Redfin Fourth-Quarter 2019 Revenue up 88% Year-over-Year to $233 Million

News provided by

Redfin

Feb 12, 2020, 16:01 ET

SEATTLE, Feb. 12, 2020 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the fourth quarter and full year ended December 31, 2019. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation as well as depreciation and amortization expenses.

Fourth Quarter 2019
Revenue increased 88% year-over-year to $233 million during the fourth quarter. Gross profit was $40 million, an increase of 51% from $26 million in the fourth quarter of 2018. Real estate services gross profit was $42 million, an increase of 51% from $28 million in the fourth quarter of 2018. Real estate services gross margin was 32%, compared to 28% in the fourth quarter of 2018. Operating expenses were $46 million, an increase of 20% from $39 million in the fourth quarter of 2018. Operating expenses were 20% of revenue, down from 31% in the fourth quarter of 2018.

Net loss was $7.8 million, compared to net loss of $12.2 million in the fourth quarter of 2018. Stock-based compensation was $8.0 million, up from $6.0 million in the fourth quarter of 2018. Depreciation and amortization was $2.9 million, up from $2.3 million in the fourth quarter of 2018. Interest income was $1.3 million and interest expense was $2.4 million, compared to $2.3 million and $2.1 million, respectively, in the fourth quarter of 2018.

Net loss per share, basic and diluted, was $0.08, compared to net loss per share, basic and diluted, of $0.14 in the fourth quarter of 2018.

Full Year 2019
Revenue increased 60% year-over-year to $780 million in 2019. Gross profit was $144 million, an increase of 21% from $119 million in 2018. Real estate services gross profit was $150 million, an increase of 22% from $123 million in 2018. Real estate services gross margin was 29%, compared to 28% in 2018. Operating expenses were $223 million, an increase of 37% from $163 million in 2018. Operating expenses were 29% of revenue, down from 34% in 2018.

Net loss was $81 million, compared to net loss of $42 million in 2018. Stock-based compensation was $28 million, up from $20 million in 2018. Depreciation and amortization was $9.2 million, up from $8.5 million in 2018. Interest income was $7.1 million and interest expense was $8.9 million, compared to $5.4 million and $3.7 million, respectively, in 2018.

Net loss per share, basic and diluted, was $0.88, compared to net loss per share, basic and diluted, of $0.49 in 2018.

"This was the fourth quarter in a row that our real estate services revenue growth accelerated, and the second quarter in a row that gross margins improved in every segment of our business," said Redfin CEO Glenn Kelman. "Our multi-year investments in a broader solution for our customers that includes mortgage, title, renovations and instant offers are really starting to pay off, but what's most important is that we've been able to grow while maintaining our commitment to efficiency, so customers get low prices and Redfin can generate more gross profit."

