Zillow issues shares, redeems convertible notes

SEATTLE, WA - Zillow Group, Inc. (NASDAQ:ZG), a $16.77 billion real estate technology company whose stock has surged over 52% in the past six months according to InvestingPro, has completed the redemption of its 1.375% Convertible Senior Notes due in 2026, the company disclosed in a recent SEC filing. The redemption followed a notice issued on October 8, 2024, and was executed on Wednesday, December 18, 2024.

During the conversion period leading up to the redemption date, holders of approximately $498 million in aggregate principal amount of the notes elected to convert their holdings into shares of Zillow Group's Class C capital stock.

In the transaction, Zillow Group issued approximately 4.53 million shares of Class C capital stock to noteholders, along with aggregate cash payments totaling around $498 million, which covered the principal amount of the notes converted and cash in lieu of fractional shares.

The remaining notes, with an aggregate principal amount of approximately $1 million, were redeemed at 100% of their principal value, plus accrued and unpaid interest up to but excluding the redemption date.

This move aligns with the company's strong financial position, as InvestingPro data shows Zillow maintains a healthy current ratio of 3.13 and holds more cash than debt on its balance sheet.

The issuance of shares to noteholders was carried out under an exemption from registration under the Securities Act of 1933, as per Section 3(a)(9) of the act. This move by Zillow Group effectively settles the company's obligations under the notes and introduces new equity into its capital structure.

The transaction reflects Zillow Group's financial strategies as it navigates the market. The company, known for its online real estate database and services, operates under the SIC code 7389, which covers various business services not elsewhere classified. With its headquarters at 1301 Second Avenue, Seattle, WA, Zillow Group continues to be a significant player in the real estate services industry.

This financial maneuver aligns with the company's broader financial management practices and capital allocation strategies. While currently unprofitable, analysts tracked by InvestingPro expect Zillow to return to profitability this year, with revenue growing at 13.12% year-over-year.

The information provided is based on a press release statement filed with the SEC. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial analysis through the Pro Research Report, available for over 1,400 US stocks including Zillow Group.

In other recent news, Zillow Group has reported robust financial results, alongside significant developments in corporate structure and strategic initiatives. The company's third-quarter performance showcased a 17% year-over-year revenue increase, reaching $581 million, primarily driven by a 63% surge in mortgage revenue, which totaled $39 million.

Despite a net loss of $20 million, effective cost management was evident with an EBITDA of $127 million. For the fourth quarter, Zillow projects a 12% year-over-year increase in revenue, anticipating earnings between $525 million and $540 million.

Analyst firms Piper Sandler and Canaccord Genuity have expressed confidence in Zillow's potential, with Piper Sandler maintaining its Overweight rating and Canaccord Genuity raising its stock price target for Zillow. Both firms emphasized Zillow's strategic initiatives and strong financial position as contributing factors to their positive outlooks.

Recent developments within the company include the promotion of Jun Choo to Chief Operating Officer, overseeing Zillow's for-sale business strategy and operations. This executive shift follows the departure of Susan Daimler (OTC:MBGAF) and Matt Daimler, president of Zillow and senior vice president of product, respectively.

Zillow has also been expanding its market presence through strategic initiatives, such as the acquisition of Virtual Staging AI and the expansion of its partnership with Realtor.com. These moves underscore Zillow's commitment to enhancing its product offerings and operational efficiency. These are recent developments and are part of Zillow's ongoing efforts to refine its services and cater to the evolving needs of its users.

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