Zillow Group(Z) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Glossary of Terms This section provides definitions for key abbreviations, acronyms, and common terms used throughout the Quarterly Report on Form 10-Q to ensure clarity and consistent understanding of the company's financial and operational disclosures Glossary of Terms | Abbreviation, Acronym or Common Term | Definition | | :---------------------------------- | :--------- | | Zillow Group, "the Company," "we," "us" and "our" | Refers to Zillow Group, Inc. | | 2024 Notes | 0.75% Convertible Senior Notes fully settled in September 2024 | | 2025 Notes | 2.75% Convertible Senior Notes fully settled in May 2025 | | 2026 Notes | 1.375% Convertible Senior Notes fully settled in December 2024 | | Board | Board of Directors of Zillow Group, Inc. | | Exchange Act | Securities Exchange Act of 1934, as amended | | FASB | Financial Accounting Standards Board | | GAAP | Generally accepted accounting principles in the United States | | IRLC | Interest rate lock commitment | | Lenders | UBS AG, JPMorgan Chase Bank, N.A., Bank of Montreal, and Bank of Nova Scotia | | MBS | Mortgage-backed security | | MLS | Multiple Listing Service | | NAR | National Association of REALTORS® | | Repurchase Authorizations | A series of authorizations from the Board to repurchase Class A common stock, Class C capital stock, convertible senior notes, or a combination thereof | | SEC | United States Securities and Exchange Commission | | SOFR | Secured Overnight Financing Rate | | TTV | Total Transaction Value for the residential real estate industry | Note Regarding Forward-Looking Statements This section cautions readers that the report contains forward-looking statements based on management's beliefs and assumptions, which are subject to various risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected - Forward-looking statements are subject to numerous risks, uncertainties, and assumptions, including those related to the economy, real estate industry health, advertising management, regulatory compliance, innovation, mortgage operations, natural disasters, security, litigation, workforce, acquisitions, third-party reliance, intellectual property, and compliance with laws[16] - The company operates in a competitive and rapidly changing environment, making it impossible to predict all risks or assess the full effect of all factors on its business[17] - Readers should not rely on forward-looking statements as predictions of future events, and the company does not guarantee that future results or events will be achieved[18] Note Regarding Industry and Market Data This section clarifies that the market and industry data presented in the report are based on the company's internal estimates and research, as well as independent third-party sources - Market and industry data in the report are based on internal estimates and research, as well as independent industry publications and third-party statistical information[21] - The company has not independently verified data from third-party sources nor validated their underlying economic assumptions[21] Where You Can Find More Information This section directs investors to Zillow Group's SEC filings and investor relations website for more information, and lists additional channels through which the company may disclose material financial information - Zillow Group's SEC filings (10-K, 10-Q, 8-K) are available free of charge on the 'Investors' section of its website (www.zillowgroup.com)[23](index=23&type=chunk) - The company uses press releases, SEC filings, public conference calls, webcasts, and its Investor Relations Site, Blog, X Account, and LinkedIn Account to disclose material financial information[24][25] Item 1. Financial Statements (unaudited) This section presents Zillow Group's unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, along with detailed notes explaining the accounting policies and specific financial line items for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets This section presents Zillow Group's condensed consolidated balance sheets, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024 | Assets (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Cash and cash equivalents | $587 | $1,082 | | Short-term investments | $571 | $776 | | Total current assets | $1,821 | $2,334 | | Total assets | $5,416 | $5,829 | | Liabilities (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Borrowings under credit facilities | $230 | $145 | | Convertible senior notes | $— | $418 | | Total current liabilities | $546 | $831 | | Total liabilities | $670 | $981 | | Shareholders' Equity (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Total shareholders' equity | $4,746 | $4,848 | | Total liabilities and shareholders' equity | $5,416 | $5,829 | Condensed Consolidated Statements of Operations This section presents Zillow Group's condensed consolidated statements of operations, detailing revenue, gross profit, and net income (loss) for the three and six months ended June 30, 2025 and 2024 | Metric (in millions, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $655 | $572 | $1,253 | $1,101 | | Gross profit | $489 | $442 | $948 | $848 | | Loss from operations | $(11) | $(38) | $(20) | $(83) | | Net income (loss) | $2 | $(17) | $10 | $(40) | | Basic net income (loss) per share | $0.01 | $(0.07) | $0.04 | $(0.17) | | Diluted net income (loss) per share | $0.01 | $(0.07) | $0.04 | $(0.17) | Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents Zillow Group's condensed consolidated statements of comprehensive income (loss), including net income (loss) and other comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $2 | $(17) | $10 | $(40) | | Other comprehensive income (loss) | $1 | $— | $4 | $(6) | | Comprehensive income (loss) | $3 | $(17) | $14 | $(46) | Condensed Consolidated Statements of Shareholders' Equity This section presents Zillow Group's condensed consolidated statements of shareholders' equity, detailing changes in capital, accumulated deficit, and comprehensive income for the periods ended June 30, 2025 and 2024 | Shareholder Equity (in millions) | Balance at April 1, 2025 | Balance at June 30, 2025 | Balance at April 1, 2024 | Balance at June 30, 2024 | | :------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Additional Paid-In Capital | $6,628 | $6,617 | $6,469 | $6,322 | | Accumulated Deficit | $(1,874) | $(1,872) | $(1,793) | $(1,810) | | Accumulated Other Comprehensive Income (Loss) | $— | $1 | $(11) | $(11) | | Total Shareholders' Equity | $4,754 | $4,746 | $4,665 | $4,501 | | Shareholder Equity (in millions) | Balance at January 1, 2025 | Balance at June 30, 2025 | Balance at January 1, 2024 | Balance at June 30, 2024 | | :------------------------------- | :------------------------- | :----------------------- | :------------------------- | :----------------------- | | Additional Paid-In Capital | $6,733 | $6,617 | $6,301 | $6,322 | | Accumulated Deficit | $(1,882) | $(1,872) | $(1,770) | $(1,810) | | Accumulated Other Comprehensive Income (Loss) | $(3) | $1 | $(5) | $(11) | | Total Shareholders' Equity | $4,848 | $4,746 | $4,526 | $4,501 | Condensed Consolidated Statements of Cash Flows This section presents Zillow Group's condensed consolidated statements of cash flows, detailing net cash from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Cash Flow Data (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $191 | $135 | | Net cash provided by (used in) investing activities | $25 | $(207) | | Net cash used in financing activities | $(709) | $(240) | | Net decrease in cash, cash equivalents and restricted cash | $(493) | $(312) | | Cash, cash equivalents and restricted cash at end of period | $592 | $1,183 | Notes to Condensed Consolidated Financial Statements This section provides detailed notes to Zillow Group's condensed consolidated financial statements, explaining accounting policies, financial instruments, and other critical disclosures Note 1. Organization and Description of Business Zillow Group is a real estate technology company focused on reimagining real estate through digital solutions, professional connections, and streamlined buying, selling, financing, and renting experiences - Zillow Group aims to make home a reality for more people by connecting them with digital solutions, real estate professionals, and easier buying, selling, financing, and renting experiences[38] - The company's portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, Out East, and marketing software solutions like ShowingTime+, Spruce, and Follow Up Boss[39] - Significant risks and uncertainties include the health of the economy and U.S. residential real estate industry, industry changes from lawsuits/settlements, policy changes, ability to manage advertising and partner relationships, compliance with NAR/MLS rules, and ability to grow mortgage operations[40] Note 2. Summary of Significant Accounting Policies This note outlines the basis of presentation for the condensed consolidated financial statements, confirming their preparation in conformity with GAAP and SEC rules for interim reporting - The condensed consolidated financial statements are prepared in conformity with GAAP and SEC rules for interim financial reporting, with certain information condensed or omitted[41] - Management makes estimates, judgments, and assumptions that affect reported amounts, with potential material differences between estimates and actual results, especially given housing market and broader economic health[43] - New FASB guidance on income tax rate reconciliation (effective after Dec 15, 2024) is expected to result in additional disclosures but no material impact, while guidance on cost and expense disclosures (effective after Dec 15, 2026) is still being evaluated for its impact[44][45] Note 3. Financial Instruments This note details the company's financial instruments, including fair value measurement methodologies for various assets and liabilities like cash equivalents, short-term investments, mortgage loans held for sale, forward contracts, and contingent consideration - Fair value measurements are categorized into Level 1 (quoted market prices), Level 2 (observable market-based inputs), and Level 3 (unobservable inputs)[46][47][48][49][52] - Contingent consideration for the Follow Up Boss acquisition is estimated using a Monte Carlo simulation, considering performance metric probabilities, with $33 million paid during the six months ended June 30, 2025[49] IRLCs Pull-Through Rates | IRLCs Pull-Through Rates | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Range | 60% - 100% | 47% - 100% | | Weighted-average | 80% | 82% | IRLCs (in millions) | IRLCs (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance, beginning of the period | $7 | $5 | $4 | $3 | | Issuances | $24 | $11 | $45 | $23 | | Transfers | $(22) | $(12) | $(40) | $(22) | | Balance, end of period | $9 | $4 | $9 | $4 | Notional Amounts of Economic Hedging Instruments (in millions) | Notional Amounts of Economic Hedging Instruments (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------------------- | :------------ | :---------------- | | IRLCs | $402 | $217 | | Forward contracts | $499 | $300 | Assets and Liabilities Measured at Fair Value (in millions) | Assets Measured at Fair Value (in millions) | June 30, 2025 (Estimated Fair Market Value) | December 31, 2024 (Estimated Fair Market Value) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Cash | $22 | $13 | | Cash equivalents | $565 | $1,069 | | Short-term investments | $571 | $776 | | Mortgage origination-related | $259 | $164 | | Restricted cash | $5 | $3 | | Total assets measured at fair value | $1,422 | $2,025 | | Liabilities Measured at Fair Value (in millions) | June 30, 2025 (Estimated Fair Market Value) | December 31, 2024 (Estimated Fair Market Value) | | :------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Mortgage origination-related | $3 | $— | | Contingent consideration | $61 | $91 | | Total liabilities measured at fair value | $64 | $91 | Note 4. Property and Equipment, Net This note provides a detailed breakdown of Zillow Group's property and equipment, net, including website development costs, leasehold improvements, and computer equipment Property and Equipment, Net (in millions) | Property and Equipment, Net (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Website development costs | $597 | $564 | | Leasehold improvements | $32 | $45 | | Computer equipment | $17 | $18 | | Office equipment, furniture and fixtures | $12 | $16 | | Construction-in-progress | $4 | $— | | Property and equipment | $662 | $643 | | Less: accumulated amortization and depreciation | $(289) | $(283) | | Property