Redfin Reports Third Quarter 2021 Financial Results - Form 8-K
November 04, 2021 at 04:50 pm
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Redfin Reports Third Quarter 2021 Financial Results
SEATTLE - November 4, 2021 - Redfin Corporation (NASDAQ: RDFN) today announced financial results for the third quarter ended September 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 128% year-over-year to $540 million during the third quarter. Gross profit was $127 million, an increase of 37% from $93 million in the third quarter of 2020. Real estate services gross profit was $96 million, an increase of 5% from $92 million in the third quarter of 2020. Real estate services gross margin was 37%, compared to 44% in the third quarter of 2020. Operating expenses were $147 million, an increase of 163% from $56 million in the third quarter of 2020. Operating expenses were 27% of revenue, up from 24% in the third quarter of 2020.
Net loss was $18.9 million, compared to net loss of $34.2 million in the third quarter of 2020. The dividend on our convertible preferred stock was $1.7 million in the third quarter. Net loss attributable to common stock was $20.6 million. Stock-based compensation was $13.1 million, up from $11.3 million in the third quarter of 2020. Depreciation and amortization was $14.5 million, up from $3.7 million in the third quarter of 2020. Interest income was $0.2 million and interest expense was $3.7 million, compared to $0.3 million and $2.5 million, respectively, in the third quarter of 2020.
Net loss per share attributable to common stock, diluted, was $0.20, compared to net income per share attributable to common stock, diluted, of $0.30 in the third quarter of 2020.
"Redfin had a fantastic quarter," said Redfin CEO Glenn Kelman. "Our revenues were at the top of the range we gave investors in our last earnings report, and our net income exceeded that range. Our year-over-year market-share gains continued even as the housing market slowed, and our website again improved its standing against its largest competitors. RedfinNow grew revenues by more than 1,000 percent all while selling homes above our forecasted price. We saved our brokerage customers more than $80 million in fees. Agent retention improved, and we're now preparing to broaden changes to our service and pricing that we expect to increase 2022 gross profits, customer satisfaction and agent retention."
Highlights
•Reached market share of 1.16% of U.S. existing home sales by value in the third quarter of 2021, an increase of 12 basis points from the third quarter of 2020.(1)
•Saved homebuyers and sellers over $83 million in the third 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% commission typically charged by traditional agents.
•Redfin's mobile application and website reached 49.1 million average monthly visitors in the third quarter, which was roughly flat compared to the third quarter of 2020.
•Launched brokerage services in Mississippi and new regions in Florida, surpassing 100 markets served.
•Continued RedfinNow expansion by launching in Chicago, Atlanta, Nashville, Charlotte and Raleigh.
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•Announced the expansion of Direct Access self-touring on October 5th, which lets buyers tour vacant homes listed by Redfin agents and is supported by a partnership with ADT to provide enhanced safety and security measures.
•Launched a Career Accelerator pilot program in Seattle and the Washington, D.C. metro area to hire and train people from diverse backgrounds to become Redfin agents.
•Delivered improved software for customers, agents, partners and mortgage teams, including:
◦Climate risk data for every location page on Redfin.com, empowering consumers to make better-informed decisions about buying, selling and renting.
◦More accurate Redfin Estimates for off-market homes that react quickly to dynamic market conditions.
◦Easy to import work history from Equifax's The Work Number in mortgage pre-approval applications.
◦iOS Home Screen Widgets, which show potential homebuyers relevant listings directly on their iPhone or iPad's home screen.
◦A new appraisal ordering system for Redfin Mortgage Lender Tools that streamlines data sharing between mortgage processors and appraisal management companies.
◦Automation software for Redfin Home Services to streamline Concierge bids and scope of work agreements.
(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 November 4, 2021, and are subject to substantial uncertainty.
For the fourth quarter of 2021 we expect:
•Total revenue between $585 million and $606 million, representing a year-over-year increase between 139% and 148% compared to the fourth quarter of 2020. Included within total revenue are real estate services segment revenue between $225 million and $230 million, properties segment revenue between $319 million and $334 million, and rentals revenue between $38 million and $39 million.
