Discontinued Operations

3 Months Ended

Mar. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Zillow Offers Wind Down

In November 2021, the Board of Directors of Zillow Group (the “Board”) made the determination to wind down Zillow Offers operations. 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 completed in the third quarter of 2022, at which time Zillow Offers met the criteria for discontinued operations. Accordingly, we have presented the results of operations, excluding allocation of any general corporate expenses, of Zillow Offers as discontinued operations in our condensed consolidated statements of operations for the three months ended March 31, 2022. No assets or liabilities were classified as discontinued operations as of December 31, 2022.

The following table presents the major classes of line items of the discontinued operations included in the condensed consolidated statements of operations for the three months ended March 31, 2022 (in millions):


Revenue	$	3,721
Cost of revenue	3,530
Gross profit	191
Operating expenses:
Sales and marketing	133
Technology and development	6
General and administrative	7
Restructuring costs	24
Total operating expenses	170
Income from discontinued operations	21
Loss on extinguishment of debt	(14)
Other income	6
Interest expense	(36)
Loss from discontinued operations before income taxes	(23)
Income tax benefit	14
Net loss from discontinued operations	$	(9)
Net loss from discontinued operations per share:
Basic	$	(0.04)
Diluted	$	(0.04)

The following table presents significant non-cash items and capital expenditures of the discontinued operations for the three months ended March 31, 2022 (in millions):


Amortization of debt discount and debt issuance costs	$	21
Loss on debt extinguishment	14
Share-based compensation	12
Inventory valuation adjustment	5
Depreciation and amortization	4

Restructuring

Restructuring charges attributable to continuing operations relate to employee termination costs and certain indirect costs that do not qualify as discontinued operations. These costs totaled $14 million for the three months ended March 31, 2022. Cumulative restructuring charges attributable to continuing operations as of March 31, 2022 totaled $23 million.