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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 March 31, 2024
or

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
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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par value per shareRDFNThe 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
 No

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
 No

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
 No

The registrant had 119,470,881 shares of common stock outstanding as of May 2, 2024.



Redfin Corporation

Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2024

Table of Contents
PART I
Page
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1
Item 1A.
Item 5.
Item 6.



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 Apollo term loan, the terms “we,” “us,” and “our” refer only to Redfin Corporation and its subsidiaries except for Bay Equity LLC, taken as a whole, and (ii) each warehouse credit facility, the terms "we," "us," and "our" refer to Bay Equity LLC.

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, 2023, 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 that generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. 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.
i

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)
March 31, 2024December 31, 2023
Assets
Current assets
Cash and cash equivalents$107,129 $149,759 
Restricted cash1,274 1,241 
Short-term investments 41,952 
Accounts receivable, net of allowances for credit losses of $3,658 and $3,234
54,839 51,738 
Loans held for sale165,487 159,587 
Prepaid expenses37,695 33,296 
Other current assets11,867 7,472 
Total current assets378,291 445,045 
Property and equipment, net46,118 46,431 
Right-of-use assets, net29,476 31,763 
Mortgage servicing rights, at fair value32,328 32,171 
Long-term investments 3,149 
Goodwill461,349 461,349 
Intangible assets, net113,537 123,284 
Other assets, noncurrent10,008 10,456 
Total assets$1,071,107 $1,153,648 
Liabilities, mezzanine equity, and stockholders' (deficit) equity
Current liabilities
Accounts payable$15,909 $10,507 
Accrued and other liabilities97,331 90,360 
Warehouse credit facilities156,588 151,964 
Lease liabilities14,710 15,609 
Total current liabilities284,538 268,440 
Lease liabilities, noncurrent26,730 29,084 
Convertible senior notes, net, noncurrent641,209 688,737 
Term loan124,123 124,416 
Deferred tax liabilities287 264 
Total liabilities1,076,887 1,110,941 
Commitments and contingencies (Note 7)
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, 2024 and December 31, 2023
39,970 39,959 
Stockholders’ (deficit) equity
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 119,440,241 and 117,372,171 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
119 117 
Additional paid-in capital844,383 826,146 
Accumulated other comprehensive loss(145)(182)
Accumulated deficit(890,107)(823,333)
Total stockholders’ (deficit) equity(45,750)2,748 
Total liabilities, mezzanine equity, and stockholders’ (deficit) equity$1,071,107 $1,153,648 

See Notes to the consolidated financial statements.
1

Table of Contents
Redfin Corporation and Subsidiaries
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts, unaudited)
Three Months Ended March 31,
20242023
Revenue$225,479 $214,083 
Cost of revenue154,667 155,945 
Gross profit70,812 58,138 
Operating expenses
Technology and development46,429 47,663 
Marketing24,878 40,403 
General and administrative67,873 69,439 
Restructuring and reorganization889 1,053 
Total operating expenses140,069 158,558 
Loss from continuing operations(69,257)(100,420)
Interest income1,832 3,406 
Interest expense(4,874)(1,922)
Income tax benefit (expense)172 (410)
Gain on extinguishment of convertible senior notes5,686 42,270 
Other expense, net(333)(234)
Net loss from continuing operations(66,774)(57,310)
Net loss from discontinued operations (3,488)
Net loss$(66,774)$(60,798)
Dividends on convertible preferred stock(233)(226)
Net loss from continuing operations attributable to common stock—basic and diluted$(67,007)$(57,536)
Net loss attributable to common stock—basic and diluted$(67,007)$(61,024)
Net loss from continuing operations per share attributable to common stock—basic and diluted$(0.57)$(0.52)
Net loss attributable to common stock per share—basic and diluted$(0.57)$(0.55)
Weighted-average shares to compute net loss per share attributable to common stock—basic and diluted118,364,267 110,103,598 
Net loss$(66,774)$(60,798)
Other comprehensive income (loss)
Foreign currency translation adjustments(3)58 
Unrealized gain (loss) on available-for-sale debt securities
40 (424)
Comprehensive loss$(66,737)$(61,164)

See Notes to the consolidated financial statements.

