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Redfin Reports Second Quarter 2021 Financial Results

PR Newswire

SEATTLE, Aug. 5, 2021 /PRNewswire/ — Redfin Corporation (NASDAQ: RDFN) today announced financial results for the second quarter ended June 30, 2021. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation, and depreciation and amortization.

Revenue increased 121% year-over-year to $471 million during the second quarter. Gross profit was $126 million, a increase of 174% from $46 million in the second quarter of 2020. Real estate services gross profit was $88 million, an increase of 90% from $46 million in the second quarter of 2020. Real estate services gross margin was 35%, compared to 34% in the second quarter of 2020. Operating expenses were $156 million, an increase of 210% from $50 million in the second quarter of 2020. Operating expenses were 33% of revenue, up from 24% in the second quarter of 2020.

Net loss was $27.9 million, compared to net loss of $6.6 million in the second quarter of 2020. The dividend on our convertible preferred stock was $1.9 million in the second quarter. Net loss attributable to common stock was $29.8 million. Stock-based compensation was $13.7 million, up from $7.2 million in the second quarter of 2020. Depreciation and amortization was $13.8 million, up from $3.6 million in the second quarter of 2020. Interest income was $0.1 million and interest expense was $2.8 million, compared to $0.4 million and $2.7 million, respectively, in the second quarter of 2020.

Net loss per share attributable to common stock, diluted, was $0.29, compared to net loss per share attributable to common stock, diluted, of $0.08 in the second quarter of 2020.

“Even in a rapidly expanding market, Redfin gained more market-share in the second quarter than at any point since our 2017 initial public offering,” said Redfin CEO Glenn Kelman. “And we took share where it mattered most: in markets where we offer Redfin Premier services, Redfin listings above a million dollars grew three times faster than listings below a million dollars. Despite increased pricing discipline and record gross margins, RedfinNow bought 40% more homes in the second quarter than we did in all of 2020; our properties revenue grew 139%. And even though this was our first quarter owning RentPath, we already hired a world-class RentPath CEO.”

Second Quarter Highlights

  • Reached market share of 1.18% of U.S. existing home sales by value in the second quarter of 2021, an increase of 24 basis points from the second quarter of 2020.
  • Saved homebuyers and sellers over $82 million in the second quarter. 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 application and website reached 48.4 million average monthly visitors in the second quarter, an increase of 14% compared to the second quarter of 2020.
  • Continued RedfinNow expansion by launching in Tucson, Boston and Portland, Oregon.
  • Closed the acquisition of RentPath on April 2; announced the appointment of Jon Ziglar as RentPath’s Chief Executive Officer, effective August 16.
  • Improved software for customers, agents, partners, home services and mortgage teams, including:
    • New data architecture in the cloud that will let Redfin’s software engineers move faster;
    • New Loan Queue software for Redfin mortgage processors to improve workflow by providing a clear list of tasks, deadlines and documents in one place; and
    • Expanding Fast Offers software to Redfin agents in Seattle, making it easy to create offer paperwork on the go with a few clicks.

(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® (“NAR”). NAR data for the most recent period is preliminary and may subsequently be updated by NAR. 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 August 5, 2021, and are subject to substantial uncertainty.

For the third quarter of 2021 we expect:

  • Total revenue between $530 million and $541 million, representing a year-over-year increase between 124% and 128% compared to the third quarter of 2020. Included within total revenue are properties segment revenue between $231 million and $236 million, and RentPath revenue between $40 million and $41 million.
  • Total net loss between $24 million and $20 million, compared to total net income of $34 million in the third quarter of 2020. RentPath’s contribution to the net loss is expected to be approximately $17 million. This guidance includes approximately $14 million of expected stock-based compensation, $14 million of expected depreciation and amortization, and $4 million of expected net interest expense. Net income attributable to common stockholders will include the value of dividends on our convertible preferred stock, which we expect to pay in shares of our common stock.

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 the anticipated benefits from our improved software. 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, as supplemented by our quarterly report for the quarter ended June 30, 2021, 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 real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. 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 our lending 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)


