Press Release

Redfin First-Quarter 2020 Revenue up 73% Year-over-Year to $191 Million

May 07, 2020

SEATTLE, May 7, 2020 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the first quarter ended March 31, 2020. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation as well as depreciation and amortization expenses.

Revenue increased 73% year-over-year to $191 million during the first quarter. Gross profit was $13 million, an increase of 368% from $3 million in the first quarter of 2019. Real estate services gross profit was $15 million, an increase of 195% from $5 million in the first quarter of 2019. Real estate services gross margin was 14%, compared to 6% in the first quarter of 2019. Operating expenses were $70 million, flat from $70 million in the first quarter of 2019. Operating expenses were 37% of revenue, down from 64% in the first quarter of 2019.

Net loss was $60 million, compared to net loss of $67 million in the first quarter of 2019. Stock-based compensation was $7.2 million, up from $6.4 million in the first quarter of 2019. Depreciation and amortization was $3.3 million, up from $1.6 million in the first quarter of 2019. Interest income was $1.1 million and interest expense was $2.4 million, compared to $2.3 million and $2.1 million, respectively, in the first quarter of 2019.

Net loss per share, basic and diluted, was $0.64, compared to net loss per share, basic and diluted, of $0.74 in the first quarter of 2019.

"Real estate commerce has probably virtualized itself more in the past two months than it had in the prior 20 years," said Redfin CEO Glenn Kelman. "This makes Redfin's technology advantage over other brokers more important than ever. But what matters most isn't what we built prior to this pandemic; it's how we've reacted since. We were the first major broker to encourage homebuyers to tour homes via video-chat, on March 3; the first to warn the public of a possible housing-market downturn, on March 4; the first to cancel all open houses to protect public health, on March 16; and the first to offer homebuyers self-service access to the listings being sold by our customers, on April 23. And there are still so many firsts ahead of us. The reason we're working so hard is to bring back all the colleagues and friends we lost in our April furlough."

First Quarter Highlights

  • Reached market share of 0.93% of U.S. existing home sales by value in the first quarter of 2020, an increase of 0.10 percentage points from the first quarter of 2019.(1)
  • Saved homebuyers and sellers over $30 million in the first quarter of 2020. This includes the savings Redfin offers buyers through the Redfin Refund and sellers through Redfin's lower listing fee when compared to a 2.5% listing commission typically charged by traditional agents.
  • Launched Redfin Premier, a luxury service offering enhanced local and international marketing, as well as high-end photography and branding for million-dollar homes. The program was introduced in Austin, Boston, Chicago, Denver, Hawaii, Maryland, Orange County, Portland, Sacramento, San Diego and Northern Virginia and will be expanded to other markets over time.
  • Expanded the brokerage's national footprint by launching agent service in Flagstaff, AZ.

COVID-19 Actions
Redfin took swift action to respond to COVID-19 and prepare the business to weather the associated economic decline, while strengthening its long-term competitive advantage as the leading technology-powered residential real estate company:

  • As soon as cases of COVID-19 were being reported in the Seattle area, the company instituted new policies to safeguard the health of Redfin customers and employees. Starting March 4, Redfin directed all employees in its Seattle office to work from home and asked employees across all of its other offices to follow suit beginning March 5.
  • Starting on March 4, Redfin began publishing weekly reports on the impact of COVID-19 on the housing market, real estate listing activity, sales and homebuyer demand, providing transparent information and the latest data to its agents and customers.
  • Established a company-wide COVID-19 response team to monitor all state and local government orders and provide real-time guidance to employees.
  • Pivoted its strategic priorities and business operations, including temporarily pausing making offers for homes through RedfinNow and shifting engineering focus to building software for the virtual brokerage.
  • Raised $110 million through the sale of capital stock to Durable Capital Partners LP.
  • Rapidly expanded its virtual brokerage capabilities and software in response to health and safety concerns and stay at home orders. Specifically:
    • Updated its website and mobile application to highlight virtual services and allow customers to request a live video chat tour with a Redfin agent with one click. The software also lets the customer select their preferred video chat application and provides market-specific messages and touring options based on local ordinances. For the week ended May 2, 27% of Redfin tour requests were for video tours.
    • Increased the prominence and visibility of 3D Virtual Walkthroughs on all Redfin listings.
    • Encouraged customers to take advantage of the digital closing capabilities of Redfin Mortgage and Title Forward in markets where the law allows them.
  • Cut executive compensation and bonuses, eliminated bonuses for headquarters employees and temporarily cut headquarters salaries between 10% and 15%.
  • In April, reduced its number of employees by approximately 400 people, which represented approximately 10% of employees, and placed approximately an additional 1,000 employees on furlough.
  • In response to strengthening homebuying demand in late April, began to unwind some of the actions taken in March and early April. RedfinNow will resume making offers on homes in select markets in May. The company also plans to resume television advertising with new ads in select markets, and in early May, asked approximately 135 employees to return from furlough to serve renewed homebuying demand.

