rdfn-20210224
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 24, 2021
Redfin Corporation
(Exact name of registrant as specified in its charter)
Delaware
001-3816074-3064240
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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.



Item 2.02 Results of Operations and Financial Condition.

On February 24, 2021, we reported our financial results for the quarter and full year ended December 31, 2020. A copy of our earnings release is furnished as exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.
Exhibit Number
Description
99.1
104
Cover page interactive data file, submitted using inline XBRL

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Redfin Corporation
(Registrant)
Date: February 24, 2021/s/ Chris Nielsen
Chris Nielsen
Chief Financial Officer

Document


https://cdn.kscope.io/97ab3286d4768a6f279d72c9d70bc06d-redfinlogoa141.jpg

Redfin Reports Fourth Quarter and Full Year 2020 Financial Results

SEATTLE - February 24, 2021 - 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.

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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.
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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

Contacts

Investor Relations
Meg Nunnally, 206-576-8132
ir@redfin.com
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Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com
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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 December 31,Year Ended December 31,
2020201920202019
Revenue
Service$204,452 $134,128 $674,345 $539,288 
Product40,065 99,063 211,748 240,508 
Total revenue244,517 233,191 886,093 779,796 
Cost of revenue(1)
Service122,642 93,183 437,484 390,504 
Product41,755 100,382 216,499 245,189 
Total cost of revenue164,397 193,565 653,983 635,693 
Gross profit80,120 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 expenses54,481 46,436 231,318 223,349 
Income (loss) from operations25,639 (6,810)792 (79,246)
Interest income215 1,341 2,074 7,146 
Interest expense(11,864)(2,365)(19,495)(8,928)
Other income (expense), net45 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—basic102,176,459 92,486,944 98,574,529 91,583,533 
Net income (loss) per share attributable to common stock—diluted0.11 (0.08)(0.23)(0.88)
Weighted average shares of common stock—diluted109,461,342 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 adjustments13 (3)33 
Unrealized gain (loss) on available-for-sale securities(110)11 172 
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,
2020201920202019
Cost of revenue$2,863 $1,689 $8,844 $6,087 
Technology and development4,828 3,701 16,564 12,362 
Marketing439 393 1,569 1,418 
General and administrative3,079 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.
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Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
December 31, 2020December 31, 2019
Assets
Current assets
Cash and cash equivalents$925,276 $234,679 
Restricted cash20,544 12,769 
Short-term investments131,561 70,029 
Accounts receivable, net of allowances for credit losses of $160 and $16554,719 19,223 
Inventory49,158 74,590 
Loans held for sale42,539 21,985 
Prepaid expenses12,131 14,822 
Other current assets4,898 3,496 
Total current assets1,240,826 451,593 
Property and equipment, net43,988 39,577 
Right-of-use assets, net44,149 52,004 
Long-term investments11,922 30,978 
Goodwill and intangibles, net11,016 11,504 
Other assets, noncurrent8,619 10,557 
Total assets$1,360,520 $596,213 
Liabilities, mezzanine equity and stockholders' equity
Current liabilities
Accounts payable$5,644 $2,122 
Accrued liabilities69,460 38,022 
Other payables13,184 7,884 
Warehouse credit facilities39,029 21,302 
Secured revolving credit facility23,949 4,444 
Convertible senior notes, net22,482 — 
Lease liabilities11,973 11,408 
Total current liabilities185,721 85,182 
Lease liabilities and deposits, noncurrent49,339 59,869 
Convertible senior notes, net, noncurrent488,268 119,716 
Payroll tax liabilities, noncurrent6,812 — 
Total liabilities730,140 264,767 
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, respectively39,823 — 
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, respectively103 93 
Additional paid-in capital860,556 583,097 
Accumulated other comprehensive income211 42 
Accumulated deficit(270,313)(251,786)
Total stockholders’ equity590,557 331,446 
Total liabilities, mezzanine equity and stockholders’ equity$1,360,520 $596,213 
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Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Year Ended December 31,
20202019
Operating Activities
Net loss
$(18,527)$(80,805)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization14,564 9,230 
Stock-based compensation36,973 27,814 
Amortization of debt discount and issuance costs12,038 6,385 
Non-cash lease expense9,204 6,940 
Impairment costs2,063 — 
Loss on repurchases and conversions of convertible senior notes4,634 — 
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)
Inventory25,432 (51,896)
Prepaid expenses and other assets2,333 (3,293)
Accounts payable2,086 (394)
Accrued liabilities, other payables, and payroll tax liabilities, noncurrent39,092 7,422 
Lease liabilities(11,312)(7,209)
Deferred rent— 
Origination of loans held for sale(677,310)(395,354)
Proceeds from sale of loans originated as held for sale657,763 378,566 
Net cash provided by (used in) operating activities61,267 (107,610)
Investing activities
Purchases of property and equipment(14,686)(15,533)
Purchases of investments(198,172)(136,265)
Sales of investments7,887 11,486 
Maturities of investments147,852 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 costs39,801 — 
Proceeds from the issuance of common stock, net of issuance costs69,701 — 
Proceeds from the issuance of common stock pursuant to employee equity plans21,072 16,107 
Tax payments related to net share settlements on restricted stock units(16,852)(5,126)
Borrowings from warehouse credit facilities662,278 388,586 
Repayments to warehouse credit facilities(644,551)(372,017)
Borrowings from secured revolving credit facility89,619 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 costs647,486 — 
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 escrow4,074 883 
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 cash698,372 (191,607)
Cash, cash equivalents, and restricted cash:
Beginning of period247,448 439,055 
End of period
$945,820 $247,448 
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Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
Three Months Ended
Dec. 31 2020Sep. 30 2020Jun. 30, 2020Mar. 31, 2020Dec. 31, 2019Sep. 30, 2019Jun. 30, 2019Mar. 31, 2019Dec. 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
Brokerage16,951 18,980 13,828 10,751 13,122 16,098 15,580 8,435 9,822 
Partner4,940 5,180 2,691 2,479 2,958 3,499 3,357 2,125 2,749 
Total21,891 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 
Partner3,123 2,988 2,417 2,535 2,369 2,295 2,218 2,153 2,232 
Aggregate9,030 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 revenue63 %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 transactions83 37 162 171 212 168 80 43 47 
Properties revenue per transaction474,690 513,648 445,578 462,563 467,276 477,167 498,847 497,044 459,663 
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Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
Three Months Ended December 31,Year Ended December 31,
2020201920202019
Real estate services revenue
Brokerage revenue$182,244 $123,671 $607,513 496,480 
Partner revenue15,426 7,008 43,695 27,060 
  Total real estate services revenue197,670 130,679 651,208 523,540 
Properties revenue39,399 99,063 209,686 240,507 
Other revenue8,213 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 
Properties41,275 100,382 214,382 245,189 
Other7,052 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)
Other1,161 (1,031)2,738 (1,605)
Total gross profit$80,120 $39,626 $232,110 $144,103 
Gross margin (percentage of revenue)
Real estate services40.9 %32.1 %35.9 %28.7 %
Properties(4.8)(1.3)(2.2)(1.9)
Other14.1 (24.9)9.7 (9.1)
Total gross margin32.8 17.0 26.2 18.5 

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