June 30, 2021


December 31, 2020


Assets

Current assets

Cash and cash equivalents

$

735,387

$

925,276

Restricted cash

52,295

20,544

Short-term investments

29,605

131,561

Accounts receivable, net of allowances for credit losses of $204 and $160

84,757

54,719

Inventory

249,003

49,158

Loans held for sale

51,643

42,539

Prepaid expenses

18,028

12,131

Other current assets

7,152

4,898

Total current assets

1,227,870

1,240,826

Property and equipment, net

53,907

43,988

Right-of-use assets, net

58,144

44,149

Long-term investments

36,085

11,922

Goodwill

407,228

9,186

Intangibles, net

203,782

1,830

Other assets, noncurrent

14,059

8,619

Total assets

$

2,001,075

$

1,360,520


Liabilities, mezzanine equity, and stockholders’ equity

Current liabilities

Accounts payable

$

26,095

$

5,644

Accrued liabilities

102,345

69,460

Other payables

17,367

13,184

Warehouse credit facilities

46,425

39,029

Secured revolving credit facility

123,770

23,949

Convertible senior notes, net

23,428

22,482

Lease liabilities

14,633

11,973

Total current liabilities

354,063

185,721

Lease liabilities and deposits, noncurrent

60,958

49,339

Convertible senior notes, net, noncurrent

1,211,517

488,268

Payroll tax liabilities, noncurrent

7,841

6,812

Deferred tax liabilities

1,254

—

Total liabilities

1,635,633

730,140

Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares
authorized; 40,000 shares issued and outstanding

39,846

39,823


Stockholders’ equity

Common stock—par value $0.001 per share; 500,000,000 shares authorized;
104,838,095 and 103,000,594 shares issued and outstanding at June 30, 2021 and
December 31, 2020, respectively

105

103

Additional paid-in capital

651,627

860,556

Accumulated other comprehensive income

77

211

Accumulated deficit

(326,213)

(270,313)

Total stockholders’ equity

325,596

590,557

Total liabilities, mezzanine equity, and stockholders’ equity

$

2,001,075

$

1,360,520

 


Redfin Corporation and Subsidiaries


Consolidated Statements of Comprehensive Loss


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


Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Revenue

Service

$

298,870

$

141,135

$

474,463

$

252,613

Product

172,445

72,530

265,171

152,047

Total revenue

471,315

213,665

739,634

404,660

Cost of revenue(1)

Service

177,762

93,891

312,613

192,259

Product

167,417

73,735

258,527

153,483

Total cost of revenue

345,179

167,626

571,140

345,742

Gross profit

126,136

46,039

168,494

58,918

Operating expenses

Technology and development(1)

41,488

17,961

69,166

38,235

Marketing(1)

55,398

9,482

67,200

35,190

General and administrative(1)

59,567

23,022

96,957

47,349

Total operating expenses

156,453

50,465

233,323

120,774

Loss from operations

(30,317)

(4,426)

(64,829)

(61,856)

Interest income

135

437

293

1,540

Interest expense

(2,813)

(2,665)

(4,151)

(5,109)

Income tax benefit

5,052

—

5,052

—

Other income (expense), net

65

43

(27)

(1,303)

Net loss

$

(27,878)

$

(6,611)

$

(63,662)

$

(66,728)

Dividends on convertible preferred stock

(1,877.865)

(1,284)

(4,213.733)

(1,284)

Net loss attributable to common stock—basic and
diluted

$

(29,756)

$

(7,895)

$

(67,876)

$

(68,012)

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

$

(0.29)

$

(0.08)

$

(0.65)

$

(0.71)

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

104,391,337

98,785,318

103,912,212

96,114,012

Net Loss

$

(27,878)

$

(6,611)

$

(63,662)

$

(66,728)

Other comprehensive income (loss)

Foreign currency translation adjustments

$

0.246

$

3

$

(0.414)

$

(22)

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

84

(137)

134

421

Comprehensive loss

$

(27,794)

$

(6,745)

$

(63,528)

$

(66,329)

 

(1) Includes stock-based compensation as follows:


Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Cost of revenue

$

3,758

$

1,769

$

6,736

$

3,407

Technology and development

5,771

3,124

11,532

6,772

Marketing

535

352

1,078

727

General and administrative

3,679

1,960

6,981

3,510

Total

$

13,743

$

7,205

$

26,327

$

14,416

 


Redfin Corporation and Subsidiaries


Consolidated Statements of Cash Flows


(in thousands, unaudited)


Six Months Ended June 30,


2021


2020


Operating Activities

Net loss

$

(63,662)

$

(66,728)

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

Depreciation and amortization

18,018

6,865

Stock-based compensation

26,327

14,416

Amortization of debt discount and issuance costs

2,203

3,477

Non-cash lease expense

5,448

4,522

Impairment costs

—

1,420

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

238

(1,928)

Other

169

(218)

Change in assets and liabilities:

Accounts receivable, net

(22,312)

(14,959)

Inventory

(199,845)

65,153

Prepaid expenses and other assets

(7,137)

6,827

Accounts payable

15,766

1,040

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

26,915

13,819

Lease liabilities

(6,144)

(5,481)

Origination of loans held for sale

(488,274)

(294,076)

Proceeds from sale of loans originated as held for sale

478,652

274,595

Net cash (used in) provided by operating activities

(213,638)

8,744


Investing activities

Purchases of property and equipment

(13,580)

(6,072)

Purchases of investments

(104,877)

(88,724)

Sales of investments

89,536

3,183

Maturities of investments

92,843

40,351

Cash paid for acquisition

(608,000)

