Zillow Group, Inc. (NASDAQ:Z) (NASDAQ:ZG), which houses a portfolio
of the largest and most vibrant real estate and home-related brands
on mobile and web, today announced its consolidated financial
results for the three months ended June 30, 2016.
“Record revenue and traffic growth were
highlights of Zillow Group’s tremendous second quarter,” said
Zillow Group CEO Spencer Rascoff. “We continue to command
significant category leadership on mobile and web, reaching an
all-time high of unique users in May and achieving our largest
market share of the real estate category. It is clear that our
monetization on mobile is benefiting from our significant market
leadership, which now captures 78% of the mobile-only category. We
are executing well against our long-term strategic priorities to
increase our audience size, grow our Premier Agent and emerging
marketplaces, and attract and retain the best talent in the
industry.”
Second Quarter 2016 Financial
Highlights
Throughout this release, certain historical
financial results and year-over-year comparisons are presented on a
pro forma basis. Pro forma results exclude items described in the
reconciliation tables below and assume the February 2015
acquisition of Trulia occurred on January 1, 2014, the beginning of
the comparable reporting period for the year prior to the year of
acquisition. The pro forma results are presented in order to
provide additional insights into the underlying trends in the
business. Financial information for the three and six month periods
ended June 30, 2016 is presented in this release on an as-reported
basis. Reported results were prepared in accordance with U.S.
generally accepted accounting principles (GAAP) unless otherwise
noted.
- Revenue increased 31% to $208.4 million from $158.7 million in
the second quarter of 2015, excluding revenue from Market Leader,
which was divested in the third quarter of 2015.
- Marketplace Revenue increased 44% to $191.6 million from $133.0
million in the second quarter of 2015, excluding revenue from
Market Leader.
- Premier Agent Revenue increased 28% to $147.1 million from
$115.2 million in the second quarter of 2015.
- Other Real Estate Revenue1 increased 254% to $26.1 million
from $7.4 million in the second quarter of 2015.
- Mortgages Revenue increased 77% to $18.4 million from $10.4
million in the second quarter of 2015.
- Display Revenue decreased 35% to $16.8 million from $25.8
million in the second quarter of 2015. The decrease is primarily a
result of the company’s strategy to deemphasize display advertising
and improve the user experience.
- GAAP net loss was $156.1 million in the second quarter of 2016,
which includes the impact of a $130.0 million litigation settlement
and $12.5 million in related legal costs, compared to GAAP net loss
of $38.7 million in the same period last year.
- Adjusted EBITDA was $(101.3) million in the second quarter of
2016, which was a decrease from $21.0 million, or 12% of Revenue,
in the second quarter of 2015. Adjusted EBITDA in the second
quarter of 2016 includes the impact of a $130.0 million litigation
settlement and $12.5 million in related legal costs. Excluding the
impact of the $130.0 million litigation settlement, Adjusted EBITDA
in the second quarter of 2016 would have been $28.7 million, or 14%
of Revenue.
Operating and Business Highlights
- More than 168 million average monthly unique users for
the second quarter of 2016.
- All-time high of more than 171 million unique users in May to
Zillow Group consumer brands Zillow, Trulia, StreetEasy, HotPads
and Naked Apartments, an increase of 20% year-over-year.
- In June, Zillow Group’s market share was up 4 percentage points
since March 2016, capturing 67% of the mobile and web real estate
audience.2
- When looking at mobile-only, Zillow Group’s market share is
even larger, capturing 78% of the category.2
- Leads to Zillow Group Premier Agent® Advertisers for
the second quarter of 2016 grew nearly 50% year over year to more
than 4 million.
- The Premier Agent marketplace continues to accelerate
as top performing agents realize the benefits of advertising on
Zillow Group’s mobile applications and websites.
- Total sales to Premier Agent Advertisers who have been
customers for more than one year increased 57% year-over-year.
- Sales to existing Premier Agent Advertisers accounted for 70%
of total bookings.
- Premier Agent Advertisers who spend more than $5,000 per month:
- Increased 73% year-over-year on a total dollar basis.
- Increased 68% year-over-year in the number of agent
advertisers.
|
1 Other Real Estate Revenue includes agent
services, dotloop, StreetEasy, Naked Apartments, rentals and other
offerings to endemic advertisers that are not traditional display
advertising. |
2 comScore data June 2016 |
Business Outlook - Third Quarter and Full Year
2016
For full year 2016, Zillow Group is increasing its outlook for
Revenue to a range of $830 million to $840 million, up from a range
of $825 million to $835 million. The 2016 Revenue outlook
represents a 30% year-over-year increase at the midpoint of the
range, compared to a 24% increase from 2014 to 2015, on a pro forma
basis and excluding revenue from Market Leader, which was
divested in 2015.
