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Redfin Reports First Quarter 2023 Financial Results

SEATTLE - May 4, 2023 - Redfin Corporation (NASDAQ: RDFN) today announced results for its first quarter ended March 31, 2023.

First Quarter 2023
First quarter revenue was $325.7 million, a decrease of 45% compared to the first quarter of 2022. Gross profit was $56.2 million, a decrease of 23% year-over-year. Real estate services gross profit was $15.8 million, a decrease of 33% year-over-year, and real estate services gross margin was 12%, compared to 13% in the first quarter of 2022.

Net loss was $60.8 million, compared to a net loss of $90.8 million in the first quarter of 2022. Net loss attributable to common stock was $61.0 million. Net loss per share attributable to common stock, diluted, was $0.55, compared to net loss per share, diluted, of $0.86 in the first quarter of 2022.

“Redfin’s first-quarter revenues and earnings exceeded our expectations, keeping us on track for full-year adjusted EBITDA in 2023,” said Redfin CEO Glenn Kelman. “We’re drawing online visitors away from our main rivals, and our brokerage has gotten more efficient. For the second quarter, we expect gross-margins gains in our core business for the first time since 2021. The two companies we acquired over the past two years to earn additional revenue from the people using our site and our brokerage are also starting to deliver results: Rent’s revenue growth is accelerating, and Bay Equity’s net income improved, with more than one in five Redfin homebuyers getting a mortgage from Bay Equity in the first quarter. And finally, our competitive position has materially improved, as we’ve reduced our debt by more than $300 million, and sold all but five of our RedfinNow homes. We wouldn’t wish a housing downturn on anyone, but it has made Redfin leaner, hungrier and better.”

First Quarter Highlights
•First quarter market share was 0.78% of U.S. existing home sales by units, compared to 0.79% in the first quarter of 2022.
•Redfin’s mobile apps and website reached more than 50 million average monthly users, compared to 51 million in the first quarter of 2022.
•Expanded Redfin Premier nationwide and made the service available to homebuyers for the first time. With this launch, we made significant branding, marketing and website improvements that make it easier for customers to identify and connect with Premier agents.
•Brought Redfin agent service to the Colorado Rockies, which was announced on April 13; listings currently cover more than 98% of the U.S. population.
•Increased momentum in mortgage cross-selling, with 20% attach rates for the first quarter, up 16 points from the first quarter of 2022.
•Launched Title Forward in northern California on April 3, expanding Title Forward coverage of Redfin’s sales from 48% to 55%.
•Released our inaugural 2023 Sustainability Report (https://investors.redfin.com/esg) outlining our environmental, social and governance (ESG) commitments, along with updated statistics (https://www.redfin.com/news/diversity-at-redfin-in-2022/) on the diversity of Redfin’s workforce.
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•Delivered software to improve customer and agent experience while boosting traffic to Redfin:
◦Favorites Lists, which help bring order to customers’ home searches by allowing them to organize their favorite homes into lists.
◦New cost of living calculator, which helps users compare the cost of living between different cities across the U.S.
◦Agent loyalty links, which make it easier for Redfin agents to share their profile with their network and generate more loyalty deals.
◦An improved home recommendation model which surfaces more listings for customers, learns their preferences faster, and boosts traffic to Redfin.
◦Updates to the rentals search experience, including a tour scheduling tool that allows renters to see a property’s calendar and directly book a tour time. We also added messaging to rental details pages that helps renters identify popular homes and move quickly in order to access them.

Business Outlook
The following forward-looking statements reflect Redfin's expectations as of May 4, 2023, and are subject to substantial uncertainty.

