Redfin Reports First Quarter 2022 Financial Results

SEATTLE--()--Redfin Corporation (NASDAQ: RDFN) today announced results for its first quarter ended March 31, 2022.

First Quarter 2022

First quarter revenue was $597.3 million, an increase of 123% compared to the first quarter of 2021. Gross profit was $72.5 million, an increase of 71% year-over-year. Real estate services gross profit was $23.7 million, a decrease of 41% year-over-year, and real estate services gross margin was 13%, compared to 24% in the first quarter of 2021.

Net loss was $90.8 million, compared to a net loss of $35.8 million in the first quarter of 2021. Net loss attributable to common stock was $91.6 million. Net loss per share attributable to common stock, diluted, was $0.86, compared to net loss per share, diluted, of $0.37 in the first quarter of 2021.

"Redfin exceeded our first-quarter revenues and earnings guidance by tens of millions of dollars,” said Redfin CEO Glenn Kelman. “Online traffic accelerated significantly. Our core business gained share, and we expect those gains to accelerate throughout the year. RedfinNow had another blow-out quarter. We closed the Bay Equity acquisition on April 1, and already we’re on pace to nearly double the percentage of Redfin homebuyers who get a Redfin loan, at roughly double the gross profits from each customer. We’re more optimistic than ever about our strategy, which is to drive customer demand by building Redfin.com into a complete destination for real estate information, and to make more money from each customer by becoming a one-stop shop for buying or selling a home."

First Quarter Highlights

  • Reached market share of 1.18% of U.S. existing home sales by value in the first quarter of 2022, an increase of 2 basis points from the first quarter of 2021.(1)
  • Saved homebuyers and sellers over $59 million in the first quarter of 2022. 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 apps and website reached nearly 51 million average monthly users in the first quarter, an increase of 11% compared to the first quarter of 2021.
  • Announced the acquisition of Bay Equity Home Loans, which closed on April 1, accelerating Redfin’s strategy to become a one-stop shop for consumers to buy, sell, rent and finance a home.
  • Launched nationwide rental search, making Redfin a destination for all U.S. home searchers, whether they’re looking to rent or buy, and significantly expanding the reach of the RentPath network.
  • Appointed Brad Singer to the Redfin Board of Directors, bringing decades of finance and investment experience to the organization.
  • Shared updated statistics on the diversity of Redfin’s workforce and the results of our ongoing diversity initiatives. In 2021, we increased the percentage of employees who are people of color by 3 points, the percentage of managers who are people of color by 2 points and the percentage of women in management by 1 point.
  • Delivered improved software for customers, agents, partners and renovations staff including:
    • An on-demand marketing platform that allows agents and coordinators to quickly produce professionally designed marketing materials, giving them more flexibility and creativity in how they market themselves and their listings.
    • Offer Summary Pages that aggregate valuation data for Redfin-owned homes and allow RedfinNow employees to easily understand the reasoning behind each home offer.
    • Updated customer lists that give agents more insight into which customers are buying and selling and helps create a more seamless moving experience for customers.
    • Integrated mortgage software that allows Redfin agents to seamlessly introduce their customers to Bay Equity loan officers.
    • A machine learning model to forecast how many days a RedfinNow home will spend on the market, improving our ability to predict holding costs.
    • More prominent search filters that help Redfin users find more homes that meet their criteria, and an improved search results module that minimizes how often a search returns “no results”.

(1) 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. 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®.

Business Outlook

The following forward-looking statements reflect Redfin's expectations as of May 5, 2022, and are subject to substantial uncertainty.

