Document
false0001382821 0001382821 2020-05-07 2020-05-07
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 7, 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 May 7, 2020, we reported our financial results for the quarter ended March 31, 2020. A copy of our earnings release 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: May 7, 2020
 
/s/ Chris Nielsen
 
 
 
 
Chris Nielsen
Chief Financial Officer
 

Exhibit





https://cdn.kscope.io/5a2439a14f5e7d0f6bb8890c972c26f2-redfinlogoa14.jpg

Redfin First-Quarter 2020 Revenue up 73% Year-over-Year to $191 Million

SEATTLE - May 7, 2020 - Redfin Corporation (NASDAQ: RDFN) today announced financial results for the first quarter ended March 31, 2020. 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 73% year-over-year to $191 million during the first quarter. Gross profit was $13 million, an increase of 368% from $3 million in the first quarter of 2019. Real estate services gross profit was $15 million, an increase of 195% from $5 million in the first quarter of 2019. Real estate services gross margin was 14%, compared to 6% in the first quarter of 2019. Operating expenses were $70 million, flat from $70 million in the first quarter of 2019. Operating expenses were 37% of revenue, down from 64% in the first quarter of 2019.

Net loss was $60 million, compared to net loss of $67 million in the first quarter of 2019. Stock-based compensation was $7.2 million, up from $6.4 million in the first quarter of 2019. Depreciation and amortization was $3.3 million, up from $1.6 million in the first quarter of 2019. Interest income was $1.1 million and interest expense was $2.4 million, compared to $2.3 million and $2.1 million, respectively, in the first quarter of 2019.

Net loss per share, basic and diluted, was $0.64, compared to net loss per share, basic and diluted, of $0.74 in the first quarter of 2019.

“Real estate commerce has probably virtualized itself more in the past two months than it had in the prior 20 years,” said Redfin CEO Glenn Kelman. “This makes Redfin’s technology advantage over other brokers more important than ever. But what matters most isn’t what we built prior to this pandemic; it’s how we’ve reacted since. We were the first major broker to encourage homebuyers to tour homes via video-chat, on March 3; the first to warn the public of a possible housing-market downturn, on March 4; the first to cancel all open houses to protect public health, on March 16; and the first to offer homebuyers self-service access to the listings being sold by our customers, on April 23. And there are still so many firsts ahead of us. The reason we’re working so hard is to bring back all the colleagues and friends we lost in our April furlough.”

First Quarter Highlights
Reached market share of 0.93% of U.S. existing home sales by value in the first quarter of 2020, an increase of 0.10 percentage points from the first quarter of 2019.(1) 
Saved homebuyers and sellers over $30 million in the first quarter of 2020. 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.
Launched Redfin Premier, a luxury service offering enhanced local and international marketing, as well as high-end photography and branding for million-dollar homes. The program was introduced in Austin, Boston, Chicago, Denver, Hawaii, Maryland, Orange County, Portland, Sacramento, San Diego and Northern Virginia and will be expanded to other markets over time.

1



Expanded the brokerage’s national footprint by launching agent service in Flagstaff, AZ.

COVID-19 Actions
Redfin took swift action to respond to COVID-19 and prepare the business to weather the associated economic decline, while strengthening its long-term competitive advantage as the leading technology-powered residential real estate company:
As soon as cases of COVID-19 were being reported in the Seattle area, the company instituted new policies to safeguard the health of Redfin customers and employees. Starting March 4, Redfin directed all employees in its Seattle office to work from home and asked employees across all of its other offices to follow suit beginning March 5.
Starting on March 4, Redfin began publishing weekly reports on the impact of COVID-19 on the housing market, real estate listing activity, sales and homebuyer demand, providing transparent information and the latest data to its agents and customers.
Established a company-wide COVID-19 response team to monitor all state and local government orders and provide real-time guidance to employees.
Pivoted its strategic priorities and business operations, including temporarily pausing making offers for homes through RedfinNow and shifting engineering focus to building software for the virtual brokerage.
Raised $110 million through the sale of capital stock to Durable Capital Partners LP.
Rapidly expanded its virtual brokerage capabilities and software in response to health and safety concerns and stay at home orders. Specifically:
Updated its website and mobile application to highlight virtual services and allow customers to request a live video chat tour with a Redfin agent with one click. The software also lets the customer select their preferred video chat application and provides market-specific messages and touring options based on local ordinances. For the week ended May 2, 27% of Redfin tour requests were for video tours.
Increased the prominence and visibility of 3D Virtual Walkthroughs on all Redfin listings.
Encouraged customers to take advantage of the digital closing capabilities of Redfin Mortgage and Title Forward in markets where the law allows them.
Cut executive compensation and bonuses, eliminated bonuses for headquarters employees and temporarily cut headquarters salaries between 10% and 15%.
In April, reduced its number of employees by approximately 400 people, which represented approximately 10% of employees, and placed approximately an additional 1,000 employees on furlough.
In response to strengthening homebuying demand in late April, began to unwind some of the actions taken in March and early April. RedfinNow will resume making offers on homes in select markets in May. The company also plans to resume television advertising with new ads in select markets, and in early May, asked approximately 135 employees to return from furlough to serve renewed homebuying demand.

