreement provides for a maximum borrowing capacity of $500.0 million (the “Maximum Amount”) with a current borrowing capacity of $145.0 million as of June 30, 2019, which amount may be increased up to the Maximum Amount subject to the satisfaction of certain conditions, through a non-recourse credit facility secured by a pledge of the equity of certain Zillow Group subsidiaries that purchase and sell select residential properties through Zillow Offers. The credit agreement has an initial term of two years and may be extended for up to two additional periods of six months each, subject to agreement by the directing lender. Zillow Group formed certain special purpose entities to effectuate the transactions contemplated by the January 31, 2019 revolving credit facility. Each special purpose entity is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such entity are available to satisfy the debts and other obligations of any affiliate or other entity.

The July 31, 2018 revolving credit facility has an initial term of one year and automatically renews on a monthly basis as of July 31, 2019 for up to 24 additional months, subject to agreement by the directing lender. The revolving credit facility has a current borrowing capacity of $275.1 million as of June 30, 2019. Zillow Group formed certain special purpose entities to effectuate the transactions contemplated by the July 31, 2018 revolving credit facility. Each special purpose entity is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such entity are available to satisfy the debts and other obligations of any affiliate or other entity.

The stated interest rate on our revolving credit facilities is one-month LIBOR plus an applicable margin as defined in the respective credit agreements. Our revolving credit facilities include customary representations and warranties, covenants (including financial covenants applicable to Zillow Group) and provisions regarding events of default. As of June 30, 2019, Zillow Group was in compliance with all financial covenants and no event of default had occurred. In certain circumstances Zillow Group may be obligated to fund some or all of the payment obligations under the credit agreement. Further, borrowings against any eligible property are due upon its sale or at maturity of the applicable facility, or if the property’s ownership period exceeds the agreed aging criteria. Each of the credit facilities permits only a portion of the financed properties to be owned longer than 180 days, and no financed properties may be owned for longer than one year. Any financed property excluded by such aging criteria will drop out of the borrowing base, and the applicable borrower will be required to repay any resulting overadvance. Our revolving credit facilities also require that we establish, maintain and in certain circumstances fund, certain specified reserve accounts. These reserve accounts include, but are not limited to, interest reserves, insurance, tax reserves, renovation cost reserves and special reserves. Amounts funded to these reserve accounts and the collection accounts have been classified within our consolidated balance sheets as restricted cash.

For additional details related to our revolving credit facilities, see Note 14 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Warehouse Lines of Credit

To provide capital for Zillow Home Loans, we utilize warehouse lines of credit that are classified as current liabilities in our condensed consolidated balance sheets. The following table summarizes our warehouse lines of credit as of the periods presented (in thousands, except interest rates):

Maturity Date	Maximum Borrowing Capacity		Outstanding Borrowings at June 30, 2019		Outstanding Borrowings at December 31, 2018		Weighted Average Interest Rate
July 15, 2019	$	50,000	$	15,722	$	14,125	4.95	%
June 27, 2020	50,000		14,335		18,892		4.95	%
Total	$	100,000	$	30,057	$	33,017

On June 28, 2019, Zillow Home Loans amended and restated its warehouse line of credit previously maturing on June 29, 2019. The amended and restated credit agreement extends the term of the original agreement for one year, through June 27, 2020, and continues to provide for a maximum borrowing capacity of $50.0 million with availability under the warehouse line of credit limited depending on the types of loans originated.

Borrowings on the warehouse lines of credit bear interest at the one-month LIBOR plus an applicable margin, as defined in the credit agreements governing the warehouse lines of credit. The warehouse lines of credit include customary representations and warranties, covenants and provisions regarding events of default. As of June 30, 2019, Zillow Group was in compliance with all financial covenants and no event of default had occurred.

Convertible Senior Notes

The following table summarizes our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

Maturity Date	Aggregate Principal Amount		Fair Value at June 30, 2019		Fair Value at December 31, 2018		Stated Interest Rate		Effective Interest Rate
July 1, 2023	$	373,750	$	370,095	$	321,855	1.50	%	6.99	%
December 1, 2021	460,000		521,318		446,200		2.00	%	7.44	%
December 15, 2020	9,637		16,842		16,744		2.75	%	N/A
Total	$	843,387	$	908,255	$	784,799

The convertible notes are senior unsecured obligations and are classified as long-term debt in our condensed consolidated balance sheets. Interest on the convertible notes is paid semi-annually. As of June 30, 2019 and December 31, 2018, respectively, the total unamortized debt discount and debt issuance costs for our outstanding senior convertible notes were $126.6 million and $144.4 million. The convertible senior notes maturing in 2023 and 2021 are not redeemable or convertible as of June 30, 2019. The convertible senior notes maturing in 2020 are convertible, at the option of the holder, and redeemable, at our option, as of June 30, 2019.

For additional details related to our convertible senior notes, see Note 14 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to federal and state income taxes in the United States and in Canada. As of June 30, 2019 and December 31, 2018, we have provided a valuation allowance against our net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized. Therefore, no material current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $1,081.7 million as of December 31, 2018, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $32.5 million (tax effected) as of December 31, 2018.

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Share-Based Awards

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Awards

Share-Based Awards

Option Awards

The following table summarizes option award activity for the six months ended June 30, 2019:

	Number of Shares Subject to Existing Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2019	27,310,110		$	34.04	6.23	$	97,941
Granted	6,721,428		40.05
Exercised	(1,543,850	)	21.37
Forfeited or cancelled	(1,419,750	)	41.10
Outstanding at June 30, 2019	31,067,938		35.65		6.62	367,905
Vested and exercisable at June 30, 2019	17,363,786		31.63		4.87	266,575

The fair value of options granted is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:

	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Expected volatility	45%	43%	45%-47%	43%-45%
Expected dividend yield	—	—	—	—
Risk-free interest rate	2.00%	2.70%	2.00%-2.53%	2.52%-2.70%
Weighted-average expected life	5.00 years	4.50 years	4.75-5.25 years	4.50-5.00 years
Weighted-average fair value of options granted	$16.96	$23.30	$16.79	$21.07

As of June 30, 2019, there was a total of $210.7 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the six months ended June 30, 2019:

	Restricted Stock Units		Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2019	5,266,324		$	42.19
Granted	3,638,550		39.32
Vested	(1,065,607	)	39.46
Forfeited or cancelled	(601,829	)	41.23
Unvested outstanding at June 30, 2019	7,237,438		41.23

As of June 30, 2019, there was a total of $277.0 million in unrecognized compensation cost related to unvested restricted stock units.

Share-Based Compensation Expense

The following table presents the effects of share-based compensation expense in our condensed consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cost of revenue	$	936	$	1,256	$	1,816	$	2,211
Sales and marketing	6,801		6,340		12,451		11,502
Technology and development	18,399		14,347		33,908		25,889
General and administrative	17,496		17,000		61,581		30,082
Total	$	43,632	$	38,943	$	109,756	$	69,684

