Redfin Third-Quarter 2019 Revenue up 70% Year-over-Year to $239 Million
SEATTLE, Nov. 6, 2019 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the third quarter ended September 30, 2019. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation as well as depreciation and amortization expenses.
Revenue increased 70% year-over-year to $239 million during the third quarter. Gross profit was $53.4 million, an increase of 26% from $42.3 million in the third quarter of 2018. Real estate services gross profit was $54.1 million, an increase of 26% from $43.0 million in the third quarter of 2018. Real estate services gross margin was 35%, compared to 34% in the third quarter of 2018. Operating expenses were $45.9 million, an increase of 18% from $39.0 million in the third quarter of 2018. Operating expenses were 19% of revenue, down from 28% in the third quarter of 2018.
Net income was $6.8 million, compared to net income of $3.5 million in the third quarter of 2018. Stock-based compensation was $7.5 million, up from $5.5 million in the third quarter of 2018. Depreciation and amortization was $2.6 million, up from $2.2 million in the third quarter of 2018. Interest income was $1.6 million and interest expense was $2.3 million, compared to $1.8 million and $1.6 million, respectively, in the third quarter of 2018.
Net income per share, basic and diluted, was $0.07, compared to net income per share, basic and diluted, of $0.04 in the third quarter of 2018.
"Redfin's third quarter was strong across the board, with accelerating revenues and year-over-year gross-margin gains in every one of our businesses," said Redfin CEO Glenn Kelman. "We're investing more in better service, but also in disruptive technologies that let people tour and buy homes without an agent. We've expanded instant offers for homeowners from six to ten markets, and are now showing homebuyers the commissions that a seller is offering their agent. These are big strides toward our long-term goal of redefining real estate in the consumers' favor."
Highlights
-- Reached market share of 0.96% of U.S. existing home sales by value in
the third quarter of 2019, an increase of 0.02 percentage points from
the second quarter of 2019, and an increase of 0.11 percentage points
from the third quarter of 2018.((1))
-- Continued to drive strong traffic growth, with visitors to our website
and mobile application increasing by 22% over the third quarter of 2018.
-- Saved Redfin homebuyers and sellers over $57 million in the third
quarter, compared to a 2.5% commission typically charged by traditional
agents.
-- Expanded RedfinNow to Austin, Houston, and San Antonio, TX. As of the
end of the third quarter, RedfinNow was also available in Denver, CO,
Dallas, TX, Los Angeles, San Diego, Inland Empire, and Orange County,
CA.
-- Launched Redfin Direct in Northern Virginia, allowing unrepresented
homebuyers to make offers on Redfin listings using a step-by-step online
tool, which in turn can help Redfin sellers save money in buyer agent
commission fees. During the third quarter, our listings received 68
Direct offers, resulting in 18 closings.
-- Launched Direct Access for RedfinNow listings in Austin, Denver and our
Southern California markets. Direct Access makes it easy for buyers to
tour RedfinNow listings on their own with their smartphone.
-- Redfin Home Services rolled out a fleet of Redfin-branded vans for our
renovation superintendents, further streamlining the process of getting
homes ready for the market.
-- Launched a referral partnership with Opendoor in Atlanta and Phoenix to
give more Redfin customers the chance to compare a cash offer to listing
with a Redfin agent. Homesellers in these markets can now request an
Opendoor offer through Redfin's website and mobile application.
-- Expanded Fast Offers technology to Redfin agents in California, making
it simple for agents to prepare offer paperwork for clients even on a
mobile device. The software is now available in 33 markets.
-- In an effort to arm consumers with as much information as possible,
Redfin is now displaying the commission offered to the buyer's agent for
homes listed by 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 November 6, 2019, and are subject to substantial uncertainty.
For the fourth quarter of 2019 we expect:
-- Total revenue between $211 million and $220 million, representing
year-over-year growth between 70% and 77% compared to the fourth quarter
of 2018. Properties segment revenue between $80 million and $85 million
is included in the guidance provided.
-- Net loss between $12.8 million and $9.5 million, compared to net loss of
$12.2 million in the fourth quarter of 2018. This guidance includes
approximately $7.6 million of expected stock-based compensation and $2.7
million of expected depreciation and amortization.
