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 March 31, 2020

☐ 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 April 30, 2020, 59,476,313 shares of Class A common stock, 6,217,447 shares of Class B common stock, and 147,230,433 shares of Class C capital stock were outstanding.

ZILLOW GROUP, INC.

Quarterly Report on Form 10-Q

For the Three Months Ended March 31, 2020

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Shareholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	56
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 6.	Exhibits	60
	Signatures	61

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, 2019 and in Part II, Item IA (Risk Factors) in this Quarterly Report on Form 10-Q, including, but not limited to:

•the impact of the novel coronavirus (“COVID-19”) pandemic and any associated economic downturn on our future financial position, operations and financial performance;

•the magnitude, duration and severity of the COVID-19 pandemic;

•the impact of actions taken by governments, businesses, and individuals in response to the COVID-19 pandemic;

•the current and future health and stability of the economy and residential housing market, including any extended slowdown in the real estate markets as a result of COVID-19;

•changes in laws or regulations applicable to our business, employees, products or services, including current and future laws, regulations and orders that limit our ability to operate in light of COVID-19;

•changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit;

•actual or anticipated fluctuations in our financial condition and results of operations;

•changes in projected operational and financial results;

•addition or loss of significant customers;

•actual or anticipated changes in our growth rate relative to that of our competitors;

•acquisitions, strategic partnerships, joint ventures, capital-raising activities, or other corporate transactions or commitments by us or our competitors;

•actual or anticipated changes in technology, products, markets or services by us or our competitors;

•ability to obtain or maintain licenses and permits to support our current and future businesses;

•actual or anticipated changes to our products and services;

•ability to maintain or establish relationships with listings and data providers;

•fluctuations in the valuation of companies perceived by investors to be comparable to us; and

•issuance of new or updated research or reports by securities analysts.

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.

1

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.

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data, unaudited)

	March 31, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	1,567,710	$	1,141,263
Short-term investments	993,258		1,280,989
Accounts receivable, net of allowance for doubtful accounts of $4,495 and $4,522 at March 31, 2020 and December 31, 2019, respectively	71,782		67,005
Mortgage loans held for sale	36,848		36,507
Inventory	533,989		836,627
Prepaid expenses and other current assets	57,635		58,117
Restricted cash	56,428		89,646
Total current assets	3,317,650		3,510,154
Contract cost assets	46,565		45,209
Property and equipment, net	188,032		170,489
Right of use assets	205,688		212,153
Goodwill	1,984,907		1,984,907
Intangible assets, net	112,274		190,567
Other assets	16,624		18,494
Total assets	$	5,871,740	$	6,131,973
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	17,819	$	8,343
Accrued expenses and other current liabilities	88,897		85,442
Accrued compensation and benefits	32,838		37,805
Borrowings under credit facilities	466,647		721,951
Deferred revenue	35,347		39,747
Lease liabilities, current portion	20,290		17,592
Convertible senior notes, current portion	9,637		9,637
Total current liabilities	671,475		920,517
Lease liabilities, net of current portion	216,122		220,445
Long-term debt	1,565,949		1,543,402
Deferred tax liabilities and other long-term liabilities	2,433		12,188
Total liabilities	2,455,979		2,696,552
Commitments and contingencies (Note 16)
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; 59,476,188 and 58,739,989 shares issued and outstanding as of March 31, 2020 and December 31, 2019, 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 March 31, 2020 and December 31, 2019	1		1
Class C capital stock, $0.0001 par value; 600,000,000 shares authorized; 147,219,504 and 144,109,419 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	15		14
Additional paid-in capital	4,551,866		4,412,200
Accumulated other comprehensive income	4,286		340
Accumulated deficit	(1,140,413)		(977,140)
Total shareholders’ equity	3,415,761		3,435,421
Total liabilities and shareholders’ equity	$	5,871,740	$	6,131,973

See accompanying notes to the condensed consolidated financial statements.

3

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

	Three Months Ended March 31,
	2020		2019
Revenue:
Homes	$	769,873	$	128,472
IMT	330,666		298,272
Mortgages	25,282		27,360
Total revenue	1,125,821		454,104
Cost of revenue (exclusive of amortization) (1):
Homes	732,199		122,419
IMT	24,318		24,251
Mortgages	5,155		4,678
Total cost of revenue	761,672		151,348
Sales and marketing	204,648		161,587
Technology and development	134,918		107,770
General and administrative	92,285		95,774
Impairment costs	76,800		—
Integration costs	—		352
Total costs and expenses	1,270,323		516,831
Loss from operations	(144,502)		(62,727)
Other income	9,593		9,168
Interest expense	(37,592)		(16,466)
Loss before income taxes	(172,501)		(70,025)
Income tax benefit	9,228		2,500
Net loss	$	(163,273)	$	(67,525)
Net loss per share — basic and diluted	$	(0.78)	$	(0.33)
Weighted-average shares outstanding — basic and diluted	210,674		204,514
____________________ (1) Amortization of website development costs and intangible assets included in technology and development	$	17,184	$	14,400

See accompanying notes to the condensed consolidated financial statements.

4

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, unaudited)

	Three Months Ended March 31,
	2020		2019
Net loss	$	(163,273)	$	(67,525)
Other comprehensive income:
Unrealized gains on investments	3,602		1,144
Reclassification adjustment for net investment losses included in net loss	434		—
Net unrealized gains on investments	4,036		1,144
Currency translation adjustments	(90)		(42)
Total other comprehensive income	3,946		1,102
Comprehensive loss	$	(159,327)	$	(66,423)

See accompanying notes to the condensed consolidated financial statements.

5

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 December 31, 2019	209,066,855	$	21	$	4,412,200	$	(977,140)	$	340	$	3,435,421
Issuance of common and capital stock upon exercise of stock options	3,207,375	1		92,201		—		—		92,202
Vesting of restricted stock units	638,909	—		—		—		—		—
Share-based compensation expense	—	—		47,465		—		—		47,465
Net loss	—	—		—		(163,273)		—		(163,273)
Other comprehensive income	—	—		—		—		3,946		3,946
Balance at March 31, 2020	212,913,139	$	22	$	4,551,866	$	(1,140,413)	$	4,286	$	3,415,761

	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 December 31, 2018	203,904,265	$	21	$	3,939,842	$	(671,779)	$	(905)	$	3,267,179
Issuance of common and capital stock upon exercise of stock options	729,788	—		13,564		—		—		13,564
Vesting of restricted stock units	496,347	—		—		—		—		—
Shares and value of restricted stock units withheld for tax liability	(68)	—		(2)		—		—		(2)
Share-based compensation expense	—	—		68,814		—		—		68,814
Net loss	—	—		—		(67,525)		—		(67,525)
Other comprehensive income	—	—		—		—		1,102		1,102
Balance at March 31, 2019	205,130,332	$	21	$	4,022,218	$	(739,304)	$	197	$	3,283,132

See accompanying notes to the condensed consolidated financial statements.

6

ZILLOW GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Three Months Ended March 31,
	2020		2019
Operating activities
Net loss	$	(163,273)	$	(67,525)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	29,026		20,525
Share-based compensation expense	43,795		66,124
Amortization of right of use assets	6,465		4,440
Amortization of contract cost assets	8,415		8,746
Amortization of discount and issuance costs on convertible senior notes maturing in 2021, 2023, 2024 and 2026	22,547		8,840
Impairment costs	76,800		—
Deferred income taxes	(9,228)		(2,500)
Loss on disposal of property and equipment and other assets	1,952		1,704
Credit loss expense	558		128
Net loss on investment securities	434		—
Accretion of bond discount	(473)		(1,733)
Changes in operating assets and liabilities:
Accounts receivable	(5,335)		(4,650)
Mortgage loans held for sale	(341)		5,940
Inventory	302,593		(162,325)
Prepaid expenses and other assets	(2,916)		(8,537)
Lease liabilities	(1,625)		(7,010)
Contract cost assets	(9,771)		(9,103)
Accounts payable	7,673		(133)
Accrued expenses and other current liabilities	4,588		328
Accrued compensation and benefits	(4,967)		(1,088)
Deferred revenue	(4,400)		2,025
Other long-term liabilities	(527)		290
Net cash provided by (used in) operating activities	301,990		(145,514)
Investing activities
Proceeds from maturities of investments	296,272		302,187
Proceeds from sales of investments	53,997		—
Purchases of investments	(58,459)		(176,412)
Purchases of property and equipment	(32,966)		(14,202)
Purchases of intangible assets	(4,503)		(3,269)
Net cash provided by investing activities	254,341		108,304
Financing activities
Proceeds from borrowings on credit facilities	34,460		129,328
Repayments of borrowings on credit facilities	(294,150)		—
Net borrowings (repayments) on warehouse lines of credit and repurchase agreement	4,386		(5,025)
Proceeds from exercise of stock options	92,202		13,564
Value of equity awards withheld for tax liability	—		2
Net cash provided by (used in) financing activities	(163,102)		137,869
Net increase in cash, cash equivalents and restricted cash during period	393,229		100,659
Cash, cash equivalents and restricted cash at beginning of period	1,230,909		663,443
Cash, cash equivalents and restricted cash at end of period	$	1,624,138	$	764,102
Supplemental disclosures of cash flow information
Cash paid for interest	$	17,038	$	4,956
Noncash transactions:
Capitalized share-based compensation	$	3,670	$	2,690
Write-off of fully depreciated property and equipment	$	4,143	$	6,269
Write-off of fully amortized intangible assets	$	—	$	3,200
Property and equipment purchased on account	$	9,445	$	4,792

See accompanying notes to the condensed consolidated financial statements.

8

ZILLOW GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Organization and Description of Business

Zillow Group, Inc., the largest portfolio of real estate brands on mobile and the web, is building an on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to the businesses of its flagship brand, Zillow, to find and get into their next home with speed, certainty and ease.

In addition to Zillow’s for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Closing Services now offers title and escrow services as another important step to unify the real estate transaction. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions which include 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: public health crises, like the COVID-19 pandemic; 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 technology, products, markets or services by us or our competitors; addition or loss of significant customers; our ability to maintain or establish relationships with listings and data providers; our ability to obtain or maintain licenses and permits to support our current and future businesses; actual or anticipated changes to our products and services; 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, 2019, which was filed with the SEC on February 19, 2020. The condensed consolidated balance sheet as of December 31, 2019, 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 March 31, 2020, and our results of operations, comprehensive loss, shareholders’ equity and cash flows for the three month periods ended March 31, 2020 and 2019. The results of the three month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any interim period or for any other future year.

9

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. The COVID-19 pandemic has introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed, among others.

Recently Adopted Accounting Standards

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 conforms the requirements for capitalizing implementation costs incurred in cloud computing arrangements that are service contracts with the accounting guidance that provides for the capitalization of costs incurred to develop or obtain internal-use software. Under the guidance, implementation costs that are capitalized should be characterized in financial statements in the same manner as other service costs and assets related to service costs and amortized over the term of the hosting arrangement. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. Entities are permitted to apply either a retrospective or prospective transition approach to adopt this guidance. We adopted this guidance on January 1, 2020 using the prospective transition approach under which we apply the guidance to all eligible costs incurred subsequent to adoption. Under the guidance, we capitalize eligible implementation costs associated with cloud computing arrangements that are service contracts within prepaid expenses and other current assets or other long-term assets in our condensed consolidated balance sheets, depending on the length of the underlying cloud computing contract. We amortize these costs on a straight-line basis over the term of the hosting arrangement. The adoption of this guidance did not have a material impact 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 certain assets and liabilities measured at fair value. 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. This guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. We adopted this guidance on January 1, 2020. We have not historically recorded material amounts of Level 3 assets and liabilities or material transfers of assets or liabilities between levels within the fair value hierarchy and therefore, the adoption of this guidance did not have a material impact on our disclosures. Refer to Note 3 for further information regarding the assets and liabilities we measure at fair value.

In June 2016, and subsequently amended in April 2019, May 2019 and November 2019, the FASB issued guidance on the measurement of credit losses on financial assets. This guidance requires an entity to measure and recognize expected 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, whereas current guidance employs an incurred loss methodology. This guidance is effective for interim and annual 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 adopted. We adopted this guidance on January 1, 2020 with no material impact to our financial position, results of operation or cash flows.

10

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We expect to apply some of the expedients and exceptions provided in this guidance to our credit facilities, warehouse line of credit and master repurchase agreement, all of which reference LIBOR in the applicable interest rate. 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.

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 credit facilities (see Note 12) 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 credit facilities are outstanding and amounts are held in escrow.

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. This adjustment is effected through the pull-through rate, which represents the probability that an interest rate lock commitment will ultimately result in a closed loan.

The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our condensed consolidated statements of operations.

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The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the periods presented:

	March 31, 2020	December 31, 2019
Range	43% - 100%	56% - 100%
Weighted average	75%	78%

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 economic 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):

	March 31, 2020
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,356,139	$	1,356,139	$	—	$	—
Commercial paper	9,389		—		9,389		—
Short-term investments:
U.S. government agency securities	713,581		—		713,581		—
Commercial paper	103,646		—		103,646		—
Treasury bills	82,578		—		82,578		—
Corporate notes and bonds	69,265		—		69,265		—
Municipal securities	23,192		—		23,192		—
Certificates of deposit	996		—		996		—
Mortgage origination-related:
Mortgage loans held for sale	36,848		—		36,848		—
IRLCs	2,225		—		—		2,225
Forward contracts - other current liabilities	2,039		—		2,039		—
Total	$	2,399,898	$	1,356,139	$	1,041,534	$	2,225

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	December 31, 2019
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	872,431	$	872,431	$	—
U.S. government agency securities	35,009		—		35,009
Commercial paper	31,113		—		31,113
Treasury bills	6,441		—		6,441
Corporate notes and bonds	1,065		—		1,065
Certificates of deposit	249		—		249
Short-term investments:
U.S. government agency securities	862,154		—		862,154
Corporate notes and bonds	159,431		—		159,431
Commercial paper	150,267		—		150,267
Treasury bills	80,003		—		80,003
Municipal securities	27,889		—		27,889
Certificates of deposit	1,245		—		1,245
Mortgage origination-related:
Mortgage loans held for sale	36,507		—		36,507
IRLCs	937		—		937
Forward contracts - other current assets	7		—		7
Forward contracts - other current liabilities	(60)		—		(60)
Total	$	2,264,688	$	872,431	$	1,392,257

The following table presents the changes in our IRLCs during the three months ended March 31, 2020 (in thousands):

Balance as of January 1, 2020 (1)	$	937
Issuances	5,208
Transfers	(5,349)
Fair value changes recognized in earnings	1,429
Balance as of March 31, 2020	$	2,225
(1) Amount represents transfers of IRLCs from Level 2 to Level 3 within the fair value hierarchy as of January 1, 2020.

At March 31, 2020, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $89.3 million and $116.2 million for our IRLCs and forward contracts, respectively. At December 31, 2019, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $34.3 million and $64.7 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 12 for the carrying amount and estimated fair value of the Company’s convertible senior notes.

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):

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	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	202,182	$	—	$	—	$	202,182
Cash equivalents:
Money market funds	1,356,139		—		—		1,356,139
Commercial paper	9,389		—		—		9,389
Short-term investments:
U.S. government agency securities	709,163		4,418		—		713,581
Commercial paper	103,646		—		—		103,646
Treasury bills	82,485		93		—		82,578
Corporate notes and bonds	69,348		21		(104)		69,265
Municipal securities	23,176		31		(15)		23,192
Certificates of deposit	996		—		—		996
Restricted cash	56,428		—		—		56,428
Total	$	2,612,952	$	4,563	$	(119)	$	2,617,396

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	194,955	$	—	$	—	$	194,955
Cash equivalents:
Money market funds	872,431		—		—		872,431
U.S. government agency securities	35,011		—		(2)		35,009
Commercial paper	31,113		—		—		31,113
Treasury bills	6,441		—		—		6,441
Corporate notes and bonds	1,065		—		—		1,065
Certificates of deposit	249		—		—		249
Short-term investments:
U.S. government agency securities	861,862		365		(73)		862,154
Corporate notes and bonds	159,382		91		(42)		159,431
Commercial paper	150,267		—		—		150,267
Treasury bills	79,989		14		—		80,003
Municipal securities	27,836		56		(3)		27,889
Certificates of deposit	1,245		—		—		1,245
Restricted cash	89,646		—		—		89,646
Total	$	2,511,492	$	526	$	(120)	$	2,511,898

All available-for-sale investments as of March 31, 2020 have a contractual maturity date of one year or less.

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Note 5. Accounts Receivable, net

The opening balance of accounts receivable, net was $67.0 million as of January 1, 2020.

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

Balance as of January 1, 2020	$	4,522
Credit loss expense	558
Less: write-offs, net of recoveries and other adjustments	(585)
Balance as of March 31, 2020	$	4,495

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):

	March 31, 2020		December 31, 2019
Work-in-process	$	117,521	$	152,171
Finished goods	416,468		684,456
Inventory	$	533,989	$	836,627

Note 7. Contract Cost Assets

As of March 31, 2020 and December 31, 2019, we had $46.6 million and $45.2 million, respectively, of contract cost assets. During the three months ended March 31, 2020 and 2019, we did not incur any impairment losses. We recorded amortization expense related to contract cost assets of $8.4 million and $8.7 million during the three months ended March 31, 2020 and 2019, respectively.

Note 8. Property and Equipment, net

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

	March 31, 2020		December 31, 2019
Website development costs	$	153,201	$	149,648
Leasehold improvements	101,970		81,981
Construction-in-progress	46,442		45,337
Office equipment, furniture and fixtures	40,612		36,582
Computer equipment	31,549		31,942
Property and equipment	373,774		345,490
Less: accumulated amortization and depreciation	(185,742)		(175,001)
Property and equipment, net	$	188,032	$	170,489

We recorded depreciation expense related to property and equipment (other than website development costs) of $11.8 million and $6.0 million during the three months ended March 31, 2020 and 2019, respectively.

We capitalized $12.5 million and $10.0 million in website development costs during the three months ended March 31, 2020 and 2019, respectively. Amortization expense for website development costs included in technology and development expenses was $5.4 million and $3.4 million during the three months ended March 31, 2020 and 2019, respectively.

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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 the carrying amount of the investment as of March 31, 2020. 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. During the three months ended March 31, 2020, we recognized a non-cash impairment of $5.3 million related to this investment. In connection with our assessment of the investment for impairment indicators as a result of COVID-19’s significant adverse impact on the real estate industry, we identified factors that led us to conclude that the investment was impaired and the fair value of the investment was less than the carrying value. The most significant of such factors related to the future expected cash flows of the investee. Accordingly, we performed an analysis to determine the fair value of the investment and concluded that our best estimate of its fair value was $4.7 million. This is considered a Level 3 measurement under the fair value hierarchy. The equity investment is classified within other assets in the condensed consolidated balance sheets.

Note 10. Intangible Assets, net

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

	March 31, 2020
	Cost		Accumulated Amortization		Net
Trade names and trademarks	$	36,500	$	—	$	36,500
Customer relationships	102,600		(77,571)		25,029
Developed technology	107,200		(84,361)		22,839
Software	37,476		(22,745)		14,731
Intangibles-in-progress	7,298		—		7,298
Purchased content	48,925		(43,181)		5,744
Lender licenses	400		(267)		133
Total	$	340,399	$	(228,125)	$	112,274

	December 31, 2019
	Cost		Accumulated Amortization		Net
Customer relationships	$	102,600	$	(73,770)	$	28,830
Developed technology	107,200		(81,383)		25,817
Software	35,527		(20,843)		14,684
Purchased content	47,298		(40,636)		6,662
Intangibles-in-progress	6,391		—		6,391
Lender licenses	400		(217)		183
Total	$	299,416	$	(216,849)	$	82,567

Amortization expense recorded for intangible assets for the three months ended March 31, 2020 and 2019 was $11.8 million and $11.0 million, respectively, and these amounts are included in technology and development expenses.

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

We have an intangible asset that we recorded in connection with our February 2015 acquisition of Trulia for Trulia’s trade names and trademarks that has not historically been subject to amortization. The carrying value of the Trulia trade names and trademarks intangible asset was $36.5 million as of March 31, 2020 and $108.0 million as of December 31, 2019.

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During the three months ended March 31, 2020, we recognized a non-cash impairment charge of $71.5 million related to our indefinite-lived Trulia trade names and trademarks intangible asset. The impairment charge is included in Impairment costs within our IMT and Mortgages segments. In March 2020, we identified factors directly related to the COVID-19 pandemic that led us to conclude it was more likely than not that the $108.0 million carrying value of the asset exceeded its fair value. The most significant of such factors was a shortfall in projected revenue related to the Trulia brand compared to previous projections used to determine the carrying value of the intangible asset, primarily driven by a reduction in expected future marketing and advertising spend for Trulia. Accordingly, with the assistance of a third-party valuation specialist, we performed a quantitative analysis to determine the fair value of the intangible asset and concluded that our best estimate of its fair value was $36.5 million. The valuation was prepared using an income approach based on the relief-from-royalty method and relied on inputs with unobservable market prices including projected revenue, royalty rate, discount rate, and estimated tax rate, and therefore is considered a Level 3 measurement under the fair value hierarchy. In connection with this impairment analysis, we evaluated our expected future reduced marketing and advertising spend related to the Trulia trade names and trademarks intangible asset and concluded that this asset no longer has an indefinite life. We will amortize the remaining $36.5 million carrying value on an accelerated basis commensurate with the projected cash flows over a useful life of 10 years.

Note 11. Deferred Revenue

The following table presents the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended March 31, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	253,729
Less: Revenue recognized	(258,129)
Balance as of March 31, 2020	$	35,347

During the three months ended March 31, 2020, we recognized as revenue a total of $36.0 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2020.

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Note 12. Debt

The following table presents the carrying values of Zillow Group’s debt as of the periods presented (in thousands):

	March 31, 2020		December 31, 2019
Homes Segment
Credit facilities:
Goldman Sachs Bank USA	$	52,623	$	39,244
Citibank, N.A.	137,590		296,369
Credit Suisse AG, Cayman Islands	241,621		355,911
Total Homes Segment debt	431,834		691,524
Mortgages Segment
Repurchase agreement:
Citibank, N.A.	4,540		394
Warehouse line of credit:
Comerica Bank	30,273		30,033
Total Mortgages Segment debt	34,813		30,427
Convertible Senior Notes
1.375% convertible senior notes due 2026	332,129		327,187
0.75% convertible senior notes due 2024	498,666		490,538
1.50% convertible senior notes due 2023	314,233		310,175
2.00% convertible senior notes due 2021	420,921		415,502
2.75% convertible senior notes due 2020	9,637		9,637
Total convertible senior notes	1,575,586		1,553,039
Total	$	2,042,233	$	2,274,990

Homes Segment

To provide capital for Zillow Offers, we utilize credit facilities that are classified as current liabilities in our condensed consolidated balance sheets. We classify these credit facilities as current liabilities as amounts drawn to purchase homes are typically repaid as homes are sold, which we expect to be within one year. The following table summarizes certain details related to our credit facilities (in thousands, except interest rates):

Lender	Final Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Goldman Sachs Bank USA	April 20, 2022	$	500,000	4.13	%
Citibank, N.A.	January 31, 2022	500,000		4.99	%
Credit Suisse AG, Cayman Islands	July 31, 2021	500,000		4.95	%
	Total	$	1,500,000

Undrawn amounts available under the credit facilities included in the table above are not committed, meaning the applicable lender is not committed to, but may in its discretion, advance loan funds in excess of the outstanding borrowings. The final maturity dates are inclusive of extensions which are subject to agreement by the respective lender.

