Discontinued Operations

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 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 periods presented (in millions):


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Revenue	$	23	$	4,249
Cost of revenue	24		4,023
Gross profit (loss)	(1)		226
Operating expenses:
Sales and marketing	1		153
Technology and development	—		6
General and administrative	—		10
Restructuring costs	—		25
Total operating expenses	1		194
Income (loss) from discontinued operations	(2)		32
Loss on extinguishment of debt	—		(21)
Other income	—		13
Interest expense	—		(36)
Loss from discontinued operations before income taxes	(2)		(12)
Income tax expense	—		(1)
Net loss from discontinued operations	$	(2)	$	(13)
Net loss from discontinued operations per share:
Basic	$	(0.01)	$	(0.05)
Diluted	$	(0.01)	$	(0.05)

The following table presents significant non-cash items and capital expenditures of the discontinued operations for the nine months ended September 30, 2022 (in millions):


Amortization of debt discount and debt issuance costs	$	21
Loss on debt extinguishment	21
Share-based compensation	16
Inventory valuation adjustment	9
Depreciation and amortization	7
Settlement of beneficial interests in securitizations	(79)

Restructuring

Restructuring costs totaled $14 million for the nine months ended September 30, 2022, and were related to the Zillow Offers wind down. Cumulative restructuring charges attributable to continuing operations related to the Zillow Offers wind down as of September 30, 2022 totaled $23 million.