Despite raking in $606.9 million in revenue, nearly a third more than last year, Seattle-based real estate brokerage Redfin saw gross profits dip by 6% in the second quarter of 2022.
Net loss also ballooned from $27.9 million in the second quarter of 2021 to $78.1 million, bringing net loss per share to $0.73. Additionally, earnings before interest, taxes, depreciation and amortization (EBITDA) loss was $28.6 million, compared to EBITDA income of $2.8 million in the previous year. The firm attributed the lackluster results in part to the housing market cooldown and other worsening macroeconomic conditions.
These headwinds “won’t be enough to sink our battleship,” said Redfin CEO Glenn Kelman in an earnings call on Wednesday.
Kelman, who has helmed the firm since 2005, touted several highlights from the second quarter before diving into countermeasures. Among them, Redfin reached marketshare of 0.82% of U.S. existing home sales by units, an increase of five basis points from the previous year, in addition to expanding listing coverage from 91% to 94% of the population. They’ve also gained ground on customer retention, which went up by 2% from the second quarter of 2021.
Kelman then rattled off several of the “thousands of decisions” that Redfin has made to adjust for the slowdown, noting that the “market correction has forced us to simplify our business.”
Reducing costs through the elimination of a previously offered commission refund for homebuyers was one of the maneuvers mentioned. Additionally, the firm is growing online traffic and accelerating share gains and loyalty sales.
Looking forward, two of the company’s goals are to surpass realtor.com®, which is now second only to Zillow in real estate traffic, and to develop a more comprehensive strategy for competing for renters, a growing segment of the population. Kelman forecasted that home prices will continue declining moderately through the rest of 2022, but noted that he expects Redfin’s properties division to turn a significant gross profit for the full year.
Rounding out the call, Kelman sounded hopeful as he noted that demand modestly improved in the second, third and fourth weeks of July. Moreover, it may further improve as mortgage rates, which were cited as a reason for company layoffs in June, dropped below 5% for the first time since April.
Redfin’s share price jumped up 19% in the past week as of Friday afternoon (press time), but remains down 73.8% year-to-date.
Many of the industry’s largest players, including Zillow, Rocket Mortgage and Anywhere Real Estate, also posted year-over-year losses in the second quarter as market conditions continue to weaken.
Brendan Rascius is RISMedia’s associate editor. Email him your story ideas at brascius@rismedia.com.