and equipment, net | $373 | $360 | - Depreciation expense for property and equipment (excluding website development costs) was $3 million for Q2 2025 (down from $4 million in Q2 2024) and $7 million for YTD 2025 (down from $8 million in YTD 2024)[57] - Capitalized website development costs were $51 million for Q2 2025 (down from $54 million in Q2 2024) and $99 million for YTD 2025 (down from $106 million in YTD 2024) Amortization expense for website development costs was $42 million for Q2 2025 (up from $36 million in Q2 2024) and $83 million for YTD 2025 (up from $69 million in YTD 2024)[58] Note 5. Intangible Assets, Net This note provides a breakdown of Zillow Group's intangible assets, net, including customer relationships, software, and developed technology, highlighting a significant increase in customer relationships due to a new partnership with Redfin Intangible Assets, Net (in millions) | Intangible Assets, Net (in millions) | June 30, 2025 (Net) | December 31, 2024 (Net) | | :----------------------------------- | :------------------ | :---------------------- | | Customer relationships | $155 | $65 | | Software | $66 | $62 | | Developed technology | $38 | $51 | | Trade names and trademarks | $20 | $22 | | Purchased content | $6 | $7 | | Total | $285 | $207 | - On February 6, 2025, Zillow entered a partnership with Redfin, becoming the exclusive provider of multifamily rental listings on Redfin's sites, involving a $100 million payment included in customer relationships, amortized over nine years[60] - Amortization expense for intangible assets was $22 million for Q2 2025 (up from $19 million in Q2 2024) and $42 million for YTD 2025 (up from $38 million in YTD 2024) No impairment costs were recorded[61] Estimated Future Amortization Expense (in millions) | Estimated Future Amortization Expense (in millions) | Amount | | :-------------------------------------------------- | :----- | | Remainder of 2025 | $42 | | 2026 | $70 | | 2027 | $59 | | 2028 | $35 | | 2029 | $28 | | Thereafter | $59 | | Total future amortization expense | $293 | Note 6. Debt This note details Zillow Group's debt, primarily consisting of master repurchase agreements for Zillow Home Loans and the settlement of convertible senior notes Debt Carrying Values (in millions) | Debt Carrying Values (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Master repurchase agreements | $230 | $145 | | 2025 Notes | $— | $418 | | Total debt | $230 | $563 | Credit Facilities (Master Repurchase Agreements) | Credit Facilities (Master Repurchase Agreements) | Maturity Date | Maximum Borrowing Capacity (in millions) | Borrowings Outstanding (in millions) | Available Borrowing Capacity (in millions) | Weighted-Average Interest Rate | | :----------------------------------------------- | :------------ | :--------------------------------------- | :----------------------------------- | :----------------------------------------- | :----------------------------- | | JPMorgan Chase Bank, N.A. | April 28, 2026 | $200 | $92 | $108 | 6.05% | | UBS AG | September 5, 2025 | $150 | $74 | $76 | 6.05% | | Bank of Montreal | February 26, 2026 | $150 | $64 | $86 | 6.02% | | Bank of Nova Scotia | June 8, 2026 | $100 | $— | $100 | —% | | Total | | $600 | $230 | $370 | | - The 2025 Notes matured on May 15, 2025, with the remaining $419 million principal settled via $425 million cash payments (including interest) and a nominal issuance of Class C capital stock[71] Interest Expense (in millions) | Interest Expense (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | 2026 Notes | $— | $2 | $— | $4 | | 2025 Notes | $1 | $3 | $5 | $7 | | 2024 Notes | $— | $2 | $— | $4 | | Total | $1 | $7 | $5 | $15 | Note 7. Income Taxes This note discusses Zillow Group's income tax position, including the impact of newly enacted tax law changes, the valuation allowance against deferred tax assets, and accumulated tax losses - The 'One Big Beautiful Bill' enacted on July 4, 2025, provides significant U.S. tax law changes, including permanent 100% bonus depreciation and expensing of domestic research costs; the company is evaluating its impact[75] - A valuation allowance has been provided against net deferred tax assets, but there's a reasonable possibility that a significant portion of this allowance against U.S. net deferred tax assets may no longer be required within the next several years[76][165] - As of December 31, 2024, the company had accumulated federal tax losses of approximately $1.3 billion and state tax losses of approximately $66 million (tax effected)[76] - Income tax expense was not material for the three or six months ended June 30, 2025 or 2024[77] Note 8. Share Repurchase Authorizations This note details the Board's authorizations for share repurchases, including an additional $1.0 billion authorization on May 2, 2025, increasing the total cumulative authorization to $3.5 billion - On May 2, 2025, the Board authorized an additional $1.0 billion for repurchases of Class A common stock, Class C capital stock, or a combination, increasing total cumulative Repurchase Authorizations to $3.5 billion[78] - As of June 30, 2025, $981 million remained available for future stock repurchases[78] Share Repurchase Activity (in millions, except shares in thousands and per share) | Share Repurchase Activity (in millions, except shares in thousands and per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Class A common stock shares repurchased (thousands) | 1,784 | 981 | 4,244 | 1,100 | | Class C capital stock shares repurchased (thousands) | 522 | 5,904 | 1,401 | 5,996 | | Weighted-average price per Class A share | $65.04 | $41.92 | $70.09 | $42.26 | | Weighted-average price per Class C share | $65.03 | $42.41 | $73.19 | $42.45 | | Total purchase price (Class A) | $116 | $41 | $297 | $46 | | Total purchase price (Class C) | $34 | $251 | $103 | $255 | Note 9. Share-Based Awards This note provides details on Zillow Group's share-based compensation, including option awards and restricted stock units (RSUs), summarizing activity for these awards, assumptions for fair value, and unrecognized compensation costs Option Award Activity (six months ended June 30, 2025) | Option Award Activity (six months ended June 30, 2025) | Number of Shares Subject to Existing Options (in thousands) | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in