Form 8-K ZILLOW GROUP, INC. For: May 09
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 9, 2019
ZILLOW GROUP, INC.
(Exact name of registrant as specified in its charter)
Washington | 001-36853 | 47-1645716 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
1301 Second Avenue, Floor 31, Seattle, Washington | 98101 | |||
(Address of principal executive offices) | (Zip Code) | |||
(206) 470-7000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
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 |
Item 2.02 | Results of Operations and Financial Condition. |
Zillow Group, Inc. (“Zillow Group”) today issued a press release announcing its financial results for the fiscal quarter ended March 31, 2019. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 and accompanying supporting tables as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Item 2.02 and Exhibits 99.1 and 99.2 of this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
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 hereunto duly authorized.
Dated: May 9, 2019 | ZILLOW GROUP, INC. | ||
By: | /s/ JENNIFER ROCK | ||
Name: | Jennifer Rock | ||
Title: | Chief Accounting Officer | ||
Exhibit 99.1
Contacts: | ||
Raymond Jones | Katie Curnutte | |
Investor Relations | Public Relations | |
ZILLOW GROUP REPORTS FIRST QUARTER 2019 RESULTS
SEATTLE - May 09, 2019 - Zillow Group, Inc. (NASDAQ: Z) (NASDAQ: ZG), which is transforming how people buy, sell, rent, and finance homes, today announced its consolidated financial results for the three months ended March 31, 2019. Complete financial results can be found in the investor relations section of Zillow Group’s website and in its quarterly letter to shareholders at https://investors.zillowgroup.com/financials/quarterly-results/default.aspx.
“We delivered strong first quarter results that met or exceeded our own expectations in all segments as our plan to streamline the real estate transaction comes together,” said Rich Barton, co-founder and CEO of Zillow Group, Inc. “Zillow Offers’ incredible consumer demand and rapid growth gives us confidence we’re in the early stages of something important. I'm quite pleased with our whole team’s execution and overall consumer and industry response to the investments we’re making in Premier Agent, Zillow Offers and now Zillow Home Loans. The Zillow Group portfolio is more than just the sum of our business segments. We are aligning our entire portfolio to deliver a seamless, integrated transaction experience to help today’s on-demand consumers buy, sell, rent and finance homes faster and easier than ever before.”
Recent highlights include:
• | Consolidated Q1 2019 revenue increased 51% year over year to $454.1 million, exceeding the company’s outlook, primarily driven by outperformance in the Homes segment due to strong demand for Zillow Offers™. |
• | Zillow sold 414 homes in Q1, an increase of nearly 200% over Q4, contributing to $128.5 million in Homes segment revenue. The company purchased 898 homes, up 80% sequentially. |
• | Accelerating Zillow Offers market expansion with 6 new planned markets, announced separately today, bringing the total planned markets to 20 by the end of the first quarter of 2020. |
• | Internet, Media & Technology segment reported $298.3 million in revenue in Q1, up 6% year over year, as the Premier Agent® marketplace is stabilizing and churn is returning to historical levels. |
• | Q1 Mortgages segment revenue of $27.4 million was up 44% year over year. |
• | Launched Zillow Home Loans, a critical step toward integrating a digital payments platform for mortgage financing to Zillow Offers consumers and other borrowers. |
• | Reached more than 181 million average monthly unique users and a record 2 billion visits across Zillow Group’s mobile apps and websites during Q1. |
First Quarter 2019 Financial Highlights
The following table sets forth Zillow Group’s financial highlights for the periods presented (in thousands, unaudited):
Three Months Ended March 31, | 2018 to 2019 % Change | |||||||||
2019 | 2018 | |||||||||
Revenue: | ||||||||||
IMT segment: | ||||||||||
Premier Agent | $ | 217,735 | $ | 213,732 | 2 | % | ||||
Rentals | 37,838 | 29,063 | 30 | % | ||||||
Other (1) | 42,699 | 38,061 | 12 | % | ||||||
Total IMT segment revenue | 298,272 | 280,856 | 6 | % | ||||||
Homes segment | 128,472 | — | N/A | |||||||
Mortgages segment | 27,360 | 19,023 | 44 | % | ||||||
Total revenue | $ | 454,104 | $ | 299,879 | 51 | % | ||||
Other Financial Data: | ||||||||||
Segment loss before income taxes: | ||||||||||
IMT segment | $ | (11,452 | ) | $ | (6,616 | ) | ||||
Homes segment | $ | (45,205 | ) | $ | (4,390 | ) | ||||
Mortgage segment | $ | (9,616 | ) | $ | (358 | ) | ||||
Net loss | $ | (67,525 | ) | $ | (18,591 | ) | ||||
Adjusted EBITDA (2): | ||||||||||
IMT segment | $ | 61,047 | $ | 46,683 | ||||||
Homes segment | (34,524 | ) | (3,513 | ) | ||||||
Mortgages segment | (2,601 | ) | 3,140 | |||||||
Total Adjusted EBITDA | $ | 23,922 | $ | 46,310 | ||||||
Percentage of Revenue: | ||||||||||
Segment loss before income taxes: | ||||||||||
IMT segment | (4 | )% | (2 | )% | ||||||
Homes segment | (35 | )% | N/A | |||||||
Mortgages segment | (35 | )% | (2 | )% | ||||||
Net loss | (15 | )% | (6 | )% | ||||||
Adjusted EBITDA: | ||||||||||
IMT segment | 20 | % | 17 | % | ||||||
Homes segment | (27 | )% | N/A | |||||||
Mortgages segment | (10 | )% | 17 | % | ||||||
Total Adjusted EBITDA | 5 | % | 15 | % | ||||||
(1) Other revenue primarily includes revenue generated by new construction and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. (2) 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 loss on a consolidated basis and loss before income taxes for each segment, for each of the periods presented. | ||||||||||
Business Outlook - Second Quarter and Full Year 2019
Zillow Group’s Q2 2019 consolidated revenue guidance range implies approximately 79% growth year over year at the mid point, driven primarily by the strong performance of the Homes segment.
