Redfin Posts Revenue Gains Amid Profit Losses In Q3

Earnings statements for the third quarter of the year are rolling out and we’re diving in to examine the market slowdown’s impact on revenue and growth for some of the industries biggest companies.

Amid layoff news and the announcement that it would shutter its iBuyer program, Redfin has posted its Q3 earnings. Net loss for the company was at $90.2 million last quarter, compared to a net loss of $18.9 million in the third quarter of 2021.

Third quarter revenue was $600.5 million, an increase of 11 percent compared to the third quarter of 2021. Gross profit was $58.1 million, down 54 percent year-over-year. 

Real estate services gross profit was $54.9 million, a decrease of 43 percent year-over-year, and real estate services gross margin was 26 percent, compared to 37 percent in the third quarter of 2021.

“Laying off 862 colleagues and friends is heartbreaking,” said Redfin CEO Glenn Kelman. “But I feel relief about closing RedfinNow with relatively low losses. We’re profoundly grateful for the dazzling entrepreneurs who built that business on a knife’s edge, but its appeal to consumers has waned as the market turned. Home prices will at some point stabilize but the cost of capital isn’t going back to 2021 levels any time soon, and this is a major why RedfinNow offers had already gotten so low. Redfin will have more cash and sell more properties by focusing on growth in our online audience, low fees, and better brokerage, mortgage and title service. Already, our share of real estate traffic and home sales is increasing. Loyalty sales and the rate at which Redfin customers stuck with us for a sale also both increased in the third quarter, as did mortgage and title attach rates. The year after we bought it in bankruptcy, our Rent business is growing instead of declining. Housing companies are in the jungle now, but Redfin has been there before and come out stronger. We’ll generate adjusted EBITDA in 2023 and net income in 2024.”

Unfortunately, the outlook doesn’t look much better at Redfin for Q4. Per their report, for the fourth quarter of 2022, total revenue is expected to be $430-$459 million, representing a year-over-year decline by as much as 33 percent compared to the fourth quarter of 2021. Total net loss is expected to be between $134-$118 million, compared to net loss of $27 million in the fourth quarter of 2021.