For the second quarter of 2023 we expect:
•Total revenue between $268 million and $281 million, representing a year-over-year decline between (24)% and (20)% compared to the second quarter of 2022. Included within total revenue are real estate services revenue between $175 million and $183 million, rentals revenue between $45 million and $46 million, mortgage revenue between $38 million and $41 million and other revenue between $10 million and $11 million. We expect to report our properties segment as discontinued operations in the second quarter, and these results are not included in total revenue.
•Total net loss is expected to be between $44 million and $35 million, compared to net loss of $78 million in the second quarter of 2022. Discontinued operations are included in net loss, but are expected to have no impact on the total. This guidance includes approximately $31 million in total marketing expenses, $17 million of stock-based compensation, $17 million of depreciation and amortization, $4 million in gains on the extinguishment of convertible senior notes and $5 million in restructuring expenses. Adjusted EBITDA is expected to be between a loss of $9 million and positive $1 million. Furthermore, we expect to pay a quarterly dividend of 30,640 shares of common stock to our preferred stockholder.

Conference Call
Redfin will webcast a conference call to discuss the results at 1:30 p.m. Pacific Time today. The webcast will be open to the public at http://investors.redfin.com. The webcast will remain available on the investor relations website for at least three months following the conference call.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws, including our future operating results, as described under Business Outlook. We believe our expectations related to these forward-looking statements are reasonable, but actual results may turn out to be materially different. For factors that could cause actual results to differ materially from the forward-looking statements in this press release, please see the risks and uncertainties identified under the heading "Risk Factors" in our annual report for the year ended December 31, 2022, as supplemented by our quarterly report for the quarter ended March 31, 2023, 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.
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Non-GAAP Financial Measure
To supplement our consolidated financial statements that are prepared and presented in accordance with GAAP, we also compute and present adjusted EBITDA, which is a non-GAAP financial measure. We believe adjusted EBITDA is useful for investors because it enhances period-to-period comparability of our financial statements on a consistent basis and provides investors with useful insight into the underlying trends of the business. The presentation of this financial measure is not intended to be considered in isolation or as a substitute of, or superior to, our financial information prepared and presented in accordance with GAAP. Our calculation of adjusted EBITDA may be different from adjusted EBITDA or similar non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Our adjusted EBITDA for the three months ended March 31, 2022 and 2021 is presented below, along with a reconciliation of adjusted EBITDA to net loss.

About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can 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. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.

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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)

March 31, 2023December 31, 2022
Assets
Current assets
Cash and cash equivalents$149,940 $239,840 
Restricted cash2,416 2,406 
Short-term investments140,531 122,259 
Accounts receivable, net of allowances for credit losses of $2,277 and $2,01948,142 54,880 
Inventory10,685 114,273 
Loans held for sale192,622 199,604 
Prepaid expenses33,784 34,506 
Other current assets14,918 8,690 
Total current assets593,038 776,458 
Property and equipment, net52,551 55,105 
Right-of-use assets, net38,932 42,032 
Mortgage servicing rights, at fair value35,061 36,261 
Long-term investments9,572 29,480 
Goodwill461,349 461,349 
Intangible assets, net152,525 162,272 
Other assets, noncurrent11,413 11,247 
Total assets$1,354,441 $1,574,204 
Liabilities, mezzanine equity, and stockholders' equity
Current liabilities
Accounts payable$10,154 $11,819 
Accrued and other liabilities92,275 109,743 
Warehouse credit facilities185,283 190,509 
Convertible senior notes, net23,468 23,431 
Lease liabilities18,015 19,137 
Total current liabilities329,195 354,639 
Lease liabilities, noncurrent35,757 37,298 
Convertible senior notes, net, noncurrent928,651 1,078,157 
Deferred tax liabilities249 243 
Total liabilities1,293,852 1,470,337 
Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively39,925 39,914 
Stockholders’ equity
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 110,526,884 and 109,696,178 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively110 110 
Additional paid-in capital775,094 757,951 
Accumulated other comprehensive loss(435)(801)
Accumulated deficit(754,105)(693,307)
Total stockholders’ equity20,664 63,953 
Total liabilities, mezzanine equity, and stockholders’ equity$1,354,441 $1,574,204 
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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 March 31,
20232022
Revenue
Service$212,934 $217,593 
Product112,727 379,753 
Total revenue325,661 597,346 
Cost of revenue(1)
Service154,796 165,809 
Product114,658 358,999 
Total cost of revenue269,454 524,808 
Gross profit56,207 72,538 
Operating expenses
Technology and development(1)
48,192 49,640 
Marketing(1)
40,908 43,342 
General and administrative(1)
69,962 58,966 
Restructuring and reorganization1,053 5,710 
Total operating expenses160,115 157,658 
Loss from operations(103,908)(85,120)
Interest income3,406 220 
Interest expense(1,922)(3,861)
Income tax expense(410)(134)
Gain on extinguishment of convertible senior notes42,270 — 
Other expense, net(234)(1,911)
Net loss$(60,798)$(90,806)
Dividends on convertible preferred stock(226)(793)
Net loss attributable to common stock—basic and diluted$(61,024)$(91,599)
Net loss per share attributable to common stock—basic and diluted$(0.55)$(0.86)
Weighted-average shares to compute net loss per share attributable to common stock—basic and diluted110,103,598 106,664,140 
Net loss$(60,798)$(90,806)
Other comprehensive (loss) income
Foreign currency translation adjustments58 4 
Unrealized (loss) gain on available-for-sale debt securities(424)561 
Comprehensive loss$(61,164)$(90,241)

