Redfin(RDFN) - 2023 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Unaudited consolidated financial statements detail the company's financial position, performance, and cash flows for the periods ended September 30, 2023 Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2023 | Dec 31, 2022 | Change (Absolute) | Change (%) | |:---|---:|---:|---:|---:| | Cash and cash equivalents | $125,803 | $232,200 | $(106,397) | -45.8% | | Short-term investments | $41,752 | $122,259 | $(80,507) | -65.8% | | Loans held for sale | $137,680 | $199,604 | $(61,924) | -31.0% | | Total current assets | $396,826 | $776,458 | $(379,632) | -48.9% | | Total assets | $1,125,865 | $1,574,204 | $(448,339) | -28.5% | | Warehouse credit facilities| $132,320 | $190,509 | $(58,189) | -30.5% | | Convertible senior notes, net (current) | $0 | $23,431 | $(23,431) | -100.0% | | Total current liabilities | $248,824 | $354,639 | $(105,815) | -29.8% | | Convertible senior notes, net (noncurrent) | $799,665 | $1,078,157 | $(278,492) | -25.8% | | Total liabilities | $1,080,165 | $1,470,337 | $(390,172) | -26.5% | | Total stockholders' equity | $5,753 | $63,953 | $(58,200) | -91.0% | Consolidated Statements of Comprehensive Loss Consolidated Statements of Comprehensive Loss Highlights (in thousands, except per share) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (Absolute) | Change (%) | |:---|---:|---:|---:|---:| | Revenue | $268,956 | $305,774 | $(36,818) | -12.0% | | Gross profit | $98,340 | $90,665 | $7,675 | 8.5% | | Loss from continuing operations | $(25,527) | $(44,172) | $18,645 | 42.2% | | Net loss from continuing operations | $(18,972) | $(46,251) | $27,279 | 59.0% | | Net loss | $(18,972) | $(90,245) | $71,273 | 79.0% | | Net loss attributable to common stock per share | $(0.17) | $(0.83) | $0.66 | 79.5% | | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (Absolute) | Change (%) | |:---|---:|---:|---:|---:| | Revenue | $758,595 | $877,639 | $(119,044) | -13.6% | | Gross profit | $256,668 | $253,550 | $3,118 | 1.2% | | Loss from continuing operations | $(173,802) | $(214,519) | $40,717 | 19.0% | | Net loss from continuing operations | $(103,494) | $(222,721) | $119,227 | 53.5% | | Net loss | $(107,128) | $(259,197) | $152,069 | 58.7% | | Net loss attributable to common stock per share | $(0.96) | $(2.42) | $1.46 | 60.3% | - The company recognized a significant gain on extinguishment of convertible senior notes: $6,495 thousand for the three months ended September 30, 2023, and $68,848 thousand for the nine months ended September 30, 2023, with no comparable gain in 2022[17] Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (Absolute) | Change (%) | |:---|---:|---:|---:|---:| | Net cash provided by (used in) operating activities | $91,428 | $(148,489) | $239,917 | 161.6% | | Net cash provided by (used in) investing activities | $97,963 | $(181,109) | $279,072 | 154.1% | | Net cash (used in) provided by financing activities | $(304,347) | $15,098 | $(319,445) | -2115.9% | | Net change in cash, cash equivalents, and restricted cash | $(115,029) | $(314,565) | $199,546 | 63.4% | | Cash, cash equivalents, and restricted cash (End of period) | $127,217 | $403,716 | $(276,499) | -68.5% | - Operating activities shifted from a net cash outflow of $148.5 million in 2022 to a net cash inflow of $91.4 million in 2023, primarily due to changes in assets and liabilities, including a $114.2 million decrease in inventory related to the properties business[240][241] - Financing activities saw a significant decrease in cash provided, moving from a $15.1 million inflow in 2022 to a $304.3 million outflow in 2023, mainly due to repurchases and repayment of convertible senior notes[246][247] Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity - Total stockholders' equity decreased from $63,953 thousand at December 31, 2022, to $5,753 thousand at September 30, 2023, primarily due to a net loss of $107,128 thousand and common stock surrendered for employees' tax liability upon settlement of restricted stock units[23][24] - Stock-based compensation contributed $58,555 thousand to additional paid-in capital for the nine months ended September 30, 2023[23] Index to Notes