Zillow Group formed certain special purpose entities (each, an “SPE”) to purchase and sell residential properties through Zillow Offers. Each SPE is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such SPE are available to satisfy the debts and other obligations of any affiliate or other entity. The credit facilities are secured by the assets and equity of one or more SPEs. These SPEs are variable interest entities and Zillow Group is the primary beneficiary as it has the power to control the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses of the SPEs or the right to receive benefits from the SPEs that could potentially be significant to the SPEs. The SPEs are consolidated within Zillow Group’s condensed consolidated financial statements and primarily increased inventory and borrowings under credit facilities by $534.0 million and $431.8 million, respectively, as of March 31, 2020 and $836.6 million and $691.5 million, respectively, as of December 31, 2019.

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Outstanding amounts drawn under each credit facility are required to be repaid on the facility maturity date or earlier if accelerated due to an event of default. Further, each SPE is required to repay any resulting shortfall if the value of the eligible properties owned by such SPE falls below a certain percentage of the principal amount outstanding under the applicable credit facility. Continued inclusion of properties in each credit facility is subject to various eligibility criteria. For example, aging criteria limit the inclusion in the borrowing base of properties owned longer than a specified number of days, and properties owned for longer than one year are generally ineligible.

The stated interest rate on our credit facilities is one-month LIBOR plus an applicable margin as defined in the respective credit agreements. Our credit facilities include customary representations and warranties, provisions regarding events of default and covenants. The terms of these credit facilities and related financing documents require Zillow Group and certain of its subsidiaries, as applicable, to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth, leverage ratios, adequate insurance coverage and market capitalization. As of March 31, 2020, Zillow Group was in compliance with all financial covenants and no event of default had occurred. Except for certain limited circumstances, the credit facilities are non-recourse to Zillow Group. Our credit facilities require that we establish, maintain and in certain circumstances that Zillow Group fund specified reserve accounts. These reserve accounts include, but are not limited to, interest reserves, insurance reserves, tax reserves, renovation cost reserves and reserves for specially permitted liens. Amounts funded to these reserve accounts and the collection accounts have been classified within our condensed consolidated balance sheets as restricted cash.

Mortgages Segment

To provide capital for Zillow Home Loans, we utilize a warehouse line of credit and a master repurchase agreement which are classified as current liabilities in our condensed consolidated balance sheets. The warehouse line of credit and repurchase agreement provide short-term financing between the issuance of a mortgage loan and when Zillow Home Loans sell the loan to an investor. The following table summarizes certain details related to our warehouse line of credit and repurchase agreement (in thousands, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Citibank, N.A.	October 27, 2020	$	75,000	2.82	%
Comerica Bank	June 27, 2020	50,000		3.40	%
	Total	$	125,000

The repurchase agreement with Citibank, N.A. includes a committed amount of $25.0 million. As of March 31, 2020 and December 31, 2019, $4.5 million and $0.4 million, respectively, in mortgage loans held for sale were pledged as collateral under the facility.

Borrowings on the warehouse line of credit and repurchase agreement bear interest at the one-month LIBOR plus an applicable margin, as defined in the governing credit agreements, and are secured by residential mortgage loans held for sale. The repurchase agreement contains margin call provisions that provide Citibank, N.A. with certain rights in the event of a decline in the market value of the assets purchased under the repurchase agreement.

The warehouse line of credit and repurchase agreement include customary representations and warranties, covenants and provisions regarding events of default. As of March 31, 2020, Zillow Home Loans was in compliance with all financial covenants and no event of default had occurred. The warehouse line of credit and repurchase agreement are recourse to Zillow Home Loans, but non-recourse to Zillow Group or any of its other subsidiaries.

For additional details related to our warehouse line of credit and repurchase agreement, see Note 15 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Convertible Senior Notes

The following tables summarize certain details related to our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

									March 31, 2020				December 31, 2019
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		First Interest Payment Date	Semi-Annual Interest Payment Dates	Unamortized Debt Discount and Debt Issuance Costs		Fair Value		Unamortized Debt Discount and Debt Issuance Costs		Fair Value
September 1, 2026	$	500,000	1.375	%	8.10	%	March 1, 2020	March 1; September 1	$	167,871	$	518,675	$	172,813	$	597,380
September 1, 2024	673,000		0.75	%	7.68	%	March 1, 2020	March 1; September 1	174,334		685,740		182,462		819,378
July 1, 2023	373,750		1.50	%	6.99	%	January 1, 2019	January 1; July 1	59,517		311,872		63,575		356,464
December 1, 2021	460,000		2.00	%	7.44	%	June 1, 2017	June 1; December 1	39,079		462,571		44,498		514,312
December 15, 2020	9,637		2.75	%	N/A		N/A	June 15; December 15	—		16,842		—		16,842
Total	$	2,016,387							$	440,801	$	1,995,700	$	463,348	$	2,304,376

	Three Months Ended March 31, 2020								Three Months Ended March 31, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	1,719	$	4,824	$	118	$	6,661	$	—	$	—	$	—	$	—
September 1, 2024	1,248		7,861		267		9,376		—		—		—		—
July 1, 2023	1,402		3,697		361		5,460		1,402		3,437		336		5,175
December 1, 2021	2,300		4,911		508		7,719		2,300		4,591		475		7,366
December 15, 2020	66		—		—		66		66		—		—		66
Total	$	6,735	$	21,293	$	1,254	$	29,282	$	3,768	$	8,028	$	811	$	12,607

The convertible notes are senior unsecured obligations and are classified as long-term debt in our condensed consolidated balance sheets with the exception of the convertible senior notes due December 15, 2020 which are classified within short-term liabilities. Interest on the convertible notes is paid semi-annually in arrears. The estimated fair value of the convertible senior notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for each of the convertible senior notes. The convertible senior notes maturing in 2026, 2024, 2023 and 2021 are not redeemable or convertible as of March 31, 2020. The convertible senior notes maturing in 2020 are convertible, at the option of the holder, and redeemable, at our option, as of March 31, 2020.

The convertible senior notes are convertible into cash, shares of Class C capital stock or a combination thereof, at our election, and may be settled as described below. The convertible senior notes will mature on their respective maturity date, unless earlier repurchased, redeemed or converted in accordance with their terms.

The following table summarizes the conversion and redemption options with respect to the convertible senior notes:

Maturity Date	Early Conversion Date	Conversion Rate	Conversion Price		Optional Redemption Date
September 1, 2026	March 1, 2026	22.9830	$	43.51	September 5, 2023
September 1, 2024	March 1, 2024	22.9830	43.51		September 5, 2022
July 1, 2023	April 1, 2023	12.7592	78.37		July 6, 2021
December 1, 2021	September 1, 2021	19.0985	52.36		December 6, 2019

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The following table summarizes certain details related to the capped call confirmations with respect to the convertible senior notes:

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%
July 1, 2023	105.45		85	%
December 1, 2021	69.19		85	%

For additional details related to our convertible senior notes, see Note 15 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Note 13. Income Taxes

We are subject to federal and state income taxes in the United States and federal and provincial income taxes in Canada. As of March 31, 2020 and December 31, 2019, 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 $1,137.6 million as of December 31, 2019, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $34.3 million (tax effected) as of December 31, 2019.

We recorded an income tax benefit of $9.2 million for the three months ended March 31, 2020. The income tax benefit was a result of a $9.7 million income tax benefit related to the $71.5 million non-cash impairment we recorded during the three months ended March 31, 2020 related to the Trulia trade names and trademarks intangible asset. For additional information about the non-cash impairment, see Note 10 to our condensed consolidated financial statements. This income tax benefit was partially offset by an immaterial amount of state income tax expense recorded for the three months ended March 31, 2020.

Note 14. Share-Based Awards

Option Awards

The following table summarizes option award activity for the three months ended March 31, 2020:

	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, 2020	29,634,296	$	35.95	6.28	$	331,107
Granted	4,358,433	49.35
Exercised	(3,207,375)	28.75
Forfeited or cancelled	(297,139)	41.01
Outstanding at March 31, 2020	30,488,215	38.57		6.87	88,874
Vested and exercisable at March 31, 2020	16,563,984	34.13		5.12	80,208

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 March 31,
	2020	2019
Expected volatility	45%-48%	46%-47%
Expected dividend yield	—	—
Risk-free interest rate	0.87%-0.93%	2.38%-2.53%
Weighted-average expected life	5.00-5.50 years	4.75-5.25 years
Weighted-average fair value of options granted	$20.75	$16.77

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As of March 31, 2020, there was a total of $236.2 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the three months ended March 31, 2020:

	Restricted Stock Units	Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2020	7,052,767	$	40.01
Granted	3,323,261	49.02
Vested	(638,909)	38.49
Forfeited or cancelled	(314,790)	40.71
Unvested outstanding at March 31, 2020	9,422,329	43.27

As of March 31, 2020, there was a total of $381.9 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 March 31,
	2020		2019
Cost of revenue	$	1,173	$	881
Sales and marketing	6,993		5,650
Technology and development	18,917		15,508
General and administrative	16,712		44,085
Total	$	43,795	$	66,124

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. 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 received, among other things, a change in the exercise period of his vested stock options outstanding as well as accelerated vesting of outstanding stock options, which have been accounted for as equity modifications. We recorded $26.4 million of share-based compensation expense associated with the modifications in the three months ended March 31, 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.

For additional details related to Mr. Rascoff’s Agreement, see Note 18 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Note 15. 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 March 31,
	2020	2019
Weighted-average Class A common stock and Class C capital stock option awards outstanding	23,663	19,408
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	7,623	5,860
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	407	421
Total Class A common stock and Class C capital stock equivalents	31,693	25,689

Since the Company expects to settle the principal amount of the outstanding convertible notes maturing in 2021, 2023, 2024 and 2026 in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread for each of the notes has a dilutive impact on diluted net income per share when the market price of the Company’s Class C capital stock at the end of the period exceeds the conversion price per share. The following table presents the conversion spread and conversion price per share of Class C capital stock for each of the convertible senior notes (in thousands, except per share amounts):

Maturity Date	Conversion Spread	Conversion Price per Share
September 1, 2026	11,492	$	43.51
September 1, 2024	15,468	43.51
July 1, 2023	4,769	78.37
December 1, 2021	8,785	52.36

Note 16. 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 2020 and 2030. For additional information regarding our lease agreements, see Note 14 in our Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019.

Purchase Commitments

Purchase commitments primarily include various non-cancelable agreements to purchase content related to our mobile applications and websites and certain cloud computing services 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 March 31, 2020, the value of homes under contract that have not closed was $14.9 million.

Letters of Credit

As of March 31, 2020, 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 $10.0 million and $10.2 million, respectively, as of March 31, 2020 and December 31, 2019.

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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. For the matters discussed below, we have not recorded any material accruals as of March 31, 2020 or December 31, 2019.

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 October 7, 2019, the United States Supreme Court denied VHT’s petition for writ of certiorari seeking review of certain rulings by the Ninth Circuit Court of Appeals. On December 9, 2019, the Company filed a motion for summary judgment with the district court seeking a ruling that VHT’s images are a compilation, or in the alternative, seeking a dismissal of the case based on a recent United States Supreme Court ruling. We do not believe there is a reasonable possibility that a material loss will be incurred related to this complaint.

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 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. On October 11, 2019, plaintiffs filed a motion for class certification, and we filed our motion in opposition on March 20, 2020. We have denied the allegations of wrongdoing and intend to vigorously defend the claims in this lawsuit. We do not believe a loss related to this complaint is probable.

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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, which we moved to dismiss on August 22, 2019. On February 28, 2020, our motion to dismiss the consolidated shareholder derivative complaint was denied. We do not believe a loss is probable related to these lawsuits.

On September 17, 2019, International Business Machines Corporation (“IBM”) filed a complaint against us in the United States District Court for the Central District of California, alleging, among other things, that the Company has infringed and continues to willfully infringe seven patents held by IBM and seeks unspecified damages, including a request that the amount of compensatory damages be trebled, injunctive relief and costs and reasonable attorneys’ fees. On December 2, 2019, IBM filed an amended complaint. On December 16, 2019, the Company filed a motion to transfer venue and a motion to dismiss the complaint. We deny the allegations of any wrongdoing and intend to vigorously defend the claims in the lawsuit. There is a reasonable possibility that a loss may be incurred related to this complaint; however, the possible loss or range of loss is not estimable.

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

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements and out of intellectual property infringement claims made by third parties. In addition, we have agreements that indemnify certain issuers of surety bonds against losses that they may incur as a result of executing surety bonds on our behalf. For our indemnification arrangements, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with certain of our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary.

Note 17. 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 $6.4 million and $4.9 million, respectively, for the three months ended March 31, 2020 and 2019.

Note 18. Segment Information and Revenue

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 Homes, Internet, Media & Technology (“IMT”) and Mortgages segments.

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The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through Zillow Offers and the financial results from title and escrow services through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, rentals, 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 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 table for the periods presented (in thousands):

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	769,112	$	—	$	—	$	128,472	$	—	$	—
Premier Agent	—		242,106		—		—		217,735		—
Other	761		88,560		—		—		80,537		—
Mortgages	—		—		25,282		—		—		27,360
Total revenue	769,873		330,666		25,282		128,472		298,272		27,360
Costs and expenses:
Cost of revenue	732,199		24,318		5,155		122,419		24,251		4,678
Sales and marketing	71,589		120,173		12,886		20,862		126,654		14,071
Technology and development	32,538		95,028		7,352		12,281		87,969		7,520
General and administrative	23,421		58,754		10,110		14,357		70,850		10,567
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		352
Total costs and expenses	859,747		372,173		38,403		169,919		309,724		37,188
Loss from operations	(89,874)		(41,507)		(13,121)		(41,447)		(11,452)		(9,828)
Segment other income	—		—		202		—		—		313
Segment interest expense	(8,084)		—		(226)		(3,758)		—		(101)
Loss before income taxes (1)	$	(97,958)	$	(41,507)	$	(13,145)	$	(45,205)	$	(11,452)	$	(9,616)

(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, unaudited):

	Three Months Ended March 31,
	2020		2019
Total segment loss before income taxes	$	(152,610)	$	(66,273)
Corporate interest expense	(29,282)		(12,607)
Corporate other income	9,391		8,855
Consolidated loss before income taxes	$	(172,501)	$	(70,025)

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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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 II, Item 1A (Risk Factors) of this report, as well as in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2019.

Overview of our Business

Zillow Group, Inc., the largest portfolio of real estate brands on mobile and the web, is building an on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to the businesses of its flagship brand, Zillow, to find and get into their next home with speed, certainty and ease.

In addition to Zillow’s for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Closing Services now offers title and escrow services as another important step to unify the real estate transaction. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions which include Mortech, dotloop, Bridge Interactive and New Home Feed.

Reportable Segments and Revenue Overview

Zillow Group has three reportable segments: the Homes segment, the Internet, Media & Technology (“IMT”) segment and the Mortgages segment. The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through the Zillow Offers service and the financial results from the title and escrow services provided through Zillow Closing Services. 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 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.

The Homes segment primarily generates revenue through our Zillow Offers service from the resale of homes on the open market. We began buying homes through Zillow Offers in April 2018, and we began selling homes in July 2018. Other Homes revenue relates to revenue associated with title and escrow services provided through Zillow Closing Services which launched in the second half of 2019.

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 primarily 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.

In October 2018, we began testing a new Flex pricing model for Premier Agent and Premier Broker advertising services in limited markets. We plan to continue testing this pricing model in select markets with high-performing partners in the future. With the Flex model, Premier Agents and Premier Brokers are provided with impressions and connections at no upfront cost, and they pay a performance advertising fee only when a real estate transaction is closed with one of those leads.

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Other IMT revenue includes revenue generated by rentals, 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. Rentals revenue 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 for a flat service fee. New construction revenue primarily includes advertising services sold to home builders on a cost per residential community or cost per impression basis. Display revenue consists of graphical mobile and web advertising sold to advertisers promoting their brands on our mobile applications and websites.

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, and from Mortech, which provides subscription-based mortgage software solutions, including a product and pricing engine and lead management platform. We also generate revenue through mortgage originations and the related sale of mortgages on the secondary market through Zillow Home Loans.

During the three months ended March 31, 2020, we generated total revenue of $1,125.8 million, as compared to $454.1 million in the three months ended March 31, 2019, an increase of $671.7 million, or 148%. This increase was primarily the result of a $641.4 million, or 499% increase in Homes segment revenue, a $32.4 million or 11% increase in IMT segment revenue driven by a $24.4 million, or 11%, increase in Premier Agent revenue and an $8.0 million, or 10%, increase in Other IMT revenue. These increases were partially offset by a $2.1 million, or 8%, decrease in Mortgages segment revenue. Visits increased 5% to 2,117.6 million for the three months ended March 31, 2020 from 2,019.8 million for the three months ended March 31, 2019. There were approximately 192.5 million average monthly unique users of our mobile applications and websites for the three months ended March 31, 2020, representing year-over-year growth of 6%. The number of homes sold through Zillow Offers increased 478% to 2,394 for the three months ended March 31, 2020 from 414 for the three months ended March 31, 2019.

As of March 31, 2020, we had 5,338 full-time employees compared to 5,249 full-time employees as of December 31, 2019.

COVID-19 Impact

In December 2019, a novel strain of coronavirus, COVID-19, was reported and has subsequently spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic and resulting global and economic disruptions have affected our business, as well as those of our customers and real estate partners, and there are no reliable estimates of how long the pandemic will last or the magnitude of its long-term impact. In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, we have taken certain measures intended to serve the needs of our customers and real estate partners, while also protecting our business and the safety of our employees, our customers and the communities in which we operate. These measures include pausing home buying through Zillow Offers, offering certain product discounts, temporarily closing offices, pausing hiring except for critical roles, pausing the majority of our advertising spending and reducing other discretionary spending. At the same time, we are striving to continue our business operations to the extent possible during these unprecedented times, including through the implementation of proactive work from home policies and acceleration of development and implementation of various technology initiatives to better enable virtual shopping and real estate transactions. As reflected in the discussion below, the impact of the pandemic and actions taken in response to it had varying effects on our key metrics and results of operations for the three months ended March 31, 2020, primarily in the last month of the period. The effect of the COVID-19 pandemic will not be fully reflected in our results of operations and overall financial performance until future periods and is expected to be significant. The extent of the impact of COVID-19 on our business is highly uncertain and difficult to predict, as information is rapidly evolving with respect to the duration and severity of the pandemic.

Key Metrics

Management has identified visits, unique users and the number of homes sold through Zillow Offers as relevant to investors’ and others’ assessment of our financial condition and results of operations. Although there was an increase in both visits and unique users for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019, both metrics were adversely impacted by the COVID-19 pandemic beginning in March 2020, although they have subsequently improved during April 2020. COVID-19 may continue to adversely impact the number of visits and unique users to our mobile applications and websites in future periods, which we would expect to result in a decline in revenue in future periods.

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In addition, on March 23, 2020, we announced that Zillow Offers would temporarily pause home buying in all markets in response to local public health orders related to COVID-19 and to help protect the safety and health of our employees, customers and partners. To the extent possible, we continue to update, list and sell homes in inventory through Zillow Offers. Although the duration and impact of COVID-19 is uncertain, we expect that this temporary pause in home buying and other potential effects of COVID-19 on residential real estate transactions will adversely impact the number of homes sold in future periods, which we expect will result in a decline in revenue in future periods.

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 participate in our Zillow Offers program or use Zillow Homes Loans or more likely to be transaction-ready real estate market participants and therefore more sought-after by our real estate partners.

We define a visit as a group of interactions by users with the Zillow, Trulia and StreetEasy 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 and StreetEasy 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 and StreetEasy end either: (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.

The following table presents the number of visits to our mobile applications and websites for the periods presented (in millions):

	Three Months Ended March 31,		2019 to 2020 % Change
	2020	2019
Visits	2,117.6	2,019.8	5	%

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 customers - 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, 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, and Premier Agent revenue and display revenue depend on advertisements being served to users of our mobile applications and websites.

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 and Naked Apartments measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics.

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Due to third-party technological limitations, user software settings, or user behavior, Google Analytics may assign a unique cookie to different instances of access by the same individual to our mobile applications and websites. In such instances, Google Analytics would count different instances of access by the same individual as separate unique users. Accordingly, reliance on the number of unique users counted by Google Analytics may overstate the actual number of unique users who access our mobile applications and websites during the period.

The following table presents our average monthly unique users for the periods presented (in millions):

	Three Months Ended March 31,		2019 to 2020 % Change
	2020	2019
Average Monthly Unique Users	192.5	181.1	6	%

Homes Sold

The number of homes sold through Zillow Offers is an important metric as it is an indicator of customers’ adoption of the Zillow Offers service as well as our ability to generate revenue through the service. Growth in the number of homes sold through Zillow Offers suggests increased adoption of the service by home buyers and generally results in growth in the amount of our Homes segment revenue.

The following table presents the number of homes sold through Zillow Offers for the periods presented:

	Three Months Ended March 31,		2019 to 2020 % Change
	2020	2019
Number of Homes Sold	2,394	414	478	%

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 Homes segment, we generate revenue from the resale of homes on the open market and through our title and escrow services. Our two revenue categories within our Homes segment are Zillow Offers and Other.

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, professionals and consumers. These professionals include real estate, rental and new construction brand advertisers, professionals and consumers. Our two revenue categories within our IMT segment are Premier Agent and Other.

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.

Homes Segment

Zillow Offers Revenue. Zillow Offers revenue is derived from the resale of homes on the open market. We recognize revenue 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.

Other Revenue. Other Homes revenue is primarily generated through Zillow Closing Services, which offers title and escrow services to home buyers and sellers, including title search procedures for title insurance policies, escrow and other closing services. Title search, which is recorded net of amounts remitted to third-party insurance underwriters, and title and escrow closing fees, are recognized as revenue upon closing of the underlying real estate transaction.

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IMT Segment

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 and 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 primarily 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 do not promise any minimum or maximum number of impressions or connections to customers, but instead control when and how many impressions and connections to deliver based on a customer’s share of voice. 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 primarily 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 control of the performance obligations to the customer over time. Given a Premier Agent or Premier Broker typically prepays their monthly spend and the monthly spend is refunded on a pro-rata basis upon cancellation of the contract by a customer at any point in time, we have determined that Premier Agent and Premier Broker contracts are effectively daily contracts, and each performance obligation is satisfied over time as each day lapses. We have not allocated the transaction price to each 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 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. During this testing phase, we recognize revenue when we receive payment for a real estate transaction closed with a Flex lead. We will continuously reevaluate this determination and the point at which we may begin to estimate variable consideration and record revenue as performance obligations are transferred.