The following table presents Zillow Group’s business outlook for
the periods presented (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ending |
|
Year Ending |
|
Zillow Group Outlook as of August 4, 2016 |
|
September 30, 2016 |
|
December 31, 2016 |
|
(in
millions) |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
217 |
|
to |
$ |
222 |
|
|
$ |
830 |
|
to |
$ |
840 |
|
|
Premier Agent
revenue |
|
$ |
156 |
|
to |
$ |
158 |
|
|
$ |
597 |
|
to |
$ |
602 |
|
|
Display revenue |
|
$ |
15 |
|
to |
$ |
16 |
|
|
$ |
60 |
|
to |
$ |
62 |
|
|
Operating expenses |
|
$ |
220 |
|
to |
$ |
225 |
|
|
*** |
|
Adjusted EBITDA
(1) |
|
$ |
48 |
|
to |
$ |
53 |
|
|
$ |
125 |
|
to |
$ |
135 |
|
|
Depreciation and
amortization |
|
$ |
24 |
|
to |
$ |
26 |
|
|
$ |
97 |
|
to |
$ |
102 |
|
|
Share-based
compensation expense |
|
$ |
26 |
|
to |
$ |
28 |
|
|
$ |
105 |
|
to |
$ |
110 |
|
|
Capital
expenditures |
|
*** |
|
$ |
44 |
|
to |
$ |
46 |
|
|
Weighted average shares
outstanding — basic |
|
|
179.5 |
|
to |
181.5 |
|
|
|
179.0 |
|
to |
181.0 |
|
|
Weighted average shares
outstanding — diluted |
|
|
196.0 |
|
to |
198.0 |
|
|
|
195.5 |
|
to |
197.5 |
|
|
|
|
|
|
|
|
|
|
|
|
*** Outlook not
provided |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Forecasted Adjusted EBITDA for the year ending December 31,
2016 in the table above excludes the impact of a $130.0 million
litigation settlement and includes $28.2 million in related legal
costs. Including the impact of the $130.0 million litigation
settlement and $28.2 million in related legal costs, forecasted
Adjusted EBITDA for the year ending December 31, 2016 is $0. A
reconciliation of forecasted Adjusted EBITDA (including the impact
of the $130.0 million litigation settlement and $28.2 million in
related legal costs) to forecasted net loss is provided below in
this press release.
Conference Call and Webcast Information
Zillow Group’s CEO Spencer Rascoff and CFO Kathleen Philips will
host a live conference call and webcast to discuss the results
today at 2 p.m. Pacific Time (5 p.m. Eastern Time). A copy of
management’s prepared remarks will be made available on the
investor relations section of Zillow Group, Inc.’s website at
http://investors.zillowgroup.com/results.cfm prior to the live
conference call and webcast to allow analysts and investors
additional time to review the details of the results.
Zillow Group’s management will first read the prepared remarks
and then answer questions submitted via Twitter® during the live
conference call, in addition to answering questions from dialed-in
participants. Questions can be submitted to the
@ZillowGroup Twitter® handle using #ZEarnings.
A link to the live webcast of the conference call will be
available on the investor relations section of Zillow Group,
Inc.’s website
at http://investors.zillowgroup.com/results.cfm. The live call
may also be accessed via phone at (877) 643-7152 toll-free
domestically and at (443) 863-7921 internationally, with conference
ID# 42951979. Following completion of the call, a recorded replay
of the webcast will be available on the investor relations section
of Zillow Group, Inc.’s website.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 that
involve risks and uncertainties, including, without limitation,
statements regarding our business outlook, strategic priorities,
and operational plans for 2016. Statements containing words such as
“may,” “believe,” “anticipate,” “expect,” “intend,” “plan,”
“project,” “will,” “projections,” “continue,” “business outlook,”
“estimate,” “outlook,” or similar expressions constitute
forward-looking statements. Differences in Zillow Group’s actual
results from those described in these forward-looking statements
may result from actions taken by Zillow Group as well as from risks
and uncertainties beyond Zillow Group’s control. Factors that may
contribute to such differences include, but are not limited to,
Zillow Group’s ability to successfully integrate and realize the
benefits of our past or future strategic acquisitions or
investments; Zillow Group’s ability to maintain and effectively
manage an adequate rate of growth; Zillow Group’s ability to
maintain or establish relationships with listings and data
providers; the impact of the real estate industry on Zillow Group’s
business; Zillow Group’s ability to innovate and provide products
and services that are attractive to its users and advertisers;
Zillow Group’s ability to increase awareness of the Zillow Group
brands; Zillow Group’s ability to attract consumers to Zillow
Group’s mobile applications and websites; Zillow Group’s ability to
compete successfully against existing or future competitors; the
reliable performance of Zillow Group’s network infrastructure and
content delivery processes; and Zillow Group’s ability to protect
its intellectual property. The foregoing list of risks and
uncertainties is illustrative, but is not exhaustive. For more
information about potential factors that could affect Zillow
Group’s business and financial results, please review the “Risk
Factors” described in Zillow Group’s Annual Report on Form 10-K for
the year ended December 31, 2015 filed with the Securities and
Exchange Commission, or SEC, and in Zillow Group’s other filings
with the SEC. Except as may be required by law, Zillow Group does
not intend, and undertakes no duty, to update this information to
reflect future events or circumstances.
Use of Non-GAAP Financial Measures
To provide investors with additional information
regarding our financial results, this press release includes
references to certain pro forma financial results, Adjusted EBITDA
and non-GAAP net income (loss) per share, all of which are non-GAAP
financial measures. We have provided a reconciliation of pro forma
Adjusted EBITDA to pro forma net loss, Adjusted EBITDA to net loss,
the most directly comparable GAAP financial measure, and a
reconciliation of net income (loss), adjusted, to net loss, as
reported on a GAAP basis, and the calculations of non-GAAP net
income (loss) per share - basic and diluted and pro forma
weighted-average shares outstanding – basic and diluted, within
this earnings release.
