Redfin’s revenue fell 25% in the fourth quarter amid a housing market slowdown that has hampered its growth over the last year.
The Seattle real estate giant reported $479 million in Q4 revenue, which beat expectations and surpassed the high end of its guidance range.
Shares were down 2% in after-hours trading.
The housing market continues to retrench due in part to rising interest rates brought on by persistent inflation. Investors fear that prolonged headwinds in the macro economy will push home prices down.
According to Redfin, investors bought roughly half as many homes in the fourth quarter as they did during the same period in 2021, resulting in a record year-over-year decline. Overall home purchases declined more than 40% from a year earlier.
Redfin has been responding to macro headwinds with layoffs and shifts to its business model.
Redfin said in November it would wind down its home-flipping program RedfinNow and eliminate 862 positions, or 13% of its workforce. That was the real estate company’s second round of layoffs last year, following an 8% workforce reduction in June.
“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,” Redfin CEO Glenn Kelman wrote in a press release.
Kelman said the company expected to own less than $85 million in homes by the end of January, then completely rid its inventory by the end of the second quarter.
Analysts were skeptical of these plans, given Redfin’s “bearish” outlook on the overall housing market.
In the fourth quarter, Redfin sold 474 homes through its properties division, with an average sale price of $538,788. This accounted for more than 53% of its total revenue during the period.
“We have either sold or accepted an offer to sell all but 19 of our RedfinNow homes,” Kelman said in the earnings release.
Redfin’s brokerage business is closely tied to the housing market, as transaction volume plays a role in how much revenue is earned through listing fees.
Redfin brokered 12,743 transactions in Q4, down 34% from the same period the year prior. The segment produced revenue of $146 million, just above the high end of its guidance range.
Redfin’s stock has risen 120% since the start of the year but remains significantly below its record-highs in early 2021. Its market capitalization is hovering around $1 billion.
Some other highlights from the Q4 report:
- Net loss was $61.9 million, compared to $27 million in the year-ago quarter.
- Rentals revenue of $40.9 million narrowly beat the high end of its guidance, and was up from $38.9 million last year.
- Mortgage revenue of $28 million was below its low end of its guidance, and up from $4 million last year. The attach rate of 17% was flat from last quarter.
- For the year, Redfin’s average monthly users rose 5% year-over-year to about 50 million.
