SEATTLE–(BUSINESS WIRE)–Redfin Corporation (NASDAQ: RDFN) today announced results for its fourth quarter and full year ended December 31, 2022.
Fourth Quarter 2022
Fourth quarter revenue was $479.7 million, a decrease of 25% compared to the fourth quarter of 2021. Gross profit was $37.4 million, a decrease of 65% year-over-year. Real estate services gross profit was $26.3 million, a decrease of 65% year-over-year, and real estate services gross margin was 18%, compared to 33% in the fourth quarter of 2021.
Net loss was $61.9 million, compared to a net loss of $27.0 million in the fourth quarter of 2021. Net loss attributable to common stock was $62.1 million. Net loss per share attributable to common stock, diluted, was $0.57, compared to net loss per share, diluted, of $0.27 in the fourth quarter of 2021.
Full Year 2022
Full year revenue was $2,284.4 million, an increase of 19% year-over-year. Gross profit was $286.1 million, a decrease of 29% year-over-year. Real estate services gross profit was $179.0 million, a decrease of 40% year-over-year, and real estate services gross margin was 23%, compared to 33% in 2021.
Net loss was $321.1 million, compared to a net loss of $109.6 million in 2021. Net loss attributable to common stock was $322.7 million. Net loss per share attributable to common stock, diluted, was $2.99, compared to a net loss per share, diluted, of $1.12 in 2021.
“Redfin in the fourth quarter of 2022 set ourselves up to earn adjusted EBITDA in 2023, which would be an improvement in profits of nearly $200 million, even in a major housing downturn,” said Redfin CEO Glenn Kelman. “We shifted to more digital-margin revenue, lowered expenses, increased our share of online real estate traffic, and improved the quality of our sales force. The discipline to make adjusted EBITDA this year can make us very profitable when the housing market recovers. We also bought $143 million of debt for $84 million in cash. We have either sold or accepted an offer to sell all but 19 of our RedfinNow homes. Our revenues and net income exceeded the guidance we gave investors in our November earnings report.”
Fourth Quarter and Full Year Highlights
Reached market share of 0.76% of U.S. existing home sales by units in the fourth quarter. For the year, Redfin reached a market share of 0.80%, an increase of 3 bps compared to 2021.
Redfin’s mobile apps and website reached nearly 44 million average monthly users in the fourth quarter. For the year, Redfin reached a record of nearly 50 million average monthly users, an increase of 5% compared to 2021.
Brought Redfin agent service to Wilmington, North Carolina and Green Bay, Wisconsin and expanded listing coverage to a total of 98% of the U.S. population.
Maintained momentum in mortgage cross-selling, with 17% attach rates for the fourth quarter which was flat compared to the third quarter of 2022.
Confirmed Redfin sells homes faster and for more money than other brokerages for the 7th year in a row. Nationwide Redfin listings sold about 3 days faster and for $1,800 more than comparable listings from other brokerages according to a third-party study that we commissioned.
Delivered software to improve the customers experience and employee productivity:
Added energy cost estimates to U.S. home listings, helping consumers understand the full cost of living in a home and allowing homeowners to discover how much they could save by installing solar panels.
Added zoning and land-use data to U.S. home listings, making it easier for consumers to understand how properties may or may not be used.
Implemented a new design system for iOS home detail pages that increased homebuyer contact and tour completion rates.
Improved landlord referral process from Redfin.com to rentals.com, helping retain high-intent prospective landlords.
Business Outlook
The following forward-looking statements reflect Redfin’s expectations as of February 16, 2023, and are subject to substantial uncertainty.
For the first quarter of 2023 we expect:
Total revenue between $307 million and $324 million, representing a year-over-year decline between (49)% and (46)% compared to the first quarter of 2022. Included within total revenue are real estate services segment revenue between $122 million and $130 million, properties segment revenue between $108 million to $113 million, rentals revenue between $41 million and $42 million, and mortgage revenue between $29 million and $32 million.
Total net loss is expected to be between $116 million and $105 million, compared to net loss of $91 million in the first quarter of 2022. This guidance includes approximately $45 million in total marketing expenses, $20 million of stock-based compensation, $17 million of depreciation and amortization, $7 million in gains on extinguishment of convertible senior notes and $1 million in restructuring expenses. Adjusted EBITDA loss is expected to be between $84 million and $73 million. Furthermore, we expect to pay a quarterly dividend of 30,640 shares of common stock to our preferred stockholder.
