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.
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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, | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | |||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||
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 | $ | 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 | 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 | $ | 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 | |||||||||||
SOURCE Redfin
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