2

Table of Contents
Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three Months Ended March 31,
20242023
Operating Activities
Net loss
$(66,774)$(60,798)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization14,398 17,013 
Stock-based compensation17,409 19,028 
Amortization of debt discount and issuance costs709 1,087 
Non-cash lease expense3,154 4,816 
Impairment costs 113 
Net gain on IRLCs, forward sales commitments, and loans held for sale(4,124)(8,326)
Change in fair value of mortgage servicing rights, net(365)1,208 
Gain on extinguishment of convertible senior notes(5,686)(42,270)
Other263 (1,174)
Change in assets and liabilities:
Accounts receivable, net(3,245)6,738 
Inventory 103,588 
Prepaid expenses and other assets(4,718)1,110 
Accounts payable5,432 (1,675)
Accrued and other liabilities, deferred tax liabilities, and payroll tax liabilities, noncurrent8,155 (16,813)
Lease liabilities(4,089)(4,619)
Origination of mortgage servicing rights(61)(347)
Proceeds from sale of mortgage servicing rights269 339 
Origination of loans held for sale(828,421)(854,085)
Proceeds from sale of loans originated as held for sale821,714 861,771 
Net cash (used in) provided by operating activities(45,980)26,704 
Investing activities
Purchases of property and equipment(3,558)(2,919)
Purchases of investments (57,556)
Sales of investments39,225 12,014 
Maturities of investments6,395 48,483 
Net cash provided by investing activities42,062 22 
Financing activities
Proceeds from the issuance of common stock pursuant to employee equity plans94 143 
Tax payments related to net share settlements on restricted stock units(529)(3,161)
Borrowings from warehouse credit facilities827,186 852,988 
Repayments to warehouse credit facilities(822,562)(858,214)
Principal payments under finance lease obligations(27)(40)
Repurchases of convertible senior notes(42,525)(108,274)
Repayment of term loan principal(313) 
Net cash used in financing activities(38,676)(116,558)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(3)(58)
Net change in cash, cash equivalents, and restricted cash(42,597)(89,890)
Cash, cash equivalents, and restricted cash:
Beginning of period(1)
151,000 242,246 
End of period(2)
$108,403 $152,356 
Supplemental disclosure of cash flow information
Cash paid for interest
$7,078 $4,609 
Non-cash transactions
Stock-based compensation capitalized in property and equipment1,265 1,134 
Property and equipment additions in accounts payable and accrued liabilities11 32 

(1) Cash, cash equivalents, and restricted cash consisted of the following (beginning of period):
As of December 31,
20232022
Continuing operations
Cash and cash equivalents$149,759 $232,200 
Restricted cash1,241 2,406 
Total 151,000 234,606 
Discontinued operations
Cash and cash equivalents 7,640 
Restricted cash  
Total 7,640 
Total cash, cash equivalents, and restricted cash$151,000 $242,246 

(2) Cash, cash equivalents, and restricted cash consisted of the following (end of period):
As of March 31,
20242023
Continuing operations
Cash and cash equivalents$107,129 $148,500 
Restricted cash1,274 2,416 
Total108,403 150,916 
Discontinued operations
Cash and cash equivalents 1,440 
Restricted cash  
Total 1,440 
Total cash, cash equivalents, and restricted cash$108,403 $152,356 

See Notes to the consolidated financial statements.
3

Table of Contents
Redfin Corporation and Subsidiaries
Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ (Deficit) Equity
(in thousands, except share amounts, unaudited)