On February 21, 2019, Zillow Group announced the appointment of Richard N. Barton as Zillow Group’s Chief Executive Officer, effective February 21, 2019. Mr. Barton succeeds Spencer Rascoff, who served as Zillow Group’s Chief Executive Officer since 2010 and who remains a member of Zillow Group’s board of directors. In connection with Mr. Rascoff’s resignation as Chief Executive Officer, Zillow Group entered into an Executive Departure Agreement and Release (the “Agreement”) with Mr. Rascoff. Pursuant to the Agreement, Mr. Rascoff remained a full-time employee of Zillow Group until March 22, 2019 (the “Departure Date”) in order to provide transition services until such date. Pursuant to the Agreement, Mr. Rascoff received, among other things, accelerated vesting of outstanding stock options held by Mr. Rascoff as of the Departure Date by an additional eighteen months from the Departure Date. Options not vested as of the Departure Date, taking into account the foregoing vesting acceleration, were terminated. Each of Mr. Rascoff’s vested stock options outstanding as of the Departure Date will remain exercisable until, except for any later date contemplated by the following proviso, the earlier of (x) the third anniversary of the Departure Date and (y) the latest day upon which the option would have expired by its original

terms under any circumstances (the “Option Expiration Outside Date”); provided, however, that the options will remain exercisable for so long as Mr. Rascoff serves on Zillow Group’s board of directors (but not later than any applicable Option Expiration Outside Date), and if Mr. Rascoff ceases to serve on Zillow Group’s board of directors on or after the third anniversary of the Departure Date, each option will remain exercisable until the earlier of (i) ninety days from the final date of Mr. Rascoff’s service on Zillow Group’s board of directors and (ii) the applicable Option Expiration Outside Date. The change in the exercise period of the options as well as the vesting acceleration pursuant to the Agreement have been accounted for as equity modifications, and we recorded $26.4 million of share-based compensation expense associated with the modifications in the six months ended June 30, 2019. We measured the modification charge by calculating the incremental fair value of the modified award compared to the fair value of the original award immediately prior to the modification. The value of the modified awards as of the modification date was estimated using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 46%-47%, a risk-free interest rate of 2.47%-2.49% and a weighted-average expected life of 3.84-5.25 years.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net loss per share because their effect would have been antidilutive (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Weighted-average Class A common stock and Class C capital stock option awards outstanding	19,502	27,428	19,656	24,393
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	7,230	5,246	6,548	4,799
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	411	402	411	402
Class C capital stock issuable related to conversion spread on the convertible notes maturing in 2021	—	997	—	997
Total Class A common stock and Class C capital stock equivalents	27,143	34,073	26,615	30,591

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lease Commitments

We have entered into various non-cancelable operating lease agreements for certain of our office space and equipment with original lease periods expiring between 2019 and 2030. For additional information regarding our lease agreements, see Note 12.

Purchase Commitments

Purchase commitments primarily include various non-cancelable agreements to purchase content related to our mobile applications and websites as well as homes we are under contract to purchase through Zillow Offers but that have not closed as of the respective date. As of June 30, 2019, the value of homes under contract that have not closed was $266.2 million.

Letters of Credit

As of June 30, 2019, we have outstanding letters of credit of approximately $16.9 million, which secure our lease obligations in connection with certain of our office space operating leases.

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 $9.7 million and $8.9 million, respectively, as of June 30, 2019 and December 31, 2018.

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 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, and on February 9, 2017, the jury returned a verdict finding that the Company had infringed VHT’s copyrights in images displayed or saved to the Digs site. The jury awarded VHT $79,875 in actual damages and approximately $8.2 million in statutory damages. In March 2017, the Company filed motions in the district court seeking judgment for the Company on certain claims that are the subject of the verdict, and for a new trial on others. On June 20, 2017, the judge ruled and granted in part our motions, finding that VHT failed to present sufficient evidence to prove direct copyright infringement for a portion of the images, reducing the total damages to approximately $4.1 million. On March 15, 2019, after the Company had filed an appeal with the Ninth Circuit Court of Appeals seeking review of the final judgment and certain prior rulings entered by the district court, the Ninth Circuit Court of Appeals issued an opinion that, among other things, (i) affirmed the district court’s grant of summary judgment in favor of Zillow on direct infringement of images on Zillow’s listing site, (ii) affirmed the district court’s grant in favor of Zillow of judgment notwithstanding the verdict on certain images that were displayed on the Zillow Digs site, (iii) remanded consideration of the issue whether VHT’s images on the Zillow Digs site were part of a compilation or individual photos, and (iv) vacated the jury’s finding of willful infringement. On June 13, 2019, VHT filed a petition for writ of certiorari with the United States Supreme Court seeking review of certain rulings by the Ninth Circuit Court of Appeals. We have recorded an estimated liability for immaterial amounts related to this matter as of June 30, 2019 and December 31, 2018. We do not believe there is a reasonable possibility that a material loss in excess of amounts accrued may be incurred.

In August and September 2017, two purported class action lawsuits were filed against us and certain of our executive officers, alleging, among other things, violations of federal securities laws on behalf of a class of those who purchased our common stock between February 12, 2016 and August 8, 2017. One of those purported class actions, captioned Vargosko v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Central District of California. The other purported class action lawsuit, captioned Shotwell v. Zillow Group, Inc. et al, was brought in the U.S. District Court for the Western District of Washington. The complaints allege, among other things, that during the period between February 12, 2016 and August 8, 2017, we issued materially false and misleading statements regarding our business practices. The complaints seek to recover, among other things, alleged damages sustained by the purported class members as a result of the alleged misconduct. In November 2017, an amended complaint was filed against us and certain of our executive officers in the Shotwell v. Zillow Group class action lawsuit, extending the beginning of the class period to November 17, 2014. In January 2018, the Vargosko v. Zillow Group purported class action lawsuit was transferred to the U.S. District Court for the Western District of Washington and consolidated with the Shotwell v. Zillow Group purported class action lawsuit. In February 2018, the plaintiffs filed a consolidated amended complaint, and in April 2018, we filed our motion to dismiss the consolidated amended complaint. In October 2018, our motion to dismiss was granted without prejudice, and the plaintiffs were given 45 days file a second consolidated amended complaint and attempt to cure the defects in their consolidated amended complaint. In November 2018, the plaintiffs filed a second consolidated amended complaint, which we moved to dismiss in December 2018. On April 19, 2019, our motion to dismiss the second consolidated amended complaint was denied, and we filed our answer to the second amended complaint on May 3, 2019. We have denied the allegations of wrongdoing and intend to vigorously defend the claims in this lawsuit. We have not recorded an accrual related to this lawsuit as of June 30, 2019 and December 31, 2018, as we do not believe a loss is probable.

In October and November 2017 and January and February 2018, four shareholder derivative lawsuits were filed in the U.S. District Court for the Western District of Washington and the Superior Court of the State of Washington, King County,

against certain of our executive officers and directors seeking unspecified damages on behalf of the Company and certain other relief, such as reform to corporate governance practices. The plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants breached their fiduciary duties in connection with oversight of the Company’s public statements and legal compliance, and as a result of the breach of such fiduciary duties, the Company was damaged, and defendants were unjustly enriched. Certain of the plaintiffs also allege, among other things, violations of Section 14(a) of the Securities Exchange Act of 1934 and waste of corporate assets. On February 5, 2018, the U.S. District Court for the Western District of Washington consolidated the two shareholder derivative lawsuits pending in that court. On February 16, 2018, the Superior Court of the State of Washington, King County, consolidated the two shareholder derivative lawsuits pending in that court. All four of the shareholder derivative lawsuits were stayed until our motion to dismiss the second consolidated amended complaint in the securities class action lawsuit discussed above was denied in April 2019. On July 8, 2019, the plaintiffs in the consolidated federal derivative lawsuit filed a consolidated shareholder derivative complaint, to which the defendants have 45 days to respond. The defendants intend to deny the allegations of wrongdoing and vigorously defend the claims in these lawsuits. We have not recorded an accrual related to these lawsuits as of June 30, 2019 and December 31, 2018, as we do not believe a loss is probable.

In addition to the matters discussed above, from time to time, we are involved in litigation and claims that arise in the ordinary course of business. Although we cannot be certain of the outcome of any such litigation or claims, nor the amount of damages and exposure that we could incur, we currently believe that the final disposition of such matters will not have a material effect on our business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, 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.

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Related Party Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

On April 3, 2019, we entered into a Charter Service Agreement with Executive Jet Management, Inc. for the occasional use by us of an aircraft owned by an entity that is owned by Mr. Lloyd Frink, our Executive Chairman and President, for business travel. We recognized approximately $0.2 million in expenses pursuant to the Charter Service Agreement for the three and six month periods ended June 30, 2019.

