rdfn-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 001-38160


Redfin Corporation

(Exact name of registrant as specified in its charter)

Delaware

74-3064240

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1099 Stewart Street

Suite 600

Seattle

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	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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒

Yes

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐

Yes

☒

The registrant had 108,454,765 shares of common stock outstanding as of July 28, 2022.

Redfin Corporation

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2022

Table of Contents



PART I		Page

Item 1.	Financial Statements (unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive Loss	2
	Consolidated Statements of Cash Flows	3
	Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity	4
	Index to Notes to Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
Item 4.	Controls and Procedures	56

PART II

Item 1	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 6.	Exhibits	59

	Signatures

As used in this quarterly report, the terms "Redfin," "we," "us," and "our" refer to Redfin Corporation and its subsidiaries taken as a whole, unless otherwise noted or unless the context indicates otherwise. However, when referencing (i) the 2023 notes, the 2025 notes, and the 2027 notes, the terms “we,” “us,” and “our” refer only to Redfin Corporation and not to Redfin Corporation and its subsidiaries taken as a whole, (ii) the secured revolving credit facility, the terms "we," "us," and "our" refer only to RedfinNow Borrower LLC, and (iii) each warehouse credit facility, the terms "we," "us," and "our" refer to Redfin Mortgage, LLC or Bay Equity LLC, as the context dictates.

Note Regarding Forward-Looking Statements

This quarterly report contains forward-looking statements. All statements contained in this report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, our market growth and trends, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” "hope,” “potentially,” “preliminary,” “likely,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described under Item 1A of our annual report for the year ended December 31, 2021, as supplemented by Part II, Item 1A of this report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this report or to conform these statements to actual results or revised expectations.

Note Regarding Industry and Market Data

This quarterly report contains information using industry publications. While we are not aware of any misstatements regarding the information from these industry publications, we have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied on therein.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share amounts, unaudited)


	June 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	379,922	$	591,003
Restricted cash	28,279		127,278
Short-term investments	82,506		33,737
Accounts receivable, net of allowances for credit losses of $1,655 and $1,298	86,082		69,594
Inventory	377,518		358,221
Loans held for sale	306,364		35,759
Prepaid expenses	30,775		22,948
Other current assets	18,378		7,524
Total current assets	1,309,824		1,246,064
Property and equipment, net	59,709		58,671
Right-of-use assets, net	54,321		54,200
Mortgage servicing rights, at fair value	35,050		—
Long-term investments	52,989		54,828
Goodwill	461,349		409,382
Intangible assets, net	181,766		185,929
Other assets, noncurrent	12,720		12,898
Total assets	$	2,167,728	$	2,021,972
Liabilities, mezzanine equity, and stockholders' equity
Current liabilities
Accounts payable	$	20,237	$	12,546
Accrued and other liabilities	161,803		118,122
Warehouse credit facilities	298,303		33,043
Secured revolving credit facility	156,540		199,781
Convertible senior notes, net	—		23,280
Lease liabilities	18,180		15,040
Total current liabilities	655,063		401,812
Lease liabilities, noncurrent	50,920		55,222
Convertible senior notes, net, noncurrent	1,239,873		1,214,017

Deferred tax liabilities	728		1,201
Total liabilities	1,946,584		1,672,252
Commitments and contingencies (Note 8)
Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	39,891		39,868
Stockholders’ equity
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 108,415,939 and 106,308,767 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	108		106
Additional paid-in capital	723,251		682,084
Accumulated other comprehensive loss	(990)		(174)
Accumulated deficit	(541,116)		(372,164)
Total stockholders’ equity	181,253		309,852
Total liabilities, mezzanine equity, and stockholders’ equity	$	2,167,728	$	2,021,972

See Notes to the consolidated financial statements.

Table of Contents

Redfin Corporation and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share amounts, unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue
Service	$	344,309	$	298,870	$	561,902	$	474,463
Product	262,606		172,445		642,359		265,171
Total revenue	606,915		471,315		1,204,261		739,634
Cost of revenue
Service	232,886		177,762		398,695		312,613
Product	256,026		167,417		615,026		258,527
Total cost of revenue	488,912		345,179		1,013,721		571,140
Gross profit	118,003		126,136		190,540		168,494
Operating expenses
Technology and development	51,506		41,488		101,146		69,166
Marketing	56,743		55,398		100,085		67,200
General and administrative	71,733		59,567		130,699		96,957
Restructuring and reorganization	12,677		—		18,386		—
Total operating expenses	192,659		156,453		350,316		233,323
Loss from operations	(74,656)		(30,317)		(159,776)		(64,829)
Interest income	554		135		774		293
Interest expense	(3,620)		(2,813)		(7,481)		(4,151)
Income tax (expense) benefit	(159)		5,052		(293)		5,052
Other (expense) income, net	(265)		65		(2,176)		(27)
Net loss	$	(78,146)	$	(27,878)	$	(168,952)	$	(63,662)
Dividends on convertible preferred stock	(350)		(1,878)		(1,144)		(4,214)