Series A Convertible Preferred StockCommon StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Loss
Total Stockholders'
(Deficit) Equity
SharesAmountSharesAmount
Balance, December 31, 202240,000 $39,914 109,696,178 $110 $757,951 $(693,307)$(801)$63,953 
Issuance of convertible preferred stock, net— 11 — — — — — — 
Issuance of common stock as dividend on convertible preferred stock— — 30,640 — — — — — 
Issuance of common stock pursuant to exercise of stock options— — 18,037 — 143 — — 143 
Issuance of common stock pursuant to settlement of restricted stock units— — 1,155,826 1 (1)— —  
Common stock surrendered for employees' tax liability upon settlement of restricted stock units— — (373,797)(1)(3,161)— — (3,162)
Stock-based compensation— — — — 20,162 — — 20,162 
Other comprehensive income
— — — — — — 366 366 
Net loss— — — — — (60,798)— (60,798)
Balance, March 31, 202340,000 $39,925 110,526,884 $110 $775,094 $(754,105)$(435)$20,664 
Balance, December 31, 2023
40,000 $39,959 117,372,171 $117 $826,146 $(823,333)$(182)$2,748 
Issuance of convertible preferred stock, net— 11 — — — — — — 
Issuance of common stock as dividend on convertible preferred stock— — 30,640 — — — — — 
Issuance of common stock pursuant to exercise of stock options— — 15,333 — 94 — — 94 
Issuance of common stock pursuant to settlement of restricted stock units— — 2,099,383 2 (2)— —  
Common stock surrendered for employees' tax liability upon settlement of restricted stock units— — (77,286)— (529)— — (529)
Stock-based compensation— — — — 18,674 — — 18,674 
Other comprehensive income— — — — — — 37 37 
Net loss— — — — — (66,774)— (66,774)
Balance, March 31, 2024
40,000 $39,970 119,440,241 $119 $844,383 $(890,107)$(145)$(45,750)

See Notes to the consolidated financial statements.
4

Table of Contents
Index to Notes to Consolidated Financial Statements

Note 1:
Note 2:
Note 3:
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
Note 9:
Note 10:
Note 11:
Note 12:
Note 13:
Note 14:
Note 15:
5

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, 2023 that is included in this quarterly report is derived from the audited consolidated financial statements and notes for the year ended December 31, 2023 included in Item 8 in our annual report for the year ended December 31, 2023. 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 March 31, 2024, our statements of comprehensive loss, and statements of changes in mezzanine equity and stockholders’ (deficit) equity for the three months ended March 31, 2024 and 2023, as well as our statements of cash flows for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 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 our 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, 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.

Recently Adopted Accounting Pronouncements—In September 2023, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance under ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures. The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We early adopted this guidance in first quarter of 2024 and there was no impact on our financial statement disclosures.

Recently Issued Accounting Pronouncements—In December 2023, the FASB issued authoritative guidance under ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures. The ASU enhances annual income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations. The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the potential impact of the guidance on our financial statement disclosures.

6

Index to Notes to Financial Statements
Note 2: Discontinued Operations

In November 2022, our management and board of directors made the decision to wind down RedfinNow. The financial results of RedfinNow have historically been included in our properties segment. Winding-down RedfinNow was a strategic decision we made in order to focus our resources on our core businesses in the face of the rising cost of capital. The wind-down of our properties segment was complete as of June 30, 2023, at which time it met the criteria for discontinued operations in our consolidated financial statements.

As of March 31, 2024 and December 31, 2023 there were no major classes of assets and liabilities of our discontinued operations remaining.

The major classes of line items of the discontinued operations included in our consolidated statement of comprehensive loss were as follows for the three months ended March 31, 2023:
Revenue$111,578 
Cost of revenue
113,509 
Gross profit
(1,931)
Operating expenses
Technology and development
529 
Marketing
505 
General and administrative
523 
Restructuring and reorganization 
Total operating expenses
1,557 
Loss from discontinued operations
(3,488)
Interest income 
Interest expense 
Income tax expense 
Other expense, net 
Net loss from discontinued operations$(3,488)
Net loss from discontinued operations per share—basic and diluted$(0.03)

Significant non-cash items and capital expenditures of the discontinued operations were as follows for the three months ended March 31, 2023:
Stock-based compensation$203 
Depreciation and amortization85 

Charges specifically relating to the wind-down of our properties segment were as follows:
Cost typeFinancial statement line itemThree Months Ended March 31, 2023Cumulative amount recognized as of March 31, 2023
Employee termination costsRestructuring and reorganization$454 $8,502 
Asset write-offsRestructuring and reorganization 493 
OtherRestructuring and reorganization(454)(880)
Acceleration of debt issuance costsInterest expense 481 
Total$ $8,596 

7

Index to Notes to Financial Statements
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 revenue, gross profit, operating income, and net income. 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 five operating segments and three reportable segments, real estate services, 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 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, rentals revenue, mortgage revenue, and other revenue.