millions) | | :------------------------------------- | :---------------------------------------- | :-------------------------------------- | :------------------------------------- | :------------------------------------ | | Outstanding at January 1, 2025 | 29,941 | $46.58 | 6.3 | $861 | | Granted | 2,183 | $75.95 | | | | Exercised | (1,320) | $41.47 | | | | Forfeited or canceled | (313) | $51.70 | | | | Outstanding at June 30, 2025 | 30,491 | $48.86 | 6.1 | $701 | | Vested and exercisable at June 30, 2025 | 22,470 | $46.49 | 5.2 | $571 | Option Award Fair Value Assumptions | Option Award Fair Value Assumptions | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Expected volatility | 59% | 59% | 59% - 60% | 57% - 61% | | Risk-free interest rate | 3.92% | 4.50% | 3.92% - 4.17% | 4.14% - 4.50% | | Weighted-average expected life | 5.5 years | 5.5 years | 5.3 - 6.8 years | 5.5 - 6.8 years | | Weighted-average fair value of options granted | $37.18 | $29.69 | $43.17 | $31.93 | - As of June 30, 2025, there was $228 million in unrecognized compensation cost related to unvested option awards[81] Restricted Stock Units Activity (six months ended June 30, 2025) | Restricted Stock Units Activity (six months ended June 30, 2025) | Restricted Stock Units (in thousands) | Weighted Average Grant Date Fair Value | | :------------------------------------------------ | :------------------------------------ | :------------------------------------- | | Unvested outstanding at January 1, 2025 | 11,729 | $50.31 | | Granted | 4,302 | $75.73 | | Vested | (2,967) | $50.90 | | Forfeited | (606) | $52.92 | | Unvested outstanding at June 30, 2025 | 12,458 | $58.82 | - As of June 30, 2025, there was $680 million in unrecognized compensation cost related to unvested restricted stock units[82] Share-Based Compensation Expense (in millions) | Share-Based Compensation Expense (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $3 | $4 | $6 | $8 | | Sales and marketing | $19 | $20 | $37 | $38 | | Technology and development | $40 | $42 | $78 | $84 | | General and administrative | $37 | $47 | $75 | $91 | | Total share-based compensation | $99 | $113 | $196 | $221 | Note 10. Net Income (Loss) Per Share This note provides the reconciliation of the denominators used in calculating basic and diluted net income (loss) per share, and lists the Class C capital stock equivalents that were excluded due to their antidilutive effect Denominators for EPS Calculation (in thousands) | Denominators for EPS Calculation (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Denominator for basic calculation | 241,083 | 233,453 | 241,667 | 234,074 | | Effect of dilutive securities: | | | | | | Option awards | 7,649 | — | 8,653 | — | | Unvested restricted stock units | 2,933 | — | 3,596 | — | | Denominator for dilutive calculation | 251,665 | 233,453 | 253,916 | 234,074 | Excluded Antidilutive Class C Capital Stock Equivalents (in thousands) | Excluded Antidilutive Class C Capital Stock Equivalents (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Weighted-average Class C capital stock option awards outstanding | 3,344 | 19,091 | 3,478 | 20,935 | | Weighted-average Class C capital stock restricted stock units outstanding | 4,145 | 14,877 | 2,844 | 13,776 | | Weighted-average Class C capital stock issuable upon conversion of notes | 3,084 | 32,410 | 4,652 | 32,697 | | Total Class C capital stock equivalents | 10,573 | 66,378 | 10,974 | 67,408 | Note 11. Commitments and Contingencies This note outlines Zillow Group's purchase commitments and ongoing legal proceedings, detailing non-cancelable purchase obligations and providing updates on significant lawsuits Purchase Commitments (in millions) | Purchase Commitments (in millions) | Amount | | :------------------------------- | :----- | | Remainder of 2025 | $99 | | 2026 | $117 | | 2027 | $67 | | 2028 | $1 | | Total future purchase commitments | $284 | - The company is involved in legal proceedings, including a patent infringement lawsuit by IBM, a federal securities class action suit regarding Zillow Offers, and shareholder derivative suits related to Zillow Offers wind-down[87][88][89] - For certain legal cases, management is unable to provide a meaningful estimate of possible loss due to preliminary stages, unspecified damages, or complex legal issues, but does not believe outcomes will materially affect financial position, results of operations, or cash flow[86][90] Note 12. Revenue and Contract Balances This note describes Zillow Group's revenue recognition policy, which involves satisfying performance obligations by transferring control of products or services, and provides details on contract assets and deferred revenue - Revenue is recognized when performance obligations are satisfied by transferring control of promised products or services to customers, in an amount reflecting expected consideration[92] - Contract assets totaled $201 million as of June 30, 2025, up from $157 million as of December 31, 2024, with an average remaining recognition period of five months for the Premier Agent Flex offering[93] - For Q2 2025, $53 million of the $70 million opening deferred revenue balance was recognized as revenue For YTD 2025, $53 million of the $62 million opening deferred revenue balance was recognized[94][95] Note 13. Segment Information This note presents a table summarizing Zillow Group's significant expense categories that are included in its reported measure of segment profitability, providing a breakdown of costs such as headcount-related expenses, share-based compensation, depreciation, marketing, and direct product costs Significant Expense Categories (in millions) | Significant Expense Categories (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $655 | $572 | $1,253 | $1,101 | | Headcount-related expenses, excluding share-based compensation | $298 | $272 | $586 | $536 | | Share-based compensation | $99 | $113 | $196 | $221 | | Depreciation and amortization | $67 | $59 | $132 | $115 | | Marketing and advertising costs | $64 | $58 | $107 | $88 | | Direct product and service costs | $73 | $44 | $123 | $87 | | Third-party professional service fees | $19 | $20 | $36 | $40 | | Facility expenses | $7 | $8 | $14 | $16 | | Impairment costs | $— | $— | $— | $6 | | Other items | $39 | $36 | $79 | $75 | | Loss from operations | $(11) | $(38) | $(20) | $(83) | | Loss on