Redfin Reports Fourth Quarter and Full Year 2020 Financial Results
SEATTLE, Feb. 24, 2021 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the fourth quarter and full year ended December 31, 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.
Fourth Quarter 2020
Revenue increased 5% year-over-year to $244.5 million during the fourth quarter. Gross profit was $80.1 million, an increase of 102% from $39.6 million in the fourth quarter of 2019. Real estate services gross profit was $80.8 million, an increase of 93% from $42.0 million in the fourth quarter of 2019. Real estate services gross margin was 41%, compared to 32% in the fourth quarter of 2019. Operating expenses were $54.5 million, an increase of 17% from $46.4 million in the fourth quarter of 2019. Operating expenses were 22% of revenue, up from 20% in the fourth quarter of 2019.
Net income was $14.0 million, compared to a net loss of $7.8 million in the fourth quarter of 2019. The dividend on our convertible preferred stock was $1.6 million. Net income attributable to common stock was $12.2 million. Stock-based compensation was $11.2 million, up from $8.0 million in the fourth quarter of 2019. Depreciation and amortization was $4.0 million, up from $2.9 million in the fourth quarter of 2019. Total interest and other expenses was $11.6 million, which included a $4.6 million loss on the extinguishment of debt and $6.8 million in non-cash interest expense which was primarily related to our convertible senior notes, compared to $1.0 million in the fourth quarter of 2019.
Net income per share attributable to common stock, diluted, was $0.11, compared to a net loss per share, diluted, of $0.08 in the fourth quarter of 2019.
Full Year 2020
Revenue increased 14% year-over-year to $886.1 million in 2020. Gross profit was $232.1 million, an increase of 61% from $144.1 million in 2019. Real estate services gross profit was $234.1 million, an increase of 56% from $150.4 million in 2019. Real estate services gross margin was 36%, compared to 29% in 2019. Operating expenses were $231.3 million, an increase of 4% from $223.3 million in 2019. Operating expenses were 26% of revenue, down from 29% in 2019.
Net loss was $18.5 million, compared to a net loss of $80.8 million in 2019. The dividend on our convertible preferred stock was $4.5 million. Net loss attributable to common stock was $23.0 million. Stock-based compensation was $37.0 million, up from $27.8 million in 2019. Depreciation and amortization was $14.6 million, up from $9.2 million in 2019. Total interest and other expenses was $19.3 million, which included a $4.6 million loss on the extinguishment of our 2023 convertible senior notes and $12.0 million in non-cash interest expense which was primarily related to our convertible senior notes, compared to $1.6 million in 2019.
Net loss per share attributable to common stock, diluted, was $0.23, compared to a net loss per share, diluted, of $0.88 in 2019.
"Revenues in our core business of brokering home sales increased 51% in the fourth quarter, with gross margins again exceeding 40%," said Redfin CEO Glenn Kelman. "Our mortgage business had even stronger results, with 210% revenue growth. We were the fastest-growing major real estate website, as home-buyers moving to a new part of the country have increasingly turned to the Internet to find a real estate agent. Since more than half of all homes now sell in a bidding war, our on-demand home-touring has become a crucial competitive advantage for our customers, who want to see a listing either in-person or virtually before other buyers even know it's for sale."
Fourth Quarter Highlights
-- Reached market share of 1.04% of U.S. existing home sales by value in
the fourth quarter of 2020, an increase of .10 percentage points from
the fourth quarter of 2019.((1))
-- Saved homebuyers and sellers over $54 million in the fourth quarter and
over $185 million in 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 typically charged
by traditional agents.
-- Redfin's mobile apps and website reached a record of 44 million average
monthly users in the fourth quarter. For the year, Redfin reached a
record of more than 42 million average monthly users, an increase of 28%
compared to 2019.
-- Continued expansion of RedfinNow by launching in Sacramento, San
Francisco and Seattle in the fourth quarter of 2020.
-- Conducted over 21,000 video tours in the fourth quarter. Since the start
of the pandemic in March, Redfin has seen a 137-fold increase in monthly
requests for video tours and a nearly 7-fold increase in monthly views
of 3D walkthroughs on Redfin.com.