In Q2, we expect Homes segment revenue to be $230 to $245 million, reflecting anticipated sequential quarter-over-quarter growth of 85% at the mid point. For Q2, we expect Homes segment Adjusted EBITDA to be a loss of $49 to $55 million as we continue to invest in scaling the business.* We are not providing full year Homes segment revenue and Adjusted EBITDA
outlook since we are in the early stages of Zillow Offers and quickly scaling the business, which make longer term forecasts challenging.
We are raising the low end of our IMT and Premier Agent full year 2019 revenue guidance ranges to reflect our confidence in the anticipated continued stabilization of the Premier Agent marketplace. We raised our full year IMT segment Adjusted EBITDA guidance range to $280 to $300 million from $241 to $266 million to reflect updates to the expected timing of recognition of certain headcount-related expenses and a reduction in our estimated legal liabilities.*
We are maintaining our full-year 2019 Mortgages segment revenue and Adjusted EBITDA outlook as we are in the early stages of transitioning our mortgage loan origination business.
The following table presents Zillow Group’s business outlook for the periods presented (in millions, unaudited):
Zillow Group Outlook as of May 9, 2019 | Three Months Ending June 30, 2019 | Year Ending December 31, 2019 | ||
Revenue: | ||||
IMT segment: | ||||
Premier Agent | $228.0 to $233.0 | $910.0 to $930.0 | ||
Total IMT segment revenue | $314.0 to $322.0 | $1,253.0 to $1,281.0 | ||
Homes segment | $230.0 to $245.0 | *** | ||
Mortgages segment | $24.0 to $27.0 | $100.0 to $115.0 | ||
Total revenue | $568.0 to $594.0 | *** | ||
Adjusted EBITDA*: | ||||
IMT segment | $60.0 to $66.0 | $280.0 to $300.0 | ||
Homes segment | ($55.0) to ($49.0) | *** | ||
Mortgages segment | ($10.0) to ($6.0) | ($32.0) to ($22.0) | ||
Total Adjusted EBITDA | ($5.0) to $11.0 | *** | ||
Weighted average shares outstanding — basic | 205.0 to 207.0 | 205.5 to 207.5 | ||
Weighted average shares outstanding — diluted | 208.5 to 210.5 | 209.0 to 211.0 | ||
*** Outlook not provided | ||||
* Zillow Group has not provided a quantitative reconciliation of forecasted GAAP net loss to forecasted total Adjusted EBITDA or of forecasted GAAP segment loss before income taxes to forecasted segment Adjusted EBITDA within this earnings release because the company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to: income taxes which are directly impacted by unpredictable fluctuations in the market price of the company’s capital stock; depreciation and amortization expense from new acquisitions; impairments of assets; and acquisition-related costs. These items, which could materially affect the computation of forward-looking GAAP net loss and segment loss before income taxes, are inherently uncertain and depend on various factors, many of which are outside of Zillow Group’s control. For more information regarding the non-GAAP financial measure discussed in this release, please see “Use of Non-GAAP Financial Measure” below.
Conference Call and Webcast Information
Zillow Group Co-founder & CEO Rich Barton and CFO Allen Parker will host a live conference call and webcast to discuss the results today at 2 p.m. Pacific Time (5 p.m. Eastern Time). They will be joined by Zillow Brand President and Co-head of Zillow Offers, Jeremy Wacksman, and President of Media & Marketplaces, Greg Schwartz. A Quarterly Shareholder Letter is available on the Quarterly Results section of Zillow Group’s investor relations website at https://investors.zillowgroup.com/financials/quarterly-results/default.aspx.
A link to the live webcast and recorded replay of the conference call will be available on the investor relations section of Zillow Group’s website. The live call may also be accessed via phone (866) 270-1533 toll-free domestically and at (412) 317-0797 internationally.
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 and operational plans for Zillow Offers and other parts of our business in 2019 and 2020. Statements containing words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “will,” “projections,” “continue,” “business outlook,” “forecast,” “estimate,” “outlook,” “guidance,” 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 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 ability to compete successfully against existing or future competitors; Zillow Group’s investment of resources to pursue strategies that may not prove effective; the impact of the real estate industry on Zillow Group’s business; the impact of pending litigation and other legal and regulatory matters; Zillow Group’s ability to increase awareness of the Zillow Group brands in a cost-effective manner; Zillow Group’s ability to attract consumers to Zillow Group’s mobile applications and websites; Zillow Group’s ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; 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, 2018 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 Measure
To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA, which is a non-GAAP financial measure. We have provided a reconciliation of Adjusted EBITDA (other than forecasted 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, within this earnings release.
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. The exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
▪ | Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; |
▪ | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
▪ | Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation; |
▪ | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; |
▪ | Adjusted EBITDA does not reflect acquisition-related costs; |
▪ | Adjusted EBITDA does not reflect interest expense or other income; |
▪ | Adjusted EBITDA does not reflect income taxes; and |
▪ | Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net loss, segment loss before income taxes and our other GAAP results. You should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP.
