November 04, 2021

SEATTLE, Nov. 4, 2021 /PRNewswire/ — Redfin Corporation (NASDAQ: RDFN) today announced financial results for the third quarter ended September 30, 2021. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation, and depreciation and amortization.

Revenue increased 128% year-over-year to $540 million during the third quarter. Gross profit was $127 million, an increase of 37% from $93 million in the third quarter of 2020. Real estate services gross profit was $96 million, an increase of 5% from $92 million in the third quarter of 2020. Real estate services gross margin was 37%, compared to 44% in the third quarter of 2020. Operating expenses were $147 million, an increase of 163% from $56 million in the third quarter of 2020. Operating expenses were 27% of revenue, up from 24% in the third quarter of 2020.

Net loss was $18.9 million, compared to net loss of $34.2 million in the third quarter of 2020. The dividend on our convertible preferred stock was $1.7 million in the third quarter. Net loss attributable to common stock was $20.6 million. Stock-based compensation was $13.1 million, up from $11.3 million in the third quarter of 2020. Depreciation and amortization was $14.5 million, up from $3.7 million in the third quarter of 2020. Interest income was $0.2 million and interest expense was $3.7 million, compared to $0.3 million and $2.5 million, respectively, in the third quarter of 2020.

Net loss per share attributable to common stock, diluted, was $0.20, compared to net income per share attributable to common stock, diluted, of $0.30 in the third quarter of 2020.

“Redfin had a fantastic quarter,” said Redfin CEO Glenn Kelman. “Our revenues were at the top of the range we gave investors in our last earnings report, and our net income exceeded that range. Our year-over-year market-share gains continued even as the housing market slowed, and our website again improved its standing against its largest competitors. RedfinNow grew revenues by more than 1,000 percent all while selling homes above our forecasted price. We saved our brokerage customers more than $80 million in fees. Agent retention improved, and we’re now preparing to broaden changes to our service and pricing that we expect to increase 2022 gross profits, customer satisfaction and agent retention.”

Highlights

  • Reached market share of 1.16% of U.S. existing home sales by value in the third quarter of 2021, an increase of 12 basis points from the third quarter of 2020.(1)
  • Saved homebuyers and sellers over $83 million in the third quarter. 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% commission typically charged by traditional agents.
  • Redfin’s mobile application and website reached 49.1 million average monthly visitors in the third quarter, which was roughly flat compared to the third quarter of 2020.
  • Launched brokerage services in Mississippi and new regions in Florida, surpassing 100 markets served.
  • Continued RedfinNow expansion by launching in Chicago, Atlanta, Nashville, Charlotte and Raleigh.
  • Announced the expansion of Direct Access self-touring on October 5th, which lets buyers tour vacant homes listed by Redfin agents and is supported by a partnership with ADT to provide enhanced safety and security measures.
  • Launched a Career Accelerator pilot program in Seattle and the Washington, D.C. metro area to hire and train people from diverse backgrounds to become Redfin agents.
  • Delivered improved software for customers, agents, partners and mortgage teams, including:
    • Climate risk data for every location page on Redfin.com, empowering consumers to make better-informed decisions about buying, selling and renting.
    • More accurate Redfin Estimates for off-market homes that react quickly to dynamic market conditions.
    • Easy to import work history from Equifax’s The Work Number in mortgage pre-approval applications.
    • iOS Home Screen Widgets, which show potential homebuyers relevant listings directly on their iPhone or iPad’s home screen.
    • A new appraisal ordering system for Redfin Mortgage Lender Tools that streamlines data sharing between  mortgage processors and appraisal management companies.
    • Automation software for Redfin Home Services to streamline Concierge bids and scope of work agreements.

(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® (“NAR”). NAR data for the most recent period is preliminary and may subsequently be updated by NAR. 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 November 4, 2021, and are subject to substantial uncertainty.

