Press Release

Redfin First-Quarter 2019 Revenue up 38% Year-over-Year to $110.1 Million

May 08, 2019

SEATTLE, May 8, 2019 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the first quarter ended March 31, 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 38% year-over-year to $110.1 million during the first quarter. Gross profit was $2.8 million, a decrease of 52% from $5.7 million in the first quarter of 2018. Gross margin was 3%, compared to 7% in the first quarter of 2018. Real estate services(1) gross profit was $5.1 million, a decrease of 24% from $6.8 million in the first quarter of 2018. Real estate services gross margin was 6%, compared to 9% in the first quarter of 2018. Operating expenses were $70.2 million, an increase of 64% from $42.9 million in the first quarter of 2018. Operating expenses were 64% of revenue, up from 54% in the first quarter of 2018.

Net loss was $67.2 million, compared to net loss of $36.4 million in the first quarter of 2018. Stock-based compensation was $6.4 million, up from $4.2 million in the first quarter of 2018. Depreciation and amortization was $1.6 million, down from $2.0 million in the first quarter of 2018. Interest income was $2.3 million and interest expense was $2.1 million, up from $0.6 million and zero, respectively, in the first quarter of 2018.

Net loss per share, basic and diluted, was $0.74, compared to net loss per share, basic and diluted, of $0.44 in the first quarter of 2018.

"Redfin's traffic and revenue growth accelerated in the first quarter, and agent productivity increased for the first time since the second quarter of 2017, all while our earnings were better than our projections," said Redfin CEO Glenn Kelman. "Demand has been especially strong for mortgage, title, RedfinNow and our concierge service for painting and staging listings, increasing our conviction that these new services can combine with our brokerage capabilities to let us solve customer problems no other real estate company can."

Highlights

  • Reached market share of 0.83% of U.S. existing home sales by value in the first quarter of 2019, an increase of 0.02 percentage points from the fourth quarter of 2018, and an increase of 0.10 percentage points from the first quarter of 2018.(2)
  • Continued to drive strong traffic growth, with visitors to our website and mobile application increasing by 20% over the first quarter of 2018.
  • Saved Redfin homebuyers and sellers nearly $24 million in the first quarter, compared to a 2.5% commission typically charged by traditional agents.
  • Launched Redfin.ca brokerage in Toronto and national search site on February 12. Redfin.ca now displays over 170,000 homes for sale across most provinces. From launch through the end of March, traffic to Redfin.ca increased by an average of 62% week over week. In the last week of March, over 165,000 people visited Redfin.ca.
  • Launched a strategic alliance with RE/MAX in the U.S. and Canada that will expand our partner service to almost 5,000 U.S. zip codes and most provinces in Canada. This allows customers that come to our website to find a local real estate agent, even in areas where Redfin does not have capacity to serve customers.
  • Expanded our brokerage service to Huntsville, Alabama. Redfin is now reaching customers across 91 markets and serves 78% of the U.S. population.
  • Launched RedfinNow in Los Angeles and Dallas. RedfinNow is a service that buys homes directly from sellers for a seven percent fee, allowing them to move on with less hassle and more certainty. RedfinNow is also available in San Diego, Inland Empire, and Orange County, California, with plans to expand to additional markets this year.
  • Further integrated RedfinNow into our brokerage operations in Dallas. When we meet with a seller about listing her home, our agent can also present a cash offer from RedfinNow, provided the home qualifies for RedfinNow and the seller requests it. We believe that most sellers want to have the opportunity to compare a cash offer with what they could get if they list on the open market with an agent. In Dallas, we've established a process to do this efficiently and we'll be rolling this out to certain other RedfinNow markets in the coming months.
  • Launched RedfinNow Remote Offers. We can now give customers a cash offer remotely over the phone, without having to visit their house. Redfin can leverage Remote Offers to increase efficiency and expand RedfinNow to more markets across America.
  • Announced an expansion of the Redfin Dallas operations by hiring engineering staff and expanding Redfin's mortgage and title businesses. With engineers working alongside our agents and mortgage and title teams, we will bring together technology and service to deliver a complete home-buying and selling solution.
  • Launched a new pricing program in 11 markets to reward customers who both buy and sell with Redfin. In these markets, we'll charge a 1% listing fee for sellers who also buy with Redfin. Customers who only sell will pay a 1.5% listing fee, still a great value compared to traditional brokerages.
  • Launched advertising campaign in 22 markets, including television, digital video, radio and outdoor media. The campaign is expected to run through May 2019.
  • Launched influencer marketing campaign featuring home designer Bobby Berk, one of Queer Eye's Fab Five. The campaign started after Bobby Berk had a great experience using Redfin to find and buy his home in Los Angeles with a Redfin Agent.