Highlights

  • Reached market share of 0.94% of U.S. existing home sales by value in the fourth quarter of 2019, an increase of 0.13 percentage points from the fourth quarter of 2018.(1)
  • Saved homebuyers and sellers over $44 million in the fourth quarter and over $180 million in 2019. 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.
  • Earned a Net Promoter Score, a measure of customer satisfaction, that is 18% higher than competing brokerages', as measured in a Redfin-commissioned November 2019 survey of people who bought or sold a home in the previous 12 months. 2019 marked the fifth consecutive year that our customer satisfaction was higher than that of traditional brokers.
  • Continued to expand our nationwide footprint in the fourth quarter, launching brokerage services in Chattanooga, TN, Savannah, GA and Northern Kentucky. Redfin is now reaching customers in 94 markets across the United States and Canada and offers services in markets covering 78% of the U.S. population.
  • Introduced a new listing fee to unify our pricing nationwide and reward our most loyal customers with the greatest savings. The brokerage previously charged either a 1% or 1.5% fee based on the market. Redfin now charges a 1% listing fee to sellers who also buy their next home with Redfin within 12 months and a 1.5% listing fee to sellers who just sell their home with Redfin.
  • RedfinNow continued expansion, launching in Las Vegas in the fourth quarter of 2019. RedfinNow is available to consumers in 13 markets in four states.
  • Redfin Mortgage expanded to Massachusetts, Michigan and Wisconsin and opened a new office in Tempe, Arizona to support growth in 2020.
  • Redfin Mortgage originated $110 million in loan volume in the fourth quarter of 2019, an increase of 370% from the fourth quarter of 2018. For the full year 2019, Redfin Mortgage originated $395 million in loan volume, an increase of 460% from 2018.
  • Expanded Direct Access from 10 to 13 markets, allowing buyers to tour RedfinNow listings on their own schedule by unlocking the door with a tap on a smartphone.
  • Launched Redfin Direct, a service to help unrepresented buyers make offers on Redfin listings, in major markets across Texas (Austin, Dallas, Houston, San Antonio) and California (Fresno, Inland Empire, Los Angeles, Orange County, Sacramento, San Diego, Santa Barbara, Ventura County). At the end of 2019, Redfin Direct was available in 14 markets in four states.
  • Improved the accuracy of the Redfin Estimate for off-market homes by over 30 basis points and expanded coverage to five metro areas and several property types, including land and multi-family properties. Redfin Estimate now covers 85 million properties across the United States.
  • Upgraded our software for agents by making it faster and releasing new features to help agents track and prioritize their deals and categorize customers at various stages of the homebuying and selling process. Other software released in the fourth quarter includes a new listings activation form that makes it simple for listing coordinators to collect all the necessary information about each home in one place, making it easier to take a listing live on the market.
  • Increased our proportion of women technologists from 32.9% in 2018 to 34.4% in 2019. We continue to work towards our goal of 50% overall as well as prioritizing racial and ethnic diversity because employing a diverse workforce will help us deliver better service to all people.

(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 12, 2020, and are subject to substantial uncertainty.

For the first quarter of 2020 we expect:

  • Total revenue between $179 million and $188 million, representing year-over-year growth between 63% and 71% compared to the first quarter of 2019. Properties segment revenue between $69 million and $74 million is included in the guidance provided.
  • Net loss between $72 million and $68 million, compared to net loss of $67 million in the first quarter of 2019. This guidance includes approximately $9.1 million of expected stock-based compensation and $3.2 million of expected depreciation and amortization.

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 Form 10-K for the year ended December 31, 2019, 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 (www.redfin.com) is a technology-powered residential real estate company. Founded by software engineers, we run the country's #1 most-visited brokerage website and offer a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. Our mission is to redefine real estate in the consumer's favor. In a commission-driven industry, we put the customer first. We do this by pairing our own agents with our own technology to create a service that is faster, better, and costs less. Since our launch in 2006 through 2019, we have helped customers buy or sell more than 235,000 homes worth more than $115 billion.

Redfin-F

Redfin Corporation and Subsidiaries
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts)





Three Months Ended December 31,

Twelve Months Ended December 31,

2019

2018

2019

2018

Unaudited



Revenue






Service

$

134,128

$

102,525

$

539,288

$

441,927

Product

99,063

21,604

240,508

44,993

Total revenue

233,191

124,129

779,796

486,920

Cost of revenue(1)






Service

93,183

75,393

390,504

320,883

Product

100,382

22,527

245,189

46,613

Total cost of revenue

193,565

97,920

635,693

367,496

Gross profit

39,626

26,209

144,103

119,424

Operating expenses






Technology and development(1)

19,345

13,692

69,765

53,797

Marketing(1)

8,099

8,054

76,710

44,061

General and administrative(1)

18,992

16,969

76,874

65,500

Total operating expenses

46,436

38,715

223,349

163,358

Loss from operations

(6,810)

(12,506)

(79,246)

(43,934)

Interest income

1,341

2,334

7,146

5,416

Interest expense

(2,365)

(2,071)

(8,928)

(3,681)

Other income, net

51

21

223

221

Net loss

$

(7,783)

$

(12,222)

$

(80,805)

$

(41,978)

Net loss per share attributable to common stock—basic and diluted

$

(0.08)

$

(0.14)

$

(0.88)

$

(0.49)

Weighted average shares of common stock—basic and diluted

92,486,944

89,650,602

91,583,533

85,669,039








Net loss

$

(7,783)

