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Redfin revenue increased 88% year-over-year to $233 million during the fourth quarter

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Real estate services gross profit was $42 million, an increase of 51% from $28 million in the fourth quarter of 2018.

Redfin Corporation (NASDAQ: RDFN) today announced financial results for the fourth quarter and full year ended December 31, 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.

Fourth Quarter 2019
Revenue increased 88% year-over-year to $233 million during the fourth quarter. Gross profit was $40 million, an increase of 51% from $26 million in the fourth quarter of 2018. Real estate services gross profit was $42 million, an increase of 51% from $28 million in the fourth quarter of 2018. Real estate services gross margin was 32%, compared to 28% in the fourth quarter of 2018. Operating expenses were $46 million, an increase of 20% from $39 million in the fourth quarter of 2018. Operating expenses were 20% of revenue, down from 31% in the fourth quarter of 2018.

Net loss was $7.8 million, compared to net loss of $12.2 million in the fourth quarter of 2018. Stock-based compensation was $8.0 million, up from $6.0 million in the fourth quarter of 2018. Depreciation and amortization was $2.9 million, up from $2.3 million in the fourth quarter of 2018. Interest income was $1.3 million and interest expense was $2.4 million, compared to $2.3 million and $2.1 million, respectively, in the fourth quarter of 2018.

Net loss per share, basic and diluted, was $0.08, compared to net loss per share, basic and diluted, of $0.14 in the fourth quarter of 2018.

Full Year 2019
Revenue increased 60% year-over-year to $780 million in 2019. Gross profit was $144 million, an increase of 21% from $119 million in 2018. Real estate services gross profit was $150 million, an increase of 22% from $123 million in 2018. Real estate services gross margin was 29%, compared to 28% in 2018. Operating expenses were $223 million, an increase of 37% from $163 million in 2018. Operating expenses were 29% of revenue, down from 34% in 2018.

Net loss was $81 million, compared to net loss of $42 million in 2018. Stock-based compensation was $28 million, up from $20 million in 2018. Depreciation and amortization was $9.2 million, up from $8.5 million in 2018. Interest income was $7.1 million and interest expense was $8.9 million, compared to $5.4 million and $3.7 million, respectively, in 2018.

Net loss per share, basic and diluted, was $0.88, compared to net loss per share, basic and diluted, of $0.49 in 2018.

“This was the fourth quarter in a row that our real estate services revenue growth accelerated, and the second quarter in a row that gross margins improved in every segment of our business,” said Redfin CEO Glenn Kelman. “Our multi-year investments in a broader solution for our customers that includes mortgage, title, renovations and instant offers are really starting to pay off, but what’s most important is that we’ve been able to grow while maintaining our commitment to efficiency, so customers get low prices and Redfin can generate more gross profit.”

Highlights

  • Reached market share of 0.94% of U.S. existing home sales by value in the fourth quarter of 2019, an increase of 0.13 percentage points from the fourth quarter of 2018.(1)
  • Saved homebuyers and sellers over $44 million in the fourth quarter and over $180 million in 2019. 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. 
  • Earned a Net Promoter Score, a measure of customer satisfaction, that is 18% higher than competing brokerages’, as measured in a Redfin-commissioned November 2019 survey of people who bought or sold a home in the previous 12 months. 2019 marked the fifth consecutive year that our customer satisfaction was higher than that of traditional brokers. 
  • Continued to expand our nationwide footprint in the fourth quarter, launching brokerage services in Chattanooga, TN, Savannah, GA and Northern Kentucky. Redfin is now reaching customers in 94 markets across the United States and Canada and offers services in markets covering 78% of the U.S. population. 
  • Introduced a new listing fee to unify our pricing nationwide and reward our most loyal customers with the greatest savings. The brokerage previously charged either a 1% or 1.5% fee based on the market. Redfin now charges a 1% listing fee to sellers who also buy their next home with Redfin within 12 months and a 1.5% listing fee to sellers who just sell their home with Redfin. 
  • RedfinNow continued expansion, launching in Las Vegas in the fourth quarter of 2019. RedfinNow is available to consumers in 13 markets in four states. 
  • Redfin Mortgage expanded to Massachusetts, Michigan and Wisconsin and opened a new office in Tempe, Arizonato support growth in 2020. 
  • Redfin Mortgage originated $110 million in loan volume in the fourth quarter of 2019, an increase of 370% from the fourth quarter of 2018. For the full year 2019, Redfin Mortgage originated $395 million in loan volume, an increase of 460% from 2018. 
  • Expanded Direct Access from 10 to 13 markets, allowing buyers to tour RedfinNow listings on their own schedule by unlocking the door with a tap on a smartphone. 
  • Launched Redfin Direct, a service to help unrepresented buyers make offers on Redfin listings, in major markets across Texas (Austin, Dallas, Houston, San Antonio) and California (Fresno, Inland Empire, Los Angeles, Orange County, Sacramento, San Diego, Santa Barbara, Ventura County). At the end of 2019, Redfin Direct was available in 14 markets in four states. 
  • Improved the accuracy of the Redfin Estimate for off-market homes by over 30 basis points and expanded coverage to five metro areas and several property types, including land and multi-family properties. Redfin Estimate now covers 85 million properties across the United States. 
  • Upgraded our software for agents by making it faster and releasing new features to help agents track and prioritize their deals and categorize customers at various stages of the homebuying and selling process. Other software released in the fourth quarter includes a new listings activation form that makes it simple for listing coordinators to collect all the necessary information about each home in one place, making it easier to take a listing live on the market. 
  • Increased our proportion of women technologists from 32.9% in 2018 to 34.4% in 2019. We continue to work towards our goal of 50% overall as well as prioritizing racial and ethnic diversity because employing a diverse workforce will help us deliver better service to all people.

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 12, 2020, and are subject to substantial uncertainty.

For the first quarter of 2020 we expect:

  • Total revenue between $179 million and $188 million, representing year-over-year growth between 63% and 71% compared to the first quarter of 2019. Properties segment revenue between $69 million and $74 million is included in the guidance provided. 
  • Net loss between $72 million and $68 million, compared to net loss of $67 million in the first quarter of 2019. This guidance includes approximately $9.1 million of expected stock-based compensation and $3.2 million of expected depreciation and amortization.

About Redfin
Redfin 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.

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