Redfin(RDFN) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents Redfin Corporation's unaudited consolidated financial statements, including balance sheets, statements of comprehensive loss, cash flows, and changes in equity Consolidated Balance Sheets - Total assets increased, while total liabilities also rose, leading to a shift from positive to negative stockholders' equity[8] Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total assets | $1,181,484 | $1,153,648 | +$27,836 | | Total liabilities | $1,194,249 | $1,110,941 | +$83,308 | | Total stockholders' (deficit) equity | $(52,746) | $2,748 | $(55,494) | Key Asset Changes (June 30, 2024 vs. December 31, 2023, in thousands) | Asset Category | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $201,812 | $149,759 | +$52,053 | | Short-term investments | $— | $41,952 | -$41,952 | | Accounts receivable, net | $75,522 | $51,738 | +$23,784 | | Loans held for sale | $208,460 | $159,587 | +$48,873 | | Mortgage servicing rights | $2,695 | $32,171 | -$29,476 | Key Liability Changes (June 30, 2024 vs. December 31, 2023, in thousands) | Liability Category | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Accrued and other liabilities | $125,082 | $90,360 | +$34,722 | | Warehouse credit facilities | $202,559 | $151,964 | +$50,595 | | Convertible senior notes, net | $571,077 | $688,737 | -$117,660 | | Term loan | $243,961 | $124,416 | +$119,545 | Consolidated Statements of Comprehensive Loss - For both the three and six months ended June 30, 2024, Redfin reported a net loss from continuing operations, influenced by increased interest expense and a reduced gain on extinguishment of convertible senior notes, despite revenue growth[10][162] Consolidated Statements of Comprehensive Loss (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $295,203 | $275,556 | +$19,647 | +7% | | Gross Profit | $109,586 | $100,190 | +$9,396 | +9% | | Total Operating Expenses | $138,514 | $148,045 | -$9,531 | -6% | | Loss from continuing operations | $(28,928) | $(47,855) | +$18,927 | -40% | | Interest Expense | $(6,086) | $(1,766) | +$4,320 | +245% | | Gain on extinguishment of convertible notes | $6,314 | $20,083 | -$13,769 | -69% | | Net loss from continuing operations | $(27,880) | $(27,212) | +$668 | +2% | | Net loss attributable to common stock per share | $(0.23) | $(0.25) | +$0.02 | -8% | Consolidated Statements of Comprehensive Loss (Six Months Ended June 30, in thousands) | Metric | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $520,682 | $489,639 | +$31,043 | +6% | | Gross Profit | $180,398 | $158,328 | +$22,070 | +14% | | Total Operating Expenses | $278,583 | $306,603 | -$28,020 | -9% | | Loss from continuing operations | $(98,185) | $(148,275) | +$50,090 | -34% | | Interest Expense | $(10,960) | $(3,688) | +$7,272 | +197% | | Gain on extinguishment of convertible notes | $12,000 | $62,353 | -$50,353 | -81% | | Net loss from continuing operations | $(94,654) | $(84,522) | +$10,132 | +12% | | Net loss attributable to common stock per share | $(0.80) | $(0.80) | $0.00 | 0% | Consolidated Statements of Cash Flows - Net cash used in operating activities significantly increased for the six months ended June 30, 2024, primarily due to the net loss and increased net originations of loans held for sale[13][213][216] - Conversely, net cash provided by financing activities turned positive, driven by proceeds from the term loan and increased warehouse credit facility borrowings, offsetting cash used for convertible note repurchases[13][213][216] Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Operating Activities | $(53,928) | $(11,115) | $(42,813) | | Investing Activities | $38,825 | $41,403 | $(2,578) | | Financing Activities | $66,673 | $(151,212) | +$217,885 | | Net Change in Cash | $51,568 | $(120,982) | +$172,550 | | Cash, Cash Equivalents, and Restricted Cash (End of Period) | $202,568 | $121,264 | +$81,304 | - Net cash used in operating activities for the six months ended June 30, 2024, was $(53,928) thousand, primarily due to a net loss of $(94,654) thousand and $48,515 thousand in net originations of loans held for sale[13][213] - Net cash provided by financing activities for the six months ended June 30, 2024, was $66,673 thousand, driven by $125,000 thousand in proceeds from the term loan and a $50,595 thousand increase in net borrowings under warehouse credit facilities, partially offset by $106,953 thousand for convertible note repurchases[13][216] Consolidated Statements of Changes in Mezzanine Equity and Stockholders' (Deficit) Equity - Total stockholders' (deficit) equity significantly decreased from $2,748 thousand at December 31, 2023, to $(52,746) thousand at June 30, 2024, primarily due to a net loss of $(94,654) thousand[19] Key Equity Changes (in thousands) | Metric | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Stockholders' (Deficit) Equity | $(52,746) | $2,748 | $(55,494) | | Accumulated Deficit | $(917,987) | $(823,333) | $(94,654) | | Additional Paid-in Capital | $865,263 | $826,146 | +$39,117 | - Additional paid-in capital increased by $39,117 thousand, mainly due to $37,903 thousand in stock-based compensation and common stock issuances[19] - Common shares outstanding increased from 117,372,171 at December 31, 2023, to 121,743,620 at June 30, 2024[19] Index to Notes to Consolidated Financial Statements - The index lists 14 notes providing detailed explanations for the consolidated financial statements[21] - Notes cover critical areas such as accounting policies, discontinued operations, segment reporting, financial instruments, property and equipment, leases, commitments and contingencies, acquired intangible assets and goodwill, accrued liabilities, mezzanine equity, equity and compensation plans, EPS, income taxes, and debt[21] Note 1: Summary of Accounting Policies - The consolidated financial statements are prepared in accordance with GAAP, reflecting only normal recurring adjustments[23][24] - Management's estimates are critical for valuations including deferred income taxes, stock-based compensation, lease payments, intangible assets, and fair value of financial instruments[25] - The company is currently evaluating the impact of recently issued accounting pronouncements, ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), on its future disclosures[26][27] Note 2: Discontinued Operations - Redfin completed the wind-down of its RedfinNow properties segment as of June 30, 2023, a strategic decision to focus resources on core businesses[29] - As of June 30, 2024, there were no major classes of assets and liabilities remaining from discontinued operations[29] Net Loss from Discontinued Operations (Six Months Ended June 30, 2023, in thousands) | Metric | Amount | | :--- | :--- | | Net loss from discontinued operations | $(3,634) | - Cumulative employee termination costs related to the wind-down recognized as of June 30, 2023, amounted to $8,587 thousand[31] Note 3: Segment Reporting and Revenue - Redfin operates with three reportable segments: real estate services, rentals, and mortgage, generating revenue primarily from commissions, subscription-based offerings, and mortgage origination/servicing[33] Revenue by Segment (Three Months Ended June 30, 2024, in thousands) | Segment | Revenue | % of Total Revenue | | :--- | :--- | :--- | | Real estate services | $187,569 | 63.5% | | Rentals | $50,927 | 17.2% | | Mortgage | $40,179 | 13.6% | | Other | $16,528 | 5.6% | | Total | $295,203 | 100.0% | Revenue by Segment (Six Months Ended June 30, 2024, in thousands) | Segment | Revenue | % of Total Revenue | | :--- | :--- | :--- | | Real estate services | $318,749 | 61.2% | | Rentals | $100,445 | 19.3% | | Mortgage | $73,998 | 14.2% | | Other | $27,490 | 5.3% | | Total | $520,682 | 100.0% | - Rentals revenue showed strong growth, increasing by 12% ($5.6 million) for the three months and 14% ($12.2 million) for the six months ended June 30, 2024, compared to the same periods in 2023[169][181] Note 4: Financial Instruments - Redfin's primary market exposure is to interest rate risk, which is managed using forward sales commitments on whole loans and mortgage-backed securities[40] Notional Amounts of Financial Instruments (June 30, 2024, in thousands) | Instrument | Amount | | :--- | :--- | | Forward sales commitments | $435,861 | | IRLCs | $350,852 | Fair Value Hierarchy of Financial Instruments (June 30, 2024, in thousands) | Asset/Liability Category | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | | Cash equivalents | $148,890 | $— | $— | | Loans held for sale | $— | $208,460 | $— | | Forward sales commitments | $— | $1,392 | $— | | IRLCs | $— | $— | $4,901 | | Mortgage servicing rights | $— | $— | $2,695 | Key Unobservable Inputs for Level 3 Valuations (June 30, 2024) | Instrument | Input | Weighted-Average | | :--- | :--- | :--- | | IRLCs | Pull-through rate | 91.3% | | MSRs | Prepayment speed | 7.4% | | MSRs | Discount rate | 10.1% | - MSRs sales for the six months ended June 30, 2024, amounted to $(30,503) thousand[50] Note 5: Property and Equipment - Property and equipment, net, decreased slightly from $46,431 thousand at December 31, 2023, to $45,303 thousand at June 30, 2024[55] - Website and software development costs (gross) were the largest component, increasing to $83,477 thousand at June 30, 2024, from $75,573 thousand