$

(12,222)

$

(80,805)

$

(41,978)

Other comprehensive income:






Foreign currency translation adjustments

5

—

33

—

Unrealized gain on available-for-sale securities

11

—

9

—

Total comprehensive loss

$

(7,767)

$

(12,222)

$

(80,763)

$

(41,978)

(1) Includes stock-based compensation as follows:


Three Months ended December 31,

Twelve Months ended December 31,

2019

2018

2019

2018

Cost of revenue

$

1,689

$

1,506

$

6,087

$

5,567

Technology and development

3,701

2,241

12,362

7,576

Marketing

393

231

1,418

662

General and administrative

2,239

1,988

7,947

6,633

Total

$

8,022

$

5,966

$

27,814

$

20,438

Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)


December 31,

2019

2018

Assets


Current assets


Cash and cash equivalents

$

234,679

$

432,608

Restricted cash

12,769

6,446

Short-term investments

70,029

—

Accounts receivable, net

19,223

15,363

Inventory

74,590

22,694

Loans held for sale

21,985

4,913

Prepaid expenses

14,822

11,916

Other current assets

3,496

2,307

Total current assets

451,593

496,247

Property and equipment, net

39,577

25,187

Right-of-use assets, net

52,004

—

Long-term investments

30,978

—

Goodwill and intangibles, net

11,504

11,992

Other non-current assets

10,557

9,395

Total assets

$

596,213

$

542,821

Liabilities and stockholders' equity


Current liabilities


Accounts payable

$

2,122

$

2,516

Accrued liabilities

37,979

30,837

Other payables

7,884

6,544

Warehouse credit facilities

21,302

4,733

Current lease liabilities

11,408

—

Secured revolving credit facility

4,444

—

Current portion of deferred rent

43

1,588

Total current liabilities

85,182

46,218

Non-current lease liabilities

59,869

—

Deferred rent

—

11,079

Convertible senior notes, net

119,716

113,586

Total liabilities

264,767

170,883

Commitments and contingencies


Stockholders' equity


Common stock—par value $0.001 per share; 500,000,000 shares authorized; 93,001,597 and 90,151,341 shares issued and outstanding, respectively

93

90

Additional paid-in capital

583,097

542,829

Accumulated other comprehensive income

42

—

Accumulated deficit

(251,786)

(170,981)

Total stockholders' equity

331,446

371,938

Total liabilities and stockholders' equity

$

596,213

$

542,821

Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)


Year Ended December 31,

2019

2018

Operating Activities


Net loss

$

(80,805)

$

(41,978)

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


Depreciation and amortization

9,230

8,465

Stock-based compensation

27,814

20,438

Amortization of debt discount and issuance costs

6,385

2,584

Non-cash lease expense

6,940

—

Other

(663)

—

Change in assets and liabilities:


Accounts receivable, net

(3,861)

(2,029)

Inventory

(51,896)

(19,312)

Prepaid expenses and other assets

(3,539)

(5,725)

Accounts payable

(394)

617

Accrued liabilities and other payables

7,459

4,509

Lease liabilities

(7,209)

—

Deferred rent

1

(1,249)

Origination of loans held for sale

(395,638)

(86,023)

Proceeds from sale of loans originated as held for sale

378,566

83,001

Net cash used in operating activities

(107,610)

(36,702)

Investing activities


Purchases of property and equipment

(15,533)

(8,303)

Purchases of investments

(136,265)

(2,000)

Sales of investments

11,486

—

Maturities of investments

24,400

—

Net cash used in investing activities

(115,912)

(10,303)

Financing activities


Proceeds from the issuance of shares resulting from employee equity plans

16,107

23,407

Tax payments related to net share settlements on restricted stock units

(5,126)

(1,426)

Borrowings from warehouse credit facilities

388,586

83,842

Repayments of warehouse credit facilities

(372,017)

(81,125)

Borrowings from secured revolving credit facility

4,444

—

Other payables - deposits held in escrow

883

2,158

Proceeds from issuance of convertible notes, net of issuance costs

—

138,953

Proceeds from follow on offering

—

107,593

Cash paid for debt issuance costs

(922)