to Consolidated Financial Statements Note 1: Summary of Accounting Policies - The company completed the wind-down of its properties segment (RedfinNow) as of June 30, 2023, reclassifying its financial results to discontinued operations[32] - Effective Q3 2023, the estimated useful lives of website and internally developed software were increased from 2-3 years to 3-5 years, reducing technology and development expenses by $1,648 thousand and decreasing net loss by $1,648 thousand for the three months ended September 30, 2023[35] Note 2: Discontinued Operations - RedfinNow's wind-down was completed by June 30, 2023, leading to zero assets and liabilities from discontinued operations as of September 30, 2023, compared to $133,468 thousand in total assets and $4,703 thousand in total liabilities at December 31, 2022[37][38] Net Loss from Discontinued Operations (in thousands) | Period | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | |:---|---:|---:|---:|---:| | Revenue| $0 | $294,744 | $122,576 | $927,139 | | Net loss from discontinued operations | $0 | $(43,994) | $(3,634) | $(36,476) | - Restructuring and reorganization charges related to continuing operations primarily consist of employee termination costs from acquisitions and workforce reductions[42] Note 3: Segment Reporting and Revenue - Redfin operates with five operating segments and three reportable segments: real estate services, rentals, and mortgage, with the properties segment now reported as a discontinued operation[43] Revenue by Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | |:---|---:|---:|---:|---:| | Real estate services | $177,750 | $211,540 | $485,687 | $640,835 | | Rentals | $47,410 | $38,686 | $135,636 | $114,979 | | Mortgage | $32,923 | $48,469 | $107,838 | $104,484 | | Other | $10,873 | $7,079 | $29,434 | $17,341 | | Total Revenue | $268,956 | $305,774 | $758,595 | $877,639 | Gross Profit by Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | |:---|---:|---:|---:|---:| | Real estate services | $54,066 | $54,908 | $126,062 | $152,721 | | Rentals | $36,586 | $30,010 | $104,620 | $91,210 | | Mortgage | $3,294 | $4,686 | $14,730 | $8,868 | | Other | $4,394 | $1,061 | $11,256 | $751 | | Total Gross Profit | $98,340 | $90,665 | $256,668 | $253,550 | Note 4: Financial Instruments - The company uses forward sales commitments on whole loans and mortgage-backed securities to manage interest rate risk on loans held for sale[51][52] Notional Amounts of Derivatives (in thousands) | Instrument | Sep 30, 2023 | Dec 31, 2022 | |:---|---:|---:| | Forward sales commitments | $322,652 | $301,548 | | IRLCs | $249,515 | $210,787 | Key Unobservable Inputs for IRLCs and MSRs | Key Inputs | Valuation Technique | Sep 30, 2023 Weighted-Average | Dec 31, 2022 Weighted-Average | |:---|:---|:---|:---| | IRLCs: Pull-through rate | Market pricing | 93.5% | 91.0% | | MSRs: Prepayment speed | Discounted cash flow | 6.5% | 6.6% | | MSRs: Default rates | Discounted cash flow | 0.2% | 0.1% | | MSRs: Discount rate | Discounted cash flow | 10.1% | 9.6% | Note 5: Property and Equipment Property and Equipment, Net (in thousands) | Metric | Sep 30, 2023 | Dec 31, 2022 | |:---|---:|---:| | Property and equipment, gross | $131,493 | $124,709 | | Accumulated depreciation and amortization | $(88,427) | $(76,597) | | Construction in progress | $5,339 | $6,827 | | Property and equipment, net | $48,405 | $54,939 | - Depreciation and amortization for property and equipment decreased in the three months ended September 30, 2023, due to the change in estimated useful lives of website and internally developed software (from 2-3 years to 3-5 years)[64] Note 6: Leases Total Operating Lease Cost (in thousands) | Period | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | |:---|---:|---:|---:|---:| | Total operating lease cost | $4,236 | $5,313 | $15,808 | $14,364 | Weighted-Average Lease Terms and Discount Rates | Metric | Sep 30, 2023 | Dec 31, 2022 | |:---|:---|:---| | Weighted-average remaining operating lease term (years) | 3.3 | 3.6 | | Weighted-average remaining finance lease term (years) | 2.7 | 2.4 | | Weighted-average discount rate for operating leases | 4.5 % | 4.5 % | | Weighted-average