Redfin Second-Quarter 2020 Revenue up 8% Year-over-Year to $214 million

News provided by

Redfin

Jul 30, 2020, 16:01 ET

SEATTLE, July 30, 2020 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the second quarter ended June 30, 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.

Revenue increased 8% year-over-year to $214 million during the second quarter. Gross profit was $46 million, a decrease of 5% from $48 million in the second quarter of 2019. Real estate services gross profit was $46 million, a decrease of 6% from $49 million in the second quarter of 2019. Real estate services gross margin was 34%, compared to 32% in the second quarter of 2019. Operating expenses were $50 million, a decrease of 17% from $61 million in the second quarter of 2019. Operating expenses were 24% of revenue, down from 31% in the second quarter of 2019.

Net loss was $6.6 million, compared to net loss of $12.6 million in the second quarter of 2019. Dividend on our convertible preferred stock issued in April 2020 was $1.3 million in the second quarter. Net loss attributable to common stock was $7.9 million. Stock-based compensation was $7.2 million, up from $5.9 million in the second quarter of 2019. Depreciation and amortization was $3.6 million, up from $2.2 million in the second quarter of 2019. Interest income was $0.4 million and interest expense was $2.7 million, compared to $1.9 million and $2.2 million, respectively, in the second quarter of 2019. Direct and incremental costs related to COVID-19 were $6.2 million and are included in the general and administrative expenses.

Net loss per share attributable to common stock, basic and diluted, was $0.08, compared to net loss per share, basic and diluted, of $0.14 in the second quarter of 2019.

"Redfin blew away our second-quarter financial targets," said Redfin CEO Glenn Kelman. "Within the span of a single quarter, year-over-year changes in demand went from -41% to +40%, a level of volatility that I have never seen in nearly 30 years of business. Over the past two months, Redfin's online visits and customer inquiries have been growing at a faster rate than at any point in the last three years. We're inside a tornado, hiring agents, lenders and closing specialists at breakneck speed to keep up with demand, but also mindful that the bottom of the economy could fall out a second time."

Second Quarter Highlights

  • Reached market share of 0.93% of U.S. existing home sales by value in the second quarter of 2020, a decrease of 0.01 percentage points from the second quarter of 2019 and consistent with the first quarter of 2020.(1)
  • Saved homebuyers and sellers over $39 million in the second quarter of 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.
  • Continued to navigate through COVID-19 and adapt to rapid shifts in the housing market and economy by creating new technologies and policies to keep customers and employees safe. Strengthened the company's long-term competitive advantage as the virtual brokerage leader with new tools and features, including:
    • Making it easier for customers to request an in person or virtual tour or listing appointment and giving agents the power to specify their preference for in-person or video appointments within Redfin's proprietary scheduling software;
    • Updating the web and mobile search experience to highlight homes with virtual walkthroughs and recorded video tours;
    • Launching a new Agent Dashboard, allowing agents from any brokerage to upload a video tour or virtual walkthrough to Redfin;
    • Launching a virtual comparative market analysis presentation for Redfin agents to present to a seller during consultation;
    • Creating a Shortlist feature, a new way for homebuyers to categorize and highlight the top homes among their Redfin Favorites and communicate preferences with their agent;
    • Developing new tools for homeowners to easily request a home valuation analysis and more easily compare a RedfinNow cash offer to listing with an agent.
  • Welcomed back most Redfin employees who were furloughed in early April and resumed hiring in a number of markets to meet resurgence of customer demand.
  • Developed, produced, and launched new television ads focusing on Redfin's virtual brokerage capabilities.
  • Resumed RedfinNow offers in Austin, Boulder, Dallas, Denver, Houston, Inland Empire, Los Angeles, Orange County, San Antonio and San Diego in response to a strengthening housing market.
  • Expanded self-service technology by launching Direct Access for our home selling customers in 13 markets. This feature allows buyers to self-tour vacant homes listed by Redfin agents, a particularly valuable option for buyers who wish to limit in-person interactions. In the second quarter, we enabled over 300 self-tours of seller-owned homes and more than 750 self-tours of RedfinNow-owned homes.
  • Recommitted to ongoing efforts to make Redfin a more diverse, inclusive, and equitable workplace and to fight racism and discrimination in the real estate industry, including:
    • Committing to set diversity-related goals for executives' 2021 performance bonuses;
    • Reporting on diversity metrics on our quarterly earnings calls;
    • Extending inclusive management training to all managers in the third quarter; and
    • Announcing a commitment to launch an executive- and employee-funded philanthropic effort to increase housing access for low-income or under-served communities.
  • Earned a profit in the Redfin Mortgage business in May and June. Redfin Mortgage expanded to Arizona, Delaware, and New Hampshire and closed its first refinance loan. While the refinancing product is in its infancy, it introduces Redfin Mortgage to a vast new customer base of existing homeowners.
  • Expanded the brokerage into Anchorage, Alaska. Redfin is now serving customers in 43 states and the District of Columbia and its home search site covers 79% of the U.S. population.

