Company Quick10K Filing
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-K 2020-12-31 Filed 2021-02-12
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
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-02-15
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-02-07
10-Q 2016-09-30 Filed 2016-11-02
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-04
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. Accounts Receivable, Net
Note 6. Inventory
Note 7. Contract Cost Assets
Note 8. Property and Equipment, Net
Note 9. Equity Investment
Note 10. Intangible Assets, Net
Note 11. Deferred Revenue
Note 12. Debt
Note 13. Income Taxes
Note 14. Share - Based Awards
Note 15. Net Loss per Share
Note 16. Commitments and Contingencies
Note 17. Employee Benefit Plan
Note 18. Segment Information and Revenue
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-10.1 q12020form10-qex101.htm
EX-31.1 q12020form10-qex311.htm
EX-31.2 q12020form10-qex312.htm
EX-32.1 q12020form10-qex321.htm
EX-32.2 q12020form10-qex322.htm

Zillow Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin

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Washington, D.C. 20549
For the quarterly period ended March 31, 2020
Commission File Number: 001-36853
(Exact name of registrant as specified in its charter)
(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 April 30, 2020, 59,476,313 shares of Class A common stock, 6,217,447 shares of Class B common stock, and 147,230,433 shares of Class C capital stock were outstanding.

Table of Contents
Quarterly Report on Form 10-Q
For the Three Months Ended March 31, 2020
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

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.
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 IA (Risk Factors) in this Quarterly Report on Form 10-Q, including, but not limited to:
the impact of the novel coronavirus (“COVID-19”) pandemic 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; 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.

Table of Contents
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, 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 Webpage (
Zillow Group Investor Relations Blog (
Zillow Group Twitter Account (
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.

Table of Contents
Item 1. Financial Statements (unaudited)
(in thousands, except share data, unaudited)
March 31,
December 31,
Current assets:
Cash and cash equivalents$1,567,710  $1,141,263  
Short-term investments
993,258  1,280,989  
Accounts receivable, net of allowance for doubtful accounts of $4,495 and $4,522 at March 31, 2020 and December 31, 2019, respectively
71,782  67,005  
Mortgage loans held for sale36,848  36,507  
Inventory533,989  836,627  
Prepaid expenses and other current assets57,635  58,117  
Restricted cash56,428  89,646  
Total current assets3,317,650  3,510,154  
Contract cost assets46,565  45,209  
Property and equipment, net188,032  170,489  
Right of use assets205,688  212,153  
Goodwill1,984,907  1,984,907  
Intangible assets, net112,274  190,567  
Other assets16,624  18,494  
Total assets$5,871,740  $6,131,973  
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$17,819  $8,343  
Accrued expenses and other current liabilities88,897  85,442  
Accrued compensation and benefits32,838  37,805  
Borrowings under credit facilities466,647  721,951  
Deferred revenue35,347  39,747  
Lease liabilities, current portion20,290  17,592  
Convertible senior notes, current portion9,637  9,637  
Total current liabilities671,475  920,517  
Lease liabilities, net of current portion216,122  220,445  
Long-term debt1,565,949  1,543,402  
Deferred tax liabilities and other long-term liabilities2,433  12,188  
Total liabilities2,455,979  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; 59,476,188 and 58,739,989 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively6  6  
Class B common stock, $0.0001 par value; 15,000,000 shares authorized; 6,217,447 shares issued and outstanding as of March 31, 2020 and December 31, 20191  1  
Class C capital stock, $0.0001 par value; 600,000,000 shares authorized; 147,219,504 and 144,109,419 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively15  14  
Additional paid-in capital4,551,866  4,412,200  
Accumulated other comprehensive income4,286  340  
Accumulated deficit(1,140,413) (977,140) 
Total shareholders’ equity3,415,761  3,435,421  
Total liabilities and shareholders’ equity$5,871,740  $6,131,973  
See accompanying notes to the condensed consolidated financial statements.


