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Redfin First-Quarter 2020 Revenue up 73% Year-over-Year to $191 Million

May 7, 2020 4:01 PM

SEATTLE, May 7, 2020 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the first quarter ended March 31, 2020. 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 73% year-over-year to $191 million during the first quarter. Gross profit was $13 million, an increase of 368% from $3 million in the first quarter of 2019. Real estate services gross profit was $15 million, an increase of 195% from $5 million in the first quarter of 2019. Real estate services gross margin was 14%, compared to 6% in the first quarter of 2019. Operating expenses were $70 million, flat from $70 million in the first quarter of 2019. Operating expenses were 37% of revenue, down from 64% in the first quarter of 2019.

Net loss was $60 million, compared to net loss of $67 million in the first quarter of 2019. Stock-based compensation was $7.2 million, up from $6.4 million in the first quarter of 2019. Depreciation and amortization was $3.3 million, up from $1.6 million in the first quarter of 2019. Interest income was $1.1 million and interest expense was $2.4 million, compared to $2.3 million and $2.1 million, respectively, in the first quarter of 2019.

Net loss per share, basic and diluted, was $0.64, compared to net loss per share, basic and diluted, of $0.74 in the first quarter of 2019.

"Real estate commerce has probably virtualized itself more in the past two months than it had in the prior 20 years," said Redfin CEO Glenn Kelman. "This makes Redfin's technology advantage over other brokers more important than ever. But what matters most isn't what we built prior to this pandemic; it's how we've reacted since. We were the first major broker to encourage homebuyers to tour homes via video-chat, on March 3; the first to warn the public of a possible housing-market downturn, on March 4; the first to cancel all open houses to protect public health, on March 16; and the first to offer homebuyers self-service access to the listings being sold by our customers, on April 23. And there are still so many firsts ahead of us. The reason we're working so hard is to bring back all the colleagues and friends we lost in our April furlough."

First Quarter Highlights

  • Reached market share of 0.93% of U.S. existing home sales by value in the first quarter of 2020, an increase of 0.10 percentage points from the first quarter of 2019.(1)
  • Saved homebuyers and sellers over $30 million in the first 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 typically charged by traditional agents.
  • Launched Redfin Premier, a luxury service offering enhanced local and international marketing, as well as high-end photography and branding for million-dollar homes. The program was introduced in Austin, Boston, Chicago, Denver, Hawaii, Maryland, Orange County, Portland, Sacramento, San Diego and Northern Virginia and will be expanded to other markets over time.
  • Expanded the brokerage's national footprint by launching agent service in Flagstaff, AZ.

COVID-19 ActionsRedfin took swift action to respond to COVID-19 and prepare the business to weather the associated economic decline, while strengthening its long-term competitive advantage as the leading technology-powered residential real estate company:

  • As soon as cases of COVID-19 were being reported in the Seattle area, the company instituted new policies to safeguard the health of Redfin customers and employees. Starting March 4, Redfin directed all employees in its Seattle office to work from home and asked employees across all of its other offices to follow suit beginning March 5.
  • Starting on March 4, Redfin began publishing weekly reports on the impact of COVID-19 on the housing market, real estate listing activity, sales and homebuyer demand, providing transparent information and the latest data to its agents and customers.
  • Established a company-wide COVID-19 response team to monitor all state and local government orders and provide real-time guidance to employees.
  • Pivoted its strategic priorities and business operations, including temporarily pausing making offers for homes through RedfinNow and shifting engineering focus to building software for the virtual brokerage.
  • Raised $110 million through the sale of capital stock to Durable Capital Partners LP.
  • Rapidly expanded its virtual brokerage capabilities and software in response to health and safety concerns and stay at home orders. Specifically:
    • Updated its website and mobile application to highlight virtual services and allow customers to request a live video chat tour with a Redfin agent with one click. The software also lets the customer select their preferred video chat application and provides market-specific messages and touring options based on local ordinances. For the week ended May 2, 27% of Redfin tour requests were for video tours.
    • Increased the prominence and visibility of 3D Virtual Walkthroughs on all Redfin listings.
    • Encouraged customers to take advantage of the digital closing capabilities of Redfin Mortgage and Title Forward in markets where the law allows them.
  • Cut executive compensation and bonuses, eliminated bonuses for headquarters employees and temporarily cut headquarters salaries between 10% and 15%.
  • In April, reduced its number of employees by approximately 400 people, which represented approximately 10% of employees, and placed approximately an additional 1,000 employees on furlough.
  • In response to strengthening homebuying demand in late April, began to unwind some of the actions taken in March and early April. RedfinNow will resume making offers on homes in select markets in May. The company also plans to resume television advertising with new ads in select markets, and in early May, asked approximately 135 employees to return from furlough to serve renewed homebuying demand.