Other Revenue. Other IMT revenue primarily includes revenue generated by rentals, new construction and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. 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, cost per listing or cost per impression basis. We recognize revenue as leads, clicks and impressions are provided to rental professionals, or as rental listings 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 pay per lease product during the period is accounted for as variable consideration, and we estimate the amount of variable consideration based on the expected number of qualified leases secured during the period. We do not believe that a

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significant reversal in the amount of cumulative revenue recognized will occur once the uncertainty related to the number of leases secured is subsequently resolved.

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.

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 we recognize revenue as impressions are delivered to users interacting with our mobile applications and websites, which is the amount for which we have the right to invoice. 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.

Mortgages Segment

Mortgages Revenue. Mortgages revenue 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, revenue generated by Zillow Home Loans, our affiliated mortgage lender, and revenue generated by Mortech. 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. 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.

Mortgage origination revenue recorded within our Mortgages segment reflects both origination fees and the corresponding sale, or expected future sale, of a loan. When an interest rate lock commitment is made to a customer, we record the expected gain on sale of the mortgage, plus the estimated earnings from the expected sale of the associated servicing rights, adjusted for a pull-through percentage (which is defined as the likelihood that an interest rate lock commitment will be originated), as revenue. Revenue from loan origination fees is recognized at the time the related real estate transactions are completed, usually upon the close of escrow and when we fund mortgage loans. Once funded, mortgage loans held for sale are recorded at fair value based on either sale commitments or current market quotes and are adjusted for subsequent changes in fair value until the loan is sold. Net origination costs and fees associated with mortgage loans are recognized as incurred. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers.

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.

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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 hosting our mobile applications and websites. For our Homes segment, our cost of revenue also consists of the consideration paid to acquire and make certain repairs and updates to each home, including associated overhead costs, as well as inventory valuation adjustments. For our IMT and Mortgages segments, cost of revenue also includes credit card fees and ad serving costs paid to third parties. For our Mortgages segment, our cost of revenue also consists of 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 incurred during the period that homes are listed for sale, including utilities, taxes and maintenance. During the three months ended March 31, 2020, Homes segment expenses also include certain expenses attributable to our efforts to pause home buying in response to the COVID-19 pandemic. For our Mortgages segment, sales and marketing expenses 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 products, mobile applications and websites and the tools and applications that support our products. 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, amortization of intangible assets recorded in connection with acquisitions, including developed technology and customer relationships, amongst others, equipment and maintenance costs and 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.

Impairment Costs. Impairment costs for the three months ended March 31, 2020 consist of a $71.5 million non-cash impairment related to the Trulia trade names and trademarks intangible asset and a $5.3 million non-cash impairment related to our October 2016 equity investment. For additional information about the impairments, see Note 9 and Note 10 to our condensed consolidated financial statements.

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 months ended March 31, 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.

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Interest Expense

Our corporate interest expense consists of interest on Trulia’s convertible senior notes due in 2020 that we guaranteed in connection with our February 2015 acquisition of Trulia, and interest on the convertible senior notes due in 2021, 2023, 2024 and 2026. Our corporate interest expense also includes the amortization of the debt discount and deferred issuance costs for the convertible senior notes due in 2021, 2023, 2024 and 2026. Refer to Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q for stated interest rates and interest payment dates for each of our convertible senior notes.

For our Homes segment, interest expense includes interest on borrowings, funding fees and other fees, including the amortization of deferred issuance costs, on the credit facilities related to our Zillow Offers business. Borrowings on these credit facilities bear interest at 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 and beginning in the fourth quarter of 2019, interest on the master repurchase agreement, related to our Zillow Home Loans business. Borrowings on the warehouse lines of credit and master repurchase agreement bear interest at the one-month LIBOR plus an applicable margin as defined in the agreements.

Income Taxes

We are subject to federal and state income taxes in the United States and federal and provincial income taxes in Canada. As of March 31, 2020 and December 31, 2019, 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 $1,137.6 million as of December 31, 2019, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $34.3 million (tax effected) as of December 31, 2019.

We recorded an income tax benefit of $9.2 million for the three months ended March 31, 2020. The income tax benefit was a result of a $9.7 million income tax benefit related to the $71.5 million non-cash impairment we recorded during the three months ended March 31, 2020 related to the Trulia trade names and trademarks intangible asset. For additional information about the non-cash impairment, see Note 10 to our condensed consolidated financial statements. This income tax benefit was partially offset by an immaterial amount of state income tax expense recorded for the three months ended March 31, 2020.

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Results of Operations

Given the unprecedented uncertainty surrounding COVID-19, including the unknown duration and severity of the pandemic and related economic disruption and the unknown overall impact on customer demand, we are unable to forecast the full impact on our business. As a result, financial performance for prior and current 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 (in thousands, except per share and percentage data, unaudited):

	Three Months Ended March 31,
	2020		2019
Statements of Operations Data:
Revenue:
Homes	$	769,873	$	128,472
IMT	330,666		298,272
Mortgages	25,282		27,360
Total revenue	1,125,821		454,104
Cost of revenue (exclusive of amortization) (1)(2):
Homes	732,199		122,419
IMT	24,318		24,251
Mortgages	5,155		4,678
Total cost of revenue	761,672		151,348
Sales and marketing (1)	204,648		161,587
Technology and development (1)	134,918		107,770
General and administrative (1)	92,285		95,774
Impairment costs	76,800		—
Integration costs	—		352
Total costs and expenses	1,270,323		516,831
Loss from operations	(144,502)		(62,727)
Other income	9,593		9,168
Interest expense	(37,592)		(16,466)
Loss before income taxes	(172,501)		(70,025)
Income tax benefit	9,228		2,500
Net loss	$	(163,273)	$	(67,525)
Net loss per share — basic and diluted	$	(0.78)	$	(0.33)
Weighted-average shares outstanding — basic and diluted	210,674		204,514
Other Financial Data:
Segment loss before income taxes:
Homes segment	$	(97,958)	$	(45,205)
IMT segment	(41,507)		(11,452)
Mortgages segment	(13,145)		(9,616)
Total segment loss before income taxes	$	(152,610)	$	(66,273)
Adjusted EBITDA (3):
Homes segment	$	(74,995)	$	(34,524)
IMT segment	85,717		61,047
Mortgages segment	(5,603)		(2,601)
Total Adjusted EBITDA	$	5,119	$	23,922

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	Three Months Ended March 31,
	2020		2019
(1) Includes share-based compensation as follows:
Cost of revenue	$	1,173	$	881
Sales and marketing	6,993		5,650
Technology and development	18,917		15,508
General and administrative	16,712		44,085
Total	$	43,795	$	66,124
(2) Amortization of website development costs and intangible assets included in technology and development	$	17,184	$	14,400
(3) See “Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP, which is net loss on a consolidated basis and loss before income taxes for each segment.

	Three Months Ended March 31,
	2020		2019
Percentage of Revenue:
Revenue:
Homes	68	%	28	%
IMT	29		66
Mortgages	2		6
Total revenue	100		100
Cost of revenue (exclusive of amortization):
Homes	65		27
IMT	2		5
Mortgages	—		1
Total cost of revenue	68		33
Sales and marketing	18		36
Technology and development	12		24
General and administrative	8		21
Impairment costs	7		0
Integration costs	0		—
Total costs and expenses	113		114
Loss from operations	(13)		(14)
Other income	1		2
Interest expense	(3)		(4)
Loss before income taxes	(15)		(15)
Income tax benefit	1		1
Net loss	(15)	%	(15)	%

Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have disclosed Adjusted EBITDA in total and for each segment, each a non-GAAP financial measure, within this Quarterly Report on Form 10-Q. We have provided a reconciliation below of Adjusted EBITDA in total to net loss and Adjusted EBITDA by segment to loss before income taxes for each segment, the most directly comparable GAAP financial measures.

We have included Adjusted EBITDA in total and for each segment in this Quarterly Report on Form 10-Q as they are key metrics used by our management and board of directors to measure operating performance and trends and to prepare and

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approve our annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.

Our use of Adjusted EBITDA in total and for each segment has limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;

•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•Adjusted EBITDA does not reflect impairment costs;

•Adjusted EBITDA does not reflect interest expense or other income;

•Adjusted EBITDA does not reflect income taxes; and

•Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA in total and for each segment alongside other financial performance measures, including various cash flow metrics, net loss, loss before income taxes for each segment and our other GAAP results.

The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, which is net loss on a consolidated basis and loss before income taxes for each segment, for each of the periods presented (in thousands, unaudited):

	Three Months Ended March 31, 2020
	Homes		IMT		Mortgages		Corporate Items (2)		Consolidated
Reconciliation of Adjusted EBITDA to Net Loss and Loss Before Income Taxes:
Net loss (1)	N/A		N/A		N/A		N/A		$	(163,273)
Income tax benefit	N/A		N/A		N/A		N/A		(9,228)
Loss before income taxes	$	(97,958)	$	(41,507)	$	(13,145)	$	(19,891)	$	(172,501)
Other income	—		—		(202)		(9,391)		(9,593)
Depreciation and amortization expense	3,575		23,777		1,674		—		29,026
Share-based compensation expense	11,304		29,547		2,944		—		43,795
Impairment costs	—		73,900		2,900		—		76,800
Interest expense	8,084		—		226		29,282		37,592
Adjusted EBITDA	$	(74,995)	$	85,717	$	(5,603)	$	—	$	5,119

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	Three Months Ended March 31, 2019
	Homes		IMT		Mortgages		Corporate Items (2)		Consolidated
Reconciliation of Adjusted EBITDA to Net Loss and Loss Before Income Taxes:
Net loss (1)	N/A		N/A		N/A		N/A		$	(67,525)
Income tax benefit	N/A		N/A		N/A		N/A		(2,500)
Loss before income taxes	$	(45,205)	$	(11,452)	$	(9,616)	$	(3,752)	$	(70,025)
Other income	—		—		(313)		(8,855)		(9,168)
Depreciation and amortization expense	1,321		17,594		1,610		—		20,525
Share-based compensation expense	5,602		54,905		5,617		—		66,124
Interest expense	3,758		—		101		12,607		16,466
Adjusted EBITDA	$	(34,524)	$	61,047	$	(2,601)	$	—	$	23,922

(1) We use loss before income taxes as our profitability measure in making operating decisions and assessing the performance of our segments, therefore, net loss and income tax benefit are calculated and presented only on a consolidated basis within our financial statements.

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

Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019

Revenue

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

	Three Months Ended March 31,				2019 to 2020 % Change
	2020		2019
Homes revenue:
Zillow Offers	$	769,112	$	128,472	499	%
Other	761		—		N/A
Total Homes revenue	769,873		128,472		499	%
IMT revenue:
Premier Agent	242,106		217,735		11	%
Other	88,560		80,537		10	%
Total IMT revenue	330,666		298,272		11	%
Mortgages	25,282		27,360		(8)	%
Total revenue	$	1,125,821	$	454,104	148	%

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

	Three Months Ended March 31,
	2020		2019
Percentage of Total Revenue:
Homes revenue:
Zillow Offers	68	%	28	%
Other	—		0
Total Homes revenue	68		28
IMT revenue:
Premier Agent	22		48
Other	8		18
Total IMT revenue	29		66
Mortgages	2		6
Total revenue	100	%	100	%

Total revenue increased by $671.7 million, or 148%, for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The increase in total revenue was primarily attributable to our Zillow Offers business. Total Homes segment revenue grew to $769.9 million for the three months ended March 31, 2020 from $128.5 million for the three months ended March 31, 2019, an increase of $641.4 million. This was primarily driven by an increase in the number of homes sold to 2,394 for the three months ended March 31, 2020 compared to 414 for the three months ended March 31,2019. Visits increased 5% to 2,117.6 million for the three months ended March 31, 2020 from 2,019.8 million for the three months ended March 31, 2019. There were approximately 192.5 million average monthly unique users of our mobile applications and websites for the three months ended March 31, 2020 compared to 181.1 million average monthly unique users for the three months ended March 31, 2019, representing year-over-year growth of 6%. The increases in visits and unique users increased the number of impressions, leads, clicks and other events we monetized across our revenue categories.

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Homes Segment

Zillow Offers Revenue. Zillow Offers revenue was $769.1 million for the three months ended March 31, 2020 due to the sale of 2,394 homes at an average selling price of $321.3 thousand per home. For the three months ended March 31, 2019, Zillow Offers revenue was $128.5 million due to the sale of 414 homes at an average selling price of $310.4 thousand per home. The increase in Zillow Offers revenue was due to an increase in the number of homes sold in the period as customer adoption of Zillow Offers increased in geographic areas in which it is currently operating and as Zillow Offers expanded into new geographic markets. As of March 31, 2020, Zillow Offers had operations in 24 metropolitan areas.

Beginning on March 23, 2020, as part of Zillow Group’s ongoing efforts to protect the health and safety of our employees, customers, partners and business in light of COVID-19, we have paused home buying activities in all Zillow Offers markets. Although we continue to update, list and sell homes in inventory, where possible, we expect this pause in home buying will result in a material decrease in Zillow Offers revenue in the future until we resume home buying activities. We are developing plans for restoring Zillow Offers home buying at a graduated pace and expect to begin home buying within the next few weeks. However, given the unknown duration and severity of the COVID-19 pandemic and related economic disruption, we do not know when we will resume home buying activities through Zillow Offers in all markets or how quickly the business will re-accelerate once we resume Zillow Offers full operations.

Other Revenue. Other revenue within the Homes segment was $0.8 million for the three months ended March 31, 2020 and relates to revenue generated by Zillow Closing Services which launched in the second half of 2019.

IMT Segment

Premier Agent Revenue. Premier Agent revenue grew to $242.1 million for the three months ended March 31, 2020 from $217.7 million for the three months ended March 31, 2019, an increase of $24.4 million, or 11%. Premier Agent revenue was positively impacted by an increase in visits. As discussed above, visits increased 5% to 2,117.6 million for the three months ended March 31, 2020 from 2,019.8 million for the three months ended March 31, 2019. The increase in visits increased the number of impressions and leads we could monetize in our Premier Agent marketplace.

Premier Agent revenue per visit increased by 6% to $0.114 for the three months ended March 31, 2020 from $0.108 for the three months ended March 31, 2019. 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 increase in Premier Agent revenue per visit was primarily a result of improved advertiser retention for the three months ended March 31, 2020 in comparison to the three months ended March 31, 2019. In 2018, we transitioned to a new lead validation and distribution process for Premier Agent and Premier Broker advertisers which increased advertiser churn, or reduction in spend or exit from the platform, in the third and fourth quarters of 2018. In 2019, we made adjustments to the Premier Agent and

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Premier Broker programs to help address this churn. However, for the three months ended March 31, 2019, the increased advertiser churn continued to negatively impact Premier Agent revenue and revenue per visit.

Premier Agent revenue for the three months ended March 31, 2020 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 plan to continue testing this pricing model in select markets with high-performing partners in the future.

In response to the rapidly unfolding situation regarding COVID-19 and to actively support our Premier Agent partners during this period of uncertainty, effective March 23, 2020, we offered Premier Agent advertisers who participate in our market-based pricing program a 50% discount on their next monthly bill. This discount also applied to any new bookings through April 22, 2020. Beginning April 23, 2020, we have provided, and expect to continue to provide, targeted market-based discounts, throughout the second quarter. We expect the combined impact of these discounts to negatively affect Premier Agent revenue in the second quarter of 2020.

Other Revenue. Other IMT revenue was $88.6 million for the three months ended March 31, 2020 compared to $80.5 million for the three months ended March 31, 2019, an increase of $8.0 million, or 10%. The increase in Other revenue was primarily a result of a 16% increase in revenue generated by our rentals marketplace. Growth in rentals revenue was primarily attributable to the adoption of our rentals application product and increased spend on our cost per lease product. Other revenue was also positively impacted by a 20% increase in revenue generated by our new construction marketing solutions. Growth in new construction revenue was primarily related to higher spend in our cost per impression product.

In response to the COVID-19 pandemic, we have offered temporary discounts on certain of our other IMT products to help mitigate the impact of the virus on our customers and expect to continue to provide certain additional discounts throughout the second quarter. We expect these discounts to negatively impact other IMT revenue in the second quarter of 2020.

Mortgages Segment

Mortgages Revenue. Mortgages revenue was $25.3 million for the three months ended March 31, 2020 compared to $27.4 million for the three months ended March 31, 2019, a decrease of $2.1 million, or 8%. The majority of the decrease in mortgages revenue was a result of a decrease in revenue generated by Zillow Home Loans as we continue to strategically transition our loan offerings from higher margin Federal Housing Administration and Veterans Affairs government loans to more conventional loan products eligible for sale to Fannie Mae and Freddie Mac in order to ultimately serve a larger total addressable market.

We expect our mortgages revenue to decrease during the three months ended June 30, 2020 compared to the three months ended March 31, 2020 primarily as a result of discounts offered beginning toward the end of March 2020 for our Connect service in response to the COVID-19 pandemic. While the impact of these discounts was not significant for the three months ended March 31, 2020, we expect these discounts to adversely impact our mortgages revenue for the three months ended June 30, 2020.

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Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019

Segment Results of Operations

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

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue	$	769,873	$	330,666	$	25,282	$	128,472	$	298,272	$	27,360
Costs and expenses:
Cost of revenue	732,199		24,318		5,155		122,419		24,251		4,678
Sales and marketing	71,589		120,173		12,886		20,862		126,654		14,071
Technology and development	32,538		95,028		7,352		12,281		87,969		7,520
General and administrative	23,421		58,754		10,110		14,357		70,850		10,567
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		352
Total costs and expenses	859,747		372,173		38,403		169,919		309,724		37,188
Loss from operations	(89,874)		(41,507)		(13,121)		(41,447)		(11,452)		(9,828)
Other income	—		—		202		—		—		313
Interest expense	(8,084)		—		(226)		(3,758)		—		(101)
Loss before income taxes (1)	$	(97,958)	$	(41,507)	$	(13,145)	$	(45,205)	$	(11,452)	$	(9,616)

(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, unaudited):

	Three Months Ended March 31,
	2020		2019
Total segment loss before income taxes	$	(152,610)	$	(66,273)
Corporate interest expense	(29,282)		(12,607)
Corporate other income	9,391		8,855
Consolidated loss before income taxes	$	(172,501)	$	(70,025)

Homes Segment

Cost of Revenue. Cost of revenue was $732.2 million for the three months ended March 31, 2020 compared to $122.4 million for the three months ended March 31, 2019, an increase of $609.8 million. The increase in cost of revenue was primarily attributable to home acquisition and renovation costs related to the 2,394 homes that we sold during the period compared to the sale of 414 homes during the three months ended March 31, 2019. Due to the pause in Zillow Offers home buying activities that began on March 23, 2020 in response to the COVID-19 pandemic, we expect cost of revenue to decrease in absolute dollars in the future as we expect to resell fewer homes until we resume home-buying activities.

Sales and Marketing. Sales and marketing expenses were $71.6 million for the three months ended March 31, 2020 compared to $20.9 million for the three months ended March 31, 2019, an increase of $50.7 million. The increase in sales and marketing expenses was primarily attributable to a $27.5 million increase in selling expenses attributable to the resale of homes, an $11.3 million increase in headcount-related expenses, including share-based compensation expense, $5.7 million in expenses attributable to our efforts to pause home buying in response to the COVID-19 pandemic, a $3.0 million increase in holding costs and a $2.1 million increase in marketing and advertising expenses.

Sales and marketing expenses include $5.3 million in holding costs for the three months ended March 31, 2020 and $2.3 million in holding costs for the three months ended March 31, 2019.

Due to the pause in Zillow Offers home buying activities beginning on March 23, 2020 in response to the COVID-19 pandemic, we expect sales and marketing expenses to decrease in absolute dollars in the future as we expect to hold and resell fewer homes until we resume home-buying activities.

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Technology and Development. Technology and development expenses, which include research and development costs, were $32.5 million for the three months ended March 31, 2020 compared to $12.3 million for the three months ended March 31, 2019, an increase of $20.3 million. The increase in technology and development expenses was primarily due to a $16.4 million increase in headcount-related expenses, including share-based compensation expense, as we continue to grow our teams to support the Homes segment, a $2.0 million increase in depreciation and amortization expense, a $0.7 million increase in data acquisition costs and a $0.5 million increase in software and hardware costs.

General and Administrative. General and administrative expenses were $23.4 million for the three months ended March 31, 2020 compared to $14.4 million for the three months ended March 31, 2019, an increase of $9.0 million. The increase in general and administrative expenses was primarily due to a $5.8 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 $1.3 million increase in building lease-related expenses including rent, utilities and insurance, a $0.7 million increase in software and hardware costs and a $0.7 million increase in business related taxes.

Interest Expense. Interest expense was $8.1 million for the three months ended March 31, 2020 compared to $3.8 million for the three months ended March 31, 2019, an increase of $4.3 million. The increase in interest expense was attributable to borrowings, funding fees and other fees, including the amortization of deferred issuance costs, on our credit facilities.

Due to the pause in Zillow Offers home buying activities beginning on March 23, 2020 in response to the COVID-19 pandemic, we expect interest expense to decrease in absolute dollars in the future as we reduce the number of homes financed on our credit facilities until we resume home-buying activities.

IMT Segment

Cost of Revenue. Cost of revenue remained flat at $24.3 million for the three months ended March 31, 2020 and 2019. This was primarily due to cost saving measures put into place to scale our businesses efficiently while continuing to support revenue growth.

Sales and Marketing. Sales and marketing expenses were $120.2 million for the three months ended March 31, 2020 compared to $126.7 million for the three months ended March 31, 2019, a decrease of $6.5 million, or 5%. The decrease in sales and marketing expenses was primarily attributable to a $10.3 million decrease in marketing and advertising expenses and a $1.2 million decrease in travel expenses as we paused non-essential travel for workers in response to the COVID-19 pandemic. The decrease in sales and marketing expenses was partially offset by a $3.3 million increase in depreciation expense and a $2.0 million increase in headcount related expenses, including stock-compensation expense. Due to the pause of most advertising spend in response to the COVID-19 pandemic, we expect sales and marketing expenses to decrease in absolute dollars in future periods.

Technology and Development. Technology and development expenses, which include research and development costs, were $95.0 million for the three months ended March 31, 2020 compared to $88.0 million for the three months ended March 31, 2019, an increase of $7.1 million, or 8%. Approximately $3.1 million of the increase related to growth in headcount-related expenses, including share-based compensation expense. In addition, there was a $2.9 million increase in depreciation and amortization expense and a $2.4 million increase in data acquisition costs, partially offset by a $1.3 million decrease in professional services.

General and Administrative. General and administrative expenses were $58.8 million for the three months ended March 31, 2020 compared to $70.9 million for the three months ended March 31, 2019, a decrease of $12.1 million, or 17%. The decrease in general and administrative expenses for the three months ended March 31, 2020 was primarily due to a $21.9 million decrease in headcount-related expenses driven by the recognition of $23.3 million of share-based compensation expense in the IMT segment in 2019 in connection with the modification of certain outstanding equity awards related to the departure of Spencer Rascoff in February 2019, who served as Zillow Group’s Chief Executive Officer beginning in 2010. For additional information regarding the equity modification, see Note 14 in our Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. This decrease in general and administrative expenses was offset by an increase in estimated legal liabilities of approximately $3.7 million, a $2.0 million increase in building lease-related expenses, including rent, utilities and insurance, a $1.9 increase in business related taxes, a $0.7 million increase in professional services expenses and a $0.5 million increase in credit loss expense.