(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 May 7, 2020, and are subject to substantial uncertainty.

For the second quarter of 2020 we expect:

  • Total revenue between $179 million and $189 million, representing a year-over-year decrease between 9% and 4% compared to the second quarter of 2019. Properties segment revenue between $61 million and $65 million is included in the guidance provided.
  • Net loss between $26 million and $21 million, compared to net loss of $13 million in the second quarter of 2019. This guidance includes approximately $7.0 million of expected stock-based compensation and $3.5 million of expected depreciation and amortization. The guidance also contains approximately $4.4 million of severance costs and $3.7 million of furlough costs, both including benefits.

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, and expansion of our Redfin Premiere service offering. 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, 2019, as supplemented by our quarterly report for the quarter ended March 31, 2020, 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 in 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 2019, we have helped customers buy or sell more than 235,000 homes worth more than $115 billion.

Redfin may post updates about COVID-19's impact on the U.S. residential real estate industry or its business on its company blog at www.redfin.com/blog/coronavirus-housing-market-news. We encourage investors and others interested in our company to review and subscribe to the information we post on our company blog, as some of the information may be material.

Redfin-F

Redfin Corporation and Subsidiaries

Consolidated Statements of Comprehensive Loss

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



Three Months Ended March 31,


2020


2019

Revenue




Service

$

111,478



$

88,768


Product

79,517



21,373


Total revenue

190,995



110,141


Cost of revenue(1)




Service

98,368



84,395


Product

79,748



22,993


Total cost of revenue

178,116



107,388


Gross profit

12,879



2,753


Operating expenses




Technology and development(1)

20,274



15,556


Marketing(1)

25,708



33,201


General and administrative(1)

24,327



21,448


Total operating expenses

70,309



70,205


Loss from operations

(57,430)



(67,452)


Interest income

1,103



2,316


Interest expense

(2,444)



(2,136)


Other income (expense), net

(1,346)



92


Net loss

$

(60,117)



$

(67,180)


Net loss per share attributable to common stock—basic and diluted

$

(0.64)



$

(0.74)


Weighted average shares of common stock—basic and diluted

93,442,706



90,610,416






Other comprehensive income




Net loss

$

(60,117)



$

(67,180)


Foreign currency translation adjustments

(25)



1


Unrealized gain on available-for-sale securities

559




Total comprehensive loss

$

(59,583)



$

(67,179)










(1) Includes stock-based compensation as follows:



Three Months Ended March 31,


2020


2019

Cost of revenue

$

1,638



$

1,465


Technology and development

3,648



2,656


Marketing

375



286


General and administrative

1,550



1,999


Total

$

7,211



$

6,406


 

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

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



March 31, 2020


December 31, 2019

Assets




Current assets




Cash and cash equivalents

$

213,940



$

234,679


Restricted cash

16,772



12,769


Short-term investments

75,049



70,029


Accounts receivable, net

21,821



19,223


Inventory

70,649



74,590


Loans held for sale

44,321



21,985


Prepaid expenses

9,555



14,822


Other current assets

5,243



3,496


Total current assets

457,350



451,593


Property and equipment, net

40,496



39,577


Right-of-use assets, net

49,972



52,004


Long-term investments

26,711



30,978


Goodwill and intangibles, net

11,382



11,504


Other non-current assets

8,923



10,557


  Total assets

$

594,834



$

596,213


Liabilities and stockholders' equity




Current liabilities




Accounts payable

$

2,909



$

2,122


Accrued liabilities

58,456



38,022


Other payables

11,717



7,884


Warehouse credit facilities

42,586



21,302


Secured revolving credit facility

8,901



4,444


Current lease liabilities

11,533



11,408


  Total current liabilities

136,102



85,182


Non-current lease liabilities

57,254



59,869


Convertible senior notes, net

121,292



119,716


  Total liabilities

314,648



264,767


Commitments and contingencies




Stockholders' equity




Common stock—par value $0.001 per share; 500,000,000 shares authorized; 93,957,774 and 93,001,597 shares issued and outstanding, respectively

94



93


Additional paid-in capital

591,421



583,097


Accumulated other comprehensive income

575



42


Accumulated deficit

(311,904)



(251,786)


