Redfin (RDFN) 7 Nov 242024 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Redfin Corporation Quarter 3 2024 Earnings Conference Call. [Operator Instructions].

At this time, it is my pleasure to turn the floor over to your host, Meg Nunnally, Head of Investor Relations. Ma'am, the floor is yours.

Thank you. to ended results September welcome the call and quarter third XX, afternoon, Redfin's conference financial for Good XXXX. I'm Investor Meg Relations. of Nunnally, Redfin's Head

CEO; the Glenn CFO. Joining today Ms. our on our Chris me Nielsen, call Kelman, is

in be we the our call forward-looking. SEC related of actual turn today's our to results Before statements forward risk statements and to our are note may of We that with our materially start, together are consider on the assumptions call. these today's believe factors different. expectations Please some reasonable, filings out but content

assumptions Any these for and encourage in you forward-looking our statements prior new investors.redfin.com the and On related are available at otherwise same based made comparisons today's light present most website review the of in to operations period we against for don't on in stated. comparable the unless information update discussing release, continuing our including our related non-GAAP to GAAP call, directly results. our future which when more financial measures this call the is events. today, non-GAAP All this financial undertake measures, We of are earnings or we year, information on course statements reconciliations. will to measures

and Lastly, transcript by audio remarks a call. replay the available we will also after and copy website the full be will prepared on conclusion call, our providing of our a of soon today's be

over to call I'll that, With Glenn.

third of $X of anticipate we guidance. didn't the in expenses adjusted of Thanks, the million range, in $XXX of range quarter were at quarter broken In call, on fell the the year. everyone. that we call, home basis of bottom And X X of our discussed share part onetime Meg. third said to middle agents we'd the loss second Year-over-year, full points. EBITDA guidance due quarter fourth that by the the From and agents set million. $X to third, fell between partner our million boundaries adjusted $XX $XX our our that our in by referrals has to Hi, now profit basis to XXXX guidance XXXX EBITDA of range, be Redfin's year-over-year roughly our our breakeven grew revenues point. quarter by own million we million X% and sales for previous share last the our the

sales it to salaries get count to worse. We the of $X housing loss expect lower year $X to brokerage rates million than we August didn't market, higher Next, plan Redfin mortgage better bonuses agent for rent. Fiscal than million forecast. expected. in fell costs larger on rapid transition we were a costs and but also with million integration didn't we is August, September, we When didn't $X or our and forecast of onetime about onetime from the replace in

cost when while shareholders market driving that fell we're In believe we undiminished room year better XXXX, We historic us a of owe with gives I still, heaven goal. short XXXX moved on but force go sales ad to our sales earth in competitors our glad aggregate hit be out profit. but make our an structure We'll to money to attack keep the and apology. we likely a historic lows, U.S. of share, a coming home and hit spending highs toward

profits over XXXX sales XXXX an home U.S. $XXX for XXXX. about existing than XX% higher improvement million of be when Our will were forecast

attach line, through mortgage October to other of audience and what we're to the to share better Over the grow, November. we to is growth brokerage execution and bottom driving revenue momentum industry-leading believe year, fallen sales almost expect past rising us an has real from every rates monetize estate close significant what carrying title we Already, now preparing online dollar should rates than be let any gains site. with are

faster signs We'll third also core service. to ad us love significantly our visitors plan in advertising At let should XXXX. life, need seekers XXXX. technology's other in scheduling to to housing invest tours competitive extending more customers Redfin.com's at advantages. shows identifying of market XXXX with serious quarter listings ahead spending sales we home year-over-year of from to visitors in machine increase Pairing grow as our online guiding home at for of buyers fell the X%

and Already deciding meet effectiveness mortgage more selling this because online visitors to didn't buyer. for home month, profits account a October, to homes, we at of our much and when how service. Until bid we increasing to title mortgages for started title pay

Our until brokerage in XXXX service part our on markets XX% online to Redfin the January agents August to our based homebuyers for larger to X This confidence and and in first we we XX% salaries, plan month. of that expansion rollout the which responsible launched to is a can completed bonuses revenues. of last rapid pay deliver Next, in in grew May and XX% percentage better