discount rate for finance leases | 5.4 % | 5.4 % | Note 7: Commitments and Contingencies - The lawsuit by David Eraker (Surefield) alleging patent infringement resulted in a jury verdict in Redfin's favor on May 17, 2022, finding no infringement and invalidity of asserted claims[70] - Misclassification lawsuits by Devin Cook and Jason Bell were settled for an aggregate of $3,000 thousand, with preliminary court approval granted on May 4, 2023, and final approval hearing set for November 27, 2023[73] - As of September 30, 2023, Redfin held $34,980 thousand in escrow for title and settlement/mortgage businesses, which is not recorded on the balance sheet but carries contingent liability[74] Note 8: Acquired Intangible Assets and Goodwill Acquired Intangible Assets, Net (in thousands) | Asset Type | Sep 30, 2023 Net | Dec 31, 2022 Net | |:---|---:|---:| | Trade names | $60,759 | $67,834 | | Developed technology| $11,811 | $27,875 | | Customer relationships | $60,461 | $66,563 | | Total | $133,031 | $162,272 | - Goodwill remained constant at $461,349 thousand for both September 30, 2023, and December 31, 2022, allocated across Real Estate Services ($250,231), Rentals ($159,151), and Mortgage ($51,967) segments[76] Note 9: Accrued and Other Liabilities Accrued and Other Liabilities (in thousands) | Component | Sep 30, 2023 | Dec 31, 2022 | |:---|---:|---:| | Accrued compensation and benefits | $57,934 | $74,079 | | Miscellaneous accrued liabilities | $24,139 | $27,023 | | Customer contract liabilities | $6,118 | $5,661 | | Total accrued and other liabilities | $88,191 | $106,763 | Note 10: Mezzanine Equity - The company has 40,000 shares of Series A Convertible Preferred Stock outstanding, classified as mezzanine equity, with a carrying value of $39,947 thousand as of September 30, 2023[78][80] - Preferred stockholders are entitled to daily accruing dividends at 5.5% per annum, payable quarterly in common stock (or cash if conditions are not met)[81] - The preferred stock is mandatorily redeemable on November 30, 2024, or automatically convertible to common stock if the common stock closing price exceeds $27.32 for 30 consecutive trading days[84][85] Note 11: Equity and Equity Compensation Plans Shares Reserved for Future Issuance under 2017 EIP | Metric | Sep 30, 2023 | Dec 31, 2022 | |:---|---:|---:| | Stock options issued and outstanding | 2,653,619 | 3,282,789 | | Restricted stock units outstanding | 13,643,678 | 15,731,632 | | Shares available for future equity grants | 11,838,057 | 7,951,616 | | Total shares reserved for future issuance | 28,135,354 | 26,966,037 | - As of September 30, 2023, there was $112,042 thousand of total unrecognized compensation cost related to restricted stock units, expected to be recognized over a weighted-average period of 2.20 years[95] Total Stock-Based Compensation from Continuing Operations (in thousands) | Period | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | |:---|---:|---:|---:|---:| | Total stock-based compensation | $18,800 | $16,424 | $55,148 | $46,962 | Note 12: Net Loss per Share Attributable to Common Stock Net Loss from Continuing Operations per Share Attributable to Common Stock | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | |:---|---:|---:|---:|---:| | Net loss from continuing operations attributable to common stock | $(19,307) | $(46,523) | $(104,352) | $(224,137) | | Weighted-average shares—basic and diluted | 114,592,679 | 108,618,491 | 112,141,342 | 107,566,894 | | Net loss from continuing operations per share attributable to common stock | $(0.17) | $(0.43) | $(0.93) | $(2.08) | - All outstanding common stock equivalents (convertible notes, preferred stock, stock options, RSUs, ESPP) were excluded from diluted EPS calculation as their effect would have been anti-dilutive due to net losses[101] Note 13: Income Taxes - For the nine months ended September 30, 2023, income tax expense was $882 thousand, resulting in an effective tax rate of (0.85)% for continuing operations, primarily due to current state income taxes and deferred tax expenses from increases to indefinite-lived deferred tax liabilities[103] - The company maintains a valuation allowance against the full