News Releases

November 6, 2019 at 4:01 PM EST
Redfin Third-Quarter 2019 Revenue up 70% Year-over-Year to $239 Million

SEATTLE, Nov. 6, 2019 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the third quarter ended September 30, 2019. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation as well as depreciation and amortization expenses.

Redfin Logo (PRNewsfoto/Redfin)

Revenue increased 70% year-over-year to $239 million during the third quarter. Gross profit was $53.4 million, an increase of 26% from $42.3 million in the third quarter of 2018. Real estate services gross profit was $54.1 million, an increase of 26% from $43.0 million in the third quarter of 2018. Real estate services gross margin was 35%, compared to 34% in the third quarter of 2018. Operating expenses were $45.9 million, an increase of 18% from $39.0 million in the third quarter of 2018. Operating expenses were 19% of revenue, down from 28% in the third quarter of 2018.

Net income was $6.8 million, compared to net income of $3.5 million in the third quarter of 2018. Stock-based compensation was $7.5 million, up from $5.5 million in the third quarter of 2018. Depreciation and amortization was $2.6 million, up from $2.2 million in the third quarter of 2018. Interest income was $1.6 million and interest expense was $2.3 million, compared to $1.8 million and $1.6 million, respectively, in the third quarter of 2018.

Net income per share, basic and diluted, was $0.07, compared to net income per share, basic and diluted, of $0.04 in the third quarter of 2018.

"Redfin's third quarter was strong across the board, with accelerating revenues and year-over-year gross-margin gains in every one of our businesses," said Redfin CEO Glenn Kelman. "We're investing more in better service, but also in disruptive technologies that let people tour and buy homes without an agent. We've expanded instant offers for homeowners from six to ten markets, and are now showing homebuyers the commissions that a seller is offering their agent. These are big strides toward our long-term goal of redefining real estate in the consumers' favor."

Highlights

  • Reached market share of 0.96% of U.S. existing home sales by value in the third quarter of 2019, an increase of 0.02 percentage points from the second quarter of 2019, and an increase of 0.11 percentage points from the third quarter of 2018.(1)
  • Continued to drive strong traffic growth, with visitors to our website and mobile application increasing by 22% over the third quarter of 2018.
  • Saved Redfin homebuyers and sellers over $57 million in the third quarter, compared to a 2.5% commission typically charged by traditional agents.
  • Expanded RedfinNow to Austin, Houston, and San Antonio, TX. As of the end of the third quarter, RedfinNow was also available in Denver, CO, Dallas, TX, Los Angeles, San Diego, Inland Empire, and Orange County, CA.
  • Launched Redfin Direct in Northern Virginia, allowing unrepresented homebuyers to make offers on Redfin listings using a step-by-step online tool, which in turn can help Redfin sellers save money in buyer agent commission fees. During the third quarter, our listings received 68 Direct offers, resulting in 18 closings.
  • Launched Direct Access for RedfinNow listings in Austin, Denver and our Southern California markets. Direct Access makes it easy for buyers to tour RedfinNow listings on their own with their smartphone.
  • Redfin Home Services rolled out a fleet of Redfin-branded vans for our renovation superintendents, further streamlining the process of getting homes ready for the market.
  • Launched a referral partnership with Opendoor in Atlanta and Phoenix to give more Redfin customers the chance to compare a cash offer to listing with a Redfin agent. Homesellers in these markets can now request an Opendoor offer through Redfin's website and mobile application.
  • Expanded Fast Offers technology to Redfin agents in California, making it simple for agents to prepare offer paperwork for clients even on a mobile device. The software is now available in 33 markets.
  • In an effort to arm consumers with as much information as possible, Redfin is now displaying the commission offered to the buyer's agent for homes listed by Redfin.

(1) We calculate the aggregate value of U.S. home sales by multiplying the total number of U.S. existing home sales by the mean sale price of these homes, each as reported by the National Association of REALTORS®. We calculate our market share by aggregating the home value of brokerage and partner real estate services transactions. Then, in order to account for both the sell- and buy-side components of each transaction, we divide that value by two-times the estimated aggregate value of U.S. home sales.

Business Outlook

The following forward-looking statements reflect Redfin's expectations as of November 6, 2019, and are subject to substantial uncertainty.

For the fourth quarter of 2019 we expect:

  • Total revenue between $211 million and $220 million, representing year-over-year growth between 70% and 77% compared to the fourth quarter of 2018. Properties segment revenue between $80 million and $85 million is included in the guidance provided.
  • Net loss between $12.8 million and $9.5 million, compared to net loss of $12.2 million in the fourth quarter of 2018. This guidance includes approximately $7.6 million of expected stock-based compensation and $2.7 million of expected depreciation and amortization.

