Glenn Kelman, CEO, Redfin
Illustration by Lanette Behiry/Real Estate News

Redfin cuts losses, touts site traffic 

CEO Glenn Kelman highlighted new programs and told investors the company isn’t interested in an ad war: “Our basic thesis is that the best product wins.”

February 27, 2024
4 minutes

Despite declining revenues and market share, Redfin managed to stem losses in 2023.

With revenues down $123 million for the year, the company ended 2023 with a loss of $130 million — a significant improvement from 2022's $321.1 million loss. For the fourth quarter, Redfin posted a net loss of $22.9 million, also an improvement over the company's loss of $61.2 million during the same quarter a year prior.

"The fourth quarter's only disappointment was a market share decline," Redfin CEO Glenn Kelman told investors Tuesday. The company's market share fell from 0.76% in Q4 2022 to 0.72% in Q4 2023, Kelman noted, but he added that the company was seeing a recovery in January and "we expect share gains to continue in 2024."

What Redfin had to say

In the earnings release, Kelman said "continued to draw visitors from rivals." Competition was a topic of the investor call as well, and Kelman addressed a question about the marketing blitz, which included an expensive series of commercials during the Super Bowl.

"I don't want to be cocky about this," Kelman said. "To be honest, I spent most of the Super Bowl in the bathroom or upstairs making nachos because I didn't want to see the competitor's ads. But according to the early reports from Similarweb and other sites that compare traffic, we still got more traffic on Super Bowl Sunday than the company promising to spend zillions of dollars. Our basic thesis is that the best product wins."

He went on to say he thought CoStar's ad spend was an outdated play. "There was sort of this 1999, dot-com thesis that advertising dollars was the way to win, but I mostly thought that we'd left that behind, and I know that when you get into some kind of advertising war it depresses margins across the segment and changes the competitive dynamic."

Key numbers

Revenue: $218.1 million for the fourth quarter, down 2% compared to Q4 2022. Revenues were $976.7 million for the full year, down 11% year-over-year.

Cash and cash equivalents: $149.8 million, down from $232.2 million last year.

Net income/loss: A loss of $22.9 million for the fourth quarter, down from $61.9 million in the same period of 2022. For the full year, the company's net loss was $130.0 million, compared to $321.1 million in 2022.

Adjusted EBITDA (earnings before income, taxes, depreciation and amortization): A loss of $13.5 million, compared to a loss of $40.2 million in the fourth quarter of 2022. For the year, the company reported an adjusted EBITDA loss of $76.4 million versus a loss of $145.1 million in 2022.

Average number of lead agents: 1,692 at the end of the fourth quarter, and 1,776 for the year. Agent count has been steadily declining since March 2022. The average number of lead agents at the end of 2022 was 2,426. 

Transactions: 10,152 for the last quarter of 2023, down from 12,743 in the same period in 2022.

Site traffic: Monthly average users was 43.9 million for Q4 2023 and 49.5 million for the entire year, essentially unchanged from 2022.

Notable moves

Kelman told investors that three key programs would help improve the company's performance next year: Redfin Next, Sign & Save and All You Can Meet. 

Redfin Next, which officially launched on Jan. 1 and shifts the company's compensation model from salary to commission-based, is currently in four markets. The company will expand to seven more in the second quarter, Kelman said. 

"I've never seen so many employees lined up saying, 'Please, cut my salary so I can have a higher bonus,'" he said, adding that in the next two-week payroll run, a Redfin agent would get a $90,000 or $91,000 commission check. "I don't know that we've ever had a check like that in January — it's just for two weeks."

Sign & Save, announced in early February, offers homebuyers a refund of between 0.25% and 0.5% of their commission if they sign a buyer's agreement before they see their second home with a Redfin agent. The company began piloting the program in September in four markets, and Kelman said it would roll out broadly this quarter.

All You Can Meet is an initiative to get homebuyers' first tour to be with a Redfin lead agent rather than a contractor. It's currently in more than 50 markets.

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