For the fourth quarter of 2021 we expect:

  • Total revenue between $585 million and $606 million, representing a year-over-year increase between 139% and 148% compared to the fourth quarter of 2020. Included within total revenue are real estate services segment revenue between $225 million and $230 million, properties segment revenue between $319 million and $334 million, and rentals revenue between $38 million and $39 million.
  • Total net loss between $36 million and $31 million, compared to total net income of $14 million in the fourth quarter of 2020. RentPath’s contribution to the net loss is expected to be approximately $15 million. This guidance includes approximately $24 million in total marketing expenses, $16 million of stock-based compensation, $15 million of depreciation and amortization, and $4 million of net interest expense. Net income attributable to common stockholders will include the value of dividends 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, 2020, as supplemented by our quarterly report for the quarter ended September 30, 2021, 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 real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country’s #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we’ve saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.

Redfin may publish information and analysis about the U.S. residential real estate industry on its company blog at www.redfin.com/news/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 Balance Sheets

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

September 30, 2021

December 31, 2020

Assets

Current assets

Cash and cash equivalents

$

562,714

$

925,276

Restricted cash

74,532

20,544

Short-term investments

28,578

131,561

Accounts receivable, net of allowances for credit losses of $933 and $160

91,932

54,719

Inventory

435,144

49,158

Loans held for sale

42,762

42,539

Prepaid expenses

19,155

12,131

Other current assets

8,537

4,898

Total current assets

1,263,354

1,240,826

Property and equipment, net

55,535

43,988

Right-of-use assets, net

55,757

44,149

Long-term investments

53,488

11,922

Goodwill

407,228

9,186

Intangibles, net

194,856

1,830

Other assets, noncurrent

13,129

8,619

Total assets

$

2,043,347

$

1,360,520

Liabilities, mezzanine equity, and stockholders’ equity

Current liabilities

Accounts payable

$

10,075

$

5,644

Accrued liabilities

102,027

69,460

Other payables

16,766

13,184

Warehouse credit facilities

39,825

39,029

Secured revolving credit facility

199,627

23,949

Convertible senior notes, net

23,243

22,482

Lease liabilities

14,793

11,973

Total current liabilities

406,356

185,721

Lease liabilities, noncurrent

57,759

49,339

Convertible senior notes, net, noncurrent

1,212,767

488,268

Payroll tax liabilities, noncurrent

7,841

6,812

Deferred tax liabilities

883

—

Total liabilities

1,685,606

730,140

Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding

39,857

39,823

Stockholders’ equity

Common stock—par value $0.001 per share; 500,000,000 shares authorized; 105,375,935 and 103,000,594 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

105

103

Additional paid-in capital

662,894

860,556

Accumulated other comprehensive income

47

211

Accumulated deficit

(345,162)

(270,313)

Total stockholders’ equity

317,884

590,557

Total liabilities, mezzanine equity, and stockholders’ equity

$

2,043,347

$

1,360,520

Redfin Corporation and Subsidiaries

Consolidated Statements of Comprehensive Loss

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

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Revenue

Service

$

301,657

$

217,280

$

776,120

$

469,893

Product

238,417

19,636

503,588

171,683

Total revenue

540,074

236,916

1,279,708

641,576

Cost of revenue(1)

Service

174,267

122,583

486,880

314,842

Product

238,505

21,261

497,032

174,744

Total cost of revenue

412,772

143,844

983,912

489,586

Gross profit

127,302

93,072

295,796

151,990

Operating expenses

Technology and development(1)

43,658

22,452

112,824

60,687

Marketing(1)

49,143

12,421

116,343

47,611

General and administrative(1)

54,395

21,190

151,352

68,539

Total operating expenses

147,196

56,063

380,519

176,837

Loss from operations

(19,894)

37,009

(84,723)

(24,847)

Interest income

178

319

472

1,859

Interest expense

(3,672)

(2,522)

(7,822)

(7,631)