Information on each of our reportable and other segments and reconciliation to net (loss) income from continuing operations is presented in the tables 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.
Three Months Ended March 31, 2024
Real estate servicesRentalsMortgageOtherCorporate overheadTotal
Revenue
$131,180 $49,518 $33,819 $10,962 $ $225,479 
Cost of revenue110,914 11,457 25,904 6,392  154,667 
Gross profit20,266 38,061 7,915 4,570  70,812 
Operating expenses
Technology and development28,507 15,512 656 832 922 46,429 
Marketing11,177 12,788 906 7  24,878 
General and administrative19,775 22,478 6,683 1,154 17,783 67,873 
Restructuring and reorganization    889 889 
Total operating expenses59,459 50,778 8,245 1,993 19,594 140,069 
(Loss) income from continuing operations(39,193)(12,717)(330)2,577 (19,594)(69,257)
Interest income, interest expense, income tax expense, gain on extinguishment of convertible senior notes, and other expense, net(46)7 3 244 2,275 2,483 
Net (loss) income from continuing operations$(39,239)$(12,710)$(327)$2,821 $(17,319)$(66,774)
8

Index to Notes to Financial Statements
Three Months Ended March 31, 2023
Real estate servicesRentalsMortgageOtherCorporate overheadTotal
Revenue(1)
$127,296 $42,870 $36,489 $7,428 $ $214,083 
Cost of revenue111,494 9,765 29,213 5,473  155,945 
Gross profit15,802 33,105 7,276 1,955  58,138 
Operating expenses
Technology and development28,895 15,964 643 1,224 937 47,663 
Marketing25,060 14,326 980 10 27 40,403 
General and administrative19,618 26,302 6,929 1,053 15,537 69,439 
Restructuring and reorganization    1,053 1,053 
Total operating expenses73,573 56,592 8,552 2,287 17,554 158,558 
Loss from continuing operations(57,771)(23,487)(1,276)(332)(17,554)(100,420)
Interest income, interest expense, income tax expense, gain on extinguishment of convertible senior notes, and other expense, net
 45 (60)115 43,010 43,110 
Net (loss) income from continuing operations
$(57,771)$(23,442)$(1,336)$(217)$25,456 $(57,310)
(1) Included in revenue is $1,149 from providing services to our discontinued properties segment.

Note 4: Financial Instruments

Derivatives

Our primary market exposure is to interest rate risk, specifically U.S. treasury and mortgage interest rates, due to their impact on mortgage-related assets and commitments. We use forward sales commitments on whole loans and mortgage-backed securities to manage and reduce this risk. We do not have any derivative instruments designated as hedging instruments.

Forward Sales Commitments—We are exposed to interest rate and price risk on loans held for sale from the funding date until the date the loan is sold. Forward sales commitments on whole loans and mortgage-backed securities are used to fix the forward sales price that will be realized at the sale of each loan.

Interest Rate Lock Commitments—Interest rate lock commitments ("IRLCs") represent an agreement to extend credit to a mortgage loan applicant. We commit (subject to loan approval) to fund the loan at the specified rate, regardless of changes in market interest rates between the commitment date and the funding date. Outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of commitment through the loan funding date or expiration date. Loan commitments generally range between 30 and 90 days and the borrower is not obligated to obtain the loan. Therefore, IRLCs are subject to fallout risk, which occurs when approved borrowers choose not to close on the underlying loans. We review our commitment-to-closing ratio ("pull-through rate") as part of an estimate of the number of mortgage loans that will fund according to the IRLCs.

The notional amounts of our forward sales commitments and IRLCs were as follows:
InstrumentMarch 31, 2024December 31, 2023
Forward sales commitments$463,110 $274,400 
IRLCs358,903 188,554 

9

Index to Notes to Financial Statements
The locations and amounts of gains (losses) recognized in income related to our derivatives were as follows:
Three Months Ended March 31,
InstrumentClassification20242023
Forward sales commitmentsRevenue$2,406 $(253)
IRLCsRevenue2,525 7,874 