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, 2022, which is 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, 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 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 $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.
Redfin-F
Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts, unaudited)
December 31,
2022
2021
Assets
Current assets
Cash and cash equivalents
$
239,840
$
591,003
Restricted cash
2,406
127,278
Short-term investments
122,259
33,737
Accounts receivable, net of allowances for credit losses of $2,019 and $1,298
54,880
69,594
Inventory
114,273
358,221
Loans held for sale
199,604
35,759
Prepaid expenses
34,506
22,948
Other current assets
8,690
7,524
Total current assets
776,458
1,246,064
Property and equipment, net
55,105
58,671
Right-of-use assets, net
42,032
54,200
Mortgage servicing rights, at fair value
36,261
—
Long-term investments
29,480
54,828
Goodwill
461,349
409,382
Intangible assets, net
162,272
185,929
Other assets, noncurrent
11,247
12,898
Total assets
$
1,574,204
$
2,021,972
Liabilities, mezzanine equity, and stockholders’ equity
Current liabilities
Accounts payable
$
11,819
$
12,546
Accrued and other liabilities
109,743
118,122
Warehouse credit facilities
190,509
33,043
Secured revolving credit facility
—
199,781
Convertible senior notes, net
23,431
23,280
Lease liabilities
19,137
15,040
Total current liabilities
354,639
401,812
Lease liabilities, noncurrent
37,298
55,222
Convertible senior notes, net, noncurrent
1,078,157
1,214,017
Deferred tax liabilities
243
1,201
Total liabilities
1,470,337
1,672,252
Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 and 40,000 shares issued and outstanding at December 31, 2022 and 2021, respectively
39,914
39,868
Stockholders’ equity
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 109,696,178 and 106,308,767 shares issued and outstanding at December 31, 2022 and 2021, respectively
110
106
Additional paid-in capital
757,951
682,084
Accumulated other comprehensive loss
(801
)
(174
)
Accumulated deficit
(693,307
)
(372,164
)
Total stockholders’ equity
63,953
309,852
Total liabilities, mezzanine equity, and stockholders’ equity
$
1,574,204
$
2,021,972
Redfin Corporation and Subsidiaries
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts, unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2022
2021
2022
2021
Revenue
Service
$
219,121
$
265,992
$
1,081,877
$
1,042,112
Product
260,543
377,065
1,202,565
880,653
Total revenue
479,664
643,057
2,284,442
1,922,765
Cost of revenue(1)
Service
163,467
161,780
772,351
648,660
Product
278,762
373,253
1,226,038
870,285
Total cost of revenue
442,229
535,033
1,998,389
1,518,945
Gross profit
37,435
108,024
286,053
403,820
Operating expenses
Technology and development(1)
47,041
43,894
196,250
156,718
Marketing(1)
24,238
22,397
158,071
138,740
General and administrative(1)
62,889
66,962
254,593
218,315
Restructuring and reorganization
21,798
—
40,469
—
Total operating expenses
155,966
133,253
649,383
513,773
Loss from operations
(118,531
)
(25,229
)
(363,330
)
(109,953
)
Interest income
4,691
163
6,639
635
Interest expense
(4,905
)
(3,939
)
(17,745
)
(11,762
)
Income tax benefit (expense)
299
744
(126
)
6,107
Gain on extinguishment of convertible senior notes
57,193
—
57,193
—
Other (expense) income, net
(693
)
1,259
(3,774
)
5,360
Net loss
$
(61,946
)
$
(27,002
)
$
(321,143
)
$
(109,613
)
Dividends on convertible preferred stock
(144
)
(1,394
)
(1,560
)
(7,269
)
Net loss attributable to common stock—basic and diluted
$
(62,090
)
$
(28,396
)
$
(322,703
)
$
(116,882
)
Net loss per share attributable to common stock—basic and diluted
$
(0.57
)
$
(0.27
)
$
(2.99
)
$
(1.12
)
Weighted average shares of common stock—basic and diluted
108,997,415
105,739,395
107,927,464
104,683,460
Net loss
$
(61,946
)
$
(27,002
)
$
(321,143
)
$
(109,613
)
Other comprehensive income
Foreign currency translation adjustments
29
4
94
6
Unrealized (loss) gain on available-for-sale securities
(279
)
217
533
379
Comprehensive loss
(62,196
)
(26,781
)
(320,516
)
(109,228
)
(1) Includes stock-based compensation as follows:
Three Months Ended December 31,
Twelve Months Ended December 31,
2022
