Redfin First-Quarter 2020 Revenue up 73% Year-over-Year to $191 Million
SEATTLE, May 7, 2020 /PRNewswire/ -- Redfin Corporation (NASDAQ: RDFN) today announced financial results for the first quarter ended March 31, 2020. 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 73% year-over-year to $191 million during the first quarter. Gross profit was $13 million, an increase of 368% from $3 million in the first quarter of 2019. Real estate services gross profit was $15 million, an increase of 195% from $5 million in the first quarter of 2019. Real estate services gross margin was 14%, compared to 6% in the first quarter of 2019. Operating expenses were $70 million, flat from $70 million in the first quarter of 2019. Operating expenses were 37% of revenue, down from 64% in the first quarter of 2019.
Net loss was $60 million, compared to net loss of $67 million in the first quarter of 2019. Stock-based compensation was $7.2 million, up from $6.4 million in the first quarter of 2019. Depreciation and amortization was $3.3 million, up from $1.6 million in the first quarter of 2019. Interest income was $1.1 million and interest expense was $2.4 million, compared to $2.3 million and $2.1 million, respectively, in the first quarter of 2019.
Net loss per share, basic and diluted, was $0.64, compared to net loss per share, basic and diluted, of $0.74 in the first quarter of 2019.
"Real estate commerce has probably virtualized itself more in the past two months than it had in the prior 20 years," said Redfin CEO Glenn Kelman. "This makes Redfin's technology advantage over other brokers more important than ever. But what matters most isn't what we built prior to this pandemic; it's how we've reacted since. We were the first major broker to encourage homebuyers to tour homes via video-chat, on March 3; the first to warn the public of a possible housing-market downturn, on March 4; the first to cancel all open houses to protect public health, on March 16; and the first to offer homebuyers self-service access to the listings being sold by our customers, on April 23. And there are still so many firsts ahead of us. The reason we're working so hard is to bring back all the colleagues and friends we lost in our April furlough."
First Quarter Highlights
-- Reached market share of 0.93% of U.S. existing home sales by value in
the first quarter of 2020, an increase of 0.10 percentage points from
the first quarter of 2019.((1))
-- Saved homebuyers and sellers over $30 million in the first quarter of
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.
-- Launched Redfin Premier, a luxury service offering enhanced local and
international marketing, as well as high-end photography and branding
for million-dollar homes. The program was introduced in Austin, Boston,
Chicago, Denver, Hawaii, Maryland, Orange County, Portland, Sacramento,
San Diego and Northern Virginia and will be expanded to other markets
over time.
-- Expanded the brokerage's national footprint by launching agent service
in Flagstaff, AZ.
COVID-19 Actions
Redfin took swift action to respond to COVID-19 and prepare the business to weather the associated economic decline, while strengthening its long-term competitive advantage as the leading technology-powered residential real estate company:
-- As soon as cases of COVID-19 were being reported in the Seattle area,
the company instituted new policies to safeguard the health of Redfin
customers and employees. Starting March 4, Redfin directed all employees
in its Seattle office to work from home and asked employees across all
of its other offices to follow suit beginning March 5.
-- Starting on March 4, Redfin began publishing weekly reports on the
impact of COVID-19 on the housing market, real estate listing activity,
sales and homebuyer demand, providing transparent information and the
latest data to its agents and customers.
-- Established a company-wide COVID-19 response team to monitor all state
and local government orders and provide real-time guidance to employees.
-- Pivoted its strategic priorities and business operations, including
temporarily pausing making offers for homes through RedfinNow and
shifting engineering focus to building software for the virtual
brokerage.
-- Raised $110 million through the sale of capital stock to Durable Capital
Partners LP.
-- Rapidly expanded its virtual brokerage capabilities and software in
response to health and safety concerns and stay at home orders.
Specifically:
-- Updated its website and mobile application to highlight virtual
services and allow customers to request a live video chat tour with
a Redfin agent with one click. The software also lets the customer
select their preferred video chat application and provides
market-specific messages and touring options based on local
ordinances. For the week ended May 2, 27% of Redfin tour requests
were for video tours.
-- Increased the prominence and visibility of 3D Virtual Walkthroughs
on all Redfin listings.
-- Encouraged customers to take advantage of the digital closing
capabilities of Redfin Mortgage and Title Forward in markets where
the law allows them.
-- Cut executive compensation and bonuses, eliminated bonuses for
headquarters employees and temporarily cut headquarters salaries between
10% and 15%.
