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Redfin Reports Third Quarter 2021 Financial Results

SEATTLE - November 4, 2021 - Redfin Corporation (NASDAQ: RDFN) today announced financial results for the third quarter ended September 30, 2021. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation, and depreciation and amortization.

Revenue increased 128% year-over-year to $540 million during the third quarter. Gross profit was $127 million, an increase of 37% from $93 million in the third quarter of 2020. Real estate services gross profit was $96 million, an increase of 5% from $92 million in the third quarter of 2020. Real estate services gross margin was 37%, compared to 44% in the third quarter of 2020. Operating expenses were $147 million, an increase of 163% from $56 million in the third quarter of 2020. Operating expenses were 27% of revenue, up from 24% in the third quarter of 2020.

Net loss was $18.9 million, compared to net loss of $34.2 million in the third quarter of 2020. The dividend on our convertible preferred stock was $1.7 million in the third quarter. Net loss attributable to common stock was $20.6 million. Stock-based compensation was $13.1 million, up from $11.3 million in the third quarter of 2020. Depreciation and amortization was $14.5 million, up from $3.7 million in the third quarter of 2020. Interest income was $0.2 million and interest expense was $3.7 million, compared to $0.3 million and $2.5 million, respectively, in the third quarter of 2020.

Net loss per share attributable to common stock, diluted, was $0.20, compared to net income per share attributable to common stock, diluted, of $0.30 in the third quarter of 2020.

“Redfin had a fantastic quarter,” said Redfin CEO Glenn Kelman. “Our revenues were at the top of the range we gave investors in our last earnings report, and our net income exceeded that range. Our year-over-year market-share gains continued even as the housing market slowed, and our website again improved its standing against its largest competitors. RedfinNow grew revenues by more than 1,000 percent all while selling homes above our forecasted price. We saved our brokerage customers more than $80 million in fees. Agent retention improved, and we’re now preparing to broaden changes to our service and pricing that we expect to increase 2022 gross profits, customer satisfaction and agent retention.”

Highlights
•Reached market share of 1.16% of U.S. existing home sales by value in the third quarter of 2021, an increase of 12 basis points from the third quarter of 2020.(1)
•Saved homebuyers and sellers over $83 million in the third quarter. 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% commission typically charged by traditional agents.
•Redfin’s mobile application and website reached 49.1 million average monthly visitors in the third quarter, which was roughly flat compared to the third quarter of 2020.
•Launched brokerage services in Mississippi and new regions in Florida, surpassing 100 markets served.
•Continued RedfinNow expansion by launching in Chicago, Atlanta, Nashville, Charlotte and Raleigh.
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•Announced the expansion of Direct Access self-touring on October 5th, which lets buyers tour vacant homes listed by Redfin agents and is supported by a partnership with ADT to provide enhanced safety and security measures.
•Launched a Career Accelerator pilot program in Seattle and the Washington, D.C. metro area to hire and train people from diverse backgrounds to become Redfin agents.
•Delivered improved software for customers, agents, partners and mortgage teams, including:
◦Climate risk data for every location page on Redfin.com, empowering consumers to make better-informed decisions about buying, selling and renting.
◦More accurate Redfin Estimates for off-market homes that react quickly to dynamic market conditions.
◦Easy to import work history from Equifax’s The Work Number in mortgage pre-approval applications.
◦iOS Home Screen Widgets, which show potential homebuyers relevant listings directly on their iPhone or iPad’s home screen.
◦A new appraisal ordering system for Redfin Mortgage Lender Tools that streamlines data sharing between mortgage processors and appraisal management companies.
◦Automation software for Redfin Home Services to streamline Concierge bids and scope of work agreements.

(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® ("NAR"). NAR data for the most recent period is preliminary and may subsequently be updated by NAR. 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 4, 2021, and are subject to substantial uncertainty.

For the fourth quarter of 2021 we expect:
•Total revenue between $585 million and $606 million, representing a year-over-year increase between 139% and 148% compared to the fourth quarter of 2020. Included within total revenue are real estate services segment revenue between $225 million and $230 million, properties segment revenue between $319 million and $334 million, and rentals revenue between $38 million and $39 million.
•Total net loss between $36 million and $31 million, compared to total net income of $14 million in the fourth quarter of 2020. RentPath’s contribution to the net loss is expected to be approximately $15 million. This guidance includes approximately $24 million in total marketing expenses, $16 million of stock-based compensation, $15 million of depreciation and amortization, and $4 million of net interest expense. Net income attributable to common stockholders will include the value of dividends on our convertible preferred stock, which we expect to pay in shares of our common stock.

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.

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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, 2020, as supplemented by our quarterly report for the quarter ended September 30, 2021, 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 real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.