About Zillow Group, Inc.
Zillow Group, Inc. (NASDAQ: Z) (NASDAQ: ZG) houses one of the largest portfolios of real estate brands on mobile and the web that attracted 181 million average monthly unique users during Q1 2019. Zillow Group is committed to leveraging its proprietary data, technology and innovations to make home buying, selling, financing and renting a seamless, on-demand experience for consumers. As its flagship brand, Zillow® now offers a fully integrated home shopping experience that includes access to for sale and rental listings, Zillow Offers™, which provides a new, hassle-free way to buy and sell homes directly through Zillow; and Zillow Home Loans, Zillow’s affiliated lender that provides an easy way to receive mortgage pre-approvals and financing. Other consumer brands include Trulia®, StreetEasy®, HotPads®, Naked Apartments®, RealEstate.com and Out East®. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions to help real estate professionals maximize business opportunities and connect with millions of consumers. Zillow Group business brands for real estate, rental and mortgage professionals include Mortech®, dotloop®, Bridge Interactive® and New Home Feed®. The company is headquartered in Seattle, Washington.
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, Bridge Interactive, StreetEasy, HotPads, Out East and New Home Feed are registered trademarks of Zillow, Inc. Zillow Offers is a trademark 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, LLC. Zillow Home Loans, LLC is an Equal Housing Lender; NMLS #10287.
(ZFIN)
Adjusted EBITDA
The following tables set forth 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, 2019 | |||||||||||||||||||
IMT | Homes | 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 | $ | (11,452 | ) | $ | (45,205 | ) | $ | (9,616 | ) | $ | (3,752 | ) | $ | (70,025 | ) | ||||
Other income | — | — | (313 | ) | (8,855 | ) | (9,168 | ) | |||||||||||
Depreciation and amortization expense | 17,594 | 1,321 | 1,610 | — | 20,525 | ||||||||||||||
Share-based compensation expense | 54,905 | 5,602 | 5,617 | — | 66,124 | ||||||||||||||
Interest expense | — | 3,758 | 101 | 12,607 | 16,466 | ||||||||||||||
Adjusted EBITDA | $ | 61,047 | $ | (34,524 | ) | $ | (2,601 | ) | $ | — | $ | 23,922 | |||||||
Three Months Ended March 31, 2018 | |||||||||||||||||||
IMT | Homes | 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 | $ | (18,591 | ) | ||||||||||||
Income tax expense | N/A | N/A | N/A | N/A | 2,600 | ||||||||||||||
Loss before income taxes | $ | (6,616 | ) | $ | (4,390 | ) | $ | (358 | ) | $ | (4,627 | ) | $ | (15,991 | ) | ||||
Other income | — | — | — | (2,446 | ) | (2,446 | ) | ||||||||||||
Depreciation and amortization expense | 25,465 | 59 | 1,382 | — | 26,906 | ||||||||||||||
Share-based compensation expense | 27,807 | 818 | 2,116 | — | 30,741 | ||||||||||||||
Acquisition-related costs | 27 | — | — | — | 27 | ||||||||||||||
Interest expense | — | — | — | 7,073 | 7,073 | ||||||||||||||
Adjusted EBITDA | $ | 46,683 | $ | (3,513 | ) | $ | 3,140 | $ | — | $ | 46,310 | ||||||||
(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 taxes 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.
Exhibit 99.2
Reported Consolidated Results
ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 736,507 | $ | 651,058 | |||
Short-term investments | 780,963 | 903,867 | |||||
Accounts receivable, net | 70,605 | 66,083 | |||||
Inventory | 325,154 | 162,829 | |||||
Mortgage loans held for sale | 29,469 | 35,409 | |||||
Prepaid expenses and other current assets | 69,292 | 61,067 | |||||
Restricted cash | 27,595 | 12,385 | |||||
Total current assets | 2,039,585 | 1,892,698 | |||||
Contract cost assets | 46,176 | 45,819 | |||||
Property and equipment, net | 142,146 | 135,172 | |||||
Right of use assets | 102,056 | — | |||||
Goodwill | 1,984,907 | 1,984,907 | |||||
Intangible assets, net | 207,933 | 215,904 | |||||
Other assets | 16,763 | 16,616 | |||||
Total assets | $ | 4,539,566 | $ | 4,291,116 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 7,708 | $ | 7,471 | |||
Accrued expenses and other current liabilities | 63,212 | 63,101 | |||||
Accrued compensation and benefits | 30,300 | 31,388 | |||||
Revolving credit facility | 246,028 | 116,700 | |||||
Warehouse lines of credit | 27,991 | 33,018 | |||||
Deferred revenue | 36,105 | 34,080 | |||||
Deferred rent, current portion | — | 1,740 | |||||
Lease liabilities, current portion | 19,561 | — | |||||
Total current liabilities | 430,905 | 287,498 | |||||
Deferred rent, net of current portion | — | 19,945 | |||||
Lease liabilities, net of current portion | 102,405 | — | |||||
Long-term debt | 707,860 | 699,020 | |||||
Deferred tax liabilities and other long-term liabilities | 15,264 | 17,474 | |||||
Total liabilities | 1,256,434 | 1,023,937 | |||||
Shareholders’ equity: | |||||||
Class A common stock | 6 | 6 | |||||
Class B common stock | 1 | 1 | |||||
Class C capital stock | 14 | 14 | |||||
Additional paid-in capital | 4,022,218 | 3,939,842 | |||||
Accumulated other comprehensive loss | 197 | (905 | ) | ||||
Accumulated deficit | (739,304 | ) | (671,779 | ) | |||
Total shareholders’ equity | 3,283,132 | 3,267,179 | |||||
Total liabilities and shareholders’ equity | $ | 4,539,566 | $ | 4,291,116 | |||
ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenue: | |||||||
IMT | $ | 298,272 | $ | 280,856 | |||
Homes | 128,472 | — | |||||
Mortgages | 27,360 | 19,023 | |||||
Total revenue | 454,104 | 299,879 | |||||
Cost of revenue (exclusive of amortization) (1)(2): | |||||||
IMT | 24,251 | 22,594 | |||||
Homes | 122,419 | 86 | |||||
Mortgages | 4,678 | 1,239 | |||||
Total cost of revenue | 151,348 | 23,919 | |||||
Sales and marketing (2) | 161,587 | 137,291 | |||||
Technology and development (2) | 107,770 | 93,933 | |||||
General and administrative (2) | 95,774 | 56,073 | |||||
Acquisition-related costs | — | 27 | |||||
Integration costs | 352 | — | |||||
Total costs and expenses | 516,831 | 311,243 | |||||
Loss from operations | (62,727 | ) | (11,364 | ) | |||
Other income | 9,168 | 2,446 | |||||
Interest expense | (16,466 | ) | (7,073 | ) | |||
Loss before income taxes | (70,025 | ) | (15,991 | ) | |||
Income tax benefit (expense) | 2,500 | (2,600 | ) | ||||
Net loss | $ | (67,525 | ) | $ | (18,591 | ) | |
Net loss per share — basic and diluted | $ | (0.33 | ) | $ | (0.10 | ) | |
Weighted-average shares outstanding — basic and diluted | 204,514 | 191,464 | |||||
_________________ (1) Amortization of website development costs and intangible assets included in technology and development | $ | 14,400 | $ | 22,549 | |||
(2) Includes share-based compensation expense as follows: | |||||||
Cost of revenue | $ | 881 | $ | 955 | |||
Sales and marketing | 5,650 | 5,162 | |||||
Technology and development | 15,508 | 11,542 | |||||
General and administrative | 44,085 | 13,082 | |||||
Total | $ | 66,124 | $ | 30,741 | |||
Other Financial Data: | |||||||
Adjusted EBITDA (3) | $ | 23,922 | $ | 46,310 | |||
(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 Exhibit 99.1 for more information regarding our presentation of Adjusted EBITDA and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for each of the periods presented. | |||||||
ZILLOW GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Operating activities | |||||||
Net loss | $ | (67,525 | ) | $ | (18,591 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 20,525 | 26,906 | |||||
Share-based compensation expense | 66,124 | 30,741 | |||||
Amortization of right of use assets | 4,440 | — | |||||
Amortization of contract cost assets | 8,746 | 9,296 | |||||
Amortization of discount and issuance costs on convertible notes maturing in 2023 and 2021 | 8,840 | 4,708 | |||||
Deferred income taxes | (2,500 | ) | 2,600 | ||||
Loss on disposal of property and equipment | 1,704 | 1,803 | |||||
Bad debt expense | 128 | (267 | ) | ||||
Deferred rent | — | (3,090 | ) | ||||
Accretion of bond discount | (1,733 | ) | (137 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (4,650 | ) | 105 | ||||
Inventory | (162,325 | ) | — | ||||
Mortgage loans held for sale | 5,940 | — | |||||
Prepaid expenses and other assets | (8,537 | ) | (19,923 | ) | |||
Lease liabilities | (7,010 | ) | — | ||||
Contract cost assets | (9,103 | ) | (11,440 | ) | |||
Accounts payable | (133 | ) | 1,672 | ||||
Accrued expenses and other current liabilities | 328 | (6,747 | ) | ||||
Accrued compensation and benefits | (1,088 | ) | 3,637 | ||||
Deferred revenue | 2,025 | 3,379 | |||||
Other long-term liabilities | 290 | — | |||||
Net cash provided by (used in) operating activities | (145,514 | ) | 24,652 | ||||
Investing activities | |||||||
Proceeds from maturities of investments | 302,187 | 61,386 | |||||
Purchases of investments | (176,412 | ) | (76,729 | ) | |||
Purchases of property and equipment | (14,202 | ) | (15,791 | ) | |||
Purchases of intangible assets | (3,269 | ) | (1,098 | ) | |||
Net cash provided by (used in) investing activities | 108,304 | (32,232 | ) | ||||
Financing activities | |||||||
Proceeds from borrowing on revolving credit facility | 129,328 | — | |||||
Net repayments on warehouse lines of credit | (5,025 | ) | — | ||||
Proceeds from exercise of stock options | 13,564 | 52,906 | |||||
Value of equity awards withheld for tax liability | 2 | (28 | ) | ||||
Net cash provided by financing activities | 137,869 | 52,878 | |||||
Net increase in cash, cash equivalents and restricted cash during period | 100,659 | 45,298 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 663,443 | 352,095 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 764,102 | $ | 397,393 | |||
Supplemental disclosures of cash flow information | |||||||
Cash paid for interest | $ | 4,956 | $ | — | |||
Noncash transactions: | |||||||
Capitalized share-based compensation | $ | 2,690 | $ | 2,120 | |||
Write-off of fully depreciated property and equipment | $ | 6,269 | $ | 7,379 | |||
Write-off of fully amortized intangible assets | $ | 3,200 | $ | 10,687 | |||
Non-GAAP Net Income (Loss) per Share
Our presentation of non-GAAP net income (loss) per share excludes the impact of share-based compensation expense, acquisition-related 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 and income taxes facilitates investors’ operating performance comparisons on a period-to-period basis. You should not consider non-GAAP income (loss) per share in isolation or as a substitute for analysis of our results as reported under GAAP.
