Document
false2020-02-120001382821 0001382821 2020-02-12 2020-02-12
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) February 12, 2020

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 February 12, 2020, Redfin Corporation (the "Company") reported its financial results for the quarter and year ended December 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
 
 
 
104
 
Cover page interactive data file, submitted using inline XBRL
 


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: February 12, 2020
 
/s/ Chris Nielsen
 
 
 
 
Chris Nielsen
Chief Financial Officer
 

Exhibit





https://cdn.kscope.io/3d6490358a2e82154bcc495563e06865-redfinlogoa12.jpg

Redfin Fourth-Quarter 2019 Revenue up 88% Year-over-Year to $233 Million

SEATTLE - February 12, 2020 - Redfin Corporation (NASDAQ: RDFN) today announced financial results for the fourth quarter and full year ended December 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.

Fourth Quarter 2019
Revenue increased 88% year-over-year to $233 million during the fourth quarter. Gross profit was $40 million, an increase of 51% from $26 million in the fourth quarter of 2018. Real estate services gross profit was $42 million, an increase of 51% from $28 million in the fourth quarter of 2018. Real estate services gross margin was 32%, compared to 28% in the fourth quarter of 2018. Operating expenses were $46 million, an increase of 20% from $39 million in the fourth quarter of 2018. Operating expenses were 20% of revenue, down from 31% in the fourth quarter of 2018.

Net loss was $7.8 million, compared to net loss of $12.2 million in the fourth quarter of 2018. Stock-based compensation was $8.0 million, up from $6.0 million in the fourth quarter of 2018. Depreciation and amortization was $2.9 million, up from $2.3 million in the fourth quarter of 2018. Interest income was $1.3 million and interest expense was $2.4 million, compared to $2.3 million and $2.1 million, respectively, in the fourth quarter of 2018.

Net loss per share, basic and diluted, was $0.08, compared to net loss per share, basic and diluted, of $0.14 in the fourth quarter of 2018.

Full Year 2019
Revenue increased 60% year-over-year to $780 million in 2019. Gross profit was $144 million, an increase of 21% from $119 million in 2018. Real estate services gross profit was $150 million, an increase of 22% from $123 million in 2018. Real estate services gross margin was 29%, compared to 28% in 2018. Operating expenses were $223 million, an increase of 37% from $163 million in 2018. Operating expenses were 29% of revenue, down from 34% in 2018.

Net loss was $81 million, compared to net loss of $42 million in 2018. Stock-based compensation was $28 million, up from $20 million in 2018. Depreciation and amortization was $9.2 million, up from $8.5 million in 2018. Interest income was $7.1 million and interest expense was $8.9 million, compared to $5.4 million and $3.7 million, respectively, in 2018.

Net loss per share, basic and diluted, was $0.88, compared to net loss per share, basic and diluted, of $0.49 in 2018.

“This was the fourth quarter in a row that our real estate services revenue growth accelerated, and the second quarter in a row that gross margins improved in every segment of our business,” said Redfin

1



CEO Glenn Kelman. “Our multi-year investments in a broader solution for our customers that includes mortgage, title, renovations and instant offers are really starting to pay off, but what’s most important is that we’ve been able to grow while maintaining our commitment to efficiency, so customers get low prices and Redfin can generate more gross profit.”