Net loss attributable to common stock—basic and diluted	$	(78,496)	$	(29,756)	$	(170,096)	$	(67,876)
Net loss per share attributable to common stock—basic and diluted	$	(0.73)	$	(0.29)	$	(1.59)	$	(0.65)
Weighted-average shares to compute net loss per share attributable to common stock—basic and diluted	107,396,575		104,391,337		107,032,381		103,912,212



Net loss	$	(78,146)	$	(27,878)	$	(168,952)	$	(63,662)
Other comprehensive income
Foreign currency translation adjustments	34		—		38		—
Unrealized gain on available-for-sale debt securities	217		84		778		134
Comprehensive loss	$	(77,895)	$	(27,794)	$	(168,136)	$	(63,528)

See Notes to the consolidated financial statements.

Table of Contents

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)


	Six Months Ended June 30,
	2022		2021
Operating Activities
Net loss	$	(168,952)	$	(63,662)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	31,140		18,018
Stock-based compensation	33,601		26,327
Amortization of debt discount and issuance costs	2,899		2,203
Non-cash lease expense	7,096		5,448

Net loss on IRLCs, forward sales commitments, and loans held for sale	2,721		238
Other	3,170		169
Change in assets and liabilities:
Accounts receivable, net	(6,791)		(22,312)
Inventory	(19,297)		(199,845)
Prepaid expenses and other assets	(2,852)		(7,137)
Accounts payable	5,964		15,766
Accrued and other liabilities, deferred tax liabilities, and payroll tax liabilities, noncurrent	5,529		26,915
Lease liabilities	(8,042)		(6,144)
Origination of mortgage servicing rights	(964)		—
Change in fair value of mortgage servicing rights, net	(878)		—
Proceeds from sale of mortgage servicing rights	774		—
Origination of loans held for sale	(1,641,377)		(488,274)
Proceeds from sale of loans originated as held for sale	1,587,759		478,652
Net cash used in operating activities	(168,500)		(213,638)
Investing activities
Purchases of property and equipment	(12,131)		(13,580)
Purchases of investments	(82,184)		(104,877)
Sales of investments	12,946		89,536
Maturities of investments	19,425		92,843
Cash paid for acquisition, net of cash acquired	(97,341)		(608,000)
Net cash used in investing activities	(159,285)		(544,078)
Financing activities


Proceeds from the issuance of common stock pursuant to employee equity plans	9,258		12,496
Tax payments related to net share settlements on restricted stock units	(3,743)		(16,530)
Borrowings from warehouse credit facilities	1,628,684		464,250
Repayments to warehouse credit facilities	(1,572,033)		(456,854)
Borrowings from secured revolving credit facility	326,025		230,608
Repayments to secured revolving credit facility	(369,266)		(130,788)
Proceeds from issuance of convertible senior notes, net of issuance costs	—		561,529
Purchases of capped calls related to convertible senior notes	—		(62,647)
Payments for repurchases and conversions of convertible senior notes	—		(1,925)
Other financing payables	—		97
Principal payments under finance lease obligations	(414)		(353)
Cash paid for secured revolving credit facility issuance costs	(764)		(305)
Net cash provided by financing activities	17,747		599,578
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(42)		—
Net change in cash, cash equivalents, and restricted cash	(310,080)		(158,138)
Cash, cash equivalents, and restricted cash:
Beginning of period	718,281		945,820
End of period	$	408,201	$	787,682

Supplemental disclosure of cash flow information
Cash paid for interest	$	6,581	$	2,038
Non-cash transactions
Stock-based compensation capitalized in property and equipment	2,053		1,717
Property and equipment additions in accounts payable and accrued liabilities	69		1,013
Leasehold improvements paid directly by lessor	77		1,334

	As of June 30,
	2022		2021
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	379,922	$	735,387
Restricted cash	28,279		52,295
Total cash, cash equivalents, and restricted cash	$	408,201	$	787,682

See Notes to the consolidated financial statements.