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, 2018, as supplemented by our Quarterly Report for the quarter ended September 30, 2019, 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 residential real estate company. Founded by software engineers, we run the country's #1 most-visited brokerage website and offer a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets throughout the United States and Canada. Our mission is to redefine real estate in the consumer's favor. In a commission-driven industry, we put the customer first. We do this by pairing our own agents with our own technology to create a service that is faster, better, and costs less. Since our launch in 2006 through 2018, we have helped customers buy or sell more than 170,000 homes worth more than $85 billion.
Redfin-F
Redfin Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except share and per share amounts, unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
---
Revenue
Service $
158,519 $
128,905 $
405,160 $
339,403
Product 80,164 11,350 141,445 23,388
Total revenue 238,683 140,255 546,605 362,791
Cost of revenue(1)
Service 104,397 86,294 297,320 245,490
Product 80,909 11,656 144,807 24,086
Total cost of revenue 185,306 97,950 442,127 269,576
Gross profit 53,377 42,305 104,478 93,215
Operating expenses
Technology and
development(1) 18,801 14,310 50,421 40,105
Marketing(1) 8,361 8,236 68,611 36,006
General and
administrative(1) 18,779 16,470 57,881 48,532
Total operating expenses 45,941 39,016 176,913 124,643
Income (loss) from
operations 7,436 3,289 (72,435) (31,428)
Interest income 1,576 1,775 5,804 3,082
Interest expense (2,274) (1,610) (6,564) (1,610)
Other income, net 44 21 172 200
Net income (loss) $
6,782 $
3,475 $
(73,023) $
(29,756)
Net income (loss) per share
-basic $
0.07 $
0.04 $
(0.80) $
(0.35)
Net income (loss) per share
-diluted $
0.07 $
0.04 $
(0.80) $
(0.35)
Weighted average shares -
basic 91,994,731 87,743,223 91,279,086 84,327,266
Weighted average shares -
diluted 97,171,270 94,642,463 91,279,086 84,327,266
Net income (loss) $
6,782 $
3,475 $
(73,023) $
(29,756)
Other comprehensive income:
Foreign currency translation
adjustments (10) 28
Unrealized loss on
available-for-sale
securities (8) (2)
Total comprehensive income
(loss) $
6,764 $
3,475 $
(72,997) $
(29,756)
(1) Includes stock-based compensation as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
---
Cost of revenue $
1,605 $
1,370 $
4,398 $
4,061
Technology and development 3,320 2,135 8,661 5,335
Marketing 390 155 1,025 431
General and administrative 2,195 1,838 5,708 4,646
Total $
7,510 $
5,498 $
19,792 $
14,473
Redfin Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
September 30, 2019 December 31, 2018
---
Assets
Current assets
Cash and cash equivalents $
209,234 $
432,608
Restricted cash 9,984 6,446
Short-term investments 62,054
Accrued revenue, net 24,434 15,363
Inventory 105,460 22,694
Loans held for sale 22,246 4,913
Prepaid expenses 8,391 11,916
Other current assets 5,763 2,307
Total current assets 447,566 496,247
Property and equipment, net 37,560 25,187
Right-of-use asset, net 45,513
Long-term investments 38,480
Goodwill and intangibles, net 11,626 11,992
Other non-current assets 11,240 9,395
Total assets $
591,985 $
542,821
Liabilities and stockholders' equity
Current liabilities
Accounts payable $
3,173 $
2,516
Accrued liabilities 50,867 30,837
Other payables 7,157 6,544
Borrowings under warehouse
credit facilities 21,987 4,733
Current operating lease
liabilities 9,731
Current portion of deferred
rent 132 1,588
Total current liabilities 93,047 46,218
Non-current operating lease
liabilities 53,059
Deferred rent - 11,079
Convertible senior notes, net 118,158 113,586
Total liabilities 264,264 170,883
Commitments and contingencies
Stockholders' equity
Common stock-par value $0.001
per share; 500,000,000 shares
authorized; 92,212,316 and
90,151,341 shares issued and
outstanding, respectively 92 90
Additional paid-in capital 571,607 542,829
Accumulated other
comprehensive income 26
Accumulated deficit (244,004) (170,981)