(1) Includes stock-based compensation as follows:
Three Months Ended March 31,
20232022
Cost of revenue$4,181 $3,377 
Technology and development8,209 7,965 
Marketing1,263 1,072 
General and administrative5,375 4,374 
Total$19,028 $16,788 

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Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three Months Ended March 31,
20232022
Operating Activities
Net loss
$(60,798)$(90,806)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization17,013 14,813 
Stock-based compensation19,028 16,788 
Amortization of debt discount and issuance costs1,087 1,440 
Non-cash lease expense4,816 3,169 
Impairment costs113 — 
Net (gain) loss on IRLCs, forward sales commitments, and loans held for sale(8,326)60 
Change in fair value of mortgage servicing rights, net1,208 — 
Gain on extinguishment of convertible senior notes(42,270)— 
Other(1,174)2,290 
Change in assets and liabilities:
Accounts receivable, net6,738 17,312 
Inventory103,588 112,734 
Prepaid expenses and other assets1,110 (1,982)
Accounts payable(1,675)9,876 
Accrued and other liabilities, deferred tax liabilities, and payroll tax liabilities, noncurrent(16,813)(14,442)
Lease liabilities(4,619)(3,642)
Origination of mortgage servicing rights(347)— 
Proceeds from sale of mortgage servicing rights339 — 
Origination of loans held for sale(854,085)(159,186)
Proceeds from sale of loans originated as held for sale861,771 170,577 
Net cash provided by operating activities26,704 79,001 
Investing activities
Purchases of property and equipment(2,919)(7,442)
Purchases of investments(57,556)(77,596)
Sales of investments12,014 5,346 
Maturities of investments48,483 6,500 
Net cash provided by (used in) investing activities22 (73,192)
Financing activities
Proceeds from the issuance of common stock pursuant to employee equity plans143 1,887 
Tax payments related to net share settlements on restricted stock units(3,161)(2,595)
Borrowings from warehouse credit facilities852,988 152,386 
Repayments to warehouse credit facilities(858,214)(163,144)
Borrowings from secured revolving credit facility— 156,799 
Repayments to secured revolving credit facility— (219,711)
Cash paid for secured revolving credit facility issuance costs— (764)
Principal payments under finance lease obligations(40)(217)
Repurchases of convertible senior notes(108,274)— 
Net cash used in financing activities(116,558)(75,359)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(58)(4)
Net change in cash, cash equivalents, and restricted cash(89,890)(69,554)
Cash, cash equivalents, and restricted cash:
Beginning of period242,246 718,281 
End of period
$152,356 $648,727 







