v3.25.2
Financial Instruments
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Financial Instruments Financial Instruments
We apply 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 (Level 1). The fair value measurement of other cash equivalents is based on observable market-based inputs principally derived from or corroborated by observable market data (Level 2).
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 (Level 2).
Restricted cash — The carrying value of restricted cash approximates fair value due to the short period of time that amounts are held in escrow (Level 1).
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 (Level 2).
Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of MBSs that are utilized as economic hedging instruments is calculated by reference to quoted prices for similar assets (Level 2).
Contingent consideration — In December 2023, Zillow Group acquired Follow Up Boss for $399 million in cash, net of cash acquired, and contingent consideration of up to $100 million, payable over a three-year period upon achievement of certain performance metrics. During the six months ended June 30, 2025, we paid $33 million in cash to settle the first earn out payment, the majority of which represented settlement of the acquisition date fair value. The fair value of the contingent consideration is estimated using a Monte Carlo simulation which considers the probabilities of the achievement of certain performance metrics (Level 3).
The discount rates used in our valuation of contingent consideration are based on our estimated cost of debt and are directly related to the fair value of contingent consideration. An increase in the discount rate, in isolation, would result in a decrease in the fair value measurement. Conversely, a decrease in the discount rate, in isolation, would result in an increase in the fair value measurement. The probabilities of achieving the relevant performance metrics used in our valuation of contingent consideration are directly related to the fair value of contingent consideration, as an increase in the probability, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the probability, in isolation, would result in a decrease in the fair value measurement.
During the three and six months ended June 30, 2025, there were no material changes in the unobservable inputs used in determining the fair value of contingent consideration included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
IRLCs — The fair value of 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. 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 IRLC will ultimately result in a closed loan. For IRLCs that are canceled or expire, any recorded gain or loss is reversed at the end of the commitment period (Level 3).
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 revenue in our condensed
consolidated statements of operations. The following table presents the range and weighted-average pull-through rates used in determining the fair value of IRLCs as of the dates presented:
June 30, 2025December 31, 2024
Range
60% - 100%
47% - 100%
Weighted-average80%82%
We manage our interest rate risk related to IRLCs and mortgage loans held for sale through the use of derivative instruments, generally forward contracts on MBSs, which are commitments to either purchase or sell a financial instrument at a future date for a specified price, and mandatory loan commitments, which are an obligation by an investor to buy loans at a specified price within a specified time period. We do not enter into or hold derivatives for trading or speculative purposes, and our derivatives are not designated as hedging instruments. Changes in the fair value of our derivative financial instruments are recognized in revenue in our condensed consolidated statements of operations.
The following table presents the changes in our IRLCs for the periods presented (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2025202420252024
Balance, beginning of the period$7 $5 $4 $3 
Issuances24 11 45 23 
Transfers(22)(12)(40)(22)
Balance, end of period$9 $4 $9 $4 
The following table presents the notional amounts of the economic hedging instruments related to our mortgage loans held for sale as of the dates presented (in millions):
June 30, 2025December 31, 2024
IRLCs
$402 $217 
Forward contracts(1)
$499 $300 
(1) Represents net notional amounts. We do not have the right to offset our forward contract derivative positions.
The following table presents the amortized cost, as applicable, and estimated fair market value of assets and liabilities measured at fair value on a recurring basis by category as of the dates presented (in millions):
 June 30, 2025December 31, 2024
 Amortized
Cost		Estimated
Fair Market
Value		Amortized
Cost		Estimated
Fair Market
Value
Assets
Cash$22 $22 $13 $13 
Cash equivalents:
Money market funds554 554 993 993 
U.S. government treasury securities11 11 75 75 
Commercial paper— — 1 1 
Short-term investments:
U.S. government treasury securities
408 408 594 591 
Corporate bonds
153 154 175 176 
U.S. government agency securities7 7 7 7 
Commercial paper1 1 2 2 
Certificate of deposit
1 1 — — 
Mortgage origination-related:
Mortgage loans held for sale— 250 — 159 
IRLCs - other current assets— 9 — 4 
Forward contracts - other current assets— — — 1 
Restricted cash5 5 3 3 
Total assets measured at fair value on a recurring basis
$1,162 $1,422 $1,863 $2,025 
Liabilities
Mortgage origination-related:
Forward contracts - accrued expenses and other current liabilities$— $3 $— $— 
Contingent consideration:
Contingent consideration - accrued expenses and other current liabilities— 31 — 33 
Contingent consideration - other long-term liabilities— 30 — 58 
Total liabilities measured at fair value on a recurring basis
$— $64 $— $91 
The following table presents available-for-sale investments by contractual maturity date as of June 30, 2025 (in millions):
Amortized CostEstimated Fair
Market Value
Due in one year or less$259 $259 
Due after one year 311 312 
Total $570 $571