Redfin may publish information and analysis about the U.S. residential real estate industry on its company blog at www.redfin.com/news/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
Meg Nunnally, 206-576-8610
ir@redfin.com

Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com
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Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
September 30, 2021December 31, 2020
Assets
Current assets
Cash and cash equivalents$562,714 $925,276 
Restricted cash74,532 20,544 
Short-term investments28,578 131,561 
Accounts receivable, net of allowances for credit losses of $933 and $16091,932 54,719 
Inventory435,144 49,158 
Loans held for sale42,762 42,539 
Prepaid expenses19,155 12,131 
Other current assets8,537 4,898 
Total current assets1,263,354 1,240,826 
Property and equipment, net55,535 43,988 
Right-of-use assets, net55,757 44,149 
Long-term investments53,488 11,922 
Goodwill407,228 9,186 
Intangibles, net194,856 1,830 
Other assets, noncurrent13,129 8,619 
Total assets$2,043,347 $1,360,520 
Liabilities, mezzanine equity, and stockholders' equity
Current liabilities
Accounts payable$10,075 $5,644 
Accrued liabilities102,027 69,460 
Other payables16,766 13,184 
Warehouse credit facilities39,825 39,029 
Secured revolving credit facility199,627 23,949 
Convertible senior notes, net23,243 22,482 
Lease liabilities14,793 11,973 
Total current liabilities406,356 185,721 
Lease liabilities, noncurrent57,759 49,339 
Convertible senior notes, net, noncurrent1,212,767 488,268 
Payroll tax liabilities, noncurrent7,841 6,812 
Deferred tax liabilities883 — 
Total liabilities1,685,606 730,140 
Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding39,857 39,823 
Stockholders’ equity
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 105,375,935 and 103,000,594 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively105 103 
Additional paid-in capital662,894 860,556 
Accumulated other comprehensive income47 211 
Accumulated deficit(345,162)(270,313)
Total stockholders’ equity317,884 590,557 
Total liabilities, mezzanine equity, and stockholders’ equity$2,043,347 $1,360,520 


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Redfin Corporation and Subsidiaries
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts, unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue
Service$301,657 $217,280 $776,120 $469,893 
Product238,417 19,636 503,588 171,683 
Total revenue540,074 236,916 1,279,708 641,576 
Cost of revenue(1)
Service174,267 122,583 486,880 314,842 
Product238,505 21,261 497,032 174,744 
Total cost of revenue412,772 143,844 983,912 489,586 
Gross profit127,302 93,072 295,796 151,990 
Operating expenses
Technology and development(1)
43,658 22,452 112,824 60,687 
Marketing(1)
49,143 12,421 116,343 47,611 
General and administrative(1)
54,395 21,190 151,352 68,539 
Total operating expenses147,196 56,063 380,519 176,837 
Loss from operations(19,894)37,009 (84,723)(24,847)
Interest income178 319 472 1,859 
Interest expense(3,672)(2,522)(7,822)(7,631)
Income tax benefit311 — 5,363 — 
Other income (expense), net4,128 (640)4,099 (1,943)
Net (loss) income$(18,949)$34,166 $(82,611)$(32,562)
Dividends on convertible preferred stock(1,662)(1,530)(5,875)(2,814)
Undistributed earnings attributable to participating securities $— $(653)$— $— 
Net (loss) income attributable to common stock—basic and diluted$(20,611)$31,983 $(88,486)$(35,376)
Net (loss) income per share attributable to common stock—basic $(0.20)$0.32 $(0.85)$(0.36)
Weighted-average shares to compute net (loss) income per share attributable to common stock—basic105,144,872 99,840,144 104,327,614 97,365,122 
Net (loss) income per share attributable to common stock—diluted$(0.20)$0.30 $(0.85)$(0.36)
Weighted-average shares to compute net (loss) income per share attributable to common stock—diluted105,144,872 107,607,711 104,327,614 97,365,122 
Net (loss) income$(18,949)$34,166 $(82,611)$(32,562)
Other comprehensive income (loss)
Foreign currency translation adjustments3 6 3 (16)
Unrealized gain (loss) on available-for-sale debt securities27 (139)161 282 
Comprehensive (loss) income$(18,919)$34,033 $(82,447)$(32,296)

(1) Includes stock-based compensation as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Cost of revenue$3,283 $2,574 $10,019 $5,981 
Technology and development5,455 4,964 16,987 11,736 
Marketing537 403 1,615 1,130 
General and administrative3,835 3,407 10,817 6,917 
Total$13,110 $11,348 $39,438 $25,764 

