Redfin (RDFN) CEO Glenn Kelman: Company Is Hiring Agents And Closing Specialists At ‘Breakneck Speed’

By Amit Chowdhry ● July 31, 2020
  • Redfin Corp (NASDAQ: RDFN) recently announced the financial results for the second quarter ended June 30, 2020, on a GAAP basis. These are the details.

Redfin Corp (NASDAQ: RDFN) recently announced the financial results for the second quarter ended June 30, 2020, on a GAAP basis. In the earnings report, Redfin CEO Glenn Kelman revealed some of the drastic changes that the company has been seeing.

The company’s revenue increased 8% year-over-year to $214 million for the second quarter. And gross profit was $46 million — a decrease of 5% from $48 million in Q2 2019. And real estate services gross profit hit $46 million, a decrease of 6% from $49 million in the second quarter of 2019.

Real estate services gross margin hit 34% compared to 32% in Q2  2019. And operating expenses were $50 million, a decrease of 17% from $61 million in the second quarter of 2019. The operating expenses were 24% of revenue, down from 31% in the second quarter of 2019. The company’s net loss was $6.6 million compared to net loss of $12.6 million in Q2 of 2019.

The net loss per share attributable to common stock, basic and diluted, was $0.08, compared to net loss per share, basic and diluted, of $0.14 in Q2 2019.

“Redfin blew away our second-quarter financial targets,” said Redfin CEO Glenn Kelman. “Within the span of a single quarter, year-over-year changes in demand went from -41% to +40%, a level of volatility that I have never seen in nearly 30 years of business. Over the past two months, Redfin’s online visits and customer inquiries have been growing at a faster rate than at any point in the last three years. We’re inside a tornado, hiring agents, lenders and closing specialists at breakneck speed to keep up with demand, but also mindful that the bottom of the economy could fall out a second time.”

During the quarter, Redfin hit a market share of 0.93% of U.S. existing home sales by value in the second quarter of 2020, which is a decrease of 0.01 percentage points from the second quarter of 2019 and consistent with the first quarter of 2020.

It is estimated that the company saved homebuyers and sellers over $39 million in the second quarter of 2020. And this includes the savings Redfin offers buyers through the Redfin Refund and sellers through Redfin’s lower listing fee when compared to a 2.5% listing commission.

Redfin is also making it easier for customers to request an in-person or virtual tour or listing appointment and giving agents the power to specify their preference for in-person or video appointments within Redfin’s proprietary scheduling software. And Redfin updated the web and mobile search experience to highlight homes with virtual walkthroughs and recorded video tours. Plus Redfin is launching a new Agent Dashboard, which allows agents from any brokerage to upload a video tour or virtual walkthrough to the platform.

Q3 2020 Guidance

Redfin said it is expecting total revenue of between $214 million and $225 million, representing a year-over-year decrease between 10% and 6% compared to the third quarter of 2019. And properties segment revenue between $10 million and $14 million was also included in the guidance provided.

The net income was between $18 million and $23 million compared to net income of $6.8 million in the third quarter of 2019. This guidance includes approximately $8.8 million of expected stock-based compensation and $3.8 million of expected depreciation and amortization.