extinguishment of debt | $— | $(1) | $— | $(1) | | Other income, net | $18 | $34 | $40 | $67 | | Interest expense | $(5) | $(10) | $(10) | $(19) | | Income tax expense | $— | $(2) | $— | $(4) | | Net income (loss) | $2 | $(17) | $10 | $(40) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Zillow Group's financial condition and results of operations, discussing business overview, housing market health, revenue performance by category, key metrics, and detailed analysis of operating results, liquidity, capital resources, and critical accounting estimates for the periods ended June 30, 2025, and 2024 Overview of our Business This section provides an overview of Zillow Group's business, highlighting its mission to simplify real estate transactions and its diverse portfolio of brands and solutions - Zillow Group aims to make home a reality for more people by connecting them with digital solutions, real estate professionals, and easier buying, selling, financing, and renting experiences[98] - The company's portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, Out East, and marketing software solutions like ShowingTime+, Spruce, and Follow Up Boss[99] - As of June 30, 2025, Zillow Group had 6,944 employees, an increase from 6,856 employees as of December 31, 2024[100] Health of Housing Market This section discusses the impact of housing market conditions, including inventory, interest rates, and home prices, on Zillow Group's financial performance and revenue growth - The company's financial performance is impacted by the health of the housing market, driven by low housing inventory, elevated and volatile mortgage interest rates, changes in rental inventory/occupancy, home price fluctuations, and inflationary conditions[101] - Total Transaction Value (TTV) for the residential real estate industry increased 2% for Q2 2025 and 4% for YTD 2025 compared to the prior year periods[101] - Zillow Group's total revenue growth for Q2 and YTD 2025 exceeded industry performance, reflecting investments in business growth[101] Revenue Overview This section outlines Zillow Group's revenue classification into Residential, Mortgages, Rentals, and Other categories, detailing the primary sources of income within each segment - Revenue is classified into four categories: Residential, Mortgages, Rentals, and Other 'For Sale revenue' combines Residential and Mortgages[102] - Residential revenue includes Premier Agent (market-based pricing and Flex models), new construction advertising, and business technology solutions like ShowingTime+, dotloop, Zillow Showcase, StreetEasy offerings, and Follow Up Boss CRM[103][104][105][106][107][108] - Mortgages revenue primarily comes from mortgage originations through Zillow Home Loans and advertising sold to mortgage professionals[109] - Rentals revenue includes advertising and tools for property managers (cost-per-lead, lease, listing, impression, or fixed fee) and revenue from rental applications[110] - Other revenue primarily consists of display advertising[111] Financial Overview This section provides a high-level summary of Zillow Group's financial performance, highlighting total revenue and gross profit growth for the second quarter of 2025 - Total revenue increased 15% to $655 million for Q2 2025, up from $572 million in Q2 2024[112] - Rentals revenue increased $42 million, or 36%, to $159 million in Q2 2025, driven by increases in quarterly revenue per average monthly rentals unique visitor and average monthly rentals unique visitors[112] - Gross profit increased 11% to $489 million for Q2 2025, up from $442 million in Q2 2024[113] Key Metrics This section presents key performance indicators used to evaluate Zillow Group's operational success, including visits, unique users, For Sale revenue per TTV, and loan origination volume Visits Visits are a key indicator of consumer engagement with Zillow Group's mobile applications and websites, which correlates with product usage and demand for advertising services - A visit is defined as a group of interactions by users with Zillow, Trulia, and StreetEasy mobile applications and websites, with a single user potentially generating multiple visits[117] - Zillow and StreetEasy measure visits using an internal tool, while Trulia uses Adobe Analytics StreetEasy transitioned from Google's Universal Analytics to an internal tool in July 2024[118][119] Visits (in millions) | Visits (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (YoY) | | :------------------- | :------------------------------- | :------------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Visits | 2,590 | 2,495 | 4% | 4,944 | 4,811 | 3% | Unique Users Measuring unique users is crucial for Zillow Group as it reflects the company's ability to connect consumers with real estate professionals and services, directly impacting revenue generation from advertisements and transactions - A unique user is counted the first time an individual accesses a mobile application or website using a specific device/browser within a calendar month[121] - Zillow, StreetEasy, and HotPads use an internal measurement tool for unique users, while Trulia uses Adobe Analytics StreetEasy and HotPads transitioned to the internal tool from Google's Universal Analytics in July 2024[122][124] Average Monthly Unique Users (in millions) | Average Monthly Unique Users (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (YoY) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Average monthly unique users | 243 | 231 | 5% | 235 | 224 | 5% | For Sale Revenue Per Total Transaction Value This metric assesses Zillow Group's 'For Sale' revenue performance relative to the overall residential real estate industry's Total Transaction Value (TTV) - For Sale revenue per TTV measures the company's ability to connect and convert buyers/sellers and grow revenue per customer transaction relative to the residential real estate industry[125] - TTV is calculated as the number of existing residential homes sold multiplied by the average sales price, and the metric is presented on a trailing twelve-month basis due to seasonality[126] For Sale Revenue Per TTV | For Sale Revenue Per TTV | Twelve Months Ended June 30, 2025 | Twelve Months Ended June 30, 2024 | % Change | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------- | | For Sale revenue (in millions) | $1,812 | $1,624 | 12% | | Total