Redfin(RDFN) - 2024 Q1 - Quarterly Results

First Quarter 2024 Performance Overview Redfin reported a 5% revenue increase and a narrowed adjusted EBITDA loss in Q1 2024, alongside growth in U.S. market share and strategic operational advancements Q1 2024 Financial Results Redfin's Q1 2024 revenue grew 5% to $225.5 million, with gross profit up 22% and adjusted EBITDA loss narrowing to $27.6 million Q1 2024 Key Financial Metrics (vs. Q1 2023) | Financial Metric | Q1 2024 | Q1 2023 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Revenue | $225.5 million | $214.1 million | +5% | | Gross Profit | $70.8 million | $58.1 million | +22% | | Real Estate Services Gross Profit | $20.3 million | $15.8 million | +28% | | Net Loss | $66.8 million | $60.8 million | +9.9% | | Adjusted EBITDA Loss | $27.6 million | $63.6 million | -56.6% (Improved) | | Diluted Net Loss Per Share | $0.57 | $0.55 | +3.6% | Q1 2024 Operational Highlights Q1 2024 saw Redfin's U.S. market share rise to 0.77%, record mortgage cross-selling, and expansion of 'Redfin Next' agent pay plan - U.S. existing home sales market share increased to 0.77% from 0.72% in Q4 2023[6] - Achieved a record mortgage cross-selling attach rate of 28%, up 3 percentage points from Q1 2023[6][7] - Expanded Title Forward's coverage of Redfin's buyside sales from 54% to 66% by launching in Chicago, Flagstaff, and Phoenix[6] - The 'Redfin Next' agent pay plan was extended to several major markets, including Chicago, Dallas, Miami, and New York, with over 130 top agents joining under the new program[6] - Average monthly users for Redfin's mobile apps and website were nearly 49 million, a slight decrease from 50 million in Q1 2023[6] Business Outlook and Strategic Initiatives Redfin forecasts Q2 2024 revenue growth and improved EBITDA, while strategically preparing for NAR settlement changes and enhancing user experience with AI and new data Second Quarter 2024 Guidance Redfin projects Q2 2024 revenue of $285M-$298M (4-8% YoY growth), with a net loss of $28M-$34M and adjusted EBITDA between ($4M) and $2M Q2 2024 Financial Guidance | Metric | Guidance Range | YoY Change (at midpoint) | | :--- | :--- | :--- | | Total Revenue | $285M - $298M | +4% to +8% | | - Real Estate Services Revenue | $180M - $188M | | | - Rentals Revenue | $50M - $51M | | | - Mortgage Revenue | $39M - $42M | | | Total Net Loss | $28M - $34M | Compared to $27M loss in Q2 2023 | | Adjusted EBITDA | ($4M) - $2M | | Strategic Initiatives Redfin prepares for NAR settlement changes with new buyer agreements, launched 'Ask Redfin' AI assistant, and enhanced listings with new data - Preparing for NAR settlement changes by deploying buyer agreements nationwide through its 'Sign & Save' program[10] - Launched 'Ask Redfin,' an AI-powered virtual assistant that showed significant increases in user engagement during its beta phase[10] - Enhanced property listings with new data, including air quality risk data for U.S. homes and a total cost of renting calculator on Rent.com[10] Consolidated Financial Statements Redfin's Q1 2024 financial statements show a decrease in total assets and a shift to stockholders' deficit, alongside increased revenue but a wider net loss and significant cash usage from operations Consolidated Balance Sheets Redfin's total assets decreased to $1.07 billion, liabilities to $1.08 billion, and stockholders' equity shifted to a $45.8 million deficit Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $107,129 | $149,759 | | Total current assets | $378,291 | $445,045 | | Total assets | $1,071,107 | $1,153,648 | | Liabilities & Equity | | | | Total current liabilities | $284,538 | $268,440 | | Convertible senior notes, net | $641,209 | $688,737 | | Total liabilities | $1,076,887 | $1,110,941 | | Total stockholders' (deficit) equity | ($45,750) | $2,748 | Consolidated Statements of Comprehensive Loss Q1 2024 revenue rose to $225.5 million with improved gross profit, but net loss increased to $67.0 million despite lower operating expenses Income Statement Summary (in thousands) | Account | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $225,479 | $214,083 | | Gross Profit | $70,812 | $58,138 | | Total operating expenses | $140,069 | $158,558 | | Gain on extinguishment of convertible senior notes | $5,686 | $42,270 | | Net loss | ($66,774) | ($60,798) | | Net loss attributable to common stock | ($67,007) | ($61,024) | - Total stock-based compensation expense was $17.4 million in Q1 2024, a decrease from $18.8 million in Q1 2023[19] Consolidated Statements of Cash Flows Redfin's Q1 2024 cash flow saw $46.0 million used in operations, $42.1 million provided by investing, and a net cash decrease of $42.6 million Cash Flow Summary (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($45,980) | $26,704 | | Net cash provided by investing activities | $42,062 | $22 | | Net cash used in financing activities | ($38,676) | ($116,558) | | Net change in cash | ($42,597) | ($89,890) | Supplemental Financial Information Redfin's supplemental data reveals an increase in Q1 2024 U.S. market share, varied segment performance with Rentals achieving positive adjusted EBITDA, and detailed reconciliation of non-GAAP measures Key Business Metrics Q1 2024 U.S. market share increased to 0.77%, but total real estate transactions and mortgage originations saw slight year-over-year declines Quarterly Business Metrics | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Monthly average visitors (thousands) | 48,803 | 43,861 | 50,440 | | Total real estate services transactions | 12,730 | 13,338 | 13,488 | | U.S. market share by units | 0.77% | 0.72% | 0.79% | | Mortgage originations ($ millions) | $969 | $885 | $991 | Segment Performance Analysis Q1 2024 saw Real Estate Services revenue growth, Rentals revenue up 15.5% with positive adjusted EBITDA, and improved Mortgage gross profit Segment Financials (Q1 2024 vs. Q1 2023, in thousands) | Segment | Metric | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Real estate services | Revenue | $131,180 | $127,296 | +3.1% | | | Gross Profit | $20,266 | $15,802 | +28.3% | | | Adjusted EBITDA | ($24,683) | ($43,746) | Improved | | Rentals | Revenue | $49,518 | $42,870 | +15.5% | | | Gross Profit | $38,061 | $33,105 | +14.9% | | | Adjusted EBITDA | $456 | ($9,711) | Turned Positive | | Mortgage | Revenue | $33,819 | $36,489 | -7.3% | | | Gross Profit | $7,915 | $7,276 | +8.8% | | | Adjusted EBITDA | $964 | $1,103 | -12.6% | Reconciliation of Non-GAAP Measures Redfin reconciled its Q1 2024 net loss of $66.8 million to an adjusted EBITDA loss of $27.6 million, with similar guidance for Q2 2024 Q1 2024 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Amount | | :--- | :--- | | Net loss from continuing operations | ($66,774) | | Interest expense, net | $3,042 | | Income tax benefit | ($172) | | Depreciation and amortization | $14,398 | | Stock-based compensation | $17,409 | | Restructuring and reorganization | $889 | | Gain on extinguishment of convertible senior notes | ($5,686) | | Legal contingencies | $9,250 | | Adjusted EBITDA | ($27,594) | - For its Q2 2024 guidance, Redfin reconciles a projected net loss of $28M-$34M to an adjusted EBITDA of ($4M)-$2M by adjusting for approximately $3M in net interest expense, $9M in depreciation & amortization, and $18M in stock-based compensation[37]