Document
false0001382821 0001382821 2019-11-06 2019-11-06
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)
November 6, 2019

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

Delaware
 
001-38160
 
74-3064240
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(I.R.S. 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)

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))

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

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 November 6, 2019, Redfin Corporation (the "Company") reported its financial results for the quarter ended September 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
 
 
 
104
 
Cover page interactive data file, submitted using inline XBRL
 


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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: November 6, 2019
 
/s/ Chris Nielsen
 
 
 
 
Chris Nielsen
Chief Financial Officer
 

Exhibit




http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13185023&doc=8

Redfin Third-Quarter 2019 Revenue up 70% Year-over-Year to $239 Million

SEATTLE - November 6, 2019 - Redfin Corporation (NASDAQ: RDFN) today announced financial results for the third quarter ended September 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 70% year-over-year to $239 million during the third quarter. Gross profit was $53.4 million, an increase of 26% from $42.3 million in the third quarter of 2018. Real estate services gross profit was $54.1 million, an increase of 26% from $43.0 million in the third quarter of 2018. Real estate services gross margin was 35%, compared to 34% in the third quarter of 2018. Operating expenses were $45.9 million, an increase of 18% from $39.0 million in the third quarter of 2018. Operating expenses were 19% of revenue, down from 28% in the third quarter of 2018.

Net income was $6.8 million, compared to net income of $3.5 million in the third quarter of 2018. Stock-based compensation was $7.5 million, up from $5.5 million in the third quarter of 2018. Depreciation and amortization was $2.6 million, up from $2.2 million in the third quarter of 2018. Interest income was $1.6 million and interest expense was $2.3 million, compared to $1.8 million and $1.6 million, respectively, in the third quarter of 2018.

Net income per share, basic and diluted, was $0.07, compared to net income per share, basic and diluted, of $0.04 in the third quarter of 2018.

"Redfin's third quarter was strong across the board, with accelerating revenues and year-over-year gross-margin gains in every one of our businesses," said Redfin CEO Glenn Kelman. "We’re investing more in better service, but also in disruptive technologies that let people tour and buy homes without an agent. We’ve expanded instant offers for homeowners from six to ten markets, and are now showing homebuyers the commissions that a seller is offering their agent. These are big strides toward our long-term goal of redefining real estate in the consumers’ favor.”

Highlights
Reached market share of 0.96% of U.S. existing home sales by value in the third quarter of 2019, an increase of 0.02 percentage points from the second quarter of 2019, and an increase of 0.11 percentage points from the third quarter of 2018.(1) 
Continued to drive strong traffic growth, with visitors to our website and mobile application increasing by 22% over the third quarter of 2018.
Saved Redfin homebuyers and sellers over $57 million in the third quarter, compared to a 2.5% commission typically charged by traditional agents.
Expanded RedfinNow to Austin, Houston, and San Antonio, TX. As of the end of the third quarter, RedfinNow was also available in Denver, CO, Dallas, TX, Los Angeles, San Diego, Inland Empire, and Orange County, CA.

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Launched Redfin Direct in Northern Virginia, 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 third quarter, our listings received 68 Direct offers, resulting in 18 closings.
Launched Direct Access for RedfinNow listings in Austin, Denver and our Southern California markets. Direct Access makes it easy for buyers to tour RedfinNow listings on their own with their smartphone.
Redfin Home Services rolled out a fleet of Redfin-branded vans for our renovation superintendents, further streamlining the process of getting homes ready for the market.
Launched a referral partnership with Opendoor in Atlanta and Phoenix to give more Redfin customers the chance to compare a cash offer to listing with a Redfin agent. Homesellers in these markets can now request an Opendoor offer through Redfin’s website and mobile application.
Expanded Fast Offers technology to Redfin agents in California, making it simple for agents to prepare offer paperwork for clients even on a mobile device. The software is now available in 33 markets.
In an effort to arm consumers with as much information as possible, Redfin is now displaying the commission offered to the buyer's agent for homes listed by Redfin.

(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 November 6, 2019, and are subject to substantial uncertainty.

For the fourth quarter of 2019 we expect:
Total revenue between $211 million and $220 million, representing year-over-year growth between 70% and 77% compared to the fourth quarter of 2018. Properties segment revenue between $80 million and $85 million is included in the guidance provided.
Net loss between $12.8 million and $9.5 million, compared to net loss of $12.2 million in the fourth quarter of 2018. This guidance includes approximately $7.6 million of expected stock-based compensation and $2.7 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 September 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-

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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

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Redfin Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except share and per share amounts, unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Revenue
 
 
 
 
 
 
 
Service
$
158,519

 
$
128,905

 
$
405,160

 
$
339,403

Product
80,164

 
11,350

 
141,445

 
23,388

Total revenue
238,683

 
140,255

 
546,605

 
362,791

Cost of revenue(1)
 
 
 
 
 
 
 