Highlights
Reached market share of 0.94% of U.S. existing home sales by value in the fourth quarter of 2019, an increase of 0.13 percentage points from the fourth quarter of 2018.(1) 
Saved homebuyers and sellers over $44 million in the fourth quarter and over $180 million in 2019. 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.
Earned a Net Promoter Score, a measure of customer satisfaction, that is 18% higher than competing brokerages’, as measured in a Redfin-commissioned November 2019 survey of people who bought or sold a home in the previous 12 months. 2019 marked the fifth consecutive year that our customer satisfaction was higher than that of traditional brokers.
Continued to expand our nationwide footprint in the fourth quarter, launching brokerage services in Chattanooga, TN, Savannah, GA and Northern Kentucky. Redfin is now reaching customers in 94 markets across the United States and Canada and offers services in markets covering 78% of the U.S. population.
Introduced a new listing fee to unify our pricing nationwide and reward our most loyal customers with the greatest savings. The brokerage previously charged either a 1% or 1.5% fee based on the market. Redfin now charges a 1% listing fee to sellers who also buy their next home with Redfin within 12 months and a 1.5% listing fee to sellers who just sell their home with Redfin.
RedfinNow continued expansion, launching in Las Vegas in the fourth quarter of 2019. RedfinNow is available to consumers in 13 markets in four states.
Redfin Mortgage expanded to Massachusetts, Michigan and Wisconsin and opened a new office in Tempe, Arizona to support growth in 2020.
Redfin Mortgage originated $110 million in loan volume in the fourth quarter of 2019, an increase of 370% from the fourth quarter of 2018. For the full year 2019, Redfin Mortgage originated $395 million in loan volume, an increase of 460% from 2018.
Expanded Direct Access from 10 to 13 markets, allowing buyers to tour RedfinNow listings on their own schedule by unlocking the door with a tap on a smartphone.
Launched Redfin Direct, a service to help unrepresented buyers make offers on Redfin listings, in major markets across Texas (Austin, Dallas, Houston, San Antonio) and California (Fresno, Inland Empire, Los Angeles, Orange County, Sacramento, San Diego, Santa Barbara, Ventura County). At the end of 2019, Redfin Direct was available in 14 markets in four states.
Improved the accuracy of the Redfin Estimate for off-market homes by over 30 basis points and expanded coverage to five metro areas and several property types, including land and multi-family properties. Redfin Estimate now covers 85 million properties across the United States.
Upgraded our software for agents by making it faster and releasing new features to help agents track and prioritize their deals and categorize customers at various stages of the homebuying and selling process. Other software released in the fourth quarter includes a new listings activation form that makes it simple for listing coordinators to collect all the necessary information about each home in one place, making it easier to take a listing live on the market.
Increased our proportion of women technologists from 32.9% in 2018 to 34.4% in 2019. We continue to work towards our goal of 50% overall as well as prioritizing racial and ethnic diversity because employing a diverse workforce will help us deliver better service to all people.

(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

2



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 February 12, 2020, and are subject to substantial uncertainty.

For the first quarter of 2020 we expect:
Total revenue between $179 million and $188 million, representing year-over-year growth between 63% and 71% compared to the first quarter of 2019. Properties segment revenue between $69 million and $74 million is included in the guidance provided.
Net loss between $72 million and $68 million, compared to net loss of $67 million in the first quarter of 2019. This guidance includes approximately $9.1 million of expected stock-based compensation and $3.2 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 Form 10-K for the year ended December 31, 2019, which is 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-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
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2019
 
2018
 
2019
 
2018
 
Unaudited
 
 
 
 
Revenue
 
 
 
 
 
 
 
Service
$
134,128

 
$
102,525

 
$
539,288

 
$
441,927

Product
99,063

 
21,604

 
240,508

 
44,993

Total revenue
233,191

 
124,129

 
779,796

 
486,920

Cost of revenue(1)
 
 
 
 
 
 
 
Service
93,183

 
75,393

 
390,504

 
320,883

Product
100,382

 
22,527

 
245,189

 
46,613

Total cost of revenue
193,565

 
97,920

 
635,693

 
367,496

Gross profit
39,626

 
26,209

 
144,103

 
119,424

Operating expenses
 
 
 
 
 
 
 
Technology and development(1)
19,345

 
13,692

 
69,765

 
53,797

Marketing(1)
8,099

 
8,054

 
76,710

 
44,061

General and administrative(1)
18,992

 
16,969

 
76,874

 
65,500

Total operating expenses
46,436

 
38,715

 
223,349

 
163,358

Loss from operations
(6,810
)
 
(12,506
)
 
(79,246
)
 
(43,934
)
Interest income
1,341

 
2,334

 
7,146

 
5,416

Interest expense
(2,365
)
 
(2,071
)
 
(8,928
)
 
(3,681
)
Other income, net
51

 
21

 
223

 
221

Net loss
$
(7,783
)
 
$
(12,222
)
 
$
(80,805
)
 
$
(41,978
)
Net loss per share attributable to common stock—basic and diluted
$
(0.08
)
 
$
(0.14
)
 
$
(0.88
)
 
$
(0.49
)
Weighted average shares of common stock—basic and diluted
92,486,944

 
89,650,602

 
91,583,533

 
85,669,039

 
 
 
 
 
 
 
 
Net loss
$
(7,783
)
 
$
(12,222
)
 
$
(80,805
)
 
$
(41,978
)
Other comprehensive income:
 
 
 
 
 
 
 
Foreign currency translation adjustments
5

 

 
33

 

Unrealized gain on available-for-sale securities
11

 

 
9

 

Total comprehensive loss
$
(7,767
)
 
$
(12,222
)
 
$
(80,763
)
 
$
(41,978
)

(1) Includes stock-based compensation as follows:
 
