Zillow Group
Investor Presentation
February 2022
Legal Disclosure
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 about the growth opportunities,
addressable market, future financial performance, 2025 financial targets and results of Zillow Group, Inc. (the “Company” or “Zillow”) that involve risks and uncertainties. The Company’s actual results may differ
materially from those anticipated in these forward-looking statements due to actions taken by Zillow as well as from risks and uncertainties beyond Zillow’s control. Differences in Zillow’s actual results from
those described in these forward-looking statements may result from actions taken by Zillow as well as from risks and uncertainties beyond Zillow’s control. Factors that may contribute to such differences
include, but are not limited to, disruptions in operations (including in our ability to complete the disposition of homes in inventory), and relationships with customers, suppliers, vendors, agents, broker partners,
contractors, employees, lenders and customers given our decision to wind down iBuying operations; unanticipated developments that may prevent, delay or increase the costs associated with our wind down
activities; our access to and the availability of financing on terms acceptable to us to finance the purchase of homes through Zillow Offers during the wind down of iBuying operations; the impact of the
COVID-19 pandemic (including variants) and any associated economic downturn on Zillow’s future financial position, operations and financial performance; the magnitude, duration and severity of the
COVID-19 pandemic (including variants); the current and future health and stability of the economy and residential housing market, including any extended slowdown in the real estate markets as a result of
COVID-19; Zillow’s ability to execute on strategy; Zillow’s ability to maintain and effectively manage an adequate rate of growth; Zillow’s ability to innovate and provide products and services that are attractive to
its users and advertisers; Zillow’s investment of resources to pursue strategies that may not prove effective; Zillow’s ability to compete successfully against existing or future competitors; the impact of pending
legal proceedings described in Zillow’s filings with the Securities and Exchange Commission (“SEC”); Zillow’s ability to successfully integrate and realize the benefits of its past or future strategic acquisitions or
investments; Zillow’s ability to maintain or establish relationships with listings and data providers; the reliable performance of Zillow’s network infrastructure and content delivery processes; Zillow’s ability to
obtain or maintain licenses and permits to support our current and future businesses; actual or anticipated changes to our products and services; the impact of natural disasters and other catastrophic events;
Zillow’s ability to protect the information and privacy of customers and other third parties; and Zillow’s ability to protect its intellectual property. The foregoing list of risks and uncertainties is illustrative but not
exhaustive. For more information about potential factors that could affect Zillow’s business, financial results and Zillow’s ability to achieve the 2025 financial targets, please review the “Risk Factors” described in
Zillow’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC and in Zillow’s other filings with the SEC. These documents are available in the Investor Relations section of the
Company’s website at https://investors.zillowgroup.com. The forward-looking statements made in this presentation are based on information available and assumptions as of February 10, 2022. Except as may
be required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events.
This presentation includes certain non-GAAP financial measures, including IMT segment Adjusted EBITDA and Adjusted EBITDA margin, which are key metrics used by our management and board of directors
to measure operating performance and trends, and to prepare and approve our annual budget. You should not consider these metrics in isolation or as a substitute for analysis of our results as reported under
GAAP. This presentation also contains estimates and other statistical data made by independent parties and by Zillow relating to market size, the housing market, connections, engagement, transactions,
growth and other data about Zillow's industry and performance. These data involve a number of assumptions and limitations, which may significantly impact their accuracy, and you are cautioned not to give
undue weight to such estimates. Projections, assumptions and estimates of future performance are necessarily subject to a high degree of uncertainty and risk. Reconciliation tables and other important
information about the Company’s financial results and operating metrics used herein are included in the Appendix of this presentation.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only.