For the second quarter of 2022 we expect:

  • Total revenue between $613 million and $650 million, representing a year-over-year growth between 30% and 38% compared to the second quarter of 2021. Included within total revenue are real estate services segment revenue between $249 million and $256 million, properties segment revenue between $256 million and $281 million, mortgage revenue between $68 million and $73 million and rentals revenue of $38 million.
  • Total net loss is expected to be between $72 million and $60 million, compared to net loss of $28 million in the second quarter of 2021. This guidance includes approximately $61 million in total marketing expenses, $21 million of stock-based compensation, $17 million of depreciation and amortization, and $4 million of net interest expense. In addition, we expect to pay a quarterly dividend of 30,640 shares of common stock to our preferred stockholder.

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, 2021, as supplemented by our quarterly report for the quarter ended March 31, 2022, 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.

Non-GAAP Financial Measure

To supplement our consolidated financial statements that are prepared and presented in accordance with GAAP, we also compute and present adjusted EBITDA, which is a non-GAAP financial measure. We believe adjusted EBITDA is useful for investors because it enhances period-to-period comparability of our financial statements on a consistent basis and provides investors with useful insight into the underlying trends of the business. The presentation of this financial measure is not intended to be considered in isolation or as a substitute of, or superior to, our financial information prepared and presented in accordance with GAAP. Our calculation of adjusted EBITDA may be different from adjusted EBITDA or similar non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Our adjusted EBITDA for the three months ended March 31, 2022 and 2021 is presented below, along with a reconciliation of adjusted EBITDA to net loss.

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 renovationsvservices. 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 ourvlending 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-F

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

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

 

 

March 31, 2022

 

December 31, 2021

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

612,680

 

 

$

591,003

 

Restricted cash

 

36,047

 

 

 

127,278

 

Short-term investments

 

95,458

 

 

 

33,737

 

Accounts receivable, net of allowances for credit losses of $1,464 and $1,298

 

52,282

 

 

 

69,594

 

Inventory

 

245,487

 

 

 

358,221

 

Loans held for sale

 

23,693

 

 

 

35,759

 

Prepaid expenses

 

26,836

 

 

 

22,948

 

Other current assets

 

6,748

 

 

 

7,524

 

Total current assets

 

1,099,231

 

 

 

1,246,064

 

Property and equipment, net

 

60,836

 

 

 

58,671

 

Right-of-use assets, net

 

51,417

 

 

 

54,200

 

Long-term investments

 

56,194

 

 

 

54,828

 

Goodwill

 

409,382

 

 

 

409,382

 

Intangible assets, net

 

177,003

 

 

 

185,929

 

Other assets, noncurrent

 

13,090

 

 

 

12,898

 

Total assets

$

1,867,153

 

 

$

2,021,972

 

Liabilities, mezzanine equity, and stockholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

22,693

 

 

$

12,546

 

Accrued and other liabilities

 

103,449

 

 

 

118,122

 

Warehouse credit facilities

 

22,285

 

 

 

33,043

 

Secured revolving credit facility

 

136,869

 

 

 

199,781

 

Convertible senior notes, net

 

 

 

 

23,280

 

Lease liabilities

 

15,070

 

 

 

15,040

 

Total current liabilities

 

300,366

 

 

 

401,812

 

Lease liabilities, noncurrent

 

51,719

 

 

 

55,222

 

Convertible senior notes, net, noncurrent

 

1,238,585

 

 

 

1,214,017

 

Deferred tax liabilities

 

981

 

 

 

1,201

 

Total liabilities

 

1,591,651

 

 

 

1,672,252

 

Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

39,879

 

 

 

39,868

 

Stockholders’ equity

 

 

 

Common stock—par value $0.001 per share; 500,000,000 shares authorized; 107,025,691 and 106,308,767 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

107

 

 

 

106

 

Additional paid-in capital

 

699,225

 

 

 

682,084

 

Accumulated other comprehensive loss

 

(739

)

 

 

(174

)

Accumulated deficit

 

(462,970

)

 

 

(372,164

)

Total stockholders’ equity

 

235,623

 

 

 

309,852

 

Total liabilities, mezzanine equity, and stockholders’ equity

$

1,867,153

 

 

$

2,021,972

 