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(in thousands, except per share data, unaudited)
 Three Months Ended
March 31,
Homes$769,873  $128,472  
IMT330,666  298,272  
Mortgages25,282  27,360  
Total revenue1,125,821  454,104  
Cost of revenue (exclusive of amortization) (1):
Homes 732,199  122,419  
IMT24,318  24,251  
Mortgages5,155  4,678  
Total cost of revenue761,672  151,348  
Sales and marketing204,648  161,587  
Technology and development134,918  107,770  
General and administrative92,285  95,774  
Impairment costs76,800    
Integration costs  352  
Total costs and expenses1,270,323  516,831  
Loss from operations(144,502) (62,727) 
Other income9,593  9,168  
Interest expense(37,592) (16,466) 
Loss before income taxes(172,501) (70,025) 
Income tax benefit 9,228  2,500  
Net loss$(163,273) $(67,525) 
Net loss per share — basic and diluted$(0.78) $(0.33) 
Weighted-average shares outstanding — basic and diluted210,674  204,514  
(1) Amortization of website development costs and intangible assets included in technology and development
$17,184  $14,400  
See accompanying notes to the condensed consolidated financial statements.


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(in thousands, unaudited)
 Three Months Ended
March 31,
Net loss$(163,273) $(67,525) 
Other comprehensive income:
Unrealized gains on investments3,602  1,144  
Reclassification adjustment for net investment losses included in net loss434    
Net unrealized gains on investments4,036  1,144  
Currency translation adjustments(90) (42) 
Total other comprehensive income 3,946  1,102  
Comprehensive loss$(159,327) $(66,423) 
See accompanying notes to the condensed consolidated financial statements.

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(in thousands, except share data, unaudited)
Class A Common
Stock, Class B
Common Stock and
Class C Capital Stock
Balance at December 31, 2019209,066,855  $21  $4,412,200  $(977,140) $340  $3,435,421  
Issuance of common and capital stock upon exercise of stock options3,207,375  1  92,201  —  —  92,202  
Vesting of restricted stock units638,909  —  —  —  —  —  
Share-based compensation expense—  —  47,465  —  —  47,465  
Net loss—  —  —  (163,273) —  (163,273) 
Other comprehensive income—  —  —  —  3,946  3,946  
Balance at March 31, 2020212,913,139  $22  $4,551,866  $(1,140,413) $4,286  $3,415,761  
Class A Common
Stock, Class B
Common Stock and
Class C Capital Stock
Income (Loss)
Balance at December 31, 2018203,904,265  $21  $3,939,842  $(671,779) $(905) $3,267,179  
Issuance of common and capital stock upon exercise of stock options729,788  —  13,564  —  —  13,564  
Vesting of restricted stock units496,347  —  —  —  —  —  
Shares and value of restricted stock units withheld for tax liability(68) —  (2) —  —  (2) 
Share-based compensation expense—  —  68,814  —  —  68,814  
Net loss—  —  —  (67,525) —  (67,525) 
Other comprehensive income—  —  —  —  1,102  1,102  
Balance at March 31, 2019205,130,332  $21  $4,022,218  $(739,304) $197  $3,283,132  

See accompanying notes to the condensed consolidated financial statements.


