Redfin Reports First Quarter 2021 Financial Results

News provided by

Redfin

May 05, 2021, 16:01 ET

SEATTLE, May 5, 2021 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the first quarter ended March 31, 2021. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation, and depreciation and amortization.

Revenue increased 40% year-over-year to $268 million during the first quarter. Gross profit was $42 million, an increase of 229% from $13 million in the first quarter of 2020. Real estate services gross profit was $40 million, an increase of 168% from $15 million in the first quarter of 2020. Real estate services gross margin was 24%, compared to 14% in the first quarter of 2020. Operating expenses were $77 million, an increase of 9% from $70 million in the first quarter of 2020. Operating expenses were 29% of revenue, down from 37% in the first quarter of 2020.

Net loss was $36 million, compared to net loss of $60 million in the first quarter of 2020. The dividend on our convertible preferred stock was $2.3 million in the first quarter. Net loss attributable to common stock was $38 million. Stock-based compensation was $12.6 million, up from $7.2 million in the first quarter of 2020. Depreciation and amortization was $4.4 million, up from $3.3 million in the first quarter of 2020. Interest income was $0.2 million and interest expense was $1.3 million, compared to $1.1 million and $2.4 million, respectively, in the first quarter of 2020.

Net loss per share attributable to common stock, diluted, was $0.37, compared to net loss per share, diluted, of $0.64 in the first quarter of 2020.

"After scrambling in the second half of 2020 to hire enough agents and lenders to handle a pandemic-driven surge in demand, Redfin is just about hitting on all cylinders," said Redfin CEO Glenn Kelman. "From the fourth quarter of 2020 to the first quarter of 2021, our year-over-year market-share gains more than doubled, and our year-over-year gross-margin gains also accelerated. We tripled the rate at which we're scheduling home tours instantly and automatically, giving our customers a competitive advantage when homes are selling faster than ever. Our RedfinNow business of buying and selling homes returned to growth and earned its first significant gross profits, and our mortgage business continued to grow at a year-over-year rate of about 200%."

First Quarter Highlights

  • Reached market share of 1.14% of U.S. existing home sales by value in the first quarter of 2021, an increase of 21 basis points from the first quarter of 2020.(1)
  • Saved homebuyers and sellers over $42 million in the first 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% listing commission typically charged by traditional agents.
  • Redfin's mobile application and website reached 46 million average monthly users in the first quarter, an increase of 30% compared to the first quarter of 2020.
  • Completed the acquisition of RentPath on April 2. RentPath is a leading rental listings company, with sites including ApartmentGuide.com, Rent.com, and Rentals.com. Combined with RentPath, Redfin can now be a nationwide destination for all consumers looking for a home.
  • Continued expansion of RedfinNow by launching in Phoenix, Maryland, Northern Virginia and Washington D.C. in the first quarter of 2021.
  • Launched Redfin Premier service for luxury homes in Lake Tahoe, Los Angeles, Santa Barbara, San Francisco, Seattle and Washington, D.C., expanding from 14 to 20 markets. Redfin Premier offers high-end photography and premium marketing to showcase million dollar homes and reach luxury buyers around the globe.
  • Upgraded our software for customers, agents, partners, home services and mortgage teams, including:
    • Shipped new software for home sale advisors to stay in touch with prospective home sellers and guide them toward the Redfin selling solution that meets their needs whether that is listing with a Redfin agent or getting a cash offer from RedfinNow.
    • Began publishing the commission offered to the buyer agent on homes for sale to give consumers more transparent information about real estate agent fees.
  • Published our 2020 Diversity at Redfin report to track our progress and the next steps in our efforts to make Redfin a better place to work for all people. The share of women and people of color at the company and within leadership roles increased from 2019 to 2020. While there is continued opportunity for improvement, the percentage of Black employees rose from 7.5% to 8.5% and the number of Latinx employees rose from 8.4% to 10.0%.
  • Subsequent to the first quarter, launched our annual media campaign on April 19 featuring on-demand tours.
    • TV ads are airing in 15 markets and on national cable networks: Welcome to Redfin.
    • Supporting listing growth with digital videos on YouTube and Facebook.
    • Developed new radio ads to drive customers to tour with Redfin.

(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 May 5, 2021, and are subject to substantial uncertainty.