2
Zillow Investment Overview
Our Mission: Give people the power to unlock life’s next chapter
• Big Customer Problem: Difficult and expensive to move — people desire a simpler way
• Our Solution: The ‘housing super app’ — connects customers with partners and integrated digital solutions
• Large and Growing Market: Housing is a growth industry with ~$300 billion
1
in transaction fees
• Significant Growth Opportunity: Integrating services to meet high-intent movers' needs so they choose to transact with us and our partners —
driving customer transactions and revenue per customer transaction
2
• 2025 Financial Targets: $5 billion revenue and 45% Adjusted EBITDA margin
• Strong Financial Foundation: Continued revenue growth, high margins, flexible balance sheet and positive cash flow
• Seasoned Management Team: Experienced team with long history of focus on shareholder value creation
• Well-Positioned Brand with Industry-Leading Technology: Leading online real estate audience
3
and strong engagement with high-intent
movers
4
and partner networks
1. $300 billion is inclusive of Zillow Group’s estimate of ~$100bn in referral fees derived from participating in real estate transactions with our partners per the 2021 National Association of REALTORS® U.S. Economic Outlook, Title and Escrow premiums of ~$26bn per the American Land Title
Association and Doma estimates, Mortgage Origination estimated revenue of $155 bn per the Mortgage Bankers Association, and rentals estimated industry revenue of $16bn per Fortune Business Insights and Zillow Group internal data.
2. Please see the appendix slides for important information about these operating metrics.
3. Comscore data as of January 2022.
4. Zillow Group internal data.
3
Zillow connects customers with partners and integrated solutions
Zillow – The ‘Housing Super App’
4
#1 U.S. Online Residential Real Estate App by Wide Margin
Our leading ‘daily active user’ position will help us evolve from
#1 Online Residential Real Estate App to the ‘Housing Super App’
Daily Active App Users Among Real Estate Marketplaces
Daily Active App Users
Zillow is 3x
our nearest
competitor
63.0%
Zillow
20.2%
Realtor.com
13.4%
Redfin
Apartments.com 1.29%
Rocket 1.13%
CoStar Homesnap 0.92%
CoStar Homes.com 0.05%
Zillow Realtor.com Redfin
Source: App Annie data as of February 2022.
5
Housing is a Growth Industry
1. Existing Home Transaction Value: is calculated as median sales price of existing residential homes sold multiplied by number of existing homes sold annualized and seasonally adjusted as reported by the National Association of REALTORS® .
2. Average Industry Commission: is calculated as median sales price of existing residential homes sold reported by the National Association of REALTORS® multiplied by historical gross commission rates as reported by Real Trends.
Existing Home Transaction Value
1
Historical Growth
Average Industry Commission
2
~4% Avg. Annual Growth
9% Avg. Annual Growth
6
Current connections
✓ ~25% of actual U.S. home buyers reached out to
connect with Zillow in 2021
3
Strong Engagement and Significant Transaction Opportunity
~25% of actual U.S. home buyers reached out to connect with Zillow in 2021
Current customer transactions
✓ ~5% of buyer customer transactions in 2021
5
✓ ~3% of all buyer and seller transactions in 2021
1. 12.2M represents both buy- and sell-side transactions for the estimated 6.1M home transactions in 2021 per National
Association of REALTORS®.
2. Internal estimate derived from the annual number of home sales in 2021 per National Association of REALTORS® and
Zillow Group internal data and estimates.
3. Estimated from Zillow Group internal data.
4. Please see the appendix slides for important information about this operating metric.
5. Represents the estimated % of buy-side transactions in 2021 that are Customer Transactions. Please see the appendix
slides for the definition of “Customer Transactions.”
