Redfin Second-Quarter 2019 Revenue up 39% Year-over-Year to $197.8 Million

News provided by

Redfin

Aug 01, 2019, 16:01 ET

SEATTLE, Aug. 1, 2019 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the second quarter ended June 30, 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.

Revenue increased 39% year-over-year to $197.8 million during the second quarter. Gross profit was $48.3 million, an increase of 7% from $45.2 million in the second quarter of 2018. Gross margin was 24%, compared to 32% in the second quarter of 2018. Real estate services gross profit was $49.2 million, an increase of 8% from $45.5 million in the second quarter of 2018. Real estate services gross margin was 32%, compared to 35% in the second quarter of 2018. Operating expenses were $60.8 million, an increase of 42% from $42.8 million in the second quarter of 2018. Operating expenses were 31% of revenue, up from 30% in the second quarter of 2018.

Net loss was $12.6 million, compared to net income of $3.2 million in the second quarter of 2018. Stock-based compensation was $5.9 million, up from $4.8 million in the second quarter of 2018. Depreciation and amortization was $2.2 million, up from $1.9 million in the second quarter of 2018. Interest income was $1.9 million and interest expense was $2.2 million, up from $0.7 million and zero, respectively, in the second quarter of 2018.

Net loss per share, basic and diluted, was $0.14, compared to net income per share, basic and diluted, of $0.04 in the second quarter of 2018.

"The second quarter is a turning point for our company," said Redfin CEO Glenn Kelman. "Year-over-year growth in website traffic, brokerage sales, and revenues overall accelerated for the second straight quarter. Our new businesses have built the infrastructure and delivered the results needed for more rapid expansion, with significant margin gains in mortgage and title, and integrated field execution for instant-offers and the brokerage. The years of work we've invested in each of these businesses are now positioning us to be the first to deliver a complete solution at a national scale for people moving from one home to the next."

Highlights

  • Reached market share of 0.94% of U.S. existing home sales by value in the second quarter of 2019, an increase of 0.11 percentage points from the first quarter of 2019, and an increase of 0.11 percentage points from the second quarter of 2018.(1)
  • Continued to drive strong traffic growth, with visitors to our website and mobile application increasing by 27% over the second quarter of 2018.
  • Saved Redfin homebuyers and sellers over $54 million in the second quarter, compared to a 2.5% commission typically charged by traditional agents.
  • Expanded brokerage service to Vancouver, BC and Des Moines, IA. Redfin is now reaching customers across 92 markets and serves 78% of the U.S. population.
  • Rolled out a new Buyer Deal Room on both iOS and Android to help our homebuyers stay up to date on key milestones and to-dos in their home purchase right from our mobile application.
  • Added marketing stats to our sellers' personalized dashboard to show them all of the ways Redfin is marketing their home to likely buyers through email, social media, and push notifications.
  • Expanded Redfin Mortgage to Florida, Maryland, and Tennessee. Invested in our proprietary efficiency tools and software for our mortgage team to further streamline the preapproval, underwriting, and closing process.
  • Rolled out a new Redfin Mortgage closing disclosure tool that is saving our closing department 50 minutes per loan.
  • Expanded RedfinNow to Denver. As of the end of the second quarter, RedfinNow was also available in Dallas, TX, Los Angeles, San Diego, Inland Empire, and Orange County, CA.
  • Rolled out integrated home-selling consultations to Denver, where a Redfin listing agent now presents the RedfinNow cash offer alongside her presentation of what the home could list for on the open market. This service is also available in Dallas.
  • Developed software that lets people unlock a RedfinNow listing from their smartphone and tour on demand. It is now available in Dallas, San Diego, and the Inland Empire.
  • Launched Redfin Direct in Boston, allowing unrepresented homebuyers to make offers on Redfin listings using a step-by-step online tool, which in turn can help Redfin sellers save money in buyer agent commission fees. During the second quarter, our listings received 52 Direct offers, resulting in 4 closings.
  • Opened a new office in Frisco, TX for our rapidly growing mortgage, RedfinNow, and brokerage teams. It's also a new engineering hub for Redfin, our first outside of Seattle and San Francisco. These engineers will sit alongside our brokerage, title, and mortgage teams and build technology to deliver a complete home buying and selling solution to our customers.

(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 transactions conducted by our lead agents or our partner agents. 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 August 1, 2019, and are subject to substantial uncertainty.