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Self-Insurance

6 Months Ended

Jun. 30, 2019

Insurance [Abstract]

Self-Insurance

Self-Insurance

We are self-insured for medical benefits and dental benefits for all qualifying Zillow Group employees. The medical plan carries a stop-loss policy which provides protection when cumulative medical claims exceed 125% of expected claims for the plan year with a limit of $1.0 million and from individual claims during the plan year exceeding $500,000. 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 claims is included within accrued compensation and benefits in our condensed consolidated balance sheets and was $3.6 million and $3.9 million, respectively, as of June 30, 2019 and December 31, 2018.

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Employee Benefit Plan

6 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

Employee Benefit Plan

Employee Benefit Plan

We have a 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 $5.2 million and $4.0 million, respectively, for the three months ended June 30, 2019 and 2018, and $10.1 million and $7.8 million, respectively, for the six months ended June 30, 2019 and 2018.

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Segment Information and Revenue

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information and Revenue

Segment Information and Revenue

Beginning January 1, 2019, we have three operating and reportable segments, which have been identified based on the way in which 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 for the Internet, Media & Technology (“IMT”), Homes and Mortgages segments.

The IMT segment includes the financial results for the Premier Agent, Rentals and new construction marketplaces, dotloop, and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly. The Mortgages segment includes financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and the sale of mortgages on the secondary market, as well as Mortech mortgage software solutions.

Revenue and costs are directly attributed to our segments when possible. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit the other segments. These costs primarily include headcount-related expenses, general and administrative expenses including executive, finance, accounting, legal, human resources,

recruiting, and facilities costs, product development and data acquisition costs and marketing and advertising costs. These costs are allocated to each segment based on the estimated benefit each segment receives from such expenditures.

The chief executive officer reviews information about our revenue categories as well as statement of operations data inclusive of loss before income taxes by segment. This information is included in the following tables for the periods presented (in thousands):

	Three Months Ended June 30, 2019								Three Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT		Homes			Mortgages
Revenue:
Premier Agent	$	231,961	$	—		$	—		$	230,885	$	—		$	—
Rentals	42,670		—			—			33,288		—			—
Other	49,038		—			—			41,768		—			—
Homes	—		248,924			—			—		—			—
Mortgages	—		—			26,985			—		—			19,305
Total revenue	323,669		248,924			26,985			305,941		—			19,305
Costs and expenses:
Cost of revenue	26,059		240,732			4,430			24,290		—			1,237
Sales and marketing	135,440		37,409			14,584			137,972		2,095			7,660
Technology and development	94,261		18,198			7,871			91,131		3,790			5,455
General and administrative	54,671		17,808			10,360			52,438		4,176			3,965
Acquisition-related costs	—		—			—			—		—			632
Integration costs	—		—			293			—		—			—
Total costs and expenses	310,431		314,147			37,538			305,831		10,061			18,949
Income (loss) from operations	13,238		(65,223		)	(10,553		)	110		(10,061		)	356
Segment other income	—		—			402			—		—			—
Segment interest expense	—		(5,899		)	(287		)	—		—			—
Income (loss) before income taxes (1)	$	13,238	$	(71,122	)	$	(10,438	)	$	110	$	(10,061	)	$	356

	Six Months Ended June 30, 2019								Six Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT			Homes			Mortgages
Revenue:
Premier Agent	$	449,696	$	—		$	—		$	444,617		$	—		$	—
Rentals	80,508		—			—			62,351			—			—
Other	91,737		—			—			79,829			—			—
Homes	—		377,396			—			—			—			—
Mortgages	—		—			54,345			—			—			38,328
Total revenue	621,941		377,396			54,345			586,797			—			38,328
Costs and expenses:
Cost of revenue	50,310		363,151			9,108			46,884			86			2,476
Sales and marketing	262,094		58,271			28,655			266,719			2,385			15,914
Technology and development	182,230		30,479			15,391			177,048			6,026			11,235
General and administrative	125,521		32,165			20,927			102,625			5,954			8,073
Acquisition-related costs	—		—			—			27			—			632
Integration costs	—		—			645			—			—			—
Total costs and expenses	620,155		484,066			74,726			593,303			14,451			38,330
Income (loss) from operations	1,786		(106,670		)	(20,381		)	(6,506		)	(14,451		)	(2		)
Segment other income	—		—			715			—			—			—
Segment interest expense	—		(9,657		)	(388		)	—			—			—
Income (loss) before income taxes (1)	$	1,786	$	(116,327	)	$	(20,054	)	$	(6,506	)	$	(14,451	)	$	(2	)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total segment loss before income taxes	$	(68,322	)	$	(9,595	)	$	(134,595	)	$	(20,959	)
Corporate interest expense	(12,711		)	(7,187		)	(25,318		)	(14,260		)
Corporate other income	9,056			3,089			17,911			5,535
Consolidated loss before income taxes	$	(71,977	)	$	(13,693	)	$	(142,002	)	$	(29,684	)

Certain corporate items are not directly attributable to any of our segments, including 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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Subsequent Events	6 Months Ended
	Jun. 30, 2019
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn July 11, 2019, Zillow Home Loans extended the term of its $50.0 million warehouse line of credit previously maturing on July 15, 2019 such that it now matures on October 15, 2019.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 21, 2019. The condensed consolidated balance sheet as of December 31, 2018, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2019, our results of operations, comprehensive loss and shareholders’ equity for the three and six month periods ended June 30, 2019 and 2018, and our cash flows for the six month periods ended June 30, 2019 and 2018. The results of the three and six month periods ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any interim period or for any other future year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to the net realizable value of inventory, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations, and the recoverability of goodwill and indefinite-lived intangible assets, among others. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.

Recently Issued Accounting Standards Not Yet Adopted

Recently Issued Accounting Standards Not Yet Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance related to a customer’s accounting for implementation costs incurred in hosting arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in cloud computing arrangements with the requirements for capitalizing costs to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. This guidance may be applied either retrospectively or prospectively. 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 August 2018, the FASB issued guidance related to disclosure requirements for fair value measurements. This guidance removes, modifies and adds disclosures related to fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim and annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. 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 statement disclosures.

In June 2016, and subsequently amended in April 2019 and May 2019, the FASB issued guidance on the measurement of credit losses on financial instruments. This guidance will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. This guidance requires an entity to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument on initial recognition and at each reporting period. 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.

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 — The fair value measurement of money market funds is based on quoted market prices in active markets. The fair value measurement of commercial paper is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Short-term investments — The fair value measurement of our short-term investments is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Restricted cash — Restricted cash consists of cash received from the resale of homes through Zillow Offers which may be used to repay amounts borrowed on our revolving credit facilities (see Note 13) and amounts held in escrow related to funding home purchases in our mortgage origination business. The carrying value of restricted cash approximates fair value due to the short period of time amounts borrowed on the revolving credit facilities are outstanding.

Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics.

Interest rate lock commitments — The fair value of interest rate lock commitments (“IRLCs”) is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. We generally only issue IRLCs for products that meet specific purchaser guidelines. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close.

Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as hedging instruments are calculated by reference to quoted prices for similar assets.

Segment Reporting

Beginning January 1, 2019, we have three operating and reportable segments, which have been identified based on the way in which 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 for the Internet, Media & Technology (“IMT”), Homes and Mortgages segments.

The IMT segment includes the financial results for the Premier Agent, Rentals and new construction marketplaces, dotloop, and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly. The Mortgages segment includes financial results for advertising sold to mortgage lenders and other mortgage professionals, mortgage originations through Zillow Home Loans and the sale of mortgages on the secondary market, as well as Mortech mortgage software solutions.

Revenue and costs are directly attributed to our segments when possible. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit the other segments. These costs primarily include headcount-related expenses, general and administrative expenses including executive, finance, accounting, legal, human resources,

recruiting, and facilities costs, product development and data acquisition costs and marketing and advertising costs. These costs are allocated to each segment based on the estimated benefit each segment receives from such expenditures.