6.1M
Buyside customer transactions
1
~4.1M
Actual buyers shopped
using Zillow
2
~1.4M
Actual buyers sought
a Zillow Premier Agent
3
12.2M
Total customer transactions
for 6.1M existing home sales
1
~360K
Customer
Transactions
4
Current engagement
✓ ~67% of U.S. home buyers use Zillow today
2
7
1. Estimated from Zillow Group internal data.
Keys to customer transaction and revenue per customer transaction growth moving forward:
✓ Touring — make it easier for high-intent movers to connect with homes and our partners
● Fulfilling less than 1/3 of tours requested today
1
● Tours convert over 3x our other leads
1
✓ Financing – prepare customers to be transaction-ready with financing in place early in home buying journey
● Pre-qualifications
● Pre-approvals
✓ Expand seller solutions – continue to innovate on novel seller solutions
● Estimate ~50% of Zillow’s buyer connections are also sellers
1
● Many buyer customers already list homes for sale with Premier Agents today
✓ Enhance partner network – work with the best agents in real estate
● High customer service ratings
● Proven ability to close transactions
● Desire to grow with Zillow and our expanded offerings
✓ Integrate services – bring services together to drive more transactions and more revenue per customer transaction
● Zillow 360 solutions
Growth Opportunity is Meaningful
Improvements to customer experience drive value throughout our
funnel and result in more transactions and revenue per transaction
8
Zillow ‘Housing Super App’ Expands Adjacent Services and
Creates New Seller Services
Zillow captures only a small portion (~$4,100
1
) of transaction spend today, largely linked to buyer referrals
$3,000
Buyer Referrals
2
$9,000
Mortgages
3
$3,000
Seller Services
2
$2,000
Closing Services
4
Revenue per customer
transaction opportunities
1. Please see the appendix slides for important information about this operating metric.
2. Calculated as median home price of existing residential homes sold of $366,400 reported by the National Association of REALTORS® multiplied by Zillow Group’s estimated referral fee.
3. Calculated as total mortgage origination revenue generated by Zillow Home Loans in 2021 divided by the number of loans originated by Zillow Home Loans in 2021 per internal Zillow Group data.
4. Calculated as total Zillow Closing Services revenue in 2021 divided by the total number of title transactions in 2021 per internal Zillow Group data.
9
Significant Long-Term Growth Opportunity
2025 financial targets of $5 billion revenue and 45% Adjusted EBITDA margin
Model
Math
Opportunity
2021
(excluding
Zillow Offers)
Path To
2025
Targets*
Assumptions and Drivers
+
Industry Customer Transactions
(Buyers & Sellers)
12.2 Million 12.2 Million No Assumed Growth for Industry Customer Transactions
x Customer Transaction Share 3% Share 6% Share
Growth Driven by Touring, Financing, Expanded Seller
Services
= # Customer Transactions ~360K
1
730K
x Revenue per Customer Transaction ~$4,100
1
~$5,200
Zillow Home Loans, Zillow Closing Services, Zillow 360
Bundled Services
Assumes 3% Home Price Appreciation per Year
= Total Customer Transaction Revenue $1.5 Billion
1
$3.8 Billion
+ Other Services Revenue $609 Million $1.2 Billion
Rentals, New Construction, StreetEasy, Mortgage
Marketplace, Display, Real Estate Industry Services
= Zillow Revenue $2.1 Billion
2
$5 Billion Implies 24% Annualized Growth
Zillow Adjusted EBITDA Margin ~39%
3
45%
4
$2.25 Billion
Scale Margins and Invest in Opportunities to Drive Growth
*The slide is provided for illustrative purposes to demonstrate one path towards achieving Zillow Group’s 2025 financial targets. For purposes of this model, we are assuming no growth in existing home sales, a 3% increase in customer transaction share, and a 3% increase in home price
appreciation per year. Please see the Legal Disclosure slide for additional information about our forward-looking statements.
1. Please see the appendix slides for important information about these operating metrics.
2. Excludes Zillow Offers FY 2021 Revenue and Zillow Offers related revenue FY 2021 for Premier Agent, Zillow Home Loans, and Zillow Closing Services, see appendix slides for important information..
3. Calculated excluding Zillow Offers FY 2021 Revenue. See appendix slides for the reconciliation to the most directly comparable GAAP measure.