Impairment Costs. Impairment costs recorded to the IMT segment for the three months ended March 31, 2020 consist of $68.6 million of the total $71.5 million non-cash impairment related to the Trulia trade names and trademarks intangible asset and a $5.3 million non-cash impairment related to our October 2016 equity investment. For additional information about these

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impairments, see Note 9 and Note 10 in our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Mortgages Segment

Cost of Revenue. Cost of revenue was $5.2 million for the three months ended March 31, 2020 compared to $4.7 million for the three months ended March 31, 2019, an increase of $0.5 million, or 10%. The increase in cost of revenue was primarily attributable to a $0.8 million increase in headcount-related expenses, including share-based compensation expense, partially offset by a $0.3 million decrease in miscellaneous expenses. We expect cost of revenue to increase in absolute dollars in future periods as we continue to incur expenses associated with growth in revenue and expansion of Zillow Home Loans.

Sales and Marketing. Sales and marketing expenses were $12.9 million for the three months ended March 31, 2020 compared to $14.1 million for the three months ended March 31, 2019, a decrease of $1.2 million, or 8%. The decrease in sales and marketing expenses was primarily attributable to a $1.5 million decrease in marketing and advertising expenses. We expect our sales and marketing expenses to decrease in absolute dollars in future periods due to the pause in marketing spend in response to the COVID-19 pandemic.

Technology and Development. Technology and development expenses, which include research and development costs, were $7.4 million for the three months ended March 31, 2020 compared to $7.5 million for the three months ended March 31, 2019, a decrease of 2%. The decrease in technology and development expenses was primarily a result of a $0.6 million decrease in data acquisition costs, partially offset by a $0.5 million increase in headcount-related expenses, including share-based compensation expense. 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 $10.1 million for the three months ended March 31, 2020 compared to $10.6 million for the three months ended March 31, 2019, a decrease of $0.5 million, or 4%. The decrease in general and administrative expenses was primarily due to a $1.2 million decrease in headcount-related expenses, including share-based compensation expense. This decrease was partially offset by a $0.3 million increase in legal expenses and a $0.2 million increase in building lease-related expenses including rent, utilities and insurance. We expect general and administrative expenses to increase over time in absolute dollars as we continue to expand our mortgage business.

Impairment Costs. Impairment costs recorded to the Mortgages segment for the three months ended March 31, 2020 consist of $2.9 million of the total $71.5 million impairment related to the Trulia trade names and trademarks intangible asset. For additional information about this impairment, see Note 10 in our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

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 was $29.3 million for the three months ended March 31, 2020 compared to $12.6 million for the three months ended March 31, 2019, an increase of $16.7 million, or 132%. This increase was primarily due to the September 2019 issuance of the convertible senior notes due in 2026 and the September 2019 and October 2019 issuances of the convertible senior notes due in 2024. For additional information regarding the convertible senior notes, see Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Other Income. Other income not directly attributable to any of our segments was $9.4 million for the three months ended March 31, 2020 compared to $8.9 million for the three months ended March 31, 2019, an increase of $0.5 million.

Liquidity and Capital Resources

As of March 31, 2020 and December 31, 2019, we had cash and cash equivalents, investments and restricted cash of $2,617.4 million and $2,511.9 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, certificates of deposit and treasury bills. Restricted cash consists of amounts funded to the reserve and collection accounts related to our credit facilities and amounts held in escrow related to funding home purchases in our mortgage origination business. Amounts on

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deposit with third-party financial institutions exceed the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insurance limits, as applicable. As of March 31, 2020, Zillow Group and its subsidiaries were in compliance with all debt covenants specified in the facilities described below. As previously noted, the COVID-19 pandemic and related economic disruptions have resulted in unprecedented uncertainty. While we believe we have a strong balance sheet and have taken appropriate prudent measures to preserve liquidity and maintain our customers, including pausing home buying through Zillow Offers, offering certain product discounts, pausing hiring except for critical roles, pausing the majority of our advertising spending and reducing other discretionary spending, the extent of the impact of COVID-19 on our business is highly uncertain and difficult to predict. The COVID-19 pandemic has and will continue to disrupt our revenue and operating cash flow levels and may disrupt future access to capital through debt or equity markets.

The expansion of Zillow Group’s purchase of homes through the Zillow Offers program and sale of homes on the open market has continued to have a significant impact on our liquidity and capital resources as a cash and inventory intensive business. We primarily use debt financing through credit facilities to fund a portion of the purchase price of homes and certain related costs. As previously noted, due to the pause in Zillow Offers home buying activities beginning on March 23, 2020 in response to the COVID-19 pandemic, we expect to decrease in the future the amounts drawn on our credit facilities as we reduce the number of homes financed until we resume home-buying activities. As of March 31, 2020, we have $431.8 million of total outstanding borrowings on credit facilities to provide capital for Zillow Offers with a total maximum borrowing capacity of $1,500.0 million.

As of March 31, 2020, we have outstanding a total of $2,016.4 million aggregate principal of convertible senior notes. The convertible notes are senior unsecured obligations, and interest on the convertible notes is paid semi-annually.

The October 31, 2018 acquisition of Zillow Home Loans continues to impact 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. As of March 31, 2020, we have $34.8 million of total outstanding borrowings on our warehouse line of credit and master repurchase agreement with a total maximum borrowing capacity of $125.0 million.

For additional information regarding our debt, see Note 12 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

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 following table presents selected cash flow data for the periods presented (in thousands, unaudited):

	Three Months Ended March 31,
	2020		2019
Cash Flow Data:
Net cash provided by (used in) operating activities	$	301,990	$	(145,514)
Net cash provided by investing activities	254,341		108,304
Net cash provided by (used in) financing activities	(163,102)		137,869

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 customers for sales of homes through Zillow Offers and sales of mortgages originated by Zillow Home Loans. 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 three months ended March 31, 2020, net cash provided by operating activities was $302.0 million. This was primarily driven by a net loss of $163.3 million, adjusted by non-cash impairment costs of $76.8 million, share-based compensation expense of $43.8 million, depreciation and amortization expense of $29.0 million, amortization of the discount and issuance costs on the convertible notes maturing in 2021, 2023, 2024 and 2026 of $22.5 million, a $9.2 million change in deferred income taxes, amortization of contract cost assets of $8.4 million, amortization of right of use assets of $6.5 million and a loss on disposal of property and equipment of $2.0 million. Changes in operating assets and liabilities increased cash

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provided by operating activities by $285.0 million. The changes in operating assets and liabilities are primarily related to a $302.6 million decrease in inventory due to the sale of homes and a decrease in home purchases through Zillow Offers during the three months ended March 31, 2020, a $9.8 million increase in contract cost assets due primarily to the capitalization of sales commissions, a $7.7 million increase in accounts payable and a $4.6 million increase in accrued expenses and other liabilities driven by the timing of payments, a $5.3 million increase in accounts receivable due primarily to an increase in revenue, a $5.0 million decrease in accrued compensation and benefits, a $4.4 million decrease in deferred revenue and a $2.9 million increase in prepaid expenses and other current assets driven primarily by the timing of payments.

For the three months ended March 31, 2019, net cash provided by operating activities was $145.5 million. This was primarily driven by a net loss of $67.5 million, adjusted by share-based compensation expense of $66.1 million, depreciation and amortization expense of $20.5 million, amortization of the discount and issuance costs on the convertible senior notes maturing in 2023 and 2021 of $8.8 million, amortization of contract cost assets of $8.7 million, amortization of right of use assets of $4.4 million, a $2.5 million change in deferred income taxes, accretion of bond discount of $1.7 million, and a loss on disposal of property and equipment of $1.7 million. Changes in operating assets and liabilities decreased cash provided by operating activities by $184.3 million. The changes in operating assets and liabilities are primarily due to a $162.3 million increase in inventory due to the purchase of homes through Zillow Offers, a $9.1 million increase in contract cost assets due primarily to the capitalization of sales commissions, an $8.5 million increase in prepaid expenses and other assets driven primarily by the timing of payments, a $7.0 million increase in lease liabilities, and a $4.7 million increase in accounts receivable due primarily to an increase in revenue, partially offset by a $5.9 million decrease in mortgage loans held for sale.

Cash Flows Provided By Investing Activities

Our primary investing activities include the purchase and sale or maturity of investments and the purchase of property and equipment and intangible assets.

For the three months ended March 31, 2020, net cash provided by investing activities was $254.3 million. This was the result of $291.8 million of net proceeds from maturities and sales of investments and $37.5 million of purchases for property and equipment and intangible assets.

For the three months ended March 31, 2019, net cash provided by investing activities was $108.3 million. This was primarily the result of $125.8 million of net proceeds from maturities of investments and $17.5 million of purchases for property and equipment and intangible assets.

Cash Flows Provided By (Used in) Financing Activities

Net cash provided by (used in) financing activities has primarily resulted from the exercise of employee option awards and equity awards withheld for tax liabilities, proceeds from and repayments of borrowings on our credit facilities related to Zillow Offers and proceeds from borrowings on warehouse lines of credit and the master repurchase agreement related to Zillow Home Loans.

For the three months ended March 31, 2020, cash used in financing activities was $163.1 million, including $259.7 million of net repayments of borrowings on our credit facilities related to Zillow Offers, partially offset by $92.2 million of proceeds from the exercise of option awards and $4.4 million of net borrowings on our warehouse line of credit and master repurchase agreement related to Zillow Home Loans.

For the three months ended March 31, 2019, cash provided by financing activities was $137.9 million, including $129.3 million of proceeds from borrowings on our credit facilities related to Zillow Offers and $13.6 million of proceeds from the exercise of option awards, partially offset by $5.0 million of net repayments of borrowings on our warehouse lines of credit related to Zillow Home Loans.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements other than outstanding surety bonds issued for our benefit of approximately $10.0 million as of March 31, 2020. 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 16 of our Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q under the subsection titled “Surety Bonds”.

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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, 2019, except for the categories of contractual obligations included in the table below, which have been updated to reflect our contractual obligations as of March 31, 2020 (in thousands, unaudited):

	Payments Due By Period
	Total	Less Than 1 Year	1-3 Years	3-5 Years	More Than 5 Years
Homes under contract (1)	14,900	14,900	—	—	—
Homes segment credit facilities (2)	431,834	431,834	—	—	—
Mortgages segment credit facilities (3)	34,813	34,813	—	—	—
____________________ (1) We have obligations to purchase homes under contract through our Zillow Offers business. (2) Includes principal amounts due for amounts borrowed under the 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 line of credit and master repurchase agreement to finance mortgages originated through Zillow Home Loans. Amounts exclude an immaterial amount of estimated interest payments.

As of March 31, 2020, 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 $10.0 million as of March 31, 2020.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated 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.

We believe that the assumptions and estimates associated with revenue recognition, 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, and the recoverability of goodwill and indefinite-lived intangible assets, have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

Revenue Recognition

We recognize revenue when or as we satisfy our performance obligations by transferring control of the 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. 

As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component as the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service is one year or less.

We do not disclose the transaction price related to remaining performance obligations for (i) contracts with an original expected duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for performance completed to date. The remaining duration of our performance obligations is generally less than one year.

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In our Homes segment, we generate revenue from the resale of homes on the open market and through our title and escrow services. Our two revenue categories within our Homes segment are Zillow Offers and Other.

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, professionals and consumers. These professionals include real estate, rental and new construction brand advertisers, professionals and consumers. Our two revenue categories within our IMT segment are Premier Agent and Other.

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.

Homes Segment

Zillow Offers Revenue. Zillow Offers revenue is derived from the resale of homes on the open market. We recognize revenue 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.

Other Revenue. Other Homes revenue is primarily generated through Zillow Closing Services, which offers title and escrow services to home buyers and sellers, including title search procedures for title insurance policies, escrow and other closing services. Title search, which is recorded net of amounts remitted to third-party insurance underwriters, and title and escrow closing fees are recognized as revenue upon closing of the underlying real estate transaction.

IMT Segment

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 and 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 primarily 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 do not promise any minimum or maximum number of impressions or connections to customers, but instead control when and how many impressions and connections to deliver based on a customer’s share of voice. 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 primarily 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 control of the performance obligations to the customer over time. Given a Premier Agent or Premier Broker typically prepays their monthly spend and the monthly spend is refunded on a pro-rata basis upon cancellation of the

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contract by a customer at any point in time, we have determined that Premier Agent and Premier Broker contracts are effectively daily contracts, and each performance obligation is satisfied over time as each day lapses. We have not allocated the transaction price to each 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 Broker and Premier Agent advertising services in limited markets. With the Flex model, Premier Brokers and Premier Agents are provided with validated leads at no upfront cost and 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. During this testing phase, we recognize revenue when we receive payment for a real estate transaction closed with a Flex lead. We will continuously reevaluate this determination and the point at which we may begin to estimate variable consideration and record revenue as performance obligations are transferred. Once we reach the point at which we may begin to estimate variable consideration associated with Flex, we will estimate the transaction price based on the consideration to which we expect to be entitled in exchange for transferring the validated Flex leads. This will include estimates associated with the probability that Flex leads provided will result in closed real estate transactions and the expected value of those transactions.

Other Revenue. Other IMT revenue primarily includes revenue generated by rentals, new construction and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. 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, cost per listing or cost per impression basis. We recognize revenue as leads, clicks and impressions are provided to rental professionals, or as rental listings 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 pay per lease product during the period is accounted for as variable consideration, and we estimate the amount of variable consideration 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.

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.

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 we recognize revenue as impressions are delivered to users interacting with our mobile applications and websites, which is the amount for which we have the right to invoice. 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.

Mortgages Segment

Mortgages Revenue. Mortgages revenue 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, and also includes revenue generated by Zillow Home Loans, our affiliated mortgage lender, and revenue generated by Mortech.

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,

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when the consumer chooses to share their information with a lender. 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.

Mortgage origination revenue reflects (1) origination fees and (2) the corresponding sale, or expected future sale, of a loan. When an interest rate lock commitment is made to a customer, we record the expected gain on sale of the mortgage, plus the estimated earnings from the expected sale of the associated servicing rights, adjusted for a pull-through percentage (which is defined as the likelihood that an interest rate lock commitment will be originated), as revenue. Revenue from loan origination fees is recognized at the time the related real estate transactions are completed, usually upon the close of escrow and when we fund mortgage loans. Once funded, mortgage loans held for sale are recorded at fair value based on either sale commitments or current market quotes and are adjusted for subsequent changes in fair value until the loan is sold. Net origination costs and fees associated with mortgage loans are recognized as incurred. We sell substantially all of the mortgages we originate and the related servicing rights to third-party purchasers.

Mortgage loans are sold with limited recourse provisions, which can result in repurchases of loans previously sold to investors or payments to reimburse investors for loan losses. Based on historical experience, discussions with our mortgage purchasers, analysis of the volume of mortgages we originated and current housing and credit market conditions, we estimate and record a loss reserve for mortgage loans held in our portfolio and mortgage loans held for sale, as well as known and projected mortgage loan repurchase requests. These have historically not been significant to our financial statements, but could vary in future periods.

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.

Inventory

Inventory is comprised of homes acquired through our Zillow Offers program and is stated at the lower of cost or net realizable value. Homes are removed from inventory on a specific identification basis when they are resold. Stated cost includes consideration paid to acquire and update each home including associated allocated overhead costs. Work-in-progress inventory includes homes undergoing updates and finished goods inventory includes homes ready for resale. Unallocated overhead costs are expensed as incurred and included in cost of revenue. Selling costs include real estate commissions, escrow and title fees, and staging costs, as well as holding costs incurred during the period that homes are listed for sale, including utilities, taxes and maintenance.

Each quarter we review the value of homes held in inventory for indicators that net realizable value is lower than cost. The calculation of net realizable value is based on several estimates which may ultimately vary materially from actual results. Given the significant assumptions required and the possibility that actual conditions will differ, we consider the valuation of inventory a critical accounting estimate. In response to the COVID-19 pandemic and the uncertainly surrounding its impact on the real estate industry, we have adjusted certain of our home asset management and resale strategies. We have estimated the impact of these strategies on the value of our inventory as of March 31, 2020. The estimate of this impact requires significant judgement and the ultimate impact of these strategies and COVID-19’s impact on the real estate industry and on our customers’ ability to purchase homes is uncertain, which may cause actual results to vary materially.

When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized in cost of revenue. We estimate that a 1% decrease in the lower of cost or net realizable value of our inventory balances as of March 31, 2020 and 2019 would increase our inventory valuation adjustment by $5.3 million and $3.3 million, respectively.

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Contract Cost Assets

We capitalize certain incremental costs of obtaining contracts with customers that we expect to recover. These costs relate to commissions paid to sales personnel, primarily for our Premier Agent and Premier Broker programs. As a practical expedient, we recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. Capitalized commission costs are recorded as contract cost assets in our condensed consolidated balance sheets. Contract cost assets are amortized to expense on a straight-line basis over a period that is consistent with the transfer to the customer of the products or services to which the asset relates, generally the estimated life of the customer relationship. Amortization expense related to contract cost assets is included in sales and marketing expenses in our consolidated statements of operations. Our determination of the estimated life of the customer relationship involves significant judgment. In determining the estimated life of our customer relationships, we consider quantitative and qualitative data, including, but not limited to, historical customer data, recent changes or expected changes in product or service offerings, and changes in how we monetize our products and services. The amortization period for our Premier Agent and Premier Broker programs ranges from two to three years.

We monitor our contract cost assets for impairment and recognize an impairment loss in the statement of operations to the extent the carrying amount of the asset recognized exceeds the amount of consideration we expect to receive in the future and that we have received but have not recognized in revenue less the costs that relate directly to providing those goods or services that have not yet been recognized as expenses.

Website and Software Development Costs

The costs incurred in the preliminary stages of website and software development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental and deemed by management to be significant, are capitalized in property and equipment and amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs, including those costs in the post-implementation stages, are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the website or software that result in added functionality, in which case the costs are capitalized and amortized on a straight-line basis over the estimated useful lives. Amortization expense related to capitalized website and software development costs is included in technology and development expense.

Capitalized development activities placed in service are amortized over the expected useful lives of those releases, currently estimated at one to five years. The estimated useful lives of website and software development activities are reviewed frequently and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades and/or enhancements to the existing functionality.

We exercise judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. To the extent that we change the manner in which we develop and test new features and functionalities related to our mobile applications and websites, assess the ongoing value of capitalized assets, or determine the estimated useful lives over which the costs are amortized, the amount of website and software development costs we capitalize and amortize could change in future periods.

Recoverability of Intangible Assets with Definite Lives and Other Long-Lived Assets

We evaluate intangible assets and other long-lived assets for impairment whenever events or circumstances indicate that they may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset group to future undiscounted net cash flows expected to be generated. We group assets for purposes of such review at the lowest level for which identifiable cash flows of the asset group are largely independent of the cash flows of the other groups of assets and liabilities. If this comparison indicates impairment, the amount of impairment to be recognized is calculated as the difference between the carrying value and the fair value of the asset group.

Unforeseen events, changes in circumstances and market conditions and material differences in estimates of future cash flows could adversely affect the fair value of our assets and could result in an impairment charge. Fair value can be estimated utilizing a number of techniques including quoted market prices, prices for comparable assets, or other valuation processes involving estimates of cash flows, multiples of earnings or revenues, and we may make various assumptions and estimates when performing our impairment assessments, particularly as it relates to cash flow projections. Cash flow estimates are by their nature subjective and include assumptions regarding factors such as recent and forecasted operating performance, revenue trends and operating margins. These estimates could also be adversely impacted by changes in federal, state, or local regulations, economic downturns or developments, pandemics such as COVID-19, or other market conditions affecting our industry.

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Share-Based Compensation

We measure compensation expense for all share-based awards at fair value on the date of grant and recognize compensation expense over the service period for awards expected to vest. We use the Black-Scholes-Merton option-pricing model to determine the fair value for option awards and recognize compensation expense on a straight-line basis over the option awards’ vesting period. For restricted stock units and restricted units, we use the market value of our Class A common stock and Class C capital stock, as applicable, on the date of grant to determine the fair value of the award, and we recognize compensation expense on a straight-line basis over the awards’ vesting period.

Determining the fair value of option awards at the grant date requires judgment. If any of the assumptions used in the Black-Scholes-Merton model changes significantly, share-based compensation expense for future option awards may differ materially compared with the awards granted previously. In valuing our option awards, we make assumptions about risk-free interest rates, dividend yields, volatility, and weighted-average expected lives.

Risk-free interest rate. Risk-free interest rates are derived from U.S. Treasury securities as of the option award’s grant date.

Expected dividend yields. Expected dividend yields are based on our historical dividend payments, which have been zero to date.

Volatility. The expected volatility for our Class A common stock and Class C capital stock is estimated using our historical volatility.

Expected term. The weighted-average expected life of the option awards is estimated based on our historical exercise data.

We will continue to use judgment in evaluating the expected volatility and expected terms utilized for our share-based compensation expense calculations on a prospective basis. Actual results, and future changes in estimates, may differ substantially from management’s current estimates. As we continue to accumulate additional data related to our Class A common stock and Class C capital stock, we may have refinements to the estimates of our expected volatility and expected terms, which could materially impact our future share-based compensation expense. In future periods, we expect our share-based compensation expense to increase as a result of our existing, unrecognized share-based compensation that will be recognized as the awards vest, and as we grant additional share-based awards to attract and retain employees.

Recoverability of Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of the cost of an acquired business over the fair value of the assets acquired at the date of acquisition, and is not amortized. We assess the impairment of goodwill on an annual basis, in our fourth quarter, or whenever events or changes in circumstances indicate that goodwill may be impaired. In our evaluation of goodwill, we typically first perform a qualitative assessment to determine whether the carrying value of each reporting unit is greater than its fair value. If it is more likely than not that the carrying value of a reporting unit is greater than its fair value, we perform a quantitative assessment and an impairment charge is recorded in our statements of operations for the excess of carrying value of the reporting unit over its fair value.

Our indefinite-lived intangible asset has not historically been amortized, and we assess the asset for impairment on an annual basis, in our fourth quarter, or whenever events or changes in circumstances indicate that the asset may be impaired. On an interim basis, we consider if there are any events and circumstances that could affect the significant inputs used to determine the fair value of the indefinite-lived intangible asset, including, but not limited to, costs that could have a negative effect on future expected earnings and cash flows, changes in certain key performance metrics, and changes in management, key personnel, strategy or customers. In our evaluation of our trade names and trademarks indefinite-lived intangible asset, we typically first perform a qualitative assessment to determine whether the fair value of the indefinite-lived intangible asset is more likely than not impaired. If so, we perform a quantitative assessment and an impairment charge is recorded in our statements of operations for the excess of the carrying value of the indefinite-lived intangible assets over their fair value.

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During the three months ended March 31, 2020, we recognized a non-cash impairment charge of $71.5 million related to our indefinite-lived Trulia trade names and trademarks intangible asset. The impairment charge is included in Impairment costs within our IMT and Mortgages segments. In March 2020, we identified factors directly related to the COVID-19 pandemic that led us to conclude it was more likely than not that the $108.0 million carrying value of the asset exceeded its fair value. The most significant of such factors was a shortfall in projected revenue related to the Trulia brand compared to previous projections used to determine the carrying value of the intangible asset, primarily driven by a reduction in expected future marketing and advertising spend for Trulia. Accordingly, with the assistance of a third-party valuation specialist, we performed a quantitative analysis to determine the fair value of the intangible asset and concluded that our best estimate of its fair value was $36.5 million. The valuation was prepared using an income approach based on the relief-from-royalty method and relied on inputs with unobservable market prices including projected revenue, royalty rate, discount rate, and estimated tax rate, and therefore is considered a Level 3 measurement under the fair value hierarchy.

