^[1]

20,260

16,745

40,492

32,948

131,218

99,629

237,158

198,730

78,541

63,396

151,409

123,767

Acquisition-related costs

53,346

183,759

98,812

241,550

43

204

148

797

Total costs and expenses

283,408

363,733

528,019

597,792

Loss from operations

(16,558)

(155,330)

(15,394)

(203,407)

Other income

1,610

753

2,563

1,434

Interest expense

(6,897)

(1,572)

(13,620)

(3,145)

Loss before income taxes

(21,845)

(156,149)

(26,451)

(205,118)

Income tax benefit

1,364

Net loss

$ (21,845)

$ (156,149)

$ (26,451)

$ (203,754)

Net loss per share - basic and diluted

$ (0.12)

$ (0.87)

$ (0.14)

$ (1.14)

Weighted-average shares outstanding - basic and diluted

185,439

179,451

184,305

179,067

[1]	Amortization of website development costs and intangible assets included in technology and development

Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Amortization of website development costs and intangible assets included in technology and development	$ 23,159	$ 22,252	$ 46,420	$ 42,925

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (21,845)	$ (156,149)	$ (26,451)	$ (203,754)
Other comprehensive income (loss):
Unrealized gains (losses) on investments	(177)	202	(202)	843
Reclassification adjustment for net losses from investments included in net loss		6		5
Net unrealized gains (losses) on investments	(177)	208	(202)	848
Total other comprehensive income (loss)	(177)	208	(202)	848
Comprehensive loss	$ (22,022)	$ (155,941)	$ (26,653)	$ (202,906)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities
Net loss	$ (26,451)	$ (203,754)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of amounts assumed in connection with acquisitions:
Depreciation and amortization	54,157	49,357
Share-based compensation expense	55,588	53,867
Amortization of discount and issuance costs on 2021 Notes	8,855
Release of valuation allowance on certain deferred tax assets		1,364
Loss on disposal of property and equipment	2,024	2,170
Bad debt expense	3,960	927
Deferred rent	1,750	1,321
Amortization of bond premium	376	808
Changes in operating assets and liabilities:
Accounts receivable	(11,149)	(6,608)
Prepaid expenses and other assets	(5,845)	7,122
Accounts payable	(1,714)	13,743
Accrued expenses and other current liabilities	1,203	5,005
Accrued compensation and benefits	503	12,708
Deferred revenue	1,635	4,190
Other long-term liabilities		(2,749)
Net cash provided by (used in) operating activities	84,892	(60,529)
Investing activities
Proceeds from maturities of investments	133,432	105,440
Purchases of investments	(193,604)	(83,976)
Proceeds from sales of investments		4,795
Decrease in restricted cash		1,962
Purchases of property and equipment	(31,608)	(31,294)
Purchases of intangible assets	(6,784)	(5,420)
Purchase of cost method investment	(10,000)
Proceeds from divestiture of a business	579
Cash paid for acquisitions, net	(6,002)	(12,357)
Net cash used in investing activities	(113,987)	(20,850)
Financing activities
Proceeds from exercise of stock options	62,263	7,737
Value of equity awards withheld for tax liability	(295)	(286)
Net cash provided by financing activities	61,968	7,451
Net increase (decrease) in cash and cash equivalents during period	32,873	(73,928)
Cash and cash equivalents at beginning of period	243,592	229,138
Cash and cash equivalents at end of period	276,465	155,210
Supplemental disclosures of cash flow information
Cash paid for interest	4,458	3,163
Noncash transactions:
Capitalized share-based compensation	5,289	5,304
Write-off of fully depreciated property and equipment	7,552	$ 9,986
Write-off of fully amortized intangible assets	$ 5,302

Organization and Description of Business	6 Months Ended
Organization and Description of Business	Jun. 30, 2017
Accounting Policies [Abstract]
Organization and Description of Business	Note 1. Organization and Description of Business Zillow Group, Inc. operates the leading real estate and home-related information marketplaces on mobile and the web, with a complementary portfolio of brands and products to help consumers find vital information about homes and connect with local professionals. Zillow Group’s brands focus on all stages of the home lifecycle: renting, buying, selling and financing. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow, Trulia, StreetEasy, HotPads, Naked Apartments and RealEstate.com. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions to help real estate, rental and mortgage professionals maximize business opportunities and connect with millions of consumers. We also own and operate a number of business brands for real estate, rental and mortgage professionals, including Mortech, dotloop and Bridge Interactive. Zillow, Inc. was incorporated as a Washington corporation in December 2004, and we launched the initial version of our website, Zillow.com, in February 2006. Zillow Group, Inc. was incorporated as a Washington corporation in July 2014 in connection with our acquisition of Trulia, Inc. (“Trulia”). Upon the closing of the Trulia acquisition in February 2015, each of Zillow, Inc. and Trulia became wholly owned subsidiaries of Zillow Group. *Certain Significant Risks and Uncertainties* We operate in a dynamic industry and, accordingly, can be affected by a variety of factors. For example, we believe that changes in any of the following areas could have a significant negative effect on us in terms of our future financial position, results of operations or cash flows: rates of revenue growth; engagement and usage of our products; competition in our market; outcomes of legal proceedings; changes in government regulation affecting our business; scaling and adaptation of existing technology and network infrastructure; management of our growth; our ability to attract and retain qualified employees and key personnel; our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; protection of customers’ information and other privacy concerns; protection of our brand and intellectual property; and intellectual property infringement and other claims, among other things.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 7, 2017. The condensed consolidated balance sheet as of December 31, 2016, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2017, our results of operations and comprehensive loss for the three and six month periods ended June 30, 2017 and 2016, and our cash flows for the six month periods ended June 30, 2017 and 2016. The results of the three and six month periods ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any interim period or for any other future year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, website development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and goodwill, among others. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected.

Reclassifications

Certain immaterial reclassifications have been made in the condensed consolidated statement of operations to conform data for prior periods to the current format. The Company reclassified certain technology-related costs and expenses between expense categories. Amounts previously reported in the condensed consolidated statement of operations for the three months ended June 30, 2016 were revised herein as shown below (in thousands):


	As Reported		As Revised		Effect of Change
Cost of revenue (exclusive of amortization)	$	17,220	$	16,745	$	(475	)
Sales and marketing		99,256		99,629		373
Technology and development		67,421		63,396		(4,025	)
General and administrative		179,632		183,759		4,127

Amounts previously reported in the condensed consolidated statement of operations for the six months ended June 30, 2016 were revised herein as shown below (in thousands):


	As Reported		As Revised		Effect of Change
Cost of revenue (exclusive of amortization)	$	33,672	$	32,948	$	(724	)
Sales and marketing		198,016		198,730		714
Technology and development		131,838		123,767		(8,071	)
General and administrative		233,469		241,550		8,081

Certain immaterial reclassifications have been made in the statement of cash flows to conform data for prior periods to the current format.

Recently Issued Accounting Standards Not Yet Adopted

In March 2017, the Financial Accounting Standards Board (“FASB”) issued guidance related to the premium amortization on purchased callable debt securities. This guidance shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. This guidance must be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We expect to adopt this guidance on January 1, 2019. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In December 2016, the FASB issued guidance to narrow the definition of a business. This guidance assists entities with evaluating when a set of transferred assets and activities is a business. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. This guidance must be applied prospectively to transactions occurring within the period of adoption. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

In November 2016, the FASB issued guidance on the classification and presentation of changes in restricted cash on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our statements of cash flows.

In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. This guidance requires the use of an expected loss impairment model for instruments measured at amortized cost. For available-for-sale debt securities, an entity is required to recognize credit losses through an allowance for credit losses rather than as a write-down. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. The adoption of this guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We expect to adopt this guidance on January 1, 2020. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In February 2016, the FASB issued guidance on leases. This guidance requires the recognition of a right-of-use asset and lease liability on the balance sheet for all leases. This guidance also requires more detailed disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and early adoption is permitted. We expect to adopt this guidance on January 1, 2019. We anticipate this guidance will have a material impact on our financial position, primarily due to our office space operating leases, as we will be required to recognize lease assets and lease liabilities on our consolidated balance sheet. We continue to assess the potential impacts of this guidance, including the impact the adoption of this guidance will have on our results of operations and cash flows, if any.