4. Zillow Group has not provided a quantitative reconciliation of this forecasted Zillow Adjusted EBITDA Margin to the most directly comparable GAAP measure within this presentation because the company is unable, without making unreasonable efforts, to calculate certain reconciling items
with confidence. For more information regarding the non-GAAP financial measures discussed in this presentation, please see the appendix slides..
10
Strong Financial Foundation - Growing Revenue
Our diversified set of services have delivered strong revenue growth
Name Description
2019
Revenue
2020
Revenue
2021
Revenue
3 Year
Revenue
CAGR
Premier Agent
Introduce customers to network of agent
partners
$924M $1.0B $1.4B 16%
Rentals
Multi service platform for renters
$164M $222M $264M 25%
Mortgages
Provides financing options for customers
$101M $174M $246M 45%
Other IMT
Other marketplaces & industry services
$189M $181M $226M 10%
Closing Services
Provides closing solutions
n.a. $5M $33M n.a.
Total $1.4B $1.6B $2.2B 19%
11
Strong Financial Foundation - Growing Profits
Delivering growth and industry leading profits while investing in future opportunities
1
2018 2019 2020 2021
57% Increase Since 2018
$602M Increase Since 2018
255% Increase Since 2018
1 - Internet, Media and Technology (IMT) Segment includes Premier Agent, Rentals, and Other IMT.
See appendix slides for additional details about our presentation of IMT segment Adjusted EBITDA, including a reconciliation to the most directly comparable GAAP financial measure, which is IMT segment income (loss) before income taxes, for the relevant period.
IMT Segment Revenue IMT Segment Income Before Taxes IMT Segment Adjusted EBITDA
$1,201M
$1,277M
$1,450M
$1,886M
$(58)M
$80M
$263M
$545M
$853M
$556M
$304M
$240M
12
Strong Financial Foundation - Flexible Balance Sheet
We will be in a positive net cash position pro forma for Zillow Offers wind down
13
Our balance sheet provides the ability to invest in innovation,
capitalize on the business cycle, and exercise prudent capital management
12/31/2021
Reported
Pro Forma Zillow
Offers Wind Down
Key Information
Cash & Investments $3.1B $3.1B+ Expect wind down to be cash flow positive in aggregate
Inventory $3.9B $0 All Zillow Offers inventory will be sold in wind down
Asset Backed Debt $3.5B
- $3.4B ZO Debt
- $0.1B Mortgage Line
$0.1B
- $0 ZO Debt
- $0.1B Mortgage Line
Zillow Offers debt repaid as inventory is sold
Convertibles $1.3B $1.3B Nearest maturity is September 2024 for $608M principal amount
Net Cash $(1.7)B $1.7B Net Cash Pro Forma Balance Sheet
13
Seasoned Management Team
Leadership team has built successful consumer internet and real
estate companies and managed across economic cycles
14
Industry and Company Background
Moving is Offline, Complicated,
Time-Consuming, Stressful & Expensive
Consumers want a better tech-enabled experience
Customer journey is often non-linear,
requiring multiple vendors with no central integrator
=
Current Home
New Home
Research
Shop
Move
Select
Finance
Inspect
Appraise
Close
Separate
Service Providers
real
estate
agent
mortgage
lender
appraiser title co escrow coinspector mover
$ $ $ $ $ $
$26-$40k
Estimated Cost to Move
1
1. Estimated Cost to Move = $26k-$40K or 7-11% of the average home transaction value of $366,400 per the National Association of REALTORS® . Based on market data, the estimated cost to move includes real estate commissions of 5-6%, mortgage origination fees of 0.5-1%, title insurance
premiums of 0.5-1%, escrow fees of 1-2%, and moving costs of 0.2-0.6% for short-distance moves. It does not include other potential costs like closing concessions, inspection, appraisal, dual mortgage payments or renovations.
