Redfin Reports First Quarter 2021 Financial Results
SEATTLE - May 5, 2021 - Redfin Corporation (NASDAQ: RDFN) today announced financial results for the first quarter ended March 31, 2021. All financial measures, unless otherwise noted, are presented on a GAAP basis and include stock-based compensation, and depreciation and amortization.
Revenue increased 40% year-over-year to $268 million during the first quarter. Gross profit was $42 million, an increase of 229% from $13 million in the first quarter of 2020. Real estate services gross profit was $40 million, an increase of 168% from $15 million in the first quarter of 2020. Real estate services gross margin was 24%, compared to 14% in the first quarter of 2020. Operating expenses were $77 million, an increase of 9% from $70 million in the first quarter of 2020. Operating expenses were 29% of revenue, down from 37% in the first quarter of 2020.
Net loss was $36 million, compared to net loss of $60 million in the first quarter of 2020. The dividend on our convertible preferred stock was $2.3 million in the first quarter. Net loss attributable to common stock was $38 million. Stock-based compensation was $12.6 million, up from $7.2 million in the first quarter of 2020. Depreciation and amortization was $4.4 million, up from $3.3 million in the first quarter of 2020. Interest income was $0.2 million and interest expense was $1.3 million, compared to $1.1 million and $2.4 million, respectively, in the first quarter of 2020.
Net loss per share attributable to common stock, diluted, was $0.37, compared to net loss per share, diluted, of $0.64 in the first quarter of 2020.
“After scrambling in the second half of 2020 to hire enough agents and lenders to handle a pandemic-driven surge in demand, Redfin is just about hitting on all cylinders,” said Redfin CEO Glenn Kelman. “From the fourth quarter of 2020 to the first quarter of 2021, our year-over-year market-share gains more than doubled, and our year-over-year gross-margin gains also accelerated. We tripled the rate at which we’re scheduling home tours instantly and automatically, giving our customers a competitive advantage when homes are selling faster than ever. Our RedfinNow business of buying and selling homes returned to growth and earned its first significant gross profits, and our mortgage business continued to grow at a year-over-year rate of about 200%.”
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First Quarter Highlights
•Reached market share of 1.14% of U.S. existing home sales by value in the first quarter of 2021, an increase of 21 basis points from the first quarter of 2020.(1)
•Saved homebuyers and sellers over $42 million in the first 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 46 million average monthly users in the first quarter, an increase of 30% compared to the first quarter of 2020.
•Completed the acquisition of RentPath on April 2. RentPath is a leading rental listings company, with sites including ApartmentGuide.com, Rent.com, and Rentals.com. Combined with RentPath, Redfin can now be a nationwide destination for all consumers looking for a home.
•Continued expansion of RedfinNow by launching in Phoenix, Maryland, Northern Virginia and Washington D.C. in the first quarter of 2021.
•Launched Redfin Premier service for luxury homes in Lake Tahoe, Los Angeles, Santa Barbara, San Francisco, Seattle and Washington, D.C., expanding from 14 to 20 markets. Redfin Premier offers high-end photography and premium marketing to showcase million dollar homes and reach luxury buyers around the globe.
•Upgraded our software for customers, agents, partners, home services and mortgage teams, including:
◦Shipped new software for home sale advisors to stay in touch with prospective home sellers and guide them toward the Redfin selling solution that meets their needs whether that is listing with a Redfin agent or getting a cash offer from RedfinNow.
◦Began publishing the commission offered to the buyer agent on homes for sale to give consumers more transparent information about real estate agent fees.
•Published our 2020 Diversity at Redfin report to track our progress and the next steps in our efforts to make Redfin a better place to work for all people. The share of women and people of color at the company and within leadership roles increased from 2019 to 2020. While there is continued opportunity for improvement, the percentage of Black employees rose from 7.5% to 8.5% and the number of Latinx employees rose from 8.4% to 10.0%.
•Subsequent to the first quarter, launched our annual media campaign on April 19 featuring on-demand tours.
◦TV ads are airing in 15 markets and on national cable networks: Welcome to Redfin.
◦Supporting listing growth with digital videos on YouTube and Facebook.