-- In April, reduced its number of employees by approximately 400 people,
which represented approximately 10% of employees, and placed
approximately an additional 1,000 employees on furlough.
-- In response to strengthening homebuying demand in late April, began to
unwind some of the actions taken in March and early April. RedfinNow
will resume making offers on homes in select markets in May. The company
also plans to resume television advertising with new ads in select
markets, and in early May, asked approximately 135 employees to return
from furlough to serve renewed homebuying demand.
((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 May 7, 2020, and are subject to substantial uncertainty.
For the second quarter of 2020 we expect:
-- Total revenue between $179 million and $189 million, representing a
year-over-year decrease between 9% and 4% compared to the second quarter
of 2019. Properties segment revenue between $61 million and $65 million
is included in the guidance provided.
-- Net loss between $26 million and $21 million, compared to net loss of
$13 million in the second quarter of 2019. This guidance includes
approximately $7.0 million of expected stock-based compensation and $3.5
million of expected depreciation and amortization. The guidance also
contains approximately $4.4 million of severance costs and $3.7 million
of furlough costs, both including benefits.
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, and expansion of our Redfin Premiere service offering. 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, 2019, as supplemented by our quarterly report for the quarter ended March 31, 2020, 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 in 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 2019, we have helped customers buy or sell more than 235,000 homes worth more than $115 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/coronavirus-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 Statements of Comprehensive Loss
(in thousands, except share and per share amounts, unaudited)
Three Months Ended March 31,
2020 2019
---
Revenue
Service $
111,478 $
88,768
Product 79,517 21,373
Total revenue 190,995 110,141
Cost of revenue(1)
Service 98,368 84,395
Product 79,748 22,993
Total cost of revenue 178,116 107,388
Gross profit 12,879 2,753
Operating expenses
Technology and
development(1) 20,274 15,556
Marketing(1) 25,708 33,201
General and
administrative(1) 24,327 21,448
Total operating expenses 70,309 70,205
Loss from operations (57,430) (67,452)
Interest income 1,103 2,316
Interest expense (2,444) (2,136)
Other income (expense), net (1,346) 92
Net loss $
(60,117) $
(67,180)
Net loss per share
attributable to common
stock-basic and diluted $
(0.64) $
(0.74)
Weighted average shares of
common stock-basic and
diluted 93,442,706 90,610,416
Other comprehensive income
Net loss $
(60,117) $
(67,180)
Foreign currency
translation adjustments (25) 1
Unrealized gain on
available-for-sale
securities 559
Total comprehensive loss $
(59,583) $
(67,179)
(1) Includes stock-based compensation as follows:
Three Months Ended March 31,
2020 2019
---
Cost of revenue $
1,638 $
1,465
Technology and development 3,648 2,656
Marketing 375 286
General and administrative 1,550 1,999
Total $
7,211 $
6,406
Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
March 31, 2020 December 31, 2019
---
Assets
Current assets
Cash and cash equivalents $
213,940 $
234,679
Restricted cash 16,772 12,769
Short-term investments 75,049 70,029
Accounts receivable, net 21,821 19,223
Inventory 70,649 74,590
Loans held for sale 44,321 21,985
Prepaid expenses 9,555 14,822
Other current assets 5,243 3,496
Total current assets 457,350 451,593
Property and equipment, net 40,496 39,577
Right-of-use assets, net 49,972 52,004
Long-term investments 26,711 30,978
Goodwill and intangibles, net 11,382 11,504
Other non-current assets 8,923 10,557
Total assets $
594,834 $
596,213
Liabilities and stockholders' equity
Current liabilities
Accounts payable $
2,909 $
2,122
Accrued liabilities 58,456 38,022
Other payables 11,717 7,884
Warehouse credit facilities 42,586 21,302
Secured revolving credit facility 8,901 4,444
Current lease liabilities 11,533 11,408
Total current liabilities 136,102 85,182
Non-current lease liabilities 57,254 59,869
Convertible senior notes, net 121,292 119,716
Total liabilities 314,648 264,767
Commitments and contingencies