The pro forma financial results included in this
press release, although helpful in illustrating the financial
characteristics of Zillow Group under one set of assumptions, are
not true historical financial results. They are provided for
informational purposes and do not attempt to represent Zillow
Group’s actual financial condition if the February 2015 acquisition
of Trulia had been completed on the applicable dates of the
financial statements presented herein, or to predict or suggest
future results.
Adjusted EBITDA is a key metric used by our
management and board of directors to measure operating performance
and trends, and to prepare and approve our annual budget. In
particular, the exclusion of certain expenses in calculating
Adjusted EBITDA facilitates operating performance comparisons on a
period-to-period basis.
Our use of Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our results as reported under GAAP.
Some of these limitations are:
- Adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive
impact of share-based compensation;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA does not reflect acquisition-related
costs;
- Adjusted EBITDA does not reflect restructuring costs;
- Adjusted EBITDA does not reflect interest expense or other
income;
- Adjusted EBITDA does not reflect the impact of income taxes;
and
- Other companies, including companies in our own industry, may
calculate Adjusted EBITDA differently than we do, limiting its
usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted
EBITDA alongside other financial performance measures, including
various cash flow metrics, net loss and our other GAAP results.
Our presentation of non-GAAP net income (loss) per share
excludes the impact of share-based compensation expense,
acquisition-related costs, restructuring costs and income taxes.
This measure is not a key metric used by our management and board
of directors to measure operating performance or otherwise manage
the business. However, we provide non-GAAP net income (loss) per
share as supplemental information to investors, as we believe the
exclusion of share-based compensation expense, acquisition-related
costs, restructuring costs and income taxes facilitates investors’
operating performance comparisons on a period-to-period basis. You
should not consider these metrics in isolation or as substitutes
for analysis of our results as reported under GAAP.
About Zillow Group
Zillow Group (NASDAQ:Z) (NASDAQ:ZG) houses a portfolio of the
largest real estate and home-related brands on mobile and the web.
The company's brands focus on all stages of the home lifecycle:
renting, buying, selling, financing and home improvement. Zillow
Group is committed to empowering consumers with unparalleled data,
inspiration and knowledge around homes, and connecting them with
the right local professionals to help. The Zillow Group portfolio
of consumer brands includes real estate and rental marketplaces
Zillow®, Trulia®, StreetEasy®, HotPads® and Naked Apartments®. In
addition, Zillow Group works with tens of thousands of real estate
agents, lenders and rental professionals, helping maximize business
opportunities and connect to millions of consumers. The company
operates a number of business brands for real estate, rental and
mortgage professionals, including Mortech®, dotloop® and
Retsly®. The company is headquartered in Seattle.
Please visit http://investors.zillowgroup.com,
www.zillowgroup.com/ir-blog, and www.twitter.com/zillowgroup, where
Zillow Group discloses information about the company, its financial
information, and its business which may be deemed material.
The Zillow Group logo is available at
http://zillowgroup.mediaroom.com/logos-photos.
Zillow, Premier Agent, Mortech, StreetEasy, Retsly and HotPads
are registered trademarks of Zillow, Inc. Trulia is
a registered trademark of Trulia, LLC. dotloop is a registered
trademark of DotLoop, LLC. Naked Apartments is a
registered trademark of Naked Apartments, Inc.
Twitter is a registered trademark of Twitter, Inc.
(ZFIN)
Pro Forma Financial Information
The following financial information for the three and six month
periods ended June 30, 2015 is presented on a pro forma basis and
gives effect to the February 2015 acquisition of Trulia as if it
were consummated on January 1, 2014, the beginning of the
comparable reporting period for the year prior to the year of
acquisition. For ease of year-over-year comparison, this pro forma
financial information is presented with financial information for
the three and six month periods ended June 30, 2016, which is
presented on an as-reported basis (in thousands, except per share
data, unaudited):
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 (1) |
|
2015 (2) |
|
2016 (1) |
|
2015 (3) |
|
|
|
|
|
|
|
|
|
|
Pro forma revenue |
$ |
208,403 |
|
|
$ |
171,269 |
|
|
$ |
394,385 |
|
|
$ |
333,800 |
|
|
Pro forma net loss |
$ |
(156,149 |
) |
|
$ |
(26,731 |
) |
|
$ |
(203,754 |
) |
|
$ |
(44,585 |
) |
|
Pro forma net loss per
share — basic and diluted |
$ |
(0.87 |
) |
|
$ |
(0.15 |
) |
|
$ |
(1.14 |
) |
|
$ |
(0.25 |
) |
|
Pro forma
weighted-average shares outstanding — basic and diluted |
|
179,451 |
|
|
|
176,142 |
|
|
|
179,067 |
|
|
|
175,290 |
|
|
_________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Data: |
|
|
|
|
|
|
|
|
Pro forma Adjusted
EBITDA (4) |
$ |
(101,260 |
) |
|
$ |
21,039 |
|
|
$ |
(99,386 |
) |
|
$ |
45,540 |
|
|
|
|
|
|
|
|
|
|
|
(1) The financial information for the three and six month
periods ended June 30, 2016 is presented on an as-reported
basis.