Redfin Corporation and Subsidiaries

Consolidated Statements of Comprehensive Loss

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

 

 

Three Months Ended March 31,

 

2022

 

2021

Revenue

 

 

 

Service

$

217,593

 

 

$

175,593

 

Product

 

379,753

 

 

 

92,726

 

Total revenue

 

597,346

 

 

 

268,319

 

Cost of revenue(1)

 

 

 

Service

 

165,809

 

 

 

134,851

 

Product

 

358,999

 

 

 

91,110

 

Total cost of revenue

 

524,808

 

 

 

225,961

 

Gross profit

 

72,538

 

 

 

42,358

 

Operating expenses

 

 

 

Technology and development(1)

 

49,640

 

 

 

27,678

 

Marketing(1)

 

43,342

 

 

 

11,802

 

General and administrative(1)

 

58,966

 

 

 

37,391

 

Restructuring and reorganization

 

5,710

 

 

 

 

Total operating expenses

 

157,658

 

 

 

76,871

 

(Loss) income from operations

 

(85,120

)

 

 

(34,513

)

Interest income

 

220

 

 

 

159

 

Interest expense

 

(3,861

)

 

 

(1,338

)

Income tax benefit

 

(134

)

 

 

 

Other expense, net

 

(1,911

)

 

 

(92

)

Net loss

$

(90,806

)

 

$

(35,784

)

Dividend on convertible preferred stock

 

(793

)

 

 

(2,336

)

Net loss attributable to common stock—basic and diluted

$

(91,599

)

 

$

(38,120

)

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

$

(0.86

)

 

$

(0.37

)

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

 

106,664,140

 

 

 

103,427,764

 

 

 

 

 

Net loss

$

(90,806

)

 

$

(35,784

)

Other comprehensive income (loss)

 

 

 

Foreign currency translation adjustments

 

4

 

 

 

 

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

 

561

 

 

 

(50

)

Comprehensive loss

$

(90,241

)

 

$

(35,834

)

 

(1) Includes stock-based compensation as follows:

Three Months Ended March 31,

2022

2021

Cost of revenue

$

3,377

 

 

$

2,978

Technology and development

 

7,965

 

 

 

5,761

Marketing

 

1,072

 

 

 

542

General and administrative

 

4,374

 

 

 

3,302

Total

$

16,788

 

 

$

12,583

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

 

Three Months Ended March 31,

 

2022

 

2021

Operating Activities

 

 

 

Net loss

$

(90,806

)

 

$

(35,784

)

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

 

 

 

Depreciation and amortization

 

14,813

 

 

 

4,341

 

Stock-based compensation

 

16,788

 

 

 

12,583

 

Amortization of debt discount and issuance costs

 

1,440

 

 

 

855

 

Non-cash lease expense

 

3,169

 

 

 

2,533

 

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

 

60

 

 

 

(1,052

)

Other

 

2,290

 

 

 

109

 

Change in assets and liabilities:

 

 

 

Accounts receivable, net

 

17,312

 

 

 

7,303

 

Inventory

 

112,734

 

 

 

(48,213

)

Prepaid expenses and other assets

 

(1,982

)

 

 

(3,359

)

Accounts payable

 

9,876

 

 

 

5,947

 

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

 

(14,442

)

 

 

8,873

 

Lease liabilities

 

(3,642

)

 

 

(2,951

)

Origination of loans held for sale

 

(159,186

)

 

 

(227,090

)

Proceeds from sale of loans originated as held for sale

 

170,577

 

 

 

225,140

 

Net cash provided by (used in) operating activities

 

79,001

 

 

 

(50,765

)

Investing activities

 

 

 

Purchases of property and equipment

 

(7,442

)

 

 

(5,285

)

Purchases of investments

 

(77,596

)

 

 

(67,877

)

Sales of investments

 

5,346

 

 

 

 

Maturities of investments

 

6,500

 

 

 

63,589

 