In January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This guidance requires equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. This guidance also requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, early adoption is permitted, and the guidance must be applied prospectively to equity investments that exist as of the adoption date. We expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In May 2014, the FASB issued guidance on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. We currently plan to adopt this guidance using the modified retrospective transition approach, which would result in an adjustment to accumulated deficit for the cumulative effect, if any, of applying this guidance to contracts in process as of the adoption date. Under this approach, we would not restate the prior financial statements presented. This guidance requires us to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018 as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any. While we continue to assess all potential impacts of this new guidance, we currently expect a significant impact related to the accounting for the cost of sales commissions. Under this new guidance, the cost of sales commissions will be recorded as an asset and recognized as an operating expense over the period that we expect to recover the costs. Currently we expense the cost of sales commissions as incurred. We continue to assess the impact the adoption of this guidance will have on our financial position, results of operations and cash flows.

Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

•

Level 1—Quoted prices in active markets for identical assets or liabilities.

•

Level 2—Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.

•

Level 3—Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash equivalents — Cash equivalents are comprised of highly liquid investments, including money market funds, U.S. government agency securities, commercial paper and certificates of deposit, with original maturities of three months or less. The fair value measurement of money market funds is based on quoted market prices in active markets, and the fair value measurement of U.S. government agency securities, commercial paper and certificates of deposit is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Investments — Our investments consist of fixed income securities, which include U.S. and foreign government agency securities, corporate notes and bonds, municipal securities, commercial paper and certificates of deposit. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

The following tables present the balances of assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):


	June 30, 2017
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	199,054	$	199,054	$	—
U.S. government agency securities		10,981		—		10,981
Commercial paper		8,987		—		8,987
Short-term investments:
U.S. government agency securities		230,211		—		230,211
Corporate notes and bonds		38,004		—		38,004
Commercial paper		28,133		—		28,133
Municipal securities		12,766		—		12,766
Certificates of deposit		7,359		—		7,359
Foreign government securities		5,990		—		5,990
Restricted cash		1,053		—		1,053

Total	$	542,538	$	199,054	$	343,484


	December 31, 2016
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	166,527	$	166,527	$	—
Certificates of deposit		460		—		460
Short-term investments:
U.S. government agency securities		162,312		—		162,312
Corporate notes and bonds		61,483		—		61,483
Commercial paper		14,952		—		14,952
Municipal securities		11,912		—		11,912
Certificates of deposit		6,226		—		6,226
Foreign government securities		5,985		—		5,985
Restricted cash		1,053		—		1,053

Total	$	430,910	$	166,527	$	264,383

See Note 9 for the carrying amount and estimated fair value of the Company’s Convertible Senior Notes due in 2021 and Trulia’s Convertible Senior Notes due in 2020.

We did not have any Level 3 assets as of June 30, 2017 or December 31, 2016. There were no liabilities measured at fair value on a recurring basis as of June 30, 2017 or December 31, 2016.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Cash, Cash Equivalents, Investments and Restricted Cash

6 Months Ended

Jun. 30, 2017

Text Block [Abstract]

Cash, Cash Equivalents, Investments and Restricted Cash

Note 4. Cash, Cash Equivalents, Investments and Restricted Cash

Our investments are classified as available-for-sale securities and are carried at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive loss in shareholders’ equity, while realized gains and losses and other-than-temporary impairments are reported as a component of net loss based on specific identification.

The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash and cash equivalents, available-for-sale investments and restricted cash as of the dates presented (in thousands):


	June 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	57,443	$	—	$	—		$	57,443
Cash equivalents:
Money market funds		199,054		—		—			199,054
U.S. government agency securities		10,981		—		—			10,981
Commercial paper		8,987		—		—			8,987
Short-term investments:
U.S. government agency securities		230,554		3		(346	)		230,211
Corporate notes and bonds		38,041		3		(40	)		38,004
Commercial paper		28,133		—		—			28,133
Municipal securities		12,778		1		(13	)		12,766
Certificates of deposit		7,359		—		—			7,359
Foreign government securities		5,997		—		(7	)		5,990
Restricted cash		1,053		—		—			1,053

Total	$	600,380	$	7	$	(406	)	$	599,981


	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	76,605	$	—	$	—		$	76,605
Cash equivalents:
Money market funds		166,527		—		—			166,527
Certificates of deposit		460		—		—			460
Short-term investments:
U.S. government agency securities		162,438		31		(157	)		162,312
Corporate notes and bonds		61,530		3		(50	)		61,483
Commercial paper		14,952		—		—			14,952
Municipal securities		11,925		—		(13	)		11,912
Certificates of deposit		6,226		—		—			6,226
Foreign government securities		5,995		—		(10	)		5,985
Restricted cash		1,053		—		—			1,053

Total	$	507,711	$	34	$	(230	)	$	507,515

The following table presents available-for-sale investments by contractual maturity date as of June 30, 2017 (in thousands):


	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	205,975	$	205,744
Due after one year through two years		116,887		116,719

Total	$	322,862	$	322,463

Property and Equipment, Net

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Note 5. Property and Equipment, net

The following table presents the detail of property and equipment as of the dates presented (in thousands):


	June 30, 2017			December 31, 2016
Website development costs	$	114,292		$	102,130
Computer equipment		29,003			28,175
Leasehold improvements		41,963			37,923
Construction-in-progress		22,460			19,470
Office equipment, furniture and fixtures		22,405			19,254

Property and equipment		230,123			206,952
Less: accumulated amortization and depreciation		(127,119	)		(108,664	)

Property and equipment, net	$	103,004		$	98,288

We recorded depreciation expense related to property and equipment (other than website development costs) of $3.9 million and $4.7 million, respectively, during the three months ended June 30, 2017 and 2016, and $7.7 million and $8.5 million, respectively, during the six months ended June 30, 2017 and 2016.

We capitalized $12.0 million and $13.6 million, respectively, in website development costs during the three months ended June 30, 2017 and 2016, and $26.4 million and $25.1 million, respectively, during the six months ended June 30, 2017 and 2016. Amortization expense for website development costs included in technology and development expenses was $9.8 million and $9.9 million, respectively, during the three months ended June 30, 2017 and 2016, and $19.9 million and $19.1 million, respectively, during the six months ended June 30, 2017 and 2016.

Construction-in-progress primarily consists of website development costs that are capitalizable, but for which the associated applications had not been placed in service.

Equity Investments	6 Months Ended
Equity Investments	Jun. 30, 2017
Text Block [Abstract]
Equity Investments	Note 6. Equity Investments In June 2017, we purchased an equity interest in a privately held corporation for approximately $10.0 million, which is accounted for as a cost method investment and classified within other assets in the condensed consolidated balance sheet. In October 2016, we purchased a 10% equity interest in a privately held variable interest entity within the real estate industry for $10.0 million, which is accounted for as a cost method investment and classified within other assets in the condensed consolidated balance sheet. In October 2016, we also entered into an immaterial commercial agreement with this entity. The entity is financed through its business operations. We are not the primary beneficiary of the entity, as we do not direct the activities that most significantly impact the entity’s economic performance. Therefore, we do not consolidate the entity. Our maximum exposure to loss is $10.0 million, the carrying amount of the investment as of June 30, 2017. As there were no identified events or changes in circumstances that may have a significant adverse effect on the fair values of our cost method investments as of June 30, 2017, and it is not practicable to estimate the fair values of the investments given the fair values of the investments are not readily determinable, an estimate of the fair values of the cost method investments was not performed.

Goodwill

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Note 7. Goodwill

The following table presents the change in goodwill from December 31, 2016 through June 30, 2017 (in thousands):


Balance as of December 31, 2016	$	1,923,480
Goodwill recorded in connection with the acquisition of HREO		3,970

Balance as of June 30, 2017	$	1,927,450

Intangible Assets, Net

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Net

Note 8. Intangible Assets, net

The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands):


	June 30, 2017
	Cost		Accumulated Amortization			Net
Purchased content	$	32,760	$	(15,482	)	$	17,278
Software		14,143		(6,583	)		7,560
Customer relationships		103,900		(38,706	)		65,194
Developed technology		111,480		(46,069	)		65,411
Trade names and trademarks		4,900		(3,414	)		1,486
Advertising relationships		9,000		(7,098	)		1,902
MLS home data feeds		1,100		(868	)		232
Intangibles-in-progress		4,450		—			4,450

Total	$	281,733	$	(118,220	)	$	163,513


	December 31, 2016
	Cost		Accumulated Amortization			Net
Purchased content	$	35,205	$	(15,508	)	$	19,697
Software		9,712		(4,773	)		4,939
Customer relationships		103,200		(30,952	)		72,248
Developed technology		110,080		(36,341	)		73,739
Trade names and trademarks		4,900		(2,877	)		2,023
Advertising relationships		9,000		(5,598	)		3,402
MLS home data feeds		1,100		(684	)		416

Total	$	273,197	$	(96,733	)	$	176,464

Amortization expense recorded for intangible assets for the three months ended June 30, 2017 and 2016 was $13.3 million and $12.3 million, respectively. Amortization expense recorded for intangible assets for the six months ended June 30, 2017 and 2016 was $26.5 million and $23.8 million, respectively. These amounts are included in technology and development expenses.