(2) The pro forma net loss for the three months ended June 30,
2015 includes pro forma adjustments for $6.7 million to eliminate
restructuring costs associated with the acquisition of Trulia
reflected in the historical financial statements, $3.7 million to
eliminate share-based compensation expense attributable to
substituted equity awards and $1.7 million to eliminate direct and
incremental acquisition-related costs reflected in the historical
financial statements.
(3) The pro forma net loss for the six months ended June 30,
2015 includes pro forma adjustments for $47.9 million to eliminate
direct and incremental acquisition-related costs reflected in the
historical financial statements, $37.3 million to eliminate
share-based compensation expense attributable to substituted equity
awards and to record additional share-based compensation expense
attributable to substituted equity awards, $31.9 million to
eliminate restructuring costs associated with the acquisition of
Trulia reflected in the historical financial statements, $2.4
million to record additional amortization expense for acquired
intangible assets and $1.1 million to eliminate Trulia’s historical
amortization of capitalized website development costs.
(4) See below for a reconciliation of pro forma Adjusted EBITDA
to pro forma net loss. For the three and six month periods ended
June 30, 2016, Adjusted EBITDA includes the impact of a $130.0
million litigation settlement. Adjusted EBITDA for the three and
six month periods ended June 30, 2016 also includes $12.5 million
and $28.2 million, respectively, in related legal costs.
The basic and diluted pro forma net loss per share is based on
the weighted-average number of shares of Zillow Group common stock
and Class C capital stock outstanding for the period presented and
adjusted for the number of shares of Class A common stock issued in
connection with the February 2015 acquisition of Trulia, assuming
for the purposes of the unaudited pro forma condensed combined
statements of operations that the closing date of the acquisition
was January 1, 2014. The calculation of the number of shares
used in the computation of pro forma basic and diluted net loss per
share is as follows (in thousands, unaudited):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding — basic and diluted (1) |
127,671 |
|
124,362 |
|
127,287 |
|
123,510 |
|
Class A common stock
issued in connection with the acquisition of Trulia |
51,780 |
|
51,780 |
|
51,780 |
|
51,780 |
|
Pro forma
weighted-average shares outstanding — basic and diluted |
179,451 |
|
176,142 |
|
179,067 |
|
175,290 |
|
|
|
|
|
|
|
|
|
|
(1) Amounts
exclude shares of Zillow Group Class A common stock issued in
connection with the acquisition of Trulia. |
|
|
The following table presents a reconciliation of pro forma
Adjusted EBITDA to pro forma net loss for the three and six month
periods ended June 30, 2015. For ease of year-over-year comparison,
this pro forma financial information is presented with financial
information for the three and six month periods ended June 30,
2016, which is presented on an as-reported basis (in thousands,
unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2016 (1) |
|
|
2015 |
|
|
2016 (1) |
|
|
2015 |
|
|
Reconciliation
of Pro Forma Adjusted EBITDA to Pro Forma Net Loss: |
|
|
|
|
|
|
|
|
|
Pro forma net loss |
|
$ |
(156,149 |
) |
|
$ |
(26,731 |
) |
|
$ |
(203,754 |
) |
|
$ |
(44,585 |
) |
|
Pro forma other
income |
|
|
(753 |
) |
|
|
(450 |
) |
|
|
(1,434 |
) |
|
|
(752 |
) |
|
Pro forma depreciation
and amortization expense |
|
|
25,550 |
|
|
|
20,419 |
|
|
|
49,357 |
|
|
|
40,281 |
|
|
Pro forma share-based
compensation expense |
|
|
28,316 |
|
|
|
26,221 |
|
|
|
53,867 |
|
|
|
47,457 |
|
|
Pro forma
acquisition-related costs |
|
|
204 |
|
|
|
- |
|
|
|
797 |
|
|
|
- |
|
|
Pro forma interest
expense |
|
|
1,572 |
|
|
|
1,580 |
|
|
|
3,145 |
|
|
|
3,139 |
|
|
Pro forma income tax
benefit |
|
|
- |
|
|
|
- |
|
|
|
(1,364 |
) |
|
|
- |
|
|
Pro forma
Adjusted EBITDA |
|
$ |
(101,260 |
) |
|
$ |
21,039 |
|
|
$ |
(99,386 |
) |
|
$ |
45,540 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The financial information for the three and six month
periods ended June 30, 2016 is presented on an as-reported basis.
For the three and six month periods ended June 30, 2016, Adjusted
EBITDA includes the impact of a $130.0 million litigation
settlement. Adjusted EBITDA for the three and six month periods
ended June 30, 2016 also includes $12.5 million and $28.2 million,
respectively, in related legal costs.