The following table sets forth a reconciliation of net income (loss), adjusted, to net loss, as reported on a GAAP basis, and the calculation of non-GAAP income (loss) per share - basic and diluted, for each of the periods presented (in thousands, except per share data, unaudited):
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net loss, as reported | $ | (67,525 | ) | $ | (18,591 | ) | |
Share-based compensation expense | 66,124 | 30,741 | |||||
Acquisition-related costs | — | 27 | |||||
Income tax (benefit) expense | (2,500 | ) | 2,600 | ||||
Net income (loss), adjusted | $ | (3,901 | ) | $ | 14,777 | ||
Non-GAAP net income (loss) per share — basic | $ | (0.02 | ) | $ | 0.08 | ||
Non-GAAP net income (loss) per share — diluted | $ | (0.02 | ) | $ | 0.07 | ||
Weighted-average shares outstanding — basic | 204,514 | 191,464 | |||||
Weighted-average shares outstanding — diluted | 204,514 | 201,096 | |||||
Non-GAAP net income (loss) per share - diluted for the periods presented is calculated using weighted-average shares outstanding - diluted, which includes potential shares of Class A common stock and Class C capital stock for the periods in which their effect would have been dilutive. The potential shares of Class A common stock and Class C capital stock were excluded from the calculation of GAAP loss per share for the periods presented because their effect would have been antidilutive as a result of the GAAP net loss incurred in such periods. The following table reconciles the denominators used in the basic and diluted non-GAAP net income (loss) per share calculations (in thousands):
Three Months Ended March 31, | |||||
2019 | 2018 | ||||
Denominator for basic calculation | 204,514 | 191,464 | |||
Effect of dilutive securities: | |||||
Option awards | — | 8,013 | |||
Unvested restricted stock units | — | 1,384 | |||
Class C capital stock issuable upon conversion of the convertible notes maturing in 2021 | — | 235 | |||
Denominator for dilutive calculation | 204,514 | 201,096 | |||
Segment Results of Operations
The following table presents our segment results for the periods presented (in thousands, unaudited):
Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | ||||||||||||||||||||||
IMT | Homes | Mortgages | IMT | Homes | Mortgages | ||||||||||||||||||
Revenue | $ | 298,272 | $ | 128,472 | $ | 27,360 | $ | 280,856 | $ | — | $ | 19,023 | |||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of revenue | 24,251 | 122,419 | 4,678 | 22,594 | 86 | 1,239 | |||||||||||||||||
Sales and marketing | 126,654 | 20,862 | 14,071 | 128,747 | 290 | 8,254 | |||||||||||||||||
Technology and development | 87,969 | 12,281 | 7,520 | 85,917 | 2,236 | 5,780 | |||||||||||||||||
General and administrative | 70,850 | 14,357 | 10,567 | 50,182 | 1,778 | 4,108 | |||||||||||||||||
Acquisition-related costs | — | — | — | 27 | — | — | |||||||||||||||||
Integration costs | — | — | 352 | — | — | — | |||||||||||||||||
Total costs and expenses | 309,724 | 169,919 | 37,188 | 287,467 | 4,390 | 19,381 | |||||||||||||||||
Loss from operations | (11,452 | ) | (41,447 | ) | (9,828 | ) | (6,611 | ) | (4,390 | ) | (358 | ) | |||||||||||
Segment other income | — | — | 313 | — | — | — | |||||||||||||||||
Segment interest expense | — | (3,758 | ) | (101 | ) | — | — | — | |||||||||||||||
Loss before income taxes (1) | $ | (11,452 | ) | $ | (45,205 | ) | $ | (9,616 | ) | $ | (6,611 | ) | $ | (4,390 | ) | $ | (358 | ) | |||||
(1) The following table presents the reconciliation of total segment loss before income taxes to consolidated loss before income taxes for the periods presented (in thousands):
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Total segment loss before income taxes | $ | (66,273 | ) | $ | (11,364 | ) | |
Corporate interest expense | (12,607 | ) | (7,073 | ) | |||
Corporate other income | 8,855 | 2,446 | |||||
Consolidated loss before income taxes | $ | (70,025 | ) | $ | (15,991 | ) | |
Key Metrics
The following table sets forth our key metrics for each of the periods presented:
Three Months Ended March 31, | 2018 to 2019 % Change | |||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Average Monthly Unique Users (1) | 181.1 | 175.5 | 3 | % | ||||
Visits (2) | 2,019.8 | 1,764.8 | 14 | % | ||||
(1) | Zillow, StreetEasy, HotPads, Naked Apartments and RealEstate.com measure unique users with Google Analytics, and Trulia measures unique users with Adobe Analytics. |
(2) | Visits includes visits to the Zillow, Trulia, StreetEasy and RealEstate.com mobile apps and websites. We measure Zillow, StreetEasy and RealEstate.com visits with Google Analytics and Trulia visits with Adobe Analytics. |
Non-GAAP Return on Homes Sold After Interest Expense
To provide investors with additional information regarding our Homes segment financial results, this Exhibit includes a calculation of Return on Homes Sold After Interest Expense, which is a non-GAAP financial measure. We have provided a
reconciliation of Return on Homes Sold After Interest Expense to the most directly comparable GAAP financial measure, which is loss before income taxes for the Homes segment.