(1) Prior to reporting our financial results for the second quarter ended June 30, 2018, we had one reportable segment ("real estate") that reflected revenue derived from commissions and fees charged on real estate services transactions closed by us or partner agents representing customers in buying and selling homes. Beginning with our financial results for the second quarter ended June 30, 2018, we recognized a new reportable segment ("properties") that reflects revenue from when we sell homes that we previously bought directly from homeowners. Concurrent with our recognition of the new "properties" segment, we changed the name of our "real estate" segment to "real estate services." Prior to our financial results for the second quarter ended June 30, 2018, we included the results from our "properties" segment as part of our "other" segment.

(2) 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 real estate services transactions conducted by our lead agents or our partner agents. 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 May 8, 2019, and are subject to substantial uncertainty.

For the second quarter of 2019 we expect:

  • Total revenue between $183.7 million and $193.1 million, representing year-over-year growth between 29% and 35% compared to the second quarter of 2018. Properties segment revenue between $30.0 million and $35.0 million is included in the guidance provided.
  • Net loss between $14.7 million and $11.3 million, compared to net income of $3.2 million in the second quarter of 2018. This guidance includes approximately $6.2 million of expected stock-based compensation and $1.9 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 statements regarding expansion of our partner program and our RedfinNow operations, our integration of technology and service to offer a complete solution, and the continuation of our advertising campaign, each as described under Highlights, and 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 on Form 10-K for the year ended December 31, 2018, as supplemented by our Quarterly Report on Form 10-Q for the quarter ended March 31, 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 Loss

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



Three Months Ended March 31,


2019


2018

Revenue




Service

$

88,768



$

76,841


Product

21,373



3,052


Total revenue

110,141



79,893


Cost of revenue (1)




Service

84,395



70,855


Product

22,993



3,342


Total cost of revenue

107,388



74,197


Gross profit

2,753



5,696


Operating expenses




Technology and development (1)

15,556



12,762


Marketing (1)

33,201



13,336


General and administrative (1)

21,448



16,772


Total operating expenses

70,205



42,870


Loss from operations

(67,452)



(37,174)


Interest income

2,316



577


Interest expense

(2,136)




Other income, net

92



158


Net loss

$

(67,180)



$

(36,439)


Net loss per share - basic and diluted

$

(0.74)



$

(0.44)


Weighted average shares - basic and diluted

90,610,416



82,010,913






Net loss

$

(67,180)



$

(36,439)


Foreign currency translation adjustments

1




Total comprehensive loss

$

(67,179)



$

(36,439)






(1) Includes stock-based compensation as follows:





Three Months Ended March 31,


2019


2018

Cost of revenue

$

1,465



$

1,300


Technology and development

2,656



1,473


Marketing

286



119


General and administrative

1,999



1,304


Total

$

6,406



$

4,196


 

Redfin Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

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



March 31, 2019


December 31, 2018

Assets




Current assets




Cash and cash equivalents

$

395,618



$

432,608


Restricted cash

10,471



6,446


Accrued revenue, net

16,253



15,363


Inventory

38,306



22,694


Loans held for sale

15,748



4,913


Prepaid expenses and other current assets

13,586



14,223


Total current assets

489,982



496,247


Property and equipment, net

30,618



25,187


Right of use assets, net

32,737




Goodwill and intangibles, net

11,870



11,992


Other non-current assets

9,403



9,395


Total assets

574,610



542,821


Liabilities and stockholders' equity




Current liabilities




Accounts payable

17,533



2,516


Accrued liabilities

54,064



30,837


Other payables

10,374



6,544


Warehouse credit facilities

15,193



4,733


Current operating lease liabilities

6,368




Current portion of deferred rent

68



1,588


Total current liabilities

103,600



46,218


Non-current operating lease liabilities

41,567




Deferred rent



11,079


Convertible senior notes, net

115,094



113,586


Total liabilities

260,261



170,883


Commitments and contingencies




Stockholders' equity




Common stock—par value $0.001 per share; 500,000,000 shares authorized; 90,926,249 and 90,151,341 shares issued and outstanding, respectively

91



90


Additional paid-in capital

552,418



542,829


Accumulated deficit

(238,160)



(170,981)