Income tax benefit

311

—

5,363

—

Other income (expense), net

4,128

(640)

4,099

(1,943)

Net (loss) income

$

(18,949)

$

34,166

$

(82,611)

$

(32,562)

Dividends on convertible preferred stock

(1,662)

(1,530)

(5,875)

(2,814)

Undistributed earnings attributable to participating securities

$

—

$

(653)

$

—

$

—

Net (loss) income attributable to common stock—basic and diluted

$

(20,611)

$

31,983

$

(88,486)

$

(35,376)

Net (loss) income per share attributable to common stock—basic

$

(0.20)

$

0.32

$

(0.85)

$

(0.36)

Weighted-average shares to compute net (loss) income per share attributable to common stock—basic

105,144,872

99,840,144

104,327,614

97,365,122

Net (loss) income per share attributable to common stock—diluted

$

(0.20)

$

0.30

$

(0.85)

$

(0.36)

Weighted-average shares to compute net (loss) income per share attributable to common stock—diluted

105,144,872

107,607,711

104,327,614

97,365,122

Net (loss) income

$

(18,949)

$

34,166

$

(82,611)

$

(32,562)

Other comprehensive income (loss)

Foreign currency translation adjustments

3

6

3

(16)

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

27

(139)

161

282

Comprehensive (loss) income

$

(18,919)

$

34,033

$

(82,447)

$

(32,296)

(1) Includes stock-based compensation as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Cost of revenue

$

3,283

$

2,574

$

10,019

$

5,981

Technology and development

5,455

4,964

16,987

11,736

Marketing

537

403

1,615

1,130

General and administrative

3,835

3,407

10,817

6,917

Total

$

13,110

$

11,348

$

39,438

$

25,764

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)

Nine Months Ended September 30,

2021

2020

Operating Activities

Net loss

$

(82,611)

$

(32,562)

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

Depreciation and amortization

32,303

10,581

Stock-based compensation

39,438

25,764

Amortization of debt discount and issuance costs

3,583

5,254

Non-cash lease expense

8,510

6,821

Impairment costs

—

2,063

Net loss (gain) on IRLCs, forward sales commitments, and loans held for sale

342

(2,303)

Other

(3,847)

(306)

Change in assets and liabilities:

Accounts receivable, net

(29,487)

(21,862)

Inventory

(385,986)

49,597

Prepaid expenses and other assets

(9,532)

7,396

Accounts payable

616

851

Accrued liabilities, other payables, deferred tax liabilities, and payroll tax liabilities, noncurrent

23,011

28,157

Lease liabilities

(9,644)

(8,368)

Origination of loans held for sale

(745,703)

(479,153)

Proceeds from sale of loans originated as held for sale

744,886

459,605

Net cash (used in) provided by operating activities

(414,121)

51,535

Investing activities

Purchases of property and equipment

(20,575)

(10,391)

Purchases of investments

(129,277)

(135,118)

Sales of investments

98,687

6,583

Maturities of investments

96,303

82,772

Cash paid for acquisition

(608,000)

—

Net cash used in investing activities

(562,862)

(56,154)

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

14,194

15,119

Tax payments related to net share settlements on restricted stock units

(21,088)

(10,987)

Borrowings from warehouse credit facilities

710,535

473,283

Repayments to warehouse credit facilities

(709,739)

(454,277)

Borrowings from secured revolving credit facility

431,717

57,378

Repayments to secured revolving credit facility

(256,039)

(46,899)

Proceeds from issuance of convertible senior notes, net of issuance costs

561,529

—

Purchases of capped calls related to convertible senior notes

(62,647)

—

Payments for repurchases and conversions of convertible senior notes

(2,159)

—

Other payables—deposits held in escrow

3,161

2,097

Principal payments under finance lease obligations

(567)

(59)

Cash paid for secured revolving credit facility issuance costs

(485)

(4)