The chief executive officer reviews information about our revenue categories as well as statement of operations data inclusive of loss before income taxes by segment.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Summary of Balances of Cash Equivalents and Investments

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

	June 30, 2019
	Total			Level 1		Level 2
Cash equivalents:
Money market funds	$	641,436		$	641,436	$	—
Short-term investments:
U.S. government agency securities	446,736			—		446,736
Corporate notes and bonds	94,922			—		94,922
Commercial paper	87,062			—		87,062
Municipal securities	33,352			—		33,352
Foreign government securities	5,997			—		5,997
Certificates of deposit	1,481			—		1,481
Treasury bills	3,479			—		3,479
Mortgage origination-related:
Mortgage loans held for sale	38,653			—		38,653
IRLCs	1,186			—		1,186
Forward contracts - other current assets	32			—		32
Forward contracts - other current liabilities	(225		)	—		(225		)
Total	$	1,354,111		$	641,436	$	712,675

	December 31, 2018
	Total			Level 1		Level 2
Cash equivalents:
Money market funds	$	541,575		$	541,575	$	—
Commercial paper	3,999			—		3,999
Short-term investments:
U.S. government agency securities	646,496			—		646,496
Corporate notes and bonds	112,933			—		112,933
Commercial paper	85,506			—		85,506
Municipal securities	39,306			—		39,306
Foreign government securities	14,915			—		14,915
Certificates of deposit	4,711			—		4,711
Mortgage origination-related:
Mortgage loans held for sale	35,409			—		35,409
IRLCs	847			—		847
Forward contracts - other current liabilities	(125		)	—		(125		)
Total	$	1,485,572		$	541,575	$	943,997

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Cash and Cash Equivalents, Short-term Investments and Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2019

Cash and Cash Equivalents [Abstract]

Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents and Available-for-Sale Investments

The following 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):

	June 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	125,262	$	—	$	—		$	125,262
Cash equivalents:
Money market funds	641,436		—		—			641,436
Short-term investments:
U.S. government agency securities	446,098		668		(30		)	446,736
Corporate notes and bonds	94,739		184		(1		)	94,922
Commercial paper	87,062		—		—			87,062
Municipal securities	33,253		99		—			33,352
Foreign government securities	5,996		1		—			5,997
Certificates of deposit	1,481		—		—			1,481
Treasury bills	3,475		4		—			3,479
Restricted cash	43,882		—		—			43,882
Total	$	1,482,684	$	956	$	(31	)	$	1,483,609

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	105,484	$	—	$	—		$	105,484
Cash equivalents:
Money market funds	541,575		—		—			541,575
Commercial paper	3,999		—		—			3,999
Short-term investments:
U.S. government agency securities	647,266		51		(821		)	646,496
Corporate notes and bonds	113,109		1		(177		)	112,933
Commercial paper	85,506		—		—			85,506
Municipal securities	39,316		23		(33		)	39,306
Foreign government securities	14,929		—		(14		)	14,915
Certificates of deposit	4,711		1		(1		)	4,711
Restricted cash	12,385		—		—			12,385
Total	$	1,568,280	$	76	$	(1,046	)	$	1,567,310

Available-for-Sale Investments by Contractual Maturity

The following table presents available-for-sale investments by contractual maturity date as of June 30, 2019 (in thousands):

	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	651,437	$	652,206
Due after one year through two years	20,667		20,823
Total	$	672,104	$	673,029

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Accounts Receivable, net (Tables)

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Schedule of Accounts Receivable, Net

The following table presents the changes in the allowance for doubtful accounts (in thousands):

Balance as of January 1, 2019	$	4,838
Bad debt expense	706
Less: write-offs, net of recoveries and other adjustments	(735		)
Balance as of June 30, 2019	$	4,809

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Inventory (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Components of Net Inventory

The following table presents the components of inventory, net of applicable lower of cost or net realizable value adjustments, as of the dates presented (in thousands):

	June 30, 2019		December 31, 2018
Work-in-progress	$	174,272	$	45,943
Finished goods	378,551		116,886
Inventory	$	552,823	$	162,829

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Property and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2019

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):

	June 30, 2019			December 31, 2018
Website development costs	$	153,905		$	149,891
Leasehold improvements	77,737			65,012
Office equipment, furniture and fixtures	43,484			39,510
Construction-in-progress	27,293			29,037
Computer equipment	23,024			22,477
Property and equipment	325,443			305,927
Less: accumulated amortization and depreciation	(179,511		)	(170,755		)
Property and equipment, net	$	145,932		$	135,172

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Intangible Assets, net (Tables)

6 Months Ended

Jun. 30, 2019

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):

	June 30, 2019
	Cost		Accumulated Amortization			Net
Purchased content	$	43,886	$	(35,555	)	$	8,331
Software	28,807		(16,850		)	11,957
Customer relationships	103,600		(67,257		)	36,343
Developed technology	109,080		(76,869		)	32,211
Trade names and trademarks	4,400		(4,400		)	—
Lender licenses	400		(117		)	283
Intangibles-in-progress	5,699		—			5,699
Total	$	295,872	$	(201,048	)	$	94,824

	December 31, 2018
	Cost		Accumulated Amortization			Net
Purchased content	$	42,110	$	(30,477	)	$	11,633
Software	24,296		(13,925		)	10,371
Customer relationships	103,900		(60,733		)	43,167
Developed technology	111,980		(72,788		)	39,192
Trade names and trademarks	4,900		(4,683		)	217
Lender licenses	400		(17		)	383
Intangibles-in-progress	2,941		—			2,941
Total	$	290,527	$	(182,623	)	$	107,904

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Deferred Revenue (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Change in Deferred Revenue

The following tables present the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended June 30, 2019
Balance as of April 1, 2019	$	36,105
Deferral of revenue	259,132
Less: Revenue recognized	(258,157		)
Balance as of June 30, 2019	$	37,080

	Six Months Ended June 30, 2019
Balance as of January 1, 2019	$	34,080
Deferral of revenue	501,984
Less: Revenue recognized	(498,984		)
Balance as of June 30, 2019	$	37,080

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Components of Lease Expense

The components of our operating lease expense were as follows for the periods presented (in thousands):

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost	$	9,004	$	15,527
Variable lease cost	4,965		9,746
Total lease cost	$	13,969	$	25,273

Schedule of Maturities for Operating Lease Liabilities

Maturities of our operating lease liabilities by fiscal year were as follows as of June 30, 2019 (in thousands):

Remainder of 2019	$	15,106
2020	37,558
2021	41,089
2022	37,173
2023	34,990
All future years	164,992
Total lease payments	330,908
Less: Imputed interest	(100,521		)
Present value of lease liabilities	$	230,387

Schedule of Future Minimum Payments for Operating Leases

The following table presents our future minimum payments for all operating leases as of December 31, 2018, including future minimum payments for operating leases that had not yet commenced as of December 31, 2018 totaling $112.9 million (in thousands):

2019	$	29,085
2020	38,060
2021	40,099
2022	37,721
2023	36,458
All future years	85,462
Total future minimum lease payments	$	266,885

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Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Revolving Credit Facilities and Lines of Credit

The following table summarizes our revolving credit facilities as of the periods presented (in thousands, except interest rates):

Effective Date	Maximum Borrowing Capacity		Outstanding Borrowings at June 30, 2019		Outstanding Borrowings at December 31, 2018		Weighted Average Interest Rate
July 31, 2018	$	500,000	$	265,097	$	116,700	5.97	%
January 31, 2019	500,000		144,702		—		5.95	%
Total	$	1,000,000	$	409,799	$	116,700

The following table summarizes our warehouse lines of credit as of the periods presented (in thousands, except interest rates):

Maturity Date	Maximum Borrowing Capacity		Outstanding Borrowings at June 30, 2019		Outstanding Borrowings at December 31, 2018		Weighted Average Interest Rate
July 15, 2019	$	50,000	$	15,722	$	14,125	4.95	%
June 27, 2020	50,000		14,335		18,892		4.95	%
Total	$	100,000	$	30,057	$	33,017