The following table presents our pro forma revenue by type for
the six months ended June 30, 2015. For ease of year-over-year
comparison, the pro forma financial information is presented with
financial information for the three and six month periods ended
June 30, 2016, which is presented on an as-reported basis (in
thousands, unaudited):
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 (1) |
|
2015 (1) |
|
2016 (1) |
|
|
2015 |
|
|
Pro Forma
Revenue: |
|
|
|
|
|
|
|
|
Pro forma Marketplace
revenue: |
|
|
|
|
|
|
|
|
Real
estate: |
|
|
|
|
|
|
|
|
Premier
Agent |
$ |
147,106 |
|
|
$ |
115,185 |
|
|
$ |
281,635 |
|
|
$ |
222,342 |
|
|
Other
real estate |
|
26,070 |
|
|
|
7,373 |
|
|
|
44,048 |
|
|
|
13,612 |
|
|
Total pro forma
Real estate revenue |
|
173,176 |
|
|
|
122,558 |
|
|
|
325,683 |
|
|
|
235,954 |
|
|
Mortgages |
|
18,392 |
|
|
|
10,393 |
|
|
|
34,846 |
|
|
|
20,343 |
|
|
Market
Leader |
|
- |
|
|
|
12,530 |
|
|
|
- |
|
|
|
26,111 |
|
|
Total pro forma
Marketplace revenue |
|
191,568 |
|
|
|
145,481 |
|
|
|
360,529 |
|
|
|
282,408 |
|
|
Pro forma Display
revenue |
|
16,835 |
|
|
|
25,788 |
|
|
|
33,856 |
|
|
|
51,392 |
|
|
Total pro
forma revenue |
$ |
208,403 |
|
|
$ |
171,269 |
|
|
$ |
394,385 |
|
|
$ |
333,800 |
|
|
|
|
|
|
|
|
|
|
|
(1) The financial information for the three months ended June
30, 2015 and for the three and six month periods ended June 30,
2016 is presented on an as-reported basis.
Reported Consolidated Results
ZILLOW GROUP, INC. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
June 30, 2016 |
|
December 31, 2015 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
155,210 |
|
|
$ |
229,138 |
|
Short-term
investments |
|
|
264,933 |
|
|
|
291,151 |
|
Accounts
receivable, net |
|
|
35,494 |
|
|
|
29,789 |
|
Prepaid expenses
and other current assets |
|
|
15,728 |
|
|
|
24,016 |
|
Total current
assets |
|
|
471,365 |
|
|
|
574,094 |
|
Restricted cash |
|
|
1,053 |
|
|
|
3,015 |
|
Property and equipment,
net |
|
|
98,799 |
|
|
|
89,639 |
|
Goodwill |
|
|
1,919,777 |
|
|
|
1,909,167 |
|
Intangible assets,
net |
|
|
539,965 |
|
|
|
554,765 |
|
Other assets |
|
|
6,142 |
|
|
|
5,020 |
|
Total assets |
|
$ |
3,037,101 |
|
|
$ |
3,135,700 |
|
|
|
|
|
|
Liabilities and
shareholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
17,144 |
|
|
$ |
3,361 |
|
Accrued expenses
and other current liabilities |
|
|
48,475 |
|
|
|
43,047 |
|
Accrued
compensation and benefits |
|
|
24,303 |
|
|
|
11,392 |
|
Deferred
revenue |
|
|
25,651 |
|
|
|
21,450 |
|
Deferred rent,
current portion |
|
|
1,215 |
|
|
|
1,172 |
|
Total current
liabilities |
|
|
116,788 |
|
|
|
80,422 |
|
Deferred rent, net of
current portion |
|
|
15,020 |
|
|
|
13,743 |
|
Long-term debt |
|
|
230,000 |
|
|
|
230,000 |
|
Deferred tax
liabilities and other long-term liabilities |
|
|
132,521 |
|
|
|
132,482 |
|
Total liabilities |
|
|
494,329 |
|
|
|
456,647 |
|
Shareholders’
equity: |
|
|
|
|
Class A common
stock |
|
|
5 |
|
|
|
5 |
|
Class B common
stock |
|
|
1 |
|
|
|
1 |
|
Class C capital
stock |
|
|
12 |
|
|
|
12 |
|
Additional
paid-in capital |
|
|
3,022,736 |
|
|
|
2,956,111 |
|
Accumulated
other comprehensive income (loss) |
|
|
377 |
|
|
|
(471 |
) |
Accumulated
deficit |
|
|
(480,359 |
) |
|
|
(276,605 |
) |
Total shareholders’
equity |
|
|
2,542,772 |
|
|
|
2,679,053 |
|
Total liabilities and
shareholders’ equity |
|
$ |
3,037,101 |
|
|
$ |
3,135,700 |
|
|
|
|
|
|
ZILLOW GROUP, INC. |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
208,403 |
|
|
$ |
171,269 |
|
|
$ |
394,385 |
|
|
$ |
298,542 |