at December 31, 2023[55] - Capitalized software development costs for the six months ended June 30, 2024, were $8,565 thousand, while depreciation and amortization for property and equipment totaled $9,403 thousand[56] Note 6: Leases - Total operating lease costs decreased significantly by 36.5% to $3,640 thousand for the three months ended June 30, 2024, and by 35.9% to $7,418 thousand for the six months ended June 30, 2024, compared to the same periods in 2023[58] - The weighted-average remaining operating lease term was 3.1 years, with a weighted-average discount rate of 4.5% as of June 30, 2024[59] - Cash paid for operating leases for the six months ended June 30, 2024, was $9,007 thousand[59] Note 7: Commitments and Contingencies - Redfin is a defendant in multiple class action antitrust lawsuits alleging a conspiracy to fix real estate commissions[68][69] - The company entered into a proposed settlement of $9,250 thousand to resolve certain nationwide antitrust claims, which received preliminary court approval on July 15, 2024, with final approval scheduled for October 31, 2024[70][71] - Redfin is also facing a putative class action lawsuit alleging privacy violations under the federal Video Privacy Protection Act (VPPA) and the California Invasion of Privacy Act (CIPA) for using tracking technologies[72] - A separate class action lawsuit alleges violations of Washington's pay transparency law for failing to disclose wage scales in job postings[73] - As of June 30, 2024, Redfin held $67,264 thousand in escrow for its title and mortgage businesses, which is not recorded on the balance sheet but carries potential contingent liability[74] Note 8: Acquired Intangible Assets and Goodwill - Acquired intangible assets, net, decreased from $123,284 thousand at December 31, 2023, to $108,832 thousand at June 30, 2024, primarily due to amortization[75] - Amortization expense for intangible assets was $14,452 thousand for the six months ended June 30, 2024[75] - Goodwill remained unchanged at $461,349 thousand across the Real Estate Services, Rentals, and Mortgage segments, with no impairment charges recorded in Q2 2024 or Q2 2023[77][223] Note 9: Accrued and Other Liabilities - Total accrued and other liabilities increased significantly from $90,360 thousand at December 31, 2023, to $125,082 thousand at June 30, 2024[78] - This increase was primarily driven by a rise in accrued compensation and benefits ($76,641 thousand at June 30, 2024, from $58,836 thousand) and the recognition of $9,250 thousand for legal contingencies[78] Note 10: Mezzanine Equity - Redfin's Series A Convertible Preferred Stock is classified as mezzanine equity, with a carrying value of $39,981 thousand as of June 30, 2024[79][80] - Holders are entitled to daily accruing dividends at a rate of 5.5% per annum, payable quarterly in common stock (or cash under certain conditions)[81] - The preferred stock is subject to automatic conversion if the common stock closing price exceeds $27.32 per share for 30 consecutive trading days prior to November 30, 2024[83] - A mandatory redemption of any outstanding preferred shares is scheduled for November 30, 2024, where holders can elect to receive cash, common stock, or a combination[84] Note 11: Equity and Equity Compensation Plans - As of June 30, 2024, Redfin had 10,957,893 shares available for future equity grants under its 2017 Equity Incentive Plan (EIP) and 14,976,805 restricted stock units (RSUs) outstanding[89][94] - Total unrecognized compensation cost related to RSUs was $100,748 thousand as of June 30, 2024, expected to be recognized over a weighted-average period of 1.91 years[95] - Stock-based compensation from continuing operations for the six months ended June 30, 2024, totaled $35,640 thousand[98] - All outstanding stock options were fully vested as of June 30, 2024, with no option-related expense recognized during the six months ended June 30, 2024[92] Note 12: Net Loss From Continuing Operations per Share Attributable to Common Stock - Redfin calculates basic and diluted net loss per share using the two-class method, as convertible preferred stock is considered a participating security[101] Net Loss per Share Attributable to Common Stock (Basic and Diluted) | Period | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss per share from continuing operations | $(0.23) | $(0.80) | | Weighted-average shares outstanding | 120,393,897 | 119,379,082 | - Various common stock equivalents, including convertible notes, preferred stock, stock options, and restricted stock units, were excluded from the diluted EPS calculation due to their anti-dilutive effect[102] Note 13: Income Taxes - Redfin