Press Release

Redfin Second-Quarter 2019 Revenue up 39% Year-over-Year to $197.8 Million

August 01, 2019

SEATTLE, Aug. 1, 2019 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the second quarter ended June 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 39% year-over-year to $197.8 million during the second quarter. Gross profit was $48.3 million, an increase of 7% from $45.2 million in the second quarter of 2018. Gross margin was 24%, compared to 32% in the second quarter of 2018. Real estate services gross profit was $49.2 million, an increase of 8% from $45.5 million in the second quarter of 2018. Real estate services gross margin was 32%, compared to 35% in the second quarter of 2018. Operating expenses were $60.8 million, an increase of 42% from $42.8 million in the second quarter of 2018. Operating expenses were 31% of revenue, up from 30% in the second quarter of 2018.

Net loss was $12.6 million, compared to net income of $3.2 million in the second quarter of 2018. Stock-based compensation was $5.9 million, up from $4.8 million in the second quarter of 2018. Depreciation and amortization was $2.2 million, up from $1.9 million in the second quarter of 2018. Interest income was $1.9 million and interest expense was $2.2 million, up from $0.7 million and zero, respectively, in the second quarter of 2018.

Net loss per share, basic and diluted, was $0.14, compared to net income per share, basic and diluted, of $0.04 in the second quarter of 2018.

"The second quarter is a turning point for our company," said Redfin CEO Glenn Kelman. "Year-over-year growth in website traffic, brokerage sales, and revenues overall accelerated for the second straight quarter. Our new businesses have built the infrastructure and delivered the results needed for more rapid expansion, with significant margin gains in mortgage and title, and integrated field execution for instant-offers and the brokerage. The years of work we've invested in each of these businesses are now positioning us to be the first to deliver a complete solution at a national scale for people moving from one home to the next."

Highlights

  • Reached market share of 0.94% of U.S. existing home sales by value in the second quarter of 2019, an increase of 0.11 percentage points from the first quarter of 2019, and an increase of 0.11 percentage points from the second quarter of 2018.(1)
  • Continued to drive strong traffic growth, with visitors to our website and mobile application increasing by 27% over the second quarter of 2018.
  • Saved Redfin homebuyers and sellers over $54 million in the second quarter, compared to a 2.5% commission typically charged by traditional agents.
  • Expanded brokerage service to Vancouver, BC and Des Moines, IA. Redfin is now reaching customers across 92 markets and serves 78% of the U.S. population.
  • Rolled out a new Buyer Deal Room on both iOS and Android to help our homebuyers stay up to date on key milestones and to-dos in their home purchase right from our mobile application.
  • Added marketing stats to our sellers' personalized dashboard to show them all of the ways Redfin is marketing their home to likely buyers through email, social media, and push notifications.
  • Expanded Redfin Mortgage to Florida, Maryland, and Tennessee. Invested in our proprietary efficiency tools and software for our mortgage team to further streamline the preapproval, underwriting, and closing process.
  • Rolled out a new Redfin Mortgage closing disclosure tool that is saving our closing department 50 minutes per loan.
  • Expanded RedfinNow to Denver. As of the end of the second quarter, RedfinNow was also available in Dallas, TX, Los Angeles, San Diego, Inland Empire, and Orange County, CA.
  • Rolled out integrated home-selling consultations to Denver, where a Redfin listing agent now presents the RedfinNow cash offer alongside her presentation of what the home could list for on the open market. This service is also available in Dallas.
  • Developed software that lets people unlock a RedfinNow listing from their smartphone and tour on demand. It is now available in Dallas, San Diego, and the Inland Empire.
  • Launched Redfin Direct in Boston, 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 second quarter, our listings received 52 Direct offers, resulting in 4 closings.
  • Opened a new office in Frisco, TX for our rapidly growing mortgage, RedfinNow, and brokerage teams. It's also a new engineering hub for Redfin, our first outside of Seattle and San Francisco. These engineers will sit alongside our brokerage, title, and mortgage teams and build technology to deliver a complete home buying and selling solution to our customers.

(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 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 August 1, 2019, and are subject to substantial uncertainty.