Transaction Value (in trillions) | $1.8 | $1.6 | 6% | | For Sale revenue per Total Transaction Value (in basis points) | 10.3 | 9.8 | 5% | Loan Origination Volume Loan origination volume is a key metric for Zillow Home Loans, directly impacting Mortgages revenue, representing the total value of mortgage loans closed through Zillow Home Loans - Loan origination volume measures the success of Zillow Home Loans' mortgage origination operations and directly impacts Mortgages revenue[128] Loan Origination Volume (in millions) | Loan Origination Volume (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (YoY) | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Purchase loan origination volume | $1,116 | $756 | 48% | $1,907 | $1,357 | 41% | | Refinance loan origination volume | $10 | $3 | 233% | $15 | $8 | 88% | | Total loan origination volume | $1,126 | $759 | 48% | $1,922 | $1,365 | 41% | - The increase in total loan origination volume was primarily driven by continued growth in Zillow Home Loans purchase loan originations, aligning with strategic priorities[129] Results of Operations This section provides a detailed analysis of Zillow Group's financial performance, including revenue, adjusted EBITDA, and various cost and expense categories for the reported periods Revenue Zillow Group's total revenue increased significantly for both the three and six months ended June 30, 2025, primarily driven by strong growth in Rentals and Mortgages revenue, alongside a steady increase in Residential revenue Revenue (in millions) | Revenue (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :------- | :----------------------------- | :----------------------------- | :------- | :------- | | Residential | $434 | $409 | $25 | 6% | $851 | $802 | $49 | 6% | | Mortgages | $48 | $34 | $14 | 41% | $89 | $65 | $24 | 37% | | Total For Sale revenue | $482 | $443 | $39 | 9% | $940 | $867 | $73 | 8% | | Rentals | $159 | $117 | $42 | 36% | $288 | $214 | $74 | 35% | | Other | $14 | $12 | $2 | 17% | $25 | $20 | $5 | 25% | | Total revenue | $655 | $572 | $83 | 15% | $1,253 | $1,101 | $152 | 14% | - Rentals revenue increased 36% for Q2 2025 and 35% for YTD 2025, primarily due to a 21% (Q2) and 18% (YTD) increase in quarterly revenue per average monthly rentals unique visitor, driven by growth in multifamily property listings and a 13% (Q2) and 14% (YTD) increase in average monthly rentals unique visitors[132][134] - Residential revenue increased 6% for both Q2 and YTD 2025, driven by a 4% (Q2) and 3% (YTD) increase in visits and an increase in Residential revenue per visit, primarily from ShowingTime+ adoption and growth in Premier Agent and new construction revenue[136][137] - Mortgages revenue increased 41% for Q2 2025 and 37% for YTD 2025, driven by a 48% (Q2) and 41% (YTD) increase in total loan origination volume and a 5% (Q2) and 8% (YTD) increase in gain on sale margin[136][137] Adjusted EBITDA Adjusted EBITDA, a non-GAAP financial measure, is used by management and the Board to assess operating performance and trends, reflecting improved operating performance for Q2 and YTD 2025 Adjusted EBITDA (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | | :------------------- | :------------------------------- | :------------------------------- | :------- | :------- | :----------------------------- | :----------------------------- | :------- | :------- | | Net income (loss) | $2 | $(17) | $19 | 112% | $10 | $(40) | $50 | 125% | | Adjusted EBITDA | $155 | $134 | $21 | 16% | $308 | $259 | $49 | 19% | - Adjusted EBITDA is a key metric for management and the Board to measure operating performance and trends, with the exclusion of certain expenses facilitating period-to-period comparisons[139] - Limitations of Adjusted EBITDA include not reflecting working capital changes, dilutive impact of share-based compensation, cash capital expenditure requirements, impairment costs, loss on debt extinguishment, interest expense, other income, or income taxes[140][141] Adjusted EBITDA Reconciliation (in millions) | Adjusted EBITDA Reconciliation (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $2 | $(17) | $10 | $(40) | | Income taxes | $— | $2 | $— | $4 | | Other income, net | $(18) | $(34) | $(40) | $(67) | | Depreciation and amortization | $67 | $59 | $132 | $115 | | Share-based compensation | $99 | $113 | $196 | $221 | | Impairment costs | $— | $— | $— | $6 | | Loss on extinguishment of debt | $— | $1 | $— | $1 | | Interest expense | $5 | $10 | $10 | $19 | | Adjusted EBITDA | $155 | $134 | $308 | $259 | Costs and Expenses, Gross Profit and Other Items This section provides a summary of changes in Zillow Group's cost of revenue, gross profit, and operating expenses, highlighting the overall trends and percentage changes for the three and six months ended June 30, 2025, compared to the prior year Costs and Expenses (in millions) | Costs and Expenses (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | | :------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | :----------------------------- | :----------------------------- | :------- | :------- | | Cost of revenue | $166 | $130 | $36 | 28% | $305 | $253 | $52 | 21% | | Gross profit | $489 | $442 | $47 | 11% | $948 | $848 | $100 | 12% | | Sales and marketing | $226 | $205 | $21 | 10% | $424 | $371 | $53 | 14% | | Technology and development | $153 | $144 | $9 | 6% | $302 | $291 | $11 | 4% | | General and administrative | $121 | $131 | $(10) | (8)% | $242 | $263 | $(21) | (8)% | | Total operating expenses | $500 | $480 | $20 | 4% | $968 | $931 | $37 | 4% | | Loss on extinguishment of debt | $— | $1 | $(1) | (100)% | $— | $1 | $(1) | (100)% | | Other income, net | $18 | $34 | $(16) | (47)% | $40 | $67 | $(27) | (40)% | | Interest expense | $5 | $10 | $(5) | (50)% | $10 | $19 | $(9) | (47)% | | Income tax expense | $— | $2 | $(2) | (100)% | $— | $4 | $(4) | (100)% | Cost of Revenue Cost of revenue increased significantly for both the three and six months ended June 30, 2025, primarily driven by higher lead acquisition costs associated with the Redfin rentals partnership, increased depreciation and amortization of website development costs, and higher ad serving costs - Cost of revenue includes expenses for operating mobile applications/websites, headcount, revenue-sharing, depreciation, amortization of website development/intangible assets, credit card