Seattle-based online real estate brokerage Redfin surpassed expectations in the first quarter and expressed optimism about its prospects for gaining share in an increasingly difficult market for home sales.
- Revenue of $597.3 million was up 123% from the prior year, exceeding the high end of Redfin’s guidance by $37 million.
- Net loss widened to $90.8 million, from $35.8 million a year earlier. Net loss per share of 86 cents was better than the loss of $1.09 expected by analysts surveyed in advance of the report.
- Redfin sold 617 homes through its RedfinNow “iBuyer” direct home sales program, generating $380 million in revenue, with average revenue per home of $608,851. That was up from from 171 homes in the same quarter last year, with total revenue of $93 million at an average of $525,765.
- Website and app traffic rose 11% to about 51 million average monthly users.
- Redfin’s core brokerage business generated $177 million in revenue, $6 million above the high end of its guidance, and up 5% from what the company described as a strong quarter a year ago.
- Mortgage revenue fell to $2.9 million from $5.7 million a year earlier. However, the company says it’s on pace to nearly double the percentage of Redfin homebuyers who get a loan through the company since closing its $135 million acquisition of Bay Equity Home Loans on April 1, after the first quarter was over.
Redfin CEO Glenn Kelman was so optimistic about the company’s prospects for increasing its market share that one analyst, Mark Mahaney of Evercore ISI, made the tongue-in-cheek suggestion that Redfin accompany his remarks with an inspirational musical score on its next quarterly conference call.
Kelman laughed and said he liked the idea. But after another analyst questioned his optimism more directly, Kelman explained his outlook in more detail, saying that Redfin does expect a significant decrease in the total number of homes sold in the U.S. this year vs. last year.
“We are still very cautious about the housing market overall. But we think we’re going to take significant share as we progress through 2022,” Kelman said, describing his comments as “more of a reflection of our business and our ability to progress through headwinds than anything else.”
Rising interest rates are causing some homebuyers to take a step back, he said. But for others, he said, the rise of remote work is changing the dynamics by making location less important.
“We now have people who are looking in three or four different markets, each at a different price tier,” Kelman said. This used to be the hallmark of a real estate investor, he said, but now it’s often “a regular consumer who’s completely agnostic about location.”
That provides “some buffer in the market,” he said.
“But there’s no question that there are headwinds, and there’s no question that the housing market is going through some kind of correction,” Kelman said. “It’s just that we think inventory will still be the main issue except in a handful of markets. And just based on our own data about tours and offers and mortgages and everything else, we think we can beat the rap and keep taking share.”
Shares of Redfin rose 2% to $11.56 in after-hours trading, after falling 11% in regular trading Thursday prior to the earnings report.
