Segment Information and Revenue

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Information and Revenue

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, 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. On November 2, 2021, the Board of Directors of the Company made the determination to wind down Zillow Offers operations. The IMT segment includes the financial results for the Premier Agent, rentals and new construction marketplaces, dotloop and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. Beginning in the fourth quarter of 2021, the IMT segment also includes the financial results of ShowingTime. The Mortgages segment primarily includes the financial results for mortgage originations and the sale of mortgages on the secondary market through Zillow Home Loans and advertising sold to mortgage lenders and other mortgage professionals.

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, costs related to operating our mobile applications, and websites 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 income (loss) before income taxes by segment. This information is included in the following tables for the periods presented (in thousands) and prior period amounts have been recast to conform to the current format (see Note 2 for additional details regarding the reclassifications):

	Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages		Homes		IMT		Mortgages
Revenue:
Zillow Offers	$	5,982,357	$	—	$	—	$	1,710,535	$	—	$	—	$	1,365,250	$	—	$	—
Premier Agent	—		1,395,723		—		—		1,046,954		—		—		923,876		—
Other	33,421		490,059		—		4,840		403,278		—		—		353,020		—
Mortgages	—		—		245,816		—		—		174,210		—		—		100,691
Total revenue	6,015,778		1,885,782		245,816		1,715,375		1,450,232		174,210		1,365,250		1,276,896		100,691
Cost of revenue (1)	6,106,944		203,449		83,784		1,634,755		193,097		38,540		1,324,464		193,885		25,750
Gross profit (loss)	(91,166)		1,682,333		162,032		80,620		1,257,135		135,670		40,786		1,083,011		74,941
Operating expenses (1):
Sales and marketing	414,797		552,592		108,846		190,818		440,517		59,784		171,571		503,473		53,587
Technology and development	124,513		317,663		32,220		106,218		260,277		23,677		69,962		255,964		24,997
General and administrative	118,790		258,161		71,822		87,034		224,757		44,931		81,383		243,514		41,122
Impairment and restructuring costs	71,247		—		926		—		73,900		2,900		—		—		—
Acquisition-related costs	—		8,615		—		—		—		—		—		—		—
Integration costs	—		680		—		—		—		—		—		—		650
Total operating expenses	729,347		1,137,711		213,814		384,070		999,451		131,292		322,916		1,002,951		120,356
Income (loss) from operations	(820,513)		544,622		(51,782)		(303,450)		257,684		4,378		(282,130)		80,060		(45,415)
Segment other income	2,878		—		5,019		—		5,300		2,369		—		—		1,409
Segment interest expense	(63,829)		(32)		(5,060)		(16,804)		—		(2,233)		(29,990)		—		(956)
Income (loss) before income taxes (2)	$	(881,464)	$	544,590	$	(51,823)	$	(320,254)	$	262,984	$	4,514	$	(312,120)	$	80,060	$	(44,962)

(1) The following table presents depreciation and amortization expense and share-based compensation expense for each of our segments for the periods presented (in thousands):

	Year Ended December 31, 2021						Year Ended December 31, 2020						Year Ended December 31, 2019
	Homes		IMT		Mortgages		Homes		IMT		Mortgages		Homes		IMT		Mortgages
Depreciation and amortization expense	$	22,393	$	99,026	$	8,361	$	13,315	$	89,862	$	6,854	$	8,414	$	73,369	$	5,684
Share-based compensation expense	$	76,879	$	200,963	$	33,844	$	48,166	$	134,691	$	14,693	$	32,390	$	150,434	$	16,078

(2) 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):

	Year Ended December 31,
	2021		2020		2019
Total segment loss before income taxes	$	(388,697)	$	(52,756)	$	(277,022)
Corporate interest expense	(122,989)		(136,190)		(70,846)
Corporate other income	2,291		17,860		38,249
Gain (loss) on extinguishment of debt	(17,119)		1,448		—
Consolidated loss before income taxes	$	(526,514)	$	(169,638)	$	(309,619)

Certain corporate items are not directly attributable to any of our segments, including the gain (loss) on extinguishment of debt, interest income earned on our short-term investments included in other income and interest costs on our convertible senior notes included in interest expense.