XXXX in markets. customers Our for results. In rates, January months the increased same theory, met but luxury other only period, close days close to first those in we confidence Comparing buyers based on X X that from in to Next us Other but of rates that from than XX month. to XXXX buy by X%. also June initial markets XX% home the likely Next compared XX% XX% home pilot in Next XXXX markets more improved a on in were isn't to time markets, the

us longer XX%. census adding our financial high-quality on Bigger we Entering for agent agent Next but why. their salaries. XXXX, the increased in see to it Next -- isn't XXXX, brokerages constraints And focus the Higher XXXX close me, with of gains announcement talent because Next fewer no of markets X hard pay bonuses to compete June have been hundreds in is X original census. rates share our source October Redfin From agents. pilot of Markets, agent another let is in excuse

at sales X% on which year-over-year census, that splits grew more to different commission agent flexibility agents year-over-year. quarter that their around X,XXX cultivate us already, give October or gives accelerated past to teams In us These based third agents our of clients. Next from top growth capacity of our letting even best X%. experience The thousands teams their producers. hundreds Redfin form sales to agents hire network agent averaged the Our is

Already in XX months, agents hired more XX into another teammates the for and begun past producers. X recruiting we've teams top than

agents rates, home margins. significant a contractors As allocate is manager And to for lift on revenue more adding should the percentage hundreds a gross entrepreneurial lower we of of agent also lead staff, their of support agents we host we plan own thousands tours add buying don't XXXX as which season, any and of take close on customers who the can when more busy. or improve tour

becoming that expect some gross also gross to increasing in be margins seasonal. We margins start are of will quarter, fourth because year-over-year but less the

intense the Next summer winter. are volatile, more selling the agents earnings improving margins margins limiting in in season and

buyer's listings expect services investors reforms took the action spring fees commission and of alongside to showing the itself in were us the agency due if buyer's the a change. aren't August, to margins offer negotiated many earning pay Association agents buyer's listing often that development setting advance. identical to in the lower fee the Realtors. posed see agent, what agent we that planning have but is Since for our and July terms. When multiple been that share lower But a each the XXXX, still stopped of National are settlement. offered and class lawsuit by -- asked settlement the to This listing. effect agencies to Instead, major to against has willing other Most homeowners before the negotiated a by surprise,

home already Of used the and larger home third taken fees, have lower become broker quarter become begins. the of from finance fees Again, a which to title customers a gains. home from sale last may third in more offer policies up if seek And hired brokerage the buyers share XX% significant to a to year. rates buying expect customers new used consumers the more Redfin of our bundling than services, than In of even other the become quarter effect. customers summer our fall an mortgage season has more before These XX% agent XX% January down XXXX, fall this increase If attach Many profit. further. closing but and of services potentially more may settlement trying XX% when in important. from lender source their more the brokerage eligible quarter new in better brokers. their Redfin had competitive title and sought value dollars mortgage Redfin's second homebuyers purchase, who had in will we're sensitive buying XXXX,

months October From expenses rent.com XXXX, an and apartmentguide.com to teams turn let's aggressively consumer Personnel We market, saved housing for which in was million XXXX that by rentals of of the listings for-sale of now traffic. our Rentals $XXX,XXX. at and the discussion rentals and on from the to combined is about this for websites, rentals the coming traffic with concluding After to year, the $XXX,XXX Before our outset with $X planned more XX XXXX. larger we From flat have year advertising. our on now which expect business, increased after Services, increased of spending decline. traffic rental to Technology even August XXXX $XX increase and is media will funding million April

the in million in quarter second third. $X.X from rose bookings net $X.X million the to Our

demand strength improving share and a the Federal points. anticipation expect grow come had gains. fallen Redfin's traffic XX, cut new of been to of rates home of existing if when the But home $X.X we sales, leading already cut, improving, our to from Home -- dreadful buying can most nonetheless the buying the September annualized On basis growth million. of since rate has market by keeps demand we execution, low XXXX September Fed's but the XX Mortgage sales Reserve better faster. strengthened significantly market the in in rates

