Zillow Group Reports Fourth-Quarter and Full-Year 2020 Financial Results

SEATTLE, Feb. 10, 2021 /PRNewswire/ — Zillow Group, Inc. (NASDAQ:Z and ZG), which is transforming the way people buy, sell, rent…

SEATTLE, Feb. 10, 2021 /PRNewswire/ — Zillow Group, Inc. (NASDAQ:Z and ZG), which is transforming the way people buy, sell, rent and finance homes, today announced its consolidated financial results for the three months ended and year ended December 31, 2020.

Complete financial results, and outlook for the first quarter of 2021, can be found in the company’s shareholder letter on the Investor Relations section of Zillow Group’s website at https://investors.zillowgroup.com/investors/financials/quarterly-results/default.aspx.

«Zillow’s strong results reflect exemplary execution and continued growth during the scary roller-coaster ride that was 2020,» said Zillow Group co-founder and CEO Rich Barton. «Many Americans who had previously dreamed of moving now have the flexibility to do so, and they flocked to Zillow in record numbers. We are investing aggressively in new technology and services to help them move. Our customers are hungry for the kind of seamless experience that we can now provide at Zillow, and we are poised to capitalize on our strong position in 2021.»

Recent highlights include:

  • Consolidated fourth quarter revenue of $789 million and revenue for each segment exceeded the high end of the company’s outlook for the fourth quarter. Full-year 2020 consolidated revenue grew 22%, despite the negative impact of COVID-19 on results during the first half of 2020.
  • On a GAAP basis, consolidated net income was $46 million for the fourth quarter and a net loss of $162 million for full year 2020. Segment income (loss) before income taxes was $145 million, $(67) million and $7 million for the IMT, Homes and Mortgages segments, for the fourth quarter, and $263 million, $(320) million and $5 million, for full year 2020, respectively.
  • Fourth-quarter Adjusted EBITDA exceeded the high end of the company’s outlook for all three segments, resulting in consolidated Adjusted EBITDA of $170 million. Consolidated Adjusted EBITDA was $343 million for full year 2020, driven primarily by Adjusted EBITDA margin expansion in the IMT segment, along with improved Mortgages and Homes segment margins.
  • Traffic to Zillow Group’s mobile apps and websites reached a fourth-quarter record of 201 million average monthly unique users, an increase of 16% year over year, driving 2.2 billion visits during the quarter, up 27% year over year. The company reported a record 9.6 billion visits for the full year 2020, up 19% year over year.
  • The company exited 2020 with cash and investments of $3.9 billion.

Fourth-Quarter and Full-Year 2020 Financial Highlights

The following table sets forth Zillow Group’s financial highlights for the periods presented (in thousands, unaudited):


Three Months Ended

December 31,


2019 to 2020

% Change


Year Ended

December 31,


2019 to 2020

% Change


2020


2019



2020


2019


Revenue:












Homes segment












Zillow Offers

$    301,703


$     603,228


(50)%


$    1,710,535


$    1,365,250


25 %

Other (1)

2,442



N/A


4,840



N/A

Total Homes segment revenue

304,145


603,228


(50)%


1,715,375


1,365,250


26 %

IMT segment:












Premier Agent

314,213


233,482


35 %


1,046,954


923,876


13 %

Other (2)

109,625


86,183


27 %


403,278


353,020


14 %

Total IMT segment revenue

423,838


319,665


33 %


1,450,232


1,276,896


14 %

Mortgages segment

60,969


21,054


190 %


174,210


100,691


73 %

Total revenue

$    788,952


$     943,947


(16)%


$    3,339,817


$    2,742,837


22 %

Other Financial Data:












Segment income (loss) before income taxes:












Homes segment

$     (66,621)


$    (107,923)




$      (320,254)


$      (312,120)



IMT segment

145,369


36,221




262,984


80,060



Mortgages segment

7,305


(12,654)




4,514


(44,962)



Total segment income (loss) before income taxes

$      86,053


$      (84,356)




$        (52,756)


$      (277,022)



Net income (loss)

$      46,036


$    (101,210)




$      (162,115)


$      (305,361)



Adjusted EBITDA (3):












Homes segment

$     (46,890)


$      (82,525)




$      (241,969)


$      (241,326)



IMT segment

203,093


87,659




556,137


303,863



Mortgages segment

13,648


(8,311)




28,825


(23,653)



Total Adjusted EBITDA

$    169,851


$        (3,177)




$       342,993


$         38,884



Percentage of Revenue:












Segment income (loss) before income taxes:












Homes segment

(22)%


(18)%




(19)%


(23)%



IMT segment

34 %


11 %




18 %


6 %



Mortgages segment

12 %


(60)%




3 %


(45)%



Total segment income (loss) before income taxes

11 %


(9)%




(2)%


(10)%



Net income (loss)

6 %


(11)%




(5)%


(11)%



Adjusted EBITDA:












Homes segment

(15)%


(14)%




(14)%


(18)%



IMT segment

48 %


27 %




38 %


24 %



Mortgages segment

22 %


(39)%




17 %


(23)%



Total Adjusted EBITDA

22 %


– %




10 %


1 %





(1) Other Homes segment revenue relates to revenue associated with the title and escrow services provided through Zillow Closing Services.