Fair Value of Financial Instruments

A summary of assets and liabilities related to our financial instruments, measured at fair value on a recurring basis and as reflected in our consolidated balance sheets, is set forth below:
Balance at March 31, 2024Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents
Money market funds$81,927 $81,927 $ $ 
Total cash equivalents81,927 81,927   
Loans held for sale165,487  165,487  
Other current assets
Forward sales commitments1,169  1,169  
IRLCs7,200   7,200 
Total other current assets8,369  1,169 7,200 
Mortgage servicing rights, at fair value32,328   32,328 
Total assets$288,111 $81,927 $166,656 $39,528 
Liabilities
Accrued liabilities
Forward sales commitments$1,192 $ $1,192 $ 
IRLCs223   223 
Total liabilities$1,415 $ $1,192 $223 

10

Index to Notes to Financial Statements
Balance at December 31, 2023Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents
        Money market funds$115,276 $115,276 $ $ 
Total cash equivalents115,276 115,276   
Short-term investments
   U.S. treasury securities10,720 10,720   
Agency bonds31,232 31,232   
Total short-term investments41,952 41,952   
Loans held for sale159,587  159,587  
Other current assets
IRLCs4,600   4,600 
Total other current assets4,600   4,600 
Mortgage servicing rights, at fair value32,171   32,171 
Long-term investments
U.S. treasury securities3,149 3,149   
Total assets$356,735 $160,377 $159,587 $36,771 
Liabilities
Accrued liabilities
Forward sales commitments$2,429 $ $2,429 $ 
IRLCs147   147 
Total liabilities$2,576 $ $2,429 $147 

There were no transfers into or out of Level 3 financial instruments during the periods presented.

The significant unobservable input used in the fair value measurement of IRLCs is the pull-through rate. Significant changes in the input could result in a significant change in fair value measurement.

The following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs and Mortgage Servicing Rights (“MSRs”):
March 31, 2024December 31, 2023
Key InputsValuation TechniqueRangeWeighted-AverageRangeWeighted-Average
IRLCs
Pull-through rate
Market pricing
70.1% - 100.0%
89.2%
67.2% - 100.0%
87.7%
MSRs
Prepayment speedDiscounted cash flow
6.0% - 20.0%
6.8%
 6.0% - 19.0%
6.8%
Default ratesDiscounted cash flow
0.1% - 1.2%
0.2%
0.1% - 1.2%
0.2%
Discount rateDiscounted cash flow
10.0% - 17.0%
10.3%
10.0% - 17.0%
10.2%
11

Index to Notes to Financial Statements

The following is a summary of changes in the fair value of IRLCs:
Three Months Ended March 31,
20242023
Balance, net—beginning of period$4,453 $1,297 
Issuances of IRLCs16,062 15,963 
Settlements of IRLCs(14,739)(10,238)
Fair value changes recognized in earnings1,201 2,148 
Balance, net—end of period$6,977 $9,170 

The following is a summary of changes in the fair value of MSRs:
Three Months Ended March 31,
20242023
Balance—beginning of period$32,171 $36,261 
MSRs originated61 347 
MSRs sales(269)(339)
Fair value changes recognized in earnings365 (1,208)
Balance, net—end of period$32,328 $35,061 

The following table presents the estimated fair values of our convertible senior notes that are not recorded at fair value on our consolidated balance sheets:
March 31, 2024December 31, 2023
2025 notes$125,007 $164,113 
2027 notes278,967 325,927 

The estimated fair value of our convertible senior notes is based on the closing trading price of the notes on the last day of trading for the period and is classified as Level 2 within the fair value hierarchy due to the limited trading activity of the notes. See Note 14 for additional details on our convertible senior notes.

See Note 10 for the carrying amount of our convertible preferred stock.

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as property and equipment, goodwill and other intangible assets, and other assets. These assets are remeasured at fair value if determined to be impaired.

12

Index to Notes to Financial Statements
The cost or amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash, money market funds, restricted cash, and available-for-sale investments were as follows:
March 31, 2024
Fair Value HierarchyCost or Amortized CostUnrealized GainsUnrealized LossesEstimated Fair ValueCash, Cash Equivalents, and Restricted CashShort-term InvestmentsLong-term Investments
CashN/A$25,202 $— $— $25,202 $25,202 $— $— 
Money markets fundsLevel 181,927 — — 81,927 81,927 — — 
Restricted cashN/A1,274 — — 1,274 1,274 — — 
Total$108,403 $ $ $108,403 $108,403 $ $ 
December 31, 2023
Fair Value HierarchyCost or Amortized CostUnrealized GainsUnrealized LossesEstimated Fair ValueCash, Cash Equivalents, and Restricted CashShort-term InvestmentsLong-term Investments
CashN/A$34,483 $— $— $34,483 $34,483 $— $— 
Money markets fundsLevel 1115,276 — — 115,276 115,276 — — 
Restricted cashN/A1,241 — — 1,241 1,241 — — 
U.S. treasury securitiesLevel 113,895 1 (27)13,869 — 10,720 3,149 
Agency bondsLevel 131,246  (14)31,232 — 31,232  
Total$196,141 $1 $(41)$196,101 $151,000 $41,952 $3,149 