•Total net loss between $36 million and $31 million, compared to total net income of $14 million in the fourth quarter of 2020. RentPath's contribution to the net loss is expected to be approximately $15 million. This guidance includes approximately $24 million in total marketing expenses, $16 million of stock-based compensation, $15 million of depreciation and amortization, and $4 million of 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.
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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 September 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 may publish information and analysis about the U.S. residential real estate industry on its company blog at www.redfin.com/news/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
Contacts
Investor Relations
Meg Nunnally, 206-576-8610
ir@redfin.com
Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com
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Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
September 30, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$
562,714
$
925,276
Restricted cash
74,532
20,544
Short-term investments
28,578
131,561
Accounts receivable, net of allowances for credit losses of $933 and $160
91,932
54,719
Inventory
435,144
49,158
Loans held for sale
42,762
42,539
Prepaid expenses
19,155
12,131
Other current assets
8,537
4,898
Total current assets
1,263,354
1,240,826
Property and equipment, net
55,535
43,988
Right-of-use assets, net
55,757
44,149
Long-term investments
53,488
11,922
Goodwill
407,228
9,186
Intangibles, net
194,856
1,830
Other assets, noncurrent
13,129
8,619
Total assets
$
2,043,347
$
1,360,520
Liabilities, mezzanine equity, and stockholders' equity
Current liabilities
Accounts payable
$
10,075
$
5,644
Accrued liabilities
102,027
69,460
Other payables
16,766
13,184
Warehouse credit facilities
39,825
39,029
Secured revolving credit facility
199,627
23,949
Convertible senior notes, net
23,243
22,482
Lease liabilities
14,793
11,973
Total current liabilities
406,356
185,721
Lease liabilities, noncurrent
57,759
49,339
Convertible senior notes, net, noncurrent
1,212,767
488,268
Payroll tax liabilities, noncurrent
7,841
6,812
Deferred tax liabilities
883
-
Total liabilities
1,685,606
730,140
Series A convertible preferred stock-par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding
39,857
39,823
Stockholders' equity
Common stock-par value $0.001 per share; 500,000,000 shares authorized; 105,375,935 and 103,000,594 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
105
103
Additional paid-in capital
662,894
860,556
Accumulated other comprehensive income
47
211
Accumulated deficit
(345,162)
(270,313)
Total stockholders' equity
317,884
590,557
Total liabilities, mezzanine equity, and stockholders' equity
$
2,043,347
$
1,360,520
4
Redfin Corporation and Subsidiaries
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts, unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2021
2020
2021
2020
Revenue
Service
$
301,657
$
217,280
$
776,120
$
469,893
Product
238,417
19,636
503,588
171,683
Total revenue
540,074
236,916
1,279,708
641,576
Cost of revenue(1)
Service
174,267
122,583
486,880
314,842
Product
238,505
21,261
497,032
174,744
Total cost of revenue
412,772
143,844
983,912
489,586
Gross profit
127,302
93,072
295,796
151,990
Operating expenses
Technology and development(1)
43,658
22,452
112,824
60,687
Marketing(1)
49,143
12,421
116,343
47,611
General and administrative(1)
54,395
21,190
151,352
68,539
Total operating expenses
147,196
56,063
380,519
176,837
Loss from operations
(19,894)
37,009
(84,723)
(24,847)
Interest income
178
319
472
1,859
Interest expense
(3,672)
(2,522)
(7,822)
(7,631)
Income tax benefit
311
-
5,363
-
Other income (expense), net
4,128
(640)
4,099
(1,943)
Net (loss) income
$
(18,949)
$
34,166
$
(82,611)
