Press Release

Redfin Reports Fourth Quarter and Full Year 2020 Financial Results

February 24, 2021

SEATTLE, Feb. 24, 2021 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the fourth quarter and full year ended December 31, 2020. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation, depreciation and amortization, and expenses related to actions taken in response to COVID-19.

Fourth Quarter 2020
Revenue increased 5% year-over-year to $244.5 million during the fourth quarter. Gross profit was $80.1 million, an increase of 102% from $39.6 million in the fourth quarter of 2019. Real estate services gross profit was $80.8 million, an increase of 93% from $42.0 million in the fourth quarter of 2019. Real estate services gross margin was 41%, compared to 32% in the fourth quarter of 2019. Operating expenses were $54.5 million, an increase of 17% from $46.4 million in the fourth quarter of 2019. Operating expenses were 22% of revenue, up from 20% in the fourth quarter of 2019.

Net income was $14.0 million, compared to a net loss of $7.8 million in the fourth quarter of 2019. The dividend on our convertible preferred stock was $1.6 million. Net income attributable to common stock was $12.2 million. Stock-based compensation was $11.2 million, up from $8.0 million in the fourth quarter of 2019. Depreciation and amortization was $4.0 million, up from $2.9 million in the fourth quarter of 2019. Total interest and other expenses was $11.6 million, which included a $4.6 million loss on the extinguishment of debt and $6.8 million in non-cash interest expense which was primarily related to our convertible senior notes, compared to $1.0 million in the fourth quarter of 2019.

Net income per share attributable to common stock, diluted, was $0.11, compared to a net loss per share, diluted, of $0.08 in the fourth quarter of 2019.

Full Year 2020
Revenue increased 14% year-over-year to $886.1 million in 2020. Gross profit was $232.1 million, an increase of 61% from $144.1 million in 2019. Real estate services gross profit was $234.1 million, an increase of 56% from $150.4 million in 2019. Real estate services gross margin was 36%, compared to 29% in 2019. Operating expenses were $231.3 million, an increase of 4% from $223.3 million in 2019. Operating expenses were 26% of revenue, down from 29% in 2019.

Net loss was $18.5 million, compared to a net loss of $80.8 million in 2019. The dividend on our convertible preferred stock was $4.5 million. Net loss attributable to common stock was $23.0 million. Stock-based compensation was $37.0 million, up from $27.8 million in 2019. Depreciation and amortization was $14.6 million, up from $9.2 million in 2019. Total interest and other expenses was $19.3 million, which included a $4.6 million loss on the extinguishment of our 2023 convertible senior notes and $12.0 million in non-cash interest expense which was primarily related to our convertible senior notes, compared to $1.6 million in 2019.

Net loss per share attributable to common stock, diluted, was $0.23, compared to a net loss per share, diluted, of $0.88 in 2019.

"Revenues in our core business of brokering home sales increased 51% in the fourth quarter, with gross margins again exceeding 40%," said Redfin CEO Glenn Kelman. "Our mortgage business had even stronger results, with 210% revenue growth. We were the fastest-growing major real estate website, as home-buyers moving to a new part of the country have increasingly turned to the Internet to find a real estate agent. Since more than half of all homes now sell in a bidding war, our on-demand home-touring has become a crucial competitive advantage for our customers, who want to see a listing either in-person or virtually before other buyers even know it's for sale."

Fourth Quarter Highlights

  • Reached market share of 1.04% of U.S. existing home sales by value in the fourth quarter of 2020, an increase of .10 percentage points from the fourth quarter of 2019.(1)
  • Saved homebuyers and sellers over $54 million in the fourth quarter and over $185 million in 2020. This includes the savings Redfin offers buyers through the Redfin Refund and sellers through Redfin's lower listing fee when compared to a 2.5% listing commission typically charged by traditional agents.
  • Redfin's mobile apps and website reached a record of 44 million average monthly users in the fourth quarter. For the year, Redfin reached a record of more than 42 million average monthly users, an increase of 28% compared to 2019.
  • Continued expansion of RedfinNow by launching in Sacramento, San Francisco and Seattle in the fourth quarter of 2020.
  • Conducted over 21,000 video tours in the fourth quarter. Since the start of the pandemic in March, Redfin has seen a 137-fold increase in monthly requests for video tours and a nearly 7-fold increase in monthly views of 3D walkthroughs on Redfin.com.
  • Upgraded its software for customers, agents, partners, home services and mortgage teams, including:
    • Adding flood risk data to home listing pages to give customers more information about individual properties and their risk factors.
    • Adding Direct Access touring information to the Owner Dashboard, giving sellers and agents the ability to track self-tours and see buyers' feedback about the home.
    • Improving the functionality, speed and stability of Redfin Builder Tools and Redfin Lender Tools, software used by Redfin's home services and mortgage organizations.
    • Rolling out a new communication platform for Redfin partner agents to help them easily connect with customers, driving faster response times and better customer experiences.
  • Launched Redfin Rise, an employee-funded initiative to support charitable organizations that are building paths to homeownership for working-class families.