Stockholders' equity
Common stock-par value $0.001 per
share; 500,000,000 shares authorized;
93,957,774 and 93,001,597 shares issued
and outstanding, respectively 94 93
Additional paid-in capital 591,421 583,097
Accumulated other comprehensive income 575 42
Accumulated deficit (311,904) (251,786)
Total stockholders' equity 280,186 331,446
Total liabilities and stockholders'
equity $
594,834 $
596,213
Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three Months Ended March 31,
2020 2019
---
Operating Activities
Net loss $
(60,117) $
(67,180)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 3,307 1,637
Stock-based compensation 7,211 6,406
Amortization of debt discount
and issuance costs 1,730 1,507
Non-cash lease expense 2,254 1,216
Impairment costs 1,420
Other (989)
Change in assets and liabilities:
Accounts receivable, net (2,598) (890)
Inventory 3,941 (15,612)
Prepaid expenses and other
assets 3,409 1,441
Accounts payable 514 14,848
Accrued liabilities and other
payables 20,626 21,764
Lease liabilities (2,693) (1,459)
Origination of loans held for
sale (132,697) (49,850)
Proceeds from sale of loans
originated as held for sale 111,233 39,015
Net cash used in operating
activities (43,449) (47,157)
Investing activities
Purchases of property and
equipment (3,406) (3,151)
Purchases of investments (33,267)
Sales of investments 31,608
Maturities of investments 1,597
Net cash used in investing
activities (3,468) (3,151)
Financing activities
Proceeds from the issuance of
shares resulting from employee
equity plans 4,103 3,732
Tax payments related to net
share settlements on restricted
stock units (3,307) (818)
Borrowings from warehouse credit
facilities 131,310 48,557
Repayments to warehouse credit
facilities (110,025) (38,097)
Borrowings from secured
revolving credit facility 11,854
Repayments to secured revolving
credit facility (7,398)
Other payables-deposits held in
escrow 3,684 3,968
Principal payments for finance
lease obligations (15)
Net cash provided by financing
activities 30,206 17,342
Effect of exchange rate changes
on cash and cash equivalents (25)
Net change in cash, cash
equivalents, and restricted
cash (16,736) (32,966)
Cash, cash equivalents, and restricted cash:
Beginning of period 247,448 439,055
End of period $
230,712 $
406,089
Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
Three Months Ended
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2020 2019 2019 2019 2019 2018 2018 2018 2018
---
Monthly average
visitors (in
thousands) 35,519 30,595 35,633 36,557 31,107 25,212 29,236 28,777 25,820
Real estate services
transactions
Brokerage 10,751 13,122 16,098 15,580 8,435 9,822 12,876 12,971 7,285
Partner 2,479 2,958 3,499 3,357 2,125 2,749 3,333 3,289 2,237
Total 13,230 16,080 19,597 18,937 10,560 12,571 16,209 16,260 9,522
Real estate services revenue per
transaction
Brokerage $
9,520 $
9,425 $
9,075 $
9,332 $
9,640 $
9,569 $
9,227 $
9,510 $
9,628
Partner 2,535 2,369 2,295 2,218 2,153 2,232 2,237 2,281 2,137
Aggregate 8,211 8,127 7,865 8,071 8,134 7,964 7,790 8,048 7,869
Aggregate home
value of real
estate services
transactions (in
millions) $
6,098 $
7,588 $
9,157 $
8,986 $
4,800 $
5,825 $
7,653 $
7,910 $
4,424
U.S. market share 0.93 0.94 0.96 0.94 0.83 0.81 0.85 0.83 0.73
by value % % % % % % % % %
Revenue from top-
10 Redfin % % % % % % % % %
markets as a
percentage of
real estate
services revenue 61 62 63 64 64 66 66 68 66
Average number of
lead agents 1,826 1,526 1,579 1,603 1,503 1,419 1,397 1,415 1,327
Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
Three Months Ended March 31,
2020 2019
---
Real estate services revenue
Brokerage revenue $
102,351 $
81,314
Partner revenue 6,285 4,576
Total real estate
services revenue 108,636 85,890
Properties revenue 79,098 21,373
Other revenue 4,250 3,047
Intercompany
eliminations (989) (169)
Total revenue $
190,995 $
110,141
Cost of revenue
Real estate services $
93,562 $
80,784
Properties 79,299 22,993
Other 6,244 3,780
Intercompany
eliminations (989) (169)
Total cost of revenue $
178,116 $
107,388
Gross profit by segment
Real estate services $
15,074 $
5,106
Properties (201) (1,620)
Other (1,994) (733)
Total gross profit $
12,879 $
2,753
Gross margin (percentage of revenue)
Real estate services 13.9
% 5.9
%
Properties (0.3) (7.6)
Other (46.9) (24.1)
Total gross margin 6.7 2.5
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SOURCE Redfin