16
Zillow Expanding to Customer Transactional Experience
Creates Significant Addressable Market
1. Borrell Associates 2019; Total spent on online and offline residential real estate advertising.
2. Our total addressable market of $300 billion is inclusive of Zillow Group’s estimate of ~$100bn in referral fees derived from participating in real estate transactions with our partners per the 2021 National Association of REALTORS® U.S. Economic Outlook, Title and Escrow premiums of ~$26bn
per the American Land Title Association and Doma estimates, Mortgage Origination estimated revenue of $155 bn per the Mortgage Bankers Association, and rentals estimated industry revenue of $16bn per Fortune Business Insights and Zillow Group internal data.
3. Future opportunities represent the estimated total size of each listed industry.
4. The Economy of Everything by Angi, 6/8/2021.
5. Homeowners' Insurance Industry in the US - Market Research Report, IBIS World, August, 25 2021.
6. Moving Services in the US – Industry Market Research Report, IBISWorld, September 1, 2021.
7. Real Estate Appraisal in the US – Industry Market Research Report, IBISWorld, May 7, 2021.
8. $2T represents estimated aggregate transaction value of U.S. homes sold in 2021. National Association of REALTORS® 2021.
2006 2018
Advertising / Lead Gen
Search, Find, Connect
Customer Transactional Experience
Buy, Sell, Finance, Rent, Close, Move
~$300B
Residential real
estate, rentals, and
mortgages
transaction fees
2
Future Opportunities
3
:
Renovation ($595B)
4
Home Insurance ($119B)
5
Moving ($18B)
6
Appraisal ($9B)
7
Data and
AI revolution
+
Increasing
consumer
expectations
$2T+
Residential Real Estate
Market
8
2019
~$19B
1
real estate
advertising
market
17
Zillow is the Leader in Online
Residential Real Estate Today &
Uniquely Positioned to Address
Customer Needs
1. Comscore data as of January 2022.
2. Lifestory Research America's Most Trusted® Survey, published January 2022.
3. Zillow Group internal data.
4. Google Trends as of December 2021.
5. Average monthly unique users for the year ended December 31, 2021. See Zillow Group 2021 10K for information on how we calculate monthly unique users.
“Zillow”
is more searched
than “Real Estate”
on Google
4
200M+
Average monthly
unique users
5
4M
buyers used
Zillow in 2021
3
63M
tours
facilitated
3
✓ #1 brand awareness, audience and trust
1,2
✓ Uniquely integrated for-sale residential housing and rental
platform
✓ Industry leading touring platform
✓ Strong engagement with high-intent movers
3
✓ High-performing partner networks
18
15+ Years Driving Innovation to Tech-Enable The Real Estate Experience
2021 releases into production increased 4x since 2015
February:
Zillow launches with
Zestimate, attracting more
than 1 million visitors in the
first 3 days
2006 2008 2009 2012
2011
20182015
April:
Mortgage Marketplace
October:
Premier Agent Advertising
April:
Zillow iPhone app
December:
Rental listings added to
database
October:
Zillow Rentals
February:
Rent zestimate
July 20th:
Zillow goes public
(NASDAQ: Z)
April:
First Zillow Offers Market
July:
Online applications and
payments for Renters / Landlords
November:
Connections customer service
team
March:
Zillow reaches over
100 million average
monthly unique users
November:
Premier Agent app
2010
April:
Steve Jobs
demonstrates
Zillow iPad app
2019
January:
Awards $1 million to build better Zestimate
April:
Zillow Home Loans
AI-powered 3D Home Tours
Information on LGBT local legal protections
added to home listings
August:
Inaugural Sustainability Report
November:
Zillow Closing Services
December:
Flex monetization model
2020
March:
Virtual tours
October:
Moves to “distributed
workforce” model indefinitely
December:
Premier Agent segment tops $1
billion in annual revenue for 1st
time
2021
January:
Real-time MLS IDX data feeds integrated
nationwide into Zillow.com
June:
Neural Zestimate improves median error rate
August:
Zillow 360
September:
Acquires ShowingTime
2013
August:
Acquires StreetEasy
September:
Adds Schools and
commute search
February:
Acquires Trulia
November:
ZG’s modern search stack
November:
Announces Zillow Offers sunset
December:
Adds down payment assistance
information to all listings
SharePlay launch
2016
December:
Market Based
Pricing model
19
Appendix
Non-GAAP Measures
Adjusted EBITDA
The following table presents a reconciliation of IMT segment Adjusted EBITDA to the most directly comparable GAAP financial measure,
which is IMT segment income (loss) before income taxes, for each of the periods presented (in thousands, unaudited):
(1) We use income (loss) before income taxes as our profitability measure in making operating decisions and assessing the performance of our segments, therefore, net income (loss) and income tax benefit (expense) are calculated and presented only on a
consolidated basis within our financial statements and not included in the above reconciliation.