As of June 30, 2017 and December 31, 2016, we have an indefinite-lived intangible asset for $351.0 million that we recorded in connection with our February 2015 acquisition of Trulia for Trulia’s trade names and trademarks that is not subject to amortization.

Intangibles-in-progress consist of purchased content and software that are capitalizable but have not been placed in service.

Convertible Senior Notes

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Convertible Senior Notes

Note 9. Convertible Senior Notes

Convertible Senior Notes due in 2021

On December 12, 2016, Zillow Group issued $460.0 million aggregate principal amount of 2.00% Convertible Senior Notes due 2021 (the “2021 Notes”), which amount includes the exercise in full of the $60.0 million over-allotment option, to Citigroup Global Markets Inc. as the initial purchaser of the 2021 Notes in a private offering to the initial purchaser in reliance on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) for resale to qualified institutional buyers as defined in, and pursuant to, Rule 144A under the Securities Act. The 2021 Notes bear interest at a fixed rate of 2.00% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2017. The 2021 Notes are convertible into cash, shares of our Class C capital stock or a combination thereof, at the Company’s election. The 2021 Notes will mature on December 1, 2021, unless earlier repurchased, redeemed, or converted in accordance with their terms.

The net proceeds from the issuance of the 2021 Notes were approximately $447.8 million, after deducting fees and expenses. The Company used approximately $370.2 million of the net proceeds from the issuance of the 2021 Notes to repurchase a portion of the outstanding 2020 Notes (see additional information below under “Trulia’s Convertible Senior Notes due 2020”) in privately negotiated transactions. In addition, the Company used approximately $36.6 million of the net proceeds from the issuance of the 2021 Notes to pay the cost of the capped call transactions with the initial purchaser of the 2021 Notes and two additional financial institutions (“Capped Call Confirmations”) as discussed further below. The Company used the remainder of the net proceeds for general corporate purposes.

Prior to the close of business on the business day immediately preceding September 1, 2021, the 2021 Notes are convertible at the option of the holders of the 2021 Notes only under certain conditions, none of which conditions have been satisfied as of June 30, 2017. On or after September 1, 2021, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2021 Notes may convert their 2021 Notes at their option at the conversion rate then in effect, irrespective of these conditions. The Company will settle conversions of the 2021 Notes by paying or delivering, as the case may be, cash, shares of Class C capital stock, or a combination of cash and shares of Class C capital stock, at its election. The conversion rate will initially be 19.0985 shares of Class C capital stock per $1,000 principal amount of 2021 Notes (equivalent to an initial conversion price of approximately $52.36 per share of Class C capital stock). The conversion rate is subject to customary adjustments upon the occurrence of certain events. The Company may redeem for cash all or part of the 2021 Notes, at its option, on or after December 6, 2019, under certain circumstances at a redemption price equal to 100% of the principal amount of the 2021 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date (as defined in the indenture governing the 2021 Notes). The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock.

If the Company undergoes a fundamental change (as defined in the indenture governing the 2021 Notes), holders of the 2021 Notes may require the Company to repurchase for cash all or part of their 2021 Notes at a repurchase price equal to 100% of the principal amount of the 2021 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (as defined in the indenture governing the 2021 Notes). In addition, if certain fundamental changes occur, the Company may be required in certain circumstances to increase the conversion rate for any 2021 Notes converted in connection with such fundamental changes by a specified number of shares of its Class C capital stock. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2021 Notes, as described in the indenture governing the notes. There are no financial covenants associated with the 2021 Notes.

We may not redeem the 2021 Notes prior to December 6, 2019. We may redeem the 2021 Notes for cash, at our option, in whole or in part on or after December 6, 2019, if the last reported sale price per share of our Class C capital stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

In accounting for the issuance of the 2021 Notes, the Company separated the 2021 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2021 Notes. The difference between the principal amount of the 2021 Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the consolidated balance sheet and amortized to interest expense using the effective interest method over the term of the 2021 Notes. The equity component of the 2021 Notes of approximately $91.4 million is included in additional paid-in capital in the condensed consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification.

The Company incurred transaction costs of approximately $12.2 million related to the issuance of the 2021 Notes, including approximately $11.5 million in fees to the initial purchaser, which amount was paid out of the gross proceeds from the note offering. In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the 2021 Notes. Transaction costs attributable to the liability component were recorded as a direct deduction from the related debt liability in the condensed consolidated balance sheet and amortized to interest expense over the term of the 2021 Notes, and transaction costs attributable to the equity component were netted with the equity component in shareholders’ equity.

Interest expense related to the 2021 Notes for the three months ended June 30, 2017 was $6.8 million, which is comprised of approximately $4.5 million related to the amortization of debt discount and debt issuance costs and $2.3 million for the contractual coupon interest. Interest expense related to the 2021 Notes for the six months ended June 30, 2017 was $13.4 million, which is comprised of approximately $8.8 million related to the amortization of debt discount and debt issuance costs and $4.6 million for the contractual coupon interest. Accrued interest related to the 2021 Notes as of June 30, 2017 and December 31, 2016 was $0.8 million and $0.5 million, respectively, and is recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheet.

The following table presents the outstanding principal amount and carrying value of the 2021 Notes as of the dates presented (in thousands):


	Outstanding Principal Amount		Unamortized Debt Discount and Debt Issuance Costs			Carrying Value
June 30, 2017	$	460,000	$	(93,878	)	$	366,122
December 31, 2016		460,000		(102,733	)		357,267

As of June 30, 2017, the unamortized debt discount and debt issuance costs for the 2021 Notes will be amortized to interest expense over a remaining period of approximately 53 months.

The estimated fair value of the 2021 Notes was $531.3 million and $474.2 million, respectively, as of June 30, 2017 and December 31, 2016. The estimated fair value of the 2021 Notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for the 2021 Notes.

The Capped Call Confirmations are expected generally to reduce the potential dilution of our Class C capital stock upon any conversion of 2021 Notes and/or offset the cash payments the Company is required to make in excess of the principal amount of the 2021 Notes in the event that the market price of the Class C capital stock is greater than the strike price of the Capped Call Confirmations (which initially corresponds to the initial conversion price of the 2021 Notes and is subject to certain adjustments under the terms of the Capped Call Confirmations), with such reduction and/or offset subject to a cap based on the cap price of the Capped Call Confirmations. The Capped Call Confirmations have an initial cap price of $69.19 per share, which represents a premium of approximately 85% over the closing price of the Company’s Class C capital stock on The NASDAQ Global Select Market on December 6, 2016, and is subject to certain adjustments under the terms of the Capped Call Confirmations. The Capped Call Confirmations will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2021 Notes, the number of shares of Class C capital stock that will underlie the 2021 Notes. In addition, the Capped Call Confirmations provide for the Company to elect, subject to certain conditions, for the Capped Call Confirmations to remain outstanding (with certain modifications) following its election to redeem the 2021 Notes, notwithstanding any conversions of 2021 Notes in connection with such redemption. The Capped Call Confirmations do not meet the criteria for separate accounting as a derivative as they are indexed to our own stock. The premiums paid for the Capped Call Confirmations have been included as a net reduction to additional paid-in capital within shareholders’ equity.

Trulia’s Convertible Senior Notes due in 2020

In connection with the February 2015 acquisition of Trulia, a portion of the total purchase price was allocated to Trulia’s Convertible Senior Notes due in 2020 (the “2020 Notes”), which are unsecured senior obligations. Pursuant to and in accordance with the Merger Agreement, Zillow Group entered into a supplemental indenture in respect of the 2020 Notes in the aggregate principal amount of $230.0 million, which supplemental indenture provides, among other things, that, at the effective time of the Trulia Merger, (i) each outstanding 2020 Note is no longer convertible into shares of Trulia common stock and is convertible solely into shares of Zillow Group Class A common stock, pursuant to, and in accordance with, the terms of the indenture governing the 2020 Notes, and (ii) Zillow Group guaranteed all of the obligations of Trulia under the 2020 Notes and related indenture. The aggregate principal amount of the 2020 Notes is due on December 15, 2020 if not earlier converted or redeemed. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually on June 15 and December 15 of each year.