$
(32,562)
Dividends on convertible preferred stock
(1,662)
(1,530)
(5,875)
(2,814)
Undistributed earnings attributable to participating securities
$
-
$
(653)
$
-
$
-
Net (loss) income attributable to common stock-basic and diluted
$
(20,611)
$
31,983
$
(88,486)
$
(35,376)
Net (loss) income per share attributable to common stock-basic
$
(0.20)
$
0.32
$
(0.85)
$
(0.36)
Weighted-average shares to compute net (loss) income per share attributable to common stock-basic
105,144,872
99,840,144
104,327,614
97,365,122
Net (loss) income per share attributable to common stock-diluted
$
(0.20)
$
0.30
$
(0.85)
$
(0.36)
Weighted-average shares to compute net (loss) income per share attributable to common stock-diluted
105,144,872
107,607,711
104,327,614
97,365,122
Net (loss) income
$
(18,949)
$
34,166
$
(82,611)
$
(32,562)
Other comprehensive income (loss)
Foreign currency translation adjustments
3
6
3
(16)
Unrealized gain (loss) on available-for-sale debt securities
27
(139)
161
282
Comprehensive (loss) income
$
(18,919)
$
34,033
$
(82,447)
$
(32,296)
(1) Includes stock-based compensation as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2021
2020
2021
2020
Cost of revenue
$
3,283
$
2,574
$
10,019
$
5,981
Technology and development
5,455
4,964
16,987
11,736
Marketing
537
403
1,615
1,130
General and administrative
3,835
3,407
10,817
6,917
Total
$
13,110
$
11,348
$
39,438
$
25,764
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Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Nine Months Ended September 30,
2021
2020
Operating Activities
Net loss
$
(82,611)
$
(32,562)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization
32,303
10,581
Stock-based compensation
39,438
25,764
Amortization of debt discount and issuance costs
3,583
5,254
Non-cash lease expense
8,510
6,821
Impairment costs
-
2,063
Net loss (gain) on IRLCs, forward sales commitments, and loans held for sale
342
(2,303)
Other
(3,847)
(306)
Change in assets and liabilities:
Accounts receivable, net
(29,487)
(21,862)
Inventory
(385,986)
49,597
Prepaid expenses and other assets
(9,532)
7,396
Accounts payable
616
851
Accrued liabilities, other payables, deferred tax liabilities, and payroll tax liabilities, noncurrent
23,011
28,157
Lease liabilities
(9,644)
(8,368)
Origination of loans held for sale
(745,703)
(479,153)
Proceeds from sale of loans originated as held for sale
744,886
459,605
Net cash (used in) provided by operating activities
(414,121)
51,535
Investing activities
Purchases of property and equipment
(20,575)
(10,391)
Purchases of investments
(129,277)
(135,118)
Sales of investments
98,687
6,583
Maturities of investments
96,303
82,772
Cash paid for acquisition
(608,000)
-
Net cash used in investing activities
(562,862)
(56,154)
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
14,194
15,119
Tax payments related to net share settlements on restricted stock units
(21,088)
(10,987)
Borrowings from warehouse credit facilities
710,535
473,283
Repayments to warehouse credit facilities
(709,739)
(454,277)
Borrowings from secured revolving credit facility
431,717
57,378
Repayments to secured revolving credit facility
(256,039)
(46,899)
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
(2,159)
-
Other payables-deposits held in escrow
3,161
2,097
Principal payments under finance lease obligations
(567)
(59)
Cash paid for secured revolving credit facility issuance costs
(485)
(4)
Net cash provided by financing activities
668,412
145,153
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(3)
(16)
Net change in cash, cash equivalents, and restricted cash
(308,574)
140,518
Cash, cash equivalents, and restricted cash:
Beginning of period
945,820
247,448
End of period
$
637,246
$
387,966
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Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
Three Months Ended