(1) We calculate the aggregate value of U.S. home sales by multiplying the total number of U.S. existing home sales by the mean sale price of these homes, each as reported by the National Association of REALTORS®. We calculate our market share by aggregating the home value of brokerage and partner real estate services transactions. Then, in order to account for both the sell- and buy-side components of each transaction, we divide that value by two-times the estimated aggregate value of U.S. home sales.

Business Outlook
The following forward-looking statements reflect Redfin's expectations as of February 24, 2021, and are subject to substantial uncertainty.

For the first quarter of 2021 we expect:

  • Total revenue between $249 million and $255 million, representing a year-over-year growth between 30% and 34% compared to the first quarter of 2020. Properties segment revenue between $77 million to $80 million is included in the guidance provided.
  • Net loss is expected to be between $39 million and $36 million, compared to net loss of $60 million in the first quarter of 2020. This guidance includes approximately $13.0 million of expected stock-based compensation, $4.5 million of expected depreciation and amortization, and $1.2 million of expected interest expense associated with our convertible senior notes and other credit obligations. In addition, 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, 2020, which is available on our Investor Relations website at http://investors.redfin.com and on the SEC website at www.sec.gov. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

About Redfin
Redfin is a technology-powered residential real estate company, redefining real estate in the consumer's favor in a commission-driven industry. We do this by integrating every step of the home buying and selling process and pairing our own agents with our own technology, creating a service that is faster, better and costs less. We offer brokerage, iBuying, mortgage, and title services, and we also run the country's #1 real estate brokerage search site, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 95 markets in the United States and Canada. Since our launch in 2006, we have saved our customers nearly $1 billion and we've helped them buy or sell more than 310,000 homes worth more than $152 billion.

Redfin may post updates about COVID-19's impact on the U.S. residential real estate industry or its business on its company blog at www.redfin.com/blog/real-estate-news/. We encourage investors and others interested in our company to review and subscribe to the information we post on our company blog, as some of the information may be material.

Redfin-F

 

Redfin Corporation and Subsidiaries

Consolidated Statements of Comprehensive Loss

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



Three Months Ended December 31,


Year Ended December 31,


2020


2019


2020


2019

Revenue








Service

$

204,452



$

134,128



$

674,345



$

539,288


Product

40,065



99,063



211,748



240,508


Total revenue

244,517



233,191



886,093



779,796


Cost of revenue(1)








Service

122,642



93,183



437,484



390,504


Product

41,755



100,382



216,499



245,189


Total cost of revenue

164,397



193,565



653,983



635,693


Gross profit

80,120



39,626



232,110



144,103


Operating expenses








Technology and development(1)

23,610



19,345



84,297



69,765


Marketing(1)

7,270



8,099



54,881



76,710


General and administrative(1)(2)

23,601



18,992



92,140



76,874


Total operating expenses

54,481



46,436



231,318



223,349


Income (loss) from operations

25,639



(6,810)



792



(79,246)


Interest income

215



1,341



2,074



7,146


Interest expense

(11,864)



(2,365)



(19,495)



(8,928)


Other income (expense), net

45



51



(1,898)



223


Net income (loss)

$

14,035



$

(7,783)



$

(18,527)



$

(80,805)


Dividend on convertible preferred stock

(1,640)





(4,454)




Undistributed earnings attributable to
participating securities

(242)








Net income (loss) attributable to common
stock—basic and diluted

$

12,153



$

(7,783)



$

(22,981)



$

(80,805)


Net income (loss) per share attributable to
common stock—basic

$

0.12



$

(0.08)



$

(0.23)



$

(0.88)


Weighted average shares of common stock—
basic

102,176,459



92,486,944



98,574,529



91,583,533


Net income (loss) per share attributable to
common stock—diluted

0.11



(0.08)



(0.23)



(0.88)


Weighted average shares of common stock—
diluted

109,461,342



92,486,944



98,574,529



91,583,533










Other comprehensive income (loss)








Net income (loss)

$

14,035



$

(7,783)



$

(18,527)



$

(80,805)


Foreign currency translation adjustments

13



5



(3)



33


Unrealized gain (loss) on available-for-sale
securities

(110)