Service
104,397

 
86,294

 
297,320

 
245,490

Product
80,909

 
11,656

 
144,807

 
24,086

Total cost of revenue
185,306

 
97,950

 
442,127

 
269,576

Gross profit
53,377

 
42,305

 
104,478

 
93,215

Operating expenses
 
 
 
 
 
 
 
Technology and development(1)
18,801

 
14,310

 
50,421

 
40,105

Marketing(1)
8,361

 
8,236

 
68,611

 
36,006

General and administrative(1)
18,779

 
16,470

 
57,881

 
48,532

Total operating expenses
45,941

 
39,016

 
176,913

 
124,643

Income (loss) from operations
7,436

 
3,289

 
(72,435
)
 
(31,428
)
Interest income
1,576

 
1,775

 
5,804

 
3,082

Interest expense
(2,274
)
 
(1,610
)
 
(6,564
)
 
(1,610
)
Other income, net
44

 
21

 
172

 
200

Net income (loss)
$
6,782

 
$
3,475

 
$
(73,023
)
 
$
(29,756
)
Net income (loss) per share - basic
$
0.07

 
$
0.04

 
$
(0.80
)
 
$
(0.35
)
Net income (loss) per share - diluted
$
0.07

 
$
0.04

 
$
(0.80
)
 
$
(0.35
)
Weighted average shares - basic
91,994,731

 
87,743,223

 
91,279,086

 
84,327,266

Weighted average shares - diluted
97,171,270

 
94,642,463

 
91,279,086

 
84,327,266

 
 
 
 
 
 
 
 
Net income (loss)
$
6,782

 
$
3,475

 
$
(73,023
)
 
$
(29,756
)
Other comprehensive income:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(10
)
 

 
28

 

Unrealized loss on available-for-sale securities
(8
)
 

 
(2
)
 

Total comprehensive income (loss)
$
6,764

 
$
3,475

 
$
(72,997
)
 
$
(29,756
)


(1) Includes stock-based compensation as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Cost of revenue
$
1,605

 
$
1,370

 
$
4,398

 
$
4,061

Technology and development
3,320

 
2,135

 
8,661

 
5,335

Marketing
390

 
155

 
1,025

 
431

General and administrative
2,195

 
1,838

 
5,708

 
4,646

Total
$
7,510

 
$
5,498

 
$
19,792

 
$
14,473


4



Redfin Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
 
September 30, 2019
 
December 31, 2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
209,234

 
$
432,608

Restricted cash
9,984

 
6,446

Short-term investments
62,054

 

Accrued revenue, net
24,434

 
15,363

Inventory
105,460

 
22,694

Loans held for sale
22,246

 
4,913

Prepaid expenses
8,391

 
11,916

Other current assets
5,763

 
2,307

Total current assets
447,566

 
496,247

Property and equipment, net
37,560

 
25,187

Right-of-use assets, net
45,513

 

Long-term investments
38,480

 

Goodwill and intangibles, net
11,626

 
11,992

Other non-current assets
11,240

 
9,395

Total assets
$
591,985

 
$
542,821

Liabilities and stockholders' equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
3,173

 
$
2,516

Accrued liabilities
50,867

 
30,837

Other payables
7,157

 
6,544

Borrowings under warehouse credit facilities
21,987

 
4,733

Current operating lease liabilities
9,731

 

Current portion of deferred rent
132

 
1,588

Total current liabilities
93,047

 
46,218

Non-current operating lease liabilities
53,059

 

Deferred rent

 
11,079

Convertible senior notes, net
118,158

 
113,586

Total liabilities
264,264

 
170,883

Commitments and contingencies
 
 
 
Stockholders’ equity
 
 
 
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 92,212,316 and 90,151,341 shares issued and outstanding, respectively
92

 
90

Additional paid-in capital
571,607

 
542,829

Accumulated other comprehensive income
26

 

Accumulated deficit
(244,004
)
 
(170,981
)
Total stockholders’ equity
327,721

 
371,938

Total liabilities and stockholders’ equity
$
591,985

 
$
542,821


5



Redfin Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
Nine Months Ended September 30,
 
2019
 
2018
Operating activities
 
 
 
Net loss
$
(73,023
)
 
$
(29,756
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
6,366

 
6,123

Stock-based compensation
19,792

 
14,472

Amortization of debt discount and issuance costs
4,674

 
1,128

Non-cash lease expense
4,727

 

Other
(401
)
 

Change in assets and liabilities:
 
 
 
Accrued revenue
(9,071
)
 
80

Inventory
(82,766
)
 
(21,779
)
Prepaid expenses and other assets
(82
)
 
1,808

Accounts payable
579

 
702

Accrued liabilities and other payables
18,994

 
11,357

Operating lease liabilities
(5,207
)
 

Deferred rent
112

 
(913
)
Origination of loans held for sale
(285,182
)
 