amount of its U.S. deferred tax assets due to uncertainty regarding their realizability[104] - As of December 31, 2022, the company had approximately $651,498 thousand in federal net operating losses (NOLs), $34,718 thousand (tax effected) in state NOLs, and $5,255 thousand in foreign NOLs[106] Note 14: Debt Warehouse Credit Facilities Outstanding Borrowings (in thousands) | Lender | Sep 30, 2023 Outstanding Borrowings | Dec 31, 2022 Outstanding Borrowings | |:---|---:|---:| | City National Bank | $13,355 | $27,288 | | Origin Bank | $15,238 | $23,739 | | M&T Bank | $9,644 | $19,126 | | Prosperity Bank | $50,912 | $35,856 | | Republic Bank & Trust Company | $23,101 | $26,636 | | Wells Fargo Bank, N.A. | $20,070 | $31,338 | | Total | $132,320 | $190,509 | - In the nine months ended September 30, 2023, Redfin repurchased and retired approximately $284,223 thousand in aggregate principal amount of its 2025 convertible notes for $212,402 thousand, resulting in a gain on extinguishment of debt of $68,848 thousand[110] Convertible Senior Notes Net Carrying Amount (in thousands) | Issuance | Sep 30, 2023 Net Carrying Amount | Dec 31, 2022 Net Carrying Amount | |:---|---:|---:| | 2023 notes | $0 | $23,431 | | 2025 notes | $232,511 | $512,683 | | 2027 notes | $567,154 | $565,474 | Note 15: Subsequent Events - On October 20, 2023, Redfin entered into a definitive agreement with Apollo Capital Management for a $250,000 thousand first lien term loan facility, with half borrowed immediately and the remainder available as a delayed draw[119] - As part of the Apollo transaction, Redfin repurchased $5,000 thousand principal amount of 2025 convertible notes and $72,000 thousand principal amount of 2027 convertible notes held by Apollo for approximately $50,000 thousand[123] - On October 19, 2023, the board of directors increased the authorized amount for the existing note repurchase program from $300,000 thousand to $450,000 thousand[125] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial conditions, operational results, macroeconomic impacts, and key business metrics for the periods ended September 30, 2023 Overview - Redfin is a residential real estate brokerage operating in over 100 markets in the U.S. and Canada, combining proprietary technology with agents to offer faster, better, and more cost-effective services[129] - The company's mission is to redefine real estate in the consumer's favor, extending its technology and service model to mortgage origination/servicing and title/settlement services, and connecting consumers with rental properties[130][131] Adverse Macroeconomic Conditions and Our Associated Actions - Adverse macroeconomic conditions, including higher mortgage interest rates, lower consumer sentiment, and increased inflation, significantly impacted the residential real estate market from Q2 2022 through Q3 2023[132] - Real estate services transaction volume decreased by 18% in Q3 2022 and another 20% in Q3 2023 year-over-year[132] - In response, Redfin reduced its total employee count by 38% (including a 37% reduction in lead agents) from April 2022 to September 2023 and completed the wind-down of its RedfinNow properties segment in Q2 2023 to focus on core businesses[134][136] Key Business Metrics Key Business Metrics | Metric | Sep 30, 2023 | Sep 30, 2022 | Change (Absolute) | Change (%) | |:---|---:|---:|---:|---:| | Monthly average visitors (in thousands) | 51,309 | 50,785 | 524 | 1.0% | | Real estate services transactions | 17,426 | 21,752 | (4,326) | -19.9% | | Brokerage revenue per transaction | $12,704 | $11,103 | $1,601 | 14.4% | | U.S. market share by units | 0.78 % | 0.80 % | -0.02 % | -2.5% | | Average number of lead agents | 1,744 | 2,293 | (549) | -23.9% | | Mortgage originations by dollars (in millions) | $1,110 | $1,557 | $(447) | -28.7% | - The elimination of the standard homebuyer commission refund in December 2022 (following a successful pilot program started in July 2022) has increased real estate services revenue per transaction[148] - U.S. market share is now reported based on the number of homes sold, rather than dollar value, due to changes in NAR's reporting methodology[138][150] Components of Our Results