  Total stockholders' equity

280,186



331,446


  Total liabilities and stockholders' equity

$

594,834



$

596,213


 

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)



Three Months Ended March 31,


2020


2019

Operating Activities




Net loss

$

(60,117)



$

(67,180)


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




Depreciation and amortization

3,307



1,637


Stock-based compensation

7,211



6,406


Amortization of debt discount and issuance costs

1,730



1,507


Non-cash lease expense

2,254



1,216


Impairment costs

1,420




Other

(989)




Change in assets and liabilities:




Accounts receivable, net

(2,598)



(890)


Inventory

3,941



(15,612)


Prepaid expenses and other assets

3,409



1,441


Accounts payable

514



14,848


Accrued liabilities and other payables

20,626



21,764


Lease liabilities

(2,693)



(1,459)


Origination of loans held for sale

(132,697)



(49,850)


Proceeds from sale of loans originated as held for sale

111,233



39,015


Net cash used in operating activities

(43,449)



(47,157)


Investing activities




Purchases of property and equipment

(3,406)



(3,151)


Purchases of investments

(33,267)




Sales of investments

31,608




Maturities of investments

1,597




Net cash used in investing activities

(3,468)



(3,151)


Financing activities




Proceeds from the issuance of shares resulting from employee equity plans

4,103



3,732


Tax payments related to net share settlements on restricted stock units

(3,307)



(818)


Borrowings from warehouse credit facilities

131,310



48,557


Repayments to warehouse credit facilities

(110,025)



(38,097)


Borrowings from secured revolving credit facility

11,854




Repayments to secured revolving credit facility

(7,398)




Other payables—deposits held in escrow

3,684



3,968


Principal payments for finance lease obligations

(15)




Net cash provided by financing activities

30,206



17,342


Effect of exchange rate changes on cash and cash equivalents

(25)




Net change in cash, cash equivalents, and restricted cash

(16,736)



(32,966)


Cash, cash equivalents, and restricted cash:




Beginning of period

247,448



439,055


End of period

$

230,712



$

406,089


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)



Three Months Ended


Mar. 31,
2020


Dec. 31,
2019


Sep. 30,
2019


Jun. 30,
2019


Mar. 31,
2019


Dec. 31,
2018


Sep. 30,
2018


Jun. 30,
2018


Mar. 31,
2018

Monthly average visitors (in thousands)

35,519



30,595



35,633



36,557



31,107



25,212



29,236



28,777



25,820


Real estate services transactions


















Brokerage

10,751



13,122



16,098



15,580



8,435



9,822



12,876



12,971



7,285


Partner

2,479



2,958



3,499



3,357



2,125



2,749



3,333



3,289



2,237


Total

13,230



16,080



19,597



18,937



10,560



12,571



16,209



16,260



9,522


Real estate services revenue per transaction


















Brokerage

$

9,520



$

9,425



$

9,075



$

9,332



$

9,640



$

9,569



$

9,227



$

9,510



$

9,628


Partner

2,535



2,369



2,295



2,218



2,153



2,232



2,237



2,281



2,137


Aggregate

8,211



8,127



7,865



8,071



8,134



7,964



7,790



8,048



7,869




















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

$

6,098



$

7,588



$

9,157



$

8,986



$

4,800



$

5,825



$

7,653



$

7,910



$

4,424


U.S. market share by value

0.93

%


0.94

%


0.96

%


0.94

%


0.83

%


0.81

%


0.85

%


0.83

%


0.73

%

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

61

%


62

%


63

%


64

%


64

%


66

%


66

%


68

%


66

%

Average number of lead agents

1,826



1,526



1,579



1,603



1,503



1,419



1,397



1,415



1,327


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)



Three Months Ended March 31,


2020


2019

Real estate services revenue




Brokerage revenue

$

102,351



$

81,314


Partner revenue

6,285



4,576


  Total real estate services revenue

108,636



85,890


Properties revenue

79,098



21,373


Other revenue

4,250



3,047


Intercompany eliminations

(989)



(169)


Total revenue

$

190,995



$

110,141






Cost of revenue




Real estate services

$

93,562



$

80,784


Properties

79,299



22,993


Other

6,244



3,780


Intercompany eliminations

(989)



(169)


Total cost of revenue

$

178,116



$

107,388






Gross profit by segment




Real estate services

$

15,074



$

5,106


Properties

(201)



(1,620)


Other

(1,994)



(733)


Total gross profit

$

12,879



$

2,753






Gross margin (percentage of revenue)




Real estate services

13.9

%


5.9

%

Properties

(0.3)



(7.6)


Other

(46.9)



(24.1)


Total gross margin

6.7



2.5


 

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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