Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported) May 8, 2019

 
Redfin Corporation
 
 
(Exact name of registrant as specific in its charter)
 

 
Delaware
 
001-38160
 
74-3064240
 
 
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 
 
 
 
 
1099 Stewart Street, Suite 600
Seattle, WA
 
 
 
98101
 
 
(Address of principal executive offices)
 
 
 
(Zip Code)
 
 
(206) 576-8333
 
 
(Registrant's telephone number, including area code)
 
 
 
 
 
(Former name, former address and former fiscal year, if changed since last report)
 

 
Securities registered pursuant to Section 12(b) of the Act:
 
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
 
 
Common Stock, $0.001 par value per share
 
RDFN
 
The Nasdaq Global Select Market
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
¨
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
¨
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
¨
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨



Item 2.02 Results of Operations and Financial Condition.

On May 8, 2019, Redfin Corporation (the "Company") reported its financial results for the quarter ended March 31, 2019. A copy of the press release issued by the Company is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.
 
Exhibit Number
 
Description
 
 
99.1
 
 


1


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
Redfin Corporation
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
Date: May 8, 2019
 
/s/ Chris Nielsen
 
 
 
 
Chris Nielsen
Chief Financial Officer
 

Exhibit




http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12889871&doc=3

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

SEATTLE - May 8, 2019 - 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.

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.

1



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.


2



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

Contacts

Investor Relations
Elena Perron, 206-576-8610
ir@redfin.com

3




Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com

4




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


5



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


6



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

 


7




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




8



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




9