In December 2016, the Company used approximately $370.2 million of the net proceeds from the issuance of the 2021 Notes discussed above to repurchase $219.9 million aggregate principal of the 2020 Notes in privately negotiated transactions. The repurchase of the 2020 Notes was accounted for as a debt extinguishment, and the consideration transferred was allocated between the liability and equity components by determining the intrinsic value of the conversion option immediately prior to the debt extinguishment and allocating that portion of the repurchase price to additional paid-in capital for $127.6 million with the residual repurchase price allocated to the liability component. The partial repurchase of the 2020 Notes resulted in the recognition of a $22.8 million loss on debt extinguishment for the year ended December 31, 2016.

Holders of the 2020 Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding the maturity date. In connection with the supplemental indenture in respect of the 2020 Notes, the conversion ratio immediately prior to the effective time of the Trulia Merger of 27.8303 shares of Trulia common stock per $1,000 principal amount of notes was adjusted to 12.3567 shares of our Class A common stock per $1,000 principal amount of notes based on the exchange ratio of 0.444 per the Merger Agreement. This was equivalent to an initial conversion price of approximately $80.93 per share of our Class A common stock. In connection with the August 2015 distribution of shares of our Class C capital stock as a dividend to our Class A and Class B common shareholders, the conversion ratio has been further adjusted to 41.4550 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $24.12 per share of our Class A common stock. The conversion ratio will be adjusted for certain dilutive events and will be increased in the case of corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture governing the notes). The conversion option of the 2020 Notes has no cash settlement provisions. The conversion option does not meet the criteria for separate accounting as a derivative as it is indexed to our own stock.

The holders of the 2020 Notes will have the ability to require us to repurchase the notes in whole or in part upon the occurrence of an event that constitutes a “Fundamental Change” (as defined in the indenture governing the notes, including such events as a “change in control” or “termination of trading”, subject to certain exceptions). In such case, the repurchase price would be 100% of the principal amount of the 2020 Notes plus accrued and unpaid interest, if any, to, but excluding, the Fundamental Change repurchase date. Certain events are also considered “Events of Default,” which may result in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the notes. There are no financial covenants associated with the 2020 Notes.

The 2020 Notes are redeemable, at our option, in whole or in part on or after December 20, 2018, if the last reported sale price per share of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

Interest expense related to the 2020 Notes for the three months ended June 30, 2017 and 2016 was $0.1 million and $1.6 million, respectively. Interest expense related to the 2020 Notes for the six months ended June 30, 2017 and 2016 was $0.1 million and $3.1 million, respectively. Accrued interest related to the 2020 Notes as of June 30, 2017 and December 31, 2016 was not material.

The carrying value of the 2020 Notes was $10.1 million as of June 30, 2017 and December 31, 2016. The estimated fair value of the 2020 Notes was $20.9 million and $17.3 million, respectively, as of June 30, 2017 and December 31, 2016. The estimated fair value of the 2020 Notes was determined through consideration of quoted market prices. The fair value is classified as Level 3 due to the limited trading activity for the 2020 Notes.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Note 10. Income Taxes We are subject to federal and state income taxes in the United States and in Canada. During the three and six month periods ended June 30, 2017 and 2016, we did not have a material amount of current taxable income, and we are not projecting a material amount of current taxable income for the year ending December 31, 2017. We have provided a full valuation allowance against our net deferred tax assets as of June 30, 2017 and December 31, 2016 because, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets will not be realized. Therefore, no current tax liability or expense has been recorded in the condensed consolidated financial statements. We have accumulated federal tax losses of approximately $893.3 million as of December 31, 2016, which are available to reduce future taxable income. We have accumulated state tax losses of approximately $13.5 million (tax effected) as of December 31, 2016. We recorded an income tax benefit of $1.4 million for the six months ended June 30, 2016 primarily due to a deferred tax liability generated in connection with Zillow Group’s February 22, 2016 acquisition of Naked Apartments that can be used to realize certain deferred tax assets for which we had previously provided a full allowance.

Shareholders' Equity	6 Months Ended
Shareholders' Equity	Jun. 30, 2017
Equity [Abstract]
Shareholders' Equity	Note 11. Shareholders’ Equity *Preferred Stock* Our board of directors has the authority to fix and determine and to amend the number of shares of any series of preferred stock that is wholly unissued or to be established and to fix and determine and to amend the designation, preferences, voting powers and limitations, and the relative, participating, optional or other rights, of any series of shares of preferred stock that is wholly unissued or to be established, subject in each case to certain approval rights of holders of our outstanding Class B common stock. There was no preferred stock issued and outstanding as of June 30, 2017 or December 31, 2016. *Common and Capital Stock* Our Class A common stock has no preferences or privileges and is not redeemable. Holders of Class A common stock are entitled to one vote for each share. Our Class B common stock has no preferences or privileges and is not redeemable. At any time after the date of issuance, each share of Class B common stock, at the option of the holder, may be converted into one share of Class A common stock, or automatically converted into Class A common stock upon the affirmative vote by or written consent of holders of a majority of the shares of the Class B common stock. During the six months ended June 30, 2017 and the year ended December 31, 2016, no shares of Class B common stock were converted into Class A common stock at the option of the holders. Holders of Class B common stock are entitled to 10 votes for each share. Our Class C capital stock has no preferences or privileges, is not redeemable and, except in limited circumstances, is non-voting.

Share-Based Awards

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Awards

Note 12. Share-Based Awards

In connection with our February 2015 acquisition of Trulia, we assumed the obligations of Zillow, Inc. and Trulia outstanding under pre-existing stock plans. We intend that future equity grants will be made under Zillow Group’s 2011 Amended and Restated Incentive Plan (as amended and/or restated from time to time, the “2011 Plan”) only (or a successor thereto).

Zillow Group, Inc. Amended and Restated 2011 Incentive Plan

On July 19, 2011, the 2011 Plan became effective and serves as the successor to Zillow, Inc.’s 2005 Equity Incentive Plan (the “2005 Plan”). Shareholders last approved the 2011 Plan on June 15, 2016. In addition to the share reserve of 18,400,000 shares, the number of shares available for issuance under the 2011 Plan automatically increases on the first day of each of our fiscal years by a number of shares equal to the least of (a) 3.5% of our outstanding Class A common stock, Class B common stock, and Class C capital stock on a fully diluted basis as of the end of our immediately preceding fiscal year, (b) 10,500,000 shares, and (c) a lesser amount determined by our board of directors; provided, however, that any shares from any increases in previous years that are not actually issued will continue to be available for issuance under the 2011 Plan. In addition, shares previously available for grant under the 2005 Plan, but not issued or subject to outstanding awards under the 2005 Plan as of July 19, 2011, and shares subject to outstanding awards under the 2005 Plan that subsequently cease to be subject to such awards (other than by reason of exercise of the awards) are available for grant under the 2011 Plan. The 2011 Plan is administered by the compensation committee of the board of directors. Under the terms of the 2011 Plan, the compensation committee may grant equity awards, including incentive stock options, nonqualified stock options, restricted stock, restricted stock units or restricted units to employees, officers, directors, consultants, agents, advisors and independent contractors. The board of directors has also authorized certain senior executive officers to grant equity awards under the 2011 Plan, within limits prescribed by our board of directors. The 2011 Plan provides that in the event of a stock dividend, stock split or similar event, the maximum number and kind of securities available for issuance under the plan will be proportionally adjusted.

Options under the 2011 Plan are granted with an exercise price per share not less than 100% of the fair market value of our stock on the date of grant, with the exception of substituted option awards granted in connection with acquisitions, and are exercisable at such times and under such conditions as determined by the compensation committee. Under the 2011 Plan, the maximum term of an option is ten years from the date of grant. Any portion of an option that is not vested and exercisable on the date of a participant’s termination of service expires on such date. Employees generally forfeit their rights to exercise vested options after 3 months following their termination of employment or 12 months in the event of termination by reason of death, disability or retirement. Options granted under the 2011 Plan typically expire seven or 10 years from the grant date and typically vest either 25% after 12 months and ratably thereafter over the next 36 months or quarterly over a period of four years, though certain options have been granted with alternative vesting schedules.