(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 OutlookThe following forward-looking statements reflect Redfin's expectations as of May 7, 2020, and are subject to substantial uncertainty.

For the second quarter of 2020 we expect:

  • Total revenue between $179 million and $189 million, representing a year-over-year decrease between 9% and 4% compared to the second quarter of 2019. Properties segment revenue between $61 million and $65 million is included in the guidance provided.
  • Net loss between $26 million and $21 million, compared to net loss of $13 million in the second quarter of 2019. This guidance includes approximately $7.0 million of expected stock-based compensation and $3.5 million of expected depreciation and amortization. The guidance also contains approximately $4.4 million of severance costs and $3.7 million of furlough costs, both including benefits.

Conference CallRedfin 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 StatementsThis press release contains forward-looking statements within the meaning of federal securities laws, including our future operating results, as described under Business Outlook, and expansion of our Redfin Premiere service offering. 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 March 31, 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 RedfinRedfin (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 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/coronavirus-housing-market-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 March 31,

2020

2019

Revenue

Service

$

111,478

$

88,768

Product

79,517

21,373

Total revenue

190,995

110,141

Cost of revenue(1)

Service

98,368

84,395

Product

79,748

22,993

Total cost of revenue

178,116

107,388

Gross profit

12,879

2,753

Operating expenses

Technology and development(1)

20,274

15,556

Marketing(1)

25,708

33,201

General and administrative(1)

24,327

21,448

Total operating expenses

70,309

70,205

Loss from operations

(57,430)

(67,452)

Interest income

1,103

2,316

Interest expense

(2,444)

(2,136)

Other income (expense), net

(1,346)

92

Net loss

$

(60,117)

$

(67,180)

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

$

(0.64)

$

(0.74)

Weighted average shares of common stock—basic and diluted

93,442,706

90,610,416

Other comprehensive income

Net loss

$

(60,117)

$

(67,180)

Foreign currency translation adjustments

(25)

1

Unrealized gain on available-for-sale securities

559

Total comprehensive loss

$

(59,583)

$

(67,179)

(1) Includes stock-based compensation as follows:

Three Months Ended March 31,

2020

2019

Cost of revenue

$

1,638

$

1,465

Technology and development

3,648

2,656

Marketing

375

286

General and administrative

1,550

1,999

Total

$

7,211

$

6,406

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

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

March 31, 2020

December 31, 2019

Assets

Current assets

Cash and cash equivalents

$

213,940

$

234,679

Restricted cash

16,772

12,769

Short-term investments

75,049

70,029

Accounts receivable, net

21,821

19,223

Inventory

70,649

74,590

Loans held for sale

44,321

21,985

Prepaid expenses

9,555

14,822

Other current assets

5,243

3,496

Total current assets

457,350

451,593

Property and equipment, net

40,496

39,577

Right-of-use assets, net

49,972

52,004

Long-term investments

26,711

30,978

Goodwill and intangibles, net

11,382

11,504

Other non-current assets

8,923

10,557

Total assets

$

594,834

$

596,213

Liabilities and stockholders' equity

Current liabilities

Accounts payable

$

2,909

$

2,122

Accrued liabilities

58,456

38,022

Other payables

11,717

7,884

Warehouse credit facilities

42,586

21,302

Secured revolving credit facility

8,901

4,444

Current lease liabilities

11,533

11,408

Total current liabilities

136,102

85,182

Non-current lease liabilities

57,254

59,869

Convertible senior notes, net

121,292

119,716

Total liabilities

314,648

264,767

Commitments and contingencies

Stockholders' equity

Common stock—par value $0.001 per share; 500,000,000 shares authorized; 93,957,774 and 93,001,597 shares issued and outstanding, respectively

94

93

Additional paid-in capital

591,421

583,097

Accumulated other comprehensive income

575

42

Accumulated deficit

(311,904)

(251,786)

Total stockholders' equity

280,186

331,446

Total liabilities and stockholders' equity

$

594,834

$

596,213

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)

Three Months Ended March 31,

2020

2019

Operating Activities

Net loss

$

(60,117)