(56,157
)
Proceeds from sale of loans originated as held for sale
267,850

 
52,127

Net cash used in operating activities
(132,638
)
 
(20,808
)
Investing activities
 
 
 
Purchases of property and equipment
(12,821
)
 
(5,528
)
Purchases of investments
(106,063
)
 

Sales of investments
1,005

 

Maturities of investments
4,900

 

Net cash used in investing activities
(112,979
)
 
(5,528
)
Financing activities
 
 
 
Proceeds from the issuance of shares resulting from employee equity plans
10,869

 
17,314

Tax payments related to net share settlements on restricted stock units
(2,856
)
 
(705
)
Borrowings from warehouse credit facilities
280,129

 
54,806

Repayments of warehouse credit facilities
(262,875
)
 
(51,031
)
Other payables - deposits held in escrow
637

 
7,684

Proceeds from issuance of convertible notes, net of issuance costs

 
138,953

Proceeds from follow on offering

 
107,593

Cash paid for debt issuance costs
(152
)
 

Net cash provided by financing activities
25,752

 
274,614

Effect of exchange rate changes on cash and cash equivalents
28

 

Net change in cash, cash equivalents, and restricted cash
(219,837
)
 
248,278

Cash, cash equivalents, and restricted cash:
 
 
 
Beginning of period
439,055

 
212,658

End of period
$
219,218

 
$
460,936


6




Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
 
Three Months Ended
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sep. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
Monthly average visitors (in thousands)
35,633

 
36,557

 
31,107

 
25,212

 
29,236

 
28,777

 
25,820

 
21,377

 
24,518

Real estate services transactions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brokerage
16,098

 
15,580

 
8,435

 
9,822

 
12,876

 
12,971

 
7,285

 
8,598

 
10,527

Partner
3,499

 
3,357

 
2,125

 
2,749

 
3,333

 
3,289

 
2,237

 
2,739

 
3,101

Total
19,597

 
18,937

 
10,560

 
12,571

 
16,209

 
16,260

 
9,522

 
11,337

 
13,628

Real estate services revenue per transaction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brokerage
$
9,075

 
$
9,332

 
$
9,640

 
$
9,569

 
$
9,227

 
$
9,510

 
$
9,628

 
$
9,659

 
$
9,289

Partner
2,295

 
2,218

 
2,153

 
2,232

 
2,237

 
2,281

 
2,137

 
2,056

 
1,960

Aggregate
7,865

 
8,071

 
8,134

 
7,964

 
7,790

 
8,048

 
7,869

 
7,822

 
7,621

Aggregate home value of real estate services transactions (in millions)
$
9,157

 
$
8,986

 
$
4,800

 
$
5,825

 
$
7,653

 
$
7,910

 
$
4,424

 
$
5,350

 
$
6,341

U.S. market share by value
0.96
%
 
0.94
%
 
0.83
%
 
0.81
%
 
0.85
%
 
0.83
%
 
0.73
%
 
0.71
%
 
0.71
%
Revenue from top-10 Redfin markets as a percentage of real estate services revenue
63
%
 
64
%
 
64
%
 
66
%
 
66
%
 
68
%
 
66
%
 
69
%
 
69
%
Average number of lead agents
1,579

 
1,603

 
1,503

 
1,419

 
1,397

 
1,415

 
1,327

 
1,118

 
1,028




7



Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Revenue by segment
 
 
 
 
 
 
 
Brokerage revenue
$
146,096

 
$
118,809

 
$
372,809

 
$
312,306

Partner revenue
8,030

 
7,456

 
20,053

 
19,741

Total real estate services revenue
154,126

 
126,265

 
392,862

 
332,047

Properties revenue
80,164

 
11,350

 
141,445

 
23,388

Other revenue
5,161

 
2,691

 
13,490

 
7,407

Intercompany elimination
(768
)
 
(51
)
 
(1,192
)
 
(51
)
Total revenue
238,683

 
140,255

 
546,605

 
362,791

 
 
 
 
 
 
 
 
Cost of revenue
 
 
 
 
 
 
 
Real estate services
$
100,048

 
$
83,274

 
$
284,447

 
$
236,775

Properties
80,909

 
11,656

 
144,807

 
24,086

Other
5,117

 
3,071

 
14,065

 
8,766

Intercompany elimination
(768
)
 
(51
)
 
(1,192
)
 
(51
)
Total cost of revenue
$
185,306

 
$
97,950

 
$
442,127

 
$
269,576

 
 
 
 
 
 
 
 
Gross profit by segment
 
 
 
 
 
 
 
Real estate services
$
54,078

 
$
42,991

 
$
108,415

 
$
95,272

Properties
(745
)
 
(306
)
 
(3,362
)
 
(698
)
Other
44

 
(380
)
 
(575
)
 
(1,359
)
Total gross profit
$
53,377

 
$
42,305

 
$
104,478

 
$
93,215




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