Restricted stock units granted under the 2011 Plan typically vest either 25% after 12 months and quarterly thereafter over the next three years or 12.5% after 6 months and quarterly thereafter for the next 3.5 years. Any portion of a restricted stock unit that is not vested on the date of a participant’s termination of service expires on such date.

In March 2016, Zillow Group established an equity choice program pursuant to which Zillow Group grants restricted stock units and option awards to acquire shares of Class C capital stock to certain employees to retain and recognize their efforts on behalf of Zillow Group.

Option Awards

The following table summarizes option award activity for the six months ended June 30, 2017:


	Number of Shares Subject to Existing Options			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2017		29,628,443		$	24.11		5.97	$	376,004
Granted		4,026,726			35.46
Exercised		(3,879,814	)		16.05
Forfeited or cancelled		(840,780	)		32.98

Outstanding at June 30, 2017		28,934,575			26.52		6.00		650,099
Vested and exercisable at June 30, 2017		13,849,724			23.21		4.47		356,770

The fair value of options granted is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:


	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Expected volatility	47%	51%	47% - 49%	51%
Expected dividend yield	—	—	—	—
Risk-free interest rate	1.67%	1.06%	1.67%-1.84%	1.05%-1.12%
Weighted-average expected life	4.25 years	4 years	4.25-4.75 years	3.75-4.25 years
Weighted-average fair value of options granted	$17.56	$11.11	$14.30	$8.92

As of June 30, 2017, there was a total of $179.3 million in unrecognized compensation cost related to unvested stock options.

Restricted Stock Units

The following table summarizes activity for restricted stock units for the six months ended June 30, 2017:


	Restricted Stock Units			Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2017		3,780,577		$	28.54
Granted		1,872,628			36.09
Vested		(671,101	)		28.09
Forfeited or cancelled		(547,209	)		31.16

Unvested outstanding at June 30, 2017		4,434,895			31.47

The fair value of the outstanding restricted stock units will be recorded as share-based compensation expense over the vesting period. As of June 30, 2017, there was $129.3 million of total unrecognized compensation cost related to unvested restricted stock units.

Share-Based Compensation Expense

The following table presents the effects of share-based compensation in our condensed consolidated statements of operations during the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Cost of revenue	$	1,025	$	982	$	1,928	$	1,768
Sales and marketing		6,250		6,395		11,780		11,598
Technology and development		10,400		8,366		18,891		15,125
General and administrative		11,518		12,573		22,989		25,376

Total	$	29,193	$	28,316	$	55,588	$	53,867

Net Loss Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Net Loss Per Share

Note 13. Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period. In the calculation of basic net loss per share, undistributed earnings are allocated assuming all earnings during the period were distributed.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period and potentially dilutive Class A common stock and Class C capital stock equivalents, except in cases where the effect of the Class A common stock or Class C capital stock equivalent would be antidilutive. Potential Class A common stock and Class C capital stock equivalents consist of Class A common stock and Class C capital stock issuable upon exercise of stock options and Class A common stock and Class C capital stock underlying unvested restricted stock awards and unvested restricted stock units using the treasury stock method. Potential Class A common stock equivalents also include Class A common stock issuable upon conversion of the 2020 Notes using the if-converted method.

For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net loss per share because their effect would have been antidilutive (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Weighted-average Class A common stock and Class C capital stock option awards and stock appreciation rights outstanding		29,921		19,407		29,214		14,164
Weighted-average Class A common stock and Class C capital stock unvested restricted stock awards and restricted stock units outstanding		4,654		4,106		4,320		3,412
Class A common stock issuable upon conversion of the 2020 Notes		427		9,535		427		9,535

Total Class A common stock and Class C capital stock equivalents		35,002		33,048		33,961		27,111

Since the Company expects to settle the principal amount of the outstanding 2021 Notes in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread of approximately 8.8 million shares will have a dilutive impact on diluted net income per share when the market price of the Company’s Class C capital stock at the end of a period exceeds the conversion price of $52.36 per share for the 2021 Notes.