Schedule of Convertible Senior Notes

The following table summarizes our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

Maturity Date	Aggregate Principal Amount		Fair Value at June 30, 2019		Fair Value at December 31, 2018		Stated Interest Rate		Effective Interest Rate
July 1, 2023	$	373,750	$	370,095	$	321,855	1.50	%	6.99	%
December 1, 2021	460,000		521,318		446,200		2.00	%	7.44	%
December 15, 2020	9,637		16,842		16,744		2.75	%	N/A
Total	$	843,387	$	908,255	$	784,799

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Share-Based Awards (Tables)

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Option Award Activity

The following table summarizes option award activity for the six months ended June 30, 2019:

	Number of Shares Subject to Existing Options		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2019	27,310,110		$	34.04	6.23	$	97,941
Granted	6,721,428		40.05
Exercised	(1,543,850	)	21.37
Forfeited or cancelled	(1,419,750	)	41.10
Outstanding at June 30, 2019	31,067,938		35.65		6.62	367,905
Vested and exercisable at June 30, 2019	17,363,786		31.63		4.87	266,575

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

The fair value of options granted is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:

	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Expected volatility	45%	43%	45%-47%	43%-45%
Expected dividend yield	—	—	—	—
Risk-free interest rate	2.00%	2.70%	2.00%-2.53%	2.52%-2.70%
Weighted-average expected life	5.00 years	4.50 years	4.75-5.25 years	4.50-5.00 years
Weighted-average fair value of options granted	$16.96	$23.30	$16.79	$21.07

Summary of Restricted Stock Units Activity

The following table summarizes activity for restricted stock units for the six months ended June 30, 2019:

	Restricted Stock Units		Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2019	5,266,324		$	42.19
Granted	3,638,550		39.32
Vested	(1,065,607	)	39.46
Forfeited or cancelled	(601,829	)	41.23
Unvested outstanding at June 30, 2019	7,237,438		41.23

Effects of Share Based Compensation in Consolidated Statements of Operations

The following table presents the effects of share-based compensation expense in our condensed consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cost of revenue	$	936	$	1,256	$	1,816	$	2,211
Sales and marketing	6,801		6,340		12,451		11,502
Technology and development	18,399		14,347		33,908		25,889
General and administrative	17,496		17,000		61,581		30,082
Total	$	43,632	$	38,943	$	109,756	$	69,684

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2019

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):

	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Weighted-average Class A common stock and Class C capital stock option awards outstanding	19,502	27,428	19,656	24,393
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	7,230	5,246	6,548	4,799
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	411	402	411	402
Class C capital stock issuable related to conversion spread on the convertible notes maturing in 2021	—	997	—	997
Total Class A common stock and Class C capital stock equivalents	27,143	34,073	26,615	30,591

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Segment Information and Revenue (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Revenue Categories

This information is included in the following tables for the periods presented (in thousands):

	Three Months Ended June 30, 2019								Three Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT		Homes			Mortgages
Revenue:
Premier Agent	$	231,961	$	—		$	—		$	230,885	$	—		$	—
Rentals	42,670		—			—			33,288		—			—
Other	49,038		—			—			41,768		—			—
Homes	—		248,924			—			—		—			—
Mortgages	—		—			26,985			—		—			19,305
Total revenue	323,669		248,924			26,985			305,941		—			19,305
Costs and expenses:
Cost of revenue	26,059		240,732			4,430			24,290		—			1,237
Sales and marketing	135,440		37,409			14,584			137,972		2,095			7,660
Technology and development	94,261		18,198			7,871			91,131		3,790			5,455
General and administrative	54,671		17,808			10,360			52,438		4,176			3,965
Acquisition-related costs	—		—			—			—		—			632
Integration costs	—		—			293			—		—			—
Total costs and expenses	310,431		314,147			37,538			305,831		10,061			18,949
Income (loss) from operations	13,238		(65,223		)	(10,553		)	110		(10,061		)	356
Segment other income	—		—			402			—		—			—
Segment interest expense	—		(5,899		)	(287		)	—		—			—
Income (loss) before income taxes (1)	$	13,238	$	(71,122	)	$	(10,438	)	$	110	$	(10,061	)	$	356

	Six Months Ended June 30, 2019								Six Months Ended June 30, 2018
	IMT		Homes			Mortgages			IMT			Homes			Mortgages
Revenue:
Premier Agent	$	449,696	$	—		$	—		$	444,617		$	—		$	—
Rentals	80,508		—			—			62,351			—			—
Other	91,737		—			—			79,829			—			—
Homes	—		377,396			—			—			—			—
Mortgages	—		—			54,345			—			—			38,328
Total revenue	621,941		377,396			54,345			586,797			—			38,328
Costs and expenses:
Cost of revenue	50,310		363,151			9,108			46,884			86			2,476
Sales and marketing	262,094		58,271			28,655			266,719			2,385			15,914
Technology and development	182,230		30,479			15,391			177,048			6,026			11,235
General and administrative	125,521		32,165			20,927			102,625			5,954			8,073
Acquisition-related costs	—		—			—			27			—			632
Integration costs	—		—			645			—			—			—
Total costs and expenses	620,155		484,066			74,726			593,303			14,451			38,330
Income (loss) from operations	1,786		(106,670		)	(20,381		)	(6,506		)	(14,451		)	(2		)
Segment other income	—		—			715			—			—			—
Segment interest expense	—		(9,657		)	(388		)	—			—			—
Income (loss) before income taxes (1)	$	1,786	$	(116,327	)	$	(20,054	)	$	(6,506	)	$	(14,451	)	$	(2	)

(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total segment loss before income taxes	$	(68,322	)	$	(9,595	)	$	(134,595	)	$	(20,959	)
Corporate interest expense	(12,711		)	(7,187		)	(25,318		)	(14,260		)
Corporate other income	9,056			3,089			17,911			5,535
Consolidated loss before income taxes	$	(71,977	)	$	(13,693	)	$	(142,002	)	$	(29,684	)

Reconciliation of Total Segment Loss

The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total segment loss before income taxes	$	(68,322	)	$	(9,595	)	$	(134,595	)	$	(20,959	)
Corporate interest expense	(12,711		)	(7,187		)	(25,318		)	(14,260		)
Corporate other income	9,056			3,089			17,911			5,535
Consolidated loss before income taxes	$	(71,977	)	$	(13,693	)	$	(142,002	)	$	(29,684	)

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Fair Value Measurements - Fair Value of Cash Equivalents and Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	$ 673,029
Mortgage loans held for sale	38,653	$ 35,409
Total	1,354,111	1,485,572
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0	0
Total	641,436	541,575
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	38,653	35,409
Total	712,675	943,997
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	641,436	541,575
Money market funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	641,436	541,575
Money market funds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		3,999
Short-term investments	87,062	85,506
Commercial paper | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
Commercial paper | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		3,999
Short-term investments	87,062	85,506
U.S. government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	446,736	646,496
U.S. government agency securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
U.S. government agency securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	446,736	646,496
Corporate notes and bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	94,922	112,933
Corporate notes and bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Corporate notes and bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	94,922	112,933
Municipal securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	33,352	39,306
Municipal securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Municipal securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	33,352	39,306
Foreign government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	5,997	14,915
Foreign government securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Foreign government securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	5,997	14,915
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	1,481	4,711
Certificates of deposit | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0	0
Certificates of deposit | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	1,481	4,711
Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	3,479
Treasury bills | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Treasury bills | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	3,479
IRLCs | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	1,186	847
IRLCs | Level 1 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
IRLCs | Level 2 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	1,186	847
Forward contracts | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	32	(125)
Derivative liability	(225)
Forward contracts | Level 1 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liability	0
Forward contracts | Level 2 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	32	$ (125)
Derivative liability	$ (225)