For the second quarter of 2021 we expect:

  • Total revenue between $446 million and $457 million, representing a year-over-year increase between 109% and 114% compared to the second quarter of 2020. Included within total revenue are properties segment revenue between $151 million and $156 million, and RentPath revenue between $41 million and $42 million.
  • Total net loss between $38 million and $32 million, compared to total net loss of $7 million in the second quarter of 2020. RentPath's contribution to the net loss is expected to be between $10 million and $9 million. This guidance includes approximately $13 million of expected stock-based compensation, $10 million of expected depreciation and amortization, $6 million of expected transaction fees associated with the RentPath acquisition, and $3 million of expected 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 March 31, 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 broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. 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. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 95 markets across the U.S. and Canada and employ over 4,100 people.

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,

2021

2020




Revenue


Service

$

175,593

$

111,478

Product

92,726

79,517

Total revenue

268,319

190,995

Cost of revenue(1)


Service

134,851

98,368

Product

91,110

79,748

Total cost of revenue

225,961

178,116

Gross profit

42,358

12,879

Operating expenses


Technology and development(1)

27,678

20,274

Marketing(1)

11,802

25,708

General and administrative(1)

37,391

24,327

Total operating expenses

76,871

70,309

Loss from operations

(34,513)

(57,430)

Interest income

159

1,103

Interest expense

(1,338)

(2,444)

Other income (expense), net

(92)

(1,346)

Net loss

$

(35,784)

$

(60,117)

Dividends on convertible preferred stock

(2,336)

—

Net loss attributable to common stock—basic and diluted

$

(38,120)

$

(60,117)

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

$

(0.37)

$

(0.64)

Weighted average shares to compute net loss per share attributable to common stock—basic and diluted

103,427,764

93,442,706




Net Loss

$

(35,784)

$

(60,117)

Other comprehensive income (loss)


     Foreign currency translation adjustments

$

—

$

(25)

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

(50)

559

Comprehensive loss

$

(35,834)

$

(59,583)

(1) Includes stock-based compensation as follows:


Three Months Ended March 31,

2021

2020




Cost of revenue

$

2,978

$

1,638

Technology and development

5,761

3,648

Marketing

542

375

General and administrative

3,302

1,550

Total

$

12,583

$

7,211

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

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


March 31, 2021

December 31, 2020




Assets


Current assets


Cash and cash equivalents

$

1,241,255

$

925,276

Restricted cash

101,790

20,544

Short-term investments

140,843

131,561

Accounts receivable, net of allowances for credit losses of $182 and $160

47,416

54,719

Inventory

97,371

49,158

Loans held for sale

43,447

42,539

Prepaid expenses

15,224

12,131

Other current assets

7,014

4,898

Total current assets

1,694,360

1,240,826

Property and equipment, net

47,649

43,988

Right-of-use assets, net

47,932

44,149

Long-term investments

6,906

11,922

Goodwill and intangibles, net

10,894

11,016

Other assets, noncurrent

8,836

8,619

Total assets

$

1,816,577

$

1,360,520

Liabilities, mezzanine equity and stockholders' equity


Current liabilities


Accounts payable

$

15,568

$

5,644

Accrued liabilities

75,754

69,460

Other payables

19,117

13,184

Warehouse credit facilities

40,663

39,029

Secured revolving credit facility

48,851

23,949

Convertible senior notes, net

23,428

22,482

Lease liabilities

12,611

11,973

Total current liabilities

235,992

185,721

Lease liabilities and deposits, noncurrent

53,333

49,339

Convertible senior notes, net, noncurrent

1,136,974

488,268

Payroll tax liabilities, noncurrent

6,812

6,812

Total liabilities

1,433,111

730,140

Commitments and contingencies (Note 7)


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

39,834

39,823

Stockholders' equity


Common stock—par value $0.001 per share; 500,000,000 shares authorized; 103,983,585 and 103,000,594 shares issued and outstanding, respectively

104

103

Additional paid-in capital

641,702

860,556

Accumulated other comprehensive income

161

211

Accumulated deficit

(298,335)

(270,313)

Total stockholders' equity

343,632

590,557

Total liabilities, mezzanine equity and stockholders' equity

$

1,816,577

$

1,360,520




Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)

Three Months Ended March 31,

2021

2020




Operating Activities


Net loss

$

(35,784)

$

(60,117)

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


Depreciation and amortization

4,341

3,307

Stock-based compensation

12,583

7,211

Amortization of debt discount and issuance costs

855

1,730

Non-cash lease expense

2,533

2,254

Impairment costs

—

1,420

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

(1,052)

(494)

Other

109

(119)

Change in assets and liabilities:


Accounts receivable, net

7,303

(2,598)

Inventory

(48,213)

3,941

Prepaid expenses and other assets

(3,359)