We believe that Return on Homes Sold After Interest Expense is a useful financial measure to investors in evaluating the performance of a subset of our assets, as it measures the return generated by Zillow specifically on homes sold during a given period. We also present this measure on a per home basis so investors are able to evaluate unit profitability across periods notwithstanding variability in the number of homes sold during each period. This measure also assists Homes segment management in making strategic decisions regarding home offer pricing and other operational decisions.
We calculate Return on Homes Sold After Interest Expense in total and on a per home basis as revenue associated with homes sold during the period less direct costs attributable to those homes. Specifically, direct costs include, with respect to each home sold during the period (1) home acquisition and renovation costs, which in turn include certain labor costs directly associated with these activities; (2) holding and selling costs; and (3) interest costs incurred.
Included in direct holding and interest expense amounts for the three months ended March 31, 2019 are holding and interest costs recorded as period expenses in prior periods associated with homes sold in the current period, which are not calculated in accordance with, or an alternative for, GAAP and should not be considered in isolation or as a substitute for results reported under GAAP. Excluded from certain of these direct cost amounts are costs recorded in the current period related to homes that remain in inventory at the end of the period, as shown in the tables below. We make these period adjustments because we believe presenting Return on Homes Sold After Interest Expense in this manner provides a focused view on a subset of our assets - homes sold during the period - and reflecting costs associated with those homes sold from the time we acquire to the time we sell the home, which may be useful to investors.
Return on Homes Sold After Interest Expense is intended to illustrate the performance of homes sold during the period and is not intended to be a segment or company performance metric. Return on Homes Sold After Interest Expense is a supplemental measure of operating performance for a subset of assets and 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:
• | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Return on Homes Sold After Interest Expense does not reflect capital expenditure requirements for such replacements or for new capital expenditure requirements; |
• | Return on Homes Sold After Interest Expense does not consider the potentially dilutive impact of share-based compensation; |
• | Return on Homes Sold After Interest Expense does not include period costs that were not eligible for inventory capitalization associated with homes held in inventory at the end of the period; |
• | Return on Homes Sold After Interest Expense does not reflect indirect expenses included in cost of revenue, sales and marketing, technology and development, or general and administrative expenses, some of which are recurring cash expenditures necessary to operate the business; and |
• | Return on Homes Sold After Interest Expense does not reflect income taxes. |
Because of these limitations, you should consider Return on Homes Sold After Interest Expense alongside other financial performance measures, including various cash flow metrics, loss before income taxes and our other GAAP results.
On a GAAP basis, per home loss before income taxes for the Homes segment was $109,191 for the three months ended March 31, 2019.
The following table presents the Return on Homes Sold After Interest Expense for the period presented (in thousands, except home and per home amounts, unaudited):
Three Months Ended March 31, 2019 | |||||||||
Total | Per Home | ||||||||
Homes sold | 414 | ||||||||
Homes revenue | $ | 128,472 | $ | 310,319 | |||||
Operating costs: | |||||||||
Home acquisition costs (1) | 116,709 | 281,906 | |||||||
Renovation costs (1) | 4,681 | 11,307 | |||||||
Holding costs (1)(2) | 1,238 | 2,990 | |||||||
Selling costs | 5,542 | 13,386 | |||||||
Total operating costs | 128,170 | 309,589 | |||||||
Interest expense (1)(2) | 1,655 | 3,998 | |||||||
Return on Homes Sold After Interest Expense | $ | (1,353 | ) | $ | (3,268 | ) | |||
(1) Amount excludes expenses incurred during the period that are not related to homes sold during the period. (2) Holding costs and interest expense include $0.6 million and $0.6 million, respectively, of costs incurred in prior quarters associated with homes sold in the first quarter of 2019. | |||||||||
Reconciliation of Non-GAAP Measure to Most Comparable GAAP Measure (in thousands, except home and per home amounts, unaudited): | Three Months Ended March 31, 2019 | ||||
Loss before income taxes | $ | (45,205 | ) | ||
Homes sold | 414 | ||||
Per home loss before income taxes | $ | (109,191 | ) | ||
Loss before income taxes | (45,205 | ) | |||
Depreciation and amortization | 1,321 | ||||