Table of Contents

Redfin Corporation and Subsidiaries

Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity

(in thousands, except share amounts, unaudited)


	Series A Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, March 31, 2022	40,000	$	39,879	107,025,691	$	107	$	699,225	$	(462,970)	$	(739)	$	235,623
Issuance of convertible preferred stock, net	—	12		—	—		—		—		—		—
Issuance of common stock as dividend on convertible preferred stock	—	—		30,640	—		—		—		—		—
Issuance of common stock pursuant to employee stock purchase program	—	—		661,054	1		4,629		—		—		4,630
Issuance of common stock pursuant to exercise of stock options	—	—		436,621	—		2,813		—		—		2,813
Issuance of common stock pursuant to settlement of restricted stock units	—	—		372,111	—		—		—		—		—
Common stock surrendered for employees' tax liability upon settlement of restricted stock units	—	—		(110,178)	—		(1,148)		—		—		(1,148)



Stock-based compensation	—	—		—	—		17,732		—		—		17,732
Other comprehensive loss	—	—		—	—		—		—		(251)		(251)
Net loss	—	—		—	—		—		(78,146)		—		(78,146)
Balance, June 30, 2022	40,000	$	39,891	108,415,939	$	108	$	723,251	$	(541,116)	$	(990)	$	181,253

Balance, December 31, 2021	40,000	$	39,868	106,308,767	$	106	$	682,084	$	(372,164)	$	(174)	$	309,852
Issuance of convertible preferred stock, net	—	23		—	—		—		—		—		—
Issuance of common stock as dividend on convertible preferred stock	—	—		61,280	—		—		—		—		—
Issuance of common stock pursuant to employee stock purchase program	—	—		661,054	1		4,629		—		—		4,630
Issuance of common stock pursuant to exercise of stock options	—	—		645,120	—		4,628		—		—		4,628
Issuance of common stock pursuant to settlement of restricted stock units	—	—		1,056,468	1		(1)		—		—		—
Common stock surrendered for employees' tax liability upon settlement of restricted stock units	—	—		(316,750)	—		(3,743)		—		—		(3,743)

Stock-based compensation	—	—		—	—		35,654		—		—		35,654
Other comprehensive loss	—	—		—	—		—		—		(816)		(816)
Net loss	—	—		—	—		—		(168,952)		—		(168,952)
Balance, June 30, 2022	40,000	$	39,891	108,415,939	$	108	$	723,251	$	(541,116)	$	(990)	$	181,253


	Series A Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, March 31, 2021	40,000	$	39,834	103,983,585	$	104	$	641,702	$	(298,335)	$	161	$	343,632
Issuance of convertible preferred stock, net	—	12		—	—		—		—		—		—
Issuance of common stock as dividend on convertible preferred stock	—	—		30,640	—		—		—		—		—

Issuance of common stock pursuant to employee stock purchase program	—	—		135,426	—		7,299		—		—		7,299
Issuance of common stock pursuant to exercise of stock options	—	—		419,153	1		1,736		—		—		1,737
Issuance of common stock pursuant to settlement of restricted stock units	—	—		377,744	—		—		—		—		—
Common stock surrendered for employees' tax liability upon settlement of restricted stock units	—	—		(109,077)	—		(5,670)		—		—		(5,670)
Purchases of capped calls related to convertible senior notes	—	—		—	—		(8,168)		—		—		(8,168)
Issuance of common stock in connection with conversion of convertible senior notes	—	—		624	—		(1)		—		—		(1)
Stock-based compensation	—	—		—	—		14,729		—		—		14,729
Other comprehensive loss	—	—		—	—		—		—		(84)		(84)
Net loss	—	—		—	—		—		(27,878)		—		(27,878)
Balance, June 30, 2021	40,000	$	39,846	104,838,095	$	105	$	651,627	$	(326,213)	$	77	$	325,596

Balance, December 31, 2020	40,000	$	39,823	103,000,594	$	103	$	860,556	$	(270,313)	$	211	$	590,557
Issuance of convertible preferred stock, net	—	23		—	—		—		—		—		—
Issuance of common stock as dividend on convertible preferred stock	—	—		61,280	—		—		—		—		—
Issuance of common stock pursuant to employee stock purchase program	—	—		135,426	—		7,299		—		—		7,299
Issuance of common stock pursuant to exercise of stock options	—	—		1,089,203	1		5,199		—		—		5,200
Issuance of common stock pursuant to settlement of restricted stock units	—	—		738,095	1		(1)		—		—		—
Common stock surrendered for employees' tax liability upon settlement of restricted stock units	—	—		(224,107)	—		(16,530)		—		—		(16,530)
Cumulative-effect adjustment from accounting changes	—	—		—	—		(170,240)		7,762		—		(162,478)
Purchases of capped calls related to convertible senior notes	—	—		—	—		(62,647)		—		—		(62,647)
Issuance of common stock in connection with conversion of convertible senior notes	—	—		37,604	—		(53)		—		—		(53)
Stock-based compensation	—	—		—	—		28,044		—		—		28,044
Other comprehensive loss	—	—		—	—		—		—		(134)		(134)
Net loss	—	—		—	—		—		(63,662)		—		(63,662)
Balance, June 30, 2021	40,000	$	39,846	104,838,095	$	105	$	651,627	$	(326,213)	$	77	$	325,596

See Notes to the consolidated financial statements.