Conference Call

Redfin will webcast a conference call to discuss the results at 1:30 p.m. Pacific Time today. The webcast will be open to the public at http://investors.redfin.com. The webcast will remain available on the investor relations website for at least three months following the conference call.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including our future operating results, as described under Business Outlook. We believe our expectations related to these forward-looking statements are reasonable, but actual results may turn out to be materially different. For factors that could cause actual results to differ materially from the forward-looking statements in this press release, please see the risks and uncertainties identified under the heading "Risk Factors" in our Annual Report for the year ended December 31, 2018, as supplemented by our Quarterly Report for the quarter ended September 30, 2019, both of which are available on our Investor Relations website at http://investors.redfin.com and on the SEC website at www.sec.gov.  All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

About Redfin

Redfin (www.redfin.com) is a technology-powered residential real estate company. Founded by software engineers, we run the country's #1 most-visited brokerage website and offer a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets throughout the United States and Canada. Our mission is to redefine real estate in the consumer's favor. In a commission-driven industry, we put the customer first. We do this by pairing our own agents with our own technology to create a service that is faster, better, and costs less. Since our launch in 2006 through 2018, we have helped customers buy or sell more than 170,000 homes worth more than $85 billion.

Redfin-F

Redfin Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except share and per share amounts, unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2019


2018


2019


2018

Revenue








Service

$

158,519



$

128,905



$

405,160



$

339,403


Product

80,164



11,350



141,445



23,388


Total revenue

238,683



140,255



546,605



362,791


Cost of revenue(1)








Service

104,397



86,294



297,320



245,490


Product

80,909



11,656



144,807



24,086


Total cost of revenue

185,306



97,950



442,127



269,576


Gross profit

53,377



42,305



104,478



93,215


Operating expenses








Technology and development(1)

18,801



14,310



50,421



40,105


Marketing(1)

8,361



8,236



68,611



36,006


General and administrative(1)

18,779



16,470



57,881



48,532


Total operating expenses

45,941



39,016



176,913



124,643


Income (loss) from operations

7,436



3,289



(72,435)



(31,428)


Interest income

1,576



1,775



5,804



3,082


Interest expense

(2,274)



(1,610)



(6,564)



(1,610)


Other income, net

44



21



172



200


Net income (loss)

$

6,782



$

3,475



$

(73,023)



$

(29,756)


Net income (loss) per share - basic

$

0.07



$

0.04



$

(0.80)



$

(0.35)


Net income (loss) per share - diluted

$

0.07



$

0.04



$

(0.80)



$

(0.35)


Weighted average shares - basic

91,994,731



87,743,223



91,279,086



84,327,266


Weighted average shares - diluted

97,171,270



94,642,463



91,279,086



84,327,266










Net income (loss)

$

6,782



$

3,475



$

(73,023)



$

(29,756)


Other comprehensive income:








Foreign currency translation adjustments

(10)





28




Unrealized loss on available-for-sale securities

(8)





(2)




Total comprehensive income (loss)

$

6,764



$

3,475



$

(72,997)



$

(29,756)



(1) Includes stock-based compensation as follows:



Three Months Ended September 30,


Nine Months Ended September 30,


2019


2018


2019


2018

Cost of revenue

$

1,605



$

1,370



$

4,398



$

4,061


Technology and development

3,320



2,135



8,661



5,335


Marketing

390



155



1,025



431


General and administrative

2,195



1,838



5,708



4,646


Total

$

7,510



$

5,498



$

19,792



$

14,473


 

Redfin Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts, unaudited)



September 30, 2019


December 31, 2018

Assets




Current assets




Cash and cash equivalents

$

209,234



$

432,608


Restricted cash

9,984



6,446


Short-term investments

62,054




Accrued revenue, net

24,434



15,363


Inventory

105,460



22,694


Loans held for sale

22,246



4,913


Prepaid expenses

8,391



11,916


Other current assets

5,763



2,307


Total current assets

447,566



496,247


Property and equipment, net

37,560



25,187


Right-of-use asset, net

45,513




Long-term investments

38,480




Goodwill and intangibles, net

11,626



11,992


Other non-current assets

11,240



9,395


Total assets

$

591,985



$

542,821


Liabilities and stockholders' equity




Current liabilities




Accounts payable

$

3,173



$

2,516


Accrued liabilities

50,867



30,837


Other payables

7,157



6,544


Borrowings under warehouse credit facilities

21,987



4,733


Current operating lease liabilities

9,731




Current portion of deferred rent

132



1,588


Total current liabilities

93,047



46,218


Non-current operating lease liabilities

53,059




Deferred rent



11,079


Convertible senior notes, net

118,158



113,586


Total liabilities

264,264



170,883


Commitments and contingencies




Stockholders' equity




Common stock—par value $0.001 per share; 500,000,000 shares authorized; 92,212,316 and 90,151,341 shares issued and outstanding, respectively

92



90


Additional paid-in capital

571,607



542,829


Accumulated other comprehensive income

26




Accumulated deficit

(244,004)



(170,981)


Total stockholders' equity

327,721



371,938


Total liabilities and stockholders' equity

$

591,985



$

542,821


 

Redfin Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)



