Redfin Reports Fourth Quarter and Full Year 2020 Financial Results
SEATTLE, Feb. 24, 2021 /PRNewswire/ -- 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 2020Revenue 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 2020Revenue 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.
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 OutlookThe following forward-looking statements reflect Redfin's expectations as of February 24, 2021, and are subject to substantial uncertainty.
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 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. 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 RedfinRedfin 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.
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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, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenue | |||||||||||||||
Service | $ | 204,452 | $ | 134,128 | $ | 674,345 | $ | 539,288 | |||||||
Product | 40,065 | 99,063 | 211,748 | 240,508 | |||||||||||
Total revenue | 244,517 | 233,191 | 886,093 | 779,796 | |||||||||||
Cost of revenue(1) | |||||||||||||||
Service | 122,642 | 93,183 | 437,484 | 390,504 | |||||||||||
Product | 41,755 | 100,382 | 216,499 | 245,189 | |||||||||||
Total cost of revenue | 164,397 | 193,565 | 653,983 | 635,693 | |||||||||||
Gross profit | 80,120 | 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 expenses | 54,481 | 46,436 | 231,318 | 223,349 | |||||||||||
Income (loss) from operations | 25,639 | (6,810) | 792 | (79,246) | |||||||||||
Interest income | 215 | 1,341 | 2,074 | 7,146 | |||||||||||
Interest expense | (11,864) | (2,365) | (19,495) | (8,928) | |||||||||||
Other income (expense), net | 45 | 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 toparticipating securities | (242) | — | — | — | |||||||||||
Net income (loss) attributable to commonstock—basic and diluted | $ | 12,153 | $ | (7,783) | $ | (22,981) | $ | (80,805) | |||||||
Net income (loss) per share attributable tocommon stock—basic | $ | 0.12 | $ | (0.08) | $ | (0.23) | $ | (0.88) | |||||||
Weighted average shares of common stock—basic | 102,176,459 | 92,486,944 | 98,574,529 | 91,583,533 | |||||||||||
Net income (loss) per share attributable tocommon stock—diluted | 0.11 | (0.08) | (0.23) | (0.88) | |||||||||||
Weighted average shares of common stock—diluted | 109,461,342 | 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 adjustments | 13 | 5 | (3) | 33 | |||||||||||
Unrealized gain (loss) on available-for-salesecurities | (110) | 11 | 172 | 9 | |||||||||||
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, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cost of revenue | $ | 2,863 | $ | 1,689 | $ | 8,844 | $ | 6,087 | |||||||
Technology and development | 4,828 | 3,701 | 16,564 | 12,362 | |||||||||||
Marketing | 439 | 393 | 1,569 | 1,418 | |||||||||||
General and administrative | 3,079 | 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. |
Redfin Corporation and Subsidiaries | |||||||
Consolidated Balance Sheets | |||||||
(in thousands, except share and per share amounts, unaudited) | |||||||
December 31, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 925,276 | $ | 234,679 | |||
Restricted cash | 20,544 | 12,769 | |||||
Short-term investments | 131,561 | 70,029 | |||||
Accounts receivable, net of allowances for credit losses of $160 and $165 | 54,719 | 19,223 | |||||
Inventory | 49,158 | 74,590 | |||||
Loans held for sale | 42,539 | 21,985 | |||||
Prepaid expenses | 12,131 | 14,822 | |||||
Other current assets | 4,898 | 3,496 | |||||
Total current assets | 1,240,826 | 451,593 | |||||
Property and equipment, net | 43,988 | 39,577 | |||||
Right-of-use assets, net | 44,149 | 52,004 | |||||
Long-term investments | 11,922 | 30,978 | |||||
Goodwill and intangibles, net | 11,016 | 11,504 | |||||
Other assets, noncurrent | 8,619 | 10,557 | |||||
Total assets | $ | 1,360,520 | $ | 596,213 | |||
Liabilities, mezzanine equity and stockholders' equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 5,644 | $ | 2,122 | |||
Accrued liabilities | 69,460 | 38,022 | |||||
Other payables | 13,184 | 7,884 | |||||
Warehouse credit facilities | 39,029 | 21,302 | |||||
Secured revolving credit facility | 23,949 | 4,444 | |||||
Convertible senior notes, net | 22,482 | — | |||||
Lease liabilities | 11,973 | 11,408 | |||||
Total current liabilities | 185,721 | 85,182 | |||||
Lease liabilities and deposits, noncurrent | 49,339 | 59,869 | |||||
Convertible senior notes, net, noncurrent | 488,268 | 119,716 | |||||
Payroll tax liabilities, noncurrent | 6,812 | — | |||||
Total liabilities | 730,140 | 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, respectively | 39,823 | — | |||||
Stockholders' equity | |||||||
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 103,000,594 and93,001,597 shares issued and outstanding, respectively | 103 | 93 | |||||
Additional paid-in capital | 860,556 | 583,097 | |||||
Accumulated other comprehensive income | 211 | 42 | |||||
Accumulated deficit | (270,313) | (251,786) | |||||
Total stockholders' equity | 590,557 | 331,446 | |||||