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of amortization) (1)(2) |
|
17,220 |
|
|
|
17,037 |
|
|
|
33,672 |
|
|
|
30,056 |
|
|
Sales and marketing (2) |
|
99,256 |
|
|
|
87,942 |
|
|
|
198,016 |
|
|
|
147,228 |
|
|
Technology and development (2) |
|
67,421 |
|
|
|
51,740 |
|
|
|
131,838 |
|
|
|
89,065 |
|
|
General and administrative (2) |
|
179,632 |
|
|
|
43,810 |
|
|
|
233,469 |
|
|
|
81,834 |
|
|
Acquisition-related costs |
|
204 |
|
|
|
1,679 |
|
|
|
797 |
|
|
|
14,156 |
|
|
Restructuring costs (2) |
|
- |
|
|
|
6,652 |
|
|
|
- |
|
|
|
31,717 |
|
|
Total costs and
expenses |
|
363,733 |
|
|
|
208,860 |
|
|
|
597,792 |
|
|
|
394,056 |
|
|
Loss from
operations |
|
(155,330 |
) |
|
|
(37,591 |
) |
|
|
(203,407 |
) |
|
|
(95,514 |
) |
|
Other income |
|
753 |
|
|
|
450 |
|
|
|
1,434 |
|
|
|
719 |
|
|
Interest expense |
|
(1,572 |
) |
|
|
(1,580 |
) |
|
|
(3,145 |
) |
|
|
(2,310 |
) |
|
Loss before income
taxes |
|
(156,149 |
) |
|
|
(38,721 |
) |
|
|
(205,118 |
) |
|
|
(97,105 |
) |
|
Income tax benefit |
|
- |
|
|
|
- |
|
|
|
1,364 |
|
|
|
- |
|
|
Net loss |
$ |
(156,149 |
) |
|
$ |
(38,721 |
) |
|
$ |
(203,754 |
) |
|
$ |
(97,105 |
) |
|
Net loss per share —
basic and diluted |
$ |
(0.87 |
) |
|
$ |
(0.22 |
) |
|
$ |
(1.14 |
) |
|
$ |
(0.60 |
) |
|
Weighted-average shares
outstanding — basic and diluted |
|
179,451 |
|
|
|
176,142 |
|
|
|
179,067 |
|
|
|
161,847 |
|
|
_________ |
|
|
|
|
|
|
|
|
(1) Amortization of
website development costs and intangible assets included in
technology and development |
$ |
20,845 |
|
|
$ |
17,117 |
|
|
$ |
40,904 |
|
|
$ |
28,899 |
|
|
|
|
|
|
|
|
|
|
|
(2) Includes
share-based compensation expense as follows: |
|
|
|
|
|
|
|
|
Cost of revenue |
$ |
1,627 |
|
|
$ |
1,110 |
|
|
$ |
2,846 |
|
|
$ |
2,062 |
|
|
Sales and marketing |
|
6,395 |
|
|
|
8,784 |
|
|
|
11,598 |
|
|
|
12,993 |
|
|
Technology and development |
|
8,366 |
|
|
|
7,005 |
|
|
|
15,125 |
|
|
|
12,771 |
|
|
General and administrative |
|
11,928 |
|
|
|
12,981 |
|
|
|
24,298 |
|
|
|
25,061 |
|
|
Restructuring costs |
|
- |
|
|
|
3,584 |
|
|
|
- |
|
|
|
14,004 |
|
|
Total |
$ |
28,316 |
|
|
$ |
33,464 |
|
|
$ |
53,867 |
|
|
$ |
66,891 |
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Data: |
|
|
|
|
|
|
|
|
Adjusted EBITDA
(3) |
$ |
(101,260 |
) |
|
$ |
21,039 |
|
|
$ |
(99,386 |
) |
|
$ |
37,693 |
|
|
|
|
|
|
|
|
|
|
|
(3)
See above for more information regarding our presentation of
Adjusted EBITDA. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZILLOW GROUP, INC. |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Operating
activities |
|
|
|
|
|
Net loss |
|
$ |
(203,754 |
) |
|
$ |
(97,105 |
) |
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities, net of amounts assumed in connection with
acquisitions: |
|
|
|
|
|
Depreciation and
amortization |
|
|
49,357 |
|
|
|
34,447 |
|
|
Share-based
compensation expense |
|
|
53,867 |
|
|
|
52,887 |
|
|
Restructuring
costs |
|
|
- |
|
|
|
18,147 |
|
|
Release of
valuation allowance on certain deferred tax assets |
|
|
1,364 |
|
|
|
- |
|
|
Loss on disposal
of property and equipment |
|
|
2,170 |
|
|
|
499 |
|
|
Bad debt
expense |
|
|
927 |
|
|
|
1,605 |
|
|
Deferred
rent |
|
|
1,321 |
|
|
|
2,310 |
|
|
Amortization of
bond premium |
|
|
808 |
|
|
|
1,593 |
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
Accounts
receivable |
|
|
(6,608 |
) |
|
|
(5,026 |
) |
|
Prepaid
expenses and other assets |
|
|
7,122 |
|
|
|
8,494 |
|
|
Accounts
payable |
|
|
13,743 |
|
|
|
(2,516 |
) |
|
Accrued
expenses and other current liabilities |
|
|
5,005 |
|
|
|
13 |
|
|
Accrued
compensation and benefits |
