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Debt | 9 Months Ended
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Sep. 30, 2022
Debt Disclosure [Abstract] |
Debt | Debt The following table presents the carrying values of Zillow Group’s debt as of the dates presented (in millions):
| September 30, 2022 |  | December 31, 2021
Mortgages segment |  |  |
Repurchase agreements: |  |  |
Credit Suisse AG, Cayman Islands | $ | 22 |  |  | $ | 77 |
Citibank, N.A. | 2 |  |  | 17 |
Warehouse line of credit: |  |  |
Comerica Bank | 21 |  |  | 19 |
Total Mortgages segment debt | 45 |  |  | 113 |
Convertible senior notes: |  |  |
1.375% convertible senior notes due 2026 | 495 |  |  | 369 |
2.75% convertible senior notes due 2025 | 559 |  |  | 443 |
0.75% convertible senior notes due 2024 | 605 |  |  | 507 |
Total convertible senior notes | 1,659 |  |  | 1,319 |
Total debt | $ | 1,704 |  |  | $ | 1,432 |
Mortgages Segment To provide capital for Zillow Home Loans, we utilize master repurchase agreements and a warehouse line of credit. The following table summarizes certain details related to our repurchase agreements and warehouse line of credit (in millions, except interest rates):
Lender |  | Maturity Date |  | Maximum Borrowing Capacity |  | Weighted-Average Interest Rate
Credit Suisse AG, Cayman Islands |  | March 17, 2023 |  | $ | 100 |  |  | 4.73 | %
Citibank, N.A. |  | June 9, 2023 |  | 100 |  |  | 4.89 | %
Comerica Bank |  | June 24, 2023 |  | 50 |  |  | 4.95 | %
|  | Total |  | $ | 250 |  |  |
In accordance with the master repurchase agreements, Credit Suisse and Citibank (together the “Lenders”) have agreed to pay Zillow Home Loans a negotiated purchase price for eligible loans, and Zillow Home Loans has simultaneously agreed to repurchase such loans from the Lenders under a specified timeframe at an agreed upon price that includes interest. The master repurchase agreements contain margin call provisions that provide the Lenders with certain rights in the event of a decline in the market value of the assets purchased under the master repurchase agreements. As of September 30, 2022 and December 31, 2021, $26 million and $87 million, respectively, in mortgage loans held for sale were pledged as collateral under the master repurchase agreements. Borrowings on the repurchase agreements and warehouse line of credit bear interest either at a floating rate based on Secured Overnight Financing Rate (“SOFR”) plus an applicable margin, as defined by the governing agreements, or Bloomberg Short-Term Bank Yield Index Rate (“BSBY”) plus an applicable margin, as defined by the governing agreements. The repurchase agreements and warehouse line of credit include customary representations and warranties, covenants and provisions regarding events of default. As of September 30, 2022, Zillow Home Loans was in compliance with all financial covenants and no event of default had occurred. The repurchase agreements and warehouse line of credit are recourse to Zillow Home Loans, and have no recourse to Zillow Group or any of its other subsidiaries. For additional details related to our warehouse line of credit and repurchase agreements, see Note 13 in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Convertible Senior Notes Effective January 1, 2022, we adopted guidance which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Refer to Note 2 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for additional information regarding the adoption of this guidance. The following tables summarize certain details related to our outstanding convertible senior notes as of the dates presented or for the periods ended (in millions, except interest rates):
|  |  |  |  |  |  |  |  |  | September 30, 2022 |  | December 31, 2021
Maturity Date |  | Aggregate Principal Amount |  | Stated Interest Rate |  | Effective Interest Rate |  | Semi-Annual Interest Payment Dates |  | Unamortized Debt Issuance Costs |  | Fair Value |  | Unamortized Debt Discount and Debt Issuance Costs |  | Fair Value
September 1, 2026 |  | $ | 499 |  |  | 1.375 | % |  | 1.57 | % |  | March 1; September 1 |  | $ | 4 |  |  | $ | 484 |  |  | $ | 130 |  |  | $ | 781 |