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Dec. 31, 2020
Sep. 30 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Monthly average visitors (in thousands)
49,147
48,437
46,202
44,135
49,258
42,537
35,519
30,595
35,633
Real estate services transactions
Brokerage
21,929
21,006
14,317
16,951
18,980
13,828
10,751
13,122
16,098
Partner
4,755
4,597
3,944
4,940
5,180
2,691
2,479
2,958
3,499
Total
26,684
25,603
18,261
21,891
24,160
16,519
13,230
16,080
19,597
Real estate services revenue per transaction
Brokerage
$
11,107
$
11,307
$
10,927
$
10,751
$
10,241
$
9,296
$
9,520
$
9,425
$
9,075
Partner
2,990
3,195
3,084
3,123
2,988
2,417
2,535
2,369
2,295
Aggregate
9,661
9,850
9,233
9,030
8,686
8,175
8,211
8,127
7,865
Aggregate home value of real estate services transactions (in millions)
$
14,926
$
14,612
$
9,621
$
11,478
$
12,207
$
7,576
$
6,098
$
7,588
$
9,157
U.S. market share by value
1.16
%
1.18
%
1.16
%
1.04
%
1.04
%
0.94
%
0.92
%
0.95
%
0.96
%
Revenue from top-10 Redfin markets as a percentage of real estate services revenue
61
%
64
%
62
%
63
%
63
%
63
%
61
%
62
%
63
%
Average number of lead agents
2,370
2,456
2,277
1,981
1,820
1,399
1,826
1,526
1,579
RedfinNow homes sold
388
292
171
83
37
162
171
212
168
Revenue per RedfinNow home sold (in ones)
$
599,010
$
570,930
$
525,173
$
471,551
$
504,583
$
444,690
$
461,916
$
466,939
$
476,770
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Redfin Corporation and Subsidiaries
Supplemental Financial Information
(unaudited, in thousands)
Three Months Ended September 30,
Nine Months Ended September 30,
2021
2020
2021
2020
Revenue
Real estate services (brokerage)
$
243,575
$
194,375
$
637,532
$
425,269
Real estate services (partner)
14,220
15,478
41,070
28,269
Properties revenue
238,417
19,005
503,588
170,287
Rentals revenue
40,406
-
82,954
-
Other revenue
8,206
8,503
26,084
19,999
Intercompany elimination
(4,750)
(445)
(11,520)
(2,248)
Total revenue
$
540,074
$
236,916
$
1,279,708
$
641,576
Cost of revenue
Real estate services
$
161,449
$
117,944
$
453,790
$
300,305
Properties
238,397
20,460
496,948
173,107
Rentals
7,395
-
14,965
-
Other
10,281
5,885
29,729
18,422
Intercompany elimination
(4,750)
(445)
(11,520)
(2,248)
Total cost of revenue
$
412,772
$
143,844
$
983,912
$
489,586
Gross profit
Real estate services
$
96,346
$
91,909
$
224,812
$
153,233
Properties
20
(1,455)
6,640
(2,820)
Rentals
33,011
-
67,989
-
Other
(2,075)
2,618
(3,645)
1,577
Total gross profit
$
127,302
$
93,072
$
295,796
$
151,990
Gross margin (percentage of revenue)
Real estate services
37.4
%
43.8
%
33.1
%
33.8
%
Properties
0.0
(7.7)
1.3
(1.7)
Rentals
81.7
-
82.0
-
Other
(25.3)
30.8
(14.0)
7.9
Total gross margin
23.6
39.3
23.1
23.7
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Redfin Corporation published this content on 04 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2021 20:47:06 UTC.
Redfin Corporation is a technology-powered real estate company. The Company operates an online real estate marketplace and provides real estate services, including assisting individuals in the purchase or sale of their home. The Company's segments include real estate services, rentals and mortgage. The Company uses digital platforms to connect consumers with rental properties. It helps people find a place to live with brokerage, rentals, lending, title insurance and renovations services. The Company's home-buying customers see homes first with on-demand tours, and its lending and title services help them close the transaction. It uses the same combination of technology and local service to originate, service, and subsequently sell mortgage loans and offer title and settlement services. The Company offers digital platforms to connect consumers with available apartments and houses for rent and for other advertising. It serves more than 100 markets across the United States and Canada.