$

(67,180)

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

Depreciation and amortization

3,307

1,637

Stock-based compensation

7,211

6,406

Amortization of debt discount and issuance costs

1,730

1,507

Non-cash lease expense

2,254

1,216

Impairment costs

1,420

Other

(989)

Change in assets and liabilities:

Accounts receivable, net

(2,598)

(890)

Inventory

3,941

(15,612)

Prepaid expenses and other assets

3,409

1,441

Accounts payable

514

14,848

Accrued liabilities and other payables

20,626

21,764

Lease liabilities

(2,693)

(1,459)

Origination of loans held for sale

(132,697)

(49,850)

Proceeds from sale of loans originated as held for sale

111,233

39,015

Net cash used in operating activities

(43,449)

(47,157)

Investing activities

Purchases of property and equipment

(3,406)

(3,151)

Purchases of investments

(33,267)

Sales of investments

31,608

Maturities of investments

1,597

Net cash used in investing activities

(3,468)

(3,151)

Financing activities

Proceeds from the issuance of shares resulting from employee equity plans

4,103

3,732

Tax payments related to net share settlements on restricted stock units

(3,307)

(818)

Borrowings from warehouse credit facilities

131,310

48,557

Repayments to warehouse credit facilities

(110,025)

(38,097)

Borrowings from secured revolving credit facility

11,854

Repayments to secured revolving credit facility

(7,398)

Other payables—deposits held in escrow

3,684

3,968

Principal payments for finance lease obligations

(15)

Net cash provided by financing activities

30,206

17,342

Effect of exchange rate changes on cash and cash equivalents

(25)

Net change in cash, cash equivalents, and restricted cash

(16,736)

(32,966)

Cash, cash equivalents, and restricted cash:

Beginning of period

247,448

439,055

End of period

$

230,712

$

406,089

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)

Three Months Ended

Mar. 31,2020

Dec. 31,2019

Sep. 30,2019

Jun. 30,2019

Mar. 31,2019

Dec. 31,2018

Sep. 30,2018

Jun. 30,2018

Mar. 31,2018

Monthly average visitors (in thousands)

35,519

30,595

35,633

36,557

31,107

25,212

29,236

28,777

25,820

Real estate services transactions

Brokerage

10,751

13,122

16,098

15,580

8,435

9,822

12,876

12,971

7,285

Partner

2,479

2,958

3,499

3,357

2,125

2,749

3,333

3,289

2,237

Total

13,230

16,080

19,597

18,937

10,560

12,571

16,209

16,260

9,522

Real estate services revenue per transaction

Brokerage

$

9,520

$

9,425

$

9,075

$

9,332

$

9,640

$

9,569

$

9,227

$

9,510

$

9,628

Partner

2,535

2,369

2,295

2,218

2,153

2,232

2,237

2,281

2,137

Aggregate

8,211

8,127

7,865

8,071

8,134

7,964

7,790

8,048

7,869

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

$

6,098

$

7,588

$

9,157

$

8,986

$

4,800

$

5,825

$

7,653

$

7,910

$

4,424

U.S. market share by value

0.93

%

0.94

%

0.96

%

0.94

%

0.83

%

0.81

%

0.85

%

0.83

%

0.73

%

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

61

%

62

%

63

%

64

%

64

%

66

%

66

%

68

%

66

%

Average number of lead agents

1,826

1,526

1,579

1,603

1,503

1,419

1,397

1,415

1,327

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)

Three Months Ended March 31,

2020

2019

Real estate services revenue

Brokerage revenue

$

102,351

$

81,314

Partner revenue

6,285

4,576

Total real estate services revenue

108,636

85,890

Properties revenue

79,098

21,373

Other revenue

4,250

3,047

Intercompany eliminations

(989)

(169)

Total revenue

$

190,995

$

110,141

Cost of revenue

Real estate services

$

93,562

$

80,784

Properties

79,299

22,993

Other

6,244

3,780

Intercompany eliminations

(989)

(169)

Total cost of revenue

$

178,116

$

107,388

Gross profit by segment

Real estate services

$

15,074

$

5,106

Properties

(201)

(1,620)

Other

(1,994)

(733)

Total gross profit

$

12,879

$

2,753

Gross margin (percentage of revenue)

Real estate services

13.9

%

5.9

%

Properties

(0.3)

(7.6)

Other

(46.9)

(24.1)

Total gross margin

6.7

2.5

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SOURCE Redfin

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