May 15, 2025 |  | 565 |  |  | 2.75 | % |  | 3.20 | % |  | May 15; November 15 |  | 6 |  |  | 522 |  |  | 122 |  |  | 725 |
September 1, 2024 |  | 608 |  |  | 0.75 | % |  | 1.02 | % |  | March 1; September 1 |  | 3 |  |  | 608 |  |  | 101 |  |  | 945 |
Total |  | $ | 1,672 |  |  |  |  |  |  |  |  | $ | 13 |  |  | $ | 1,614 |  |  | $ | 353 |  |  | $ | 2,451 |
|  | Three Months Ended September 30, 2022 |  | Three Months Ended September 30, 2021
Maturity Date |  | Contractual Coupon Interest |  | Amortization of Debt Issuance Costs |  | Interest Expense |  | Contractual Coupon Interest |  | Amortization of Debt Discount |  | Amortization of Debt Issuance Costs |  | Interest Expense
September 1, 2026 |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 7 |
May 15, 2025 |  | 4 |  |  | 1 |  |  | 5 |  |  | 4 |  |  | 7 |  |  | — |  |  | 11 |
September 1, 2024 |  | 1 |  |  | 1 |  |  | 2 |  |  | 1 |  |  | 8 |  |  | 1 |  |  | 10 |
July 1, 2023 |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 7 |  |  | $ | 2 |  |  | $ | 9 |  |  | $ | 7 |  |  | $ | 20 |  |  | $ | 1 |  |  | $ | 28 |
|  | Nine Months Ended September 30, 2022 |  | Nine Months Ended September 30, 2021
Maturity Date |  | Contractual Coupon Interest |  | Amortization of Debt Issuance Costs |  | Interest Expense |  | Contractual Coupon Interest |  | Amortization of Debt Discount |  | Amortization of Debt Issuance Costs |  | Interest Expense
September 1, 2026 |  | $ | 5 |  |  | $ | — |  |  | $ | 5 |  |  | $ | 5 |  |  | $ | 16 |  |  | $ | — |  |  | $ | 21 |
May 15, 2025 |  | 12 |  |  | 2 |  |  | 14 |  |  | 12 |  |  | 21 |  |  | 1 |  |  | 34 |
September 1, 2024 |  | 4 |  |  | 1 |  |  | 5 |  |  | 3 |  |  | 23 |  |  | 2 |  |  | 28 |
July 1, 2023 |  | — |  |  | — |  |  | — |  |  | 3 |  |  | 8 |  |  | 1 |  |  | 12 |
Total |  | $ | 21 |  |  | $ | 3 |  |  | $ | 24 |  |  | $ | 23 |  |  | $ | 68 |  |  | $ | 4 |  |  | $ | 95 |
The convertible notes are senior unsecured obligations. The convertible senior notes maturing in 2026 (“2026 Notes”), 2025 (“2025 Notes”) and 2024 (“2024 Notes”) (together, the “Notes”) are classified as long-term debt in our condensed consolidated balance sheets based on their contractual maturity dates. Interest on the convertible notes is paid semi-annually in arrears. The estimated fair value of the convertible senior notes is classified as Level 2 and was determined through consideration of quoted market prices in markets that are not active. The Notes are convertible into cash, shares of Class C capital stock or a combination thereof, at our election, and may be settled as described below. They will mature on their respective maturity date, unless earlier repurchased, redeemed or converted in accordance with their terms. The following table summarizes the conversion and redemption options with respect to the Notes:
Maturity Date |  | Early Conversion Date |  | Conversion Rate |  | Conversion Price |  | Optional Redemption Date
September 1, 2026 |  | March 1, 2026 |  | 22.9830 |  | $ | 43.51 |  |  | September 5, 2023
May 15, 2025 |  | November 15, 2024 |  | 14.8810 |  | 67.20 |  |  | May 22, 2023
September 1, 2024 |  | March 1, 2024 |  | 22.9830 |  | 43.51 |  |  | September 5, 2022
The following table summarizes certain details related to the capped call confirmations with respect to the convertible senior notes:
Maturity Date |  | Initial Cap Price |  | Cap Price Premium
September 1, 2026 |  | $ | 80.5750 |  |  | 150 | %
September 1, 2024 |  | 72.5175 |  |  | 125 | %
July 1, 2023 |  | 105.45 |  |  | 85 | %
There were no conversions of convertible senior notes during the three and nine months ended September 30, 2022. The following table summarizes the activity for our convertible senior notes maturing in 2023 (“2023 Notes”) for the three months ended September 30, 2021 (in millions, except share data which are presented in thousands):
Aggregate principal amount settled | $ | 368 |
Cash paid | $ | 1 |
Shares of Class C capital stock issued | 4,675 |
Total fair value of consideration transferred (1) | $ | 562 |
Loss on extinguishment of debt: |