(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 July 30, 2020, and are subject to substantial uncertainty.

For the third quarter of 2020 we expect:

  • Total revenue between $214 million and $225 million, representing a year-over-year decrease between 10% and 6% compared to the third quarter of 2019. Properties segment revenue between $10 million and $14 million is included in the guidance provided.
  • Net income between $18 million and $23 million, compared to net income of $6.8 million in the third quarter of 2019. This guidance includes approximately $8.8 million of expected stock-based compensation and $3.8 million of expected depreciation and amortization. Net income attributable to common stock will include the value of dividend on our convertible preferred stock, which we expect to pay in shares of our common stock.

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, 2019, as supplemented by our quarterly report for the quarter ended June 30, 2020, 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, 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 search site, offering 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. Since our launch in 2006, we have saved our customers over $800 million and we've helped them buy or sell more than 235,000 homes worth more than $115 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 June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Revenue






Service

$

141,135

$

157,872

$

252,613

$

246,641

Product

72,530

39,908

152,047

61,281

Total revenue

213,665

197,780

404,660

307,922

Cost of revenue(1)






Service

93,891

108,528

192,259

192,923

Product

73,735

40,906

153,483

63,898

Total cost of revenue

167,626

149,434

345,742

256,821

Gross profit

46,039

48,346

58,918

51,101

Operating expenses






Technology and development(1)

17,961

16,063

38,235

31,620

Marketing(1)

9,482

27,050

35,190

60,250

General and administrative(1)(2)

23,022

17,654

47,349

39,102

Total operating expenses

50,465

60,767

120,774

130,972

Loss from operations

(4,426)

(12,421)

(61,856)

(79,871)

Interest income

437

1,913

1,540

4,229

Interest expense

(2,665)

(2,153)

(5,109)

(4,290)

Other income (expense), net

43

36

(1,303)

128

Net loss

$

(6,611)

$

(12,625)

$

(66,728)

$

(79,804)

Dividend on convertible preferred stock

(1,284)

—

(1,284)

—

Net loss attributable to common stock—basic and diluted

(7,895)

(12,625)

(68,012)

(79,804)

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

$

(0.08)

$

(0.14)

$

(0.71)

$

(0.88)

Weighted average shares of common stock—basic and diluted

98,785,318

91,216,886

96,114,012

90,915,334

.........................................................








Other comprehensive income (loss)






Net loss

$

(6,611)

$

(12,625)

$

(66,728)

$

(79,804)

Foreign currency translation adjustments

3

37

(22)

38

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

(137)

6

421

6

Total comprehensive loss

$

(6,745)

$

(12,582)

$

(66,329)

$

(79,760)









(1) Includes stock-based compensation as follows:


Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Cost of revenue

$

1,769

$

1,328

$

3,407

$

2,793

Technology and development

3,124

2,685

6,772

5,341

Marketing

352

349

727

635

General and administrative

1,960

1,514

3,510

3,513

Total

$

7,205

$

5,876

$

14,416

$

12,282

(2) Includes direct and incremental costs related to COVID-19 of $7,525, which are partially offset by $1,292 in employee retention credits allowed under the CARES Act, for the three and six months ended June 30, 2020

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

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


June 30, 2020

December 31, 2019

Assets


Current assets


Cash and cash equivalents

$

325,352

$

234,679

Restricted cash

35,102

12,769

Short-term investments

128,056

70,029

Accounts receivable, net

34,182

19,223

Inventory

9,437

74,590

Loans held for sale

42,439

21,985

Prepaid expenses

7,624

14,822

Other current assets

4,555

3,496

Total current assets

586,747

451,593

Property and equipment, net

41,414

39,577

Right-of-use assets, net

47,697

52,004

Long-term investments

18,792

30,978

Goodwill and intangibles, net

11,260

11,504

Other non-current assets

9,430

10,557

Total assets

$

715,340

$

596,213

Liabilities, mezzanine equity and stockholders' equity


Current liabilities


Accounts payable

$

3,389

$

2,122

Accrued liabilities

48,967

38,022

Other payables

27,614

7,884

Warehouse credit facilities

40,566

21,302

Secured revolving credit facility

7,215

4,444

Current lease liabilities

11,614

11,408

Total current liabilities

139,365

85,182

Non-current lease liabilities

54,362

59,869

Convertible senior notes, net

122,884

119,716

Non-current payroll tax liabilities

3,668

—

Total liabilities

320,279

264,767

Commitments and contingencies


Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 and no shares issued and outstanding, respectively

39,801

—

Stockholders' equity


Common stock—par value $0.001 per share; 500,000,000 shares authorized; 99,394,432 and 93,001,597 shares issued and outstanding, respectively

99

93

Additional paid-in capital

673,234

583,097

Accumulated other comprehensive income

441

42

Accumulated deficit

(318,514)

(251,786)

Total stockholders' equity

355,260

331,446

Total liabilities, mezzanine equity and stockholders' equity

$

715,340

$

596,213

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)


