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Zillow Makes Progress As It Exits Home-Flipping

Katie Jensen
Dec 03, 2021

Zillow Group Inc. announced that it’s made significant progress in winding down Zillow Offers inventory.

KEY TAKEAWAYS
  • Zillow Group Inc. announced that it’s made significant progress in winding down Zillow Offers inventory and has sold more than 50% of the homes that were expected to resell during the wind-down process.
  • Zillow’s Board of Directors also authorized the repurchase of $750 million of its Class A common stock, Class C capital stock or a combination of both. 
  • The company is currently updating it’s fourth quarter home segment revenue outlook to a range of  $2.3 billion to $2.9 billion from $1.7 billion to $2.1 billion.
  • The company continues to expect the net impact of the Zillow Offers wind-down of inventory, operating costs, and restructuring costs in the aggregate to achieve a cash-neutral flow.

Zillow Group Inc. announced that it’s made significant progress in winding down Zillow Offers inventory and has sold more than 50% of the homes that were expected to resell during the wind-down process. Zillow’s Board of Directors also authorized the repurchase of $750 million of its Class A common stock, Class C capital stock or a combination of both. 

The Zillow Offers unit has bought, flipped, and sold homes nationwide for the past few years, and in the second quarter of 2021, the company bought another 3,800 homes. This led the company to have to sell 7,000 homes for a target of $2.8 billion, but once the quarter ended, Zillow reported a consolidated net loss of $328 million and had to lay off 25% of its staff.

The company announced its plan to wind down Zillow Offers operations on November 22, 2021, and is currently updating it’s fourth quarter home segment revenue outlook to a range of  $2.3 billion to $2.9 billion from $1.7 billion to $2.1 billion.

"We are pleased with the progress of our wind-down efforts and recognize that no longer operating Zillow Offers will allow us to have a more capital-efficient balance sheet and business moving forward," said Zillow Group co-founder and CEO Rich Barton. "With that, we see today as an opportune time to announce a share repurchase program and reduce the cash balance we built up to support Zillow Offers."

The company continues to expect the net impact of the Zillow Offers wind-down of inventory (including inventory losses), operating costs, and restructuring costs in the aggregate to achieve a cash-neutral flow. This includes paying all Zillow Offers secured debt, which was $2.9 billion as of September 30, 2021. 

"We are pleased with the significant Zillow Offers inventory wind-down progress we've made in such a short time," said Zillow Group chief financial officer Allen Parker. "We will continue to be disciplined in our inventory wind-down strategy and evaluate a variety of options to best optimize net cash flows to the company."

The share repurchase program, approved by Zillow Group’s Board of Directors, allows for the repurchase of $750 million of the Company’s Class A common stock, Class C capital stock or a combination of both. The timing and number of shares repurchased will be determined by management and depends on a variety of factors, such as stock price, trading volume, market conditions, and general business considerations. 
 

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