recorded an income tax expense of $387 thousand for the six months ended June 30, 2024, resulting in an effective tax rate of (0.41)%[104] - The company maintains a full valuation allowance against its U.S. deferred tax assets due to historical losses and uncertainty of realization[105] - As of December 31, 2023, Redfin had approximately $642,212 thousand in federal net operating loss (NOL) carryforwards, with $449,434 thousand generated after 2017 available indefinitely[106] - Research and development credit carryforwards of $23,968 thousand were available as of December 31, 2023, beginning to expire in 2026[107] Note 14: Debt - As of June 30, 2024, Redfin had $571,077 thousand in convertible senior notes and $243,961 thousand in term loan principal outstanding[8][109][117] Total Borrowings by Type (June 30, 2024, in thousands) | Debt Type | Amount | Maturity | | :--- | :--- | :--- | | Warehouse Credit Facilities | $202,559 | 2024 | | 2025 Convertible Notes | $73,366 | October 15, 2025 | | 2027 Convertible Notes | $497,711 | April 1, 2027 | | Term Loan | $243,961 | October 20, 2028 | - The company drew down the remaining $125,000 thousand of its Apollo term loan on May 31, 2024, which carries an effective interest rate of 12.13%[110][112] - During Q2 2024, Redfin repurchased $71,155 thousand principal amount of its 2025 convertible notes for $64,428 thousand cash, resulting in a $6,314 thousand gain on extinguishment[115] - Warehouse credit facilities, with a total borrowing capacity of $295,000 thousand, had $202,559 thousand outstanding as of June 30, 2024, used to fund mortgage originations[110] - Cross-acceleration and cross-default provisions exist across convertible senior notes, term loan, and warehouse credit facilities, which could trigger immediate payment obligations upon a single default[123] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Redfin's financial condition and operational results, highlighting macroeconomic impacts, strategic actions, key metrics, and detailed financial comparisons Overview - Redfin is a residential real estate brokerage operating in over 100 markets in the United States and Canada, aiming to redefine real estate through technology and local agents[128] - The company's services include real estate brokerage, mortgage origination and servicing, title and settlement services, and digital platforms for rentals[128][129] Adverse Macroeconomic Conditions and Our Associated Actions - Adverse macroeconomic conditions, including higher mortgage interest rates and increased inflation, negatively impacted the residential real estate market and consumer demand from Q2 2022 through Q2 2024[129] - In response, Redfin reduced its total workforce by 40% (including lead agents) from April 2022 through December 2023 and completed the wind-down of its RedfinNow properties segment by Q2 2023 to focus on core businesses and achieve profitability[130][131] - The company is navigating multiple antitrust lawsuits related to real estate commissions, with a proposed $9.25 million settlement reached for certain claims[133][135] - Changes from the NAR settlement agreement, such as prohibiting buyer broker compensation offers on MLS and mandating written buyer agreements, may put downward pressure on buyer agent commissions[134] Key Business Metrics - Monthly average visitors increased quarter-over-quarter but slightly decreased year-over-year[136] Monthly Average Visitors (in thousands) | Period | Visitors | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Jun 30, 2024 | 51,619 | -1.3% | +5.8% | | Jun 30, 2023 | 52,308 | - | - | | Mar 31, 2024 | 48,803 | - | - | - Real estate services transactions decreased year-over-year, while aggregate revenue per transaction increased[136] Real Estate Services Transactions and Revenue per Transaction | Metric | Jun 30, 2024 | Jun 30, 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Real Estate Services Transactions | 17,573 | 17,668 | -0.5% | | Aggregate Revenue per Transaction | $10,674 | $10,224 | +4.4% | - U.S. market share by units slightly increased to 0.77% as of June 30, 2024, from 0.75% in the prior year[136] - Mortgage originations by dollars increased by 4.4% year-over-year to $1,338 million for the period ended June 30, 2024[136] - The elimination of the standard commission refund in December 2022 contributed to increased real estate services revenue per transaction in 2023, with a pilot program for buyer refunds expanded in Q1 2024[146] Components of Our Results of Operations - Redfin's revenue streams include brokerage, partner, rentals, mortgage, and other services, with brokerage revenue recognized upon transaction closing