(2) Other IMT segment 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.

(3) Adjusted EBITDA is a non-GAAP financial measure; it is not calculated or presented in accordance with U.S. generally accepted accounting principles, or GAAP. See below for more information regarding our presentation of Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, which is net income (loss) on a consolidated basis and income (loss) before income taxes for each segment, for each of the periods presented.

Conference Call and Webcast Information

Zillow Group CEO & co-founder Rich Barton and CFO Allen Parker will host a live conference call to discuss the results today at 2 p.m. Pacific Time (5 p.m. Eastern Time). A shareholder letter and link to both the live webcast and recorded replay of the call may be accessed on the Quarterly Results section of Zillow Group’s investor relations website. Participants must register in advance at: https://dpregister.com/sreg/10150693/dfabe47e70 using conference ID 10150693 to receive emailed instructions. This process is designed to reduce delays due to operator congestion when accessing the live call.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including, without limitation, statements regarding the future performance and operation of our business and the current and future health and stability of the residential housing market and economy and our expectations regarding future shifts in behavior by consumers and employees. Statements containing words such as «may,» «believe,» «anticipate,» «expect,» «intend,» «plan,» «project,» «predict,» «will,» «projections,» «continue,» «estimate,» «outlook,» «guidance,» «would,» «could,» or similar expressions constitute forward-looking statements. Forward-looking statements are made based on assumptions as of February 10, 2021, and although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee these results. Differences in Zillow Group’s actual results from those described in these forward-looking statements may result from actions taken by Zillow Group as well as from risks and uncertainties beyond Zillow Group’s control. Factors that may contribute to such differences include, but are not limited to, the impact of the COVID-19 pandemic or other public health crises and any associated economic downturn on Zillow Group’s future financial position, operations and financial performance; the magnitude, duration and severity of the COVID-19 pandemic and the availability and widespread distribution and use of effective vaccines; the impact of actions taken by governments, businesses and individuals in response to the COVID-19 pandemic, including changes in laws or regulations that limit Zillow Group’s ability to operate; the current and future health and stability of the economy, financial conditions and residential housing market, including any extended slowdown in the real estate markets as a result of the COVID-19 pandemic or changes that reduce demand for Zillow Group’s products and services, lower Zillow Group’s profitability or reduce Zillow Group’s access to credit; Zillow Group’s ability to execute on strategy; Zillow Group’s ability to maintain and effectively manage an adequate rate of growth; Zillow Group’s ability to innovate and provide products and services that are attractive to its users and advertisers; Zillow Group’s investment of resources to pursue strategies that may not prove effective; Zillow Group’s ability to compete successfully against existing or future competitors; the impact of pending or future legal proceedings, including those described in Zillow Group’s filings with the Securities and Exchange Commission, or SEC; Zillow Group’s ability to successfully integrate and realize the benefits of its past or future strategic acquisitions or investments; Zillow Group’s ability to comply with MLS rules and requirements to access and use listing data, and to maintain or establish relationships with listings and data providers; the ability of Zillow Group to operate its mortgage originations business, including the ability to obtain sufficient financing; the reliable performance of Zillow Group’s network infrastructure and content delivery processes; Zillow Group’s ability to obtain or maintain licenses and permits to support our current and future businesses; actual or anticipated changes to our products and services; the impact of natural disasters and other catastrophic events; and Zillow Group’s ability to protect its intellectual property. The foregoing list of risks and uncertainties is illustrative but not exhaustive. For more information about potential factors that could affect Zillow Group’s business and financial results, please review the «Risk Factors» described in Zillow Group’s Annual Report on Form 10-K for the year ended December 31, 2019, and in Zillow Group’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020, filed with the SEC and in Zillow Group’s other filings with the SEC. Except as may be required by law, Zillow Group does not intend and undertakes no duty to update this information to reflect future events or circumstances.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA in total and for each segment, each a non-GAAP financial measure. We have provided a reconciliation within this earnings release of Adjusted EBITDA in total to net income (loss) and Adjusted EBITDA by segment to income (loss) before income taxes for each segment, the most directly comparable GAAP financial measures.