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Fair Value Measurements - Additional Information (Detail) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
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	0	0
Mortgage Loans Held For Sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	45,700,000	26,700,000
IRLCs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	$ 80,600,000	$ 28,800,000

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Cash and Cash Equivalents, Short-term Investments and Restricted Cash - Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents and Available-for-Sale Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 766,698	$ 651,058
Short-term investments:
Amortized Cost	672,104
Gross Unrealized Gains	956	76
Gross Unrealized Losses	(31)
Estimated Fair Market Value	673,029
Restricted cash	43,882	12,385
Cash, cash equivalents, short-term investments, and restricted cash, amortized cost	1,482,684	1,568,280
Cash, cash equivalents, short-term investments, and restricted cash, gross unrealized losses		(1,046)
Cash, cash equivalents, short-term investments, and restricted cash, estimated fair market value	1,483,609	1,567,310
U.S. government agency securities
Short-term investments:
Amortized Cost	446,098	647,266
Gross Unrealized Gains	668	51
Gross Unrealized Losses	(30)	(821)
Estimated Fair Market Value	446,736	646,496
Corporate notes and bonds
Short-term investments:
Amortized Cost	94,739	113,109
Gross Unrealized Gains	184	1
Gross Unrealized Losses	(1)	(177)
Estimated Fair Market Value	94,922	112,933
Commercial paper
Short-term investments:
Amortized Cost	87,062	85,506
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Market Value	87,062	85,506
Municipal securities
Short-term investments:
Amortized Cost	33,253	39,316
Gross Unrealized Gains	99	23
Gross Unrealized Losses	0	(33)
Estimated Fair Market Value	33,352	39,306
Foreign government securities
Short-term investments:
Amortized Cost	5,996	14,929
Gross Unrealized Gains	1	0
Gross Unrealized Losses	0	(14)
Estimated Fair Market Value	5,997	14,915
Certificates of deposit
Short-term investments:
Amortized Cost	1,481	4,711
Gross Unrealized Gains	0	1
Gross Unrealized Losses	0	(1)
Estimated Fair Market Value	1,481	4,711
Treasury bills
Short-term investments:
Amortized Cost	3,475
Gross Unrealized Gains	4
Gross Unrealized Losses	0
Estimated Fair Market Value	3,479
Cash
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	125,262	105,484
Money market funds
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 641,436	541,575
Commercial paper
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents		$ 3,999

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Cash and Cash Equivalents, Short-term Investments and Restricted Cash - Available-for-Sale Investments by Contractual Maturity (Detail) $ in Thousands	Jun. 30, 2019 USD ($)
Cash and Cash Equivalents [Abstract]
Amortized Cost, Due in one year or less	$ 651,437
Amortized Cost, Due after one year through two years	20,667
Amortized Cost	672,104
Estimated Fair Market Value, Due in one year or less	652,206
Estimated Fair Market Value, Due after one year through two years	20,823
Total	$ 673,029

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Accounts Receivable, net (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Receivables [Abstract]
Accounts receivable, net	$ 82,261		$ 66,083
Allowance for Doubtful Accounts Receivable [Roll Forward]
Beginning balance	4,838
Bad debt expense	706	$ (352)
Less: write-offs, net of recoveries and other adjustments	(735)
Ending balance	$ 4,809

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Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Work-in-progress	$ 174,272	$ 45,943
Finished goods	378,551	116,886
Inventory	$ 552,823	$ 162,829

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Contract Cost Assets (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Contract cost assets	$ 46,271,000		$ 46,271,000		$ 45,819,000
Impairment of contract cost assets	0	$ 0	0	$ 0
Amortization of contract cost assets	$ 9,200,000	$ 9,000,000.0	$ 17,880,000	$ 18,309,000

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Property and Equipment, net - Detail of Property and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property and equipment	$ 325,443	$ 305,927
Less: accumulated amortization and depreciation	(179,511)	(170,755)
Property and equipment, net	145,932	135,172
Website development costs
Property, Plant and Equipment [Line Items]
Property and equipment	153,905	149,891
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	77,737	65,012
Office equipment, furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment	43,484	39,510
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment	27,293	29,037
Computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment	$ 23,024	$ 22,477

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Property and Equipment, net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Property, Plant and Equipment [Line Items]
Amortization and depreciation expense related to property and equipment other than website development costs	$ 6.4	$ 4.9	$ 12.4	$ 9.1
Capitalization of website development costs	10.3	10.0	20.3	18.6
Amortization of website development costs and intangible assets included in technology and development	11.0	12.6	22.0	25.6
Technology and development | Software Development
Property, Plant and Equipment [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 3.6	$ 8.4	$ 7.0	$ 18.0

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Equity Investment - Additional Information (Detail) - October 2016 Investment - USD ($)	1 Months Ended
	Oct. 31, 2016	Jun. 30, 2019
Schedule of Equity Method Investments [Line Items]
Cumulative impairment charge		$ 0
Upward adjustments		0
Downward adjustments		0
Variable Interest Entity, Not Primary Beneficiary
Schedule of Equity Method Investments [Line Items]
Percentage of equity interest held	10.00%
Equity investments	$ 10,000,000.0
Maximum exposure to loss		$ 10,000,000.0

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Intangible Assets, net - Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Cost	$ 295,872	$ 290,527
Accumulated Amortization	(201,048)	(182,623)
Net	94,824	107,904
Purchased content
Finite-Lived Intangible Assets [Line Items]
Cost	43,886	42,110
Accumulated Amortization	(35,555)	(30,477)
Net	8,331	11,633
Software
Finite-Lived Intangible Assets [Line Items]
Cost	28,807	24,296
Accumulated Amortization	(16,850)	(13,925)
Net	11,957	10,371
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Cost	103,600	103,900
Accumulated Amortization	(67,257)	(60,733)
Net	36,343	43,167
Developed technology
Finite-Lived Intangible Assets [Line Items]
Cost	109,080	111,980
Accumulated Amortization	(76,869)	(72,788)
Net	32,211	39,192
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Cost	4,400	4,900
Accumulated Amortization	(4,400)	(4,683)
Net	0	217
Lender licenses
Finite-Lived Intangible Assets [Line Items]
Cost	400	400
Accumulated Amortization	(117)	(17)
Net	283	383
Intangibles-in-progress
Finite-Lived Intangible Assets [Line Items]
Cost	5,699	2,941
Accumulated Amortization	0	0
Net	$ 5,699	$ 2,941

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Intangible Assets, net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Indefinite-lived Intangible Assets [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 11.0	$ 12.6	$ 22.0	$ 25.6
Trade names and trademarks | Trulia
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible asset	$ 108.0		$ 108.0		$ 108.0

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Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Change in Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 36,105	$ 34,080
Deferral of revenue	259,132	501,984
Less: Revenue recognized	(258,157)	(498,984)
Ending balance	37,080	37,080
Revenue recognized, recorded in deferred revenue as of prior period	$ 33,000	$ 30,900

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Leases - Narrative (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($) renewal_option	Jun. 30, 2019 USD ($) renewal_option	Dec. 31, 2018 USD ($)
Lessee, Lease, Description [Line Items]
Option to extend lease	10 years	10 years
Number of periods | renewal_option	2
Option to extend existing lease	5 years	5 years
Cash paid for amounts included in measurement of lease liabilities	$ 7.2	$ 16.3
Right of use assets obtained in exchange for new operating lease obligations	$ 113.7	$ 113.7
Weighted average remaining lease term	9 years	9 years
Weighted average discount rate	6.50%	6.50%
Operating lease expense	$ 5.6	$ 11.4
Operating leases not yet commenced			$ 112.9
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term		1 year
Number of periods | renewal_option		1
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term		12 years
Number of periods | renewal_option		2

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Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 9,004	$ 15,527
Variable lease cost	4,965	9,746
Total lease cost	$ 13,969	$ 25,273