As of March 31, 2024 and December 31, 2023, we had no accrued interest and accrued interest of $332, respectively, on our available-for-sale investments, of which we have recorded no expected credit losses. Accrued interest receivable is recorded in other current assets in our consolidated balance sheets.

Note 5: Property and Equipment

The components of property and equipment were as follows:
Useful Lives (Years)March 31, 2024December 31, 2023
Leasehold improvementsShorter of lease term or economic life$28,328 $28,789 
Website and software development costs
3 - 5
79,135 75,573 
Computer and office equipment
3 - 5
15,468 16,175 
Software31,869 1,869 
Furniture77,446 7,754 
Property and equipment, gross132,246 130,160 
Accumulated depreciation and amortization(92,280)(89,275)
Construction in progress6,152 5,546 
Property and equipment, net$46,118 $46,431 

The following table summarizes depreciation and amortization and capitalized software development costs:
Three Months Ended March 31,
20242023
Depreciation and amortization for property and equipment$4,651 $7,181 
Capitalized software development costs, including stock-based compensation4,550 4,555 

13

Index to Notes to Financial Statements
Note 6: Leases

We lease office space under noncancelable operating leases with original terms ranging from one to 11 years and vehicles under noncancelable finance leases with terms of four years. Generally, the operating leases require a fixed minimum rent with contractual minimum rent increases over the lease term. The components of lease expense were as follows:
Three Months Ended March 31,
Lease Cost20242023
Operating lease cost:
Operating lease cost (cost of revenue)
$2,377 $2,909 
Operating lease cost (operating expenses)
1,216 2,441 
Short-term lease cost
686 832 
Sublease income
(501)(342)
Total operating lease cost$3,778 $5,840 
Finance lease cost:
Amortization of right-of-use assets$25 $15 
Interest on lease liabilities3 1 
Total finance lease cost$28 $16 
Lease LiabilitiesOther LeasesTotal Lease Obligations
Maturity of Lease Liabilities
Operating(2)
FinancingOperating
2024, excluding the three months ended March 31, 2024
$12,657 $58 $1,402 $14,117 
202513,555 57 448 14,060 
202610,735 35 243 11,013 
20275,666 30 246 5,942 
20281,280  253 1,533 
Thereafter178  163 341 
Total lease payments$44,071 $180 $2,755 $47,006 
Less: Interest(1)
2,798 13 
Present value of lease liabilities$41,273 $167 
(1) Includes interest on operating leases of $1,452 and financing lease of $7 within the next twelve months.
(2) Excludes sublease income. As of March 31, 2024, we expect sublease income of approximately $1,316 to be received for the remainder of fiscal year 2024.
Lease Term and Discount RateMarch 31, 2024December 31, 2023
Weighted-average remaining operating lease term (years)
3.13.2
Weighted-average remaining finance lease term (years)
2.92.5
Weighted-average discount rate for operating leases
4.5 %4.5 %
Weighted-average discount rate for finance leases
5.4 %5.4 %
Three Months Ended March 31,
Supplemental Cash Flow Information20242023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$4,637 $5,253 
Operating cash flows from finance leases2 1 
Financing cash flows from finance leases20 13 
Right of use assets obtained in exchange for lease liabilities
Operating leases
$896 $3,130 
Finance leases68  

14

Index to Notes to Financial Statements
Note 7: Commitments and Contingencies

Legal Proceedings

Below is a discussion of our material, pending legal proceedings. Except as otherwise indicated, given the preliminary stage of these proceedings and the claims and issues presented, we cannot estimate a range of reasonably possible losses.