-- Upgraded its software for customers, agents, partners, home services and
mortgage teams, including:
-- Adding flood risk data to home listing pages to give customers more
information about individual properties and their risk factors.
-- Adding Direct Access touring information to the Owner Dashboard,
giving sellers and agents the ability to track self-tours and see
buyers' feedback about the home.
-- Improving the functionality, speed and stability of Redfin Builder
Tools and Redfin Lender Tools, software used by Redfin's home
services and mortgage organizations.
-- Rolling out a new communication platform for Redfin partner agents
to help them easily connect with customers, driving faster response
times and better customer experiences.
-- Launched Redfin Rise, an employee-funded initiative to support
charitable organizations that are building paths to homeownership for
working-class families.
((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 February 24, 2021, and are subject to substantial uncertainty.
For the first quarter of 2021 we expect:
-- Total revenue between $249 million and $255 million, representing a
year-over-year growth between 30% and 34% compared to the first quarter
of 2020. Properties segment revenue between $77 million to $80 million
is included in the guidance provided.
-- Net loss is expected to be between $39 million and $36 million, compared
to net loss of $60 million in the first quarter of 2020. This guidance
includes approximately $13.0 million of expected stock-based
compensation, $4.5 million of expected depreciation and amortization,
and $1.2 million of expected interest expense associated with our
convertible senior notes and other credit obligations. 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, 2020, which is 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 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 brokerage search site, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 95 markets in the United States and Canada. Since our launch in 2006, we have saved our customers nearly $1 billion and we've helped them buy or sell more than 310,000 homes worth more than $152 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 December 31, Year Ended December 31,
---
2020 2019 2020 2019
---
Revenue
Service $
204,452 $
134,128 $
674,345 $
539,288
Product 40,065 99,063 211,748 240,508
Total revenue 244,517 233,191 886,093 779,796
Cost of revenue(1)
Service 122,642 93,183 437,484 390,504
Product 41,755 100,382 216,499 245,189
Total cost of revenue 164,397 193,565 653,983 635,693
Gross profit 80,120 39,626 232,110 144,103
Operating expenses
Technology and development(1) 23,610 19,345 84,297 69,765
Marketing(1) 7,270 8,099 54,881 76,710
General and administrative(1)(2) 23,601 18,992 92,140 76,874
Total operating expenses 54,481 46,436 231,318 223,349
Income (loss) from operations 25,639 (6,810) 792 (79,246)
Interest income 215 1,341 2,074 7,146
Interest expense (11,864) (2,365) (19,495) (8,928)
Other income (expense), net 45 51 (1,898) 223
Net income (loss) $
14,035 $
(7,783) $
(18,527) $
(80,805)
Dividend on convertible preferred stock (1,640) (4,454)
Undistributed earnings attributable to (242)
participating securities
Net income (loss) attributable to common $
12,153 $
(7,783) $
(22,981) $
(80,805)
stock-basic and diluted
Net income (loss) per share attributable to $
0.12 $
(0.08) $
(0.23) $
(0.88)
common stock-basic
Weighted average shares of common stock- 102,176,459 92,486,944 98,574,529 91,583,533
basic
Net income (loss) per share attributable to 0.11 (0.08) (0.23) (0.88)
common stock-diluted
Weighted average shares of common stock- 109,461,342 92,486,944 98,574,529 91,583,533
diluted
Other comprehensive income (loss)
Net income (loss) $
14,035 $
(7,783) $
(18,527) $
(80,805)
Foreign currency translation adjustments 13 5 (3) 33
Unrealized gain (loss) on available-for-sale (110) 11 172 9
securities
Total comprehensive income (loss) $
13,938 $
(7,767) $
(18,358) $
(80,763)
(1) Includes stock-based
compensation as follows:
Three Months Ended December 31, Twelve Months Ended December 31,
2020 2019 2020 2019
Cost of revenue $
2,863 $
1,689 $
8,844 $
6,087
Technology and development 4,828 3,701 16,564 12,362
Marketing 439 393 1,569 1,418
General and administrative 3,079 2,239 9,996 7,947
Total $
11,209 $
8,022 $
36,973 $
27,814
(2) Includes direct and
incremental costs related to
COVID-19 of $18 and $7,864,
which are partially offset by
$0 and $1,348 in employee
retention credits allowed under
the CARES Act, for the three
and twelve months ended
December 31, 2020,
respectively.
Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
December 31, 2020 December 31, 2019
---
Assets
Current assets
Cash and cash equivalents $
925,276 $
234,679
Restricted cash 20,544 12,769
Short-term investments 131,561 70,029
Accounts receivable, net of allowances for credit losses of $160 and $165 54,719 19,223
Inventory 49,158 74,590
Loans held for sale 42,539 21,985
Prepaid expenses 12,131 14,822
Other current assets 4,898 3,496
Total current assets 1,240,826 451,593
Property and equipment, net 43,988 39,577
Right-of-use assets, net 44,149 52,004
Long-term investments 11,922 30,978
Goodwill and intangibles, net 11,016 11,504
Other assets, noncurrent 8,619 10,557
Total assets $
1,360,520 $
596,213
Liabilities, mezzanine equity and stockholders' equity
Current liabilities
Accounts payable $
5,644 $
2,122
Accrued liabilities 69,460 38,022
Other payables 13,184 7,884
Warehouse credit facilities 39,029 21,302
Secured revolving credit facility 23,949 4,444
Convertible senior notes, net 22,482
Lease liabilities 11,973 11,408
Total current liabilities 185,721 85,182
Lease liabilities and deposits, noncurrent 49,339 59,869
Convertible senior notes, net, noncurrent 488,268 119,716
Payroll tax liabilities, noncurrent 6,812
Total liabilities 730,140 264,767
Commitments and contingencies (Note 7)
Series A convertible preferred stock-par value $0.001 per share; 10,000,000 shares authorized; 39,823
40,000 and 0 shares issued and outstanding, respectively
Stockholders' equity
Common stock-par value $0.001 per share; 500,000,000 shares authorized; 103,000,594 and 103 93
93,001,597 shares issued and outstanding, respectively
Additional paid-in capital 860,556 583,097
Accumulated other comprehensive income 211 42
Accumulated deficit (270,313) (251,786)
Total stockholders' equity 590,557 331,446
Total liabilities, mezzanine equity and stockholders' equity $
1,360,520 $
596,213
Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Year Ended December 31,
2020 2019
---
Operating Activities
Net loss $
(18,527) $
(80,805)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 14,564 9,230
Stock-based compensation 36,973 27,814
Amortization of debt discount and issuance costs 12,038 6,385
Non-cash lease expense 9,204 6,940
Impairment costs 2,063
Loss on repurchases and conversions of convertible senior notes 4,634
Net gain on IRLCs, forward sales commitments and loans held for sale (1,921) (493)
Other (349) (663)
Change in assets and liabilities:
Accounts receivable, net (35,496) (3,861)
Inventory 25,432 (51,896)
Prepaid expenses and other assets 2,333 (3,293)
Accounts payable 2,086 (394)
Accrued liabilities, other payables, and payroll tax liabilities, noncurrent 39,092 7,422
Lease liabilities (11,312) (7,209)
Deferred rent - 1
Origination of loans held for sale (677,310) (395,354)
Proceeds from sale of loans originated as held for sale 657,763 378,566
Net cash provided by (used in) operating activities 61,267 (107,610)
Investing activities
Purchases of property and equipment (14,686) (15,533)
Purchases of investments (198,172) (136,265)
Sales of investments 7,887 11,486
Maturities of investments 147,852 24,400
Net cash used in investing activities (57,119) (115,912)
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 21,072 16,107
Tax payments related to net share settlements on restricted stock units (16,852) (5,126)
Borrowings from warehouse credit facilities 662,278 388,586
Repayments to warehouse credit facilities (644,551) (372,017)