Fair value can be estimated utilizing a number of techniques including quoted market prices, prices for comparable assets, or other valuation processes involving estimates of cash flows, multiples of earnings or revenues, and we may make various assumptions and estimates when performing our impairment assessments, particularly as it relates to cash flow projections. Cash flow estimates are by their nature subjective and include assumptions regarding factors such as recent and forecasted operating performance, revenue trends and operating margins. These estimates could also be adversely impacted by changes in federal, state or local regulations, economic downturns, pandemics such as COVID-19, or developments or other market conditions affecting our industry. Changes in these estimates could result in future material impairment losses related to the Trulia trade names and trademarks intangible asset. Given the unprecedented uncertainty surrounding COVID-19, including the unknown impact on customer demand for our products and services related to the Trulia brand, projecting future revenue related to the Trulia brand requires significant judgment, and actual revenue related to the Trulia brand may vary significantly based on the duration and severity of the pandemic and responses to it and future amounts of marketing and advertising spend.

In connection with this impairment analysis, we evaluated our planned future marketing and advertising spend related to the Trulia trade names and trademarks intangible asset and concluded that this asset no longer has an indefinite life. We will amortize the remaining $36.5 million carrying value on an accelerated basis commensurate with the projected cash flows over a useful life of 10 years.

Recently Adopted Accounting Standards and Recently Issued Accounting Standards Not Yet Adopted

For information about our recently adopted accounting standards and recently issued accounting standards not yet adopted, see Note 2 of the accompanying Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

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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, treasury bills, 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.

Our convertible senior notes bear interest at fixed rates. Thus, we have no related direct financial statement risk associated with changes in interest rates. However, the fair values of the convertible senior notes change primarily when the market price of our stock fluctuates or interest rates change. The following table summarizes our outstanding convertible senior notes as of March 31, 2020 (in thousands, except interest rates):

Maturity Date	Aggregate Principal Amount		Stated Interest Rate
September 1, 2026	$	500,000	1.375	%
September 1, 2024	673,000		0.75	%
July 1, 2023	373,750		1.50	%
December 1, 2021	460,000		2.00	%
December 15, 2020	9,637		2.75	%
	$	2,016,387

Since the convertible senior notes bear interest at fixed rates, we have no direct financial statement risk associated with changes in interest rates as of March 31, 2020. However, the fair values of the convertible senior 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 credit facilities that provide capital for Zillow Offers. As of March 31, 2020 and December 31, 2019, we had outstanding $431.8 million and $691.5 million, respectively, of borrowings on these 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 credit facilities, we estimate that a one percentage point increase in LIBOR would increase our annual interest expense by approximately $4.3 million and $6.9 million as of March 31, 2020 and December 31, 2019, respectively.

We are also subject to market risk by way of changes in interest rates on borrowings under our warehouse line of credit and master repurchase agreement that provide capital for Zillow Home Loans. As of March 31, 2020 and December 31, 2019, we had outstanding $34.8 million and $30.4 million, respectively, of borrowings on our warehouse line of credit and master repurchase agreement 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 line of credit and master repurchase agreement, we estimate that a one percentage point increase in LIBOR would increase our annual interest expense associated with the warehouse line of credit and master repurchase agreement by an insignificant amount as of March 31, 2020 and December 31, 2019.

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.

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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.

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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 March 31, 2020. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective as of March 31, 2020.

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 March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding legal proceedings in which we are involved, see Note 16 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.

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Item 1A. Risk Factors

Our business is subject to numerous risks. You should carefully consider the following risk factor, in addition to those set forth in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2019, as any of these risks could harm our business, results of operations, and future financial performance. Recovery pursuant to our insurance policies may not be available due to policy definitions of covered losses or other factors, and available insurance may be insufficient to compensate for damages, expenses, fines, penalties, and other losses we may incur as a result of these and other risks. In addition, risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially adversely affect our business, financial condition and operating results. If any of these risks occur, the trading price of our common and capital stock could decline, and you could lose all or part of your investment.

Our financial condition and results of operations have been and are expected to continue to be adversely affected by the COVID-19 pandemic.

In December 2019, a novel strain of coronavirus, COVID-19, was reported and has subsequently spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. As a result of COVID-19, significant portions of the United States economy and population have shut down and slowed down due to widespread travel and transportation restrictions, shelter in place and stay at home policies, and closures of commercial spaces and government facilities, including in locations where we maintain operations and a significant number of employees. The current COVID-19 pandemic, its broad impact and preventive measures taken to contain or mitigate the pandemic have had, and are likely to continue to have, significant negative effects on the United States and global economy, employment levels, employee productivity, residential real estate and financial markets. This, in turn, has and may increasingly have a negative impact on our real estate partners, suppliers, demand for our products and services, the ability of customers to effectuate real estate transactions, profit margins, the value of collateral securing loans, our ability to resell loans on the secondary market, access to credit and our ability to operate our business.

In response to these unprecedented circumstances, we have temporarily paused buying homes through Zillow Offers, offered certain product discounts, temporarily closed offices, paused hiring except for critical roles, paused the majority of our advertising spending and reduced discretionary spending. As a result of these or other consequences, the pandemic has and may continue to adversely affect our business, results of operations and financial condition, likely materially.

Our ability to fund our liquidity requirements and operate our business depends on our cash flows from operations as well as our ability to access the capital markets and borrow on our existing credit facilities. For example, the provision of certain product discounts and pause of home buying through Zillow Offers has and may continue to disrupt our revenue and operating cash flow levels. Further, our access to and the availability of financing on acceptable terms may be adversely impacted by the pandemic. For more information on the impact the COVID-19 pandemic has had on our liquidity position and outlook, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

The extent to which the outbreak will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the magnitude, duration and severity of the outbreak, the actions taken to contain or mitigate the outbreak and any associated economic downturn or extended slowdown in the real estate markets.

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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 March 31, 2020.

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Item 6. Exhibits

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

Exhibit Number	Description
10.1*	Amended and Restated Stock Option Program for Non-Employee Director Grants under the Zillow Group, Inc. Amended and Restated 2011 Incentive Plan.
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	Inline 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	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the inline XBRL document).
*	Indicates a management contract or compensatory plan or arrangement.

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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: May 7, 2020	ZILLOW GROUP, INC.
	By:	/s/ JENNIFER ROCK
	Name:	Jennifer Rock
	Title:	Chief Accounting Officer

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EX-10.1

EXHIBIT 10.1

AMENDED AND RESTATED STOCK OPTION GRANT PROGRAM

FOR

NONEMPLOYEE DIRECTORS UNDER THE

ZILLOW GROUP, INC. AMENDED AND RESTATED

2011 INCENTIVE PLAN

(Amended and restated effective as of March 1, 2020)

The following provisions set forth the terms of the stock option grant program (the “Program”) for nonemployee directors of Zillow Group, Inc. (the “Company”) under the Zillow Group, Inc. Amended and Restated 2011 Incentive Plan (the “Plan”). The Program does not constitute a separate source of shares of Common Stock available for issuance under the Plan. In the event of any inconsistency between the terms contained herein and in the Plan, the Plan shall govern. Capitalized terms that are not defined herein have the meanings set forth in the Plan.

1. Eligibility

Each director of the Company elected or appointed to the Board who is not otherwise an officer or employee of the Company or of any Related Company (an “Eligible Director”) shall be eligible to receive Options under the Plan, as described below.

2. Annual Option Grants

(a) Beginning on March 1, 2020 and on each anniversary thereafter (each, a “Grant Date”), each individual who is an Eligible Director as of the Grant Date shall automatically receive a Nonqualified Stock Option to purchase that number of shares of Class C Capital Stock with a Black-Scholes-Merton value (or such other valuation method then being used by the Company to value its stock options for financial reporting purposes) equal to $250,000, with any fractional share rounded to the nearest whole share (0.5 to be rounded up) (each, an “Annual Option Grant”).

(b) In the event of an Eligible Director’s initial election or appointment to the Board during the twelve-month period following a Grant Date, such Eligible Director shall, subject to approval by the Board or the Compensation Committee, receive a Nonqualified Stock Option in connection with their initial election or appointment to the Board to purchase that number of shares of Class C Capital Stock calculated in the same manner as for Annual Option Grants, but prorated based on the number of full calendar months between the date of the Eligible Director’s initial election or appointment to the Board and the first Grant Date following their initial election or appointment to the Board (each, a “Prorated Option Grant”). Following initial election or appointment to the Board, an Eligible Director shall be eligible to receive Annual Option Grants pursuant to Section 2(a) above.

3. Option Vesting

(a) One-fourth of the shares subject to Annual Option Grants will vest and become exercisable after each three-month period following the Grant Date such that Annual Option Grants will be fully vested and exercisable on the one-year anniversary of the Grant Date.

(b) Prorated Option Grants will become fully vested and exercisable as of the first Grant Date following the Board’s or Compensation Committee’s (as appropriate) approval of the Option.

4. Option Exercise Price

The per share exercise price of each Option granted under the Program shall be equal to the Fair Market Value of the Class C Capital Stock on the Grant Date (which, for Prorated Option Grants, shall be the date of Board or Compensation Committee approval of such grant).

5. Payment of Exercise Price

Options granted under the Program shall be exercised by giving notice to the Company (or a brokerage firm designated or approved by the Company) in such form as required by the Company, stating the number of shares of Class C Capital Stock with respect to which the Option is being exercised, accompanied by payment in full for such Class C Capital Stock, which payment may be made, to the extent permitted by applicable laws and regulations, in whole or in part:

(a) by cash, check or wire transfer;

(b) if and so long as the Class C Capital Stock is registered under the Exchange Act, by delivery of a properly executed exercise notice, together with irrevocable instructions to a broker, to promptly deliver to the Company the amount of proceeds to pay the exercise price, all in accordance with the regulations of the Federal Reserve Board; or

(c) by such other consideration as the Compensation Committee may permit.

6. Term of Options

Each Option shall expire ten years from the Grant Date thereof (the “Option Expiration Date”), provided that any unvested portion of an Option shall terminate automatically and without further notice immediately upon an Eligible Director’s Termination of Service for any reason. The vested portion of the Option shall be exercisable as follows:

(a) General Rule. In the event of an Eligible Director’s Termination of Service for any reason other than death, Disability or for Cause, the vested portion of the Option may be exercised by the Eligible Director only until the earlier of (i) two years after the Eligible Director’s Termination of Service and (ii) the Option Expiration Date;

(b) Death or Disability. In the event of an Eligible Director’s Termination of Service by reason of death or Disability, the vested portion of the Option may be exercised only until the earlier of (i) the one-year anniversary of the date of the Eligible Director’s Termination of Service and (ii) the Option Expiration Date. If an Eligible Director dies after his or her Termination of Service but while the Option is still exercisable, the Option may be exercised until the earlier of (x) the one-year anniversary of the date of death and (y) the Option Expiration Date; and

(c) Cause.In the event of an Eligible Director’s Termination of Service for Cause, the Option, whether vested or unvested, shall terminate and no longer be exercisable, unless the Committee determines otherwise.

7. Amendment

The Board or the Compensation Committee may, in accordance with the Plan, the Compensation Committee Charter, and other relevant documents, amend the provisions contained herein in such respects as it deems advisable. Unless otherwise provided in the Plan, any such amendment shall not, without the consent of the Eligible Director, materially adversely affect any rights of an Eligible Director under an Option granted to the Eligible Director.

Provisions of the Plan (including any amendments thereto) that are not discussed herein, to the extent applicable to Eligible Directors, shall continue to govern the terms and conditions of Options granted to Eligible Directors.

8. Effective Date

This Program, as amended and restated, shall become effective on March 1, 2020 and, unless sooner terminated by the Board or the Compensation Committee, shall remain effective during the term of the Plan.

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 March 31, 2020;

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:	May 7, 2020

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 March 31, 2020;

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:	May 7, 2020

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 March 31, 2020 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:	May 7, 2020

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 March 31, 2020 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:	May 7, 2020

XML

Share-Based Awards - Summary of Option Award (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Number of Shares Subject to Existing Options
Beginning Balance (in shares)	29,634,296
Granted (in shares)	4,358,433
Exercised (in shares)	(3,207,375)
Forfeited or cancelled (in shares)	(297,139)
Ending Balance (in shares)	30,488,215	29,634,296
Vested and exercisable ending balance (in shares)	16,563,984
Weighted- Average Exercise Price Per Share
Beginning Balance (usd per share)	$ 35.95
Granted (usd per share)	49.35
Exercised (usd per share)	28.75
Forfeited or cancelled (usd per share)	41.01
Ending Balance (usd per share)	38.57	$ 35.95
Vested and exercisable (usd per share)	$ 34.13
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted-Average Remaining Contractual Life, Outstanding	6 years 10 months 13 days	6 years 3 months 10 days
Weighted-Average Remaining Contractual Life, Vested and exercisable	5 years 1 month 13 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract]
Aggregate Intrinsic Value, Outstanding	$ 88,874	$ 331,107
Aggregate Intrinsic Value Vested, and exercisable	$ 80,208

XML

Deferred Revenue (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Change in Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 39,747
Deferral of revenue	253,729
Less: Revenue recognized	(258,129)
Ending balance	35,347
Revenue recognized, recorded in deferred revenue as of prior period	$ 36,000

XML

Debt - Schedule of Warehouse Lines of Credit (Details) - Line of Credit - Mortgages Segment	Mar. 31, 2020 USD ($)
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 125,000,000
Citibank, N.A.
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 75,000,000
Weighted Average Interest Rate	2.82%
Comerica Bank
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 50,000,000
Weighted Average Interest Rate	3.40%

XML

Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Carrying Value of Debt

The following table presents the carrying values of Zillow Group’s debt as of the periods presented (in thousands):

	March 31, 2020		December 31, 2019
Homes Segment
Credit facilities:
Goldman Sachs Bank USA	$	52,623	$	39,244
Citibank, N.A.	137,590		296,369
Credit Suisse AG, Cayman Islands	241,621		355,911
Total Homes Segment debt	431,834		691,524
Mortgages Segment
Repurchase agreement:
Citibank, N.A.	4,540		394
Warehouse line of credit:
Comerica Bank	30,273		30,033
Total Mortgages Segment debt	34,813		30,427
Convertible Senior Notes
1.375% convertible senior notes due 2026	332,129		327,187
0.75% convertible senior notes due 2024	498,666		490,538
1.50% convertible senior notes due 2023	314,233		310,175
2.00% convertible senior notes due 2021	420,921		415,502
2.75% convertible senior notes due 2020	9,637		9,637
Total convertible senior notes	1,575,586		1,553,039
Total	$	2,042,233	$	2,274,990

Schedule of Revolving Credit Facilities and Lines of Credit

The following table summarizes certain details related to our credit facilities (in thousands, except interest rates):

Lender	Final Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Goldman Sachs Bank USA	April 20, 2022	$	500,000	4.13	%
Citibank, N.A.	January 31, 2022	500,000		4.99	%
Credit Suisse AG, Cayman Islands	July 31, 2021	500,000		4.95	%
	Total	$	1,500,000

The following table summarizes certain details related to our warehouse line of credit and repurchase agreement (in thousands, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Citibank, N.A.	October 27, 2020	$	75,000	2.82	%
Comerica Bank	June 27, 2020	50,000		3.40	%
	Total	$	125,000

Schedule of Convertible Senior Notes

The following tables summarize certain details related to our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

									March 31, 2020				December 31, 2019
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		First Interest Payment Date	Semi-Annual Interest Payment Dates	Unamortized Debt Discount and Debt Issuance Costs		Fair Value		Unamortized Debt Discount and Debt Issuance Costs		Fair Value
September 1, 2026	$	500,000	1.375	%	8.10	%	March 1, 2020	March 1; September 1	$	167,871	$	518,675	$	172,813	$	597,380
September 1, 2024	673,000		0.75	%	7.68	%	March 1, 2020	March 1; September 1	174,334		685,740		182,462		819,378
July 1, 2023	373,750		1.50	%	6.99	%	January 1, 2019	January 1; July 1	59,517		311,872		63,575		356,464
December 1, 2021	460,000		2.00	%	7.44	%	June 1, 2017	June 1; December 1	39,079		462,571		44,498		514,312
December 15, 2020	9,637		2.75	%	N/A		N/A	June 15; December 15	—		16,842		—		16,842
Total	$	2,016,387							$	440,801	$	1,995,700	$	463,348	$	2,304,376

	Three Months Ended March 31, 2020								Three Months Ended March 31, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	1,719	$	4,824	$	118	$	6,661	$	—	$	—	$	—	$	—
September 1, 2024	1,248		7,861		267		9,376		—		—		—		—
July 1, 2023	1,402		3,697		361		5,460		1,402		3,437		336		5,175
December 1, 2021	2,300		4,911		508		7,719		2,300		4,591		475		7,366
December 15, 2020	66		—		—		66		66		—		—		66
Total	$	6,735	$	21,293	$	1,254	$	29,282	$	3,768	$	8,028	$	811	$	12,607

The following table summarizes the conversion and redemption options with respect to the convertible senior notes:

Maturity Date	Early Conversion Date	Conversion Rate	Conversion Price		Optional Redemption Date
September 1, 2026	March 1, 2026	22.9830	$	43.51	September 5, 2023
September 1, 2024	March 1, 2024	22.9830	43.51		September 5, 2022
July 1, 2023	April 1, 2023	12.7592	78.37		July 6, 2021
December 1, 2021	September 1, 2021	19.0985	52.36		December 6, 2019

The following table summarizes certain details related to the capped call confirmations with respect to the convertible senior notes:

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%
July 1, 2023	105.45		85	%
December 1, 2021	69.19		85	%

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Inventory (Tables)

3 Months Ended

Mar. 31, 2020

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):

	March 31, 2020		December 31, 2019
Work-in-process	$	117,521	$	152,171
Finished goods	416,468		684,456
Inventory	$	533,989	$	836,627

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Fair Value Measurements - Fair Value Measurement Inputs and Valuation Techniques (Details) - IRLCs - Not Designated as Hedging Instrument	Mar. 31, 2020	Dec. 31, 2019
Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value rates, IRLCs	0.43	0.56
Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value rates, IRLCs	1	1
Weighted average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value rates, IRLCs	0.75	0.78

XML

Inventory

3 Months Ended

Mar. 31, 2020

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):

	March 31, 2020		December 31, 2019
Work-in-process	$	117,521	$	152,171
Finished goods	416,468		684,456
Inventory	$	533,989	$	836,627

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Revenue:
Revenue		$ 1,125,821	$ 454,104
Cost of revenue (exclusive of amortization)
Cost of revenue	[1]	761,672	151,348
Sales and marketing		204,648	161,587
Technology and development		134,918	107,770
General and administrative		92,285	95,774
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		76,800	0
Integration costs		0	352
Total costs and expenses		1,270,323	516,831
Loss from operations		(144,502)	(62,727)
Other income		9,593	9,168
Interest expense		(37,592)	(16,466)
Loss before income taxes		(172,501)	(70,025)
Income tax benefit		9,228	2,500
Net loss		$ (163,273)	$ (67,525)
Net loss per share - basic and diluted (usd per share)		$ (0.78)	$ (0.33)
Weighted-average shares outstanding - basic and diluted (in shares)		210,674	204,514
Amortization of website development costs and intangible assets included in technology and development		$ 11,800	$ 11,000
Technology and Development
Cost of revenue (exclusive of amortization)
Amortization of website development costs and intangible assets included in technology and development		17,184	14,400
Homes
Revenue:
Revenue		769,873	128,472
Cost of revenue (exclusive of amortization)
Cost of revenue	[1]	732,199	122,419
Sales and marketing		71,589	20,862
Technology and development		32,538	12,281
General and administrative		23,421	14,357
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		0	0
Integration costs		0	0
Total costs and expenses		859,747	169,919
Loss from operations		(89,874)	(41,447)
Other income		0	0
Interest expense		(8,084)	(3,758)
Loss before income taxes		(97,958)	(45,205)
IMT
Revenue:
Revenue		330,666	298,272
Cost of revenue (exclusive of amortization)
Cost of revenue	[1]	24,318	24,251
Sales and marketing		120,173	126,654
Technology and development		95,028	87,969
General and administrative		58,754	70,850
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		73,900	0
Integration costs		0	0
Total costs and expenses		372,173	309,724
Loss from operations		(41,507)	(11,452)
Other income		0	0
Interest expense		0	0
Loss before income taxes		(41,507)	(11,452)
Mortgages Segment
Revenue:
Revenue		25,282	27,360
Cost of revenue (exclusive of amortization)
Cost of revenue	[1]	5,155	4,678
Sales and marketing		12,886	14,071
Technology and development		7,352	7,520
General and administrative		10,110	10,567
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		2,900	0
Integration costs		0	352
Total costs and expenses		38,403	37,188
Loss from operations		(13,121)	(9,828)
Other income		202	313
Interest expense		(226)	(101)
Loss before income taxes		$ (13,145)	$ (9,616)

[1] Amortization of website development costs and intangible assets included in technology and development of $0 and $14,400 for the three months ended March 31, 2020 and 2019.

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Intangible Assets, net

3 Months Ended

Mar. 31, 2020

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):

	March 31, 2020
	Cost		Accumulated Amortization		Net
Trade names and trademarks	$	36,500	$	—	$	36,500
Customer relationships	102,600		(77,571)		25,029
Developed technology	107,200		(84,361)		22,839
Software	37,476		(22,745)		14,731
Intangibles-in-progress	7,298		—		7,298
Purchased content	48,925		(43,181)		5,744
Lender licenses	400		(267)		133
Total	$	340,399	$	(228,125)	$	112,274

	December 31, 2019
	Cost		Accumulated Amortization		Net
Customer relationships	$	102,600	$	(73,770)	$	28,830
Developed technology	107,200		(81,383)		25,817
Software	35,527		(20,843)		14,684
Purchased content	47,298		(40,636)		6,662
Intangibles-in-progress	6,391		—		6,391
Lender licenses	400		(217)		183
Total	$	299,416	$	(216,849)	$	82,567

Amortization expense recorded for intangible assets for the three months ended March 31, 2020 and 2019 was $11.8 million and $11.0 million, respectively, and these amounts are included in technology and development expenses.

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

We have an intangible asset that we recorded in connection with our February 2015 acquisition of Trulia for Trulia’s trade names and trademarks that has not historically been subject to amortization. The carrying value of the Trulia trade names and trademarks intangible asset was $36.5 million as of March 31, 2020 and $108.0 million as of December 31, 2019.