Table of Contents

Index to Notes to Consolidated Financial Statements


Note 1:	Summary of Accounting Policies	6
Note 2:	Business Combinations	7
Note 3:	Segment Reporting and Revenue	8
Note 4:	Financial Instruments	10
Note 5:	Inventory	15
Note 6:	Property and Equipment	16
Note 7:	Leases	16
Note 8:	Commitments and Contingencies	17
Note 9:	Acquired Intangible Assets and Goodwill	19
Note 10:	Accrued and Other Liabilities	20
Note 11:	Mezzanine Equity	20
Note 12:	Equity and Equity Compensation Plans	21
Note 13:	Net Loss per Share Attributable to Common Stock	24
Note 14:	Income Taxes	24
Note 15:	Debt	26
Note 16:	Subsequent Events	29

Index to Notes to Financial Statements

Redfin Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts, unaudited)

Note 1: Summary of Accounting Policies

Basis of Presentation—The consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The financial information as of December 31, 2021 that is included in this quarterly report is derived from the audited consolidated financial statements and notes for the year ended December 31, 2021 included in Item 8 in our annual report for the year ended December 31, 2021. Such financial information should be read in conjunction with the notes and management’s discussion and analysis of the consolidated financial statements included in our annual report.

The unaudited consolidated interim financial statements, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2022, our statements of comprehensive loss, and statements of changes in mezzanine equity and stockholders’ equity for the three and six months ended June 30, 2022 and 2021, as well as our statements of cash flows for the six months ended June 30, 2022 and 2021. The results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any interim period or for any other future year.

Principles of Consolidation—The unaudited consolidated interim financial statements include the accounts of Redfin Corporation and its wholly owned subsidiaries, including those entities in which we have a variable interest and of which we are the primary beneficiary. Intercompany transactions and balances have been eliminated.

Use of Estimates—The preparation of consolidated financial statements, in conformity with GAAP, requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and results of operations during the respective periods. Our estimates include, but are not limited to, valuation of deferred income taxes, stock-based compensation, net realizable value of inventory, capitalization of website and software development costs, the incremental borrowing rate for the determination of the present value of lease payments, recoverability of intangible assets with finite lives, fair value of our mortgage loans held for sale (“LHFS”) and mortgage servicing rights, estimated useful life of intangible assets, fair value of reporting units for purposes of allocating and evaluating goodwill for impairment, and current expected credit losses on certain financial assets. The amounts ultimately realized from the affected assets or ultimately recognized as liabilities will depend on, among other factors, general business conditions and could differ materially in the near term from the carrying amounts reflected in the consolidated financial statements.

Restructuring and Reorganization—Restructuring and reorganization expenses primarily consist of employee termination costs (including severance, retention, benefits, and payroll taxes) associated with the restructuring and reorganization activities from our acquisitions of Bay Equity, our mortgage business, and Rent., our rental business, and from our June 2022 workforce reduction. These expenses are included in restructuring and reorganization in our consolidated statements of comprehensive loss and in accrued and other liabilities in our consolidated balance sheets. We expect to complete our restructuring and reorganization activities by the end of 2022.

Mortgage Servicing Rights (“MSRs”)—We determine the fair value of MSRs using a valuation model that calculates the net present value of estimated future cash flows. Key estimates of future cash flows include prepayment speeds, default rates, discount rates, cost of servicing, objective portfolio characteristics, and others factors. Changes in these estimates could materially change the estimated fair value.

Index to Notes to Financial Statements

Recently Adopted Accounting Pronouncements—On October 28, 2021, the Financial Accounting Standards Board issued ASU 2021-08—Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. As a result of the amendments made by ASU 2021-08, it is expected that an acquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its pre-acquisition financial statements. The amendments made by ASU 2021-08 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. We elected to early adopt this standard in the second quarter of 2022, and there was not any material impact on our financial statements as a result of adopting ASU 2021-08.

Recently Issued Accounting Pronouncements—None applicable.

Note 2: Business Combinations

On April 1, 2022, we acquired, for $139,671 in cash, all of the equity interests of Bay Equity LLC (“Bay Equity”), and Bay Equity became one of our wholly owned subsidiaries. We acquired Bay Equity to expand our mortgage business.