21
Zillow Adjusted EBITDA Margin (excluding Zillow Offers impact) Reconciliation
(1) We use income (loss) before income taxes as our profitability measure in making operating decisions and assessing the performance of our segments, therefore, net loss and income tax benefit (expense) are calculated and presented only on a consolidated basis within our financial statements.
(2) Certain corporate items are not directly attributable to any of our segments, including the gain (loss) on extinguishment of debt, interest income earned on our short-term investments included in other income and interest costs on our convertible senior notes included in interest expense.
(3) The calculation of Zillow Adjusted EBITDA (excluding Customer Transactions attributable to Zillow Offers) excludes costs savings that would be achieved from removing the Customer Transaction revenue attributable to Zillow Offers because the company is unable, without making unreasonable efforts, to
calculate these cost savings with confidence. Please see the following “Use of Operating Metrics” slide for the definition of and more information about Customer Transactions.
Use of Operating Metrics
23
Zillow reviews a number of operating metrics to evaluate its business, measure performance, identify trends, formulate business plans, and make strategic
decisions. This presentation includes Revenue Per Customer Transaction and Customer Transactions. Going forward, Zillow expects to use these operating metrics
on a periodic basis to evaluate and provide investors with insight into the performance of Zillow’s transaction-based lines of business, which currently include
Premier Agent, Zillow Home Loans and Zillow Closing Services. Because Zillow is winding down Zillow Offers operations, Zillow excluded revenue and transaction
contributions from Zillow Offers from the calculations of Customer Transactions and Revenue Per Customer Transaction, as further described below. We believe
these adjustments enable management and investors to better understand and monitor the health and performance of Zillow’s continuing transaction-based lines
of business while controlling for impacts from Zillow Offers.
Customer Transactions: Zillow calculates “Customer Transactions” as each unique purchase or sale transaction in which the home buyer or seller uses Zillow
Home Loans, Zillow Closing Services, and/or involves a Premier Agent that the buyer or seller connected with through Zillow, in each case excluding those
transactions which occurred in connection with a Zillow Offers transaction. In particular:
● For Premier Agent, Zillow uses an internal approximation of the number of buy- and sell-side transactions that involve a Premier Agent that the buyer or
seller connected with through Zillow. Because of the challenges associated with measuring the conversion of connections to transactions outside of our
Flex program, including reliance on the availability and quality of public records and data, these estimates may be inaccurate.
● For Zillow Closing Services, Zillow counts each unique purchase or sale transaction in which the home buyer or seller uses Zillow Closing Services.
● For Zillow Home Loans, Zillow counts each unique purchase or sale transaction in which the home buyer or seller uses Zillow Home Loans.
Revenue Per Customer Transaction: Zillow calculates “Revenue Per Customer Transaction” as Premier Agent, Zillow Home Loans and Zillow Closing Services
revenue (excluding revenue generated in connection with a Zillow Offers transaction) divided by the number of Customer Transactions during the relevant period.