Six Months Ended June 30,

2020

2019

Operating Activities


Net loss

$

(66,728)

$

(79,804)

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


Depreciation and amortization

6,865

3,809

Stock-based compensation

14,416

12,282

Amortization of debt discount and issuance costs

3,477

3,031

Non-cash lease expense

4,522

2,943

Impairment costs

1,420

—

Other

(1,190)

(100)

Change in assets and liabilities:


Accounts receivable, net

(14,959)

(23,323)

Inventory

65,153

(62,960)

Prepaid expenses and other assets

5,446

1,230

Accounts payable

1,040

1,350

Accrued liabilities, other payables, and non-current payroll tax liabilities

14,244

26,489

Lease liabilities

(5,481)

(3,301)

Origination of loans held for sale

(294,076)

(153,335)

Proceeds from sale of loans originated as held for sale

274,595

128,080

Net cash provided by (used in) operating activities

8,744

(143,609)

Investing activities


Purchases of property and equipment

(6,072)

(9,504)

Purchases of investments

(88,724)

(70,312)

Sales of investments

3,183

100

Maturities of investments

40,351

—

Net cash used in investing activities

(51,262)

(79,716)

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 shares resulting from employee equity plans

11,052

8,965

Tax payments related to net share settlements on restricted stock units

(6,065)

(1,792)

Borrowings from warehouse credit facilities

290,891

149,900

Repayments to warehouse credit facilities

(271,627)

(125,206)

Borrowings from secured revolving credit facility

39,587

—

Repayments to secured revolving credit facility

(36,816)

—

Other payables—deposits held in escrow

19,056

11,602

Principal payments for finance lease obligations

(30)

—

Cash paid for debt issuance costs

(4)

—

Net cash provided by financing activities

155,546

43,469

Effect of exchange rate changes on cash and cash equivalents

(22)

38

Net change in cash, cash equivalents, and restricted cash

113,006

(179,818)

Cash, cash equivalents, and restricted cash:


Beginning of period

247,448

439,055

End of period

$

360,454

$

259,237

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)


Three Months Ended

Jun. 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Sep. 30, 2019

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Monthly average visitors (in thousands)

42,537

35,519

30,595

35,633

36,557

31,107

25,212

29,236

28,777

Real estate services transactions
















Brokerage

13,828

10,751

13,122

16,098

15,580

8,435

9,822

12,876

12,971

Partner

2,691

2,479

2,958

3,499

3,357

2,125

2,749

3,333

3,289

Total

16,519

13,230

16,080

19,597

18,937

10,560

12,571

16,209

16,260

Real estate services revenue per transaction
















Brokerage

$

9,296

$

9,520

$

9,425

$

9,075

$

9,332

$

9,640

$

9,569

$

9,227

$

9,510

Partner

2,417

2,535

2,369

2,295

2,218

2,153

2,232

2,237

2,281

Aggregate

8,175

8,211

8,127

7,865

8,071

8,134

7,964

7,790

8,048


















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

$

7,576

$

6,098

$

7,588

$

9,157

$

8,986

$

4,800

$

5,825

$

7,653

$

7,910

U.S. market share by value

0.93

%

0.93

%

0.94

%

0.96

%

0.94

%

0.83

%

0.81

%

0.85

%

0.83

%

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

63

%

61

%

62

%

63

%

64

%

64

%

66

%

66

%

68

%

Average number of lead agents

1,399

1,826

1,526

1,579

1,603

1,503

1,419

1,397

1,415

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)


Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Real estate services revenue






Brokerage revenue

$

128,543

$

145,399

$

230,894

$

226,713

Partner revenue

6,506

7,447

12,791

12,023

  Total real estate services revenue

135,049

152,846

243,685

238,736

Properties revenue

72,184

39,908

151,282

61,281

Other revenue

7,246

5,281

11,496

8,329

Intercompany eliminations

(814)

(255)

(1,803)

(424)

Total revenue

$

213,665

$

197,780

$

404,660

$

307,922








Cost of revenue






Real estate services

$

88,799

$

103,616

$

182,361

$

184,399

Properties

73,348

40,906

152,647

63,898

Other

6,293

5,167

12,537

8,948

Intercompany eliminations

(814)

(255)

(1,803)

(424)

Total cost of revenue

$

167,626

$

149,434

$

345,742

$

256,821








Gross profit by segment






Real estate services

$

46,250

$

49,230

$

61,324

$

54,337

Properties

(1,164)

(998)

(1,365)

(2,617)

Other

953

114

(1,041)

(619)

Total gross profit

$

46,039

$

48,346

$

58,918

$

51,101








Gross margin (percentage of revenue)






Real estate services

34.2

%

32.2

%

25.2

%

22.8

%

Properties

(1.6)

(2.5)

(0.9)

(4.3)

Other

13.2

2.2

(9.1)

(7.4)

Total gross margin

21.5

24.4

14.6

16.6

SOURCE Redfin

Related Links

www.redfin.com

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