The results of operations and the fair values of the assets acquired and liabilities assumed have been included in our consolidated financial statements since the date of acquisition. The revenue from Bay Equity is reported in our mortgage segment in Note 3. The goodwill recognized in connection with our acquisition of Bay Equity is primarily attributable to the anticipated synergies from future growth of the combined business and is not expected to be deductible for tax purposes. We assigned the recognized goodwill of $51,967 to the mortgage segment.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as a result of the Bay Equity acquisition and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available:


Cash and cash equivalents	$	39,963
Restricted cash	2,367
Accounts receivable	9,697
Prepaid expenses	1,222
Other current assets	19,262
Property and equipment, net	897
Operating lease right-of-use assets	4,995
Loans held for sale	213,891
Mortgage servicing rights, at fair value	33,982
Other assets, noncurrent	294
Intangible assets	14,510
Goodwill	51,967
Total assets acquired	393,047
Accounts payable	1,747
Accrued and other liabilities	38,026
Lease liabilities	2,848
Lease liabilities and deposits, noncurrent	2,147
Warehouse credit facilities	208,608
Total liabilities assumed	253,376
Total purchase consideration	$	139,671

Index to Notes to Financial Statements

Acquisition-related costs consisted of external fees for advisory, legal, and other professional services and totaled approximately $1,507 and $2,424 for the three and six months ended June 30, 2022, respectively. These costs were expensed as incurred and recorded in general and administrative costs in our consolidated statements of comprehensive loss.

Identifiable Intangible Assets—The following table provides the preliminary fair values of the Bay Equity intangible assets, along with their estimated useful lives:


	Estimated Fair Value		Estimated Useful Life (in years)
Trade names	$	11,650	5
Developed technology	2,860		3
Total	$	14,510

The identifiable intangible assets include trade names and developed technology. Trade names primarily relate to the Bay Equity brand. Developed technology primarily relates to website functionality around data consolidation and optimization which helps drive efficiencies in loan origination and processing. The fair values of trade names and developed technology are derived by applying the relief from royalty method and replacement cost method, respectively. Critical estimates in valuing the intangible assets include revenue growth rate, royalty rate, discount rate, and number of months to recreate the underlying application.

Unaudited Pro Forma Financial Information—The following table presents unaudited pro forma financial information for the three and six months ended June 30, 2022 and 2021. The pro forma financial information combines our results of operations with that of Bay Equity as though the companies had been combined as of January 1, 2021. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the Bay Equity acquisition had taken place at such time. The pro forma financial information presented below includes adjustments for depreciation and amortization, restructuring costs, and transaction costs:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	606,915	$	560,241	$	1,260,129	$	941,990
Net loss	(78,967)		(14,538)		(165,561)		(32,785)

There were no material non-recurring adjustments made in the pro forma financial information disclosed above.

Note 3: Segment Reporting and Revenue

In its operation of our business, our management, including our chief operating decision maker ("CODM"), who is also our chief executive officer, evaluates the performance of our operating segments based on our statement of operations results, inclusive of net loss. We do not analyze discrete segment balance sheet information related to long-term assets, substantially all of which are located in the United States. We have six operating segments and four reportable segments, real estate services, properties, rentals, and mortgage.

We generate revenue primarily from commissions and fees charged on each real estate services transaction closed by our lead agents or partner agents, from the sale of RedfinNow homes, from subscription-based product offerings for our rentals business, and from the origination, sales, and servicing of mortgages. Our key revenue components are brokerage revenue, partner revenue, properties revenue, rentals revenue, mortgage revenue, and other revenue.

Information on each of the reportable and other segments and reconciliation to consolidated net loss is presented in the table below. We have assigned certain previously reported expenses to each segment to conform to the way we internally manage and monitor our business. We allocated indirect costs to each segment based on a reasonable allocation methodology, when such costs are significant to the performance measures of the segments.

Index to Notes to Financial Statements


	Three Months Ended June 30, 2022
	Real estate services		Properties		Rentals		Mortgage		Other		Corporate Overhead and Intercompany Eliminations		Total
Revenue	$	251,809	$	262,606	$	38,248	$	53,098	$	5,894	$	(4,740)	$	606,915
Cost of revenue	177,698		255,839		7,901		46,316		5,898		(4,740)		488,912
Gross profit	74,111		6,767		30,347		6,782		(4)		—		118,003
Operating expenses
Technology and development	27,696		4,684		14,871		1,904		1,189		1,162		51,506
Marketing	40,765		821		13,086		1,843		71		157		56,743
General and administrative	24,341