In the event of liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of all classes of common and capital stock have equal rights to receive all the assets of the Company after the rights of the holders of preferred stock have been satisfied. We have not presented net loss per share under the two-class method for our Class A common stock, Class B common stock and Class C capital stock because it would be the same for each class due to equal dividend and liquidation rights for each class.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 14. Commitments and Contingencies *Lease Commitments* We have entered into various non-cancelable operating lease agreements for certain of our office space and equipment with original lease periods expiring between 2017 and 2024. We are committed to pay a portion of the related operating expenses under certain of these lease agreements. Certain of these arrangements have free rent periods or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis. Operating lease expense for the three months ended June 30, 2017 and 2016 was $5.2 million and $3.8 million, respectively. Operating lease expense for the six months ended June 30, 2017 and 2016 was $10.1 million and $7.7 million, respectively. *Purchase Commitments* We have entered into various non-cancelable purchase commitments for content related to our mobile applications and websites. License agreement terms vary by vendor. In some instances, we retain perpetual rights to this information after the contract ends; in other instances, the information and data are licensed only during the fixed term of the agreement. Additionally, certain data license agreements provide for uneven payment amounts throughout the contract term. We capitalize payments made to third parties for data licenses that we expect to provide future economic benefit through the recovery of the costs of these arrangements via the generation of our revenue and margins. For data license contracts that include uneven payment amounts, we capitalize the payments as they are made as an intangible asset and amortize the total contract value over the estimated useful life. For contracts in which we have perpetual rights to the data and expect to utilize the data beyond the life of the contract, the total contract value is amortized on a straight-line basis over the life of the contract plus two years, which is equivalent to the estimated useful life of the asset. For contracts in which we either do not have access to the data beyond the contractual term or do not expect to utilize the data beyond the life of the contract, the total contract value is amortized on a straight-line basis over the term of the contract. We evaluate data content contracts for potential capitalization at the inception of the arrangement as well as each time periodic payments to third parties are made. The amortization period for the capitalized purchased content is based on our best estimate of the useful life of the asset, which ranges from approximately five to nine years. The capitalized purchased data content is amortized on a straight-line basis as the pattern of delivery of the economic benefits of the data cannot reliably be determined because we do not have the ability to reliably predict future traffic to our mobile applications and websites. Under certain other data agreements, the underlying data is obtained on a subscription basis with consistent monthly or quarterly recurring payment terms over the contractual period. Upon the expiration of such arrangements, we no longer have the right to access the related data, and therefore, the costs incurred under such contracts are not capitalized and are expensed as payments are made. We would immediately lose rights to data under these arrangements if we were to cancel the subscription and/or cease making payments under the subscription arrangements. *Letters of Credit* As of June 30, 2017, we have outstanding letters of credit of approximately $5.2 million, $1.8 million, $1.5 million and $1.1 million, respectively, which secure our lease obligations in connection with the operating leases of our San Francisco, Seattle, New York and Denver office spaces. Certain of the letters of credit are unsecured obligations, and certain of the letters of credit are secured by certificates of deposit held as collateral in our name at a financial institution. The secured letters of credit are classified as restricted cash in our consolidated balance sheet. *Surety Bonds* In the course of business, we are required to provide financial commitments in the form of surety bonds to third parties as a guarantee of our performance on and our compliance with certain obligations. If we were to fail to perform or comply with these obligations, any draws upon surety bonds issued on our behalf would then trigger our payment obligation to the surety bond issuer. We have outstanding surety bonds issued for our benefit of approximately $2.2 million and $3.6 million as of June 30, 2017 and December 31, 2016, respectively. *Legal Proceedings* We are involved in a number of legal proceedings concerning matters arising in connection with the conduct of our business activities, some of which are at preliminary stages and some of which seek an indeterminate amount of damages. We regularly evaluate the status of legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made if accruals are not appropriate. For certain cases described below, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damages sought are, in our view, unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories presented. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material effect on our financial position, results of operations or cash flow. In March 2015, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) notified the Company that it was initiating a compliance review to determine the Company’s compliance with one or more federal labor laws enforced by the DOL. As discussed below, on May 5, 2016, Zillow, Inc. agreed to settle a class action lawsuit which alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. The settlement of the class action lawsuit, which has not yet been finally approved by the court, was contingent on Zillow, Inc.’s complete resolution of the DOL compliance review. On November 28, 2016, Zillow, Inc. entered into a settlement agreement with the DOL that resolved the DOL’s compliance review. Under the terms of the settlement agreement, Zillow, Inc. agreed that it will make the voluntary payments contemplated by the class action lawsuit settlement and establish and maintain certain procedures to promote future compliance with the Fair Labor Standards Act. The settlement agreement with the DOL does not require Zillow, Inc. to make any payments which are in addition to those contemplated by the class action lawsuit settlement. Zillow, Inc. has not admitted liability with respect to either the DOL settlement or the class action lawsuit settlement. In November 2014, a former employee filed a putative class action lawsuit against us in the United States District Court, Central District of California, with the caption Ian Freeman v. Zillow, Inc. The complaint alleged, among other things, claims that we failed to provide meal and rest breaks, failed to pay overtime, and failed to keep accurate records of employees’ hours worked. After the court granted our two motions to dismiss certain claims, plaintiff filed a second amended complaint that includes claims under the Fair Labor Standards Act. On November 20, 2015, plaintiff filed a motion for class certification. On February 26, 2016, the court granted the plaintiff’s motion for class certification. On May 5, 2016, the parties agreed to settle the lawsuit, which was later memorialized in a settlement agreement executed by the parties on December 2, 2016, with payment by Zillow, Inc. of up to $6.0 million. On June 9, 2016, the Ninth Circuit Court of Appeals granted our petition for permission to appeal the order granting class certification. The settlement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. On April 10, 2017, the parties executed an amendment to the settlement agreement providing that the settlement class includes all current and former inside sales consultants employed by Zillow, Inc. in (i) its California offices from November 19, 2010 through the date on which the court granted preliminary approval and (ii) its Washington offices from March 1, 2013 through the date on which the court granted preliminary approval. On May 26, 2017, the court granted preliminary approval of the settlement of the class action lawsuit. We expect to make the voluntary payments contemplated by the settlement agreement during 2017. We have recorded a liability related to the settlement for $6.0 million as of June 30, 2017 and December 31, 2016. We do not believe there is a reasonable possibility that a material loss in excess of amounts accrued may be incurred. In July 2015, VHT, Inc. (“VHT”) filed a complaint against us in the U.S. District Court for the Western District of Washington alleging copyright infringement of VHT’s images on the Zillow Digs site. In January 2016, VHT filed an amended complaint alleging copyright infringement of VHT’s images on the Zillow Digs site as well as the Zillow listing site. In December 2016, the court granted a motion for partial summary judgment that dismissed VHT’s claims with respect to the Zillow listing site. A federal jury trial began on January 23, 2017, and on February 9, 2017, the jury returned a verdict finding that the Company had infringed VHT’s copyrights in images displayed or saved to the Digs site. The jury awarded VHT $79,875 in actual damages and approximately $8.2 million in statutory damages. In March 2017, the Company filed motions in the district court seeking judgment for the Company on certain claims that are the subject of the verdict, and for a new trial on others. On June 20, 2017, the judge ruled and granted in part our motions, finding that VHT failed to present sufficient evidence to prove direct copyright infringement for a portion of the images, reducing the total damages to approximately $4.1 million. On July 18, 2017, the Company filed a Notice of Appeal with the Ninth Circuit Court of Appeals from the final judgment and prior rulings entered by the district court. We did not record an accrual related to this complaint as of December 31, 2016, as we did not believe a loss was probable. We have recorded an estimated liability for approximately $4.1 million as of June 30, 2017, which is classified in general and administrative expenses in our condensed consolidated statements of operations for the three and six month periods ended June 30, 2017. We do not believe there is a reasonable possibility that a material loss in excess of amounts accrued may be incurred. In April 2017, we received a Civil Investigative Demand from the Consumer Financial Protection Bureau (“CFPB”) requesting information related to our March 2017 response to the CFPB’s February 2017 Notice and Opportunity to Respond and Advise (“NORA”) letter. The NORA letter notified us that the CFPB’s Office of Enforcement was considering whether to recommend that the CFPB take legal action against us, alleging that we violated Section 8 of the Real Estate Settlement Procedures Act (“RESPA”) and Section 1036 of the Consumer Financial Protection Act (“CFPA”). This notice stemmed from an inquiry that commenced in 2015 when we received and responded to an initial Civil Investigative Demand from the CFPB. We continue to cooperate with the CFPB in connection with requests for information. Based on correspondence from the CFPB in August 2017, we understand that it has concluded its investigation. The CFPB has invited us to discuss a possible settlement and indicated that it intends to pursue further action if those discussions do not result in a settlement. We continue to believe that our acts and practices are lawful and that our co-marketing program allows lenders and agents to comply with RESPA, and we will vigorously defend against any allegations to the contrary. Should the CFPB commence an action against us, it may seek restitution, disgorgement, civil monetary penalties, injunctive relief or other corrective action. We cannot provide assurance that the CFPB will not commence a legal action against us in this matter, nor are we able to predict the likely outcome of any such action. We have not recorded an accrual related to this matter as of June 30, 2017 or December 31, 2016. There is a reasonable possibility that a loss may be incurred; however, the possible loss or range of loss is not estimable. In addition to the matters discussed above, from time to time, we are involved in litigation and claims that arise in the ordinary course of business. Although we cannot be certain of the outcome of any such litigation or claims, nor the amount of damages and exposure that we could incur, we currently believe that the final disposition of such matters will not have a material effect on our business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. *Indemnifications* In the ordinary course of business, we enter into contractual arrangements under which we agree to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements and out of intellectual property infringement claims made by third parties. In addition, we have agreements that indemnify certain issuers of surety bonds against losses that they may incur as a result of executing surety bonds on our behalf. For our indemnification arrangements, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments. In addition, we have indemnification agreements with certain of our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations may vary.

Related Party Transactions	6 Months Ended
Related Party Transactions	Jun. 30, 2017
Related Party Transactions [Abstract]
Related Party Transactions	Note 15. Related Party Transactions In February 2016, we paid a total of approximately $0.2 million and $0.2 million, respectively, to Mr. Lloyd Frink, our Vice Chairman and President, and Mr. Richard Barton, our Executive Chairman, for reimbursement of costs incurred by Mr. Frink and Mr. Barton for use of private planes by certain of the Company’s employees and Mr. Frink and Mr. Barton for business travel in prior years. In April 2016, we paid approximately $0.1 million for a tax “gross-up” payment to Mr. Barton to cover the imputed income associated with one of his Hart-Scott-Rodino Antitrust Improvements Act of 1976 filings, which filing was required due to Mr. Barton’s ownership of Zillow, Inc.’s common stock.

Self-Insurance	6 Months Ended
Self-Insurance	Jun. 30, 2017
Accounting Policies [Abstract]
Self-Insurance	Note 16. Self-Insurance Beginning on January 1, 2016, we are self-insured for medical benefits for all qualifying Zillow Group employees. The medical plan carries a stop-loss policy which will protect when cumulative medical claims exceed 125% of expected claims for the plan year with a limit of $1.0 million and from individual claims during the plan year exceeding $150,000. We record estimates of the total costs of claims incurred based on an analysis of historical data and independent estimates. Our liability for self-insured medical claims is included within accrued compensation and benefits in our consolidated balance sheet and was $2.0 million as of June 30, 2017 and $1.7 million as of December 31, 2016.

Employee Benefit Plan	6 Months Ended
Employee Benefit Plan	Jun. 30, 2017
Postemployment Benefits [Abstract]
Employee Benefit Plan	Note 17. Employee Benefit Plan Effective January 1, 2016, we have a single defined contribution 401(k) retirement plan covering Zillow Group employees who have met certain eligibility requirements (“the Zillow Group 401(k) Plan”). Eligible employees may contribute pretax compensation up to a maximum amount allowable under the Internal Revenue Service limitations. Employee contributions and earnings thereon vest immediately. We currently match up to 4% of employee contributions under the Zillow Group 401(k) Plan. The total expense related to the Zillow Group 401(k) Plan for the three months ended June 30, 2017 and 2016 was $3.0 million and $2.4 million, respectively. The total expense related to the Zillow Group 401(k) Plan for the six months ended June 30, 2017 and 2016 was $5.9 million and $4.8 million, respectively.