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Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
Three Months Ended
Mar. 31, 2023Dec. 31, 2022Sep. 30, 2022Jun. 30, 2022Mar. 31, 2022Dec. 31, 2021Sep. 30, 2021Jun. 30, 2021
Monthly average visitors (in thousands)50,440 43,847 50,785 52,698 51,287 44,665 49,147 48,437 
Real estate services transactions
Brokerage10,301 12,743 18,245 20,565 15,001 19,428 21,929 21,006 
Partner3,187 2,742 3,507 3,983 3,417 4,603 4,755 4,597 
Total13,488 15,485 21,752 24,548 18,418 24,031 26,684 25,603 
Real estate services revenue per transaction
Brokerage$11,556 $10,914 $11,103 $11,692 $11,191 $10,900 $11,107 $11,307 
Partner2,592 2,611 2,556 2,851 2,814 2,819 2,990 3,195 
Aggregate9,438 9,444 9,725 10,258 9,637 9,352 9,661 9,850 
U.S. market share by units(1)
0.78 %0.76 %0.80 %0.82 %0.79 %0.78 %0.78 %0.77 %
Revenue from top-10 Redfin markets as a percentage of real estate services revenue53 %57 %58 %59 %57 %61 %62 %64 %
Average number of lead agents
1,876 2,022 2,293 2,640 2,750 2,485 2,370 2,456 
RedfinNow homes sold191 474 530 423 617 600 388 292 
Revenue per RedfinNow home sold (in ones)$573,571 $538,788 $550,903 $604,120 $608,851 $622,519 $599,963 $571,670 
Mortgage originations by dollars (in millions)$991 $1,036 $1,557 $1,565 $159 $242 $258 $261 
Mortgage originations by units (in ones)2,444 2,631 3,720 3,860 414 591 671 749 
(1) Prior to the second quarter of 2022, we reported our U.S. market share based on the aggregate home value of our real estate services transactions, relative to the aggregate value of all U.S. home sales, which we computed based on the mean sale price of U.S. homes provided by the National Association of REALTORS® (“NAR”). Beginning in the second quarter of 2022, NAR (1) revised its methodology of computing the mean sale price, (2) restated its previously reported mean sale price beginning from January 2020 (and indicated that previously reported mean sale price prior to January 2020 is not comparable), and (3) discontinued publication of the mean sale price as part of its primary data set. Due to these changes, as of the second quarter of 2022, we report our U.S. market share based on the number of homes sold, rather than the dollar value of homes sold. Our market share by number of homes sold has historically been lower than our market share by dollar value of homes sold. We also stopped reporting the aggregate home value of our real estate services transactions.













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Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
Three Months Ended March 31, 2023
Real estate servicesPropertiesRentalsMortgageOtherCorporate Overhead and Intercompany EliminationsTotal
Revenue$127,296 $112,727 $42,870 $36,489 $7,428 $(1,149)$325,661 
Cost of revenue111,494 114,658 9,765 29,213 5,473 (1,149)269,454 
Gross profit15,802 (1,931)33,105 7,276 1,955 — 56,207 
Operating expenses
Technology and development28,895 529 15,964 643 1,224 937 48,192 
Marketing25,060 505 14,326 980 10 27 40,908 
General and administrative19,618 523 26,302 6,929 1,053 15,537 69,962 
Restructuring and reorganization— — — — — 1,053 1,053 
Total operating expenses73,573 1,557 56,592 8,552 2,287 17,554 160,115 
Loss from operations(57,771)(3,488)(23,487)(1,276)(332)(17,554)(103,908)
Interest income, interest expense, income tax expense, gain on extinguishment of convertible senior notes, and other expense, net— 814 45 (60)115 42,196 43,110 
Net loss$(57,771)$(2,674)$(23,442)$(1,336)$(217)$24,642 $(60,798)