Total liabilities, mezzanine equity and stockholders' equity | $ | 1,360,520 | $ | 596,213 | |||
Redfin Corporation and Subsidiaries | |||||||
Consolidated Statements of Cash Flows | |||||||
(in thousands, unaudited) | |||||||
Year Ended December 31, | |||||||
2020 | 2019 | ||||||
Operating Activities | |||||||
Net loss | $ | (18,527) | $ | (80,805) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 14,564 | 9,230 | |||||
Stock-based compensation | 36,973 | 27,814 | |||||
Amortization of debt discount and issuance costs | 12,038 | 6,385 | |||||
Non-cash lease expense | 9,204 | 6,940 | |||||
Impairment costs | 2,063 | — | |||||
Loss on repurchases and conversions of convertible senior notes | 4,634 | — | |||||
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) | |||||
Inventory | 25,432 | (51,896) | |||||
Prepaid expenses and other assets | 2,333 | (3,293) | |||||
Accounts payable | 2,086 | (394) | |||||
Accrued liabilities, other payables, and payroll tax liabilities, noncurrent | 39,092 | 7,422 | |||||
Lease liabilities | (11,312) | (7,209) | |||||
Deferred rent | — | 1 | |||||
Origination of loans held for sale | (677,310) | (395,354) | |||||
Proceeds from sale of loans originated as held for sale | 657,763 | 378,566 | |||||
Net cash provided by (used in) operating activities | 61,267 | (107,610) | |||||
Investing activities | |||||||
Purchases of property and equipment | (14,686) | (15,533) | |||||
Purchases of investments | (198,172) | (136,265) | |||||
Sales of investments | 7,887 | 11,486 | |||||
Maturities of investments | 147,852 | 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 costs | 39,801 | — | |||||
Proceeds from the issuance of common stock, net of issuance costs | 69,701 | — | |||||
Proceeds from the issuance of common stock pursuant to employee equity plans | 21,072 | 16,107 | |||||
Tax payments related to net share settlements on restricted stock units | (16,852) | (5,126) | |||||
Borrowings from warehouse credit facilities | 662,278 | 388,586 | |||||
Repayments to warehouse credit facilities | (644,551) | (372,017) | |||||
Borrowings from secured revolving credit facility | 89,619 | 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 costs | 647,486 | — | |||||
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 escrow | 4,074 | 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 cash | 698,372 | (191,607) | |||||
Cash, cash equivalents, and restricted cash: | |||||||
Beginning of period | 247,448 | 439,055 | |||||
End of period | $ | 945,820 | $ | 247,448 | |||
Redfin Corporation and Subsidiaries | |||||||||||||||||||||||||||||||||||
Supplemental Financial Information and Business Metrics | |||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||
Dec. 312020 | Sep. 30 2020 | Jun. 30,2020 | Mar. 31, 2020 | Dec. 31,2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 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 | |||||||||||||||||||||||||||||||||||
Brokerage | 16,951 | 18,980 | 13,828 | 10,751 | 13,122 | 16,098 | 15,580 | 8,435 | 9,822 | ||||||||||||||||||||||||||
Partner | 4,940 | 5,180 | 2,691 | 2,479 | 2,958 | 3,499 | 3,357 | 2,125 | 2,749 | ||||||||||||||||||||||||||
Total | 21,891 | 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 | |||||||||||||||||
Partner | 3,123 | 2,988 | 2,417 | 2,535 | 2,369 | 2,295 | 2,218 | 2,153 | 2,232 | ||||||||||||||||||||||||||
Aggregate | 9,030 | 8,686 | 8,175 | 8,211 | 8,127 | 7,865 | 8,071 | 8,134 | 7,964 | ||||||||||||||||||||||||||
Aggregate home value of real estateservices 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 apercentage of real estate services revenue | 63 | % | 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 transactions | 83 | 37 | 162 | 171 | 212 | 168 | 80 | 43 | 47 | ||||||||||||||||||||||||||
Properties revenue per transaction | 474,690 | 513,648 | 445,578 | 462,563 | 467,276 | 477,167 | 498,847 | 497,044 | 459,663 | ||||||||||||||||||||||||||
Redfin Corporation and Subsidiaries | |||||||||||||||
Supplemental Financial Information | |||||||||||||||
(unaudited, in thousands) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Real estate services revenue | |||||||||||||||
Brokerage revenue | $ | 182,244 | $ | 123,671 | $ | 607,513 | 496,480 | ||||||||
Partner revenue | 15,426 | 7,008 | 43,695 | 27,060 | |||||||||||
Total real estate services revenue | 197,670 | 130,679 | 651,208 | 523,540 | |||||||||||
Properties revenue | 39,399 | 99,063 | 209,686 | 240,507 | |||||||||||
Other revenue | 8,213 | 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 | |||||||
Properties | 41,275 | 100,382 | 214,382 | 245,189 | |||||||||||
Other | 7,052 | 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) | |||||||||||
Other | 1,161 | (1,031) | 2,738 | (1,605) | |||||||||||
Total gross profit | $ | 80,120 | $ | 39,626 | $ | 232,110 | $ | 144,103 | |||||||
Gross margin (percentage of revenue) | |||||||||||||||
Real estate services | 40.9 | % | 32.1 | % | 35.9 | % | 28.7 | % | |||||||
Properties | (4.8) | (1.3) | (2.2) | (1.9) | |||||||||||
Other | 14.1 | (24.9) | 9.7 | (9.1) | |||||||||||
Total gross margin | 32.8 | 17.0 | 26.2 | 18.5 | |||||||||||
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SOURCE Redfin