Borrowings from secured revolving credit facility 89,619 4,444
Repayments to secured revolving credit facility (70,115)
Cash paid for secured revolving credit facility issuance costs (4) (922)
Proceeds from issuance of convertible senior notes, net of issuance costs 647,486
Payments for repurchases and conversions of convertible senior notes (108,061)
Principal payments under finance lease obligations (221) (72)
Proceeds from follow on offering -
Other payables - deposits held in escrow 4,074 883
Net cash provided by financing activities $
694,227 $
31,883
Effect of exchange rate changes on cash and cash equivalents (3) 32
Net change in cash, cash equivalents, and restricted cash 698,372 (191,607)
Cash, cash equivalents, and restricted cash:
Beginning of period 247,448 439,055
End of period $
945,820 $
247,448
Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
Three Months Ended
Dec. 31 Sep. 30 Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31,
2020 2020 2020 2020 2019 2019 2019 2019 2018
---
Monthly average visitors (in thousands) 44,135 49,258 42,537 35,519 30,595 35,633 36,557 31,107 25,212
Real estate services transactions
Brokerage 16,951 18,980 13,828 10,751 13,122 16,098 15,580 8,435 9,822
Partner 4,940 5,180 2,691 2,479 2,958 3,499 3,357 2,125 2,749
Total 21,891 24,160 16,519 13,230 16,080 19,597 18,937 10,560 12,571
Real estate services revenue per transaction
Brokerage $
10,751 $
10,241 $
9,296 $
9,520 $
9,425 $
9,075 $
9,332 $
9,640 $
9,569
Partner 3,123 2,988 2,417 2,535 2,369 2,295 2,218 2,153 2,232
Aggregate 9,030 8,686 8,175 8,211 8,127 7,865 8,071 8,134 7,964
Aggregate home value of real estate $
11,478 $
12,207 $
7,576 $
6,098 $
7,588 $
9,157 $
8,986 $
4,800 $
5,825
services transactions (in millions)
U.S. market share by value 1.04 1.04 0.93 0.93 0.94 0.96 0.94 0.83 0.81
% % % % % % % % %
Revenue from top-10 Redfin markets as a 63
% 63
% 63 61 62 63 64 64 66
% % % % % % %
percentage of real estate services revenue
Average number of lead agents 1,981 1,820 1,399 1,826 1,526 1,579 1,603 1,503 1,419
Properties transactions 83 37 162 171 212 168 80 43 47
Properties revenue per transaction 474,690 513,648 445,578 462,563 467,276 477,167 498,847 497,044 459,663
Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
Three Months Ended December 31, Year Ended December 31,
---
2020 2019 2020 2019
---
Real estate services revenue
Brokerage revenue $
182,244 $
123,671 $
607,513 496,480
Partner revenue 15,426 7,008 43,695 27,060
Total real estate services revenue 197,670 130,679 651,208 523,540
Properties revenue 39,399 99,063 209,686 240,507
Other revenue 8,213 4,143 28,212 17,634
Intercompany eliminations (765) (693) (3,013) (1,885)
Total revenue $
244,517 $
233,192 $
886,093 $
779,796
Cost of revenue
Real estate services $
116,835 $
88,703 $
417,140 $
373,150
Properties 41,275 100,382 214,382 245,189
Other 7,052 5,174 25,474 19,239
Intercompany eliminations (765) (693) (3,013) (1,885)
Total cost of revenue $
164,397 $
193,566 $
653,983 $
635,693
Gross profit by segment
Real estate services $
80,835 $
41,976 $
234,068 $
150,390
Properties (1,876) (1,319) (4,696) (4,682)
Other 1,161 (1,031) 2,738 (1,605)
Total gross profit $
80,120 $
39,626 $
232,110 $
144,103
Gross margin (percentage of revenue)
Real estate services 40.9
% 32.1
% 35.9
% 28.7
%
Properties (4.8) (1.3) (2.2) (1.9)
Other 14.1 (24.9) 9.7 (9.1)
Total gross margin 32.8 17.0 26.2 18.5
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SOURCE Redfin