(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 May 7, 2020, and are subject to substantial uncertainty.

For the second quarter of 2020 we expect:

2



Total revenue between $179 million and $189 million, representing a year-over-year decrease between 9% and 4% compared to the second quarter of 2019. Properties segment revenue between $61 million and $65 million is included in the guidance provided.
Net loss between $26 million and $21 million, compared to net loss of $13 million in the second quarter of 2019. This guidance includes approximately $7.0 million of expected stock-based compensation and $3.5 million of expected depreciation and amortization. The guidance also contains approximately $4.4 million of severance costs and $3.7 million of furlough costs, both including benefits.

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, and expansion of our Redfin Premiere service offering. 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, 2019, as supplemented by our quarterly report for the quarter ended March 31, 2020, 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 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 may post updates about COVID-19's impact on the U.S. residential real estate industry or its business on its company blog at www.redfin.com/blog/coronavirus-housing-market-news. We encourage investors and others interested in our company to review and subscribe to the information we post on our company blog, as some of the information may be material.

Redfin-F

Contacts

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

Public Relations

3



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, unaudited)
 
Three Months Ended March 31,
 
2020
 
2019
Revenue
 
 
 
Service
$
111,478

 
$
88,768

Product
79,517

 
21,373

Total revenue
190,995

 
110,141

Cost of revenue(1)
 
 
 
Service
98,368

 
84,395

Product
79,748

 
22,993

Total cost of revenue
178,116

 
107,388

Gross profit
12,879

 
2,753

Operating expenses
 
 
 
Technology and development(1)
20,274

 
15,556

Marketing(1)
25,708

 
33,201

General and administrative(1)
24,327

 
21,448

Total operating expenses
70,309

 
70,205

Loss from operations
(57,430
)
 
(67,452
)
Interest income
1,103

 
2,316

Interest expense
(2,444
)
 
(2,136
)
Other income (expense), net
(1,346
)
 
92

Net loss
$
(60,117
)
 
$
(67,180
)
Net loss per share attributable to common stock—basic and diluted
$
(0.64
)
 
$
(0.74
)
Weighted average shares of common stock—basic and diluted
93,442,706

 
90,610,416

 
 
 
 
Other comprehensive income
 
 
 
Net loss
$
(60,117
)
 
$
(67,180
)
Foreign currency translation adjustments
(25
)
 
1

Unrealized gain on available-for-sale securities
559

 

Total comprehensive loss
$
(59,583
)
 
$
(67,179
)

(1) Includes stock-based compensation as follows:
 
Three Months Ended March 31,
 
2020
 
2019
Cost of revenue
$
1,638

 
$
1,465

Technology and development
3,648

 
2,656

Marketing
375

 
286

General and administrative
1,550

 
1,999

Total
$
7,211

 
$
6,406


5



Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
 
March 31, 2020
 
December 31, 2019
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
213,940

 
$
234,679

Restricted cash
16,772

 
12,769

Short-term investments
75,049

 
70,029

Accounts receivable, net
21,821

 
19,223

Inventory
70,649

 
74,590

Loans held for sale
44,321

 
21,985

Prepaid expenses
9,555

 
14,822

Other current assets
5,243

 
3,496

Total current assets
457,350

 
451,593

Property and equipment, net
40,496

 
39,577

Right-of-use assets, net
49,972

 
52,004

Long-term investments
26,711

 
30,978

Goodwill and intangibles, net
11,382

 
11,504

Other non-current assets
8,923

 
10,557

Total assets
$
594,834

 
$
596,213

Liabilities and stockholders' equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
2,909

 
$
2,122

Accrued liabilities
58,456

 
38,022

Other payables
11,717

 
7,884

Warehouse credit facilities
42,586

 
21,302

Secured revolving credit facility
8,901

 
4,444

Current lease liabilities
11,533

 
11,408

Total current liabilities
136,102

 
85,182

Non-current lease liabilities
57,254

 
59,869

Convertible senior notes, net
121,292

 
119,716

Total liabilities
314,648

 
264,767

Commitments and contingencies
 
 
 
Stockholders’ equity
 
 
 
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 93,957,774 and 93,001,597 shares issued and outstanding, respectively
94

 
93

Additional paid-in capital
591,421

 
583,097

Accumulated other comprehensive income
575

 
42

Accumulated deficit
(311,904
)
 
(251,786
)
Total stockholders’ equity
280,186

 
331,446

Total liabilities and stockholders’ equity
$
594,834

 
$
596,213


6



Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
Three Months Ended March 31,
 
2020
 
2019
Operating Activities
 
 
 
Net loss
$
(60,117
)
 
$
(67,180
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
3,307

 
1,637

Stock-based compensation
7,211

 
6,406

Amortization of debt discount and issuance costs
1,730

 
1,507

Non-cash lease expense
2,254

 
1,216

Impairment costs
1,420

 

Other
(989
)
 

Change in assets and liabilities:
 
 
 
Accounts receivable, net
(2,598
)
 