Net cash used in investing activities

 

(73,192

)

 

 

(9,573

)

Financing activities

 

 

 

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

 

1,887

 

 

 

3,411

 

Tax payments related to net share settlements on restricted stock units

 

(2,595

)

 

 

(10,860

)

Borrowings from warehouse credit facilities

 

152,386

 

 

 

216,382

 

Repayments to warehouse credit facilities

 

(163,144

)

 

 

(214,747

)

Borrowings from secured revolving credit facility

 

156,799

 

 

 

71,177

 

Repayments to secured revolving credit facility

 

(219,711

)

 

 

(46,275

)

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 financing payables

 

 

 

 

6,521

 

Principal payments under finance lease obligations

 

(217

)

 

 

(67

)

Cash paid for secured revolving credit facility issuance costs

 

(764

)

 

 

(305

)

Net cash (used in) provided by financing activities

 

(75,359

)

 

 

457,562

 

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

 

(4

)

 

 

1

 

Net change in cash, cash equivalents, and restricted cash

 

(69,554

)

 

 

397,225

 

Cash, cash equivalents, and restricted cash:

 

 

 

Beginning of period

 

718,281

 

 

 

945,820

 

End of period

$

648,727

 

 

$

1,343,045

 

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)

 

 

Three Months Ended

 

Mar. 31,
2022

 

Dec. 31,
2021

 

Sep. 30,
2021

 

Jun. 30,
2021

 

Mar. 31,
2021

 

Dec. 31,
2020

 

Sep. 30,
2020

 

Jun. 30,
2020

Monthly average visitors (in thousands)

 

51,287

 

 

 

44,665

 

 

 

49,147

 

 

 

48,437

 

 

 

46,202

 

 

 

44,135

 

 

 

49,258

 

 

 

42,537

 

Real estate services transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage

 

15,001

 

 

 

19,428

 

 

 

21,929

 

 

 

21,006

 

 

 

14,317

 

 

 

16,951

 

 

 

18,980

 

 

 

13,828

 

Partner

 

3,417

 

 

 

4,603

 

 

 

4,755

 

 

 

4,597

 

 

 

3,944

 

 

 

4,940

 

 

 

5,180

 

 

 

2,691

 

Total

 

18,418

 

 

 

24,031

 

 

 

26,684

 

 

 

25,603

 

 

 

18,261

 

 

 

21,891

 

 

 

24,160

 

 

 

16,519

 

Real estate services revenue per transaction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage

$

11,191

 

 

$

10,900

 

 

$

11,107

 

 

$

11,307

 

 

$

10,927

 

 

$

10,751

 

 

$

10,241

 

 

$

9,296

 

Partner

 

2,814

 

 

 

2,819

 

 

 

2,990

 

 

 

3,195

 

 

 

3,084

 

 

 

3,123

 

 

 

2,988

 

 

 

2,417

 

Aggregate

 

9,637

 

 

 

9,352

 

 

 

9,661

 

 

 

9,850

 

 

 

9,233

 

 

 

9,030

 

 

 

8,686

 

 

 

8,175

 

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

$

10,346

 

 

$

13,255

 

 

$

14,926

 

 

$

14,612

 

 

$

9,710

 

 

$

11,478

 

 

$

12,207

 

 

$

7,576

 

U.S. market share by value

 

1.18

%

 

 

1.15

%

 

 

1.16

%

 

 

1.18

%

 

 

1.16

%

 

 

1.04

%

 

 

1.04

%

 

 

0.94

%

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

 

57

%

 

 

61

%

 

 

62

%

 

 

64

%

 

 

62

%

 

 

63

%

 

 

63

%

 

 

63

%

Average number of lead agents

 

2,750

 

 

 

2,485

 

 

 

2,370

 

 

 

2,456

 

 

 

2,277

 

 

 

1,981

 

 

 

1,820

 

 

 

1,399

 

RedfinNow homes sold

 