Nine Months Ended September 30,


2019


2018

Operating activities




Net loss

$

(73,023)



$

(29,756)


Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation and amortization

6,366



6,123


Stock-based compensation

19,792



14,472


Amortization of debt discount and issuance costs

4,674



1,128


Non-cash lease expense

4,727




Other

(401)




Change in assets and liabilities:




Accrued revenue

(9,071)



80


Inventory

(82,766)



(21,779)


Prepaid expenses and other assets

(82)



1,808


Accounts payable

579



702


Accrued liabilities and other payables

18,994



11,357


Operating lease liabilities

(5,207)




Deferred rent

112



(913)


Origination of loans held for sale

(285,182)



(56,157)


Proceeds from sale of loans originated as held for sale

267,850



52,127


Net cash used in operating activities

(132,638)



(20,808)


Investing activities




Purchases of property and equipment

(12,821)



(5,528)


Purchases of investments

(106,063)




Sale of investments

1,005




Maturities of investments

4,900




Net cash used in investing activities

(112,979)



(5,528)


Financing activities




Proceeds from the issuance of shares resulting from employee equity plans

10,869



17,314


Tax payments related to net share settlements on restricted stock units

(2,856)



(705)


Borrowings from warehouse credit facilities

280,129



54,806


Repayments of warehouse credit facilities

(262,875)



(51,031)


Other payables - deposits held in escrow

637



7,684


Proceeds from issuance of convertible notes, net of issuance costs



138,953


Proceeds from follow on offering



107,593


Cash paid for debt issuance costs

(152)




Net cash provided by financing activities

25,752



274,614


Effect of exchange rate changes on cash and cash equivalents

28




Net change in cash, cash equivalents, and restricted cash

(219,837)



248,278


Cash, cash equivalents, and restricted cash:




Beginning of period

439,055



212,658


End of period

$

219,218



$

460,936


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)



Three Months Ended


Sep. 30,
2019


Jun. 30,
2019


Mar. 31,
2019


Dec. 31,
2018


Sep. 30,
2018


Jun. 30,
2018


Mar. 31,
2018


Dec. 31,
2017


Sep. 30,
2017

Monthly average visitors (in thousands)

35,633



36,557



31,107



25,212



29,236



28,777



25,820



21,377



24,518


Real estate services transactions


















Brokerage

16,098



15,580



8,435



9,822



12,876



12,971



7,285



8,598



10,527


Partner

3,499



3,357



2,125



2,749



3,333



3,289



2,237



2,739



3,101


Total

19,597



18,937



10,560



12,571



16,209



16,260



9,522



11,337



13,628


Real estate services revenue per transaction


















Brokerage

$

9,075



$

9,332



$

9,640



$

9,569



$

9,227



$

9,510



$

9,628



$

9,659



$

9,289


Partner

2,295



2,218



2,153



2,232



2,237



2,281



2,137



2,056



1,960


Aggregate

7,865



8,071



8,134



7,964



7,790



8,048



7,869



7,822



7,621


Aggregate home value of real estate services transactions (in millions)

$

9,157



$

8,986



$

4,800



$

5,825



$

7,653



$

7,910



$

4,424



$

5,350



$

6,341


U.S. market share by value

0.96

%


0.94

%


0.83

%


0.81

%


0.85

%


0.83

%


0.73

%


0.71

%


0.71

%

Revenue from top-10 Redfin markets as a percentage of real estate services revenue

63

%


64

%


64

%


66

%


66

%


68

%


66

%


69

%


69

%

Average number of lead agents

1,579



1,603



1,503



1,419



1,397



1,415



1,327



1,118



1,028


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)



Three Months Ended September 30,


Nine Months Ended September 30,


2019


2018


2019


2018

Revenue by segment








Brokerage revenue

$

146,096



$

118,809



$

372,809



$

312,306


Partner revenue

8,030



7,456



20,053



19,741


Total real estate services revenue

154,126



126,265



392,862



332,047


Properties revenue

80,164



11,350



141,445



23,388


Other revenue

5,161



2,691



13,490



7,407


Intercompany elimination

(768)



(51)



(1,192)



(51)


Total revenue

238,683



140,255



546,605



362,791










Cost of revenue








Real estate services

$

100,048



$

83,274



$

284,447



$

236,775


Properties

80,909



11,656



144,807



24,086


Other

5,117



3,071



14,065



8,766


Intercompany elimination

(768)



(51)



(1,192)



(51)


Total cost of revenue

$

185,306



$

97,950



$

442,127



$

269,576










Gross profit by segment








Real estate services

$

54,078



$

42,991



$

108,415



$

95,272


Properties

(745)



(306)



(3,362)



(698)


Other

44



(380)



(575)



(1,359)


Total gross profit

$

53,377



$

42,305



$

104,478



$

93,215


 

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SOURCE Redfin

Investor Relations, Elena Perron, 206-576-8610, ir@redfin.com, Public Relations, Mariam Sughayer, 206-876-1322, press@redfin.com