—

Principal payments under finance lease obligations

(72)

—

Net cash provided by financing activities

31,883

273,402

Effect of exchange rate changes on cash and cash equivalents

32

—

Net change in cash, cash equivalents, and restricted cash

(191,607)

226,397

Cash, cash equivalents, and restricted cash:


Beginning of period

439,055

212,658

End of period

$

247,448

$

439,055

Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)





Three Months Ended

Twelve Months Ended

Dec. 31,
2019

Sep. 30,
2019

Jun. 30,
2019

Mar. 31,
2019

Dec. 31,
2018

Sep. 30,
2018

Jun. 30,
2018

Mar. 31,
2018

Dec. 31,
2017

Dec. 31,
2019

Dec. 31,
2018

Dec. 31,
2017

Monthly average visitors (in thousands)

30,595

35,633

36,557

31,107

25,212

29,236

28,777

25,820

21,377

33,473

27,261

22,623

Real estate services transactions






















Brokerage

13,122

16,098

15,580

8,435

9,822

12,876

12,971

7,285

8,598

53,235

42,954

35,038

Partner

2,958

3,499

3,357

2,125

2,749

3,333

3,289

2,237

2,739

11,939

11,608

10,755

Total

16,080

19,597

18,937

10,560

12,571

16,209

16,260

9,522

11,337

65,174

54,562

45,793

Real estate services revenue per transaction






















Brokerage

$

9,425

$

9,075

$

9,332

$

9,640

$

9,569

$

9,227

$

9,510

$

9,628

$

9,659

$

9,326

$

9,459

$

9,429

Partner

2,369

2,295

2,218

2,153

2,232

2,237

2,281

2,137

2,056

2,267

2,229

1,971

Aggregate

8,127

7,865

8,071

8,134

7,964

7,790

8,048

7,869

7,822

8,033

7,921

7,677
























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

$

7,588

$

9,157

$

8,986

$

4,800

$

5,825

$

7,653

$

7,910

$

4,424

$

5,350

$

30,532

$

25,812

$

21,280

U.S. market share by value

0.94

%

0.96

%

0.94

%

0.83

%

0.81

%

0.85

%

0.83

%

0.73

%

0.71

%

0.93

%

0.81

%

0.67

%

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

62

%

63

%

64

%

64

%

66

%

66

%

68

%

66

%

69

%

63

%

67

%

69

%

Average number of lead agents

1,526

1,579

1,603

1,503

1,419

1,397

1,415

1,327

1,119

1,553

1,390

1,023

Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)


Three Months Ended December 31,

Twelve Months Ended December 31,

2019

2018

2019

2018

Real estate services revenue






Brokerage revenue

$

123,671

$

93,985

$

496,480

$

406,293

Partner revenue

7,008

6,135

27,060

25,875

  Total real estate services revenue

130,679

100,120

523,540

432,168

Properties revenue

99,063

21,604

240,507

44,993

Other revenue

4,143

2,476

17,634

9,882

Intercompany eliminations

(693)

(71)

(1,885)

(123)

Total revenue

$

233,192

$

124,129

$

779,796

$

486,920








Cost of revenue






Real estate services

$

88,703

$

72,294

$

373,150

$

309,069

Properties

100,382

22,527

245,189

46,613

Other

5,174

3,170

19,239

11,937

Intercompany eliminations

(693)

(71)

(1,885)

(123)

Total cost of revenue

$

193,566

$

97,920

$

635,693

$

367,496








Gross profit by segment






Real estate services

$

41,976

$

27,826

$

150,390

$

123,099

Properties

(1,319)

(923)

(4,682)

(1,620)

Other

(1,031)

(694)

(1,605)

(2,055)

Total gross profit

$

39,626

$

26,209

$

144,103

$

119,424








Gross margin (percentage of revenue)






Real estate services

32.1

%

27.8

%

28.7

%

28.5

%

Properties

(1.3)

(4.3)

(1.9)

(3.6)

Other

(24.9)

(28.0)

(9.1)

(20.8)

Total gross margin

17.0

21.1

18.5

24.5

SOURCE Redfin

Related Links

www.redfin.com

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