Three Months ended December 31,
 
Twelve Months ended December 31,
 
2019
 
2018
 
2019
 
2018
Cost of revenue
$
1,689

 
$
1,506

 
$
6,087

 
$
5,567

Technology and development
3,701

 
2,241

 
12,362

 
7,576

Marketing
393

 
231

 
1,418

 
662

General and administrative
2,239

 
1,988

 
7,947

 
6,633

Total
$
8,022

 
$
5,966

 
$
27,814

 
$
20,438


5



Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
 
December 31,
 
2019
 
2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
234,679

 
$
432,608

Restricted cash
12,769

 
6,446

Short-term investments
70,029

 

Accounts receivable, net
19,223

 
15,363

Inventory
74,590

 
22,694

Loans held for sale
21,985

 
4,913

Prepaid expenses
14,822

 
11,916

Other current assets
3,496

 
2,307

Total current assets
451,593

 
496,247

Property and equipment, net
39,577

 
25,187

Right-of-use assets, net
52,004

 

Long-term investments
30,978

 

Goodwill and intangibles, net
11,504

 
11,992

Other non-current assets
10,557

 
9,395

Total assets
$
596,213

 
$
542,821

Liabilities and stockholders' equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
2,122

 
$
2,516

Accrued liabilities
37,979

 
30,837

Other payables
7,884

 
6,544

Warehouse credit facilities
21,302

 
4,733

Current lease liabilities
11,408

 

Secured revolving credit facility
4,444

 

Current portion of deferred rent
43

 
1,588

Total current liabilities
85,182

 
46,218

Non-current lease liabilities
59,869

 

Deferred rent

 
11,079

Convertible senior notes, net
119,716

 
113,586

Total liabilities
264,767

 
170,883

Commitments and contingencies
 
 
 
Stockholders’ equity
 
 
 
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 93,001,597 and 90,151,341 shares issued and outstanding, respectively
93

 
90

Additional paid-in capital
583,097

 
542,829

Accumulated other comprehensive income
42

 

Accumulated deficit
(251,786
)
 
(170,981
)
Total stockholders’ equity
331,446

 
371,938

Total liabilities and stockholders’ equity
$
596,213

 
$
542,821


6



Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
 
Year Ended December 31,
 
2019
 
2018
Operating Activities
 
 
 
Net loss
$
(80,805
)
 
$
(41,978
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
Depreciation and amortization
9,230

 
8,465

Stock-based compensation
27,814

 
20,438

Amortization of debt discount and issuance costs
6,385

 
2,584

Non-cash lease expense
6,940

 

Other
(663
)
 

Change in assets and liabilities:
 
 
 
Accounts receivable, net
(3,861
)
 
(2,029
)
Inventory
(51,896
)
 
(19,312
)
Prepaid expenses and other assets
(3,539
)
 
(5,725
)
Accounts payable
(394
)
 
617

Accrued liabilities and other payables
7,459

 
4,509

Lease liabilities
(7,209
)
 

Deferred rent
1

 
(1,249
)
Origination of loans held for sale
(395,638
)
 
(86,023
)
Proceeds from sale of loans originated as held for sale
378,566

 
83,001

Net cash used in operating activities
(107,610
)
 
(36,702
)
Investing activities
 
 
 
Purchases of property and equipment
(15,533
)
 
(8,303
)
Purchases of investments
(136,265
)
 
(2,000
)
Sales of investments
11,486

 

Maturities of investments
24,400

 

Net cash used in investing activities
(115,912
)
 
(10,303
)
Financing activities
 
 
 
Proceeds from the issuance of shares resulting from employee equity plans
16,107

 
23,407

Tax payments related to net share settlements on restricted stock units
(5,126
)
 
(1,426
)
Borrowings from warehouse credit facilities
388,586

 
83,842

Repayments of warehouse credit facilities
(372,017
)
 
(81,125
)
Borrowings from secured revolving credit facility
4,444

 

Other payables - deposits held in escrow
883

 
2,158

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
(922
)
 

Principal payments under finance lease obligations
(72
)
 

Net cash provided by financing activities
31,883

 
273,402

Effect of exchange rate changes on cash and cash equivalents
32

 

Net change in cash, cash equivalents, and restricted cash
(191,607
)
 
226,397

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

 
212,658

End of period
$
247,448

 
$
439,055


7




Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sep. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Dec. 31, 2019
 
