Redfin revenue soars 163%, even as losses return in Q4

Redfin on Thursday revealed that during the final three months of 2021 its revenue spiked 163 percent compared to the same period a year earlier. However, in a reversal from the end of 2020 when the company was profitable, it also suffered a net loss as last year wrapped up.

The numbers came in a fourth quarter earnings report that showed Redfin raked in $643.1 million between October and December of last year. That haul handily beat analysts’ forecasts of $599.2 million in revenue, which would have represented a 145.1 percent year-over-year increase.

Despite the soaring revenue, though, Redfin reported a net loss of $27 million during the quarter. One year prior, the company made a profit of $14 million.

Thursday’s report also included numbers for all of 2021. It revealed that over the course of the entire year, Redfin earned about $1.9 billion in revenue, up 117 percent year over year. The company experienced a net loss of $109.6 million in 2021.

In the report, company CEO Glenn Kelman said “fourth-quarter revenues and net income exceeded our expectations.”

“More importantly, Redfin is broadening its sources of customer value and corporate income, with title, mortgage, and iBuying now on track to generate gross profits, after years of being subsidized by our brokerage,” Kelman continued. “Entering an uncertain market, Redfin’s pricing power and on-demand service will let us take share and improve operating margins.”

During a call with investors Thursday afternoon, Kelman pointed to RedfinNow as a particular bright spot in the company’s earnings, noting that the iBuying segment “blew out its revenue forecast” in part because homes are currently “selling faster than ever.”

The report specifically reveals that Redfin’s Properties segment, which includes RedfinNow, earned $377 million in revenue during the fourth quarter. That’s way up from just $39 million a year earlier. The report further shows that the company sold 600 homes during the final three months of 2021, which is up from 83 the year before. The fourth quarter of 2021 also beat the prior three month period, when Redfin sold 388 homes.

Kelman said in his call that Redfin’s iBuyer is more active on the coasts than rival companies, and that it is buying older and more expensive homes than other iBuyers. He added that RedfinNow is also benefiting from the fact that there are “fewer iBuyers bidding against us” — a possible allusion to the demise last fall of Zillow Offers, which had been the second largest iBuyer in the U.S.

Additionally, Kelman said Redfin bid higher on homes in December with the assumption that inventory would be low in the following months. That bet is already paying off, he went on to say, with inventory falling in early 2022 for a variety of reasons. However, he also hinted at the difficulty of getting iBuying right.

“We are running on a knife’s edge on iBuying and we know it,” Kelman said on the call, “and when we’re not sure which way to go we go low.”

Redfin’s stock had been trading in the mid $28 per share range in the hours before the company published its earnings. That was down for the day, as well as compared to a year ago when shares were nearing $100 — though many other real estate companies’ share prices have declined over the past year as well.

After Redfin published its report Thursday, shares fluctuated but ultimately dropped in after hours trading to the mid $24 range.

Redfin had a market cap of about $3 billion as of the time markets closed on Thursday.

Redfin last reported earnings in November. At the time, the company revealed that its revenue had soared 128 percent during the third quarter of 2021. The company also suffered a net loss of $18.9 million during that period. Redfin’s third quarter report also revealed that iBuying revenues jumped 1,000 percent year-over-year.

One quarter prior, Redfin saw its revenue rise 121 percent year over year.

Thursday’s report also offered a number of insights into Redfin’s growth and operations. Among other things, the company had 1.15 percent market share in the fourth quarter of 2021. That’s down slightly from the previous quarters of 2021, but up from 1.04 percent during the final months of 2020.

Kelman said during Thursday’s investor call that he expects “the brokerage to keep taking share and growing the business quarter after quarter.”

“We’ll get more than our fair share of customers,” he also said, adding “we believe we’re going to take share in every quarter of 2022.”

The report additionally shows that during the fourth quarter of 2021 Redfin had an average of 2,485 lead agents, which is more than any other quarter in 2021 or 2020. Kelman noted in his call that 23 percent of the company’s lead agents have joined Redfin since Oct. 1, and that hiring ticked up because the company “lowered the number of customers each agent supports.”

“Redfin outperformed all of our rivals in agent retention last year,” Kelman also said.

Looking forward, Kelman said that the coming year at Redfin will be defined by “executing the strategy we’ve laid out over the past year” rather than investing in new ventures. And regarding the market, Kelman said issues with inventory are “long term and structural,” though the real estate landscape is getting more seasonal and there may be some degree of relief in the coming months.

“We expect inventory to ease in the spring,” Kelman said during the call, adding later that, “I do think inventory will get better.”

Updated: This post was updated after publication with additional information from Redfin’s earnings report, and from a call company leaders held with investors.

Email Jim Dalrymple II