2021
2022
2021
Cost of revenue
$
4,307
$
3,595
$
15,950
$
13,614
Technology and development
6,572
6,288
29,608
23,275
Marketing
1,069
736
4,093
2,350
General and administrative
4,638
4,667
18,606
15,483
Total
$
16,586
$
15,286
$
68,257
$
54,722
Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Year Ended December 31,
2022
2021
Operating Activities
Net loss
$
(321,143
)
$
(109,613
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization
64,907
46,906
Stock-based compensation
68,257
54,722
Amortization of debt discount and issuance costs
6,137
4,989
Non-cash lease expense
16,234
11,630
Impairment costs
1,136
—
Net loss on IRLCs, forward sales commitments, and loans held for sale
14,427
815
Change in fair value of mortgage servicing rights, net
(801
)
—
Gain on extinguishment of convertible senior notes
(57,193
)
—
Other
3,791
(4,227
)
Change in assets and liabilities:
Accounts receivable, net
24,411
(7,149
)
Inventory
243,948
(309,063
)
Prepaid expenses and other assets
(5,904
)
(12,248
)
Accounts payable
(2,472
)
3,059
Accrued and other liabilities, deferred tax liabilities, and payroll tax liabilities, noncurrent
(46,454
)
25,791
Lease liabilities
(18,452
)
(13,268
)
Origination of mortgage servicing rights
(3,140
)
—
Proceeds from sale of mortgage servicing rights
1,662
—
Origination of loans held for sale
(3,949,442
)
(986,982
)
Proceeds from sale of loans originated as held for sale
4,000,582
993,070
Net cash provided by (used in) operating activities
40,491
(301,568
)
Investing activities
Purchases of property and equipment
(21,531
)
(27,492
)
Purchases of investments
(182,466
)
(146,274
)
Sales of investments
17,545
98,687
Maturities of investments
99,455
106,773
Cash paid for acquisition, net of cash, cash equivalents, and restricted cash acquired
(97,341
)
(608,000
)
Net cash used in investing activities
(184,338
)
(576,306
)
Financing activities
Proceeds from the issuance of common stock pursuant to employee equity plans
11,528
22,772
Tax payments related to net share settlements on restricted stock units
(7,498
)
(27,066
)
Borrowings from warehouse credit facilities
3,938,265
942,993
Repayments to warehouse credit facilities
(3,989,407
)
(948,979
)
Borrowings from secured revolving credit facility
565,334
624,828
Repayments to secured revolving credit facility
(765,114
)
(448,996
)
Cash paid for secured revolving credit facility issuance costs
(733
)
(527
)
Proceeds from issuance of convertible senior notes, net of issuance costs
—
561,529
Purchases of capped calls related to convertible senior notes
—
(62,647
)
Conversions of convertible senior notes
—
(2,159
)
Principal payments under finance lease obligations
(855
)
(796
)
Repurchases of convertible senior notes
(83,614
)
—
Other financing payables
—
(10,611
)
Net cash (used in) provided by financing activities
(332,094
)
650,341
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(94
)
(6
)
Net change in cash, cash equivalents, and restricted cash
(476,035
)
(227,539
)
Cash, cash equivalents, and restricted cash:
Beginning of period
718,281
945,820
End of period
$
242,246
$
718,281
Redfin Corporation and Subsidiaries
Supplemental Financial Information and Business Metrics
(unaudited)
Three Months Ended
Dec. 31,
2022
Sep. 30,
2022
Jun. 30,
2022
Mar. 31,
2022
Dec. 31,
2021
Sep. 30,
2021
Jun. 30,
2021
Mar. 31,
2021
Monthly average visitors (in thousands)
43,847
50,785
52,698
51,287
44,665
49,147
48,437
46,202
Real estate services transactions
Brokerage
12,743
18,245
20,565
15,001
19,428
21,929
21,006
14,317
Partner
2,742
3,507
3,983
3,417
4,603
4,755
4,597
3,944
Total
15,485
21,752
24,548
18,418
24,031
26,684
25,603
18,261
Real estate services revenue per transaction
Brokerage
$
10,914
$
11,103
$
11,692
$
11,191
$
10,900
$
11,107
$
11,307
$
10,927
Partner
2,611
2,556
2,851
2,814
2,819
2,990
3,195
3,084
Aggregate
9,444
9,725
10,258
9,637
9,352
9,661
9,850
9,233
U.S. market share by units(1)
0.76
%
0.80
%
0.82
%
0.79
%
0.78
%
0.78
%
0.77
%
0.75
%
Revenue from top-10 Redfin markets as a percentage of real estate services revenue
57
%
58
%
59
%
57
%
61
%
62
%
64
%
62
%
Average number of lead agents
2,022
2,293
2,640
2,750
2,485
2,370
2,456
2,277
RedfinNow homes sold
474
530
