Redfin Reports Third Quarter 2023 Financial Results

SEATTLE: Redfin Corporation (NASDAQ: RDFN) today announced results for its third quarter ended September 30, 2023.

Third Quarter 2023

Third quarter revenue was $269.0 million, a decrease of 12% compared to the third quarter of 2022. Gross profit was $98.3 million, an increase of 8% year-over-year. Real estate services gross profit was $54.1 million, a decrease of 2% year-over-year, and real estate services gross margin was 30%, compared to 26% in the third quarter of 2022.

Net loss was $19.0 million, compared to a net loss of $90.2 million in the third quarter of 2022. Net loss attributable to common stock was $19.3 million. Net loss per share attributable to common stock, diluted, was $0.17, compared to net loss per share, diluted, of $0.83 in the third quarter of 2022.

“In a worsening housing market, Redfin earned an adjusted EBITDA profit, a $59 million improvement over the third quarter of 2022, all while growing traffic and gaining share,” said Redfin CEO Glenn Kelman. “In October, we raised capital, began generating revenues from a new digital business, and launched all-variable agent pay in California. This downturn has only made us stronger.”

Third Quarter Highlights

• Third quarter market share was 0.78% of U.S. existing home sales by units, compared to 0.75% in the second quarter of 2023.
• Redfin’s mobile apps and website reached more than 51 million average monthly users, up 1% compared to the third quarter of 2022.
• Achieved mortgage cross-selling attach rate of 18% in the third quarter, despite strong headwinds.
• Sustained momentum in loyalty sales, with 36% of sales coming from loyalty customers in Q3 2023 compared to 33% in Q3 2022.
• Announced a new construction partnership that will add thousands of new listings to Redfin and provide customers with richer information about newly built homes and communities.
• Delivered software to improve customer and agent experience while driving customer contacts and boosting traffic to Redfin:
  • Added wind risk data to home description pages, making Redfin the first brokerage to publish wind risk information for nearly every for-sale home in the U.S.
  • Launched a new design system for rental detail pages, improving the visual appearance and driving significant increases in user engagement. We applied the same design system to the tour checkout process for customers touring with a Redfin partner agent, leading to an increase in contacts.
  • Improved call filters on our customer service line, allowing Redfin sales advisors to spend more time helping high-intent customers.
  • Simplified Redfin Estimate section for off-market home detail pages, making it easier for consumers to find the information they need and generating a 5% increase in listing contacts.

Business Outlook

The following forward-looking statements reflect Redfin's expectations as of November 2, 2023, and are subject to substantial uncertainty.

For the fourth quarter of 2023 we expect:

• Total revenue between $211 million and $226 million, representing a year-over-year change between (5)% and 2% compared to the fourth quarter of 2022. Included within total revenue are real estate services revenue between $127 million and $137 million, rentals revenue between $49 million and $50 million, mortgage revenue between $26 million and $29 million and other revenue of $9 million to $10 million.
• Total net loss is expected to be between $27 million and $18 million, compared to net loss of $62 million in the fourth quarter of 2022. This guidance includes approximately $20 million in total marketing expenses, $18 million of stock-based compensation, $15 million in depreciation and amortization, $27 million in gains on extinguishment of convertible senior notes and $2 million to $3 million in net interest expense. Adjusted EBITDA loss is expected to be between $19 million and $9 million. Furthermore, we expect to pay a quarterly dividend of 30,640 shares of common stock to our preferred stockholder.

Conference Call

Redfin will webcast a conference call to discuss the results at 1:30 p.m. Pacific Time today. The webcast will be open to the public at http://investors.redfin.com. The webcast will remain available on the investor relations website for at least three months following the conference call.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including our future operating results, as described under Business Outlook. We believe our expectations related to these forward-looking statements are reasonable, but actual results may turn out to be materially different. For factors that could cause actual results to differ materially from the forward-looking statements in this press release, please see the risks and uncertainties identified under the heading "Risk Factors" in our annual report for the year ended December 31, 2022, as supplemented by our quarterly report for the quarter ended September 30, 2023, both of which are available on our Investor Relations website at http://investors.redfin.com and on the SEC website at www.sec.gov. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

Non-GAAP Financial Measure

To supplement our consolidated financial statements that are prepared and presented in accordance with GAAP, we also compute and present adjusted EBITDA, which is a non-GAAP financial measure. We believe adjusted EBITDA is useful for investors because it enhances period-to-period comparability of our financial statements on a consistent basis and provides investors with useful insight into the underlying trends of the business. The presentation of this financial measure is not intended to be considered in isolation or as a substitute of, or superior to, our financial information prepared and presented in accordance with GAAP. Our calculation of adjusted EBITDA may be different from adjusted EBITDA or similar non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Our adjusted EBITDA for the three months ended September 30, 2023 and 2022 is presented below, along with a reconciliation of adjusted EBITDA to net loss.

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

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