(890
)
Inventory
3,941

 
(15,612
)
Prepaid expenses and other assets
3,409

 
1,441

Accounts payable
514

 
14,848

Accrued liabilities and other payables
20,626

 
21,764

Lease liabilities
(2,693
)
 
(1,459
)
Origination of loans held for sale
(132,697
)
 
(49,850
)
Proceeds from sale of loans originated as held for sale
111,233

 
39,015

Net cash used in operating activities
(43,449
)
 
(47,157
)
Investing activities
 
 
 
Purchases of property and equipment
(3,406
)
 
(3,151
)
Purchases of investments
(33,267
)
 

Sales of investments
31,608

 

Maturities of investments
1,597

 

Net cash used in investing activities
(3,468
)
 
(3,151
)
Financing activities
 
 
 
Proceeds from the issuance of shares resulting from employee equity plans
4,103

 
3,732

Tax payments related to net share settlements on restricted stock units
(3,307
)
 
(818
)
Borrowings from warehouse credit facilities
131,310

 
48,557

Repayments to warehouse credit facilities
(110,025
)
 
(38,097
)
Borrowings from secured revolving credit facility
11,854

 

Repayments to secured revolving credit facility
(7,398
)
 

Other payables—deposits held in escrow
3,684

 
3,968

Principal payments for finance lease obligations
(15
)
 

Net cash provided by financing activities
30,206

 
17,342

Effect of exchange rate changes on cash and cash equivalents
(25
)
 

Net change in cash, cash equivalents, and restricted cash
(16,736
)
 
(32,966
)
Cash, cash equivalents, and restricted cash:
 
 
 
Beginning of period
247,448

 
439,055

End of period
$
230,712

 
$
406,089


7




Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
 
Three Months Ended
 
Mar. 31, 2020
 
Dec. 31, 2019
 
Sep. 30, 2019
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sep. 30, 2018
 
Jun. 30, 2018
 
Mar. 31, 2018
Monthly average visitors (in thousands)
35,519

 
30,595

 
35,633

 
36,557

 
31,107

 
25,212

 
29,236

 
28,777

 
25,820

Real estate services transactions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brokerage
10,751

 
13,122

 
16,098

 
15,580

 
8,435

 
9,822

 
12,876

 
12,971

 
7,285

Partner
2,479

 
2,958

 
3,499

 
3,357

 
2,125

 
2,749

 
3,333

 
3,289

 
2,237

Total
13,230

 
16,080

 
19,597

 
18,937

 
10,560

 
12,571

 
16,209

 
16,260

 
9,522

Real estate services revenue per transaction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brokerage
$
9,520

 
$
9,425

 
$
9,075

 
$
9,332

 
$
9,640

 
$
9,569

 
$
9,227

 
$
9,510

 
$
9,628

Partner
2,535

 
2,369

 
2,295

 
2,218

 
2,153

 
2,232

 
2,237

 
2,281

 
2,137

Aggregate
8,211

 
8,127

 
7,865

 
8,071

 
8,134

 
7,964

 
7,790

 
8,048

 
7,869

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate home value of real estate services transactions (in millions)
$
6,098

 
$
7,588

 
$
9,157

 
$
8,986

 
$
4,800

 
$
5,825

 
$
7,653

 
$
7,910

 
$
4,424

U.S. market share by value
0.93
%
 
0.94
%
 
0.96
%
 
0.94
%
 
0.83
%
 
0.81
%
 
0.85
%
 
0.83
%
 
0.73
%
Revenue from top-10 Redfin markets as a percentage of real estate services revenue
61
%
 
62
%
 
63
%
 
64
%
 
64
%
 
66
%
 
66
%
 
68
%
 
66
%
Average number of lead agents
1,826

 
1,526

 
1,579

 
1,603

 
1,503

 
1,419

 
1,397

 
1,415

 
1,327


8



Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
 
Three Months Ended March 31,
 
2020
 
2019
Real estate services revenue
 
 
 
Brokerage revenue
$
102,351

 
$
81,314

Partner revenue
6,285

 
4,576

  Total real estate services revenue
108,636

 
85,890

Properties revenue
79,098

 
21,373

Other revenue
4,250

 
3,047

Intercompany eliminations
(989
)
 
(169
)
Total revenue
$
190,995

 
$
110,141

 
 
 
 
Cost of revenue
 
 
 
Real estate services
$
93,562

 
$
80,784

Properties
79,299

 
22,993

Other
6,244

 
3,780

Intercompany eliminations
(989
)
 
(169
)
Total cost of revenue
$
178,116

 
$
107,388

 
 
 
 
Gross profit by segment
 
 
 
Real estate services
$
15,074

 
$
5,106

Properties
(201
)
 
(1,620
)
Other
(1,994
)
 
(733
)
Total gross profit
$
12,879

 
$
2,753

 
 
 
 
Gross margin (percentage of revenue)
 
 
 
Real estate services
13.9
 %
 
5.9
 %
Properties
(0.3
)
 
(7.6
)
Other
(46.9
)
 
(24.1
)
Total gross margin
6.7

 
2.5



9