Segment Information and Revenue

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Information and Revenue

Note 18. Segment Information and Revenue

We have one operating and reportable segment which has been identified based on how 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 on an entity-wide basis. There are no segment managers who are held accountable for operations, operating results or plans for levels or components.

The chief executive officer reviews information about revenue categories, including marketplace revenue and display revenue. The following table presents our revenue categories during the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Marketplace revenue:
Premier Agent	$	189,725	$	147,106	$	365,026	$	281,635
Other real estate		37,894		26,070		72,649		44,048
Mortgages		20,936		18,392		41,206		34,846

Total Marketplace revenue		248,555		191,568		478,881		360,529
Display revenue		18,295		16,835		33,744		33,856

Total revenue	$	266,850	$	208,403	$	512,625	$	394,385

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements include Zillow Group, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes included in Zillow Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 7, 2017. The condensed consolidated balance sheet as of December 31, 2016, included herein, was derived from the audited financial statements of Zillow Group, Inc. as of that date.

The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2017, our results of operations and comprehensive loss for the three and six month periods ended June 30, 2017 and 2016, and our cash flows for the six month periods ended June 30, 2017 and 2016. The results of the three and six month periods ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any interim period or for any other future year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, website development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and goodwill, among others. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements will be affected.

Reclassifications

Reclassifications

Certain immaterial reclassifications have been made in the condensed consolidated statement of operations to conform data for prior periods to the current format. The Company reclassified certain technology-related costs and expenses between expense categories. Amounts previously reported in the condensed consolidated statement of operations for the three months ended June 30, 2016 were revised herein as shown below (in thousands):


	As Reported		As Revised		Effect of Change
Cost of revenue (exclusive of amortization)	$	17,220	$	16,745	$	(475	)
Sales and marketing		99,256		99,629		373
Technology and development		67,421		63,396		(4,025	)
General and administrative		179,632		183,759		4,127

Amounts previously reported in the condensed consolidated statement of operations for the six months ended June 30, 2016 were revised herein as shown below (in thousands):


	As Reported		As Revised		Effect of Change
Cost of revenue (exclusive of amortization)	$	33,672	$	32,948	$	(724	)
Sales and marketing		198,016		198,730		714
Technology and development		131,838		123,767		(8,071	)
General and administrative		233,469		241,550		8,081

Certain immaterial reclassifications have been made in the statement of cash flows to conform data for prior periods to the current format.

Recently Issued Accounting Standards Not Yet Adopted

Recently Issued Accounting Standards Not Yet Adopted

In March 2017, the Financial Accounting Standards Board (“FASB”) issued guidance related to the premium amortization on purchased callable debt securities. This guidance shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. This guidance must be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We expect to adopt this guidance on January 1, 2019. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In December 2016, the FASB issued guidance to narrow the definition of a business. This guidance assists entities with evaluating when a set of transferred assets and activities is a business. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. This guidance must be applied prospectively to transactions occurring within the period of adoption. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows.

In November 2016, the FASB issued guidance on the classification and presentation of changes in restricted cash on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. The adoption of this guidance requires a retrospective transition method to each period presented. We expect to adopt this guidance on January 1, 2018. We do not expect the adoption of this guidance to have a material impact on our statements of cash flows.

In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. This guidance requires the use of an expected loss impairment model for instruments measured at amortized cost. For available-for-sale debt securities, an entity is required to recognize credit losses through an allowance for credit losses rather than as a write-down. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. The adoption of this guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We expect to adopt this guidance on January 1, 2020. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In February 2016, the FASB issued guidance on leases. This guidance requires the recognition of a right-of-use asset and lease liability on the balance sheet for all leases. This guidance also requires more detailed disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and early adoption is permitted. We expect to adopt this guidance on January 1, 2019. We anticipate this guidance will have a material impact on our financial position, primarily due to our office space operating leases, as we will be required to recognize lease assets and lease liabilities on our consolidated balance sheet. We continue to assess the potential impacts of this guidance, including the impact the adoption of this guidance will have on our results of operations and cash flows, if any.

In January 2016, the FASB issued guidance on the recognition and measurement of financial instruments. This guidance requires equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. This guidance also requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, early adoption is permitted, and the guidance must be applied prospectively to equity investments that exist as of the adoption date. We expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.

In May 2014, the FASB issued guidance on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. We currently plan to adopt this guidance using the modified retrospective transition approach, which would result in an adjustment to accumulated deficit for the cumulative effect, if any, of applying this guidance to contracts in process as of the adoption date. Under this approach, we would not restate the prior financial statements presented. This guidance requires us to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018 as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any. While we continue to assess all potential impacts of this new guidance, we currently expect a significant impact related to the accounting for the cost of sales commissions. Under this new guidance, the cost of sales commissions will be recorded as an asset and recognized as an operating expense over the period that we expect to recover the costs. Currently we expense the cost of sales commissions as incurred. We continue to assess the impact the adoption of this guidance will have on our financial position, results of operations and cash flows.

Fair Value

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

•

Level 1—Quoted prices in active markets for identical assets or liabilities.

•

Level 2—Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.

•

Level 3—Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash equivalents — Cash equivalents are comprised of highly liquid investments, including money market funds, U.S. government agency securities, commercial paper and certificates of deposit, with original maturities of three months or less. The fair value measurement of money market funds is based on quoted market prices in active markets, and the fair value measurement of U.S. government agency securities, commercial paper and certificates of deposit is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Investments — Our investments consist of fixed income securities, which include U.S. and foreign government agency securities, corporate notes and bonds, municipal securities, commercial paper and certificates of deposit. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period. In the calculation of basic net loss per share, undistributed earnings are allocated assuming all earnings during the period were distributed.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares (including Class A common stock, Class B common stock and Class C capital stock) outstanding during the period and potentially dilutive Class A common stock and Class C capital stock equivalents, except in cases where the effect of the Class A common stock or Class C capital stock equivalent would be antidilutive. Potential Class A common stock and Class C capital stock equivalents consist of Class A common stock and Class C capital stock issuable upon exercise of stock options and Class A common stock and Class C capital stock underlying unvested restricted stock awards and unvested restricted stock units using the treasury stock method. Potential Class A common stock equivalents also include Class A common stock issuable upon conversion of the 2020 Notes using the if-converted method.

Segment Information and Revenue

We have one operating and reportable segment which has been identified based on how 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 on an entity-wide basis. There are no segment managers who are held accountable for operations, operating results or plans for levels or components.

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Schedule of Reclassifications

The Company reclassified certain technology-related costs and expenses between expense categories. Amounts previously reported in the condensed consolidated statement of operations for the three months ended June 30, 2016 were revised herein as shown below (in thousands):


	As Reported		As Revised		Effect of Change
Cost of revenue (exclusive of amortization)	$	17,220	$	16,745	$	(475	)
Sales and marketing		99,256		99,629		373
Technology and development		67,421		63,396		(4,025	)
General and administrative		179,632		183,759		4,127

Amounts previously reported in the condensed consolidated statement of operations for the six months ended June 30, 2016 were revised herein as shown below (in thousands):


	As Reported		As Revised		Effect of Change
Cost of revenue (exclusive of amortization)	$	33,672	$	32,948	$	(724	)
Sales and marketing		198,016		198,730		714
Technology and development		131,838		123,767		(8,071	)
General and administrative		233,469		241,550		8,081

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Summary of Balances of Cash Equivalents and Investments

The following tables present the balances of assets measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):


	June 30, 2017
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	199,054	$	199,054	$	—
U.S. government agency securities		10,981		—		10,981
Commercial paper		8,987		—		8,987
Short-term investments:
U.S. government agency securities		230,211		—		230,211
Corporate notes and bonds		38,004		—		38,004
Commercial paper		28,133		—		28,133
Municipal securities		12,766		—		12,766
Certificates of deposit		7,359		—		7,359
Foreign government securities		5,990		—		5,990
Restricted cash		1,053		—		1,053

Total	$	542,538	$	199,054	$	343,484


	December 31, 2016
	Total		Level 1		Level 2
Cash equivalents:
Money market funds	$	166,527	$	166,527	$	—
Certificates of deposit		460		—		460
Short-term investments:
U.S. government agency securities		162,312		—		162,312
Corporate notes and bonds		61,483		—		61,483
Commercial paper		14,952		—		14,952
Municipal securities		11,912		—		11,912
Certificates of deposit		6,226		—		6,226
Foreign government securities		5,985		—		5,985
Restricted cash		1,053		—		1,053