reality. through What In investors And among The lowered of mortgage and likelihood XX excuse Then dollars. anxious. months in savings our more that October, in since tariffs even so to mostly bizarre react has by that September source even of in has even is increase increasingly reality election, a October that live anxiety rate seen just -- and made XX homebuyers Redfin, last the of hundreds years political undeterred and homebuyers running weekend, we own have never payments my has been more, deficits an common as unflinching my in rates. larger drop homebuyers and me, disappeared. is rates. been increasing not More so September of monthly higher government XX by a been debt those slowly I've

increased now in last out one sure. a home have so many sell election With or the buy volatile for of but the save to off no sales run housing XXXX, people wait. over reasons to plans that are years over, the world who the Home put in market X can

flexible. uncertainty, and that made Redfin brokerage opportunities. invest more lowered census is employee Given in core overall have glad And our have to so our advertising we to growth can quickly more see business

call With to that, I'll turn over the Chris.

Glenn. Thanks,

assets as increase and media business year million million X% a year-over-year. gross XX%. margin the was was marks were $XXX straight Gross $X up decrease increases expense revenue Third up increase costs. quarter were with $X $X technology $XXX was million, amortization. marketing of a in expenses a amortization in increase primarily from The up quarter their X% third by unchanged revenue and was year-over-year restructuring at completed intangible million $X to organic operating our a million of offset in rentals $XXX These ago. growth. partially million, Total attributable total This profit our acquired million and costs

in prior EBITDA adjusted million, the million was Our from $X year. $X down

year. slightly result our restructuring last impacted $XX million onetime million range loss primarily million. resulted the that of not discussed, As to worse closing prior $XX approximately $XX in compared service. this contemplated to expenses guidance. $XX in of due repair from to home guidance net expenses is our Glenn at laying million loss These were $X restructuring time than million million, was to the was $X a costs by Net of This

compared year X $X.XX Diluted stock loss to per was share with $X.XX attributable common ago.

home our sales to $XXX year-over-year. X% in was XX% X% turning per Now own a brokerage results. by Brokerage on Real million, decrease brokerage partner down revenue in transactions partners a our transaction. employee transaction basis from agents increase transaction. Estate point revenue and by transactions, driven per was segment increase bonuses home was in Services eliminated a revenue and closed in Services X% or revenue costs expenses, decreased partially Revenue expenses XX% offset a margin decrease XXX our X% revenue basis from on a by XX% and Estate This field XXX in for XX.X%, some replaced XXX basis increase home Real transaction touring touring points personnel gross for offset down bonuses it and field with down a point we've and decrease in compensation as was by agents. year-over-year. primarily

was net Real EBITDA down million of loss $X the and Services prior Estate our the $X $XX for $X Total year. prior in million compared million, loss a positive was million to adjusted year, in net from

year in year. prior in quarter million, from -- was million Our Rental $X compared up its of Adjusted growth down loss and $XX X%. segment for positive the margin net gross for $XXX,XXX Total $XXX,XXX $XX to third the a was quarter posted of loss was of prior ago. year. straight growth of with XX.X% eighth of EBITDA XX.X% a revenue million second loss rentals the Rentals a net from

in margin was million, in for Mortgage mortgage prior $X Our up from prior XX% the roughly X% from $X Net million, generated loss million unchanged year Mortgage $XX segment from Adjusted up ago. gross a million EBITDA year. year-over-year. of was was loss the XX.X%, a up revenue, loss $X year.

net $X $X to million $X XX.X% a in Total was compared revenue million Our margin prior the prior $XX in digital adjusted XX.X%, of year. ago. in year compared million businesses revenue from EBITDA year $X as up prior income title to our gross and million year million generated Other segment segment both was the grew. million was the compared $XX Other to and

million between expectations $XXX XXXX. within to revenue financial of services and between Real quarter $XX total other fourth million of revenue million, $XX X% our million year-over-year for million XXX and representing million and estate to revenue turning Next and be compared gross approximately $XX XXXX on consolidated revenue net more expected real than to between positive to growth million $XX and net to seasonality. in and $XX between the of $X Total basis $XX is XXXX. the expected $XXX mortgage $XX a million points rentals and $XXX EBITDA million is positive impact compared million, expected fourth quarter Adjusted our the to million revenue XXXX. the loss Estate revenue XX% million to be Services to between positive due Redfin to of quarter million, to are Included program the million, margin compared and XX% of of is loss Total $XX up expected be $XX and $X be fourth has year. negative is million. fourth Now last quarter compared between between $XXX