Dec. 31, 2018
 
Dec. 31, 2017
Monthly average visitors (in thousands)
30,595

 
35,633

 
36,557

 
31,107

 
25,212

 
29,236

 
28,777

 
25,820

 
21,377

 
33,473

 
27,261

 
22,623

Real estate services transactions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brokerage
13,122

 
16,098

 
15,580

 
8,435

 
9,822

 
12,876

 
12,971

 
7,285

 
8,598

 
53,235

 
42,954

 
35,038

Partner
2,958

 
3,499

 
3,357

 
2,125

 
2,749

 
3,333

 
3,289

 
2,237

 
2,739

 
11,939

 
11,608

 
10,755

Total
16,080

 
19,597

 
18,937

 
10,560

 
12,571

 
16,209

 
16,260

 
9,522

 
11,337

 
65,174

 
54,562

 
45,793

Real estate services revenue per transaction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brokerage
$
9,425

 
$
9,075

 
$
9,332

 
$
9,640

 
$
9,569

 
$
9,227

 
$
9,510

 
$
9,628

 
$
9,659

 
$
9,326

 
$
9,459

 
$
9,429

Partner
2,369

 
2,295

 
2,218

 
2,153

 
2,232

 
2,237

 
2,281

 
2,137

 
2,056

 
2,267

 
2,229

 
1,971

Aggregate
8,127

 
7,865

 
8,071

 
8,134

 
7,964

 
7,790

 
8,048

 
7,869

 
7,822

 
8,033

 
7,921

 
7,677

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate home value of real estate services transactions (in millions)
$
7,588

 
$
9,157

 
$
8,986

 
$
4,800

 
$
5,825

 
$
7,653

 
$
7,910

 
$
4,424

 
$
5,350

 
$
30,532

 
$
25,812

 
$
21,280

U.S. market share by value
0.94
%
 
0.96
%
 
0.94
%
 
0.83
%
 
0.81
%
 
0.85
%
 
0.83
%
 
0.73
%
 
0.71
%
 
0.93
%
 
0.81
%
 
0.67
%
Revenue from top-10 Redfin markets as a percentage of real estate services revenue
62
%
 
63
%
 
64
%
 
64
%
 
66
%
 
66
%
 
68
%
 
66
%
 
69
%
 
63
%
 
67
%
 
69
%
Average number of lead agents
1,526

 
1,579

 
1,603

 
1,503

 
1,419

 
1,397

 
1,415

 
1,327

 
1,119

 
1,553

 
1,390

 
1,023


8



Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2019
 
2018
 
2019
 
2018
Real estate services revenue
 
 
 
 
 
 
 
Brokerage revenue
$
123,671

 
$
93,985

 
$
496,480

 
$
406,293

Partner revenue
7,008

 
6,135

 
27,060

 
25,875

  Total real estate services revenue
130,679

 
100,120

 
523,540

 
432,168

Properties revenue
99,063

 
21,604

 
240,507

 
44,993

Other revenue
4,143

 
2,476

 
17,634

 
9,882

Intercompany eliminations
(693
)
 
(71
)
 
(1,885
)
 
(123
)
Total revenue
$
233,192

 
$
124,129

 
$
779,796

 
$
486,920

 
 
 
 
 
 
 
 
Cost of revenue
 
 
 
 
 
 
 
Real estate services
$
88,703

 
$
72,294

 
$
373,150

 
$
309,069

Properties
100,382

 
22,527

 
245,189

 
46,613

Other
5,174

 
3,170

 
19,239

 
11,937

Intercompany eliminations
(693
)
 
(71
)
 
(1,885
)
 
(123
)
Total cost of revenue
$
193,566

 
$
97,920

 
$
635,693

 
$
367,496

 
 
 
 
 
 
 
 
Gross profit by segment
 
 
 
 
 
 
 
Real estate services
$
41,976

 
$
27,826

 
$
150,390

 
$
123,099

Properties
(1,319
)
 
(923
)
 
(4,682
)
 
(1,620
)
Other
(1,031
)
 
(694
)
 
(1,605
)
 
(2,055
)
Total gross profit
$
39,626

 
$
26,209

 
$
144,103

 
$
119,424

 
 
 
 
 
 
 
 
Gross margin (percentage of revenue)
 
 
 
 
 
 
 
Real estate services
32.1
 %
 
27.8
 %
 
28.7
 %
 
28.5
 %
Properties
(1.3
)
 
(4.3
)
 
(1.9
)
 
(3.6
)
Other
(24.9
)
 
(28.0
)
 
(9.1
)
 
(20.8
)
Total gross margin
17.0

 
21.1

 
18.5

 
24.5



9