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Discontinued Operations | 9 Months Ended
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Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations Zillow Offers Wind Down In November 2021, the Board of Directors of Zillow Group made the determination to wind down Zillow Offers operations, and the financial results of Zillow Offers have historically been reported within our Homes segment. This decision was made in light of home pricing unpredictability, capacity constraints and other operational challenges faced by Zillow Offers that were exacerbated by an unprecedented housing market, a global pandemic and a difficult labor and supply chain environment, all of which led us to conclude that, despite its initial promise in earlier quarters, Zillow Offers was unlikely to be a sufficiently stable line of business to meet our goals going forward. The wind down of Zillow Offers was complete as of September 30, 2022, at which time Zillow Offers met the criteria for discontinued operations. We have presented the assets and liabilities and results of operations, excluding allocation of any general corporate expenses, of Zillow Offers for all periods presented as discontinued operations in our condensed consolidated financial statements. No assets or liabilities were classified as discontinued operations as of September 30, 2022. The following table presents the major classes of assets and liabilities of discontinued operations as of December 31, 2021 (in millions):
Assets |
Current assets: |
Cash and cash equivalents | $ | 296 |
Accounts receivable, net | 78 |
Inventory | 3,913 |
Prepaid expenses and other current assets | 13 |
Restricted cash | 226 |
Total current assets of discontinued operations | 4,526 |
Intangible assets, net | 4 |
Other assets | 78 |
Total assets of discontinued operations | $ | 4,608 |
Liabilities |
Current liabilities: |
Accounts payable | $ | 6 |
Accrued expenses and other current liabilities | 72 |
Accrued compensation and benefits | 47 |
Borrowings under credit facilities | 2,199 |
Securitization term loans | 1,209 |
Total current liabilities of discontinued operations | $ | 3,533 |
The following table presents the major classes of line items of the discontinued operations included in the condensed consolidated statements of operations for the periods presented (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenue | $ | 23 |  |  | $ | 1,187 |  |  | $ | 4,249 |  |  | $ | 2,668 |
Cost of revenue | 24 |  |  | 1,414 |  |  | 4,023 |  |  | 2,751 |
Gross profit (loss) | (1) |  |  | (227) |  |  | 226 |  |  | (83) |
Operating expenses: |  |  |  |  |  |  |
Sales and marketing | 1 |  |  | 90 |  |  | 153 |  |  | 189 |
Technology and development | — |  |  | 10 |  |  | 6 |  |  | 41 |
General and administrative | — |  |  | 10 |  |  | 10 |  |  | 26 |
Restructuring costs | — |  |  | — |  |  | 25 |  |  | — |
Total operating expenses | 1 |  |  | 110 |  |  | 194 |  |  | 256 |
Income (loss) from discontinued operations | (2) |  |  | (337) |  |  | 32 |  |  | (339) |
Loss on extinguishment of debt | — |  |  | — |  |  | (21) |  |  | — |
Other income | — |  |  | — |  |  | 13 |  |  | — |
Interest expense | — |  |  | (16) |  |  | (36) |  |  | (25) |
Loss from discontinued operations before income taxes | (2) |  |  | (353) |  |  | (12) |  |  | (364) |
Income tax benefit (expense) | — |  |  | 6 |  |  | (1) |  |  | 1 |
Net loss from discontinued operations | $ | (2) |  |  | $ | (347) |  |  | $ | (13) |  |  | $ | (363) |
Net loss from discontinued operations per share: |  |  |  |  |  |  |
Basic | $ | (0.01) |  |  | $ | (1.37) |  |  | $ | (0.05) |  |  | $ | (1.46) |
Diluted | $ | (0.01) |  |  | $ | (1.31) |  |  | $ | (0.05) |  |  | $ | (1.38) |
The following table presents significant non-cash items and capital expenditures of the discontinued operations for the periods presented (in millions):
| Nine Months Ended September 30,
| 2022 |  | 2021
Amortization of debt discount and debt issuance costs | $ | 21 |  |  | $ | 1 |
Loss on debt extinguishment | 21 |  |  | — |
Share-based compensation | 16 |  |  | 27 |
Inventory valuation adjustment | 9 |  |  | 304 |
Depreciation and amortization | 7 |  |  | 7 |
Capital expenditures | 1 |  |  | 6 |
Issuance (settlement) of beneficial interests in securitizations | (79) |  |  | 25 |
Restructuring There were no restructuring charges attributable to discontinued operations for the three months ended September 30, 2022. The following table presents a summary of restructuring charges attributable to discontinued operations for the periods presented (in millions):
| Line Item of Discontinued Operations |  | Nine Months Ended September 30, 2022 |  | Cumulative Amount Recognized
Inventory write-down | Cost of revenue |  | $ | 9 |  |  | N/A
Other charges: |  |  |  |  |
Employee termination costs | Restructuring costs |  | $ | 20 |  |  | $ | 72 |
Financing-related charges | Interest expense and Loss on debt extinguishment |  | 37 |  |  | 43 |
Contract termination costs | Restructuring costs |  | 4 |  |  | 14 |
Accelerated depreciation and amortization | Cost of revenue |  | 14 |  |  | 19 |
Asset write-offs | Restructuring costs |  | — |  |  | 1 |
Other charges | Restructuring costs |  | 1 |  |  | 1 |
Total other charges |  |  | 76 |  |  | 150 |
Total |  |  | $ | 85 |  |  | $ | 150 |
Restructuring charges attributable to continued operations relate to employee termination costs within our IMT and Mortgages segments and certain indirect costs of the Homes segment that do not qualify as discontinued operations. These costs were not material for the three months ended September 30, 2022 and totaled $6 million, $2 million and $6 million, respectively, for the nine months ended September 30, 2022. Cumulative restructuring charges attributable to continued operations as of September 30, 2022 totaled $23 million. The remaining liability balance associated with such restructuring charges as of September 30, 2022 is not material.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI https://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 + Details
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