It always helps to be a glass-half-full thinker when faced with the challenges of a turbulent market shift. Redfin CEO Glenn Kelman certainly exuded that mentality as he unpacked the company’s rough performance in the first three months of the year.
Redfin reeled in $325.7 million in the first quarter, down 45% from last year, but managed to decrease its losses by $30 million annually. Despite taking its lumps in Q1, Kelman maintained his optimism for Redfin’s future as he claimed that the Seattle-based company “exceeded our expectations.”
“Coming out of the first quarter with profits ahead of our plan, we still expect our full-year adjusted EBITDA to be breakeven or better in 2023, an improvement of roughly $190 million over 2022,” he said on a conference call following the company’s Q1 earnings release Thursday.
Redfin saw its number of transactions dwindle annually as the company reported a total of 13,488 deals compared to 18,418 during the same period last year. The company’s brokerage service closed 10,301 deals, while its partner agents closed 3,197, down from 15,001 and 3,417, respectively.
Despite the decline in transactions, the revenue per transaction experienced a slight uptick—increasing 3.26% year-over-year to $11,556.
Market headwinds forced Redfin to reassess its gameplan last year. Still, Kelman remained confident that the company would turn a corner this year following several adjustments the company has made in previous quarters.
“Between the end of the third quarter of 2022 and the first quarter of 2023, our competitive position has significantly improved,” he said, noting that the company cut $295 million in debt.
That was primarily attributed to the continued wind-down of RedfinNow, as the company reduced its iBuying inventory by $291 million. Redfin sold 191 homes that it bought through the now-defunct iBuying business.
According to Redfin CFO Chris Nielsen, the company has five homes remaining from its RedfinNow supply that are already under contract.
Kelman also acknowledged recent staff cuts as part of the company’s cost reduction measures, including a recent wave of layoffs in April. The company cut 200 more jobs, which impacted its brokerage services segment.
The move marked the company’s third wave of firings, which included laying off 470 employees, or 6% of its workforce, in June 2022, then another 862 in November, when it shuttered its iBuying division.
Admittedly, Kelman suggested that the company is focused on bringing in more experienced talent this year to help bolster sales. He explained that the company launched a new program to hire at least 50 agents this year, each with 20 or more sales in the last two years, or 50-lifetime sales.
Kelman said Redfin had hired 39 agents at that level of seniority already.
Redfin touted its online traffic as an indicator of a potential boon for the company’s balance sheet. The company indicated that it reached more than 50 million average monthly users online compared to 51 million in the first quarter of 2022.
“Demand for the agents on our site has strengthened as we’ve drawn online visitors away from our rivals and more recently increased the rate at which those visitors ask an agent for service,” he said.
Looking ahead to the second quarter, Redfin expects total revenue to range between $268 million and $281 million, which would mark a 20% to 24% annual decline compared to the second quarter of 2022.
The company also forecasts real estate services to earn between $175 million and $183 million, rentals revenue between $45 million and $46 million, mortgage revenue between $38 million and $41 million, and other revenue between $10 million and $11 million.
