Company Quick10K Filing
Zillow
Price29.53 EPS-1
Shares207 P/E-30
MCap6,113 P/FCF-9
Net Debt-920 EBIT-208
TEV5,193 TEV/EBIT-25
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-05
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-19
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10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-11-06
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10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-02-15
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10-K 2016-12-31 Filed 2017-02-07
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10-K 2015-12-31 Filed 2016-02-12
10-Q 2015-09-30 Filed 2015-11-05
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-12
8-K 2020-11-05
8-K 2020-10-11
8-K 2020-09-17
8-K 2020-08-06
8-K 2020-06-09
8-K 2020-06-02
8-K 2020-05-15
8-K 2020-05-12
8-K 2020-05-07
8-K 2020-04-06
8-K 2020-03-23
8-K 2020-03-23
8-K 2020-03-17
8-K 2020-02-19
8-K 2019-11-18
8-K 2019-11-07
8-K 2019-10-04
8-K 2019-09-04
8-K 2019-09-04
8-K 2019-09-03
8-K 2019-08-07
8-K 2019-06-04
8-K 2019-05-09
8-K 2019-05-03
8-K 2019-04-23
8-K 2019-02-21
8-K 2018-11-13
8-K 2018-11-06
8-K 2018-10-31
8-K 2018-10-16
8-K 2018-08-03
8-K 2018-08-02
8-K 2018-06-28
8-K 2018-06-28
8-K 2018-06-25
8-K 2018-05-31
8-K 2018-05-03
8-K 2018-04-12
8-K 2018-02-08

Z 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Note 1. Organization and Description of Business
Note 2. Summary of Significant Accounting Policies
Note 3. Fair Value Measurements
Note 4. Cash and Cash Equivalents, Short - Term Investments and Restricted Cash
Note 5. Inventory
Note 6. Contract Balances
Note 7. Contract Cost Assets
Note 8. Property and Equipment, Net
Note 9. Equity Investment
Note 10. Intangible Assets, Net
Note 11. Debt
Note 12. Income Taxes
Note 13. Shareholders' Equity
Note 14. Share - Based Awards
Note 15. Net Income (Loss) per Share
Note 16. Commitments and Contingencies
Note 17. Employee Benefit Plan
Note 18. Segment Information and Revenue
Note 19. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.2 q32020form10-qex102.htm
EX-31.1 q32020form10-qex311.htm
EX-31.2 q32020form10-qex312.htm
EX-32.1 q32020form10-qex321.htm
EX-32.2 q32020form10-qex322.htm

Zillow Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02013201520172020
Assets, Equity
0.80.60.40.20.0-0.22013201520172020
Rev, G Profit, Net Income
1.30.90.50.2-0.2-0.62013201520172020
Ops, Inv, Fin

z-20200930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________
FORM 10-Q
_____________________________________________________
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-36853
 
_____________________________________________________
ZILLOW GROUP, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________________
Washington47-1645716
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
                    
1301 Second Avenue, Floor 31,
Seattle, Washington 98101
(Address of principal executive offices) (Zip Code)
(206) 470-7000
(Registrant’s telephone number, including area code)
 _____________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareZGThe Nasdaq Global Select Market
Class C Capital Stock, par value $0.0001 per shareZThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of October 29, 2020, 60,567,704 shares of Class A common stock, 6,217,447 shares of Class B common stock, and 165,887,630 shares of Class C capital stock were outstanding.



Table of Contents
ZILLOW GROUP, INC.
Quarterly Report on Form 10-Q
For the Three Months Ended September 30, 2020
TABLE OF CONTENTS
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
 
i

Table of Contents
As used in this Quarterly Report on Form 10-Q, the terms “Zillow Group,” “the Company,” “we,” “us” and “our” refer to Zillow Group, Inc., unless the context indicates otherwise.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including Part I, Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), contains forward-looking statements based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” or the negative or plural of these words or similar expressions.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those risks, uncertainties and assumptions described in Part I, Item 1A (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2019 and in Part II, Item 1A (Risk Factors) in this Quarterly Report on Form 10-Q, including, but not limited to:
the impact of the COVID-19 pandemic or other public health crises and any associated economic downturn on our future financial position, operations and financial performance;
the magnitude, duration and severity of the COVID-19 pandemic;
the impact of actions taken by governments, businesses, and individuals in response to the COVID-19 pandemic;
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;
changes in laws or regulations applicable to our business, employees, products or services, including current and future laws, regulations and orders that limit our ability to operate in light of COVID-19;
changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit;
actual or anticipated fluctuations in our financial condition and results of operations;
changes in projected operational and financial results;
addition or loss of significant customers;
actual or anticipated changes in our growth rate relative to that of our competitors;
acquisitions, strategic partnerships, joint ventures, capital-raising activities, or other corporate transactions or commitments by us or our competitors;
actual or anticipated changes in technology, products, markets or services by us or our competitors;
ability to obtain or maintain licenses and permits to support our current and future businesses;
actual or anticipated changes to our products and services;
ability to maintain or establish relationships with listings and data providers;
fluctuations in the valuation of companies perceived by investors to be comparable to us;
the impact of natural disasters and other catastrophic events;
the impact of pending or future litigation; and
issuance of new or updated research or reports by securities analysts.
Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements, and we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.
1

Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
Our filings with the Securities and Exchange Commission, or SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, are available on our website at www.zillowgroup.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with the SEC. The information contained on our website is not a part of this quarterly report on Form 10-Q or any other document we file with the SEC.
Investors and others should note that Zillow Group announces material financial information to its investors using its press releases, SEC filings and public conference calls and webcasts. Zillow Group intends to also use the following channels as a means of disclosing information about Zillow Group, its services and other matters and for complying with its disclosure obligations under Regulation FD:
Zillow Group Investor Relations web page (http://investors.zillowgroup.com)
Zillow Group Investor Relations Blog (http://www.zillowgroup.com/ir-blog)
Zillow Group Twitter Account (https://twitter.com/zillowgroup)
The information Zillow Group posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following Zillow Group’s press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this quarterly report on Form 10-Q or any other document we file with the SEC, and the inclusion of our website addresses and Twitter account are as inactive textual references only.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)
September 30, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$1,904,785 $1,141,263 
Short-term investments
1,885,385 1,280,989 
Accounts receivable, net of allowance for doubtful accounts of $2,739 and $4,522 at September 30, 2020 and December 31, 2019, respectively
79,642 67,005 
Mortgage loans held for sale125,324 36,507 
Inventory193,283 836,627 
Prepaid expenses and other current assets73,604 58,117 
Restricted cash44,103 89,646 
Total current assets4,306,126 3,510,154 
Contract cost assets50,488 45,209 
Property and equipment, net198,243 170,489 
Right of use assets193,789 212,153 
Goodwill1,984,907 1,984,907 
Intangible assets, net100,649 190,567 
Other assets9,373 18,494 
Total assets$6,843,575 $6,131,973 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$19,352 $8,343 
Accrued expenses and other current liabilities93,901 85,442 
Accrued compensation and benefits35,474 37,805 
Borrowings under credit facilities232,397 721,951 
Deferred revenue49,153 39,747 
Lease liabilities, current portion28,307 17,592 
Convertible senior notes, current portion7,584 9,637 
Total current liabilities466,168 920,517 
Lease liabilities, net of current portion214,503 220,445 
Convertible senior notes, net of current portion1,838,010 1,543,402 
Deferred tax liabilities and other long-term liabilities21,539 12,188 
Total liabilities2,540,220 2,696,552 
Commitments and contingencies (Note 16)
Shareholders’ equity:
Preferred stock, $0.0001 par value; 30,000,000 shares authorized; no shares issued and outstanding
  
Class A common stock, $0.0001 par value; 1,245,000,000 shares authorized; 60,567,136 and 58,739,989 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
6 6 
Class B common stock, $0.0001 par value; 15,000,000 shares authorized; 6,217,447 shares issued and outstanding
1 1 
Class C capital stock, $0.0001 par value; 600,000,000 shares authorized; 165,574,240 and 144,109,419 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
17 14 
Additional paid-in capital5,488,161 4,412,200 
Accumulated other comprehensive income461 340 
Accumulated deficit(1,185,291)(977,140)
Total shareholders’ equity4,303,355 3,435,421 
Total liabilities and shareholders’ equity$6,843,575 $6,131,973 
See accompanying notes to the condensed consolidated financial statements.
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ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)