Share-based compensation expense | 5,602 | ||||
Costs incurred in prior periods associated with homes sold in the current period (1) | (1,229 | ) | |||
Costs incurred in current period related to homes not sold in current period (2) | 4,877 | ||||
Indirect expenses included in cost of revenue (3) | 421 | ||||
Indirect marketing and advertising costs included in sales and marketing (4) | 12,225 | ||||
Indirect costs included in technology and development expense (5) | 9,326 | ||||
Indirect costs included in general and administrative expense (6) | 11,309 | ||||
Return on Homes Sold After Interest Expense | (1,353 | ) | |||
Homes sold | 414 | ||||
Per Home Return on Homes Sold After Interest Expense | $ | (3,268 | ) | ||
(1) Amount represents costs incurred in prior periods associated with homes sold in the current period that were not eligible for inventory capitalization and were therefore expensed as period costs. (2) Amount represents costs ineligible for inventory capitalization which were expensed as period costs in the first quarter of 2019 associated with homes that remain in inventory as of March 31, 2019. (3) Includes allocated segment costs, which were recorded to cost of revenue within the Homes segment during the first quarter of 2019. (4) Includes marketing and advertising expenses incurred in the first quarter of 2019 not directly related to purchasing, renovating and selling homes. (5) Includes technology and development expenses incurred in the first quarter of 2019 not directly related to purchasing, renovating and selling homes. (6) Includes general and administration expenses incurred in the first quarter of 2019 not directly related to purchasing, renovating and selling homes. | |||||
Selected Historical Segment Data
As previously disclosed, beginning with the quarterly period ended March 31, 2019, we report financial results for three reportable segments: the Internet, Media, and Technology (“IMT”) segment, the Homes segment and the Mortgages segment. For the purpose of aiding period-over-period comparisons, Zillow Group is providing selected historical statements of operations information by segment assuming it had three reportable segments for the three months ended each of March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018 and for the year ended December 31, 2018 as follows (in thousands, unaudited):
Three Months Ended March 31, 2018 | |||||||||||||||||||
IMT | Homes | Mortgages | Corporate Items (2) | Consolidated | |||||||||||||||
Revenue: | |||||||||||||||||||
Premier Agent | $ | 213,732 | $ | — | $ | — | $ | — | $ | 213,732 | |||||||||
Rentals | 29,063 | — | — | — | 29,063 | ||||||||||||||
Other | 38,061 | — | — | — | 38,061 | ||||||||||||||
Mortgages | — | — | 19,023 | — | 19,023 | ||||||||||||||
Total revenue | 280,856 | — | 19,023 | — | 299,879 | ||||||||||||||
Cost and expenses: | |||||||||||||||||||
Cost of revenue | 22,594 | 86 | 1,239 | — | 23,919 | ||||||||||||||
Sales and marketing | 128,747 | 290 | 8,254 | — | 137,291 | ||||||||||||||
Technology and development | 85,917 | 2,236 | 5,780 | — | 93,933 | ||||||||||||||
General and administrative | 50,187 | 1,778 | 4,108 | — | 56,073 | ||||||||||||||
Acquisition-related costs | 27 | — | — | — | 27 | ||||||||||||||
Total costs and expenses | 287,472 | 4,390 | 19,381 | — | 311,243 | ||||||||||||||
Loss from operations | (6,616 | ) | (4,390 | ) | (358 | ) | — | (11,364 | ) | ||||||||||
Other income | — | — | — | 2,446 | 2,446 | ||||||||||||||
Interest expense | — | — | — | (7,073 | ) | (7,073 | ) | ||||||||||||
Loss before income taxes (1) | $ | (6,616 | ) | $ | (4,390 | ) | $ | (358 | ) | $ | (4,627 | ) | $ | (15,991 | ) | ||||
Three Months Ended June 30, 2018 | |||||||||||||||||||
IMT | Homes | Mortgages | Corporate Items (2) | Consolidated | |||||||||||||||
Revenue: | |||||||||||||||||||
Premier Agent | $ | 230,885 | $ | — | $ | — | $ | — | $ | 230,885 | |||||||||
Rentals | 33,288 | — | — | — | 33,288 | ||||||||||||||
Other | 41,768 | — | — | — | 41,768 | ||||||||||||||
Mortgages | — | — | 19,305 | — | 19,305 | ||||||||||||||
Total revenue | 305,941 | — | 19,305 | — | 325,246 | ||||||||||||||
Cost and expenses: | |||||||||||||||||||
Cost of revenue | 24,290 | — | 1,237 | — | 25,527 | ||||||||||||||
Sales and marketing | 137,972 | 2,095 | 7,660 | — | 147,727 | ||||||||||||||
Technology and development | 91,131 | 3,790 | 5,455 | — | 100,376 | ||||||||||||||
General and administrative | 52,438 | 4,176 | 3,965 | — | 60,579 | ||||||||||||||
Acquisition-related costs | — | — | 632 | — | 632 | ||||||||||||||
Total costs and expenses | 305,831 | 10,061 | 18,949 | — | 334,841 | ||||||||||||||
Loss from operations | 110 | (10,061 | ) | 356 | — | (9,595 | ) | ||||||||||||
Other income | — | — | — | 3,089 | 3,089 | ||||||||||||||
Interest expense | — | — | — | (7,187 | ) | (7,187 | ) | ||||||||||||
Loss before income taxes (1) | $ | 110 | $ | (10,061 | ) | $ | 356 | $ | (4,098 | ) | $ | (13,693 | ) | ||||||
Three Months Ended September 30, 2018 | |||||||||||||||||||