For the third quarter of 2019 we expect:

  • Total revenue between $223 million and $233 million, representing year-over-year growth between 59% and 66% compared to the third quarter of 2018. Properties segment revenue between $67 million and $72 million is included in the guidance provided.
  • Net income between $3.4 million and $6.4 million, compared to net income of $3.5 million in the third quarter of 2018. This guidance includes approximately $6.6 million of expected stock-based compensation and $2.5 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 June 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 June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Revenue








Service

$

157,872



$

133,656



$

246,641



$

210,498


Product

39,908



8,986



61,281



12,038


Total revenue

197,780



142,642



307,922



222,536


Cost of revenue(1)








Service

108,528



88,341



192,923



159,196


Product

40,906



9,088



63,898



12,430


Total cost of revenue

149,434



97,429



256,821



171,626


Gross profit

48,346



45,213



51,101



50,910


Operating expenses








Technology and development(1)

16,063



13,033



31,620



25,796


Marketing(1)

27,050



14,435



60,250



27,770


General and administrative(1)

17,654



15,288



39,102



32,062


Total operating expenses

60,767



42,756



130,972



85,628


Income (loss) from operations

(12,421)



2,457



(79,871)



(34,718)


Interest income

1,913



729



4,229



1,307


Interest expense

(2,153)





(4,290)




Other income, net

36



21



128



179


Net income (loss)

$

(12,625)



$

3,207



$

(79,804)



$

(33,232)


Net income (loss) per share - basic

$

(0.14)



$

0.04



$

(0.88)



$

(0.40)


Net income (loss) per share - diluted

$

(0.14)



$

0.04



$

(0.88)



$

(0.40)


Weighted average shares - basic

91,216,886



83,164,670



90,915,334



82,590,979


Weighted average shares - diluted

91,216,886



90,743,178



90,915,334



82,590,979










Net income (loss)

$

(12,625)



$

3,207



$

(79,804)



$

(33,232)


Other comprehensive income:








Foreign currency translation adjustments

37





38




Unrealized gain on available-for-sale securities

6





6




Total comprehensive income (loss)

$

(12,582)



$

3,207



$

(79,760)



$

(33,232)



(1) Includes stock-based compensation as follows:



Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Cost of revenue

$

1,328



$

1,392



$

2,793



$

2,691


Technology and development

2,685



1,726



5,341



3,200


Marketing

349



157



635



276


General and administrative

1,514



1,503



3,513



2,808


Total

$

5,876



$

4,778



$

12,282



$

8,975


 

Redfin Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

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



June 30, 2019


December 31, 2018

Assets




Current assets




Cash and cash equivalents

$

241,104



$

432,608


Restricted cash

18,133



6,446


Short-term investments

35,365




Accrued revenue, net

38,686



15,363


Inventory

85,654



22,694


Loans held for sale

30,169



4,913


Prepaid expenses

6,763



11,916


Other current assets

5,860



2,307


Total current assets

461,734



496,247


Long-term investments

34,954




Property and equipment, net

35,675



25,187


Right of use assets, net

44,830




Goodwill and intangibles, net

11,748



11,992


Other non-current assets

10,627



9,395


Total assets

599,568



542,821


Liabilities and stockholders' equity




Current liabilities




Accounts payable

4,217



2,516


Accrued liabilities

57,423



30,837


Other payables

18,250



6,544


Borrowings under warehouse credit facilities

29,427



4,733


Current operating lease liabilities

8,719




Current portion of deferred rent

36



1,588


Total current liabilities

118,072



46,218


Non-current operating lease liabilities

52,634




Deferred rent



11,079


Convertible senior notes, net

116,617



113,586


Total liabilities

287,323



170,883


Commitments and contingencies




Stockholders' equity




Common stock—par value $0.001 per share; 500,000,000 shares authorized; 91,777,537 and 90,151,341 shares issued and outstanding, respectively

92



90


Additional paid-in capital

562,894



542,829


Accumulated other comprehensive income

44




Accumulated deficit

(250,785)



(170,981)


Total stockholders' equity

312,245



371,938


Total liabilities and stockholders' equity

$

599,568



$

542,821


 

Redfin Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)



Six Months Ended June 30,


2019


2018

Operating activities




Net loss

$

(79,804)



$

(33,232)


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




Depreciation and amortization

3,809



3,902


Stock-based compensation

12,282



8,974


Amortization of debt discount and issuance costs

3,031




Non-cash lease expense

2,943




Other

(100)