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Leases - Schedule of Maturities for Operating Lease Liabilities (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Leases [Abstract]
Remainder of 2019	$ 15,106
2020	37,558
2021	41,089
2022	37,173
2023	34,990
All future years	164,992
Total lease payments	330,908
Less: Imputed interest	(100,521)
Present value of lease liabilities	$ 230,387

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Leases - Schedule of Future Minimum Payments for Operating Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 29,085
2020	38,060
2021	40,099
2022	37,721
2023	36,458
All future years	85,462
Total future minimum lease payments	$ 266,885

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Debt - Schedule of Revolving Credit Facilities (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Outstanding borrowings on revolving credit facility	$ 409,799,000	$ 116,700,000
Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum Borrowing Capacity	1,000,000,000
Outstanding borrowings on revolving credit facility	409,799,000	116,700,000
Line of Credit | Revolving Credit Facility | July 31, 2018
Debt Instrument [Line Items]
Maximum Borrowing Capacity	500,000,000
Outstanding borrowings on revolving credit facility	$ 265,097,000	116,700,000
Weighted Average Interest Rate	5.97%
Line of Credit | Revolving Credit Facility | January 31, 2019
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 500,000,000
Outstanding borrowings on revolving credit facility	$ 144,702,000	$ 0
Weighted Average Interest Rate	5.95%

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Debt - Narrative (Detail) - USD ($)	Jun. 28, 2019	Jan. 31, 2019	Jul. 31, 2018	Jun. 30, 2019	Dec. 31, 2018
Convertible Debt
Debt Instrument [Line Items]
Unamortized debt discount and debt issuance costs				$ 126,600,000	$ 144,400,000
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity				1,000,000,000
Extension of expiration period (up to)			2 years
Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity				100,000,000
Credit Agreement | Revolving Credit Facility | Citibank, N.A. | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 500,000,000.0
Current borrowing capacity				145,000,000.0
Revolving credit facility, initial term		2 years
July 31, 2018 | Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity				500,000,000
Current borrowing capacity				275,100,000
Revolving credit facility, initial term			1 year
Automatic renewal term			24 months
June 27, 2020 | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 50,000,000.0			$ 50,000,000
Revolving credit facility, initial term	1 year

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Debt - Schedule of Warehouse Lines of Credit (Details) - USD ($)	Jun. 30, 2019	Jun. 28, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Warehouse lines of credit	$ 30,057,000		$ 33,018,000
Line of Credit
Debt Instrument [Line Items]
Maximum Borrowing Capacity	100,000,000
Warehouse lines of credit	30,057,000		33,017,000
Line of Credit | July 15, 2019
Debt Instrument [Line Items]
Maximum Borrowing Capacity	50,000,000
Warehouse lines of credit	$ 15,722,000		14,125,000
Weighted Average Interest Rate	4.95%
Line of Credit | June 27, 2020
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 50,000,000	$ 50,000,000.0
Warehouse lines of credit	$ 14,335,000		$ 18,892,000
Weighted Average Interest Rate	4.95%

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Debt - Schedule of Convertible Senior Notes (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 843,387
Fair Value	908,255	$ 784,799
Convertible Debt | July 1, 2023
Debt Instrument [Line Items]
Aggregate Principal Amount	373,750
Fair Value	$ 370,095	321,855
Stated Interest Rate	1.50%
Effective Interest Rate	6.99%
Convertible Debt | December 1, 2021
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 460,000
Fair Value	$ 521,318	446,200
Stated Interest Rate	2.00%
Effective Interest Rate	7.44%
Convertible Debt | December 15, 2020
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 9,637
Fair Value	$ 16,842	$ 16,744
Stated Interest Rate	2.75%

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Income Taxes - Additional Information (Detail) $ in Millions	Dec. 31, 2018 USD ($)
Federal
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards	$ 1,081.7
State
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards	$ 32.5

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Share-Based Awards - Summary of Option Award (Detail) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares
Number of Shares Subject to Existing Options
Beginning Balance (in shares) | shares	27,310,110
Granted (in shares) | shares	6,721,428
Exercised (in shares) | shares	(1,543,850)
Forfeited or cancelled (in shares) | shares	(1,419,750)
Ending Balance (in shares) | shares	31,067,938	27,310,110
Vested and exercisable ending balance (in shares) | shares	17,363,786
Weighted- Average Exercise Price Per Share
Beginning Balance (usd per share) | $ / shares	$ 34.04
Granted (usd per share) | $ / shares	40.05
Exercised (usd per share) | $ / shares	21.37
Forfeited or cancelled (usd per share) | $ / shares	41.10
Ending Balance (usd per share) | $ / shares	35.65	$ 34.04
Vested and exercisable (usd per share) | $ / shares	$ 31.63
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted-Average Remaining Contractual Life, Outstanding	6 years 7 months 13 days	6 years 2 months 23 days
Weighted-Average Remaining Contractual Life, Vested and exercisable	4 years 10 months 13 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract]
Aggregate Intrinsic Value, Outstanding | $	$ 367,905	$ 97,941
Aggregate Intrinsic Value Vested, and exercisable | $	$ 266,575

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Share-Based Awards - Fair Value of Options Granted, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model (Detail) - Option Awards - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	45.00%	43.00%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Weighted-average expected life	5 years	4 years 6 months
Weighted-average fair value of options granted (usd per share)	$ 16.96	$ 23.30	$ 16.79	$ 21.07
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			45.00%	43.00%
Risk-free interest rate	2.00%	2.70%	2.00%	2.52%
Weighted-average expected life			4 years 9 months	4 years 6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			47.00%	45.00%
Risk-free interest rate			2.53%	2.70%
Weighted-average expected life			5 years 3 months	5 years

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Share-Based Awards - Option Awards - Additional Information (Detail) $ in Millions	Jun. 30, 2019 USD ($)
Option Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized cost of unvested share-based compensation awards	$ 210.7

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Share-Based Awards - Summary of Restricted Stock Units Activity (Detail) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2019 $ / shares shares
Restricted Stock Units
Beginning balance (in shares) | shares	5,266,324
Granted (in shares) | shares	3,638,550
Vested (in shares) | shares	(1,065,607)
Forfeited or cancelled (in shares) | shares	(601,829)
Ending balance (in shares) | shares	7,237,438
Weighted- Average Grant- Date Fair Value
Unvested outstanding, beginning balance (usd per share) | $ / shares	$ 42.19
Granted (usd per share) | $ / shares	39.32
Vested (usd per share) | $ / shares	39.46
Forfeited or cancelled (usd per share) | $ / shares	41.23
Unvested outstanding, ending balance (usd per share) | $ / shares	$ 41.23

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Share-Based Awards - Restricted Stock Units - Additional Information (Detail) $ in Millions	Jun. 30, 2019 USD ($)
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost	$ 277.0

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Share-Based Awards - Effects of Share Based Compensation in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Feb. 21, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		$ 43,632	$ 38,943	$ 109,756	$ 69,684
Chief Executive Officer
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation				26,400
Accelerated vesting period from departure date	18 months
Exercisable period from final date	90 days
Minimum | Chief Executive Officer
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Expected volatility	46.00%
Risk-free interest rate	2.47%
Weighted-average expected life	3 years 10 months 2 days
Maximum | Chief Executive Officer
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Expected volatility	47.00%
Risk-free interest rate	2.49%
Weighted-average expected life	5 years 3 months
Cost of revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		936	1,256	1,816	2,211
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		6,801	6,340	12,451	11,502
Technology and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		18,399	14,347	33,908	25,889
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		$ 17,496	$ 17,000	$ 61,581	$ 30,082

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Net Loss Per Share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Class A Common Stock and Class C Capital Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	27,143	34,073	26,615	30,591
Class A Common Stock and Class C Capital Stock | Weighted Average | Option Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	19,502	27,428	19,656	24,393
Class A Common Stock and Class C Capital Stock | Weighted Average | Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	7,230	5,246	6,548	4,799
Class A Common Stock | December 15, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	411	402	411	402
Class C Capital Stock | December 1, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total Class A common stock and Class C capital stock equivalents (in shares)	0	997	0	997