617

 

 

 

600

 

 

 

388

 

 

 

292

 

 

 

171

 

 

 

83

 

 

 

37

 

 

 

162

 

Revenue per RedfinNow home sold (in ones)

$

608,851

 

 

$

622,519

 

 

$

599,963

 

 

$

571,670

 

 

$

525,765

 

 

$

471,895

 

 

$

504,730

 

 

$

444,757

 

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)

 

 

Three Months Ended March 31,

 

2022

 

2021

Revenue

 

 

 

Real estate services (brokerage)

$

167,872

 

 

$

156,447

 

Real estate services (partner)

 

9,615

 

 

 

12,162

 

Properties

 

379,753

 

 

 

92,726

 

Rentals

 

38,044

 

 

 

 

Mortgage

 

2,917

 

 

 

5,711

 

Other

 

4,368

 

 

 

3,646

 

Intercompany eliminations

 

(5,223

)

 

 

(2,373

)

Total

$

597,346

 

 

$

268,319

 

 

 

 

 

Cost of revenue

 

 

 

Real estate services

$

153,784

 

 

$

128,216

 

Properties

 

358,866

 

 

 

91,130

 

Rentals

 

7,193

 

 

 

 

Mortgage

 

5,517

 

 

 

5,869

 

Other

 

4,671

 

 

 

3,119

 

Intercompany eliminations

 

(5,223

)

 

 

(2,373

)

Total

$

524,808

 

 

$

225,961

 

 

 

 

 

Gross Profit

 

 

 

Real estate services

$

23,703

 

 

$

40,393

 

Properties

 

20,887

 

 

 

1,596

 

Rentals

 

30,851

 

 

 

 

Mortgage

 

(2,600

)

 

 

(158

)

Other

 

(303

)

 

 

527

 

Total

$

72,538

 

 

$

42,358

 

 

 

 

 

Real estate services, properties, mortgage, and other operating expenses

$

109,781

 

 

$

76,871

 

Rentals operating expenses

 

47,877

 

 

 

 

Loss from operations

 

(85,120

)

 

 

(34,513

)

Interest income

 

220

 

 

 

159

 

Interest expense

 

(3,861

)

 

 

(1,338

)

Income tax expense

 

(134

)

 

 

 

Other expense, net

 

(1,911

)

 

 

(92

)

Net loss

$

(90,806

)

 

$

(35,784

)

Reconciliation of Adjusted EBITDA to Net Loss

(unaudited, in thousands)

 

 

Three Months Ended March 31,

 

2022

 

2021

Net loss

(90,806

)

 

(35,784

)

Interest income(1)

(538

)

 

(515

)

Interest expense(2)

4,138

 

 

1,767

 

Income tax expense

134

 

 

 

Depreciation and amortization

14,813

 

 

4,341

 

Stock-based compensation(3)

16,788

 

 

12,583

 

Acquisition-related costs(4)

917

 

 

2,107

 

Restructuring and reorganization(5)

5,710

 

 

 

Adjusted EBITDA

(48,844

)

 

(15,501

)

(1) Interest income includes $0.3 million and $0.4 million of interest income related to originated mortgage loans for the three months ended March 31, 2022 and 2021, respectively.

(2) Interest expense includes $0.3 million and $0.4 million of interest expense related to our warehouse credit facilities for the three months ended March 31, 2022 and 2021, respectively.

(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program. See Note 12 to our consolidated financial statements for more information.

(4) Acquisition-related costs consist of fees for external advisory, legal, and other professional services incurred in connection with our acquisition of other companies.

(5) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention for our mortgage and rentals segments due to the restructuring and reorganization activities from our acquisitions of Bay Equity and RentPath, respectively.

Contacts

Investor Relations
Meg Nunnally, 206-576-8610
ir@redfin.com

Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com

Contacts

Investor Relations
Meg Nunnally, 206-576-8610
ir@redfin.com

Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com