Three Months Ended March 31, 2023
Real estate servicesPropertiesRentalsMortgageOtherCorporate Overhead and Intercompany EliminationsTotal
Net loss$(57,771)$(2,674)$(23,442)$(1,336)$(217)$24,642 $(60,798)
Interest income(1)
— (814)(80)(2,490)(115)(2,387)(5,886)
Interest expense(2)
— — — 2,615 — 1,921 4,536 
Income tax expense— — 43 68 — 299 410 
Depreciation and amortization4,432 122 10,152 988 216 1,103 17,013 
Stock-based compensation(3)
9,593 248 3,616 1,258 561 3,752 19,028 
Restructuring and reorganization(4)
— — — — — 1,053 1,053 
Impairment(5)
— — — — — 113 113 
Gain on extinguishment of convertible senior notes— — — — — (42,270)(42,270)
Adjusted EBITDA$(43,746)$(3,118)$(9,711)$1,103 $445 $(11,774)$(66,801)
(1) Interest income includes $2.5 million of interest income related to originated mortgage loans for the three months ended March 31, 2023.
(2) Interest expense includes $2.6 million of interest expense related to our warehouse credit facilities for the three months ended March 31, 2023.
(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program. See Note 12 to our consolidated financial statements for more information.
(4) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention due to the restructuring and reorganization activities from our acquisitions of Bay Equity and Rent., and from our June 2022, October 2022, and March 2023 workforce reductions.
(5) Impairment consists of an impairment loss due to subleasing one of our operating leases.

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Three Months Ended March 31, 2022
Real estate servicesPropertiesRentalsMortgageOtherCorporate Overhead and Intercompany EliminationsTotal
Revenue$177,487 $379,753 $38,044 $2,917 $4,368 $(5,223)$597,346 
Cost of revenue153,784 358,866 7,193 5,517 4,671 (5,223)524,808 
Gross profit23,703 20,887 30,851 (2,600)(303)— 72,538 
Operating expenses
Technology and development26,739 4,119 14,282 2,347 1,036 1,117 49,640 
Marketing30,844 1,153 11,042 28 53 222 43,342 
General and administrative22,992 2,825 24,192 1,524 712 6,721 58,966 
Restructuring and reorganization— — — — — 5,710 5,710 
Total operating expenses80,575 8,097 49,516 3,899 1,801 13,770 157,658 
Income (loss) from operations(56,872)12,790 (18,665)(6,499)(2,104)(13,770)(85,120)
Interest income, interest expense, income tax expense, and other expense, net— (1,624)469 1 1 (4,533)(5,686)
Net loss$(56,872)$11,166 $(18,196)$(6,498)$(2,103)$(18,303)$(90,806)

Three Months Ended March 31, 2022
Real estate servicesPropertiesRentalsMortgageOtherCorporate Overhead and Intercompany EliminationsTotal
Net loss$(56,872)$11,166 $(18,196)$(6,498)$(2,103)$(18,303)$(90,806)
Interest income(1)
— (25)— (318)(1)(194)(538)
Interest expense(2)
— 1,649 — 277 — 2,212 4,138 
Income tax expense— — (203)— — 337 134 
Depreciation and amortization4,018 537 9,356 302 255 345 14,813 
Stock-based compensation(3)
10,140 1,537 2,240 601 369 1,901 16,788 
Acquisition-related costs(4)
— — — — — 917 917 
Restructuring and reorganization(5)
— — — — — 5,710 5,710 
Adjusted EBITDA$(42,714)$14,864 $(6,803)$(5,636)$(1,480)$(7,075)$(48,844)
(1) Interest income includes $0.3 million of interest income related to originated mortgage loans for the three months ended March 31, 2022.
(2) Interest expense includes $0.3 million of interest expense related to our warehouse credit facilities for the three months ended March 31, 2022.
(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program. See Note 12 to our consolidated financial statements for more information.
(4) Acquisition-related costs consist of fees for external advisory, legal, and other professional services incurred in connection with our acquisition of other companies.
(5) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention due to the restructuring and reorganization activities from our acquisitions of Bay Equity and Rent., and from our June and October 2022 workforce reductions.




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Reconciliation of Adjusted EBITDA Guidance to Net Loss Guidance
(unaudited, in millions)

Q2 2023
LowHigh
Net loss(44)(35)
Depreciation and amortization17 17 
Stock-based compensation17 17 
Restructuring and reorganization5 5 
Gain on extinguishment of convertible senior notes(4)(4)
Adjusted EBITDA(9)1 


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