July 30, 2020

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


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SOURCE Redfin

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