Keeping your head down day-to-day is an easy routine to fall into when you work in real estate—you’re so focused on closing that sale, getting that new listing, etc. However, each quarter provides an opportunity to assess company results and plot an informed business strategy.
With the second quarter of 2023 now behind us, among the sea of earnings calls reports, Redfin released its results on Thursday, August 3, 2023.
Key financial results:
- Redfin reported $276 million in revenue, a decrease compared to the $349 million posted in the previous quarter and $679 million in Q2 2022.
- The majority of revenue, $181 million, came from real estate services.
- This was followed by rentals ($45 million) and then mortgages ($38 million).
- However, gross profits were $100 million, a 10% decline year-over-year.
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were just under $7 million.
- Operating expenses totaled $160 million, a 2% increase from 2022, and 49.2% from Q1 2023.
- The company operated at a net loss of $27 million compared to $30 million in Q1 2023. The company had projected a higher loss and currently believes its Q3 loss will fall between $21 – $30 million. This suggests that Redfin’s leadership has a degree of control over their losses, but a net gain is not quite in sight yet.
- Redfin’s recorded website and app viewers numbered 52.3 million during this quarter. This is a slight decline quarter-over-quarter (52.7 million), but an increase year-over-year (49.7 million).
Redfin’s Premier agent program, which launched nationwide near the end of Q1 2023, reported 1,300-plus listings priced at more than $1 million. These early results are not enough to cast judgment on the program’s long-term success, though.
For Q3 2023 (set to end Saturday, Sept. 30, 2023), Redfin projects total revenue between $265 – $279 million, broken down as follows:
- $172 – $182 million for real estate services
- $46 – $47 million for rentals
- $35 – $38 million for mortgages
- Other revenue is projected at $12 million
Adjusted EBITDA for Q3 2023 is projected to fall between $4 – $14 million.
CEO Glenn Kelman, noting the “declining market,” summarized Redfin’s performance and future expectations as follows:
“We expect to break-even on an adjusted-EBITDA basis over the next 12 months rather than in 2023, which is a setback, but still we project that our adjusted EBITDA this year will improve by more than $140 million. We lost marketshare due to one-time setbacks from agent layoffs and the closure of RedfinNow, but we expect to return to quarter-over-quarter gains in the second half, as Redfin.com has been competing better for traffic We believe Redfin is set up for profitable growth.”
Continuing on the point, Kelman said that over the next year, until June 2023, Redfin plans to generate “a full year adjusted EBITDA profit.”
Following its earnings call, Redfin stock has fallen by 10%—a drop that may or may not impede the company’s plans to reach profit.
Read the full Q2 2023 results for Redfin here.