During the three months ended March 31, 2020, we recognized a non-cash impairment charge of $71.5 million related to our indefinite-lived Trulia trade names and trademarks intangible asset. The impairment charge is included in Impairment costs within our IMT and Mortgages segments. In March 2020, we identified factors directly related to the COVID-19 pandemic that led us to conclude it was more likely than not that the $108.0 million carrying value of the asset exceeded its fair value. The most significant of such factors was a shortfall in projected revenue related to the Trulia brand compared to previous projections used to determine the carrying value of the intangible asset, primarily driven by a reduction in expected future marketing and advertising spend for Trulia. Accordingly, with the assistance of a third-party valuation specialist, we performed a quantitative analysis to determine the fair value of the intangible asset and concluded that our best estimate of its fair value was $36.5 million. The valuation was prepared using an income approach based on the relief-from-royalty method and relied on inputs with unobservable market prices including projected revenue, royalty rate, discount rate, and estimated tax rate, and therefore is considered a Level 3 measurement under the fair value hierarchy. In connection with this impairment analysis, we evaluated our expected future reduced marketing and advertising spend related to the Trulia trade names and trademarks intangible asset and concluded that this asset no longer has an indefinite life. We will amortize the remaining $36.5 million carrying value on an accelerated basis commensurate with the projected cash flows over a useful life of 10 years.

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Organization and Description of Business

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Organization and Description of Business

Organization and Description of Business

Zillow Group, Inc., the largest portfolio of real estate brands on mobile and the web, is building an on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to the businesses of its flagship brand, Zillow, to find and get into their next home with speed, certainty and ease.

In addition to Zillow’s for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Closing Services now offers title and escrow services as another important step to unify the real estate transaction. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions which include 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: public health crises, like the COVID-19 pandemic; 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 technology, products, markets or services by us or our competitors; addition or loss of significant customers; our ability to maintain or establish relationships with listings and data providers; our ability to obtain or maintain licenses and permits to support our current and future businesses; actual or anticipated changes to our products and services; 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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Accounts Receivable, net (Tables)

3 Months Ended

Mar. 31, 2020

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, 2020	$	4,522
Credit loss expense	558
Less: write-offs, net of recoveries and other adjustments	(585)
Balance as of March 31, 2020	$	4,495

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Share-Based Awards

3 Months Ended

Mar. 31, 2020

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 three months ended March 31, 2020:

	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, 2020	29,634,296	$	35.95	6.28	$	331,107
Granted	4,358,433	49.35
Exercised	(3,207,375)	28.75
Forfeited or cancelled	(297,139)	41.01
Outstanding at March 31, 2020	30,488,215	38.57		6.87	88,874
Vested and exercisable at March 31, 2020	16,563,984	34.13		5.12	80,208

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 March 31,
	2020	2019
Expected volatility	45%-48%	46%-47%
Expected dividend yield	—	—
Risk-free interest rate	0.87%-0.93%	2.38%-2.53%
Weighted-average expected life	5.00-5.50 years	4.75-5.25 years
Weighted-average fair value of options granted	$20.75	$16.77

As of March 31, 2020, there was a total of $236.2 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the three months ended March 31, 2020:

	Restricted Stock Units	Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2020	7,052,767	$	40.01
Granted	3,323,261	49.02
Vested	(638,909)	38.49
Forfeited or cancelled	(314,790)	40.71
Unvested outstanding at March 31, 2020	9,422,329	43.27

As of March 31, 2020, there was a total of $381.9 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 March 31,
	2020		2019
Cost of revenue	$	1,173	$	881
Sales and marketing	6,993		5,650
Technology and development	18,917		15,508
General and administrative	16,712		44,085
Total	$	43,795	$	66,124

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. 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 received, among other things, a change in the exercise period of his vested stock options outstanding as well as accelerated vesting of outstanding stock options, which have been accounted for as equity modifications. We recorded $26.4 million of share-based compensation expense associated with the modifications in the three months ended March 31, 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.

For additional details related to Mr. Rascoff’s Agreement, see Note 18 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Segment Information and Revenue

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Segment Information and Revenue

Segment Information and RevenueWe 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 Homes, Internet, Media & Technology (“IMT”) and Mortgages segments.

The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through Zillow Offers and the financial results from title and escrow services through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, rentals, 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 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 table for the periods presented (in thousands):

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	769,112	$	—	$	—	$	128,472	$	—	$	—
Premier Agent	—		242,106		—		—		217,735		—
Other	761		88,560		—		—		80,537		—
Mortgages	—		—		25,282		—		—		27,360
Total revenue	769,873		330,666		25,282		128,472		298,272		27,360
Costs and expenses:
Cost of revenue	732,199		24,318		5,155		122,419		24,251		4,678
Sales and marketing	71,589		120,173		12,886		20,862		126,654		14,071
Technology and development	32,538		95,028		7,352		12,281		87,969		7,520
General and administrative	23,421		58,754		10,110		14,357		70,850		10,567
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		352
Total costs and expenses	859,747		372,173		38,403		169,919		309,724		37,188
Loss from operations	(89,874)		(41,507)		(13,121)		(41,447)		(11,452)		(9,828)
Segment other income	—		—		202		—		—		313
Segment interest expense	(8,084)		—		(226)		(3,758)		—		(101)
Loss before income taxes (1)	$	(97,958)	$	(41,507)	$	(13,145)	$	(45,205)	$	(11,452)	$	(9,616)

(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, unaudited):

	Three Months Ended March 31,
	2020		2019
Total segment loss before income taxes	$	(152,610)	$	(66,273)
Corporate interest expense	(29,282)		(12,607)
Corporate other income	9,391		8,855
Consolidated loss before income taxes	$	(172,501)	$	(70,025)

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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Share-Based Awards - Restricted Stock Units - Additional Information (Detail) $ in Millions	Mar. 31, 2020 USD ($)
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost	$ 381.9

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Employee Benefit Plan - Additional Information (Detail) - Zillow Merger - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
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	$ 6.4	$ 4.9

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Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Work-in-process	$ 117,521	$ 152,171
Finished goods	416,468	684,456
Inventory	$ 533,989	$ 836,627

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Fair Value Measurements - Schedule of Changes in IRLCs (Details) - IRLCs $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Derivative Asset, Rollforward [Roll Forward]
Balance as of January 1, 2020 (1)	$ 937
Issuances	5,208
Transfers	(5,349)
Fair value changes recognized in earnings	1,429
Balance as of March 31, 2020	$ 2,225

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Equity Investment - Additional Information (Detail) - October 2016 Investment - USD ($) $ in Millions	1 Months Ended
	Oct. 31, 2016	Mar. 31, 2020
Schedule of Equity Method Investments [Line Items]
Cumulative impairment charge		$ 5.3
Level 3
Schedule of Equity Method Investments [Line Items]
Equity investments		$ 4.7
Variable Interest Entity, Not Primary Beneficiary
Schedule of Equity Method Investments [Line Items]
Percentage of equity interest held	10.00%
Equity investments	$ 10.0
Maximum exposure to loss	$ 10.0

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to federal and state income taxes in the United States and federal and provincial income taxes in Canada. As of March 31, 2020 and December 31, 2019, 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 $1,137.6 million as of December 31, 2019, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $34.3 million (tax effected) as of December 31, 2019.

We recorded an income tax benefit of $9.2 million for the three months ended March 31, 2020. The income tax benefit was a result of a $9.7 million income tax benefit related to the $71.5 million non-cash impairment we recorded during the three months ended March 31, 2020 related to the Trulia trade names and trademarks intangible asset. For additional information about the non-cash impairment, see Note 10 to our condensed consolidated financial statements. This income tax benefit was partially offset by an immaterial amount of state income tax expense recorded for the three months ended March 31, 2020.

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Employee Benefit Plan	3 Months Ended
	Mar. 31, 2020
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit PlanWe 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 $6.4 million and $4.9 million, respectively, for the three months ended March 31, 2020 and 2019.

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

3 Months Ended

Mar. 31, 2020

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):

	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	202,182	$	—	$	—	$	202,182
Cash equivalents:
Money market funds	1,356,139		—		—		1,356,139
Commercial paper	9,389		—		—		9,389
Short-term investments:
U.S. government agency securities	709,163		4,418		—		713,581
Commercial paper	103,646		—		—		103,646
Treasury bills	82,485		93		—		82,578
Corporate notes and bonds	69,348		21		(104)		69,265
Municipal securities	23,176		31		(15)		23,192
Certificates of deposit	996		—		—		996
Restricted cash	56,428		—		—		56,428
Total	$	2,612,952	$	4,563	$	(119)	$	2,617,396

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	194,955	$	—	$	—	$	194,955
Cash equivalents:
Money market funds	872,431		—		—		872,431
U.S. government agency securities	35,011		—		(2)		35,009
Commercial paper	31,113		—		—		31,113
Treasury bills	6,441		—		—		6,441
Corporate notes and bonds	1,065		—		—		1,065
Certificates of deposit	249		—		—		249
Short-term investments:
U.S. government agency securities	861,862		365		(73)		862,154
Corporate notes and bonds	159,382		91		(42)		159,431
Commercial paper	150,267		—		—		150,267
Treasury bills	79,989		14		—		80,003
Municipal securities	27,836		56		(3)		27,889
Certificates of deposit	1,245		—		—		1,245
Restricted cash	89,646		—		—		89,646
Total	$	2,511,492	$	526	$	(120)	$	2,511,898

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Share-Based Awards - Summary of Restricted Stock Units Activity (Detail) - Restricted Stock Units	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Restricted Stock Units
Beginning balance (in shares) | shares	7,052,767
Granted (in shares) | shares	3,323,261
Vested (in shares) | shares	(638,909)
Forfeited or cancelled (in shares) | shares	(314,790)
Ending balance (in shares) | shares	9,422,329
Weighted- Average Grant- Date Fair Value
Unvested outstanding, beginning balance (usd per share) | $ / shares	$ 40.01
Granted (usd per share) | $ / shares	49.02
Vested (usd per share) | $ / shares	38.49
Forfeited or cancelled (usd per share) | $ / shares	40.71
Unvested outstanding, ending balance (usd per share) | $ / shares	$ 43.27

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Commitments and Contingencies - Additional Information (Detail)	Jun. 20, 2017 USD ($)	Feb. 09, 2017 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Mar. 31, 2018 claim	Feb. 28, 2018 claim	Feb. 05, 2018 claim
Other Commitments [Line Items]
Outstanding letters of credit			$ 16,900,000
Outstanding surety bonds			10,000,000.0	$ 10,200,000
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			$ 14,900,000

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Intangible Assets, net - Intangible Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Cost	$ 340,399	$ 299,416
Accumulated Amortization	(228,125)	(216,849)
Net	112,274	82,567
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Cost	36,500
Accumulated Amortization	0
Net	36,500
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Cost	102,600	102,600
Accumulated Amortization	(77,571)	(73,770)
Net	25,029	28,830
Developed technology
Finite-Lived Intangible Assets [Line Items]
Cost	107,200	107,200
Accumulated Amortization	(84,361)	(81,383)
Net	22,839	25,817
Software
Finite-Lived Intangible Assets [Line Items]
Cost	37,476	35,527
Accumulated Amortization	(22,745)	(20,843)
Net	14,731	14,684
Intangibles-in-progress
Finite-Lived Intangible Assets [Line Items]
Cost	7,298	6,391
Accumulated Amortization	0	0
Net	7,298	6,391
Purchased content
Finite-Lived Intangible Assets [Line Items]
Cost	48,925	47,298
Accumulated Amortization	(43,181)	(40,636)
Net	5,744	6,662
Lender licenses
Finite-Lived Intangible Assets [Line Items]
Cost	400	400
Accumulated Amortization	(267)	(217)
Net	$ 133	$ 183

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Contract Cost Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Contract cost assets	$ 46,565,000		$ 45,209,000
Impairment of contract cost assets	0	$ 0
Amortization of contract cost assets	$ 8,415,000	$ 8,746,000

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Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Mortgage Loans Held For Sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	$ 89.3	$ 34.3
IRLCs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount	$ 116.2	$ 64.7

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Intangible Assets, net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Indefinite-lived Intangible Assets [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 11,800	$ 11,000
Non-cash impairment charge	76,800	$ 0
Trade names and trademarks | Trulia
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible asset	36,500		$ 108,000
Non-cash impairment charge	71,500
Fair value of the intangible asset	$ 36,500
Useful life	10 years

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Debt - Narrative (Detail) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Variable Interest Entity, Consolidated, Increase Amount to Inventory	$ 534,000,000.0	$ 836,600,000
Variable Interest Entity, Consolidation, Increase Amount to Borrowings	431,800,000	691,500,000
Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	2,016,387,000
1.375% convertible senior notes due 2026 | Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 500,000,000
Stated Interest Rate	1.375%
0.75% convertible senior notes due 2024 | Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 673,000,000
Stated Interest Rate	0.75%
1.50% convertible senior notes due 2023 | Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 373,750,000
Stated Interest Rate	1.50%
2.00% convertible senior notes due 2021 | Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 460,000,000
Stated Interest Rate	2.00%
2.75% convertible senior notes due 2020 | Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 9,637,000
Stated Interest Rate	2.75%
Citibank, N.A.
Debt Instrument [Line Items]
Repurchase Agreement, Committed Amount	$ 25,000,000.0
Mortgage Loans Held-for-sale, Pledged as Collateral		$ 400,000
Line of Credit | Homes Segment
Debt Instrument [Line Items]
Maximum Borrowing Capacity	1,500,000,000
Line of Credit | Mortgages Segment
Debt Instrument [Line Items]
Maximum Borrowing Capacity	125,000,000
Line of Credit | Citibank, N.A. | Mortgages Segment
Debt Instrument [Line Items]
Maximum Borrowing Capacity	75,000,000
Line of Credit | Comerica Bank | Mortgages Segment
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 50,000,000

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Schedule Of Income Tax [Line Items]
Income tax benefit	$ 9,228	$ 2,500
Non-cash impairment charge	76,800	0
Loss before income taxes	172,501	$ 70,025
Trulia | Trade names and trademarks
Schedule Of Income Tax [Line Items]
Income tax benefit	9,700
Non-cash impairment charge	$ 71,500
Federal
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards			$ 1,137,600
State
Schedule Of Income Tax [Line Items]
Net operating loss carryforwards			$ 34,300

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Fair Value Measurements - Fair Value of Cash Equivalents and Investments (Detail) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	$ 36,848	$ 36,507
Total	2,399,898	2,264,688
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0	0
Total	1,356,139	872,431
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	36,848	36,507
Total	1,041,534	1,392,257
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans held for sale	0
Total	2,225
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,356,139	872,431
Money market funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,356,139	872,431
Money market funds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Money market funds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
U.S. government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		35,009
Short-term investments	713,581	862,154
U.S. government agency securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
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]
Cash equivalents		35,009
Short-term investments	713,581	862,154
U.S. government agency securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	9,389	31,113
Short-term investments	103,646	150,267
Commercial paper | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	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	9,389	31,113
Short-term investments	103,646	150,267
Commercial paper | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0
Short-term investments	0
Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		6,441
Short-term investments	82,578	80,003
Treasury bills | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
Treasury bills | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		6,441
Short-term investments	82,578	80,003
Treasury bills | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Corporate notes and bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		1,065
Short-term investments	69,265	159,431
Corporate notes and bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
Corporate notes and bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		1,065
Short-term investments	69,265	159,431
Corporate notes and bonds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		249
Short-term investments	996	1,245
Certificates of deposit | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		0
Short-term investments	0	0
Certificates of deposit | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		249
Short-term investments	996	1,245
Certificates of deposit | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
Municipal securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	23,192	27,889
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	23,192	27,889
Municipal securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	0
IRLCs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	2,225	937
IRLCs | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	2,225	937
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	0	937
IRLCs | Level 3 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	2,225
Forward contracts | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets		7
Derivative liability	2,039	(60)
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
Derivative liability	0	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		7
Derivative liability	2,039	$ (60)
Forward contracts | Level 3 | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 0

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Share-Based Awards (Tables)

3 Months Ended

Mar. 31, 2020

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

Summary of Option Award Activity

The following table summarizes option award activity for the three months ended March 31, 2020:

	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, 2020	29,634,296	$	35.95	6.28	$	331,107
Granted	4,358,433	49.35
Exercised	(3,207,375)	28.75
Forfeited or cancelled	(297,139)	41.01
Outstanding at March 31, 2020	30,488,215	38.57		6.87	88,874
Vested and exercisable at March 31, 2020	16,563,984	34.13		5.12	80,208

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 March 31,
	2020	2019
Expected volatility	45%-48%	46%-47%
Expected dividend yield	—	—
Risk-free interest rate	0.87%-0.93%	2.38%-2.53%
Weighted-average expected life	5.00-5.50 years	4.75-5.25 years
Weighted-average fair value of options granted	$20.75	$16.77

Summary of Restricted Stock Units Activity

The following table summarizes activity for restricted stock units for the three months ended March 31, 2020:

	Restricted Stock Units	Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2020	7,052,767	$	40.01
Granted	3,323,261	49.02
Vested	(638,909)	38.49
Forfeited or cancelled	(314,790)	40.71
Unvested outstanding at March 31, 2020	9,422,329	43.27

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 March 31,
	2020		2019
Cost of revenue	$	1,173	$	881
Sales and marketing	6,993		5,650
Technology and development	18,917		15,508
General and administrative	16,712		44,085
Total	$	43,795	$	66,124

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Property and Equipment, net (Tables)

3 Months Ended

Mar. 31, 2020

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):

	March 31, 2020		December 31, 2019
Website development costs	$	153,201	$	149,648
Leasehold improvements	101,970		81,981
Construction-in-progress	46,442		45,337
Office equipment, furniture and fixtures	40,612		36,582
Computer equipment	31,549		31,942
Property and equipment	373,774		345,490
Less: accumulated amortization and depreciation	(185,742)		(175,001)
Property and equipment, net	$	188,032	$	170,489

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

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, 2019, which was filed with the SEC on February 19, 2020. The condensed consolidated balance sheet as of December 31, 2019, 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 March 31, 2020, and our results of operations, comprehensive loss, shareholders’ equity and cash flows for the three month periods ended March 31, 2020 and 2019. The results of the three month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 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. The COVID-19 pandemic has introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed, among others.

Recently Adopted Accounting Standards

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 conforms the requirements for capitalizing implementation costs incurred in cloud computing arrangements that are service contracts with the accounting guidance that provides for the capitalization of costs incurred to develop or obtain internal-use software. Under the guidance, implementation costs that are capitalized should be characterized in financial statements in the same manner as other service costs and assets related to service costs and amortized over the term of the hosting arrangement. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. Entities are permitted to apply either a retrospective or prospective transition approach to adopt this guidance. We adopted this guidance on January 1, 2020 using the prospective transition approach under which we apply the guidance to all eligible costs incurred subsequent to adoption. Under the guidance, we capitalize eligible implementation costs associated with cloud computing arrangements that are service contracts within prepaid expenses and other current assets or other long-term assets in our condensed consolidated balance sheets, depending on the length of the underlying cloud computing contract. We amortize these costs on a straight-line basis over the term of the hosting arrangement. The adoption of this guidance did not have a material impact 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 certain assets and liabilities measured at fair value. 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. This guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. We adopted this guidance on January 1, 2020. We have not historically recorded material amounts of Level 3 assets and liabilities or material transfers of assets or liabilities between levels within the fair value hierarchy and therefore, the adoption of this guidance did not have a material impact on our disclosures. Refer to Note 3 for further information regarding the assets and liabilities we measure at fair value.

In June 2016, and subsequently amended in April 2019, May 2019 and November 2019, the FASB issued guidance on the measurement of credit losses on financial assets. This guidance requires an entity to measure and recognize expected 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, whereas current guidance employs an incurred loss methodology. This guidance is effective for interim and annual 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 adopted. We adopted this guidance on January 1, 2020 with no material impact to our financial position, results of operation or cash flows.

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We expect to apply some of the expedients and exceptions provided in this guidance to our credit facilities, warehouse line of credit and master repurchase agreement, all of which reference LIBOR in the applicable interest rate. 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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Accounts Receivable, net

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Accounts Receivable, net

Accounts Receivable, net

The opening balance of accounts receivable, net was $67.0 million as of January 1, 2020.

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

Balance as of January 1, 2020	$	4,522
Credit loss expense	558
Less: write-offs, net of recoveries and other adjustments	(585)
Balance as of March 31, 2020	$	4,495

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Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (163,273)	$ (67,525)
Other comprehensive income:
Unrealized gains on investments	3,602	1,144
Reclassification adjustment for net investment losses included in net loss	434	0
Net unrealized gains on investments	4,036	1,144
Currency translation adjustments	(90)	(42)
Total other comprehensive income	3,946	1,102
Comprehensive loss	$ (159,327)	$ (66,423)

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Cover Page - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
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	Q1
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		59,476,313
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		147,230,433

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Equity Investment	3 Months Ended
	Mar. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]
Equity Investment	Equity InvestmentIn 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 the carrying amount of the investment as of March 31, 2020. 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. During the three months ended March 31, 2020, we recognized a non-cash impairment of $5.3 million related to this investment. In connection with our assessment of the investment for impairment indicators as a result of COVID-19’s significant adverse impact on the real estate industry, we identified factors that led us to conclude that the investment was impaired and the fair value of the investment was less than the carrying value. The most significant of such factors related to the future expected cash flows of the investee. Accordingly, we performed an analysis to determine the fair value of the investment and concluded that our best estimate of its fair value was $4.7 million. This is considered a Level 3 measurement under the fair value hierarchy. The equity investment is classified within other assets in the condensed consolidated balance sheets.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2020

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 March 31,
	2020	2019
Weighted-average Class A common stock and Class C capital stock option awards outstanding	23,663	19,408
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	7,623	5,860
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	407	421
Total Class A common stock and Class C capital stock equivalents	31,693	25,689

Since the Company expects to settle the principal amount of the outstanding convertible notes maturing in 2021, 2023, 2024 and 2026 in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread for each of the notes has a dilutive impact on diluted net income per share when the market price of the Company’s Class C capital stock at the end of the period exceeds the conversion price per share. The following table presents the conversion spread and conversion price per share of Class C capital stock for each of the convertible senior notes (in thousands, except per share amounts):

Maturity Date	Conversion Spread	Conversion Price per Share
September 1, 2026	11,492	$	43.51
September 1, 2024	15,468	43.51
July 1, 2023	4,769	78.37
December 1, 2021	8,785	52.36

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

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, 2019, which was filed with the SEC on February 19, 2020. The condensed consolidated balance sheet as of December 31, 2019, 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 March 31, 2020, and our results of operations, comprehensive loss, shareholders’ equity and cash flows for the three month periods ended March 31, 2020 and 2019. The results of the three month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 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. The COVID-19 pandemic has introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed, among others.

Recently Issued Accounting Standards Not Yet Adopted

Recently Adopted Accounting Standards

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 conforms the requirements for capitalizing implementation costs incurred in cloud computing arrangements that are service contracts with the accounting guidance that provides for the capitalization of costs incurred to develop or obtain internal-use software. Under the guidance, implementation costs that are capitalized should be characterized in financial statements in the same manner as other service costs and assets related to service costs and amortized over the term of the hosting arrangement. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. Entities are permitted to apply either a retrospective or prospective transition approach to adopt this guidance. We adopted this guidance on January 1, 2020 using the prospective transition approach under which we apply the guidance to all eligible costs incurred subsequent to adoption. Under the guidance, we capitalize eligible implementation costs associated with cloud computing arrangements that are service contracts within prepaid expenses and other current assets or other long-term assets in our condensed consolidated balance sheets, depending on the length of the underlying cloud computing contract. We amortize these costs on a straight-line basis over the term of the hosting arrangement. The adoption of this guidance did not have a material impact 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 certain assets and liabilities measured at fair value. 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. This guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. We adopted this guidance on January 1, 2020. We have not historically recorded material amounts of Level 3 assets and liabilities or material transfers of assets or liabilities between levels within the fair value hierarchy and therefore, the adoption of this guidance did not have a material impact on our disclosures. Refer to Note 3 for further information regarding the assets and liabilities we measure at fair value.