◦Developed new radio ads to drive customers to tour with 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 May 5, 2021, and are subject to substantial uncertainty.
For the second quarter of 2021 we expect:
•Total revenue between $446 million and $457 million, representing a year-over-year increase between 109% and 114% compared to the second quarter of 2020. Included within total revenue are properties segment revenue between $151 million and $156 million, and RentPath revenue between $41 million and $42 million.
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•Total net loss between $38 million and $32 million, compared to total net loss of $7 million in the second quarter of 2020. RentPath’s contribution to the net loss is expected to be between $10 million and $9 million. This guidance includes approximately $13 million of expected stock-based compensation, $10 million of expected depreciation and amortization, $6 million of expected transaction fees associated with the RentPath acquisition, and $3 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. 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 March 31, 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 broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. 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. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 95 markets across the U.S. and Canada and employ over 4,100 people.
Redfin-F
Contacts
Investor Relations
Meg Nunnally, 206-576-8132
ir@redfin.com
Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com
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Redfin Corporation and Subsidiaries
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts, unaudited)
Three Months Ended March 31,
2021
2020
Revenue
Service
$
175,593
$
111,478
Product
92,726
79,517
Total revenue
268,319
190,995
Cost of revenue(1)
Service
134,851
98,368
Product
91,110
79,748
Total cost of revenue
225,961
178,116
Gross profit
42,358
12,879
Operating expenses
Technology and development(1)
27,678
20,274
Marketing(1)
11,802
25,708
General and administrative(1)
37,391
24,327
Total operating expenses
76,871
70,309
Loss from operations
(34,513)
(57,430)
Interest income
159
1,103
Interest expense
(1,338)
(2,444)
Other income (expense), net
(92)
(1,346)
Net loss
$
(35,784)
$
(60,117)
Dividends on convertible preferred stock
(2,336)
—
Net loss attributable to common stock—basic and diluted
$
(38,120)
$
(60,117)
Net loss per share attributable to common stock—basic and diluted
$
(0.37)
$
(0.64)
Weighted average shares to compute net loss per share attributable to common stock—basic and diluted
103,427,764
93,442,706
Net Loss
$
(35,784)
$
(60,117)
Other comprehensive income (loss)
Foreign currency translation adjustments
$
—
$
(25)
Unrealized gain (loss) on available-for-sale securities
(50)
559
Comprehensive loss
$
(35,834)
$
(59,583)
(1) Includes stock-based compensation as follows:
Three Months Ended March 31,
2021
2020
Cost of revenue
$
2,978
$
1,638
Technology and development
5,761
3,648
Marketing
542
375
General and administrative
3,302
1,550
Total
$
12,583
$
7,211
4
Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
March 31, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$
1,241,255
$
925,276
Restricted cash
101,790
20,544
Short-term investments
140,843
131,561
Accounts receivable, net of allowances for credit losses of $182 and $160
47,416
54,719
Inventory
97,371
49,158
Loans held for sale
43,447
42,539
Prepaid expenses
15,224
12,131
Other current assets
7,014
4,898
Total current assets
1,694,360
1,240,826
Property and equipment, net
47,649
43,988
Right-of-use assets, net
47,932
44,149
Long-term investments
6,906
11,922
Goodwill and intangibles, net
10,894
11,016
Other assets, noncurrent
8,836
8,619
Total assets
$
1,816,577
$
1,360,520
Liabilities, mezzanine equity and stockholders' equity
Current liabilities
Accounts payable
$
15,568
$
5,644
Accrued liabilities
75,754
69,460
Other payables
19,117
13,184
Warehouse credit facilities
40,663
39,029
Secured revolving credit facility
48,851
23,949
Convertible senior notes, net
23,428
22,482
Lease liabilities
12,611
11,973
Total current liabilities
235,992
185,721
Lease liabilities and deposits, noncurrent