For the third quarter of 2019 we expect:

  • Total revenue between $223 million and $233 million, representing year-over-year growth between 59% and 66% compared to the third quarter of 2018. Properties segment revenue between $67 million and $72 million is included in the guidance provided.
  • Net income between $3.4 million and $6.4 million, compared to net income of $3.5 million in the third quarter of 2018. This guidance includes approximately $6.6 million of expected stock-based compensation and $2.5 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 Annual Report for the year ended December 31, 2018, as supplemented by our Quarterly Report for the quarter ended June 30, 2019, both of which are available on our Investor Relations website at http://investors.redfin.com and on the SEC website at www.sec.gov.  All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

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 throughout 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 2018, we have helped customers buy or sell more than 170,000 homes worth more than $85 billion.

Redfin-F

Redfin Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

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


Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Revenue






Service

$

157,872

$

133,656

$

246,641

$

210,498

Product

39,908

8,986

61,281

12,038

Total revenue

197,780

142,642

307,922

222,536

Cost of revenue(1)






Service

108,528

88,341

192,923

159,196

Product

40,906

9,088

63,898

12,430

Total cost of revenue

149,434

97,429

256,821

171,626

Gross profit

48,346

45,213

51,101

50,910

Operating expenses






Technology and development(1)

16,063

13,033

31,620

25,796

Marketing(1)

27,050

14,435

60,250

27,770

General and administrative(1)

17,654

15,288

39,102

32,062

Total operating expenses

60,767

42,756

130,972

85,628

Income (loss) from operations

(12,421)

2,457

(79,871)

(34,718)

Interest income

1,913

729

4,229

1,307

Interest expense

(2,153)

—

(4,290)

—

Other income, net

36

21

128

179

Net income (loss)

$

(12,625)

$

3,207

$

(79,804)

$

(33,232)

Net income (loss) per share - basic

$

(0.14)

$

0.04

$

(0.88)

$

(0.40)

Net income (loss) per share - diluted

$

(0.14)

$

0.04

$

(0.88)

$

(0.40)

Weighted average shares - basic

91,216,886

83,164,670

90,915,334

82,590,979

Weighted average shares - diluted

91,216,886

90,743,178

90,915,334

82,590,979








Net income (loss)

$

(12,625)

$

3,207

$

(79,804)

$

(33,232)

Other comprehensive income:






Foreign currency translation adjustments

37

—

38

—

Unrealized gain on available-for-sale securities

6

—

6

—

Total comprehensive income (loss)

$

(12,582)

$

3,207

$

(79,760)

$

(33,232)

(1) Includes stock-based compensation as follows:


Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Cost of revenue

$

1,328

$

1,392

$

2,793

$

2,691

Technology and development

2,685

1,726

5,341

3,200

Marketing

349

157

635

276

General and administrative

1,514

1,503

3,513

2,808

Total

$

5,876

$

4,778

$

12,282

$

8,975

Redfin Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

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


June 30, 2019

December 31, 2018

Assets


Current assets


Cash and cash equivalents

$

241,104

$

432,608

Restricted cash

18,133

6,446

Short-term investments

35,365

—

Accrued revenue, net

38,686

15,363

Inventory

85,654

22,694

Loans held for sale

30,169

4,913

Prepaid expenses

6,763

11,916

Other current assets

5,860

2,307

Total current assets

461,734

496,247

Long-term investments

34,954

—

Property and equipment, net

35,675

25,187

Right of use assets, net

44,830

—

Goodwill and intangibles, net

11,748

11,992

Other non-current assets

10,627

9,395

Total assets

599,568

542,821

Liabilities and stockholders' equity


Current liabilities


Accounts payable

4,217

2,516

Accrued liabilities

57,423

30,837

Other payables

18,250

6,544

Borrowings under warehouse credit facilities

29,427

4,733

Current operating lease liabilities

8,719

—

Current portion of deferred rent

36

1,588

Total current liabilities

118,072

46,218

Non-current operating lease liabilities

52,634

—

Deferred rent

—

11,079

Convertible senior notes, net

116,617

113,586

Total liabilities

287,323

170,883

Commitments and contingencies


Stockholders' equity


Common stock—par value $0.001 per share; 500,000,000 shares authorized; 91,777,537 and 90,151,341 shares issued and outstanding, respectively

92

90

Additional paid-in capital

562,894

542,829

Accumulated other comprehensive income

44

—

Accumulated deficit

(250,785)

(170,981)

Total stockholders' equity

312,245

371,938

Total liabilities and stockholders' equity

$

599,568

$

542,821

Redfin Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)


Six Months Ended June 30,

2019

2018

Operating activities


Net loss

$

(79,804)