of Operations - Revenue streams include commissions from real estate services (brokerage and partner), subscription-based offerings for rentals, and fees from mortgage origination, sales, and servicing[156] - Cost of revenue primarily comprises personnel costs, transaction bonuses, home-touring/field expenses, listing expenses, customer fulfillment costs for rentals, and interest expense on mortgage warehouse facilities[162] - Operating expenses are categorized into Technology and Development, Marketing, General and Administrative, and Restructuring and Reorganization[164][165][166][167] Results of Operations Revenue and Gross Profit (in thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (Absolute) | Change (%) | |:---|---:|---:|---:|---:| | Total Revenue | $268,956 | $305,774 | $(36,818) | -12.0% | | Total Gross Profit | $98,340 | $90,665 | $7,675 | 8.5% | | Total Gross Margin | 36.6 % | 29.7 % | 6.9 % | 23.2% | | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (Absolute) | Change (%) | |:---|---:|---:|---:|---:| | Total Revenue | $758,595 | $877,639 | $(119,044) | -13.6% | | Total Gross Profit | $256,668 | $253,550 | $3,118 | 1.2% | | Total Gross Margin | 33.8 % | 28.9 % | 4.9 % | 17.0% | - For the three months ended September 30, 2023, real estate services revenue decreased by $33.8 million (16%), driven by a 28% decrease in brokerage transactions, partially offset by a 14% increase in brokerage revenue per transaction due to the elimination of homebuyer commission refunds[177] - Total cost of revenue decreased by $44.5 million (21%) for the three months ended September 30, 2023, primarily due to a $39.0 million decrease in personnel costs and transaction bonuses[179] - Marketing expenses decreased by $9.1 million (28%) for the three months ended September 30, 2023, mainly due to a $9.3 million reduction in marketing media costs[186] - For the nine months ended September 30, 2023, net loss from continuing operations improved significantly, decreasing by $119.2 million (53.5%) compared to the same period in 2022, largely due to a $68.8 million gain on extinguishment of convertible senior notes[175][205] Segment Financial Information - Redfin computes and presents adjusted EBITDA as a non-GAAP financial measure to enhance period-to-period comparability and provide insight into underlying business trends[210] Adjusted EBITDA by Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | |:---|---:|---:|---:|---:| | Real estate services | $13,426 | $4,405 | $(21,574) | $(42,903) | | Rentals | $624 | $(7,418) | $(17,767) | $(21,404) | | Mortgage | $(3,601) | $(3,436) | $(4,736) | $(14,612) | | Other | $3,096 | $58 | $7,138 | $(2,782) | | Corporate overhead | $(5,894) | $(6,065) | $(25,970) | $(23,216) | | Total Adjusted EBITDA | $7,651 | $(12,456) | $(62,909) | $(104,917) | Liquidity and Capital Resources - As of September 30, 2023, Redfin had $125.8 million in cash and cash equivalents and $47.3 million in investments[232] - The company had $809.5 million of convertible senior notes outstanding and 40,000 shares of convertible preferred stock outstanding as of September 30, 2023[233][234] - Net cash provided by operating activities was $91.4 million for the nine months ended September 30, 2023, a significant improvement from $148.5 million used in the prior year, primarily due to changes in assets and liabilities[238][240] - Net cash used in financing activities was $304.3 million for the nine months ended September 30, 2023, mainly due to repurchases of 2025 notes and repayment of 2023 notes[238][246] Critical Accounting Policies and Estimates - Critical accounting policies include revenue recognition for brokerage commissions (recognized upon closing, net of refunds/offers) and mortgage revenue (recognized when IRLC is made, adjusted for pull-through, and for fair value changes)[250][252] - Acquired intangible assets and goodwill require significant management judgment in fair value determination and impairment testing, which can impact financial statements through amortization and potential impairment charges[254][255][257] Recent Accounting Standards - No recently adopted or issued accounting pronouncements were applicable during the