Change in assets and liabilities




Accrued revenue

(23,323)



(5,568)


Inventory

(62,960)



(11,137)


Prepaid expenses and other assets

1,230



3,682


Accounts payable

1,350



1,934


Accrued liabilities and other payables

26,494



7,481


Operating lease liabilities

(3,301)




Deferred rent

(5)



(583)


Origination of loans held for sale

(153,335)



(29,249)


Proceeds from sale of loans originated as held for sale

128,080



27,555


Net cash used in operating activities

(143,609)



(26,241)


Investing activities




Purchases of investments

(70,312)




Sales of investments

100




Purchases of property and equipment

(9,504)



(4,045)


Net cash used in investing activities

(79,716)



(4,045)


Financing activities




Proceeds from the exercise of stock options

8,965



14,394


Tax payments related to net share settlements on restricted stock units

(1,792)



(227)


Borrowings from warehouse credit facilities

149,900



28,551


Repayments of warehouse credit facilities

(125,206)



(27,076)


Other payables - deposits held in escrow

11,602



13,631


Net cash provided by financing activities

43,469



29,273


Effect of exchange rate changes on cash and cash equivalents

38




Net change in cash, cash equivalents, and restricted cash

(179,818)



(1,013)


Cash, cash equivalents, and restricted cash




Beginning of period

439,055



212,658


End of period

$

259,237



$

211,645


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)



Three Months Ended


Jun. 30,
2019


Mar. 31,
2019


Dec. 31,
2018


Sep. 30,
2018


Jun. 30,
2018


Mar. 31,
2018


Dec. 31,
2017


Sep. 30,
2017


Jun. 30,
2017

Monthly average visitors (in thousands)

36,557



31,107



25,212



29,236



28,777



25,820



21,377



24,518



24,400


Real estate services transactions


















Brokerage

15,580



8,435



9,822



12,876



12,971



7,285



8,598



10,527



10,221


Partner

3,357



2,125



2,749



3,333



3,289



2,237



2,739



3,101



2,874


Total

18,937



10,560



12,571



16,209



16,260



9,522



11,337



13,628



13,095


Real estate services revenue per transaction


















Brokerage

$

9,332



$

9,640



$

9,569



$

9,227



$

9,510



$

9,628



$

9,659



$

9,289



$

9,301


Partner

2,218



2,153



2,232



2,237



2,281



2,137



2,056



1,960



1,945


Aggregate

8,071



8,134



7,964



7,790



8,048



7,869



7,822



7,621



7,687


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

$

8,986



$

4,800



$

5,825



$

7,653



$

7,910



$

4,424



$

5,350



$

6,341



$

6,119


U.S. market share by value

0.94

%


0.83

%


0.81

%


0.85

%


0.83

%


0.73

%


0.71

%


0.71

%


0.64

%

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

64

%


64

%


66

%


66

%


68

%


66

%


69

%


69

%


69

%

Average number of lead agents

1,603



1,503



1,419



1,397



1,415



1,327



1,118



1,028



1,010


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)



Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Revenue by segment








Brokerage revenue

$

145,399



$

123,355



$

226,713



$

193,498


Partner revenue

7,447



7,503



12,023



12,285


Total real estate services revenue

152,846



130,858



238,736



205,783


Properties revenue

39,908



8,986



61,281



12,038


Other revenue

5,281



2,798



8,329



4,715


Intercompany eliminations

(255)





(424)




Total revenue

$

197,780



$

142,642



$

307,922



$

222,536










Cost of revenue by segment








Real estate services cost of revenue

$

103,616



$

85,337



$

184,399



$

153,501


Properties cost of revenue

40,906



9,088



63,898



12,430


Other cost of revenue

5,167



3,004



8,948



5,695


Intercompany eliminations

(255)





(424)




Total cost of revenue

$

149,434



$

97,429



$

256,821



$

171,626










Gross profit by segment








Real estate services gross profit

$

49,230



$

45,521



54,337



52,282


Properties gross profit

(998)



(102)



(2,617)



(392)


Other gross profit

114



(206)



(619)



(980)


Total gross profit

$

48,346



$

45,213



$

51,101



$

50,910


 

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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