Tech-driven real estate company Redfin Corp. announced its second-quarter results Thursday after the close of trading.
The company, which laid off about 6% of its workforce in June due to a drop in home purchases as interest rates rose at the fastest rate since the mid-1980s, reported that:
- Second quarter revenue was $606.9 million, an increase of 29% over the second quarter of 2021. First quarter revenue was $597.3 million.
- Gross profit was $118 million, down 6% year-over-year. Gross profit was $72.5 million in the first quarter.
- Real Estate Services gross profit was $74.1 million, down 16% year-over-year.
- Real estate services gross margin was 29%, compared to 35% in the second quarter of 2021. Real estate services gross margin was $23.7 million in the first quarter.
- Net loss was $78.1 million, compared to a net loss of $27.9 million in the second quarter of 2021. Net loss was $90.8 million in the first quarter of this year.
- Net loss attributable to common shares was $78.5 million. Net loss per share attributable to common shares, diluted, was $0.73, compared to net loss per share, diluted, of $0.29 in the second quarter of 2021. Net loss per share attributable to common shares, diluted, was $0.86 in the first quarter.
- The Adjusted EBITDA loss was $28.6 million, compared to an Adjusted EBITDA profit of $2.8 million in the second quarter of 2021.
“The housing market deteriorated in the second quarter,” Redfin CEO Glenn Kelman said in a press release Thursday. “But I’ve never been prouder of the way this company has responded: we’ve cut costs, increased traffic, accelerated stock gains and loyalty sales, reduced voluntary attrition and, for the first time since April 2020 improved the rate at which people are buying homes. stuck with a Redfin agent.”
During an earnings call, Kelman also acknowledged that the company’s performance fell short of stated expectations after the first quarter earnings announcement, and pointed to interest rate hikes and overly aggressive hiring during the pandemic.
“In the five years as a public company, we have never fallen short of our revenue projections,” he said. “But that’s also true, even though the housing market has weakened our results, Redfin has strengthened. We’ve grown our site from 91% of homes in America to 94% to compete as a national rather than a regional destination. “
Chris Nielsen, Redfin’s chief financial officer, also spoke on the earnings call, saying the second quarter had been volatile with faster than expected declines and the company was responsive to changing economic conditions. environment and was taking steps to manage profitability, including reducing the number of homes the company purchased, laying off staff and limiting landfills.
“Second quarter revenue was $607 million, up 29% from a year ago and below the low end of our guidance range of $613 million at 650 million dollars,” he said. “The difference is due to a faster-than-expected decline in refinancing and purchase-home volumes for Bay Equity.”
Kelman said he expects the business, including the iBuying business, to still be profitable for the year, despite challenges ahead in the next two quarters. “It would take a pretty apocalyptic price drop (iBuying) for us to end up in the negative,” he said.
Looking ahead, company officials said that in the third quarter, they expect total revenue of between $590 million and $627 million, representing year-over-year growth. another between 9% and 16% compared to the third quarter of 2021.
Total revenue includes real estate segment revenue between $200 million and $208 million, property segment revenue between $305 million and $330 million, rental revenue between $37 million and $38 million, and mortgages between $45 million and $48 million, officials said.
Officials also expect total net losses to be between $87 million and $79 million, compared to a net loss of $19 million in the third quarter of 2021. Company officials said the forecast includes about 37 million in total marketing spend, $19 million in stock-based compensation. , $16 million in amortization and $5 million in net interest expense.
Officials expect the adjusted EBITDA loss to be between $47 million and $39 million in the third quarter. The company also plans to pay a quarterly dividend of 30,640 common shares to its preferred shareholders.