11



172



9


Total comprehensive income (loss)

$

13,938



$

(7,767)



$

(18,358)



$

(80,763)



(1) Includes stock-based compensation as follows:



Three Months Ended December 31,


Twelve Months Ended December 31,


2020


2019


2020


2019

Cost of revenue

$

2,863



$

1,689



$

8,844



$

6,087


Technology and development

4,828



3,701



16,564



12,362


Marketing

439



393



1,569



1,418


General and administrative

3,079



2,239



9,996



7,947


Total

$

11,209



$

8,022



$

36,973



$

27,814



(2) Includes direct and incremental costs related to COVID-19 of $18 and $7,864, which are partially offset by $0 and $1,348 in employee retention credits allowed under the CARES Act, for the three and twelve months ended December 31, 2020, respectively.

 

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

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



December 31, 2020


December 31, 2019

Assets




Current assets




Cash and cash equivalents

$

925,276



$

234,679


Restricted cash

20,544



12,769


Short-term investments

131,561



70,029


Accounts receivable, net of allowances for credit losses of $160 and $165

54,719



19,223


Inventory

49,158



74,590


Loans held for sale

42,539



21,985


Prepaid expenses

12,131



14,822


Other current assets

4,898



3,496


Total current assets

1,240,826



451,593


Property and equipment, net

43,988



39,577


Right-of-use assets, net

44,149



52,004


Long-term investments

11,922



30,978


Goodwill and intangibles, net

11,016



11,504


Other assets, noncurrent

8,619



10,557


Total assets

$

1,360,520



$

596,213


Liabilities, mezzanine equity and stockholders' equity




Current liabilities




Accounts payable

$

5,644



$

2,122


Accrued liabilities

69,460



38,022


Other payables

13,184



7,884


Warehouse credit facilities

39,029



21,302


Secured revolving credit facility

23,949



4,444


Convertible senior notes, net

22,482




Lease liabilities

11,973



11,408


Total current liabilities

185,721



85,182


Lease liabilities and deposits, noncurrent

49,339



59,869


Convertible senior notes, net, noncurrent

488,268



119,716


Payroll tax liabilities, noncurrent

6,812




Total liabilities

730,140



264,767


Commitments and contingencies (Note 7)




Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized;
40,000 and 0 shares issued and outstanding, respectively

39,823




Stockholders' equity




Common stock—par value $0.001 per share; 500,000,000 shares authorized; 103,000,594 and
93,001,597 shares issued and outstanding, respectively

103



93


Additional paid-in capital

860,556



583,097


Accumulated other comprehensive income

211



42


Accumulated deficit

(270,313)



(251,786)


Total stockholders' equity

590,557



331,446


Total liabilities, mezzanine equity and stockholders' equity

$

1,360,520



$

596,213






 

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)



Year Ended December 31,


2020


2019

Operating Activities




Net loss

$

(18,527)



$

(80,805)


Adjustments to reconcile net loss to net cash provided by (used in) operating activities:




Depreciation and amortization

14,564



9,230


Stock-based compensation

36,973



27,814


Amortization of debt discount and issuance costs

12,038



6,385


Non-cash lease expense

9,204



6,940


Impairment costs

2,063




Loss on repurchases and conversions of convertible senior notes

4,634




Net gain on IRLCs, forward sales commitments and loans held for sale

(1,921)



(493)


Other

(349)



(663)


Change in assets and liabilities:




Accounts receivable, net

(35,496)



(3,861)


Inventory

25,432



(51,896)


Prepaid expenses and other assets

2,333



(3,293)


Accounts payable

2,086



(394)


Accrued liabilities, other payables, and payroll tax liabilities, noncurrent

39,092



7,422


Lease liabilities

(11,312)



(7,209)


Deferred rent



1


Origination of loans held for sale

(677,310)



(395,354)


Proceeds from sale of loans originated as held for sale

657,763



378,566


Net cash provided by (used in) operating activities

61,267



(107,610)


Investing activities




Purchases of property and equipment

(14,686)



(15,533)


Purchases of investments

(198,172)



(136,265)


Sales of investments

7,887



11,486


Maturities of investments

147,852



24,400


Net cash used in investing activities

(57,119)



(115,912)


Financing activities




Proceeds from the issuance of convertible preferred stock, net of issuance costs

39,801




Proceeds from the issuance of common stock, net of issuance costs

69,701




Proceeds from the issuance of common stock pursuant to employee equity plans

21,072



16,107


Tax payments related to net share settlements on restricted stock units

(16,852)



(5,126)


