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Segment Information and Revenue | 9 Months Ended
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Sep. 30, 2020
Segment Reporting [Abstract] |
Segment Information and Revenue | Segment Information and Revenue We have three operating and reportable segments, which have been identified based on the way in which our chief operating decision-maker manages our business, makes operating decisions and evaluates operating performance. The chief executive officer acts as the chief operating decision-maker and reviews financial and operational information for the Homes, Internet, Media & Technology (“IMT”) and Mortgages segments. The Homes segment includes the financial results from Zillow Group’s purchase and sale of homes directly through Zillow Offers and the financial results from title and escrow services through Zillow Closing Services. The IMT segment includes the financial results for the Premier Agent, rentals and new construction marketplaces, dotloop and display, as well as revenue from the sale of various other marketing and business products and services to real estate professionals. The Mortgages segment includes financial results for mortgage originations and the sale of mortgages on the secondary market through Zillow Home Loans, advertising sold to mortgage lenders and other mortgage professionals as well as Mortech mortgage software solutions. Revenue and costs are directly attributed to our segments when possible. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit the other segments. These costs primarily include headcount-related expenses, general and administrative expenses including executive, finance, accounting, legal, human resources, recruiting and facilities costs, product development and data acquisition costs and marketing and advertising costs. These costs are allocated to each segment based on the estimated benefit each segment receives from such expenditures. The chief executive officer reviews information about our revenue categories as well as statement of operations data inclusive of income (loss) before income taxes by segment. This information is included in the following tables for the periods presented (in thousands, unaudited):
| Three Months Ended September 30, 2020 |  | Three Months Ended September 30, 2019
| Homes |  | IMT |  | Mortgages |  | Homes |  | IMT |  | Mortgages
Revenue: |  |  |  |  |  |  |  |  |  |  |
Zillow Offers | $ | 185,904 |  |  | $ | — |  |  | $ | — |  |  | $ | 384,626 |  |  | $ | — |  |  | $ | — |
Premier Agent | — |  |  | 298,673 |  |  | — |  |  | — |  |  | 240,698 |  |  | — |
Other | 1,201 |  |  | 116,716 |  |  | — |  |  | — |  |  | 94,592 |  |  | — |
Mortgages | — |  |  | — |  |  | 54,198 |  |  | — |  |  | — |  |  | 25,292 |
Total revenue | 187,105 |  |  | 415,389 |  |  | 54,198 |  |  | 384,626 |  |  | 335,290 |  |  | 25,292 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |
Cost of revenue | 179,804 |  |  | 28,448 |  |  | 7,972 |  |  | 370,796 |  |  | 24,318 |  |  | 4,721 |
Sales and marketing | 32,714 |  |  | 102,902 |  |  | 15,210 |  |  | 49,186 |  |  | 118,514 |  |  | 13,647 |
Technology and development | 28,273 |  |  | 90,536 |  |  | 8,491 |  |  | 20,651 |  |  | 94,656 |  |  | 8,667 |
General and administrative | 20,334 |  |  | 53,547 |  |  | 12,014 |  |  | 22,174 |  |  | 55,749 |  |  | 10,570 |
Integration costs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5 |
Total costs and expenses (1) | 261,125 |  |  | 275,433 |  |  | 43,687 |  |  | 462,807 |  |  | 293,237 |  |  | 37,610 |
Income (loss) from operations | (74,020) |  |  | 139,956 |  |  | 10,511 |  |  | (78,181) |  |  | 42,053 |  |  | (12,318) |
Segment other income | — |  |  | — |  |  | 636 |  |  | — |  |  | — |  |  | 344 |
Segment interest expense | (1,597) |  |  | — |  |  | (553) |  |  | (9,689) |  |  | — |  |  | (280) |
Income (loss) before income taxes (2) | $ | (75,617) |  |  | $ | 139,956 |  |  | $ | 10,594 |  |  | $ | (87,870) |  |  | $ | 42,053 |  |  | $ | (12,254) |
| Nine Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2019
