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) August 1, 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 August 1, 2019, Redfin Corporation (the "Company") reported its financial results for the quarter ended June 30, 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: August 1, 2019
 
/s/ Chris Nielsen
 
 
 
 
Chris Nielsen
Chief Financial Officer
 

Exhibit




http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13036676&doc=3

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

SEATTLE - August 1, 2019 - 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.

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.

1



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.




2



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

Contacts

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

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

3




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


4



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


5



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


6




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




7



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




8