Consideration allocated to the liability component (2) | $ | 343 |
Carrying value of the liability component, net of unamortized debt discount and debt issuance costs | 328 |
Loss on extinguishment of debt | $ | 15 |
Consideration allocated to the equity component | $ | 219 |
The following table summarizes the activity for our 2023 Notes, 2024 Notes and 2026 Notes for the nine months ended September 30, 2021 (in millions, except share data which are presented in thousands):
| 2023 Notes |  | 2024 Notes |  | 2026 Notes |  | Total
Aggregate principal amount settled | $ | 374 |  |  | $ | 65 |  |  | $ | 1 |  |  | $ | 440 |
Cash paid | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Shares of Class C capital stock issued | 4,752 |  |  | 1,485 |  |  | 28 |  |  | 6,265 |
Total fair value of consideration transferred (1) | $ | 572 |  |  | $ | 200 |  |  | $ | 4 |  |  | $ | 776 |
Loss on extinguishment of debt: |  |  |  |  |  |  |
Consideration allocated to the liability component (2) | $ | 349 |  |  | $ | 53 |  |  | $ | 1 |  |  | $ | 403 |
Carrying value of the liability component, net of unamortized debt discount and debt issuance costs | 334 |  |  | 51 |  |  | 1 |  |  | 386 |
Loss on extinguishment of debt | $ | 15 |  |  | $ | 2 |  |  | $ | — |  |  | $ | 17 |
Consideration allocated to the equity component | $ | 223 |  |  | $ | 147 |  |  | $ | 3 |  |  | $ | 373 |
(1) For convertible senior notes converted by note holders, the total fair value of consideration transferred includes the value of shares transferred to note holders using the daily volume weighted-average price of our Class C capital stock on the conversion date and an immaterial amount of cash paid in lieu of fractional shares. For convertible senior notes redeemed, the total fair value of consideration transferred comprises cash transferred to note holders to settle the related notes.
(2) Consideration allocated to the liability component is based on the fair value of the liability component immediately prior to settlement, which was calculated using a discounted cash flow analysis with a market interest rate of a similar liability that does not have an associated convertible feature.
The last reported sale price of our Class C capital stock did not exceed 130% of the conversion price of each series of the Notes for more than 20 trading days during the 30 consecutive trading days ended September 30, 2022. Accordingly, each series of the Notes is not redeemable or convertible at the option of the holders from October 1 through December 31, 2022. For additional details related to our convertible senior notes, see Note 13 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Convertible Senior Notes Repurchase Authorization On December 2, 2021, Zillow Group’s Board of Directors authorized the repurchase of up to $750 million of our Class A common stock, Class C capital stock or a combination thereof. On May 4, 2022, the Board of Directors authorized the repurchase of up to an additional $1.0 billion (together the “Repurchase Authorizations”) of our Class A common stock, Class C capital stock or a combination thereof. On November 1, 2022, Zillow Group’s Board of Directors further expanded the Repurchase Authorizations to allow for the repurchase of a portion of our outstanding Notes. Repurchases of outstanding Notes may be made in open-market transactions or privately negotiated transactions, or in such other manner as deemed appropriate by management, and may be made from time to time as determined by management depending on market conditions, market price of the Notes, trading volume, cash needs and other business factors, in each case as permitted by securities laws and other legal requirements. As of September 30, 2022, $674 million remained available for future repurchases pursuant to the Repurchase Authorizations. For additional details related to the Repurchase Authorizations, see Note 13 under the subsection titled “Stock Repurchase Authorizations”.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI https://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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