Total stockholders' equity 327,721 371,938
Total liabilities and
stockholders' equity $
591,985 $
542,821
Redfin Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Nine Months Ended September 30,
2019 2018
---
Operating activities
Net loss $
(73,023) $
(29,756)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 6,366 6,123
Stock-based compensation 19,792 14,472
Amortization of debt discount
and issuance costs 4,674 1,128
Non-cash lease expense 4,727
Other (401)
Change in assets and liabilities:
Accrued revenue (9,071) 80
Inventory (82,766) (21,779)
Prepaid expenses and other
assets (82) 1,808
Accounts payable 579 702
Accrued liabilities and other
payables 18,994 11,357
Operating lease liabilities (5,207)
Deferred rent 112 (913)
Origination of loans held for
sale (285,182) (56,157)
Proceeds from sale of loans
originated as held for sale 267,850 52,127
Net cash used in operating
activities (132,638) (20,808)
Investing activities
Purchases of property and
equipment (12,821) (5,528)
Purchases of investments (106,063)
Sale of investments 1,005
Maturities of investments 4,900
Net cash used in investing
activities (112,979) (5,528)
Financing activities
Proceeds from the issuance of
shares resulting from employee
equity plans 10,869 17,314
Tax payments related to net
share settlements on restricted
stock units (2,856) (705)
Borrowings from warehouse credit
facilities 280,129 54,806
Repayments of warehouse credit
facilities (262,875) (51,031)
Other payables -deposits held
in escrow 637 7,684
Proceeds from issuance of
convertible notes, net of
issuance costs - 138,953
Proceeds from follow on offering - 107,593
Cash paid for debt issuance
costs (152)
Net cash provided by financing
activities 25,752 274,614
Effect of exchange rate changes
on cash and cash equivalents 28
Net change in cash, cash
equivalents, and restricted
cash (219,837) 248,278
Cash, cash equivalents, and restricted cash:
Beginning of period 439,055 212,658
End of period $
219,218 $
460,936
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,
2019 2019 2019 2018 2018 2018 2018 2017 2017
---
Monthly average
visitors (in
thousands) 35,633 36,557 31,107 25,212 29,236 28,777 25,820 21,377 24,518
Real estate services transactions
Brokerage 16,098 15,580 8,435 9,822 12,876 12,971 7,285 8,598 10,527
Partner 3,499 3,357 2,125 2,749 3,333 3,289 2,237 2,739 3,101
Total 19,597 18,937 10,560 12,571 16,209 16,260 9,522 11,337 13,628
Real estate services revenue per
transaction
Brokerage $
9,075 $
9,332 $
9,640 $
9,569 $
9,227 $
9,510 $
9,628 $
9,659 $
9,289
Partner 2,295 2,218 2,153 2,232 2,237 2,281 2,137 2,056 1,960
Aggregate 7,865 8,071 8,134 7,964 7,790 8,048 7,869 7,822 7,621
Aggregate home
value of real
estate services
transactions (in
millions) $
9,157 $
8,986 $
4,800 $
5,825 $
7,653 $
7,910 $
4,424 $
5,350 $
6,341
U.S. market share 0.96 0.94 0.83 0.81 0.85 0.83 0.73 0.71 0.71
by value % % % % % % % % %
Revenue from top-
10 Redfin % % % % % % % % %
markets as a
percentage of
real estate
services revenue 63 64 64 66 66 68 66 69 69
Average number of
lead agents 1,579 1,603 1,503 1,419 1,397 1,415 1,327 1,118 1,028
Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
---
Revenue by segment
Brokerage revenue $
146,096 $
118,809 $
372,809 $
312,306
Partner revenue 8,030 7,456 20,053 19,741
Total real estate
services revenue 154,126 126,265 392,862 332,047
Properties revenue 80,164 11,350 141,445 23,388
Other revenue 5,161 2,691 13,490 7,407
Intercompany elimination (768) (51) (1,192) (51)
Total revenue 238,683 140,255 546,605 362,791
Cost of revenue
Real estate services $
100,048 $
83,274 $
284,447 $
236,775
Properties 80,909 11,656 144,807 24,086
Other 5,117 3,071 14,065 8,766
Intercompany elimination (768) (51) (1,192) (51)
Total cost of revenue $
185,306 $
97,950 $
442,127 $
269,576
Gross profit by segment
Real estate services $
54,078 $
42,991 $
108,415 $
95,272
Properties (745) (306) (3,362) (698)
Other 44 (380) (575) (1,359)
Total gross profit $
53,377 $
42,305 $
104,478 $
93,215
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SOURCE Redfin