|
|
12,877 |
|
|
|
(3,259 |
) |
|
Accrued
restructuring costs |
|
|
(169 |
) |
|
|
1,425 |
|
|
Deferred
revenue |
|
|
4,190 |
|
|
|
(366 |
) |
|
Other
long-term liabilities |
|
|
(2,749 |
) |
|
|
2,998 |
|
|
Net cash provided by
(used in) operating activities |
|
|
(60,529 |
) |
|
|
16,146 |
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
Proceeds from
maturities of investments |
|
|
105,440 |
|
|
|
165,723 |
|
|
Purchases of
investments |
|
|
(83,976 |
) |
|
|
(164,718 |
) |
|
Proceeds from sales of
investments |
|
|
4,795 |
|
|
|
4,979 |
|
|
Decrease in restricted
cash, net of amounts assumed in connection with an acquisition |
|
|
1,962 |
|
|
|
312 |
|
|
Purchases of property
and equipment |
|
|
(33,393 |
) |
|
|
(25,546 |
) |
|
Purchases of intangible
assets |
|
|
(3,321 |
) |
|
|
(8,006 |
) |
|
Cash acquired in
acquisition, net |
|
|
- |
|
|
|
173,406 |
|
|
Cash paid for
acquisition, net |
|
|
(12,357 |
) |
|
|
- |
|
|
Net cash provided by
(used in) investing activities |
|
|
(20,850 |
) |
|
|
146,150 |
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
Proceeds from exercise
of stock options |
|
|
7,737 |
|
|
|
14,722 |
|
|
Value of equity awards
withheld for tax liability |
|
|
(286 |
) |
|
|
(511 |
) |
|
Net cash provided by
financing activities |
|
|
7,451 |
|
|
|
14,211 |
|
|
Net increase (decrease) in
cash and cash equivalents during period |
|
|
(73,928 |
) |
|
|
176,507 |
|
|
Cash and cash
equivalents at beginning of period |
|
|
229,138 |
|
|
|
125,765 |
|
|
Cash and cash
equivalents at end of period |
|
$ |
155,210 |
|
|
$ |
302,272 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information |
|
|
|
|
|
Cash paid
for interest |
|
$ |
3,163 |
|
|
$ |
3,163 |
|
|
Noncash
transactions: |
|
|
|
|
|
Value of
Class A common stock issued in connection with an acquisition |
|
$ |
- |
|
|
$ |
1,883,728 |
|
|
Capitalized share-based compensation |
|
$ |
5,304 |
|
|
$ |
4,783 |
|
|
Write-off
of fully depreciated property and equipment |
|
$ |
9,986 |
|
|
$ |
13,001 |
|
|
|
|
Adjusted EBITDA
The following table presents a reconciliation of Adjusted EBITDA
to net loss, the most directly comparable GAAP financial measure,
for each of the periods presented (in thousands, unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Reconciliation
of Adjusted EBITDA to Net Loss: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(156,149 |
) |
|
$ |
(38,721 |
) |
|
$ |
(203,754 |
) |
|
$ |
(97,105 |
) |
|
Other income |
|
|
(753 |
) |
|
|
(450 |
) |
|
|
(1,434 |
) |
|
|
(719 |
) |
|
Depreciation and
amortization expense |
|
|
25,550 |
|
|
|
20,419 |
|
|
|
49,357 |
|
|
|
34,447 |
|
|
Share-based
compensation expense |
|
|
28,316 |
|
|
|
29,880 |
|
|
|
53,867 |
|
|
|
52,887 |
|
|
Acquisition-related
costs |
|
|
204 |
|
|
|
1,679 |
|
|
|
797 |
|
|
|
14,156 |
|
|
Restructuring
costs |
|
|
- |
|
|
|
6,652 |
|
|
|
- |
|
|
|
31,717 |
|
|
Interest expense |
|
|
1,572 |
|
|
|
1,580 |
|
|
|
3,145 |
|
|
|
2,310 |
|
|
Income tax benefit |
|
|
- |
|
|
|
- |
|
|
|
(1,364 |
) |
|
|
- |
|
|
Adjusted EBITDA
(1) |
|
$ |
(101,260 |
) |
|
$ |
21,039 |
|
|
$ |
(99,386 |
) |
|
$ |
37,693 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three and six month periods ended June 30, 2016,
Adjusted EBITDA includes the impact of a $130.0 million litigation
settlement. Adjusted EBITDA for the three and six month periods
ended June 30, 2016 also includes $12.5 million and $28.2 million,
respectively, in related legal costs. Excluding the $130.0 million
litigation settlement, Adjusted EBITDA in the second quarter of
2016 would have been $28.7 million.