Borrowings from warehouse credit facilities

662,278



388,586


Repayments to warehouse credit facilities

(644,551)



(372,017)


Borrowings from secured revolving credit facility

89,619



4,444


Repayments to secured revolving credit facility

(70,115)




Cash paid for secured revolving credit facility issuance costs

(4)



(922)


Proceeds from issuance of convertible senior notes, net of issuance costs

647,486




Payments for repurchases and conversions of convertible senior notes

(108,061)




Principal payments under finance lease obligations

(221)



(72)


Proceeds from follow on offering




Other payables - deposits held in escrow

4,074



883


Net cash provided by financing activities

$

694,227



$

31,883


Effect of exchange rate changes on cash and cash equivalents

(3)



32


Net change in cash, cash equivalents, and restricted cash

698,372



(191,607)


Cash, cash equivalents, and restricted cash:




Beginning of period

247,448



439,055


End of period

$

945,820



$

247,448


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)



Three Months Ended


Dec. 31
2020


Sep. 30
2020


Jun. 30,
2020


Mar. 31,
2020


Dec. 31,
2019


Sep. 30,
2019


Jun. 30,
2019


Mar. 31,
2019


Dec. 31,
2018

Monthly average visitors (in thousands)

44,135



49,258



42,537



35,519



30,595



35,633



36,557



31,107



25,212


Real estate services transactions


















Brokerage

16,951



18,980



13,828



10,751



13,122



16,098



15,580



8,435



9,822


Partner

4,940



5,180



2,691



2,479



2,958



3,499



3,357



2,125



2,749


Total

21,891



24,160



16,519



13,230



16,080



19,597



18,937



10,560



12,571


Real estate services revenue per transaction


















Brokerage

$

10,751



$

10,241



$

9,296



$

9,520



$

9,425



$

9,075



$

9,332



$

9,640



$

9,569


Partner

3,123



2,988



2,417



2,535



2,369



2,295



2,218



2,153



2,232


Aggregate

9,030



8,686



8,175



8,211



8,127



7,865



8,071



8,134



7,964




















Aggregate home value of real estate
services transactions (in millions)

$

11,478



$

12,207



$

7,576



$

6,098



$

7,588



$

9,157



$

8,986



$

4,800



$

5,825


U.S. market share by value

1.04

%


1.04

%


0.93

%


0.93

%


0.94

%


0.96

%


0.94

%


0.83

%


0.81

%

Revenue from top-10 Redfin markets as a
percentage of real estate services revenue

63

%


63

%


63

%


61

%


62

%


63

%


64

%


64

%


66

%

Average number of lead agents

1,981



1,820



1,399



1,826



1,526



1,579



1,603



1,503



1,419


Properties transactions

83



37



162



171



212



168



80



43



47


Properties revenue per transaction

474,690



513,648



445,578



462,563



467,276



477,167



498,847



497,044



459,663


 

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)



Three Months Ended December 31,


Year  Ended December 31,


2020


2019


2020


2019

Real estate services revenue








Brokerage revenue

$

182,244



$

123,671



$

607,513



496,480


Partner revenue

15,426



7,008



43,695



27,060


  Total real estate services revenue

197,670



130,679



651,208



523,540


Properties revenue

39,399



99,063



209,686



240,507


Other revenue

8,213



4,143



28,212



17,634


Intercompany eliminations

(765)



(693)



(3,013)



(1,885)


Total revenue

$

244,517



$

233,192



$

886,093



$

779,796










Cost of revenue








Real estate services

$

116,835



$

88,703



$

417,140



$

373,150


Properties

41,275



100,382



214,382



245,189


Other

7,052



5,174



25,474



19,239


Intercompany eliminations

(765)



(693)



(3,013)



(1,885)


Total cost of revenue

$

164,397



$

193,566



$

653,983



$

635,693










Gross profit by segment








Real estate services

$

80,835



$

41,976



$

234,068



$

150,390


Properties

(1,876)



(1,319)



(4,696)



(4,682)


Other

1,161



(1,031)



2,738



(1,605)


Total gross profit

$

80,120



$

39,626



$

232,110



$

144,103










Gross margin (percentage of revenue)








Real estate services

40.9

%


32.1

%


35.9

%


28.7

%

Properties

(4.8)



(1.3)



(2.2)



(1.9)


Other

14.1



(24.9)



9.7



(9.1)


Total gross margin

32.8



17.0



26.2



18.5


 

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SOURCE Redfin

Investor Relations, Meg Nunnally, 206-576-8132, ir@redfin.com; Public Relations, Mariam Sughayer, 206-876-1322, press@redfin.com