In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving employment, intellectual property, privacy and data protection, consumer protection, competition and antitrust laws, and commercial or contractual disputes, and other matters. The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows. Except for the matters discussed below, we do not believe that any of our pending litigation, claims, and other proceedings are material to our business.

Lawsuit by David Eraker—On May 11, 2020, David Eraker, our co-founder and former chief executive officer who departed Redfin in 2006, filed a complaint through Appliance Computing III, Inc. (d/b/a Surefield) ("Surefield"), which is a company that Mr. Eraker founded and that we believe he controls, in the U.S. District Court for the Western District of Texas, Waco Division. The complaint alleged that we were infringing four patents claimed to be owned by Surefield without its authorization or license. Surefield sought an unspecified amount of damages and an injunction against us offering products and services that allegedly infringe the patents at issue. On May 17, 2022, the jury returned a verdict in our favor, finding that we did not infringe any of the asserted claims of the patents claimed to be owned by Surefield, and accordingly, we do not owe any damages to Surefield. The jury also found that all asserted claims of Surefield’s claimed patents were invalid. The court entered final judgment on August 15, 2022. On September 12, 2022, Surefield filed a motion for judgment as a matter of law and a motion for a new trial. In the motions, Surefield asserts that no jury could have found non-infringement based on the trial record, among other things. We filed oppositions to the motions on October 3, 2022 and Surefield filed replies on October 21, 2022.

Lawsuits Alleging Misclassification—On August 28, 2019, Devin Cook, who was one of our former independent contractor licensed sales associates, whom we call associate agents, filed a complaint against us in the Superior Court of California, County of San Francisco. The plaintiff initially pled the complaint as a class action and alleged that we misclassified her as an independent contractor instead of an employee. The plaintiff also sought unspecified penalties pursuant to representative claims under California’s Private Attorney General Act ("PAGA"). On January 30, 2020, the plaintiff filed a first amended complaint dismissing her class action claim and asserting only claims under PAGA.

On November 20, 2020, Jason Bell, who was one of our former lead agents as well as a former associate agent, filed a complaint against us in the U.S. District Court for the Southern District of California. The complaint was pled as a class action and alleges that, (1) during the time he served as an associate agent, we misclassified him as an independent contractor instead of an employee and (2) during the time he served as a lead agent, we misclassified him as an employee who was exempt from minimum wage and overtime laws. The plaintiff also asserted representative claims under PAGA. The plaintiff sought unspecified amounts of unpaid overtime wages, regular wages, meal and rest period compensation, waiting time and other penalties, injunctive and other equitable relief, and plaintiff's attorneys' fees and costs.

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Index to Notes to Financial Statements
On May 23, 2022, pursuant to a combined mediation, we settled the lawsuits brought by Ms. Cook and Mr. Bell for an aggregate of $3,000. This amount is subject to adjustment if our actual number of associate agents, lead agents, or their respective workweeks differs from the number that we represented to the plaintiffs. This settlement is subject to court approval. On April 7, 2023, plaintiffs filed a motion for preliminary approval of the class settlements. The motion for preliminary approval of the class settlement was granted by the court on May 4, 2023. The motion for final approval of the class settlement was granted on November 28, 2023. The settlement funds have been paid and are being distributed to class members. A final compliance hearing is set for July 29, 2024.

Lawsuits Alleging Antitrust Violations—Since October 2023, a number of class action lawsuits have been filed on behalf of putative classes of home buyers and home sellers against the National Association of Realtors, local real estate associations, multiple listing services, and various residential real estate brokerages in various federal districts in the United States. Some of these lawsuits name Redfin as a defendant, including:
Don Gibson, et al. v. National Association of Realtors, et al., Case no. 4:23-cv-00788-SRB, filed on October 31, 2023 in United States District Court for the Western District of Missouri (the “Gibson Action”).
Mya Batton et al. v. Compass, Inc., et al., Case no. 1:23-cv-15618, filed on November 2, 2023 in United States District Court for the Northern District of Illinois.
1925 Hooper LLC, et al. v. The National Association of Realtors, et al., Case no. 1:23-cv-05392-SEG, filed on December 6, 2023 in the United States District Court for the Northern District of Georgia.
Daniel Umpa v. The National Association of Realtors, et al., Case no. 4:23-cv-00945-FJG, filed on December 27, 2023 in the United States District Court for the Western District of Missouri (the “Umpa Action”).
Nathaniel Whaley v. National Association of Realtors, et al., Case no. 2:24-cv-00105-GMN-MDC, filed on January 25, 2024 in the United States District Court for the District of Nevada.
Angela Boykin v. National Association of Realtors, et al., Case No. 2:24-cv-00340, filed on February 16, 2024 in the United States District Court for the District of Nevada.
Freedlund v. Redfin Corporation, et al., Case No. 2:24-cv-01561, filed on February 26, 2024 in the United States District Court for the Central District of California.
Rajninder (Raven) Jutla, et al. v. Redfin Corporation, et al., Case No. 2:24-cv-00464, filed on April 1, 2024 in the United States District Court for the Eastern District of California and transferred on April 5, 2024, to the United States District Court for the Western District of Washington.

