Redfin reports third quarter 2019 revenue, up by 70% to $239M

Redfin Corporation announced financial results for the third quarter ended September 30, 2019.

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. 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."

— Redfin CEO Glenn Kelman

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.

SOURCE Redfin Corporation

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