IMT | Homes | Mortgages | Corporate Items (2) | Consolidated | |||||||||||||||
Revenue: | |||||||||||||||||||
Premier Agent | $ | 232,703 | $ | — | $ | — | $ | — | $ | 232,703 | |||||||||
Rentals | 37,319 | — | — | — | 37,319 | ||||||||||||||
Other | 43,616 | — | — | — | 43,616 | ||||||||||||||
Homes | — | 11,018 | — | — | 11,018 | ||||||||||||||
Mortgages | — | — | 18,438 | — | 18,438 | ||||||||||||||
Total revenue | 313,638 | 11,018 | 18,438 | — | 343,094 | ||||||||||||||
Cost and expenses: | |||||||||||||||||||
Cost of revenue | 25,186 | 10,226 | 1,260 | — | 36,672 | ||||||||||||||
Sales and marketing | 117,522 | 4,650 | 6,562 | — | 128,734 | ||||||||||||||
Technology and development | 93,930 | 6,128 | 5,256 | — | 105,314 | ||||||||||||||
General and administrative | 60,678 | 6,010 | 4,055 | — | 70,743 | ||||||||||||||
Acquisition-related costs | — | — | 1,405 | — | 1,405 | ||||||||||||||
Integration costs | — | — | 523 | — | 523 | ||||||||||||||
Impairment | 10,000 | — | — | — | 10,000 | ||||||||||||||
Total costs and expenses | 307,316 | 27,014 | 19,061 | — | 353,391 | ||||||||||||||
Loss from operations | 6,322 | (15,996 | ) | (623 | ) | — | (10,297 | ) | |||||||||||
Other income | — | — | — | 7,773 | 7,773 | ||||||||||||||
Interest expense | — | (432 | ) | — | (12,236 | ) | (12,668 | ) | |||||||||||
Loss before income taxes (1) | $ | 6,322 | $ | (16,428 | ) | $ | (623 | ) | $ | (4,463 | ) | $ | (15,192 | ) | |||||
Three Months Ended December 31, 2018 | |||||||||||||||||||
IMT | Homes | Mortgages | Corporate Items (2) | Consolidated | |||||||||||||||
Revenue: | |||||||||||||||||||
Premier Agent | $ | 221,012 | $ | — | $ | — | $ | — | $ | 221,012 | |||||||||
Rentals | 34,917 | — | — | — | 34,917 | ||||||||||||||
Other | 44,779 | — | — | — | 44,779 | ||||||||||||||
Homes | — | 41,347 | — | — | 41,347 | ||||||||||||||
Mortgages | — | — | 23,280 | — | 23,280 | ||||||||||||||
Total revenue | 300,708 | 41,347 | 23,280 | — | 365,335 | ||||||||||||||
Cost and expenses: | |||||||||||||||||||
Cost of revenue | 24,623 | 39,080 | 3,769 | — | 67,472 | ||||||||||||||
Sales and marketing | 118,544 | 10,099 | 10,226 | — | 138,869 | ||||||||||||||
Technology and development | 92,734 | 9,197 | 9,264 | — | 111,195 | ||||||||||||||
General and administrative | 57,261 | 10,038 | 7,459 | — | 74,758 | ||||||||||||||
Acquisition-related costs | — | — | 268 | — | 268 | ||||||||||||||
Integration costs | — | — | 1,492 | — | 1,492 | ||||||||||||||
Impairment | 65,000 | — | 4,000 | — | 69,000 | ||||||||||||||
Total costs and expenses | 358,162 | 68,414 | 36,478 | — | 463,054 | ||||||||||||||
Loss from operations | (57,454 | ) | (27,067 | ) | (13,198 | ) | — | (97,719 | ) | ||||||||||
Other income | — | — | 244 | 5,718 | 5,962 | ||||||||||||||
Interest expense | — | (1,745 | ) | (132 | ) | (12,450 | ) | (14,327 | ) | ||||||||||
Loss before income taxes (1) | $ | (57,454 | ) | $ | (28,812 | ) | $ | (13,086 | ) | $ | (6,732 | ) | $ | (106,084 | ) | ||||
Year Ended December 31, 2018 | |||||||||||||||||||
IMT | Homes | Mortgages | Corporate Items (2) | Consolidated | |||||||||||||||
Revenue: | |||||||||||||||||||
Premier Agent | $ | 898,332 | $ | — | $ | — | $ | — | $ | 898,332 | |||||||||
Rentals | 134,587 | — | — | — | 134,587 | ||||||||||||||
Other | 168,224 | — | — | — | 168,224 | ||||||||||||||
Homes | — | 52,365 | — | — | 52,365 | ||||||||||||||
Mortgages | — | — | 80,046 | — | 80,046 | ||||||||||||||
Total revenue | 1,201,143 | 52,365 | 80,046 | — | 1,333,554 | ||||||||||||||
Cost and expenses: | |||||||||||||||||||
Cost of revenue | 96,693 | 49,392 | 7,505 | — | 153,590 | ||||||||||||||
Sales and marketing | 502,785 | 17,134 | 32,702 | — | 552,621 | ||||||||||||||
Technology and development | 363,712 | 21,351 | 25,755 | — | 410,818 | ||||||||||||||
General and administrative | 220,564 | 22,002 | 19,587 | — | 262,153 | ||||||||||||||
Acquisition-related costs | 27 | — | 2,305 | — | 2,332 | ||||||||||||||
Integration costs | — | — | 2,015 | — | 2,015 | ||||||||||||||
Impairment | 75,000 | — | 4,000 | — | 79,000 | ||||||||||||||
Total costs and expenses | 1,258,781 | 109,879 | 93,869 | — | 1,462,529 | ||||||||||||||
Loss from operations | (57,638 | ) | (57,514 | ) | (13,823 | ) | — | (128,975 | ) | ||||||||||
Other income | — | — | 244 | 19,026 | 19,270 | ||||||||||||||
Interest expense | — | (2,177 | ) | (132 | ) | (38,946 | ) | (41,255 | ) | ||||||||||
Loss before income taxes (1) | $ | (57,638 | ) | $ | (59,691 | ) | $ | (13,711 | ) | $ | (19,920 | ) | $ | (150,960 | ) | ||||
(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 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 interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense. |
For information regarding Adjusted EBITDA assuming we had three reportable segments for the three months ended each of March 31, 2018, June 30, 2018, September 30, 2018 and for the year ended December 31, 2018, see the supplemental tables furnished as Exhibit 99.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 23, 2019.