These lawsuits variously allege a conspiracy to fix prices stemming from a National Association of Realtors rule, which allegedly requires brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property on a multiple listing service. The plaintiffs generally seek injunctive relief, unspecified damages under federal antitrust law, and unspecified damages under various state laws. The Judicial Panel on Multidistrict Litigation denied a motion to consolidate some of these cases as In re Real Estate Commission Antitrust Litigation, MDL No. 3100 on April 12, 2024. At this time, except as set forth below, we are unable to predict the potential outcome of these lawsuits.

On May 3, 2024 we entered into a settlement term sheet (the “Proposed Settlement”) to resolve, on a nationwide basis, all claims asserted in the Gibson Action and the Umpa Action, each pending in the United States District Court for the Western District of Missouri. These two cases are collectively referred to as “The Lawsuits.” The Proposed Settlement resolves all claims in the Lawsuits and similar claims on behalf of home sellers on a nationwide basis against Redfin (the “Claims”) and releases Redfin, its subsidiaries and its employees and contractors from the Claims. The Proposed Settlement does not include an admission of liability.

Under the Proposed Settlement, Redfin will pay $9,250 (the “Settlement Amount”) into a qualified settlement fund within 30 business days after preliminary approval by the court of the Proposed Settlement. Redfin recorded $9,250 in accrued and other liabilities during the quarter ended March 31, 2024.

The Proposed Settlement remains subject to preliminary and final court approval and will become effective upon such final approval.

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Index to Notes to Financial Statements
Other Commitments

Our title and settlement business and our mortgage business each hold cash in escrow at third-party financial institutions on behalf of homebuyers and home sellers. As of March 31, 2024, we held $48,383 in escrow and did not record this amount on our consolidated balance sheets. We may be held contingently liable for the disposition of the cash we hold in escrow.

Note 8: Acquired Intangible Assets and Goodwill

Acquired Intangible AssetsThe following table presents the gross carrying amount and accumulated amortization of intangible assets:
March 31, 2024December 31, 2023
Weighted-Average Useful Lives (Years)GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Trade names9.3$82,690 $(26,648)$56,042 $82,690 $(24,290)$58,400 
Developed technology
3.3
66,340 (65,238)1,102 66,340 (59,883)6,457 
Customer relationships1081,360 (24,967)56,393 81,360 (22,933)58,427 
Total$230,390 $(116,853)$113,537 $230,390 $(107,106)$123,284 

Amortization expense amounted to $9,747 and $9,747 for the three months ended March 31, 2024 and 2023, respectively.

The following table presents our estimate of remaining amortization expense for intangible assets that existed as of March 31, 2024:
2024, excluding the three months ended March 31, 2024
$13,994 
202517,618 
202617,380 
202715,633 
202815,050 
Thereafter33,862 
Estimated remaining amortization expense$113,537 

GoodwillThe following table presents the carrying amount of goodwill by reportable segment:
Real Estate ServicesRentals
Mortgage
Total
Balance as of March 31, 2024 and December 31, 2023
$250,231 $159,151 $51,967 $461,349 

Note 9: Accrued and Other Liabilities

The components of accrued and other liabilities were as follows:
March 31, 2024December 31, 2023
Accrued compensation and benefits
$58,537 $58,836 
Miscellaneous accrued liabilities
23,979 26,037 
Legal contingencies9,250  
Customer contract liabilities5,565 5,487 
Total accrued and other liabilities
$97,331 $90,360