—

Net cash used in investing activities

(544,078)

(51,262)


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

12,496

11,052

Tax payments related to net share settlements on restricted stock units

(16,530)

(6,065)

Borrowings from warehouse credit facilities

464,250

290,891

Repayments to warehouse credit facilities

(456,854)

(271,627)

Borrowings from secured revolving credit facility

230,608

39,587

Repayments to secured revolving credit facility

(130,788)

(36,816)

Proceeds from issuance of convertible senior notes, net of issuance costs

561,529

—

Purchases of capped calls related to convertible senior notes

(62,647)

—

Payments for repurchases and conversions of convertible senior notes

(1,925)

—

Other payables—deposits held in escrow

97

19,056

Principal payments under finance lease obligations

(353)

(30)

Cash paid for secured revolving credit facility issuance costs

(305)

(4)

Net cash provided by financing activities

599,578

155,546

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

—

(22)

Net change in cash, cash equivalents, and restricted cash

(158,138)

113,006

Cash, cash equivalents, and restricted cash:

Beginning of period

945,820

247,448

End of period

787,682

360,454

 


Redfin Corporation and Subsidiaries


Supplemental Financial Information and Business Metrics


(unaudited)


Three Months Ended


Jun. 30,
2021


Mar. 31,
2021


Dec. 31,
2020


Sep. 30
2020


Jun. 30,
2020


Mar. 31,
2020


Dec. 31,
2019


Sep. 30,
2019


Jun. 30,
2019

Monthly average visitors (in thousands)

48,437

46,202

44,135

49,258

42,537

35,519

30,595

35,633

36,557

Real estate services transactions

Brokerage

21,006

14,317

16,951

18,980

13,828

10,751

13,122

16,098

15,580

Partner

4,597

3,944

4,940

5,180

2,691

2,479

2,958

3,499

3,357

Total

25,603

18,261

21,891

24,160

16,519

13,230

16,080

19,597

18,937

Real estate services revenue per
transaction

Brokerage

$

11,307

$

10,927

$

10,751

$

10,241

$

9,296

$

9,520

$

9,425

$

9,075

$

9,332

Partner

3,195

3,084

3,123

2,988

2,417

2,535

2,369

2,295

2,218

Aggregate

9,850

9,233

9,030

8,686

8,175

8,211

8,127

7,865

8,071

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

$

14,612

$

9,621

$

11,478

$

12,207

$

7,576

$

6,098

$

7,588

$

9,157

$

8,986

U.S. market share by value

1.18

%

1.16

%

1.04

%

1.04

%

0.94

%

0.92

%

0.95

%

0.96

%

0.94

%

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

64

%

62

%

63

%

63

%

63

%

61

%

62

%

63

%

64

%

Average number of lead agents

2,456

2,277

1,981

1,820

1,399

1,826

1,526

1,579

1,603

RedfinNow homes sold

292

171

83

37

162

171

212

168

80

Revenue per RedfinNow home sold

$

570,930

$

525,173

$

471,551

$

504,583

$

444,690

$

461,916

$

466,939

$

476,770

$

498,083

 


Redfin Corporation and Subsidiaries


Supplemental Financial Information


(unaudited, in thousands)


Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Real estate services (brokerage)

$

237,511

$

128,543

$

393,957

$

230,894

Real estate services (partner)

14,688

6,506

26,851

12,791

Properties revenue

172,445

72,184

265,171

151,282

Rentals revenue

42,548

—

42,548

—

Other revenue

8,521

7,246

17,878

11,496

Intercompany elimination

(4,398)

(814)

(6,771)

(1,803)

Total revenue

$

471,315

$

213,665

$

739,634

$

404,660

Cost of revenue

Real estate services

$

164,125

$

88,799

$

292,342

$

182,361

Properties

167,420

73,348

258,551

152,647

Rentals

7,570

—

7,570

—

Other

10,462

6,293

19,448

12,537

Intercompany elimination

(4,398)

(814)

(6,771)

(1,803)

Total cost of revenue

$

345,179

$

167,626

$

571,140

$

345,742

Gross profit

Real estate services

$

88,074

$

46,250

$

128,466

$

61,324

Properties

5,025

(1,164)

6,620

(1,365)

Rentals

34,978

—

34,978

—

Other

(1,941)

953

(1,570)

(1,041)

Total gross profit

$

126,136

$

46,039

$

168,494

$

58,918

Gross margin (percentage of revenue)

Real estate services

34.9

%

34.2

%

30.5

%

25.2

%

Properties

2.9

(1.6)

2.5

(0.9)

Rentals

82.2

—

82.2

—

Other

(22.8)

13.2

(8.8)

(9.1)

Total gross margin

26.8

21.5

22.8

14.6

 

 

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SOURCE Redfin