period[36] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure relates to interest rate fluctuations affecting investments and mortgage-related assets - Redfin's primary market exposure is to interest rate risk, impacting its cash equivalents, investments (U.S. treasury securities), mortgage loans held for sale, and interest rate lock commitments (IRLCs)[260][261][263] - The company manages interest rate risk on mortgage loans and IRLCs using forward sales commitments on both a best effort and mandatory basis[263] - Due to limited operations in Canada and minimal foreign currency balances, Redfin does not currently face significant foreign currency exchange rate risk[264] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls - Redfin's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of September 30, 2023[265] - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2023[266] - Management acknowledges the inherent limitations of any control system, which can only provide reasonable, not absolute, assurance against errors and fraud[267] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company discloses a new antitrust class action lawsuit in addition to previously reported legal matters - On October 31, 2023, a new putative class action complaint (Gibson et al. v. National Association of Realtors, et al.) was filed against Redfin and other real estate brokerages, alleging a system that resulted in sellers paying inflated buyer broker commissions in violation of federal antitrust law[270][273] - The lawsuit seeks unspecified damages, injunctive relief, and attorneys' fees and costs[270] Item 1A. Risk Factors Updated risk factors highlight threats from industry-wide litigation, government investigations, and risks associated with the company's indebtedness - The real estate market faces significant pressure from private lawsuits and DOJ investigations into antitrust issues, exemplified by the NAR Class Action jury verdict awarding nearly $1.8 billion in damages[272][273] - Potential changes to real estate industry practices, such as agent and broker compensation models, could adversely affect Redfin's financial condition and results of operations[276] - Redfin's new term loan facility grants lenders a first-priority lien on substantially all assets and includes financial covenants and restrictions that could limit operational flexibility and lead to acceleration of debt if breached[278][279][280] - The company's ability to make payments on its indebtedness depends on sufficient cash flow, and failure to do so could result in acceleration of debt or bankruptcy[281] - Inaccurate fair value estimates for mortgage servicing rights (MSRs), interest rate lock commitments (IRLCs), and mortgage loans held for sale could lead to significant asset write-downs[285][286] - Bay Equity's reliance on warehouse credit facilities for mortgage loan funding poses a risk; unavailability or breach of covenants could adversely affect its ability to originate loans and trigger cross-defaults[287][288][289] Item 5. Other Information Certain directors and officers adopted Rule 10b5-1 trading plans for the potential sale of company securities - Christian Taubman (Chief Growth Officer) adopted a Rule 10b5-1 Plan on August 18, 2023, for the potential sale of 34,492 shares of common stock[292] - Anna Stevens (Chief Human Resources Officer) adopted a Rule 10b5-1 Plan on August 31, 2023, for the potential sale of up to 46,301 vested and 49,739 future-vesting Restricted Stock Units[293] Item 6. Exhibits A list of all exhibits filed or furnished as part of the Quarterly Report is provided - Exhibits include certifications from the principal executive and financial officers (31.1, 31.2, 32.1, 32.2), various agreements (10.1, 10.2, 10.3, 10.4), and interactive data files (101, 104)[296] - Exhibits 32.1, 32.2, 101, and 104 are not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934[295] Signatures The report is certified by the signatures of the President and Chief Executive Officer, and the Chief Financial Officer - The report was signed by Glenn Kelman, President and Chief Executive Officer, and Chris Nielsen, Chief Financial Officer, on November 2, 2023[299]