53,333
49,339
Convertible senior notes, net, noncurrent
1,136,974
488,268
Payroll tax liabilities, noncurrent
6,812
6,812
Total liabilities
1,433,111
730,140
Commitments and contingencies (Note 7)
Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding
39,834
39,823
Stockholders’ equity
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 103,983,585 and 103,000,594 shares issued and outstanding, respectively
104
103
Additional paid-in capital
641,702
860,556
Accumulated other comprehensive income
161
211
Accumulated deficit
(298,335)
(270,313)
Total stockholders’ equity
343,632
590,557
Total liabilities, mezzanine equity and stockholders’ equity
$
1,816,577
$
1,360,520
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Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Three Months Ended March 31,
2021
2020
Operating Activities
Net loss
$
(35,784)
$
(60,117)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
4,341
3,307
Stock-based compensation
12,583
7,211
Amortization of debt discount and issuance costs
855
1,730
Non-cash lease expense
2,533
2,254
Impairment costs
—
1,420
Net gain on IRLCs, forward sales commitments and loans held for sale
(1,052)
(494)
Other
109
(119)
Change in assets and liabilities:
Accounts receivable, net
7,303
(2,598)
Inventory
(48,213)
3,941
Prepaid expenses and other assets
(3,359)
4,934
Accounts payable
5,947
514
Accrued liabilities, other payables, and non-current payroll tax liabilities
8,873
18,725
Lease liabilities
(2,951)
(2,693)
Origination of loans held for sale
(227,090)
(132,697)
Proceeds from sale of loans originated as held for sale
225,140
111,233
Net cash provided by (used in) operating activities
(50,765)
(43,449)
Investing activities
Purchases of property and equipment
(5,285)
(3,406)
Purchases of investments
(67,877)
(33,267)
Sales of investments
—
31,608
Maturities of investments
63,589
1,597
Net cash used in investing activities
(9,573)
(3,468)
Financing activities
Proceeds from the issuance of common stock pursuant to employee equity plans
3,411
4,103
Tax payments related to net share settlements on restricted stock units
(10,860)
(3,307)
Borrowings from warehouse credit facilities
216,382
131,310
Repayments to warehouse credit facilities
(214,747)
(110,025)
Borrowings from secured revolving credit facility
71,177
11,854
Repayments to secured revolving credit facility
(46,275)
(7,398)
Proceeds from issuance of convertible senior notes, net of issuance costs
488,691
—
Purchases of capped calls related to convertible senior notes
(54,480)
—
Payments for repurchases and conversions of convertible senior notes
(1,886)
—
Other payables—deposits held in escrow
6,521
3,684
Principal payments under finance lease obligations
(67)
(15)
Cash paid for secured revolving credit facility issuance costs
(305)
—
Net cash provided by financing activities
457,562
30,206
Effect of exchange rate changes on cash and cash equivalents
1
(25)
Net change in cash, cash equivalents, and restricted cash
397,225
(16,736)
Cash, cash equivalents, and restricted cash:
Beginning of period
945,820
247,448
End of period
1,343,045
230,712
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Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
Three Months Ended
Mar. 31, 2021
Dec. 31, 2020
Sep. 30 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Monthly average visitors (in thousands)
46,202
44,135
49,258
42,537
35,519
30,595
35,633
36,557
31,107
Real estate services transactions
Brokerage
14,317
16,951
18,980
13,828
10,751
13,122
16,098
15,580
8,435
Partner
3,944
4,940
5,180
2,691
2,479
2,958
3,499
3,357
2,125
Total
18,261
21,891
24,160
16,519
13,230
16,080
19,597
18,937
10,560
Real estate services revenue per transaction
Brokerage
$
10,927
$
10,751
$
10,241
$
9,296
$
9,520
$
9,425
$
9,075
$
9,332
$
9,640
Partner
3,084
3,123
2,988
2,417
2,535
2,369
2,295
2,218
2,153
Aggregate
9,233
9,030
8,686
8,175
8,211
8,127
7,865
8,071
8,134
Aggregate home value of real estate services transactions (in millions)
$
9,621
$
11,478
$
12,207
$
7,576
$
6,098
$
7,588
$
9,157
$
8,986
$
4,800
U.S. market share by value
1.14
%
1.04
%
1.04
%
0.93
%
0.93
%
0.94
%
0.96
%
0.94
%
0.83
%
Revenue from top-10 Redfin markets as a percentage of real estate services revenue
