Redfin: Revenue is up, Kelman is bullish despite losses 

Redfin beat expectations in the first quarter as it positions itself as a leader in the post-settlement environment.

Revenue was $225.5 million for the quarter, up 5% compared to a year ago, and while the company's adjusted EBITDA was still in negative territory, losses improved.

Net losses, on the other hand, continued to balloon, rising around 10% to $66.8 million.

But the company provided aggressive guidance for the second quarter, with CEO Glenn Kelman saying simply that the reason they'll "win in this tough market is because Redfin has gotten better."

What Redfin had to say

Kelman believes Redfin, which is known for offering lower fees, will be in a good position as consumers become more aware of buyer agent commissions through written agreements. Rule changes, including mandatory buyer agreements, are expected to take place in August.

"And as someone who has been trying to give consumers a better deal, only to discover that homebuyers are completely indifferent to price over the past 15 years because they've been trained to believe that a buyer's agent is free, we have to welcome the possibility that those consumers will now become more aware of the fees and will shop based on value and price," Kelman said. 

"That is what Redfin has been hoping for all along — that when you give people a better deal, they actually beat a path to your door."

As for the market itself, Kelman said that signals from consumers are mixed — and confusing. There are more homes to choose from, and buyers in some markets are willing to move forward despite high mortgage rates, while other areas are seeing price drops.

"I think they are very sensitive to macroeconomic news and obviously interest rates," Kelman said. "It is just a jittery time in the overall economy and in the housing market."

Key numbers

Revenue: $225.5 million, up 5% compared to the first quarter of 2023. For the second quarter, the company expects revenue to be between $285 million and $298 million, which would be a 4-8% increase over a year ago.

Cash and cash equivalents: $107.1 million, down from $149.8 million at the end of 2023.

Net income/loss: A loss of $66.8 million, which is more than the $60.8 million net loss in the first quarter of 2023. Redfin estimates a net loss of between $28 million and $34 million in Q2.

Adjusted EBITDA (earnings before income, taxes, depreciation and amortization): A loss of $27.6 million, compared to a loss of $63.6 million in the first quarter of 2023.

Average number of lead agents: 1,658 at the end of the first quarter, down from 1,692 at the end of the fourth quarter. Agent count has been steadily declining since March 2022. The average number of lead agents at the end of 2022 was 2,426. 

Transactions: 10,039 for the first quarter, down slightly from 10,152 for the last quarter of 2023. A year ago, Redfin had 13,488 transactions.

Site traffic: Nearly 49 million average monthly users, down from 50 million monthly users in the first quarter of 2023.

Notable moves

One day ahead of its earnings release, Redfin reached a settlement in the buyer agent commissions lawsuits, agreeing to pay $9.25 million in damages.

The company was busy in March, launching Ask Redfin, an AI-powered virtual assistant to help buyers find information about for-sale homes, which has driven significant increases in user engagement, the company said in its earnings report.

Redfin also expanded its Redfin Next agent pay plan to seven new markets in March. Redfin Next offers more traditional splits for agents in those markets, versus the company's original base salary-plus-bonuses pay structure. The program began as a pilot last fall, and the company plans to roll it out nationwide next year.

And finally in March, Redfin opened up its "Sign & Save" program to buyers nationwide after announcing the program in February. The program offers buyers a rebate if they sign a buyer agreement with Redfin and go under contract on a home within six months.