Total	$	430,910	$	166,527	$	264,383

Cash, Cash Equivalents, Investments and Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2017

Text Block [Abstract]

Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Market Value of Cash and Cash Equivalents, Available-for-Sale Investments and Restricted Cash

The following tables present the amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash and cash equivalents, available-for-sale investments and restricted cash as of the dates presented (in thousands):


	June 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	57,443	$	—	$	—		$	57,443
Cash equivalents:
Money market funds		199,054		—		—			199,054
U.S. government agency securities		10,981		—		—			10,981
Commercial paper		8,987		—		—			8,987
Short-term investments:
U.S. government agency securities		230,554		3		(346	)		230,211
Corporate notes and bonds		38,041		3		(40	)		38,004
Commercial paper		28,133		—		—			28,133
Municipal securities		12,778		1		(13	)		12,766
Certificates of deposit		7,359		—		—			7,359
Foreign government securities		5,997		—		(7	)		5,990
Restricted cash		1,053		—		—			1,053

Total	$	600,380	$	7	$	(406	)	$	599,981


	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Market Value
Cash	$	76,605	$	—	$	—		$	76,605
Cash equivalents:
Money market funds		166,527		—		—			166,527
Certificates of deposit		460		—		—			460
Short-term investments:
U.S. government agency securities		162,438		31		(157	)		162,312
Corporate notes and bonds		61,530		3		(50	)		61,483
Commercial paper		14,952		—		—			14,952
Municipal securities		11,925		—		(13	)		11,912
Certificates of deposit		6,226		—		—			6,226
Foreign government securities		5,995		—		(10	)		5,985
Restricted cash		1,053		—		—			1,053

Total	$	507,711	$	34	$	(230	)	$	507,515

Available-for-Sale Investments by Contractual Maturity

The following table presents available-for-sale investments by contractual maturity date as of June 30, 2017 (in thousands):


	Amortized Cost		Estimated Fair Market Value
Due in one year or less	$	205,975	$	205,744
Due after one year through two years		116,887		116,719

Total	$	322,862	$	322,463

Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Detail of Property and Equipment

The following table presents the detail of property and equipment as of the dates presented (in thousands):


	June 30, 2017			December 31, 2016
Website development costs	$	114,292		$	102,130
Computer equipment		29,003			28,175
Leasehold improvements		41,963			37,923
Construction-in-progress		22,460			19,470
Office equipment, furniture and fixtures		22,405			19,254

Property and equipment		230,123			206,952
Less: accumulated amortization and depreciation		(127,119	)		(108,664	)

Property and equipment, net	$	103,004		$	98,288

Goodwill (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Change in Goodwill

The following table presents the change in goodwill from December 31, 2016 through June 30, 2017 (in thousands):


Balance as of December 31, 2016	$	1,923,480
Goodwill recorded in connection with the acquisition of HREO		3,970

Balance as of June 30, 2017	$	1,927,450

Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

The following tables present the detail of intangible assets subject to amortization as of the dates presented (in thousands):


	June 30, 2017
	Cost		Accumulated Amortization			Net
Purchased content	$	32,760	$	(15,482	)	$	17,278
Software		14,143		(6,583	)		7,560
Customer relationships		103,900		(38,706	)		65,194
Developed technology		111,480		(46,069	)		65,411
Trade names and trademarks		4,900		(3,414	)		1,486
Advertising relationships		9,000		(7,098	)		1,902
MLS home data feeds		1,100		(868	)		232
Intangibles-in-progress		4,450		—			4,450

Total	$	281,733	$	(118,220	)	$	163,513


	December 31, 2016
	Cost		Accumulated Amortization			Net
Purchased content	$	35,205	$	(15,508	)	$	19,697
Software		9,712		(4,773	)		4,939
Customer relationships		103,200		(30,952	)		72,248
Developed technology		110,080		(36,341	)		73,739
Trade names and trademarks		4,900		(2,877	)		2,023
Advertising relationships		9,000		(5,598	)		3,402
MLS home data feeds		1,100		(684	)		416

Total	$	273,197	$	(96,733	)	$	176,464

Convertible Senior Notes (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Outstanding Principal Amount and Carrying Value

The following table presents the outstanding principal amount and carrying value of the 2021 Notes as of the dates presented (in thousands):


	Outstanding Principal Amount		Unamortized Debt Discount and Debt Issuance Costs			Carrying Value
June 30, 2017	$	460,000	$	(93,878	)	$	366,122
December 31, 2016		460,000		(102,733	)		357,267

Share-Based Awards (Tables)

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Option Award

The following table summarizes option award activity for the six months ended June 30, 2017:


	Number of Shares Subject to Existing Options			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2017		29,628,443		$	24.11		5.97	$	376,004
Granted		4,026,726			35.46
Exercised		(3,879,814	)		16.05
Forfeited or cancelled		(840,780	)		32.98

Outstanding at June 30, 2017		28,934,575			26.52		6.00		650,099
Vested and exercisable at June 30, 2017		13,849,724			23.21		4.47		356,770

Fair Value of Options Granted, Estimated at Date of Grant Using Black Scholes Merton Option Pricing Model

The fair value of options granted is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends and with the following assumptions for the periods presented:


	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Expected volatility	47%	51%	47% - 49%	51%
Expected dividend yield	—	—	—	—
Risk-free interest rate	1.67%	1.06%	1.67%-1.84%	1.05%-1.12%
Weighted-average expected life	4.25 years	4 years	4.25-4.75 years	3.75-4.25 years
Weighted-average fair value of options granted	$17.56	$11.11	$14.30	$8.92

Summary of Restricted Stock Units Activity

The following table summarizes activity for restricted stock units for the six months ended June 30, 2017:


	Restricted Stock Units			Weighted- Average Grant- Date Fair Value
Unvested outstanding at January 1, 2017		3,780,577		$	28.54
Granted		1,872,628			36.09
Vested		(671,101	)		28.09
Forfeited or cancelled		(547,209	)		31.16

Unvested outstanding at June 30, 2017		4,434,895			31.47

Effects of Share Based Compensation in Consolidated Statements of Operations

The following table presents the effects of share-based compensation in our condensed consolidated statements of operations during the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Cost of revenue	$	1,025	$	982	$	1,928	$	1,768
Sales and marketing		6,250		6,395		11,780		11,598
Technology and development		10,400		8,366		18,891		15,125
General and administrative		11,518		12,573		22,989		25,376

Total	$	29,193	$	28,316	$	55,588	$	53,867

Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Antidilutive Securities Excluded from Computation of Earnings Per Share

For the periods presented, the following Class A common stock and Class C capital stock equivalents were excluded from the calculations of diluted net loss per share because their effect would have been antidilutive (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Weighted-average Class A common stock and Class C capital stock option awards and stock appreciation rights outstanding		29,921		19,407		29,214		14,164
Weighted-average Class A common stock and Class C capital stock unvested restricted stock awards and restricted stock units outstanding		4,654		4,106		4,320		3,412
Class A common stock issuable upon conversion of the 2020 Notes		427		9,535		427		9,535

Total Class A common stock and Class C capital stock equivalents		35,002		33,048		33,961		27,111

Segment Information and Revenue (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Revenue Categories

The chief executive officer reviews information about revenue categories, including marketplace revenue and display revenue. The following table presents our revenue categories during the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Marketplace revenue:
Premier Agent	$	189,725	$	147,106	$	365,026	$	281,635
Other real estate		37,894		26,070		72,649		44,048
Mortgages		20,936		18,392		41,206		34,846

Total Marketplace revenue		248,555		191,568		478,881		360,529
Display revenue		18,295		16,835		33,744		33,856

Total revenue	$	266,850	$	208,403	$	512,625	$	394,385

Schedule of Reclassifications (Detail) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2017

Jun. 30, 2016

Jun. 30, 2017

Jun. 30, 2016

Error Corrections and Prior Period Adjustments Restatement [Line Items]

^[1]

$ 20,260

$ 16,745

$ 40,492

$ 32,948

131,218

99,629

237,158

198,730

78,541

63,396

151,409

123,767

Error Corrections and Prior Period Adjustments Restatement [Line Items]

$ 53,346

183,759

$ 98,812

241,550

As Reported

17,220

33,672

99,256

198,016

67,421

131,838

Error Corrections and Prior Period Adjustments Restatement [Line Items]

179,632

233,469

Effect of Change

(475)

(724)

373

714

(4,025)

(8,071)