 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Revenue:
Homes$187,105 $384,626 $1,411,230 $762,022 
IMT415,389 335,290 1,026,394 957,231 
Mortgages54,198 25,292 113,241 79,637 
Total revenue656,692 745,208 2,550,865 1,798,890 
Cost of revenue (exclusive of amortization) (1):
Homes 179,804 370,796 1,343,791 733,947 
IMT28,448 24,318 76,153 74,628 
Mortgages7,972 4,721 19,023 13,829 
Total cost of revenue216,224 399,835 1,438,967 822,404 
Sales and marketing150,826 181,347 511,072 530,367 
Technology and development127,300 123,974 391,075 352,074 
General and administrative85,895 88,493 263,691 267,106 
Impairment costs  76,800  
Integration costs 5  650 
Total costs and expenses580,245 793,654 2,681,605 1,972,601 
Income (loss) from operations76,447 (48,446)(130,740)(173,711)
Gain on partial extinguishment of 2021 Notes  6,391  
Other income3,018 8,999 22,726 27,625 
Interest expense(39,470)(26,502)(114,652)(61,865)
Income (loss) before income taxes39,995 (65,949)(216,275)(207,951)
Income tax benefit (expense)(425)1,300 8,124 3,800 
Net income (loss)$39,570 $(64,649)$(208,151)$(204,151)
Net income (loss) per share:
Basic$0.17 $(0.31)$(0.95)$(0.99)
Diluted$0.16 $(0.31)$(0.95)$(0.99)
Weighted-average shares outstanding:
Basic229,719 207,002 219,989 205,766 
Diluted242,632 207,002 219,989 205,766 
 ____________________
(1) Amortization of website development costs and intangible assets included in technology and development
$19,245 $15,835 $55,286 $44,891 
See accompanying notes to the condensed consolidated financial statements.

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ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)

 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Net income (loss)$39,570 $(64,649)$(208,151)$(204,151)
Other comprehensive income (loss):
Unrealized gains (losses) on investments(1,122)(132)(326)1,763 
Reclassification adjustment for net investment (gains) losses included in net loss (11)372 (11)
Net unrealized gains (losses) on investments(1,122)(143)46 1,752 
Currency translation adjustments58 31 75 (63)
Total other comprehensive income (loss)(1,064)(112)121 1,689 
Comprehensive income (loss)$38,506 $(64,761)$(208,030)$(202,462)
See accompanying notes to the condensed consolidated financial statements.
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ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except share data, unaudited)
Class A Common
Stock, Class B
Common Stock and
Class C Capital Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Shareholders’
Equity
SharesAmount
Balance at July 1, 2020226,041,936 $23 $5,246,371 $(1,224,861)$1,525 $4,023,058 
Issuance of common and capital stock upon exercise of stock options5,454,246 1 186,242 — — 186,243 
Vesting of restricted stock units777,561 — — — — — 
Restricted stock units withheld for tax liability(26)— (2)— — (2)
Share-based compensation expense— — 53,489 — — 53,489 
Partial conversion of 2020 Notes85,106 — 2,061 — — 2,061 
Net income— — — 39,570 — 39,570 
Other comprehensive loss— — — — (1,064)(1,064)
Balance at September 30, 2020232,358,823 $24 $5,488,161 $(1,185,291)$461 $4,303,355 
Class A Common
Stock, Class B
Common Stock and
Class C Capital Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Shareholders’
Equity
SharesAmount
Balance at July 1, 2019206,513,636 $21 $4,088,470 $(811,281)$896 $3,278,106 
Issuance of common and capital stock upon exercise of stock options347,261 — 8,017 — — 8,017 
Vesting of restricted stock units568,355 — — — — — 
Restricted stock units withheld for tax liability(6)— — — — — 
Share-based compensation expense— — 45,192 — — 45,192 
Premiums paid for capped call confirmations— — (150,530)— — (150,530)
Equity component of issuance of 2024 Notes and 2026 Notes, net of issuance costs of $4,430
— — 335,854 — — 335,854 
Net loss— — — (64,649)— (64,649)
Other comprehensive loss— — — — (112)(112)
Balance at September 30, 2019207,429,246 $21 $4,327,003 $(875,930)$784 $3,451,878 