In June 2016, and subsequently amended in April 2019, May 2019 and November 2019, the FASB issued guidance on the measurement of credit losses on financial assets. This guidance requires an entity to measure and recognize expected 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, whereas current guidance employs an incurred loss methodology. This guidance is effective for interim and annual 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 adopted. We adopted this guidance on January 1, 2020 with no material impact to our financial position, results of operation or cash flows.

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We expect to apply some of the expedients and exceptions provided in this guidance to our credit facilities, warehouse line of credit and master repurchase agreement, all of which reference LIBOR in the applicable interest rate. 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 credit facilities (see Note 12) 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 credit facilities are outstanding and amounts are held in escrow.

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. This adjustment is effected through the pull-through rate, which represents the probability that an interest rate lock commitment will ultimately result in a closed loan.

The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our condensed consolidated statements of operations.

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 economic hedging instruments are calculated by reference to quoted prices for similar assets.

Segment Reporting

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 Homes, Internet, Media & Technology (“IMT”) and Mortgages segments.

The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through Zillow Offers and the financial results from title and escrow services through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, rentals, 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 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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Property and Equipment, net - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Property, Plant and Equipment [Line Items]
Amortization and depreciation expense related to property and equipment other than website development costs	$ 11.8	$ 6.0
Capitalization of website development costs	12.5	10.0
Amortization of website development costs and intangible assets included in technology and development	11.8	11.0
Technology and development | Software Development
Property, Plant and Equipment [Line Items]
Amortization of website development costs and intangible assets included in technology and development	$ 5.4	$ 3.4

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Accounts Receivable, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Receivables [Abstract]
Accounts receivable, net	$ 71,782		$ 67,005
Allowance for Doubtful Accounts Receivable [Roll Forward]
Beginning balance	4,522
Credit loss expense	558	$ 128
Less: write-offs, net of recoveries and other adjustments	(585)
Ending balance	$ 4,495

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Segment Information and Revenue - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2020 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

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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
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Weighted-average fair value of options granted (usd per share)	$ 20.75	$ 16.77
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	45.00%	46.00%
Risk-free interest rate	0.87%	2.38%
Weighted-average expected life	5 years	4 years 9 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	48.00%	47.00%
Risk-free interest rate	0.93%	2.53%
Weighted-average expected life	5 years 6 months	5 years 3 months

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Share-Based Awards - Effects of Share Based Compensation in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands		3 Months Ended
	Feb. 21, 2019	Mar. 31, 2020	Mar. 31, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		$ 43,795	$ 66,124
Chief Executive Officer
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		26,400
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		1,173	881
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		6,993	5,650
Technology and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		18,917	15,508
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation		$ 16,712	$ 44,085

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Debt - Schedule of Carrying Value of Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Total	$ 2,042,233	$ 2,274,990
Convertible Debt
Debt Instrument [Line Items]
Convertible senior notes	$ 1,575,586	1,553,039
Convertible Debt | 1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Stated Interest Rate	1.375%
Convertible senior notes	$ 332,129	327,187
Convertible Debt | 0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Stated Interest Rate	0.75%
Convertible senior notes	$ 498,666	490,538
Convertible Debt | 1.50% convertible senior notes due 2023
Debt Instrument [Line Items]
Stated Interest Rate	1.50%
Convertible senior notes	$ 314,233	310,175
Convertible Debt | 2.00% convertible senior notes due 2021
Debt Instrument [Line Items]
Stated Interest Rate	2.00%
Convertible senior notes	$ 420,921	415,502
Convertible Debt | 2.75% convertible senior notes due 2020
Debt Instrument [Line Items]
Stated Interest Rate	2.75%
Convertible senior notes	$ 9,637	9,637
Mortgages Segment
Debt Instrument [Line Items]
Warehouse line of credit	34,813	30,427
Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	431,834	691,524
Goldman Sachs Bank USA | Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	52,623	39,244
Citibank, N.A. | Mortgages Segment
Debt Instrument [Line Items]
Short-term debt	4,540	394
Citibank, N.A. | Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	137,590	296,369
Credit Suisse AG, Cayman Islands | Line of Credit | Homes Segment
Debt Instrument [Line Items]
Short-term debt	241,621	355,911
Comerica Bank | Line of Credit | Mortgages Segment
Debt Instrument [Line Items]
Warehouse line of credit	$ 30,273	$ 30,033

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Debt - Schedule of Convertible Senior Notes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Interest Expense	$ 37,592	$ 16,466
Convertible Debt
Debt Instrument [Line Items]
Aggregate Principal Amount	2,016,387
Unamortized Debt Discount and Debt Issuance Costs	440,801		$ 463,348
Fair Value	1,995,700		2,304,376
Contractual Coupon Interest	6,735	3,768
Accretion of bond discount	21,293	8,028
Amortization of Debt Issuance Costs	1,254	811
Interest Expense	29,282	12,607
Convertible Debt | 1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 500,000
Stated Interest Rate	1.375%
Effective Interest Rate	8.10%
Unamortized Debt Discount and Debt Issuance Costs	$ 167,871		172,813
Fair Value	518,675		597,380
Contractual Coupon Interest	1,719	0
Accretion of bond discount	4,824	0
Amortization of Debt Issuance Costs	118	0
Interest Expense	6,661	0
Convertible Debt | 0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 673,000
Stated Interest Rate	0.75%
Effective Interest Rate	7.68%
Unamortized Debt Discount and Debt Issuance Costs	$ 174,334		182,462
Fair Value	685,740		819,378
Contractual Coupon Interest	1,248	0
Accretion of bond discount	7,861	0
Amortization of Debt Issuance Costs	267	0
Interest Expense	9,376	0
Convertible Debt | 1.50% convertible senior notes due 2023
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 373,750
Stated Interest Rate	1.50%
Effective Interest Rate	6.99%
Unamortized Debt Discount and Debt Issuance Costs	$ 59,517		63,575
Fair Value	311,872		356,464
Contractual Coupon Interest	1,402	1,402
Accretion of bond discount	3,697	3,437
Amortization of Debt Issuance Costs	361	336
Interest Expense	5,460	5,175
Convertible Debt | 2.00% convertible senior notes due 2021
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 460,000
Stated Interest Rate	2.00%
Effective Interest Rate	7.44%
Unamortized Debt Discount and Debt Issuance Costs	$ 39,079		44,498
Fair Value	462,571		514,312
Contractual Coupon Interest	2,300	2,300
Accretion of bond discount	4,911	4,591
Amortization of Debt Issuance Costs	508	475
Interest Expense	7,719	7,366
Convertible Debt | 2.75% convertible senior notes due 2020
Debt Instrument [Line Items]
Aggregate Principal Amount	$ 9,637
Stated Interest Rate	2.75%
Unamortized Debt Discount and Debt Issuance Costs	$ 0		0
Fair Value	16,842		$ 16,842
Contractual Coupon Interest	66	66
Accretion of bond discount	0	0
Amortization of Debt Issuance Costs	0	0
Interest Expense	$ 66	$ 66

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Deferred Revenue

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Deferred Revenue

Contract Cost AssetsAs of March 31, 2020 and December 31, 2019, we had $46.6 million and $45.2 million, respectively, of contract cost assets. During the three months ended March 31, 2020 and 2019, we did not incur any impairment losses. We recorded amortization expense related to contract cost assets of $8.4 million and $8.7 million during the three months ended March 31, 2020 and 2019, respectively.Deferred Revenue

The following table presents the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended March 31, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	253,729
Less: Revenue recognized	(258,129)
Balance as of March 31, 2020	$	35,347

During the three months ended March 31, 2020, we recognized as revenue a total of $36.0 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2020.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2020

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 credit facilities (see Note 12) 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 credit facilities are outstanding and amounts are held in escrow.

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. This adjustment is effected through the pull-through rate, which represents the probability that an interest rate lock commitment will ultimately result in a closed loan.

The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our condensed consolidated statements of operations.

The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the periods presented:

	March 31, 2020	December 31, 2019
Range	43% - 100%	56% - 100%
Weighted average	75%	78%

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 economic 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):

	March 31, 2020
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,356,139	$	1,356,139	$	—	$	—
Commercial paper	9,389		—		9,389		—
Short-term investments:
U.S. government agency securities	713,581		—		713,581		—
Commercial paper	103,646		—		103,646		—
Treasury bills	82,578		—		82,578		—
Corporate notes and bonds	69,265		—		69,265		—
Municipal securities	23,192		—		23,192		—
Certificates of deposit	996		—		996		—
Mortgage origination-related:
Mortgage loans held for sale	36,848		—		36,848		—
IRLCs	2,225		—		—		2,225
Forward contracts - other current liabilities	2,039		—		2,039		—
Total	$	2,399,898	$	1,356,139	$	1,041,534	$	2,225

	December 31, 2019
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	872,431	$	872,431	$	—
U.S. government agency securities	35,009		—		35,009
Commercial paper	31,113		—		31,113
Treasury bills	6,441		—		6,441
Corporate notes and bonds	1,065		—		1,065
Certificates of deposit	249		—		249
Short-term investments:
U.S. government agency securities	862,154		—		862,154
Corporate notes and bonds	159,431		—		159,431
Commercial paper	150,267		—		150,267
Treasury bills	80,003		—		80,003
Municipal securities	27,889		—		27,889
Certificates of deposit	1,245		—		1,245
Mortgage origination-related:
Mortgage loans held for sale	36,507		—		36,507
IRLCs	937		—		937
Forward contracts - other current assets	7		—		7
Forward contracts - other current liabilities	(60)		—		(60)
Total	$	2,264,688	$	872,431	$	1,392,257

The following table presents the changes in our IRLCs during the three months ended March 31, 2020 (in thousands):

Balance as of January 1, 2020 (1)	$	937
Issuances	5,208
Transfers	(5,349)
Fair value changes recognized in earnings	1,429
Balance as of March 31, 2020	$	2,225
(1) Amount represents transfers of IRLCs from Level 2 to Level 3 within the fair value hierarchy as of January 1, 2020.

At March 31, 2020, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $89.3 million and $116.2 million for our IRLCs and forward contracts, respectively. At December 31, 2019, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $34.3 million and $64.7 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.

See Note 12 for the carrying amount and estimated fair value of the Company’s convertible senior notes.

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities
Net loss	$ (163,273)	$ (67,525)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	29,026	20,525
Share-based compensation expense	43,795	66,124
Amortization of right of use assets	6,465	4,440
Amortization of contract cost assets	8,415	8,746
Amortization of discount and issuance costs on convertible senior notes maturing in 2021, 2023, 2024 and 2026	22,547	8,840
Impairment costs	76,800	0
Deferred income taxes	(9,228)	(2,500)
Loss on disposal of property and equipment and other assets	1,952	1,704
Credit loss expense	558	128
Net loss on investment securities	434	0
Accretion of bond discount	(473)	(1,733)
Changes in operating assets and liabilities:
Accounts receivable	(5,335)	(4,650)
Mortgage loans held for sale	(341)	5,940
Inventory	302,593	(162,325)
Prepaid expenses and other assets	(2,916)	(8,537)
Lease liabilities	(1,625)	(7,010)
Contract cost assets	(9,771)	(9,103)
Accounts payable	7,673	(133)
Accrued expenses and other current liabilities	4,588	328
Accrued compensation and benefits	(4,967)	(1,088)
Deferred revenue	(4,400)	2,025
Other long-term liabilities	(527)	290
Net cash provided by (used in) operating activities	301,990	(145,514)
Investing activities
Proceeds from maturities of investments	296,272	302,187
Proceeds from sales of investments	53,997	0
Purchases of investments	(58,459)	(176,412)
Purchases of property and equipment	(32,966)	(14,202)
Purchases of intangible assets	(4,503)	(3,269)
Net cash provided by investing activities	254,341	108,304
Financing activities
Proceeds from borrowings on credit facilities	34,460	129,328
Repayments of borrowings on credit facilities	(294,150)	0
Net borrowings (repayments) on warehouse lines of credit and repurchase agreement	4,386	(5,025)
Proceeds from exercise of stock options	92,202	13,564
Value of equity awards withheld for tax liability	0	2
Net cash provided by (used in) financing activities	(163,102)	137,869
Net increase in cash, cash equivalents and restricted cash during period	393,229	100,659
Cash, cash equivalents and restricted cash at beginning of period	1,230,909	663,443
Cash, cash equivalents and restricted cash at end of period	1,624,138	764,102
Supplemental disclosures of cash flow information
Cash paid for interest	17,038	4,956
Noncash transactions:
Capitalized share-based compensation	3,670	2,690
Write-off of fully depreciated property and equipment	4,143	6,269
Write-off of fully amortized intangible assets	0	3,200
Property and equipment purchased on account	$ 9,445	$ 4,792

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Allowance for doubtful accounts	$ 4,495	$ 4,522
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)	59,476,188	58,739,989
Common stock, outstanding (in shares)	59,476,188	58,739,989
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)	147,219,504	144,109,419
Common stock, outstanding (in shares)	147,219,504	144,109,419

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Contract Cost Assets

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Contract Cost Assets

Contract Cost AssetsAs of March 31, 2020 and December 31, 2019, we had $46.6 million and $45.2 million, respectively, of contract cost assets. During the three months ended March 31, 2020 and 2019, we did not incur any impairment losses. We recorded amortization expense related to contract cost assets of $8.4 million and $8.7 million during the three months ended March 31, 2020 and 2019, respectively.Deferred Revenue

The following table presents the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended March 31, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	253,729
Less: Revenue recognized	(258,129)
Balance as of March 31, 2020	$	35,347

During the three months ended March 31, 2020, we recognized as revenue a total of $36.0 million pertaining to amounts that were recorded in deferred revenue as of January 1, 2020.

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Segment Information and Revenue (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Revenue Categories

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

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	769,112	$	—	$	—	$	128,472	$	—	$	—
Premier Agent	—		242,106		—		—		217,735		—
Other	761		88,560		—		—		80,537		—
Mortgages	—		—		25,282		—		—		27,360
Total revenue	769,873		330,666		25,282		128,472		298,272		27,360
Costs and expenses:
Cost of revenue	732,199		24,318		5,155		122,419		24,251		4,678
Sales and marketing	71,589		120,173		12,886		20,862		126,654		14,071
Technology and development	32,538		95,028		7,352		12,281		87,969		7,520
General and administrative	23,421		58,754		10,110		14,357		70,850		10,567
Impairment costs	—		73,900		2,900		—		—		—
Integration costs	—		—		—		—		—		352
Total costs and expenses	859,747		372,173		38,403		169,919		309,724		37,188
Loss from operations	(89,874)		(41,507)		(13,121)		(41,447)		(11,452)		(9,828)
Segment other income	—		—		202		—		—		313
Segment interest expense	(8,084)		—		(226)		(3,758)		—		(101)
Loss before income taxes (1)	$	(97,958)	$	(41,507)	$	(13,145)	$	(45,205)	$	(11,452)	$	(9,616)

(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, unaudited):

	Three Months Ended March 31,
	2020		2019
Total segment loss before income taxes	$	(152,610)	$	(66,273)
Corporate interest expense	(29,282)		(12,607)
Corporate other income	9,391		8,855
Consolidated loss before income taxes	$	(172,501)	$	(70,025)

Reconciliation of Segment Gross Profit and 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, unaudited):

	Three Months Ended March 31,
	2020		2019
Total segment loss before income taxes	$	(152,610)	$	(66,273)
Corporate interest expense	(29,282)		(12,607)
Corporate other income	9,391		8,855
Consolidated loss before income taxes	$	(172,501)	$	(70,025)

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Deferred Revenue (Tables)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Change in Deferred Revenue

The following table presents the changes in deferred revenue for the periods presented (in thousands):

	Three Months Ended March 31, 2020
Balance as of January 1, 2020	$	39,747
Deferral of revenue	253,729
Less: Revenue recognized	(258,129)
Balance as of March 31, 2020	$	35,347

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Debt - Schedule of Credit Facilities (Details) - Homes Segment - Line of Credit	Mar. 31, 2020 USD ($)
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 1,500,000,000
Goldman Sachs Bank USA | Final Maturity Date, April 20, 2022
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 500,000,000
Weighted Average Interest Rate	4.13%
Citibank, N.A. | Final Maturity Date, January 31, 2022
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 500,000,000
Weighted Average Interest Rate	4.99%
Credit Suisse AG, Cayman Islands | Final Maturity Date, July 31, 2021
Debt Instrument [Line Items]
Maximum Borrowing Capacity	$ 500,000,000
Weighted Average Interest Rate	4.95%

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Debt - Summary of Conversion and Redemption Options and Details Related to Capped Call Confirmations (Details) - Convertible Debt	3 Months Ended
	Mar. 31, 2020 $ / shares
1.375% convertible senior notes due 2026
Debt Instrument [Line Items]
Conversion Rate	0.0229830
Conversion Price per Share (usd per share)	$ 43.51
Initial cap price (usd per share)	$ 80.5750
Cap Price Premium	150.00%
0.75% convertible senior notes due 2024
Debt Instrument [Line Items]
Conversion Rate	0.0229830
Conversion Price per Share (usd per share)	$ 43.51
Initial cap price (usd per share)	$ 72.5175
Cap Price Premium	125.00%
1.50% convertible senior notes due 2023
Debt Instrument [Line Items]
Conversion Rate	0.0127592
Conversion Price per Share (usd per share)	$ 78.37
Initial cap price (usd per share)	$ 105.45
Cap Price Premium	85.00%
2.00% convertible senior notes due 2021
Debt Instrument [Line Items]
Conversion Rate	0.0190985
Conversion Price per Share (usd per share)	$ 52.36
Initial cap price (usd per share)	$ 69.19
Cap Price Premium	85.00%

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Segment Information and Revenue - Reconciliation of Segment Gross Profit and Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting, Revenue Reconciling Item [Line Items]
Loss before income taxes	$ (172,501)	$ (70,025)
Corporate interest expense	(37,592)	(16,466)
Corporate other income	9,593	9,168
Consolidated loss before income taxes	(172,501)	(70,025)
Operating Segments
Segment Reporting, Revenue Reconciling Item [Line Items]
Loss before income taxes	(152,610)	(66,273)
Consolidated loss before income taxes	(152,610)	(66,273)
Corporate
Segment Reporting, Revenue Reconciling Item [Line Items]
Corporate interest expense	(29,282)	(12,607)
Corporate other income	$ 9,391	$ 8,855

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

3 Months Ended

Mar. 31, 2020

Cash and Cash Equivalents [Abstract]

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

Cash and Cash Equivalents, Short-term Investments and Restricted CashThe 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):

	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	202,182	$	—	$	—	$	202,182
Cash equivalents:
Money market funds	1,356,139		—		—		1,356,139
Commercial paper	9,389		—		—		9,389
Short-term investments:
U.S. government agency securities	709,163		4,418		—		713,581
Commercial paper	103,646		—		—		103,646
Treasury bills	82,485		93		—		82,578
Corporate notes and bonds	69,348		21		(104)		69,265
Municipal securities	23,176		31		(15)		23,192
Certificates of deposit	996		—		—		996
Restricted cash	56,428		—		—		56,428
Total	$	2,612,952	$	4,563	$	(119)	$	2,617,396

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Market Value
Cash	$	194,955	$	—	$	—	$	194,955
Cash equivalents:
Money market funds	872,431		—		—		872,431
U.S. government agency securities	35,011		—		(2)		35,009
Commercial paper	31,113		—		—		31,113
Treasury bills	6,441		—		—		6,441
Corporate notes and bonds	1,065		—		—		1,065
Certificates of deposit	249		—		—		249
Short-term investments:
U.S. government agency securities	861,862		365		(73)		862,154
Corporate notes and bonds	159,382		91		(42)		159,431
Commercial paper	150,267		—		—		150,267
Treasury bills	79,989		14		—		80,003
Municipal securities	27,836		56		(3)		27,889
Certificates of deposit	1,245		—		—		1,245
Restricted cash	89,646		—		—		89,646
Total	$	2,511,492	$	526	$	(120)	$	2,511,898

All available-for-sale investments as of March 31, 2020 have a contractual maturity date of one year or less.

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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, 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	13,564		13,564
Issuance of common and capital stock upon exercise of stock options (in shares)		729,788,000
Vesting of restricted stock units (in shares)		496,347,000
Shares and value of restricted stock units withheld for tax liability	(2)		(2)
Shares and value of restricted stock units withheld for tax liability (in shares)		(68,000)
Share-based compensation expense	68,814		68,814
Net loss	(67,525)			(67,525)
Other comprehensive income (loss)	1,102				1,102
Ending Balance at Mar. 31, 2019	3,283,132	$ 21	4,022,218	(739,304)	197
Ending Balance (in shares) at Mar. 31, 2019		205,130,332,000
Beginning Balance at Dec. 31, 2019	3,435,421	$ 21	4,412,200	(977,140)	340
Beginning Balance (in shares) at Dec. 31, 2019		209,066,855,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common and capital stock upon exercise of stock options	$ 92,202	$ 1	92,201
Issuance of common and capital stock upon exercise of stock options (in shares)	3,207,375	3,207,375,000
Vesting of restricted stock units (in shares)		638,909,000
Share-based compensation expense	$ 47,465		47,465
Net loss	(163,273)			(163,273)
Other comprehensive income (loss)	3,946				3,946
Ending Balance at Mar. 31, 2020	$ 3,415,761	$ 22	$ 4,551,866	$ (1,140,413)	$ 4,286
Ending Balance (in shares) at Mar. 31, 2020		212,913,139,000

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 1,567,710	$ 1,141,263
Short-term investments	993,258	1,280,989
Accounts receivable, net of allowance for doubtful accounts of $4,495 and $4,522 at March 31, 2020 and December 31, 2019, respectively	71,782	67,005
Mortgage loans held for sale	36,848	36,507
Inventory	533,989	836,627
Prepaid expenses and other current assets	57,635	58,117
Restricted cash	56,428	89,646
Total current assets	3,317,650	3,510,154
Contract cost assets	46,565	45,209
Property and equipment, net	188,032	170,489
Right of use assets	205,688	212,153
Goodwill	1,984,907	1,984,907
Intangible assets, net	112,274	190,567
Other assets	16,624	18,494
Total assets	5,871,740	6,131,973
Current liabilities:
Accounts payable	17,819	8,343
Accrued expenses and other current liabilities	88,897	85,442
Accrued compensation and benefits	32,838	37,805
Borrowings under credit facilities	466,647	721,951
Deferred revenue	35,347	39,747
Lease liabilities, current portion	20,290	17,592
Convertible senior notes, current portion	9,637	9,637
Total current liabilities	671,475	920,517
Lease liabilities, net of current portion	216,122	220,445
Long-term debt	1,565,949	1,543,402
Deferred tax liabilities and other long-term liabilities	2,433	12,188
Total liabilities	2,455,979	2,696,552
Commitments and contingencies (Note 16)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized; no shares issued and outstanding	0	0
Additional paid-in capital	4,551,866	4,412,200
Accumulated other comprehensive income	4,286	340
Accumulated deficit	(1,140,413)	(977,140)
Total shareholders’ equity	3,415,761	3,435,421
Total liabilities and shareholders’ equity	5,871,740	6,131,973
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	$ 15	$ 14

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Property and Equipment, net

3 Months Ended

Mar. 31, 2020

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):

	March 31, 2020		December 31, 2019
Website development costs	$	153,201	$	149,648
Leasehold improvements	101,970		81,981
Construction-in-progress	46,442		45,337
Office equipment, furniture and fixtures	40,612		36,582
Computer equipment	31,549		31,942
Property and equipment	373,774		345,490
Less: accumulated amortization and depreciation	(185,742)		(175,001)
Property and equipment, net	$	188,032	$	170,489

We recorded depreciation expense related to property and equipment (other than website development costs) of $11.8 million and $6.0 million during the three months ended March 31, 2020 and 2019, respectively.