423
617
600
388
292
171
Revenue per RedfinNow home sold
538,788
550,903
604,120
608,851
622,519
599,963
571,670
525,765
Mortgage originations by dollars (in millions)
$
1,036
$
1,557
$
1,565
$
159
$
242
$
258
$
261
$
227
Mortgage originations by units (in ones)
2,631
3,720
3,860
414
591
671
749
632
Year Ended December 31,
2022
2021
Monthly average visitors (in thousands)
49,654
47,113
Real estate services transactions
Brokerage
66,554
76,680
Partner
13,649
17,899
Total
80,203
94,579
Real estate services revenue per transaction
Brokerage
$
11,269
$
11,076
Partner
2,718
3,020
Aggregate
9,814
9,551
U.S. market share by units(1)
0.80
%
0.77
%
Revenue from top-10 markets as a percentage of real estate services revenue
58
%
62
%
Average number of lead agents
2,426
2,396
RedfinNow homes sold
2,044
1,451
Revenue per RedfinNow home sold
$
576,599
$
594,268
Mortgage originations by dollars (in millions)
$
4,317
$
988
Mortgage originations by units (in ones)
10,625
2,643
(1) Prior to the second quarter of 2022, we reported our U.S. market share based on the aggregate home value of our real estate services transactions, relative to the aggregate value of all U.S. home sales, which we computed based on the mean sale price of U.S. homes provided by the National Association of REALTORS® (“NAR”). Beginning in the second quarter of 2022, NAR (1) revised its methodology of computing the mean sale price, (2) restated its previously reported mean sale price beginning from January 2020 (and indicated that previously reported mean sale price prior to January 2020 is not comparable), and (3) discontinued publication of the mean sale price as part of its primary data set. Due to these changes, as of the second quarter of 2022, we report our U.S. market share based on the number of homes sold, rather than the dollar value of homes sold. Our market share by number of homes sold has historically been lower than our market share by dollar value of homes sold. We also stopped reporting the aggregate home value of our real estate services transactions.
Redfin Corporation and Subsidiaries
Segment Reporting and Reconciliation of Adjusted EBITDA to Net Income (Loss)
(unaudited, in thousands)
Three Months Ended December 31, 2022
Real estate
services
Properties
Rentals
Mortgage
Other
Corporate
Overhead and
Intercompany
Eliminations
Total
Revenue
$
146,242
$
260,629
$
40,931
$
28,420
$
6,342
$
(2,900
)
$
479,664
Cost of revenue
119,913
278,761
9,647
30,936
5,872
(2,900
)
442,229
Gross profit
26,329
(18,132
)
31,284
(2,516
)
470
—
37,435
Operating expenses
Technology and development
25,052
3,794
15,360
798
616
1,421
47,041
Marketing
8,293
282
14,258
1,364
26
15
24,238
General and administrative
20,594
2,138
23,990
7,633
960
7,574
62,889
Restructuring and reorganization
—
—
—
—
—
21,798
21,798
Total operating expenses
53,939
6,214
53,608
9,795
1,602
30,808
155,966
Loss from operations
(27,610
)
(24,346
)
(22,324
)
(12,311
)
(1,132
)
(30,808
)
(118,531
)
Interest income, interest expense, income tax expense, gain on extinguishment of convertible senior notes, and other expense, net
—
(1,924
)
291
50
88
58,080
56,585
Net loss
$
(27,610
)
$
(26,270
)
$
(22,033
)
$
(12,261
)
$
(1,044
)
$
27,272
$
(61,946
)
Three Months Ended December 31, 2022
Real estate
services
Properties
Rentals
Mortgage
Other
Corporate
Overhead and
Intercompany
Eliminations
Total
Net loss
$
(27,610
)
$
(26,270
)
$
(22,033
)
$
(12,261
)
$
(1,044
)
$
27,272
$
(61,946
)
Interest income(1)
—
(752
)
(23
)
(3,203
)
(88
)
(3,819
)
(7,885
)
Interest expense(2)
—
2,666
—
2,981
—
2,136
7,783
Income tax expense
—
10
(288
)
(174
)
—
153
(299
)
Depreciation and amortization
4,569
552
10,133
1,013
274
927
17,468
Stock-based compensation(3)
7,008
528
2,709
1,542
345
4,454
16,586
Acquisition-related costs(4)
—
—
—
—
—
—
—
Restructuring and reorganization(5)
—
—
—
—
—
21,798
21,798
Impairment(6)
—
—
—
—
—
224
224
Gain on extinguishment of convertible senior notes
—
—
—
—
—
(57,193
)
(57,193
)
Adjusted EBITDA
$
(16,033
)
$
(23,266
)
$
(9,502
)
$
(10,102
)
$
(513
)
$
(4,048
)
$
(63,464
)
(1) Interest income includes $3.2 million of interest income related to originated mortgage loans for the three months ended December 31, 2022.