The following table presents a reconciliation of forecasted
Adjusted EBITDA to forecasted net loss for each of the periods
presented (in thousands, unaudited):
|
|
|
|
|
|
|
Three Months Ending |
|
Year Ending |
|
|
September 30, 2016 |
|
December 31, 2016 |
Reconciliation
of Forecasted Adjusted EBITDA to Forecasted Net Loss: |
|
|
|
|
Forecasted Net
loss |
|
$ |
(3,100 |
) |
|
$ |
(210,900 |
) |
Forecasted Other
income |
|
|
(700 |
) |
|
|
(2,800 |
) |
Forecasted Depreciation
and amortization expense |
|
|
25,000 |
|
|
|
99,500 |
|
Forecasted Share-based
compensation expense |
|
|
27,000 |
|
|
|
107,500 |
|
Forecasted
Acquisition-related costs |
|
|
600 |
|
|
|
1,600 |
|
Forecasted Interest
expense |
|
|
1,600 |
|
|
|
6,300 |
|
Forecasted Income tax
expense (benefit) |
|
|
100 |
|
|
|
(1,200 |
) |
Forecasted
Adjusted EBITDA |
|
$ |
50,500 |
|
|
$ |
- |
|
|
|
|
|
|
Non-GAAP Net Income (Loss) per Share
The following table presents a reconciliation of net income
(loss), adjusted, to net loss, as reported on a GAAP basis, and the
calculation of non-GAAP net income (loss) per share - basic and
diluted, for each of the periods presented (in thousands, except
per share data, unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss, as
reported |
|
$ |
(156,149 |
) |
|
$ |
(38,721 |
) |
|
$ |
(203,754 |
) |
|
$ |
(97,105 |
) |
|
Share-based
compensation expense |
|
|
28,316 |
|
|
|
29,880 |
|
|
|
53,867 |
|
|
|
52,887 |
|
|
Acquisition-related
costs |
|
|
204 |
|
|
|
1,679 |
|
|
|
797 |
|
|
|
14,156 |
|
|
Restructuring
costs |
|
|
- |
|
|
|
6,652 |
|
|
|
- |
|
|
|
31,717 |
|
|
Income tax benefit |
|
|
- |
|
|
|
- |
|
|
|
(1,364 |
) |
|
|
- |
|
|
Net income
(loss), adjusted |
|
$ |
(127,629 |
) |
|
$ |
(510 |
) |
|
$ |
(150,454 |
) |
|
$ |
1,655 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
(loss) per share - basic |
|
$ |
(0.71 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.84 |
) |
|
$ |
0.01 |
|
|
Non-GAAP net income
(loss) per share - diluted |
|
$ |
(0.71 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.84 |
) |
|
$ |
0.02 |
|
|
Weighted-average shares
outstanding - basic |
|
|
179,451 |
|
|
|
176,142 |
|
|
|
179,067 |
|
|
|
161,847 |
|
|
Weighted-average shares
outstanding - diluted |
|
|
179,451 |
|
|
|
176,142 |
|
|
|
179,067 |
|
|
|
179,876 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Type
The following tables present our revenue by type and as a
percentage of total revenue for each of the periods presented (in
thousands, unaudited):
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
Marketplace
revenue: |
|
|
|
|
|
|
|
|
Real
estate: |
|
|
|
|
|
|
|
|
Premier
Agent |
$ |
147,106 |
|
|
$ |
115,185 |
|
|
$ |
281,635 |
|
|
$ |
203,077 |
|
|
Other
real estate |
|
26,070 |
|
|
|
7,373 |
|
|
|
44,048 |
|
|
|
12,793 |
|
|
Total Real
estate revenue |
|
173,176 |
|
|
|
122,558 |
|
|
|
325,683 |
|
|
|
215,870 |
|
|
Mortgages |
|
18,392 |
|
|
|
10,393 |
|
|
|
34,846 |
|
|
|
19,951 |
|
|
Market
Leader |
|
- |
|
|
|
12,530 |
|
|
|
- |
|
|
|
18,587 |
|
|
Total Marketplace
revenue |
|
191,568 |
|
|
|
145,481 |
|
|
|
360,529 |
|
|
|
254,408 |
|
|
Display revenue |
|
16,835 |
|
|
|
25,788 |
|
|
|
33,856 |
|
|
|
44,134 |
|
|
Total
revenue |
$ |
208,403 |
|
|
$ |
171,269 |
|
|
$ |
394,385 |
|
|
$ |
298,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Percentage of
Total Revenue: |
|
|
|
|
|
|
|
|
Marketplace
revenue: |
|
|
|
|
|
|
|
|
Real
estate: |
|
|
|
|
|
|
|
|
Premier
Agent |
|
71 |
% |
|
|
67 |
% |
|
|
71 |
% |
|
|
68 |
% |
|
Other
real estate |
|
13 |
% |
|
|
4 |
% |
|
|
11 |
% |
|
|
4 |
% |
|
Total Real
estate revenue |
|
83 |
% |
|
|
72 |
% |
|
|
83 |
% |
|
|
72 |
% |
|
Mortgages |
|
9 |
% |
|
|
6 |
% |
|
|
9 |
% |
|
|
7 |
% |
|
Market
Leader |
|
0 |
% |
|
|
7 |
% |
|
|
0 |
% |
|
|
6 |
% |
|
Total Marketplace
revenue |
|
92 |
% |
|
|
85 |
% |
|
|
91 |
% |
|
|
85 |
% |
|
Display revenue |
|
8 |
% |
|
|
15 |
% |
|
|
9 |
% |
|
|
15 |
% |
|
Total
revenue |
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
Unique Users
The following table sets forth our average monthly unique users
for each of the periods presented:
|
|
|
|
|
|
|
|
Average Monthly Unique Users for the Three
Months Ended June 30, |
|
2015 to 2016 |
|
|
2016 |
|
2015 |
|
% Change |
|
|
(in thousands) |
|
|
|
Unique Users |
168,700 |
|
140,959 |
|
|
20 |
% |
|
|
|
|
|
|
|
|
Unique users source: We measure Zillow unique users with Google
Analytics and Trulia unique users with Omniture analytical
tools.
Raymond Jones
Investor Relations
206-470-7137
ir@zillow.com
Katie Curnutte
Public Relations
206-757-2701
press@zillow.com
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