Redfin tripled profit from last year in its first quarter as a public company, and its stock is rising as a result.
In its first public earnings report, the Seattle-based tech-powered real estate brokerage reported quarterly profit of $4.3 million, up from $1.4 million from a year ago.
Redfin posted $104.9 million in revenue, a 35 percent increase over this time last year, and earnings per share of $0.06, right on par with expectations of analysts surveyed in advance by Yahoo Finance.
Redfin’s stock initially dropped in after-hours trading before rallying and rising close to 4 percent. Shares of the tech-powered real estate brokerage are up 70 percent from its initial $15 offering price in July.
CEO Glenn Kelman discussed Redfin’s successful first quarter and new services the company is testing on an earnings call Thursday. Among them is Redfin Mortgage, which underwrote its first-ever mortgage in the first quarter of 2017. In the second quarter, Redfin underwrote eight mortgages.
“The premise of our mortgage and title business is that when a real estate agent, title officer, and a loan officer all work for one company, use one software system to close a sale, the whole process is easier, faster, and more efficient,” Kelman said on the call.
He also shared some early learnings from Redfin Now, a service the company is testing. Redfin Now lets customers sell homes directly to Redfin. It expedites the process but “the customer typically nets lower proceeds than she would in a conventional sale,” Kelman said on the call.
Redfin bought five homes in Q1 and another five the following quarter. Kelman said that all five of the first homes purchased were sold in Q2.
“It’s too early to say what percentage of home sellers prefer this service,” Kelman said. “What we’ve learned so far is that Redfin Now customers are sensitive to the small changes in the price difference between Redfin Now and what a broker charges. Since price matters so much, our online buyer audience, our pricing expertise, and our agent network would have to give us meaningfully lower costs than our competitors before we decided to pursue this business in earnest.”
Redfin continues to gain market share and web views, according to its earnings report. The company reported 24 million monthly active visitors to its website, a 43 percent increase over this time last year.
“Redfin’s market-share growth accelerated in the second quarter, in part because so many people have been visiting our website,” Kelman said in a statement. “Redfin.com visitors have grown at a higher rate over each of the past three quarters than in any quarter in the last three years. And more of those visitors are connecting with a Redfin agent because our technology lets those customers move faster to tour and buy homes. Technology also benefits our home-sellers, by promoting their listing to a huge online audience, and by driving long-term efficiency gains that help us charge less and still deliver better results.”