Redfin captures nearly $600 million in first-quarter revenue as market share grows

Revenues, market share, web users and homes sold by RedfinNow increased. But the company posted a $90.8 million net loss in its first-quarter earnings call on Thursday.

With Redfin CEO Glenn Kellman acknowledging the market headwinds, he described his company’s strategy as running a marathon against competitors Zillow, Realtor.com and soon CoStar.

“As you mature as a runner, you realize that everyone suffers,” Kellman told investors during an earnings call Thursday when Redfin reported earnings of $597.3 million and a net loss of $90.8 million during the first three months of this year.

“The object of maximum suffering is when the best prepared wins it,” he said. “Redfin is at this point in our race.”

Despite the loss, the online brokerage portal beat the most optimistic expectations of investors in terms of revenue.

Heading into 2022, when many analysts predicted home sales to rival record numbers in 2021, Kellman may be one of the least optimistic. But he said the company’s recent major acquisitions — including a rush to hire new agents, buying Bay Equity to boost its mortgage division and adding rentals to its site — have set themselves up before the competing gates.

“Our mortgage business will transition from a major source of Redfin 2021 losses to a major source of 2022 profits,” he said.

Redfin has begun training a series of new agents set to compete for the rush of buyers moving from high-cost markets to low-cost areas of the Sun Belt.

“We think we’ll gain a share with the season for these customers,” Kellman said. “This is especially true in places where we have hired the most clients such as in the Southeast.”

With rental listings added to the platform, Kellman said the company is building relationships with people who aren’t yet in the market to buy, while at the same time catering to a basic housing need.

“We can’t get people to build relationships with other websites during their first 30 years of life,” Kellman said, and then try to attract them when it’s time to buy.

Thursday’s report offered a glimpse of how companies are performing amid the start of a rapid rise in mortgage rates, which topped 5.5 percent this week and rose much faster than analysts expected to enter this year.

A closer look at the numbers

The company offered an optimistic view, saying that its market share grew to 1.18 percent of existing home sales in the United States by value in the quarter. The number of users on the portal’s application and website also increased by 11% to 51 million monthly users.

The company said in its earnings report, which was released after markets closed on Thursday, that its total profit amounted to $72.5 million, although it posted a net loss of $90.8 million after accounting for its common stock expenses. The company’s real estate services accounted for $23.7 million of its total profit, down 41 percent year-over-year.

“We remain very cautious about the housing market in general,” Kellman said. “We think we’ll take a big stake as we go through 2022.”

The company reported a surge in revenue over the past year, jumping from $268 million during the first three months of 2021.

At the same time, it continued to incur net losses. Analysts had expected Redfin to earn $551.1 million in the first quarter. Its actual reported earnings posted a 123 percent increase over the same time period last year.

During the last three months of 2021, the company raised $643.1 million, an increase of 163 percent over the same period the previous year. Despite these higher revenues, the company posted a net loss of $27 million to close last year.

But Kellman reiterated the company’s strategy and retracted his marathon comparison: “Most marathons try to complete the race, not compete in it.”

right Now

The company reported that it earned $376 million selling 617 properties from its iBuying arm, the most in the company’s history from buying and reselling homes through the program.

That’s a big jump from the same quarter last year, when the company sold 171 properties for a total revenue of $90 million.

Kellman suggested that instead of speculating on price hikes to take profits for its iBuying arm, RedfinNow, the company would only own “real estate where necessary to facilitate a sale.”

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