Adjusted EBITDA is a key metric used by our management and board of directors to measure operating performance and trends and to prepare and approve our annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.

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

  • Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
  • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  • Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • Adjusted EBITDA does not reflect impairment costs;
  • Adjusted EBITDA does not reflect the gain (loss) on extinguishment of the 2021 Notes;
  • Adjusted EBITDA does not reflect interest expense or other income;
  • Adjusted EBITDA does not reflect income taxes; and
  • Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

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

About Zillow Group, Inc.

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life’s next chapter.

As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched  Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.

Zillow Group’s affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

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 that may be deemed material.

The Zillow Group logo is available at http://zillowgroup.mediaroom.com/logos-photos.

(ZFIN)

Adjusted EBITDA

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


Three Months Ended

December 31, 2020


Homes


IMT


Mortgages


Corporate

Items (2)


Consolidated

Reconciliation of Adjusted EBITDA to Net Income and Income (Loss) Before Income Taxes:










Net income (1)

N/A


N/A


N/A


N/A


$        46,036

Income tax expense

N/A


N/A


N/A


N/A


601

Income (loss) before income taxes

$       (66,621)


$   145,369


$       7,305


$      (39,416)


$        46,637

Other income



(1,146)


(1,657)


(2,803)

Depreciation and amortization expense

4,114


21,973


1,967



28,054

Share-based compensation expense

12,319


35,751


4,375



52,445

Loss on extinguishment of 2021 Notes




4,943


4,943

Interest expense

3,298



1,147


36,130


40,575

Adjusted EBITDA

$       (46,890)


$   203,093


$     13,648


$                  –


$      169,851






















Three Months Ended

December 31, 2019


Homes


IMT


Mortgages


Corporate

Items (2)


Consolidated

Reconciliation of Adjusted EBITDA to Net Loss and Income (Loss) Before Income Taxes:










Net loss (1)

N/A


N/A


N/A


N/A


$     (101,210)

Income tax benefit

N/A


N/A


N/A


N/A


(458)

Income (loss) before income taxes

$     (107,923)


$      36,221


$     (12,654)


$      (17,312)


$     (101,668)

Other income



(350)


(11,683)


(12,033)

Depreciation and amortization expense

3,030


19,105


1,444



23,579

Share-based compensation expense

11,724


32,333


2,961



47,018

Interest expense

10,644



288


28,995


39,927

Adjusted EBITDA

$       (82,525)


$      87,659


$       (8,311)


$                 –


$         (3,177)






















Year Ended

December 31, 2020


Homes


IMT


Mortgages


Corporate

Items (2)


Consolidated

Reconciliation of Adjusted EBITDA to Net Loss and Income (Loss) Before Income Taxes:










Net loss (1)

N/A


N/A


N/A


N/A


$     (162,115)

Income tax benefit

N/A


N/A


N/A


N/A


(7,523)

Income (loss) before income taxes

$     (320,254)


$    262,984


$        4,514


$    (116,882)


$     (169,638)

Other income


(5,300)


(2,369)


(17,860)


(25,529)

Depreciation and amortization expense

13,315


89,862


6,854



110,031

Share-based compensation expense

48,166


134,691


14,693



197,550

Gain on extinguishment of 2021 Notes




(1,448)


(1,448)

Impairment costs


73,900


2,900



76,800

Interest expense

16,804



2,233


136,190


155,227

Adjusted EBITDA

$     (241,969)


$    556,137


$      28,825


$                 –


$      342,993






















Year Ended

December 31, 2019


Homes


IMT


Mortgages


Corporate

Items (2)


Consolidated

Reconciliation of Adjusted EBITDA to Net Loss and Income (Loss) Before Income Taxes:










Net loss (1)

N/A


N/A


N/A


N/A


$     (305,361)

Income tax benefit

N/A


N/A


N/A


N/A


(4,258)

Income (loss) before income taxes

$     (312,120)


$      80,060


$     (44,962)


$      (32,597)


$     (309,619)

Other income



(1,409)


(38,249)


(39,658)

Depreciation and amortization expense

8,414


73,369


5,684



87,467

Share-based compensation expense

32,390


150,434


16,078



198,902

Interest expense

29,990



956


70,846


101,792

Adjusted EBITDA

$     (241,326)


$    303,863


$     (23,653)


$                 –


$        38,884


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

(2) Certain corporate items are not directly attributable to any of our segments, including the gain (loss) on extinguishment of the 2021 Notes, interest income earned on our short-term investments included in other income and interest costs on our convertible senior notes included in interest expense.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/zillow-group-reports-fourth-quarter-and-full-year-2020-financial-results-301226249.html

SOURCE Zillow Group