Redfin revenue down by nearly half, but better than expected
Redfin CEO Glenn Kelman says the company is ‘leaner, hungrier’ and ready for when the real estate market rebounds.
Like many of its real estate peers, Redfin reported first quarter results that, while not exactly positive, weren't as bad as analysts had expected.
The Seattle-based company's revenue for Q1 was $325.7 million, which is down 45% compared to a year ago, but it beat company guidance and analyst predictions. Analysts at the research firm Zacks estimated revenue would be in the $315 million range.
Redfin reported a net loss of $60.8 million for the first three months of 2023, which was an improvement from a year ago, when losses exceeded $90 million. At that time, the company was struggling to maintain its iBuyer program, RedfinNow. In November, the company announced it was winding down that program, and it currently has just five homes left.
Redfin also retired around $295 million of debt while the companies it acquired over the past two years, Rent. (formerly RentPath) and mortgage firm Bayview Equity, are delivering results, said CEO Glenn Kelman.
"We wouldn't wish a housing downturn on anyone, but it has made Redfin leaner, hungrier and better," Kelman said.
Shares of Redfin were mostly flat in after hours trading following the release of the earnings report.
Revenue: $325.7 million, down 45% compared to the first quarter of 2022, and a drop of more than $150 million from the previous quarter.
Cash and cash equivalents: $149.9 million, down from $239.8 million at the end of 2022.
Gross profit: $56.2 million, down 23% year-over-year, but up $37.4 from the previous quarter.
Net loss: $60.8 million. A year ago the net loss was $90.8 million.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): A loss of $66.8 million. In the first quarter of 2022, adjusted EBITDA loss was $48.8 million.
What Redfin had to say
During the earnings call, Kelman fielded several questions about the company's adjusted EBITDA, which was a $66.8 million loss. He said he expects those numbers to turn around and reach breakeven or positive territory by the end of the year, noting that because of real estate's seasonality, Redfin has front-loaded costs and back-loaded revenues in a typical year.
"There's a lot of leverage in the back half of 2023. We haven't put a number out there that we've missed. This one is a doozy but we feel good," Kelman said during the call.
Kelman said the company is focused on positioning itself for when the housing market rebounds after making tough decisions, including several rounds of layoffs.
"It's good to be alive. It will be even better to go back on the attack leaner, hungrier and in many ways better than ever," Kelman said.
The company laid off around 200 people in April, its third round of layoffs since June 2022. The company had hinted at possible cuts in February when it noted that "lowered expenses" would contribute to an increase in profitability in 2023.
For remaining employees, fully remote work will no longer be an option. Redfin told employees in late April that, beginning in July, they would need to come into the office two days a week. He said the change was "necessary to our culture."
In May, Redfin announced the launch of a ChatGPT plugin which allows potential buyers to describe their ideal home and neighborhood in everyday terms to get more customized listing results.