Net cash provided by financing activities

668,412

145,153

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(3)

(16)

Net change in cash, cash equivalents, and restricted cash

(308,574)

140,518

Cash, cash equivalents, and restricted cash:

Beginning of period

945,820

247,448

End of period

637,246

387,966

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)

Three Months Ended

Sep. 30,
2021

Jun. 30,
2021

Mar. 31,
2021

Dec. 31,
2020

Sep. 30,
2020

Jun. 30,
2020

Mar. 31,
2020

Dec. 31,
2019

Sep. 30,
2019

Monthly average visitors (in thousands)

49,147

48,437

46,202

44,135

49,258

42,537

35,519

30,595

35,633

Real estate services transactions

Brokerage

21,929

21,006

14,317

16,951

18,980

13,828

10,751

13,122

16,098

Partner

4,755

4,597

3,944

4,940

5,180

2,691

2,479

2,958

3,499

Total

26,684

25,603

18,261

21,891

24,160

16,519

13,230

16,080

19,597

Real estate services revenue per
transaction

Brokerage

$

11,107

$

11,307

$

10,927

$

10,751

$

10,241

$

9,296

$

9,520

$

9,425

$

9,075

Partner

2,990

3,195

3,084

3,123

2,988

2,417

2,535

2,369

2,295

Aggregate

9,661

9,850

9,233

9,030

8,686

8,175

8,211

8,127

7,865

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

$

14,926

$

14,612

$

9,621

$

11,478

$

12,207

$

7,576

$

6,098

$

7,588

$

9,157

U.S. market share by value

1.16

%

1.18

%

1.16

%

1.04

%

1.04

%

0.94

%

0.92

%

0.95

%

0.96

%

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

61

%

64

%

62

%

63

%

63

%

63

%

61

%

62

%

63

%

Average number of lead agents

2,370

2,456

2,277

1,981

1,820

1,399

1,826

1,526

1,579

RedfinNow homes sold

388

292

171

83

37

162

171

212

168

Revenue per RedfinNow home sold (in
ones)

$

599,010

$

570,930

$

525,173

$

471,551

$

504,583

$

444,690

$

461,916

$

466,939

$

476,770

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Revenue

Real estate services (brokerage)

$

243,575

$

194,375

$

637,532

$

425,269

Real estate services (partner)

14,220

15,478

41,070

28,269

Properties revenue

238,417

19,005

503,588

170,287

Rentals revenue

40,406

—

82,954

—

Other revenue

8,206

8,503

26,084

19,999

Intercompany elimination

(4,750)

(445)

(11,520)

(2,248)

Total revenue

$

540,074

$

236,916

$

1,279,708

$

641,576

Cost of revenue

Real estate services

$

161,449

$

117,944

$

453,790

$

300,305

Properties

238,397

20,460

496,948

173,107

Rentals

7,395

—

14,965

—

Other

10,281

5,885

29,729

18,422

Intercompany elimination

(4,750)

(445)

(11,520)

(2,248)

Total cost of revenue

$

412,772

$

143,844

$

983,912

$

489,586

Gross profit

Real estate services

$

96,346

$

91,909

$

224,812

$

153,233

Properties

20

(1,455)

6,640

(2,820)

Rentals

33,011

—

67,989

—

Other

(2,075)

2,618

(3,645)

1,577

Total gross profit

$

127,302

$

93,072

$

295,796

$

151,990

Gross margin (percentage of revenue)

Real estate services

37.4

%

43.8

%

33.1

%

33.8

%

Properties

0.0

(7.7)

1.3

(1.7)

Rentals

81.7

—

82.0

—

Other

(25.3)

30.8

(14.0)

7.9

Total gross margin

23.6

39.3

23.1

23.7

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SOURCE Redfin

Investor Relations, Meg Nunnally, 206-576-8610, ir@redfin.com; Public Relations, Mariam Sughayer, 206-876-1322, press@redfin.com