and rentals revenue primarily on a straight-line basis[151][152][154] - Cost of revenue encompasses personnel costs, transaction bonuses, home-touring expenses, listing expenses, rentals fulfillment, office costs, interest on warehouse facilities, and depreciation/amortization[155] - Operating expenses are categorized into technology and development, marketing, general and administrative, and restructuring[157][158] - Other income/expense items include interest income, interest expense, income tax expense, gains on extinguishment of convertible senior notes, and other net expenses[159][160][161] Results of Operations Comparison of the Three Months Ended June 30, 2024 and 2023 For Q2 2024, Redfin's revenue increased by 7% year-over-year to $295.2 million, but the net loss from continuing operations slightly increased due to higher interest expense - Revenue increased by $19.6 million (7%) to $295.2 million, primarily from real estate services (+$6.9 million), rentals (+$5.6 million), and other segments (+$5.4 million)[169] - Gross profit increased by $9.4 million (9%) to $109.6 million, with total gross margin improving by 70 basis points to 37.1%[171][172] - Total operating expenses decreased by $9.5 million (6%) to $138.5 million, mainly due to a $4.9 million decrease in technology and development expenses and a $7.1 million decrease in general and administrative expenses[175][176] - Net loss from continuing operations slightly increased from $(27.2) million in Q2 2023 to $(27.9) million in Q2 2024[162] - Interest expense surged by $4.3 million (245%) to $(6.1) million, primarily due to interest on the new term loan[178] - Gain on extinguishment of convertible senior notes decreased by $13.8 million (69%) to $6.3 million, as a smaller portion of notes were paid down at a discount[179] Comparison of the Six Months Ended June 30, 2024 and 2023 For H1 2024, Redfin's revenue increased by 6% year-over-year to $520.7 million, but the net loss from continuing operations increased by 12% due to higher interest expense - Revenue increased by $31.0 million (6%) to $520.7 million, primarily from rentals (+$12.2 million) and real estate services (+$10.8 million)[181] - Gross profit increased by $22.1 million (14%) to $180.4 million, with total gross margin improving by 230 basis points to 34.6%[183][184] - Total operating expenses decreased by $28.0 million (9%) to $278.6 million, driven by decreases in technology and development, marketing, and general and administrative expenses, partially offset by an $8.6 million increase in legal settlements[187][188] - Net loss from continuing operations increased from $(84.5) million in H1 2023 to $(94.7) million in H1 2024[162] - Interest expense increased by $7.3 million (197%) to $(11.0) million, primarily due to interest on the term loan[191] - Gain on extinguishment of convertible senior notes decreased by $50.4 million (81%) to $12.0 million, due to a smaller portion of notes being paid down at a discount[191] Segment Financial Information - Redfin provides segment-level financial data for its real estate services, rentals, mortgage, and other segments, along with corporate overhead[192] - Adjusted EBITDA, a non-GAAP financial measure, is presented to enhance period-to-period comparability and provide insight into underlying business trends[193] Adjusted EBITDA (in thousands) | Period | Amount | | :--- | :--- | | Three Months Ended June 30, 2024 | $(28) | | Six Months Ended June 30, 2024 | $(27,622) | Liquidity and Capital Resources - As of June 30, 2024, Redfin had $201.8 million in cash and cash equivalents[207] - The company had $576.9 million in convertible senior notes and $248.8 million in term loan principal outstanding as of June 30, 2024[207][208] - During Q2 2024, Redfin repurchased $71.2 million of its 2025 convertible notes for $64.4 million cash, with $17.6 million remaining under the repurchase program[207] - Redfin relies on existing cash, future operations, and mortgage warehouse credit facilities to meet operational needs and growth, and fulfill payment obligations[209] - The company had 40,000 shares of convertible preferred stock outstanding as of June 30, 2024, subject to mandatory redemption on November 30, 2024[208] Critical Accounting Policies and Estimates - Redfin's critical accounting policies involve significant management judgment and estimates, particularly in revenue recognition and the valuation of acquired intangible assets and goodwill[219][220][222] - Brokerage revenue is recognized upon transaction closing, with a single performance obligation, net of any commission refunds or promotional offers[220] - Acquired intangible assets are valued