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(in thousands, unaudited)
 Three Months Ended
March 31,
Operating activities
Net loss$(163,273) $(67,525) 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization29,026  20,525  
Share-based compensation expense43,795  66,124  
Amortization of right of use assets6,465  4,440  
Amortization of contract cost assets8,415  8,746  
Amortization of discount and issuance costs on convertible senior notes maturing in 2021, 2023, 2024 and 202622,547  8,840  
Impairment costs76,800    
Deferred income taxes(9,228) (2,500) 
Loss on disposal of property and equipment and other assets1,952  1,704  
Credit loss expense558  128  
Net loss on investment securities434    
Accretion of bond discount(473) (1,733) 
Changes in operating assets and liabilities:
Accounts receivable(5,335) (4,650) 
Mortgage loans held for sale(341) 5,940  
Inventory302,593  (162,325) 
Prepaid expenses and other assets(2,916) (8,537) 
Lease liabilities(1,625) (7,010) 
Contract cost assets(9,771) (9,103) 
Accounts payable7,673  (133) 
Accrued expenses and other current liabilities4,588  328  
Accrued compensation and benefits(4,967) (1,088) 
Deferred revenue(4,400) 2,025  
Other long-term liabilities(527) 290  
Net cash provided by (used in) operating activities301,990  (145,514) 
Investing activities
Proceeds from maturities of investments296,272  302,187  
Proceeds from sales of investments53,997    
Purchases of investments(58,459) (176,412) 
Purchases of property and equipment(32,966) (14,202) 
Purchases of intangible assets(4,503) (3,269) 
Net cash provided by investing activities254,341  108,304  
Financing activities
Proceeds from borrowings on credit facilities34,460  129,328  
Repayments of borrowings on credit facilities(294,150)   
Net borrowings (repayments) on warehouse lines of credit and repurchase agreement4,386  (5,025) 
Proceeds from exercise of stock options92,202  13,564  
Value of equity awards withheld for tax liability  2  
Net cash provided by (used in) financing activities(163,102) 137,869  
Net increase in cash, cash equivalents and restricted cash during period393,229  100,659  
Cash, cash equivalents and restricted cash at beginning of period1,230,909  663,443  
Cash, cash equivalents and restricted cash at end of period$1,624,138  $764,102  
Supplemental disclosures of cash flow information
Cash paid for interest$17,038  $4,956  
Noncash transactions:
Capitalized share-based compensation$3,670  $2,690  
Write-off of fully depreciated property and equipment$4,143  $6,269  
Write-off of fully amortized intangible assets$  $3,200  
Property and equipment purchased on account$9,445  $4,792  
See accompanying notes to the condensed consolidated financial statements.

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Note 1. Organization and Description of Business
Zillow Group, Inc., the largest portfolio of real estate brands on mobile and the web, is building an on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to the businesses of its flagship brand, Zillow, to find and get into their next home with speed, certainty and ease.
In addition to Zillow’s for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Closing Services now offers title and escrow services as another important step to unify the real estate transaction. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.
Other consumer brands include Trulia, StreetEasy, HotPads, Naked Apartments and Out East. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions which include Mortech, dotloop, Bridge Interactive and New Home Feed. Zillow, Inc. was incorporated as a Washington corporation in December 2004, and we launched the initial version of our website,, 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: public health crises, like the COVID-19 pandemic; rates of revenue growth; our ability to manage advertising inventory or pricing; engagement and usage of our products; our investment of resources to pursue strategies that may not prove effective; competition in our market; the stability of the residential real estate market and the impact of interest rate changes; changes in technology, products, markets or services by us or our competitors; addition or loss of significant customers; our ability to maintain or establish relationships with listings and data providers; our ability to obtain or maintain licenses and permits to support our current and future businesses; actual or anticipated changes to our products and services; changes in government regulation affecting our business; outcomes of legal proceedings; natural disasters and catastrophic events; 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.
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, 2019, which was filed with the SEC on February 19, 2020. The condensed consolidated balance sheet as of December 31, 2019, 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 March 31, 2020, and our results of operations, comprehensive loss, shareholders’ equity and cash flows for the three month periods ended March 31, 2020 and 2019. The results of the three month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any interim period or for any other future year.