your Now the open let's to questions. line

our [Operator from from comes Instructions]. Arounian And Citi. question Ygal first

we start if things. to just profitability. a Maybe could I And with guess few the

number have do believe what's this as for we spend, should guidance, year? the XQ would If think hit outlook map you the profitability about translate tying road EBITDA year, think year if just the you of full next XQ look it profitability well? And be the at think next would that implied, in we target breakeven guidance is with have I maybe even in through we I to how in missed. And as the How the on that want for And the that? year? thinking in increase with marketing about into

start. is This Chris. I'll Sure.

way program related half the than the mentioned, where, we made that to we the already in we the had revenue. from expected, were costs extra particularly on second to changes. So Glenn we top lower difference addressed anticipated, costs the results. volumes less had and the then that, program. that as year program the that of next to were is hadn't additional primary led about And we next quarter We've thinking third related of

So those fourth into into won't the next and be quarter continuing year.

year half already in So that's of we occur third the really second quarter. addressed a again, profitability. the we've the that most the of from of in were did just in terms But expecting variance piece the what

comment be We're going afford answer want the to a going not to to continue to year. question it's we we the issuing And are that next to fair not we're able in efficiencies now, to to on just find marketing XXXX money. when make guidance, more business. going but obviously how the And especially be is

get have we're at growth then conclusion traffic. in need growth share. organic in cost more in We invest draw going to level, to come have to to to our trying and and need to growth do that best we're going the some enhancements are to structure be investment market can media. going that continuing website, our in we so in we to in further part invest you enhance But the also Obviously, is

these We benefit that reductions made a all somewhat from year will second half cost because benefit XXXX. get in we in full the

concierge running support cuts, we our get think and efficiently in service. efficient. eliminated can We're We've So we organization. made to our more ended we other managers. sales more continue we just some

year, from Okay. just really Next those they And maybe and Redfin on in are into to seeing the Any for Next the that And earlier that's the you're expansion markets now. looking And expansion the the what saw gain of the That's do trends indications market contemplating markets? of every kind what in for? next that you're early pilot think you reach helpful. expect you following Great. needed you share expectations the Redfin markets? as or from about share gain

fairly Well, for a it optimistic reasons. we're about few

at for of given better that's significantly close where closed true being and number rate the a especially rate agent customers. a The sales luxury opportunities, higher first has same

going we're to often think on on do doing dollar but even a market unit we share, report better. -- we're So we basis,

customers to where partners been have we much spent is But sometimes markets haven't able that agent as And demand to. of wanted had agents problems. as recruit too X our because the and we major air gotten we factor many the quickly agents census we too other X to

Over actually we the past understaffed. were X months,

really markets get now, And recruiting right profile a of are successfully talent different able those so before. to and than we've it's been

long since albeit and the some our margins. to so until don't sales Redfin hundreds we hatched. company, bringing to where experienced, a they're time So never have agents them been been that chickens the want lower agents, But been done we've at count of has adding of

from next our Bank question comes And Nagle of Curtis from America.

much. Thanks very Great.

I just seen, don't you, just that given yes, in in the that view do maybe be of just, October this rates guess, curious much? through I your interested thoughts quick Glenn, your we've could we grow? that view home What existing dynamic perhaps and And So question know, any terms activity there? with bump kind for How kind of there. are your thoughts of volumes, in on then XXXX temporary,

shocking, sales many it's been surprised were we time for relationship even a and inverse I been doing strong said. and Well, activity. mortgage as I've see X, a to people there's homes. election November touring day, on were between this rates But very long usually how

it's have because they're I, both read out. really strong. it's the are funnel been data Chris there the of our real-time ourselves priced long a and integration, waiting regardless are what good going And above So in they pinching of take or throughout later, media climbing to vertical we X%, just and how keep really rates if been sooner toll just or because people, they've

of really housing to it's the market, to to going to the still expect laws what's and apply hard happen. do I So physics predict

now, question inflation by of geopolitical confidence plan and new President plenty about just driven much right deficits. but the so tariffs there's economy, for concern the in some think his also I

no anxiety. including have why some investors mortgage-backed to what's interest on just hard rates, Fed news happen even it. really worried because That's rates say geopolitical going traded today, up of to to So gone up basically really are securities about

hard So it's to say. really

especially we've and in XXXX just XXXX, You're of asking the to that's me, seen do number zone what XX think years. past ] is the be strike way kind the low, a I of going September better [ than outside X.X hitting that's