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Commitments and Contingencies - Additional Information (Detail)	Jun. 20, 2017 USD ($)	Feb. 09, 2017 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Feb. 28, 2018 claim	Feb. 05, 2018 claim	Sep. 30, 2017 claim
Other Commitments [Line Items]
Outstanding letters of credit			$ 16,900,000
Outstanding surety bonds			9,700,000	$ 8,900,000
VHT Vs Zillow Group Inc.
Other Commitments [Line Items]
Jury awarded damages	$ 4,100,000
VHT Vs Zillow Group Inc. | Actual Damages
Other Commitments [Line Items]
Jury awarded damages		$ 79,875
VHT Vs Zillow Group Inc. | Statutory Damages
Other Commitments [Line Items]
Jury awarded damages		$ 8,200,000
Class Action Lawsuits
Other Commitments [Line Items]
Number of pending claims | claim							2
Shareholder Derivative Lawsuits
Other Commitments [Line Items]
Number of pending claims | claim					4	2
Homes under contract to purchase that have not closed
Other Commitments [Line Items]
Value of homes under contract that have not closed			$ 266,200,000

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Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Affiliated Entity | Charter Service Agreement
Related Party Transaction [Line Items]
Expense recognized pursuant to the Charter Service Agreement	$ 0.2	$ 0.2

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Self-Insurance - Additional Information (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Insurance [Abstract]
Percentage of cumulative medical claim under self insurance plan (percent exceeded)	125.00%
Limit of medical claim under self insurance plan (limit)	$ 1,000,000.0
Minimum amount of individual claim under self insurance plan	500,000
Liability for self-insured claims included in accrued compensation and benefits	$ 3,600,000	$ 3,900,000

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Employee Benefit Plan - Additional Information (Detail) - Zillow Merger - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Defined Contribution Plan Disclosure [Line Items]
Company's contribution based on employee contribution (up to)			4.00%
Company's expense related to its defined contribution 401(k) retirement plans	$ 5.2	$ 4.0	$ 10.1	$ 7.8

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Segment Information and Revenue - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2019 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

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Segment Information and Revenue - Revenue Categories (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue:
Total revenue		$ 599,578	$ 325,246	$ 1,053,682	$ 625,125
Costs and expenses:
Cost of revenue		271,221	25,527	422,569	49,446
Sales and marketing		187,433	147,727	349,020	285,018
Technology and development		120,330	100,376	228,100	194,309
General and administrative		82,839	60,579	178,613	116,652
Acquisition-related costs		0	632	0	659
Integration costs		293	0	645	0
Total costs and expenses		662,116	334,841	1,178,947	646,084
Income (loss) from operations		(62,538)	(9,595)	(125,265)	(20,959)
Other income		9,458	3,089	18,626	5,535
Interest expense		(18,897)	(7,187)	(35,363)	(14,260)
Loss before income taxes		(71,977)	(13,693)	(142,002)	(29,684)
IMT
Revenue:
Total revenue		323,669	305,941	621,941	586,797
Costs and expenses:
Cost of revenue	[1]	26,059	24,290	50,310	46,884
Sales and marketing		135,440	137,972	262,094	266,719
Technology and development		94,261	91,131	182,230	177,048
General and administrative		54,671	52,438	125,521	102,625
Acquisition-related costs		0	0	0	27
Integration costs		0	0	0	0
Total costs and expenses		310,431	305,831	620,155	593,303
Income (loss) from operations		13,238	110	1,786	(6,506)
Other income		0	0	0	0
Interest expense		0	0	0	0
Loss before income taxes		13,238	110	1,786	(6,506)
IMT | Premier Agent
Revenue:
Total revenue		231,961	230,885	449,696	444,617
IMT | Rentals
Revenue:
Total revenue		42,670	33,288	80,508	62,351
IMT | Other
Revenue:
Total revenue		49,038	41,768	91,737	79,829
IMT | Homes
Revenue:
Total revenue		0	0	0	0
IMT | Mortgages
Revenue:
Total revenue		0	0	0	0
Homes
Revenue:
Total revenue		248,924	0	377,396	0
Costs and expenses:
Cost of revenue	[1]	240,732	0	363,151	86
Sales and marketing		37,409	2,095	58,271	2,385
Technology and development		18,198	3,790	30,479	6,026
General and administrative		17,808	4,176	32,165	5,954
Acquisition-related costs		0	0	0	0
Integration costs		0	0	0	0
Total costs and expenses		314,147	10,061	484,066	14,451
Income (loss) from operations		(65,223)	(10,061)	(106,670)	(14,451)
Other income		0	0	0	0
Interest expense		(5,899)	0	(9,657)	0
Loss before income taxes		(71,122)	(10,061)	(116,327)	(14,451)
Homes | Premier Agent
Revenue:
Total revenue		0	0	0	0
Homes | Rentals
Revenue:
Total revenue		0	0	0	0
Homes | Other
Revenue:
Total revenue		0	0	0	0
Homes | Homes
Revenue:
Total revenue		248,924	0	377,396	0
Homes | Mortgages
Revenue:
Total revenue		0	0	0	0
Mortgages
Revenue:
Total revenue		26,985	19,305	54,345	38,328
Costs and expenses:
Cost of revenue	[1]	4,430	1,237	9,108	2,476
Sales and marketing		14,584	7,660	28,655	15,914
Technology and development		7,871	5,455	15,391	11,235
General and administrative		10,360	3,965	20,927	8,073
Acquisition-related costs		0	632	0	632
Integration costs		293	0	645	0
Total costs and expenses		37,538	18,949	74,726	38,330
Income (loss) from operations		(10,553)	356	(20,381)	(2)
Other income		402	0	715	0
Interest expense		(287)	0	(388)	0
Loss before income taxes		(10,438)	356	(20,054)	(2)
Mortgages | Premier Agent
Revenue:
Total revenue		0	0	0	0
Mortgages | Rentals
Revenue:
Total revenue		0	0	0	0
Mortgages | Other
Revenue:
Total revenue		0	0	0	0
Mortgages | Homes
Revenue:
Total revenue		0	0	0	0
Mortgages | Mortgages
Revenue:
Total revenue		$ 26,985	$ 19,305	$ 54,345	$ 38,328

[1] Amortization of website development costs and intangible assets included in technology and development of $14,656 and $21,020 for the three months ended June 30, 2019 and 2018, respectively and $29,056 and $43,569 for the six months ended June 30, 2019 and 2018, respectively.

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Segment Information and Revenue - Reconciliation of Total Segment Loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Segment Reporting, Revenue Reconciling Item [Line Items]
Loss before income taxes	$ (71,977)	$ (13,693)	$ (142,002)	$ (29,684)
Corporate interest expense	(18,897)	(7,187)	(35,363)	(14,260)
Corporate other income	9,458	3,089	18,626	5,535
Consolidated loss before income taxes	(71,977)	(13,693)	(142,002)	(29,684)
Operating Segments
Segment Reporting, Revenue Reconciling Item [Line Items]
Loss before income taxes	(68,322)	(9,595)	(134,595)	(20,959)
Consolidated loss before income taxes	(68,322)	(9,595)	(134,595)	(20,959)
Corporate
Segment Reporting, Revenue Reconciling Item [Line Items]
Corporate interest expense	(12,711)	(7,187)	(25,318)	(14,260)
Corporate other income	$ 9,056	$ 3,089	$ 17,911	$ 5,535

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Subsequent Event (Details) - Line of Credit - USD ($)	Jul. 11, 2019	Jun. 30, 2019
Subsequent Event [Line Items]
Maximum borrowing capacity		$ 100,000,000
Subsequent Event | June 27, 2020
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 50,000,000.0

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Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 40,322,000
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 40,322,000