Redfin Reports Third Quarter 2021 Financial Results

Published: Oct. 6, 2021 at 4:00 AM CDT|Updated: Nov. 4, 2021 at 3:01 PM CDT

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.

Redfin Logo (PRNewsfoto/Redfin)
Redfin Logo (PRNewsfoto/Redfin)

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:

(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

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