(2) Interest expense includes $2.9 million of interest expense related to our warehouse credit facilities for the three months ended December 31, 2022.
(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program.
(4) Acquisition-related costs consist of fees for external advisory, legal, and other professional services incurred in connection with our acquisition of other companies.
(5) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention due to the restructuring and reorganization activities from our acquisitions of Bay Equity and Rent., and from our June and October 2022 workforce reductions.
(6) Impairment consists of an impairment loss due to subleasing one of our operating leases.
Three Months Ended December 31, 2021
Real estate
services
Properties
Rentals
Mortgage
Other
Corporate
Overhead and
Intercompany
Eliminations
Total
Revenue
$
224,732
$
377,065
$
38,923
$
3,996
$
3,347
$
(5,006
)
$
643,057
Cost of revenue
149,529
373,105
6,774
6,690
3,941
(5,006
)
535,033
Gross profit
75,203
3,960
32,149
(2,694
)
(594
)
—
108,024
Operating expenses
Technology and development
20,727
3,724
13,876
2,582
990
1,995
43,894
Marketing
11,923
466
9,450
149
104
305
22,397
General and administrative
23,842
2,828
25,530
2,620
823
11,319
66,962
Restructuring and reorganization
—
—
—
—
—
—
—
Total operating expenses
56,492
7,018
48,856
5,351
1,917
13,619
133,253
Loss from operations
18,711
(3,058
)
(16,707
)
(8,045
)
(2,511
)
(13,619
)
(25,229
)
Interest income, interest expense, income tax expense, gain on extinguishment of convertible senior notes, and other expense, net
—
(1,723
)
2,777
1
1
(2,829
)
(1,773
)
Net loss
$
18,711
$
(4,781
)
$
(13,930
)
$
(8,044
)
$
(2,510
)
$
(16,448
)
$
(27,002
)
Three Months Ended December 31, 2021
Real estate
services
Properties
Rentals
Mortgage
Other
Corporate
Overhead and
Intercompany
Eliminations
Total
Net loss
$
18,711
$
(4,781
)
$
(13,930
)
$
(8,044
)
$
(2,510
)
$
(16,448
)
$
(27,002
)
Interest income(1)
—
(2
)
—
(424
)
(1
)
(159
)
(586
)
Interest expense(2)
—
1,725
—
431
—
2,214
4,370
Income tax expense
—
—
(2,177
)
—
—
1,433
(744
)
Depreciation and amortization
3,583
554
9,307
387
247
525
14,603
Stock-based compensation(3)
8,963
1,492
994
820
348
2,669
15,286
Adjusted EBITDA
$
31,257
$
(1,012
)
$
(5,806
)
$
(6,830
)
$
(1,916
)
$
(9,766
)
$
5,927
(1) Interest income includes $0.4 million of interest income related to originated mortgage loans for the three months ended December 31, 2021.
(2) Interest expense includes $0.4 million of interest expense related to our warehouse credit facilities for the three months ended December 31, 2021.
(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program.
Contacts
Investor Relations
Meg Nunnally, 206-576-8610
ir@redfin.com
Public Relations
Mariam Sughayer, 206-876-1322
press@redfin.com