Redfin closed 2022 with layoffs, low stock prices and another quarterly loss amid a tough year for the housing market.
The company reported it lost $62 million last quarter, almost double what it lost in the same period in 2021. Revenue was down 25 percent year over year to $480 million.
Redfin posted adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — of $63 million in the fourth quarter.
Revenue from the company’ rent business grew year-over-year for the first time since 2017 as apartment vacancies rose in the second half of 2022. Revenue from rentals increased by 5 percent from the same period in the previous year.
CEO Glenn Kelman called the uptick a “dazzling turnaround for a business acquired out of bankruptcy,” referring to Redfin’s $608 million acquisition of rental listings company RentPath in April 2021.
Redfin laid off 862 employees — about 13 percent of its workforce — in the fourth quarter, marking the company’s second round of layoffs last year amid the housing downturn. Redfin laid off about 470 employees in June 2022.
The layoffs last quarter coincided with the shutdown of Redfin Now, the company’s iBuying division.
“I probably should have closed the iBuying business earlier,” Kelman told the Associated Press at the time. “It shouldn’t have taken a housing market correction to realize how capital-intensive and risky that was.”
Both the layoffs and the closure of Redfin Now contributed to the company’s loss of two basis points in market share.
Oppenheimer analyst Jason Helfstein also sent the company’s share price to a record low last quarter when he downgraded Redfin’s stock, citing a “fundamentally flawed” business model. The company’s stock hit an all-time low in November.
The company has since shifted some of its business to partner agents instead of in-house agents in an attempt to lower some of the personnel costs such as training.
“Going through this near-death experience of trading at $3 or $4 a share made us examine every cost associated with employing agents and comparing that to the gross profit margin we get from partner agents,” Kelman said.
Kelman also acknowledged the company’s geographic focus has skewed largely to the West Coast, particularly in states where homebuyers are increasingly leaving, like California and Oregon.
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“Our geographic concentration has been an issue that we have worked on both through the two layoffs we had last year and on a go forward basis,” Kelman said. “If we do hire someone, it’s going to be in states like Texas, Georgia or Florida.”
Redfin’s plans for 2023 include reaping the benefits of mass media campaigns launched in the fourth quarter of 2022 and continue its focus on high-margin digital revenue rolled out in the second quarter.