4,934

Accounts payable

5,947

514

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

8,873

18,725

Lease liabilities

(2,951)

(2,693)

Origination of loans held for sale

(227,090)

(132,697)

Proceeds from sale of loans originated as held for sale

225,140

111,233

Net cash provided by (used in) operating activities

(50,765)

(43,449)

Investing activities


Purchases of property and equipment

(5,285)

(3,406)

Purchases of investments

(67,877)

(33,267)

Sales of investments

—

31,608

Maturities of investments

63,589

1,597

Net cash used in investing activities

(9,573)

(3,468)

Financing activities


Proceeds from the issuance of common stock pursuant to employee equity plans

3,411

4,103

Tax payments related to net share settlements on restricted stock units

(10,860)

(3,307)

Borrowings from warehouse credit facilities

216,382

131,310

Repayments to warehouse credit facilities

(214,747)

(110,025)

Borrowings from secured revolving credit facility

71,177

11,854

Repayments to secured revolving credit facility

(46,275)

(7,398)

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

488,691

—

Purchases of capped calls related to convertible senior notes

(54,480)

—

Payments for repurchases and conversions of convertible senior notes

(1,886)

—

Other payables—deposits held in escrow

6,521

3,684

Principal payments under finance lease obligations

(67)

(15)

Cash paid for secured revolving credit facility issuance costs

(305)

—

Net cash provided by financing activities

457,562

30,206

Effect of exchange rate changes on cash and cash equivalents

1

(25)

Net change in cash, cash equivalents, and restricted cash

397,225

(16,736)

Cash, cash equivalents, and restricted cash:


Beginning of period

945,820

247,448

End of period

1,343,045

230,712

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)


Three Months Ended



Mar. 31,
2021

Dec. 31,
2020

Sep. 30
2020

Jun. 30,
2020

Mar. 31,
2020

Dec. 31,
2019

Sep. 30,
2019

Jun. 30,
2019

Mar. 31,
2019


















Monthly average visitors (in thousands)

46,202

44,135

49,258

42,537

35,519

30,595

35,633

36,557

31,107

Real estate services transactions
















Brokerage

14,317

16,951

18,980

13,828

10,751

13,122

16,098

15,580

8,435

Partner

3,944

4,940

5,180

2,691

2,479

2,958

3,499

3,357

2,125

Total

18,261

21,891

24,160

16,519

13,230

16,080

19,597

18,937

10,560

Real estate services revenue per transaction
















Brokerage

$

10,927

$

10,751

$

10,241

$

9,296

$

9,520

$

9,425

$

9,075

$

9,332

$

9,640

Partner

3,084

3,123

2,988

2,417

2,535

2,369

2,295

2,218

2,153

Aggregate

9,233

9,030

8,686

8,175

8,211

8,127

7,865

8,071

8,134

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

$

9,621

$

11,478

$

12,207

$

7,576

$

6,098

$

7,588

$

9,157

$

8,986

$

4,800

U.S. market share by value

1.14

%

1.04

%

1.04

%

0.93

%

0.93

%

0.94

%

0.96

%

0.94

%

0.83

%

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

62

%

63

%

63

%

63

%

61

%

62

%

63

%

64

%

64

%

Average number of lead agents

2,277

1,981

1,820

1,399

1,826

1,526

1,579

1,603

1,503

RedfinNow homes sold

171

83

37

162

171

212

168

80

43

Revenue per RedfinNow home sold

$

525,173

$

471,551

$

504,583

$

444,690

$

461,916

$

466,939

$

476,770

$

498,083

$

496,437

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)


Three Months Ended March 31,

2021

2020

Real estate services revenue


Brokerage revenue

$

156,447

$

102,351

Partner revenue

12,162

6,285

Total real estate services revenue

168,609

108,636

Properties revenue

92,726

79,098

Other revenue

9,357

4,250

Intercompany elimination

(2,373)

(989)

Total revenue

$

268,319

$

190,995




Cost of revenue


Real estate services

$

128,216

$

93,562

Properties

91,130

79,299

Other

8,988

6,244

Intercompany elimination

(2,373)

(989)

Total cost of revenue

$

225,961

$

178,116




Gross profit


Real estate services

$

40,393

$

15,074

Properties

1,596

(201)

Other

369

(1,994)

Total gross profit

$

42,358

$

12,879




Gross margin (percentage of revenue)


Real estate services

24.0

%

13.9

%

Properties

1.7

(0.3)

Other

3.9

(46.9)

Total gross margin

15.8

6.7

SOURCE Redfin

Related Links

https://www.redfin.com

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