fees, ad serving, and direct mortgage origination costs[146] - For Q2 2025, cost of revenue increased $36 million (28%), primarily due to $20 million in lead acquisition costs (Redfin partnership), $5 million in depreciation/amortization, and $5 million in ad serving costs[147] - For YTD 2025, cost of revenue increased $52 million (21%), primarily due to $25 million in lead acquisition costs (Redfin partnership), $13 million in depreciation/amortization, and $6 million in ad serving costs[148] - The company expects cost of revenue to increase in absolute dollars for the three months ending September 30, 2025, driven by higher direct product and service costs, including increased lead acquisition costs from the Redfin partnership[147] Gross Profit Gross profit increased for both the three and six months ended June 30, 2025, driven by higher revenue, though gross margin decreased slightly due to increased lead acquisition costs from the Redfin rentals partnership - Gross profit increased by $47 million (11%) for Q2 2025 and $100 million (12%) for YTD 2025, primarily due to increased revenue[150][151] - Total gross margin decreased from 77% to 75% for Q2 2025 and from 77% to 76% for YTD 2025, primarily due to increased lead acquisition costs from the Redfin rentals partnership[150][151] Sales and Marketing Sales and marketing expenses increased for both the three and six months ended June 30, 2025, primarily driven by higher headcount-related expenses and increased marketing and advertising costs to support rentals marketplace growth - Sales and marketing expenses increased $21 million (10%) for Q2 2025, driven by $12 million in headcount-related expenses (including share-based compensation) and $6 million in marketing/advertising costs for the rentals marketplace[153] - Sales and marketing expenses increased $53 million (14%) for YTD 2025, driven by $28 million in headcount-related expenses and $18 million in marketing/advertising costs for the rentals marketplace[154] Technology and Development Technology and development expenses increased for both the three and six months ended June 30, 2025, primarily due to increased headcount-related expenses as the company invests in product development, and higher software and hardware costs - Technology and development expenses increased $9 million (6%) for Q2 2025, driven by $6 million in headcount-related expenses (including share-based compensation) and $2 million in software/hardware costs[156] - Technology and development expenses increased $11 million (4%) for YTD 2025, driven by $6 million in headcount-related expenses and $4 million in software/hardware costs[157] General and Administrative General and administrative expenses decreased for both the three and six months ended June 30, 2025, primarily due to lower headcount-related expenses, influenced by prior equity award actions, and reduced third-party professional service fees - General and administrative expenses decreased $10 million (8%) for Q2 2025, primarily due to $7 million in headcount-related expenses (impacted by August 2022 equity awards) and $2 million in third-party professional service fees[159] - General and administrative expenses decreased $21 million (8%) for YTD 2025, primarily due to $13 million in headcount-related expenses, $6 million in third-party professional service fees, and $3 million in facility expenses[160] Other Income, net Other income, net, primarily consisting of interest income, decreased for both the three and six months ended June 30, 2025, mainly due to lower interest income on investments following the settlement of convertible senior notes - Other income, net, primarily interest income, decreased $16 million for Q2 2025 and $27 million for YTD 2025[161] - The decrease was primarily driven by lower interest income on investments due to a decrease in investment balances after the settlement of the 2024, 2025, and 2026 Notes[161] Interest Expense Interest expense decreased for both the three and six months ended June 30, 2025, primarily due to the settlement of the 2024, 2025, and 2026 Convertible Senior Notes - Interest expense decreased $5 million for Q2 2025 and $9 million for YTD 2025[163] - The decrease was primarily due to the settlement of the 2024, 2025, and 2026 Notes[163] Income Taxes Income tax expense was not material for the reported periods, and the company is evaluating the impact of newly enacted tax law changes while maintaining a valuation allowance against net deferred tax assets - The 'One Big Beautiful Bill' enacted on July 4, 2025, provides significant U.S. tax law changes, which the company is currently evaluating for impact[164] - A valuation allowance is provided against net deferred tax assets, but there's a reasonable possibility that a significant portion of this allowance against U.S. net deferred tax assets may no longer be required within the next several years[165] - Income tax expense was not material for the three and six month periods ended June 30, 2025 or 2024[166] Liquidity and Capital Resources This section analyzes Zillow Group's financial liquidity and capital management, including sources of funds, cash flow activities, debt obligations, and share repurchase programs Sources of Liquidity Zillow Group's primary sources of liquidity are cash flows from operations, debt financing, and equity offerings, with current resources believed sufficient to meet capital requirements - Primary sources of liquidity and capital are cash flows from operations, debt financing, and equity offerings[167] - As of June 30, 2025, cash, cash equivalents, investments, and restricted cash totaled $1.2 billion, down from $1.9 billion as of December 31, 2024[168] - The company believes current liquidity sources are sufficient for ongoing operating activities, working capital, capital expenditures, strategic acquisitions, and other capital requirements for at least the next 12 months[169] - Zillow Group and its subsidiaries were in compliance with all debt covenants as of June 30, 2025[168] Summarized Cash Flow Information This section provides a summary of Zillow Group's cash flow activities for the six months ended June 30, 2025, and 2024, highlighting net cash provided by operating activities, and net cash used in investing and financing activities Cash Flow Data (in millions) | Cash Flow Data (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $191 | $135 | | Net cash provided by (used in) investing activities | $25 | $(207) | | Net cash used in financing activities | $(709) | $(240) | Cash Flows Provided By Operating Activities Net cash provided by operating activities increased to $191 million for the six months ended June 30, 2025, driven by net income and non-cash adjustments, partially offset by changes in operating assets and liabilities - Net cash provided by operating activities was $191 million for YTD 2025, up from $135 million for YTD 2024[172][173] - For YTD 2025, operating cash flow was driven by $10 million net income, adjusted by $196 million share-based compensation and $132 million depreciation/amortization[172] - Changes in operating assets and liabilities decreased net cash by $152 million for YTD 2025, primarily due to a $91 million increase in mortgage loans held for sale and a $47 million increase in accounts receivable[172] Cash Flows Provided By (Used In) Investing Activities Net cash provided by investing activities was $25 million for the six months ended June 30, 2025, a significant improvement from net cash used in the prior year, primarily due to net proceeds from investments - Net cash provided by investing activities was $25 million for YTD 2025, compared to net cash used of $207 million for YTD 2024[175][176] - For YTD 2025, this was primarily due to $213 million of net proceeds from maturities and sales of investments, partially offset by $188 million of purchases of property/equipment and intangible assets, including a $100 million payment for the Redfin partnership[175] Cash Flows Used In Financing Activities Net cash used in financing activities increased to $709 million for the six months ended June 30, 2025, primarily driven by the settlement of the 2025 Notes, significant share repurchases, and contingent consideration payments - Net cash used in financing activities was $709 million for YTD 2025, up from $240 million for YTD 2024[178][179] - For YTD 2025, this was primarily due to $419 million for 2025 Notes settlement, $400 million for share repurchases, and $30 million for Follow Up Boss contingent consideration[178] - These outflows were partially offset by $55 million from stock option exercises and $85 million in net borrowings on master repurchase agreements[178] Capital Resources This section details specific changes in Zillow Group's capital resources, including the settlement of the 2025 Notes, updates to share repurchase authorizations, and the status of credit facilities used to fund mortgage loan originations - The 2025 Notes matured on May 15, 2025, with the remaining $419 million principal settled via $425 million cash payments (including interest) and a nominal issuance of Class C capital stock[180] Share Repurchases On May 2, 2025, the Board authorized an additional $1 billion for share repurchases, increasing the total cumulative authorization to $3.5 billion - On May 2, 2025, the Board authorized an additional $1 billion for repurchases of Class A common stock, Class C capital stock, or a combination, increasing total cumulative Repurchase Authorizations to $3.5 billion[182] - For YTD 2025, the company repurchased 4.2 million Class A shares ($297 million) and 1.4 million Class C shares ($103 million) at average prices of $70.09 and $73.19 per share, respectively[182] - As of June 30, 2025, $981 million remained available for future stock repurchases[182] Credit Facilities Zillow Home Loans utilizes master repurchase agreements to fund mortgage loan originations, amending its JPMorgan Chase agreement to increase capacity and extending maturity, and entering a new agreement with Bank of Nova Scotia Master Repurchase Agreements (in millions, except interest rates) | Master Repurchase Agreements (in millions, except interest rates) | Maturity Date | Maximum Borrowing Capacity | Outstanding Borrowings at June 30, 2025 | Outstanding Borrowings at December 31, 2024 | Weighted Average Interest Rate at June 30, 2025 | | :--------------------------------------------------------------- | :------------ | :------------------------- | :-------------------------------------- | :------------------------------------------ | :------------------------------------------ | | JPMorgan Chase Bank, N.A. | April 28, 2026 | $200 | $92 | $72 | 6.05% | | UBS AG | September 5, 2025 | $150 | $74 | $73 | 6.05% | | Bank of Montreal | February 26, 2026 | $150 | $64 | $— | 6.02% | | Bank of Nova Scotia | June 8, 2026 | $100 | $— | $— | —% | | Total | | $600 | $230 | $145 | | - The JPMorgan Chase Bank, N.A. agreement was amended on April 29, 2025, increasing maximum borrowing capacity to $200 million and extending maturity to April 28, 2026[183] - A new master repurchase agreement with Bank of Nova Scotia was entered into on June 9, 2025, providing $100 million maximum borrowing capacity, with no draws during Q2 2025[183] - As of June 30, 2025, Zillow Home Loans was in compliance with all financial covenants[68] Contractual Obligations and Other Commitments This section summarizes Zillow Group's contractual obligations, including principal amounts due under credit facilities, operating lease obligations, contingent consideration for acquisitions, and non-cancelable purchase obligations - Outstanding principal amounts under master repurchase agreements totaled $230 million as of June 30, 2025, due upon sale of related mortgage loans[184] - Operating lease obligations for office space had no material changes during Q2 2025[185] - Contingent consideration is owed for the Follow Up Boss acquisition, payable over three years upon achievement of performance metrics[186] - Non-cancelable purchase obligations include agreements for content, cloud computing services, and partnership payments[187] Critical Accounting Estimates This section highlights Zillow Group's critical accounting estimates, emphasizing the use of management judgment and assumptions in financial reporting and confirming no material changes since the last annual report - The preparation of financial statements requires estimates, judgments, and assumptions that affect reported amounts, which are evaluated on an ongoing basis[188] - There have been no material changes to the critical accounting policies and estimates previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[188] [Item 3. Quantitative a