| Homes |  | IMT |  | Mortgages |  | Homes |  | IMT |  | Mortgages
Revenue: |  |  |  |  |  |  |  |  |  |  |
Zillow Offers | $ | 1,408,832 |  |  | $ | — |  |  | $ | — |  |  | $ | 762,022 |  |  | $ | — |  |  | $ | — |
Premier Agent | — |  |  | 732,741 |  |  | — |  |  | — |  |  | 690,394 |  |  | — |
Other | 2,398 |  |  | 293,653 |  |  | — |  |  | — |  |  | 266,837 |  |  | — |
Mortgages | — |  |  | — |  |  | 113,241 |  |  | — |  |  | — |  |  | 79,637 |
Total revenue | 1,411,230 |  |  | 1,026,394 |  |  | 113,241 |  |  | 762,022 |  |  | 957,231 |  |  | 79,637 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |
Cost of revenue | 1,343,791 |  |  | 76,153 |  |  | 19,023 |  |  | 733,947 |  |  | 74,628 |  |  | 13,829 |
Sales and marketing | 152,180 |  |  | 319,101 |  |  | 39,791 |  |  | 107,457 |  |  | 380,608 |  |  | 42,302 |
Technology and development | 89,729 |  |  | 278,740 |  |  | 22,606 |  |  | 51,130 |  |  | 276,886 |  |  | 24,058 |
General and administrative | 65,657 |  |  | 166,185 |  |  | 31,849 |  |  | 54,339 |  |  | 181,270 |  |  | 31,497 |
Impairment costs | — |  |  | 73,900 |  |  | 2,900 |  |  | — |  |  | — |  |  | — |
Integration costs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 650 |
Total costs and expenses (1) | 1,651,357 |  |  | 914,079 |  |  | 116,169 |  |  | 946,873 |  |  | 913,392 |  |  | 112,336 |
Income (loss) from operations | (240,127) |  |  | 112,315 |  |  | (2,928) |  |  | (184,851) |  |  | 43,839 |  |  | (32,699) |
Segment other income | — |  |  | 5,300 |  |  | 1,223 |  |  | — |  |  | — |  |  | 1,059 |
Segment interest expense | (13,506) |  |  | — |  |  | (1,086) |  |  | (19,346) |  |  | — |  |  | (668) |
Income (loss) before income taxes (2) | $ | (253,633) |  |  | $ | 117,615 |  |  | $ | (2,791) |  |  | $ | (204,197) |  |  | $ | 43,839 |  |  | $ | (32,308) |
(1) The following tables present depreciation and amortization expense and share-based compensation expense for each of our segments for the periods presented (in thousands, unaudited):
| Three Months Ended September 30, 2020 |  | Three Months Ended September 30, 2019
| Homes |  | IMT |  | Mortgages |  | Homes |  | IMT |  | Mortgages
Depreciation and amortization expense | $ | 3,029 |  |  | $ | 22,074 |  |  | $ | 1,675 |  |  | $ | 2,331 |  |  | $ | 18,362 |  |  | $ | 1,467 |
Share-based compensation expense | $ | 11,815 |  |  | $ | 33,435 |  |  | $ | 3,709 |  |  | $ | 8,025 |  |  | $ | 30,687 |  |  | $ | 3,416 |
| Nine Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2019
| Homes |  | IMT |  | Mortgages |  | Homes |  | IMT |  | Mortgages
Depreciation and amortization expense | $ | 9,201 |  |  | $ | 67,889 |  |  | $ | 4,887 |  |  | $ | 5,384 |  |  | $ | 54,264 |  |  | $ | 4,240 |
Share-based compensation expense | $ | 35,847 |  |  | $ | 98,940 |  |  | $ | 10,318 |  |  | $ | 20,666 |  |  | $ | 118,101 |  |  | $ | 13,117 |
(2) The following table presents the reconciliation of total segment income (loss) before income taxes to consolidated income (loss) before income taxes for the periods presented (in thousands, unaudited):
| Three Months Ended September 30, |  | Nine Months Ended September 30, 2020
| 2020 |  | 2019 |  | 2020 |  | 2019
Total segment income (loss) before income taxes | $ | 74,933 |  |  | $ | (58,071) |  |  | $ | (138,809) |  |  | $ | (192,666) |
Corporate interest expense | (37,320) |  |  | (16,533) |  |  | (100,060) |  |  | (41,851) |
Corporate other income | 2,382 |  |  | 8,655 |  |  | 16,203 |  |  | 26,566 |
Gain on partial extinguishment of 2021 Notes | — |  |  | — |  |  | 6,391 |  |  | — |
Consolidated income (loss) before income taxes | $ | 39,995 |  |  | $ | (65,949) |  |  | $ | (216,275) |  |  | $ | (207,951) |
Certain corporate items are not directly attributable to any of our segments, including the gain on the partial extinguishment of the 2021 Notes, interest income earned on our short-term investments included in Other income and interest costs on our convertible senior notes included in Interest expense.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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