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Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Nine Months Ended September 30,
20212020
Operating Activities
Net loss
$(82,611)$(32,562)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization32,303 10,581 
Stock-based compensation39,438 25,764 
Amortization of debt discount and issuance costs3,583 5,254 
Non-cash lease expense8,510 6,821 
Impairment costs— 2,063 
Net loss (gain) on IRLCs, forward sales commitments, and loans held for sale342 (2,303)
Other(3,847)(306)
Change in assets and liabilities:
Accounts receivable, net(29,487)(21,862)
Inventory(385,986)49,597 
Prepaid expenses and other assets(9,532)7,396 
Accounts payable616 851 
Accrued liabilities, other payables, deferred tax liabilities, and payroll tax liabilities, noncurrent23,011 28,157 
Lease liabilities (9,644)(8,368)
Origination of loans held for sale(745,703)(479,153)
Proceeds from sale of loans originated as held for sale744,886 459,605 
Net cash (used in) provided by operating activities(414,121)51,535 
Investing activities
Purchases of property and equipment(20,575)(10,391)
Purchases of investments(129,277)(135,118)
Sales of investments98,687 6,583 
Maturities of investments96,303 82,772 
Cash paid for acquisition(608,000)— 
Net cash used in investing activities(562,862)(56,154)
Financing activities
Proceeds from the issuance of convertible preferred stock, net of issuance costs— 39,801 
Proceeds from the issuance of common stock, net of issuance costs— 69,701 
Proceeds from the issuance of common stock pursuant to employee equity plans14,194 15,119 
Tax payments related to net share settlements on restricted stock units(21,088)(10,987)
Borrowings from warehouse credit facilities710,535 473,283 
Repayments to warehouse credit facilities(709,739)(454,277)
Borrowings from secured revolving credit facility431,717 57,378 
Repayments to secured revolving credit facility(256,039)(46,899)
Proceeds from issuance of convertible senior notes, net of issuance costs561,529 — 
Purchases of capped calls related to convertible senior notes(62,647)— 
Payments for repurchases and conversions of convertible senior notes(2,159)— 
Other payables—deposits held in escrow3,161 2,097 
Principal payments under finance lease obligations(567)(59)
Cash paid for secured revolving credit facility issuance costs(485)(4)
Net cash provided by financing activities668,412 145,153 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(3)(16)
Net change in cash, cash equivalents, and restricted cash(308,574)140,518 
Cash, cash equivalents, and restricted cash:
Beginning of period945,820 247,448 
End of period
$637,246 $387,966 
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Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)

Three Months Ended
Sep. 30, 2021Jun. 30, 2021Mar. 31, 2021Dec. 31, 2020Sep. 30 2020Jun. 30, 2020Mar. 31, 2020Dec. 31, 2019Sep. 30, 2019
Monthly average visitors (in thousands)49,147 48,437 46,202 44,135 49,258 42,537 35,519 30,595 35,633 
Real estate services transactions
Brokerage21,929 21,006 14,317 16,951 18,980 13,828 10,751 13,122 16,098 
Partner4,755 4,597 3,944 4,940 5,180 2,691 2,479 2,958 3,499 
Total26,684 25,603 18,261 21,891 24,160 16,519 13,230 16,080 19,597 
Real estate services revenue per transaction
Brokerage$11,107 $11,307 $10,927 $10,751 $10,241 $9,296 $9,520 $9,425 $9,075 
Partner2,990 3,195 3,084 3,123 2,988 2,417 2,535 2,369 2,295 
Aggregate9,661 9,850 9,233 9,030 8,686 8,175 8,211 8,127 7,865 
Aggregate home value of real estate services transactions (in millions)$14,926 $14,612 $9,621 $11,478 $12,207 $7,576 $6,098 $7,588 $9,157 
U.S. market share by value
1.16 %1.18 %1.16 %1.04 %1.04 %0.94 %0.92 %0.95 %0.96 %
Revenue from top-10 Redfin markets as a percentage of real estate services revenue61 %64 %62 %63 %63 %63 %61 %62 %63 %
Average number of lead agents
2,370 2,456 2,277 1,981 1,820 1,399 1,826 1,526 1,579 
RedfinNow homes sold388 292 171 83 37 162 171 212 168 
Revenue per RedfinNow home sold (in ones)$599,010 $570,930 $525,173 $471,551 $504,583 $444,690 $461,916 $466,939 $476,770 
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Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue
Real estate services (brokerage)$243,575 $194,375 $637,532 $425,269 
Real estate services (partner)14,220 15,478 41,070 28,269 
Properties revenue238,417 19,005 503,588 170,287 
Rentals revenue40,406 — 82,954 — 
Other revenue8,206 8,503 26,084 19,999 
Intercompany elimination(4,750)(445)(11,520)(2,248)
Total revenue$540,074 $236,916 $1,279,708 $641,576 
Cost of revenue
Real estate services$161,449 $117,944 $453,790 $300,305 
Properties238,397 20,460 496,948 173,107 
Rentals7,395 — 14,965 — 
Other10,281 5,885 29,729 18,422 
Intercompany elimination(4,750)(445)(11,520)(2,248)
Total cost of revenue$412,772 $143,844 $983,912 $489,586 
Gross profit
Real estate services$96,346 $91,909 $224,812 $153,233 
Properties20 (1,455)6,640 (2,820)
Rentals33,011 — 67,989 — 
Other(2,075)2,618 (3,645)1,577 
Total gross profit$127,302 $93,072 $295,796 $151,990 
Gross margin (percentage of revenue)
Real estate services37.4 %43.8 %33.1 %33.8 %
Properties0.0 (7.7)1.3 (1.7)
Rentals81.7 — 82.0 — 
Other(25.3)30.8 (14.0)7.9 
Total gross margin23.6 39.3 23.1 23.7 

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