using significant estimates of future cash flows, discount rates, and asset lives, and are subject to amortization and impairment testing[222][223] - Goodwill is not amortized but is subject to annual impairment testing, with no impairment charges recorded in Q2 2024 or Q2 2023[223] - Accounting for debt issuances, such as the Apollo term loan and associated convertible note repurchases, requires careful consideration of the debt's nature, fees, and resulting gains or losses[225][226] Recent Accounting Standards - Information on recently adopted and issued accounting pronouncements, including ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), is detailed in Note 1 to the consolidated financial statements[26][27][227] Item 3. Quantitative and Qualitative Disclosures About Market Risk Redfin's primary market risk is interest rate fluctuations, which it manages through forward sales commitments, with no material impact expected from a hypothetical 10% rate change Interest Rate Risk - Redfin's primary market risk is from fluctuations in interest rates, specifically U.S. treasury and mortgage interest rates, due to their impact on mortgage-related assets and commitments[227] - The company manages this interest rate risk through the use of forward sales commitments on both whole loans and mortgage-backed securities[229] - Redfin's investment policy prioritizes liquidity and capital preservation, with investments in U.S. treasury and agency issues, bank certificates of deposit, and SEC-registered money market funds[228] - A hypothetical 10% change in interest rates is not expected to have a material impact on the company's financial results for the third quarter of 2024[228] Foreign Currency Exchange Risk - Redfin does not currently face significant foreign currency exchange rate risk due to limited operations in Canada and minimal foreign currency balances[230] Item 4. Controls and Procedures Redfin's management concluded its disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control during the quarter Evaluation of Disclosure Controls and Procedures - Redfin's management, including its principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2024[231] Changes in Internal Control - There were no changes in Redfin's internal control over financial reporting during the quarter ended June 30, 2024, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[232] Inherent Limitations on Effectiveness of Controls - Management acknowledges that all control systems have inherent limitations and can only provide reasonable, not absolute, assurance that objectives are met[233] - Due to these limitations, not all errors or fraud may be detected, and controls may become inadequate over time due to changing conditions or deteriorating compliance[233] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 7 of the consolidated financial statements for a detailed discussion of Redfin's material, pending legal proceedings - Detailed information on material, pending legal proceedings is provided in Note 7 to the consolidated financial statements[235] Item 1A. Risk Factors Redfin states that there have been no material changes to the risk factors previously disclosed in its 2023 annual report and Q1 2024 quarterly report - There have been no material changes from the risk factors included in the 2023 annual report and the Q1 2024 quarterly report[236] - Investors should carefully consider the described risks, as their occurrence could materially and adversely affect Redfin's business, operating results, financial condition, liquidity, or competitive position[236] Item 5. Other Information During Q2 2024, Redfin's Chief Technology Officer, Bridget Frey, adopted a Rule 10b5-1 trading plan for the potential sale of 38,493 shares of common stock - Bridget Frey, Chief Technology Officer, adopted a Rule 10b5-1 Plan on May 17, 2024[238] - The plan provides for the potential sale of 38,493 shares of common stock[238] - No other directors or Section 16 officers adopted or terminated a 'non-Rule 10b5-1 trading arrangement' during the covered period[237] Item 6. Exhibits This section lists the exhibits filed or furnished as part of the Quarterly Report, including officer certifications and interactive data files - The exhibits include certifications from the principal executive officer (31.1) and principal financial officer (31.2), as well as interactive data files (101, 104)[241] Signatures The report is duly signed on August 6, 2024, by the CEO and CFO, certifying its submission to the SEC - The report was signed by Glenn Kelman, President and Chief Executive Officer, and Chris Nielsen, Chief Financial Officer, on August 6, 2024[243]