Redfin Loses $67M In Q1, Beating Expectations

Redfin beat its expectations last quarter, despite a housing market still stalled by high mortgage rates and low inventory.

The discount brokerage and listings platform reported adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — and revenues that surpassed the thresholds it anticipated in the fourth quarter of 2023, executives said during its earnings call on Tuesday.

Redfin lost $27.6 million in adjusted EBITDA last quarter, down from the $29 million to $36 million the company expected to lose. The metric was also significantly less than the $63.6 million it lost in the same period last year.

“We’re nearly 40 million bucks ahead of where we were a year ago,” CEO Glenn Kelman said on the call. “These results put Redfin in a good position to earn a full year adjusted EBITDA profit despite the recent increase in mortgage rates.”

Redfin posted $225 million, which was more than the $213 million to $223 million it anticipated earning in the first quarter. Total revenue was up 5 percent from the first quarter of 2023.

Despite the gains, Redfin still lost $66.8 million last quarter, more than the $60.8 million it lost in the same period last year.

“Since 2015, our largest quarterly loss has always been in the first quarter, when we invest in serving customers who close in the summer,” Kelman said.

The company said its traffic growth last quarter — 2 percent year-over-year — was on par with several of its competitors, including Realtor.com and Zillow.

The uptick came after the firm cut back on marketing and as CoStar spent $1 billion on an advertising campaign for Homes.com. Traffic to the residential listing platform outpaced Redfin’s in the first quarter of 2023.

“To engage that audience, we’re increasingly turning to artificial intelligence,” Kelman said. “Artificial intelligence has long been effective at bringing visitors back to Redfin.com.”

Last month, the firm rolled out its AI-powered chatbot, Ask Redfin, on its iPhone application. The tool allows users to ask questions about listings, and the company plans to integrate it into its website and Android application later this year.

Redfin’s earnings call came a day after the firm announced its agreement to pay $9.25 million to settle antitrust litigation over broker commissions. The deal extends to cases brought by homesellers, but the firm is still facing two lawsuits from buyers.

“They’re in a much earlier stage,” Kelman said. “Our defenses are really good.”

Kelman also projected confidence ahead of the industry changes taking hold as a result of the National Association of Realtors’ settlement with the homeseller plaintiffs. Among the new policies is a provision requiring agents to obtain signed agreements with buyers before bringing them on a home tour. The rules are slated to take effect in August.

While other executives downplayed the settlement’s impact on the market, Kelman acknowledged concerns from agents on the ground and predicted that shakeups to the industry will likely be more tangible than some are predicting.

“I’m not trying to say that all heck is gonna break loose, that the four horsemen of the apocalypse are coming in August or something like that,” Kelman said. “But I do think that there could be a medium level of change.”

He added that Redfin was well positioned to capitalize on enhanced consumer awareness about the cost of buyer’s agent services as a result of the media coverage of the lawsuits.

“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.”

Kelman also acknowledged Zillow’s new touring agreements, which the company announced last week as an attempt to comply with NAR’s buyer’s agent agreement policy. The non-exclusive agreements allow an agent to show a buyer homes for seven days without a compensation expectation.

“It seems pretty clear right now that the industry is trying to figure out a low friction way for websites to introduce homebuyers to real estate agents,” Kelman said. “We’ll be on the same playing field as other real estate websites. And we think that the friction will be fairly low.”