Total stockholders' equity

314,349



371,938


Total liabilities and stockholders' equity

$

574,610



$

542,821


 

Redfin Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)



Three Months Ended March 31,


2019


2018

Operating activities




Net loss

$

(67,180)



$

(36,439)


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




Depreciation and amortization

1,637



2,003


Stock-based compensation

6,406



4,196


Amortization of debt discount and issuance costs

1,507




Non-cash lease expense

1,216




Change in assets and liabilities




Accrued revenue

(890)



1,241


Inventory

(15,612)



(3,286)


Other assets

1,441



3,374


Accounts payable

14,848



1,029


Accrued liabilities

21,695



7,248


Operating lease liabilities

(1,459)




Deferred rent

69



(268)


Origination of loans held for sale

(49,850)



(9,477)


Proceeds from sale of loans originated as held for sale

39,015



9,887


Net cash used in operating activities

(47,157)



(20,492)


Investing activities




Purchases of property and equipment

(3,151)



(2,305)


Net cash used in investing activities

(3,151)



(2,305)


Financing activities




Proceeds from the exercise of stock options

3,732



5,946


Tax payment related to net share settlements on restricted stock units

(818)



(59)


Borrowings from warehouse credit facilities

48,557



9,265


Repayments of warehouse credit facilities

(38,097)



(9,924)


Other payables - deposits held in escrow

3,968



6,808


Net cash provided by financing activities

17,342



12,036


Net change in cash, cash equivalents, and restricted cash

(32,966)



(10,761)


Cash, cash equivalents, and restricted cash




Beginning of period

439,055



212,658


End of period

$

406,089



$

201,897


Supplemental disclosure of cash flow information




Cash paid for interest

$

1,202



$


  Non-cash transactions




Stock-based compensation capitalized in property and equipment

(270)



(124)


Property and equipment additions in accounts payable and accrued liabilities

(1,370)



(55)


Leasehold improvements paid directly by lessor

1,963




 

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)



Three Months Ended


Mar. 31,
2019


Dec. 31,
2018


Sep. 30,
2018


Jun. 30,
2018


Mar. 31,
2018


Dec. 31,
2017


Sep. 30,
2017


Jun. 30,
2017


Mar. 31,
2017

Monthly average visitors (in thousands)

31,107



25,212



29,236



28,777



25,820



21,377



24,518



24,400



20,162


Real estate services transactions


















Brokerage

8,435



9,822



12,876



12,971



7,285



8,598



10,527



10,221



5,692


Partner

2,125



2,749



3,333



3,289



2,237



2,739



3,101



2,874



2,041


Total

10,560



12,571



16,209



16,260



9,522



11,337



13,628



13,095



7,733




















Real estate services revenue per transaction


















Brokerage

$

9,640



$

9,569



$

9,227



$

9,510



$

9,628



$

9,659



$

9,289



$

9,301



$

9,570


Partner

2,153



2,232



2,237



2,281



2,137



2,056



1,960



1,945



1,911


Aggregate

8,134



7,964



7,790



8,048



7,869



7,822



7,621



7,687



7,548


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

$

4,800



$

5,825



$

7,653



$

7,910



$

4,424



$

5,350



$

6,341



$

6,119



$

3,470


U.S. market share by value

0.83

%


0.81

%


0.85

%


0.83

%


0.73

%


0.71

%


0.71

%


0.64

%


0.58

%

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

64

%


66

%


66

%


68

%


66

%


69

%


69

%


69

%


68

%

Average number of lead agents

1,503



1,419



1,397



1,415



1,327



1,118



1,028



1,010



935


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)



Three Months Ended March 31,


2019


2018

Revenue by segment




Brokerage revenue

$

81,314



$

70,143


Partner revenue

4,576



4,781


Total real estate services revenue

85,890



74,924


Properties revenue

21,373



3,052


Other revenue

3,047



1,917


Intercompany eliminations

(169)




Total revenue

$

110,141



$

79,893






Cost of revenue by segment




Real estate services cost of revenue

$

80,784



$

68,164


Properties cost of revenue

22,993



3,342


Other cost of revenue

3,780



2,691


Intercompany eliminations

(169)




Total cost of revenue

$

107,388



$

74,197






Gross profit by segment




Real estate services gross profit

$

5,106



$

6,760


Properties gross profit

(1,620)



(290)


Other gross profit

(733)



(774)


Total gross profit

$

2,753



$

5,696


 

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SOURCE Redfin

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