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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 the net realizable value of inventory, amortization period and recoverability of contract cost assets, website and software development costs, recoverability of long-lived assets and intangible assets with definite lives, share-based compensation, income taxes, business combinations and the recoverability of goodwill and indefinite-lived intangible assets, among others. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. The COVID-19 pandemic has introduced significant additional uncertainty with respect to estimates, judgments and assumptions, which may materially impact the estimates previously listed, among others.
Recently Adopted Accounting Standards
In August 2018, the Financial Accounting Standards Board (“FASB”) issued guidance related to a customer’s accounting for implementation costs incurred in hosting arrangements. The guidance conforms the requirements for capitalizing implementation costs incurred in cloud computing arrangements that are service contracts with the accounting guidance that provides for the capitalization of costs incurred to develop or obtain internal-use software. Under the guidance, implementation costs that are capitalized should be characterized in financial statements in the same manner as other service costs and assets related to service costs and amortized over the term of the hosting arrangement. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. Entities are permitted to apply either a retrospective or prospective transition approach to adopt this guidance. We adopted this guidance on January 1, 2020 using the prospective transition approach under which we apply the guidance to all eligible costs incurred subsequent to adoption. Under the guidance, we capitalize eligible implementation costs associated with cloud computing arrangements that are service contracts within prepaid expenses and other current assets or other long-term assets in our condensed consolidated balance sheets, depending on the length of the underlying cloud computing contract. We amortize these costs on a straight-line basis over the term of the hosting arrangement. The adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows.
In August 2018, the FASB issued guidance related to disclosure requirements for fair value measurements. This guidance removes, modifies and adds disclosures related to certain assets and liabilities measured at fair value. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim and annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. We adopted this guidance on January 1, 2020. We have not historically recorded material amounts of Level 3 assets and liabilities or material transfers of assets or liabilities between levels within the fair value hierarchy and therefore, the adoption of this guidance did not have a material impact on our disclosures. Refer to Note 3 for further information regarding the assets and liabilities we measure at fair value.
In June 2016, and subsequently amended in April 2019, May 2019 and November 2019, the FASB issued guidance on the measurement of credit losses on financial assets. This guidance requires an entity to measure and recognize expected credit losses for certain financial instruments and financial assets, including trade receivables. This guidance requires an entity to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument on initial recognition and at each reporting period, whereas current guidance employs an incurred loss methodology. This guidance is effective for interim and annual 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 adopted. We adopted this guidance on January 1, 2020 with no material impact to our financial position, results of operation or cash flows.

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Recently Issued Accounting Standards Not Yet Adopted
In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We expect to apply some of the expedients and exceptions provided in this guidance to our credit facilities, warehouse line of credit and master repurchase agreement, all of which reference LIBOR in the applicable interest rate. We have not yet determined the impact the adoption of this guidance will have on our financial position, results of operations or cash flows.
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 — The fair value measurement of money market funds is based on quoted market prices in active markets. The fair value measurement of commercial paper 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.
Short-term investments — The fair value measurement of our short-term investments 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.
Restricted cash — Restricted cash consists of cash received from the resale of homes through Zillow Offers which may be used to repay amounts borrowed on our credit facilities (see Note 12) and amounts held in escrow related to funding home purchases in our mortgage origination business. The carrying value of restricted cash approximates fair value due to the short period of time amounts borrowed on the credit facilities are outstanding and amounts are held in escrow.
Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics.
Interest rate lock commitments — The fair value of interest rate lock commitments “IRLCs” is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. We generally only issue IRLCs for products that meet specific purchaser guidelines. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close. This adjustment is effected through the pull-through rate, which represents the probability that an interest rate lock commitment will ultimately result in a closed loan.
The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our condensed consolidated statements of operations.

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The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the periods presented:
March 31, 2020December 31, 2019
Range43% - 100%56% - 100%
Weighted average75%78%
Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as economic hedging instruments are calculated by reference to quoted prices for similar assets.
The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):
 March 31, 2020
TotalLevel 1Level 2Level 3
Cash equivalents:
Money market funds$1,356,139  $1,356,139  $  $  
Commercial paper9,389    9,389    
Short-term investments:
U.S. government agency securities713,581    713,581    
Commercial paper103,646    103,646    
Treasury bills82,578    82,578    
Corporate notes and bonds69,265    69,265    
Municipal securities23,192    23,192    
Certificates of deposit996    996    
Mortgage origination-related:
Mortgage loans held for sale36,848    36,848    
IRLCs2,225      2,225  
Forward contracts - other current liabilities2,039    2,039    
        Total$2,399,898  $1,356,139  $1,041,534  $2,225  


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 December 31, 2019
 TotalLevel 1Level 2
Cash equivalents:
Money market funds$872,431  $872,431  $  
U.S. government agency securities35,009    35,009  
Commercial paper31,113    31,113  
Treasury bills6,441    6,441  
Corporate notes and bonds1,065