We capitalized $12.5 million and $10.0 million in website development costs during the three months ended March 31, 2020 and 2019, respectively. Amortization expense for website development costs included in technology and development expenses was $5.4 million and $3.4 million during the three months ended March 31, 2020 and 2019, respectively.

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Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

Debt

The following table presents the carrying values of Zillow Group’s debt as of the periods presented (in thousands):

	March 31, 2020		December 31, 2019
Homes Segment
Credit facilities:
Goldman Sachs Bank USA	$	52,623	$	39,244
Citibank, N.A.	137,590		296,369
Credit Suisse AG, Cayman Islands	241,621		355,911
Total Homes Segment debt	431,834		691,524
Mortgages Segment
Repurchase agreement:
Citibank, N.A.	4,540		394
Warehouse line of credit:
Comerica Bank	30,273		30,033
Total Mortgages Segment debt	34,813		30,427
Convertible Senior Notes
1.375% convertible senior notes due 2026	332,129		327,187
0.75% convertible senior notes due 2024	498,666		490,538
1.50% convertible senior notes due 2023	314,233		310,175
2.00% convertible senior notes due 2021	420,921		415,502
2.75% convertible senior notes due 2020	9,637		9,637
Total convertible senior notes	1,575,586		1,553,039
Total	$	2,042,233	$	2,274,990

Homes Segment

To provide capital for Zillow Offers, we utilize credit facilities that are classified as current liabilities in our condensed consolidated balance sheets. We classify these credit facilities as current liabilities as amounts drawn to purchase homes are typically repaid as homes are sold, which we expect to be within one year. The following table summarizes certain details related to our credit facilities (in thousands, except interest rates):

Lender	Final Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Goldman Sachs Bank USA	April 20, 2022	$	500,000	4.13	%
Citibank, N.A.	January 31, 2022	500,000		4.99	%
Credit Suisse AG, Cayman Islands	July 31, 2021	500,000		4.95	%
	Total	$	1,500,000

Undrawn amounts available under the credit facilities included in the table above are not committed, meaning the applicable lender is not committed to, but may in its discretion, advance loan funds in excess of the outstanding borrowings. The final maturity dates are inclusive of extensions which are subject to agreement by the respective lender.

Zillow Group formed certain special purpose entities (each, an “SPE”) to purchase and sell residential properties through Zillow Offers. Each SPE is a wholly owned subsidiary of Zillow Group and a separate legal entity, and neither the assets nor credit of any such SPE are available to satisfy the debts and other obligations of any affiliate or other entity. The credit facilities are secured by the assets and equity of one or more SPEs. These SPEs are variable interest entities and Zillow Group is the primary beneficiary as it has the power to control the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses of the SPEs or the right to receive benefits from the SPEs that could potentially be significant to the SPEs. The SPEs are consolidated within Zillow Group’s condensed consolidated financial statements and primarily increased inventory and borrowings under credit facilities by $534.0 million and $431.8 million, respectively, as of March 31, 2020 and $836.6 million and $691.5 million, respectively, as of December 31, 2019.

Outstanding amounts drawn under each credit facility are required to be repaid on the facility maturity date or earlier if accelerated due to an event of default. Further, each SPE is required to repay any resulting shortfall if the value of the eligible properties owned by such SPE falls below a certain percentage of the principal amount outstanding under the applicable credit facility. Continued inclusion of properties in each credit facility is subject to various eligibility criteria. For example, aging criteria limit the inclusion in the borrowing base of properties owned longer than a specified number of days, and properties owned for longer than one year are generally ineligible.

The stated interest rate on our credit facilities is one-month LIBOR plus an applicable margin as defined in the respective credit agreements. Our credit facilities include customary representations and warranties, provisions regarding events of default and covenants. The terms of these credit facilities and related financing documents require Zillow Group and certain of its subsidiaries, as applicable, to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth, leverage ratios, adequate insurance coverage and market capitalization. As of March 31, 2020, Zillow Group was in compliance with all financial covenants and no event of default had occurred. Except for certain limited circumstances, the credit facilities are non-recourse to Zillow Group. Our credit facilities require that we establish, maintain and in certain circumstances that Zillow Group fund specified reserve accounts. These reserve accounts include, but are not limited to, interest reserves, insurance reserves, tax reserves, renovation cost reserves and reserves for specially permitted liens. Amounts funded to these reserve accounts and the collection accounts have been classified within our condensed consolidated balance sheets as restricted cash.

Mortgages Segment

To provide capital for Zillow Home Loans, we utilize a warehouse line of credit and a master repurchase agreement which are classified as current liabilities in our condensed consolidated balance sheets. The warehouse line of credit and repurchase agreement provide short-term financing between the issuance of a mortgage loan and when Zillow Home Loans sell the loan to an investor. The following table summarizes certain details related to our warehouse line of credit and repurchase agreement (in thousands, except interest rates):

Lender	Maturity Date	Maximum Borrowing Capacity		Weighted Average Interest Rate
Citibank, N.A.	October 27, 2020	$	75,000	2.82	%
Comerica Bank	June 27, 2020	50,000		3.40	%
	Total	$	125,000

The repurchase agreement with Citibank, N.A. includes a committed amount of $25.0 million. As of March 31, 2020 and December 31, 2019, $4.5 million and $0.4 million, respectively, in mortgage loans held for sale were pledged as collateral under the facility.

Borrowings on the warehouse line of credit and repurchase agreement bear interest at the one-month LIBOR plus an applicable margin, as defined in the governing credit agreements, and are secured by residential mortgage loans held for sale. The repurchase agreement contains margin call provisions that provide Citibank, N.A. with certain rights in the event of a decline in the market value of the assets purchased under the repurchase agreement.

The warehouse line of credit and repurchase agreement include customary representations and warranties, covenants and provisions regarding events of default. As of March 31, 2020, Zillow Home Loans was in compliance with all financial covenants and no event of default had occurred. The warehouse line of credit and repurchase agreement are recourse to Zillow Home Loans, but non-recourse to Zillow Group or any of its other subsidiaries.

For additional details related to our warehouse line of credit and repurchase agreement, see Note 15 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Convertible Senior Notes

The following tables summarize certain details related to our outstanding convertible senior notes as of the periods presented (in thousands, except interest rates):

									March 31, 2020				December 31, 2019
Maturity Date	Aggregate Principal Amount		Stated Interest Rate		Effective Interest Rate		First Interest Payment Date	Semi-Annual Interest Payment Dates	Unamortized Debt Discount and Debt Issuance Costs		Fair Value		Unamortized Debt Discount and Debt Issuance Costs		Fair Value
September 1, 2026	$	500,000	1.375	%	8.10	%	March 1, 2020	March 1; September 1	$	167,871	$	518,675	$	172,813	$	597,380
September 1, 2024	673,000		0.75	%	7.68	%	March 1, 2020	March 1; September 1	174,334		685,740		182,462		819,378
July 1, 2023	373,750		1.50	%	6.99	%	January 1, 2019	January 1; July 1	59,517		311,872		63,575		356,464
December 1, 2021	460,000		2.00	%	7.44	%	June 1, 2017	June 1; December 1	39,079		462,571		44,498		514,312
December 15, 2020	9,637		2.75	%	N/A		N/A	June 15; December 15	—		16,842		—		16,842
Total	$	2,016,387							$	440,801	$	1,995,700	$	463,348	$	2,304,376

	Three Months Ended March 31, 2020								Three Months Ended March 31, 2019
Maturity Date	Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense		Contractual Coupon Interest		Amortization of Debt Discount		Amortization of Debt Issuance Costs		Interest Expense
September 1, 2026	$	1,719	$	4,824	$	118	$	6,661	$	—	$	—	$	—	$	—
September 1, 2024	1,248		7,861		267		9,376		—		—		—		—
July 1, 2023	1,402		3,697		361		5,460		1,402		3,437		336		5,175
December 1, 2021	2,300		4,911		508		7,719		2,300		4,591		475		7,366
December 15, 2020	66		—		—		66		66		—		—		66
Total	$	6,735	$	21,293	$	1,254	$	29,282	$	3,768	$	8,028	$	811	$	12,607

The convertible notes are senior unsecured obligations and are classified as long-term debt in our condensed consolidated balance sheets with the exception of the convertible senior notes due December 15, 2020 which are classified within short-term liabilities. Interest on the convertible notes is paid semi-annually in arrears. The estimated fair value of the convertible senior notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for each of the convertible senior notes. The convertible senior notes maturing in 2026, 2024, 2023 and 2021 are not redeemable or convertible as of March 31, 2020. The convertible senior notes maturing in 2020 are convertible, at the option of the holder, and redeemable, at our option, as of March 31, 2020.

The convertible senior notes are convertible into cash, shares of Class C capital stock or a combination thereof, at our election, and may be settled as described below. The convertible senior notes will mature on their respective maturity date, unless earlier repurchased, redeemed or converted in accordance with their terms.

The following table summarizes the conversion and redemption options with respect to the convertible senior notes:

Maturity Date	Early Conversion Date	Conversion Rate	Conversion Price		Optional Redemption Date
September 1, 2026	March 1, 2026	22.9830	$	43.51	September 5, 2023
September 1, 2024	March 1, 2024	22.9830	43.51		September 5, 2022
July 1, 2023	April 1, 2023	12.7592	78.37		July 6, 2021
December 1, 2021	September 1, 2021	19.0985	52.36		December 6, 2019

The following table summarizes certain details related to the capped call confirmations with respect to the convertible senior notes:

Maturity Date	Initial Cap Price		Cap Price Premium
September 1, 2026	$	80.5750	150	%
September 1, 2024	72.5175		125	%
July 1, 2023	105.45		85	%
December 1, 2021	69.19		85	%

For additional details related to our convertible senior notes, see Note 15 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2020

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 March 31,
	2020	2019
Weighted-average Class A common stock and Class C capital stock option awards outstanding	23,663	19,408
Weighted-average Class A common stock and Class C capital stock restricted stock units outstanding	7,623	5,860
Class A common stock issuable upon conversion of the convertible notes maturing in 2020	407	421
Total Class A common stock and Class C capital stock equivalents	31,693	25,689

The following table presents the conversion spread and conversion price per share of Class C capital stock for each of the convertible senior notes (in thousands, except per share amounts):

Maturity Date	Conversion Spread	Conversion Price per Share
September 1, 2026	11,492	$	43.51
September 1, 2024	15,468	43.51
July 1, 2023	4,769	78.37
December 1, 2021	8,785	52.36

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Intangible Assets, net (Tables)

3 Months Ended

Mar. 31, 2020

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):

	March 31, 2020
	Cost		Accumulated Amortization		Net
Trade names and trademarks	$	36,500	$	—	$	36,500
Customer relationships	102,600		(77,571)		25,029
Developed technology	107,200		(84,361)		22,839
Software	37,476		(22,745)		14,731
Intangibles-in-progress	7,298		—		7,298
Purchased content	48,925		(43,181)		5,744
Lender licenses	400		(267)		133
Total	$	340,399	$	(228,125)	$	112,274

	December 31, 2019
	Cost		Accumulated Amortization		Net
Customer relationships	$	102,600	$	(73,770)	$	28,830
Developed technology	107,200		(81,383)		25,817
Software	35,527		(20,843)		14,684
Purchased content	47,298		(40,636)		6,662
Intangibles-in-progress	6,391		—		6,391
Lender licenses	400		(217)		183
Total	$	299,416	$	(216,849)	$	82,567

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

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 2020 and 2030. For additional information regarding our lease agreements, see Note 14 in our Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019.

Purchase Commitments

Purchase commitments primarily include various non-cancelable agreements to purchase content related to our mobile applications and websites and certain cloud computing services 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 March 31, 2020, the value of homes under contract that have not closed was $14.9 million.

Letters of Credit

As of March 31, 2020, 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 $10.0 million and $10.2 million, respectively, as of March 31, 2020 and December 31, 2019.

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. For the matters discussed below, we have not recorded any material accruals as of March 31, 2020 or December 31, 2019.

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 October 7, 2019, the United States Supreme Court denied VHT’s petition for writ of certiorari seeking review of certain rulings by the Ninth Circuit Court of Appeals. On December 9, 2019, the Company filed a motion for summary judgment with the district court seeking a ruling that VHT’s images are a compilation, or in the alternative, seeking a dismissal of the case based on a recent United States Supreme Court ruling. We do not believe there is a reasonable possibility that a material loss will be incurred related to this complaint.

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 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. On October 11, 2019, plaintiffs filed a motion for class certification, and we filed our motion in opposition on March 20, 2020. We have denied the allegations of wrongdoing and intend to vigorously defend the claims in this lawsuit. We do not believe a loss related to this complaint 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, which we moved to dismiss on August 22, 2019. On February 28, 2020, our motion to dismiss the consolidated shareholder derivative complaint was denied. We do not believe a loss is probable related to these lawsuits.

On September 17, 2019, International Business Machines Corporation (“IBM”) filed a complaint against us in the United States District Court for the Central District of California, alleging, among other things, that the Company has infringed and continues to willfully infringe seven patents held by IBM and seeks unspecified damages, including a request that the amount of compensatory damages be trebled, injunctive relief and costs and reasonable attorneys’ fees. On December 2, 2019, IBM filed an amended complaint. On December 16, 2019, the Company filed a motion to transfer venue and a motion to dismiss the complaint. We deny the allegations of any wrongdoing and intend to vigorously defend the claims in the lawsuit. There is a reasonable possibility that a loss may be incurred related to this complaint; however, the possible loss or range of loss is not estimable.

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

Indemnifications

In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements and out of intellectual property infringement claims made by third parties. In addition, we have agreements that indemnify certain issuers of surety bonds against losses that they may incur as a result of executing surety bonds on our behalf. For our indemnification arrangements, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with certain of our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurement Inputs and Valuation Techniques

The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the periods presented:

	March 31, 2020	December 31, 2019
Range	43% - 100%	56% - 100%
Weighted average	75%	78%

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):

	March 31, 2020
	Total		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,356,139	$	1,356,139	$	—	$	—
Commercial paper	9,389		—		9,389		—
Short-term investments:
U.S. government agency securities	713,581		—		713,581		—
Commercial paper	103,646		—		103,646		—
Treasury bills	82,578		—		82,578		—
Corporate notes and bonds	69,265		—		69,265		—
Municipal securities	23,192		—		23,192		—
Certificates of deposit	996		—		996		—
Mortgage origination-related:
Mortgage loans held for sale	36,848		—		36,848		—
IRLCs	2,225		—		—		2,225
Forward contracts - other current liabilities	2,039		—		2,039		—
Total	$	2,399,898	$	1,356,139	$	1,041,534	$	2,225

	December 31, 2019
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	872,431	$	872,431	$	—
U.S. government agency securities	35,009		—		35,009
Commercial paper	31,113		—		31,113
Treasury bills	6,441		—		6,441
Corporate notes and bonds	1,065		—		1,065
Certificates of deposit	249		—		249
Short-term investments:
U.S. government agency securities	862,154		—		862,154
Corporate notes and bonds	159,431		—		159,431
Commercial paper	150,267		—		150,267
Treasury bills	80,003		—		80,003
Municipal securities	27,889		—		27,889
Certificates of deposit	1,245		—		1,245
Mortgage origination-related:
Mortgage loans held for sale	36,507		—		36,507
IRLCs	937		—		937
Forward contracts - other current assets	7		—		7
Forward contracts - other current liabilities	(60)		—		(60)
Total	$	2,264,688	$	872,431	$	1,392,257

Schedule of Changes in IRLCs

The following table presents the changes in our IRLCs during the three months ended March 31, 2020 (in thousands):

Balance as of January 1, 2020 (1)	$	937
Issuances	5,208
Transfers	(5,349)
Fair value changes recognized in earnings	1,429
Balance as of March 31, 2020	$	2,225
(1) Amount represents transfers of IRLCs from Level 2 to Level 3 within the fair value hierarchy as of January 1, 2020.

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Property and Equipment, net - Detail of Property and Equipment (Detail) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property and equipment	$ 373,774	$ 345,490
Less: accumulated amortization and depreciation	(185,742)	(175,001)
Property and equipment, net	188,032	170,489
Website development costs
Property, Plant and Equipment [Line Items]
Property and equipment	153,201	149,648
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	101,970	81,981
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment	46,442	45,337
Office equipment, furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment	40,612	36,582
Computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment	$ 31,549	$ 31,942

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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	Mar. 31, 2020	Dec. 31, 2019
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 1,567,710	$ 1,141,263
Short-term investments:
Gross Unrealized Gains	4,563	526
Gross Unrealized Losses	(119)	(120)
Restricted cash	56,428	89,646
Cash, cash equivalents, short-term investments, and restricted cash, amortized cost	2,612,952	2,511,492
Cash, cash equivalents, short-term investments, and restricted cash, estimated fair market value	2,617,396	2,511,898
U.S. government agency securities
Short-term investments:
Amortized Cost	709,163	861,862
Gross Unrealized Gains	4,418	365
Gross Unrealized Losses	0	(73)
Estimated Fair Market Value	713,581	862,154
Commercial paper
Short-term investments:
Amortized Cost	103,646	150,267
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Market Value	103,646	150,267
Corporate notes and bonds
Short-term investments:
Amortized Cost	69,348	159,382
Gross Unrealized Gains	21	91
Gross Unrealized Losses	(104)	(42)
Estimated Fair Market Value	69,265	159,431
Treasury bills
Short-term investments:
Amortized Cost	82,485	79,989
Gross Unrealized Gains	93	14
Gross Unrealized Losses	0	0
Estimated Fair Market Value	82,578	80,003
Municipal securities
Short-term investments:
Amortized Cost	23,176	27,836
Gross Unrealized Gains	31	56
Gross Unrealized Losses	(15)	(3)
Estimated Fair Market Value	23,192	27,889
Certificates of deposit
Short-term investments:
Amortized Cost	996	1,245
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Market Value	996	1,245
Cash
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	202,182	194,955
Money market funds
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	1,356,139	872,431
U.S. government agency securities
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents, at cost		35,011
Cash and cash equivalents, gross unrealized losses		(2)
Cash and cash equivalents		35,009
Commercial paper
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents	$ 9,389	31,113
Treasury bills
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents		6,441
Corporate notes and bonds
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents		1,065
Certificates of deposit
Cash and Cash Equivalents, at Carrying Value [Abstract]
Cash and cash equivalents		$ 249

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Share-Based Awards - Option Awards - Additional Information (Detail) $ in Millions	Mar. 31, 2020 USD ($)
Option Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized cost of unvested share-based compensation awards	$ 236.2

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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
	Mar. 31, 2020	Mar. 31, 2019
September 1, 2026 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)	11,492
Conversion Price per Share (usd per share)	$ 43.51
September 1, 2024 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)	15,468
Conversion Price per Share (usd per share)	$ 43.51
1.50% convertible senior notes due 2023 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)	4,769
Conversion Price per Share (usd per share)	$ 78.37
December 1, 2021 | Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion Spread (in shares)	8,785
Conversion Price per Share (usd per share)	$ 52.36
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)	31,693	25,689
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)	23,663	19,408
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)	7,623	5,860
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)	407	421

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Segment Information and Revenue - Revenue Categories (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
Revenue:
Total revenue		$ 1,125,821	$ 454,104
Costs and expenses:
Cost of revenue	[1]	761,672	151,348
Sales and marketing		204,648	161,587
Technology and development		134,918	107,770
General and administrative		92,285	95,774
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		76,800	0
Integration costs		0	352
Total costs and expenses		1,270,323	516,831
Loss from operations		(144,502)	(62,727)
Other income		9,593	9,168
Interest expense		(37,592)	(16,466)
Loss before income taxes		(172,501)	(70,025)
Homes
Revenue:
Total revenue		769,873	128,472
Costs and expenses:
Cost of revenue	[1]	732,199	122,419
Sales and marketing		71,589	20,862
Technology and development		32,538	12,281
General and administrative		23,421	14,357
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		0	0
Integration costs		0	0
Total costs and expenses		859,747	169,919
Loss from operations		(89,874)	(41,447)
Other income		0	0
Interest expense		(8,084)	(3,758)
Loss before income taxes		(97,958)	(45,205)
Homes | Zillow Offers
Revenue:
Total revenue		769,112	128,472
Homes | Premier Agent
Revenue:
Total revenue		0	0
Homes | Other
Revenue:
Total revenue		761	0
Homes | Mortgages
Revenue:
Total revenue		0	0
IMT
Revenue:
Total revenue		330,666	298,272
Costs and expenses:
Cost of revenue	[1]	24,318	24,251
Sales and marketing		120,173	126,654
Technology and development		95,028	87,969
General and administrative		58,754	70,850
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		73,900	0
Integration costs		0	0
Total costs and expenses		372,173	309,724
Loss from operations		(41,507)	(11,452)
Other income		0	0
Interest expense		0	0
Loss before income taxes		(41,507)	(11,452)
IMT | Zillow Offers
Revenue:
Total revenue		0	0
IMT | Premier Agent
Revenue:
Total revenue		242,106	217,735
IMT | Other
Revenue:
Total revenue		88,560	80,537
IMT | Mortgages
Revenue:
Total revenue		0	0
Mortgages Segment
Revenue:
Total revenue		25,282	27,360
Costs and expenses:
Cost of revenue	[1]	5,155	4,678
Sales and marketing		12,886	14,071
Technology and development		7,352	7,520
General and administrative		10,110	10,567
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount		2,900	0
Integration costs		0	352
Total costs and expenses		38,403	37,188
Loss from operations		(13,121)	(9,828)
Other income		202	313
Interest expense		(226)	(101)
Loss before income taxes		(13,145)	(9,616)
Mortgages Segment | Zillow Offers
Revenue:
Total revenue		0	0
Mortgages Segment | Premier Agent
Revenue:
Total revenue		0	0
Mortgages Segment | Other
Revenue:
Total revenue		0	0
Mortgages Segment | Mortgages
Revenue:
Total revenue		$ 25,282	$ 27,360

[1] Amortization of website development costs and intangible assets included in technology and development of $0 and $14,400 for the three months ended March 31, 2020 and 2019.