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Class A Common
Stock, Class B
Common Stock and
Class C Capital Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Shareholders’
Equity
SharesAmount
Balance at January 1, 2020209,066,855 $21 $4,412,200 $(977,140)$340 $3,435,421 
Issuance of common and capital stock upon exercise of stock options11,779,104 2 371,226 — — 371,228 
Vesting of restricted stock units2,191,719 — — — — — 
Restricted stock units withheld for tax liability(32)— (2)— — (2)
Share-based compensation expense— — 158,125 — — 158,125 
Issuance of Class C capital stock in connection with equity offering, net of issuance costs of $10,877
8,800,000 1 411,522 — — 411,523 
Equity component of issuance of 2025 Notes, net of issuance costs of $3,279
— — 154,813 — — 154,813 
Partial repurchase of 2021 Notes753,936 — (21,784)— — (21,784)
Partial unwind of capped call transactions for 2021 Notes(317,865)— — — — — 
Partial conversion of 2020 Notes85,106 — 2,061 — — 2,061 
Net loss— — — (208,151)— (208,151)
Other comprehensive income— — — — 121 121 
Balance at September 30, 2020232,358,823 $24 $5,488,161 $(1,185,291)$461 $4,303,355 
Class A Common
Stock, Class B
Common Stock and
Class C Capital Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders’
Equity
SharesAmount
Balance at January 1, 2019203,904,265 $21 $3,939,842 $(671,779)$(905)$3,267,179 
Issuance of common and capital stock upon exercise of stock options1,891,111 — 41,014 — — 41,014 
Vesting of restricted stock units1,633,962 — — — — — 
Restricted stock units withheld for tax liability(92)— (3)— — (3)
Share-based compensation expense— — 160,826 — — 160,826 
Premiums paid for capped call confirmations— — (150,530)— — (150,530)
Equity component of issuance of 2024 Notes and 2026 Notes, net of issuance costs of $4,430
— — 335,854 — — 335,854 
Net loss— — — (204,151)— (204,151)
Other comprehensive income— — — — 1,689 1,689 
Balance at September 30, 2019207,429,246 $21 $4,327,003 $(875,930)$784 $3,451,878 

See accompanying notes to the condensed consolidated financial statements.

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ZILLOW GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 Nine Months Ended
September 30,
 20202019
Operating activities
Net loss$(208,151)$(204,151)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization81,977 63,888 
Share-based compensation expense145,105 151,884 
Amortization of right of use assets18,364 16,710 
Amortization of contract cost assets26,554 26,722 
Amortization of discount and issuance costs on convertible senior notes maturing in 2021, 2023, 2024, 2025 and 202675,414 29,868 
Gain on partial extinguishment of 2021 Notes(6,391) 
Impairment costs76,800  
Deferred income taxes(8,124)(3,800)
Loss (gain) on disposal of property and equipment and other assets(1,032)5,755 
Credit loss expense1,846 1,894 
Net loss (gain) on investment securities372 (11)
Accretion of bond discount(238)(5,241)
Changes in operating assets and liabilities:
Accounts receivable(14,483)(13,485)
Mortgage loans held for sale(88,817)(1,353)
Inventory643,265 (716,524)
Prepaid expenses and other assets(16,385)(5,848)
Contract cost assets(31,833)(26,950)
Lease liabilities4,773 (15,029)
Accounts payable12,239 2,999 
Accrued expenses and other current liabilities14,499 12,241 
Accrued compensation and benefits(2,331)2,152 
Deferred revenue9,406 7,875 
Other long-term liabilities17,329 122 
Net cash provided by (used in) operating activities750,158 (670,282)
Investing activities
Proceeds from maturities of investments1,160,271 859,142 
Proceeds from sales of investments116,394  
Purchases of investments(1,881,002)(479,963)
Purchases of property and equipment(72,420)(45,140)
Purchases of intangible assets(17,226)(15,123)
Proceeds from sale of equity investment10,000  
Net cash provided by (used in) investing activities(683,983)318,916 
Financing activities
Proceeds from issuance of convertible notes, net of issuance costs553,282 1,085,686 
Premiums paid for capped call confirmations (150,530)
Proceeds from issuance of Class C capital stock, net of issuance costs411,522  
Partial extinguishment of 2021 Notes(194,670) 
Proceeds from borrowings on credit facilities97,437 581,580 
Repayments of borrowings on credit facilities(674,658) 
Net borrowings (repayments) on warehouse lines of credit and repurchase agreement87,667 (2,902)
Proceeds from exercise of stock options371,226 41,014 
Value of equity awards withheld for tax liability(2)(3)
Net cash provided by financing activities651,804 1,554,845 
Net increase in cash, cash equivalents and restricted cash during period717,979 1,203,479 
Cash, cash equivalents and restricted cash at beginning of period1,230,909 663,443 
Cash, cash equivalents and restricted cash at end of period$1,948,888 $1,866,922 
Supplemental disclosures of cash flow information
Cash paid for interest$36,787 $25,837 
Noncash transactions:
Capitalized share-based compensation$13,020 $8,942 
Write-off of fully depreciated property and equipment$13,100 $28,951 
Write-off of fully amortized intangible assets$