$

(33,232)

Adjustments to reconcile net loss to net cash used in operating activities


Depreciation and amortization

3,809

3,902

Stock-based compensation

12,282

8,974

Amortization of debt discount and issuance costs

3,031

—

Non-cash lease expense

2,943

—

Other

(100)

—

Change in assets and liabilities


Accrued revenue

(23,323)

(5,568)

Inventory

(62,960)

(11,137)

Prepaid expenses and other assets

1,230

3,682

Accounts payable

1,350

1,934

Accrued liabilities and other payables

26,494

7,481

Operating lease liabilities

(3,301)

—

Deferred rent

(5)

(583)

Origination of loans held for sale

(153,335)

(29,249)

Proceeds from sale of loans originated as held for sale

128,080

27,555

Net cash used in operating activities

(143,609)

(26,241)

Investing activities


Purchases of investments

(70,312)

—

Sales of investments

100

—

Purchases of property and equipment

(9,504)

(4,045)

Net cash used in investing activities

(79,716)

(4,045)

Financing activities


Proceeds from the exercise of stock options

8,965

14,394

Tax payments related to net share settlements on restricted stock units

(1,792)

(227)

Borrowings from warehouse credit facilities

149,900

28,551

Repayments of warehouse credit facilities

(125,206)

(27,076)

Other payables - deposits held in escrow

11,602

13,631

Net cash provided by financing activities

43,469

29,273

Effect of exchange rate changes on cash and cash equivalents

38

—

Net change in cash, cash equivalents, and restricted cash

(179,818)

(1,013)

Cash, cash equivalents, and restricted cash


Beginning of period

439,055

212,658

End of period

$

259,237

$

211,645

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)


Three Months Ended

Jun. 30,
2019

Mar. 31,
2019

Dec. 31,
2018

Sep. 30,
2018

Jun. 30,
2018

Mar. 31,
2018

Dec. 31,
2017

Sep. 30,
2017

Jun. 30,
2017

Monthly average visitors (in thousands)

36,557

31,107

25,212

29,236

28,777

25,820

21,377

24,518

24,400

Real estate services transactions
















Brokerage

15,580

8,435

9,822

12,876

12,971

7,285

8,598

10,527

10,221

Partner

3,357

2,125

2,749

3,333

3,289

2,237

2,739

3,101

2,874

Total

18,937

10,560

12,571

16,209

16,260

9,522

11,337

13,628

13,095

Real estate services revenue per transaction
















Brokerage

$

9,332

$

9,640

$

9,569

$

9,227

$

9,510

$

9,628

$

9,659

$

9,289

$

9,301

Partner

2,218

2,153

2,232

2,237

2,281

2,137

2,056

1,960

1,945

Aggregate

8,071

8,134

7,964

7,790

8,048

7,869

7,822

7,621

7,687

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

$

8,986

$

4,800

$

5,825

$

7,653

$

7,910

$

4,424

$

5,350

$

6,341

$

6,119

U.S. market share by value

0.94

%

0.83

%

0.81

%

0.85

%

0.83

%

0.73

%

0.71

%

0.71

%

0.64

%

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

64

%

64

%

66

%

66

%

68

%

66

%

69

%

69

%

69

%

Average number of lead agents

1,603

1,503

1,419

1,397

1,415

1,327

1,118

1,028

1,010

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)


Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Revenue by segment






Brokerage revenue

$

145,399

$

123,355

$

226,713

$

193,498

Partner revenue

7,447

7,503

12,023

12,285

Total real estate services revenue

152,846

130,858

238,736

205,783

Properties revenue

39,908

8,986

61,281

12,038

Other revenue

5,281

2,798

8,329

4,715

Intercompany eliminations

(255)

—

(424)

—

Total revenue

$

197,780

$

142,642

$

307,922

$

222,536








Cost of revenue by segment






Real estate services cost of revenue

$

103,616

$

85,337

$

184,399

$

153,501

Properties cost of revenue

40,906

9,088

63,898

12,430

Other cost of revenue

5,167

3,004

8,948

5,695

Intercompany eliminations

(255)

—

(424)

—

Total cost of revenue

$

149,434

$

97,429

$

256,821

$

171,626








Gross profit by segment






Real estate services gross profit

$

49,230

$

45,521

54,337

52,282

Properties gross profit

(998)

(102)

(2,617)

(392)

Other gross profit

114

(206)

(619)

(980)

Total gross profit

$

48,346

$

45,213

$

51,101

$

50,910

SOURCE Redfin

Related Links

www.redfin.com

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