Zillow Group(US:Z)2025-02-11 21:21Financial Performance - Total revenue for 2024 was $2,236 million, an increase of 14.9% compared to $1,945 million in 2023[378]. - Residential revenue reached $1,594 million in 2024, up from $1,452 million in 2023, reflecting a growth of 9.8%[378]. - Gross profit for 2024 was $1,709 million, compared to $1,524 million in 2023, marking a 12.1% increase[378]. - Operating expenses totaled $1,906 million in 2024, an increase of 6.2% from $1,794 million in 2023[378]. - Net loss from continuing operations for 2024 was $112 million, an improvement from a net loss of $158 million in 2023[378]. - The company reported a comprehensive loss of $110 million for 2024, compared to a comprehensive loss of $148 million in 2023, indicating an improvement[381]. - Net cash provided by operating activities increased to $428 million in 2024, compared to $354 million in 2023[386]. - Cash and cash equivalents decreased to $1,082 million in 2024 from $1,492 million in 2023, a decline of 27.5%[377]. - Total assets decreased to $5,829 million in 2024 from $6,652 million in 2023, a reduction of 12.3%[377]. - Total liabilities decreased significantly to $981 million in 2024 from $2,126 million in 2023, a decrease of 53.8%[377]. - Shareholders' equity increased to $4,848 million in 2024 from $4,526 million in 2023, reflecting a growth of 7.1%[377]. Debt and Financing - As of December 31, 2024, the company had approximately $419 million in aggregate principal amount of convertible senior notes outstanding, maturing in May 2025[356]. - The company reported outstanding borrowings on master repurchase agreements of $145 million and $93 million as of December 31, 2024 and 2023, respectively[357]. - The company has a fixed rate of interest on its 2025 Notes, mitigating financial statement risk associated with changes in interest rates[356]. - The company is exposed to market risks primarily from fluctuations in interest rates, which may affect the yield on investments and fair value[354]. - As of December 31, 2024, total debt for Zillow Group was $563 million, down from $1.7 billion in 2023[510]. - The company repurchased $88 million of the 2025 Notes for $89 million in cash during the year ended December 31, 2024, resulting in a loss on extinguishment of debt of $1 million[520]. - During the year ended December 31, 2024, Zillow settled conversions of the 2024 Notes with cash payments totaling $610 million, including $608 million in principal repayments[518]. - The 2026 Notes had an aggregate principal amount of $499 million, with $498 million converted prior to the redemption date, resulting in the issuance of 4.5 million shares of Class C capital stock[521]. Market and Operational Risks - The company experienced inflationary pressures impacting costs, particularly in labor, marketing, and hosting, which may not be fully offset by price increases[360]. - The company anticipates continued impacts from high mortgage interest rates on transaction volumes and demand for its services, adversely affecting revenue[359]. - The company is navigating industry changes, including potential impacts from lawsuits and government investigations, which may affect operations[22]. - The company has implemented forward sales of mortgage-backed securities to manage interest rate risk associated with mortgage loan origination[357]. - Zillow Offers operations were wound down due to home pricing unpredictability and operational challenges, with the wind down completed in Q3 2022[474][475]. Acquisitions and Investments - Zillow Group acquired Follow Up Boss for $399 million in cash, with contingent consideration of up to $100 million based on performance metrics[483]. - The total purchase price for Follow Up Boss was allocated as follows: cash $403 million, contingent consideration $81 million, with goodwill recorded at $402 million[494]. - Zillow Group also acquired Aryeo for approximately $35 million and Spruce for approximately $19 million, with total consideration for both acquisitions being $54 million[496]. - The estimated fair value of identifiable intangible assets acquired from Follow Up Boss was $86 million, with developed technology valued at $50 million[495]. Revenue Recognition and Accounting Policies - Revenue is recognized when performance obligations are satisfied, reflecting the consideration expected in exchange for products or services[436]. - Revenue is disaggregated into categories: Residential, Rentals, Mortgages, and Other, with "For Sale revenue" including Residential and Mortgages categories[439]. - Premier Agent program revenue includes marketing and technology products, with revenue recognized on a straight-line basis during the monthly billing period[444]. - Revenue from ShowingTime+ includes multiple products, with revenue recognized ratably over the contract period, aligning with performance obligations[446]. - Rentals revenue includes advertising sold to rental professionals, recognized as leads, clicks, and impressions are provided, with a total advertising expense of $175 million for 2024[460]. - Mortgages revenue primarily comes from Zillow Home Loans and marketing products, with revenue recognized upon the completion of purchase or refinance transactions[451][452]. Taxation - The company recorded income tax expenses of $5 million, $4 million, and $3 million for the years ended December 31, 2024, 2023, and 2022, respectively[523]. - Total income tax expense for 2024 increased to $5 million from $4 million in 2023 and $3 million in 2022[524]. - The effective tax rate for 2024 was 4.0%, up from 2.8% in 2023 and 2.6% in 2022[524]. - Federal net operating losses amounted to approximately $1.3 billion in 2024, down from $1.4 billion in 2023[526]. - The valuation allowance against deferred tax assets increased by $49 million in 2024 and $22 million in 2023[525]. - Unrecognized tax benefits rose to $115 million by December 31, 2024, from $95 million in 2023[528]. Stock Repurchase and Equity - The company repurchased 1,100 thousand shares of Class A common stock at an average price of $42.26 per share in 2024[535]. - Total purchase price for stock repurchases in 2024 was $46 million for Class A and $255 million for Class C capital stock[535]. - The company has authorized up to $2.5 billion for stock repurchases, with $381 million remaining available as of December 31, 2024[534]. - The 2020 Incentive Plan allows for the issuance of up to 12 million shares of Class C capital stock, with awards typically vesting over four years[536].