What of I what's kind quick dropped of a the transition then the Or And little that of maybe a couple dynamics bit, on think, to XQ drove just it. a Next? share in due follow-up the in there? market just Got year-over-year. bps of kind terms going

win Yes. you some. Well, some, lose you

but cadence steady in That's in get Redfin. to share growth that gain be every think a our an long by back the is to traffic that conclusion we've It's been Homes.com bounds, had so year, got that and And of place We where maybe to of drawn of taking won't expect a of we -- cost case, some that's of actually should quarter. earlier we this level there back, we XXXX unprecedented leaps history it had share And be pulled I of part quarter about it advertising. every aggressively. advertising. a and increase get the structure advertising less was we've just to been can the

It full leaning some confident and will mortgage going what's season, over the profit. year, course more actually every And it of for of direct that more a or won't into from marketing because year profits customer, in we're is the straddles be that stands XXXX on and we that XXXX. at buy profits but which be title can we're we've got

we before. sales we better we just more can so those close that than demand And about generation think to because ever really get one believe aggressive have step I

about with how and homes.com big don't could a being is follow-up, if But natural all perhaps 'XX in market be think just, know impacted sounds a respect, kind your so guess that return tricky the right I of spending aggressively? step hurdles if do just the it you they're up, thinking if and now. like aggressive still I that

one than it's us affected a having Yes. I a somewhat. or market. because the that mean, look, investors do bigger We're from forbearance think or new entrant competitive we're asking But company in another. for not I smaller any market

increase to XXXX. budget to their from them expect don't XXXX I So

do that I that. think ours. expect they point increase don't on been to clear And we that to they've expect

We've on a right That's sort on that's weren't And year-over-year growth. speculative our And getting it November. traffic growth growth on horse organic other should lead less be traffic and more marketing mostly got of October investment the now. just not and to based growing spending would growth. on even expense. on in So if areas back

And from Campbell Stephens. question our next from comes John

I pretty a there. in kind would just topic clear can cooperation policy. if that to the a just right Maybe recap what maybe maybe negatively. affect positive or if hotly of then Redfin that want it's stance touch just And to assuming I could your now scenario if debated be on work industry. know you you ways eliminated, in play

our to same Well, the position is what's it playing that the It's has the see that, to the way. the been were interest playing homes the pro-consumer all in want going position. best Buyers consumer. see sale. It's for of regulators that

that So America. to were just pleased the to it of run supported Realtors Association change, National far, that. brokerage largest we see And we've been has in so website the if

brokerages a if battle better get than of into we're So how we position in other own our we think other our to about websites with privately brokerages website, on some market we're reach. because going listings

position. our So that's

then makes That top market. the touch And broader want to sense. maybe your fusion that's or area. mean, sound just I obviously, I on Seattle

talk So breakout, I maybe you bit cells, cells, acceleration like of it could across close like we're spending every... what new think, if seeing, October. listings, price a to a From home looks

Seattle share? MLS are about John, market Northwest the you our clearing

Exactly.

could you within whether talk on any if So yes, and commentary just kind your you're of system seeing that Seattle. broad to

another would Redfin markets and you, market in where encourage be one more analysts I'll after Next. we be on just have then going John, that not transitioned to because to to I'm like comment

are line a straight and agents enough demand. have We adding pretty when it's you

to going sales. you're more get agents, add You

So time Next long that has We have Redfin the a to been dynamic. ago. transitioned should

Wedbush. Jay question from McCanless from next comes Our

about home have I last a to I you mean, ask much was agent you same dollar more that if think sale, out the year? to paid Next going sale paying average are how would the you first, just Redfin for

as most our much are agent as himself, of website. sales sourced Twice it sourced the by the but

low-margin no we've when That's but We actually is the support source rate, the the at same pay source touring. majority a agents we No closed margins what ourselves, because better sales without staff first we So same And to handle which have overwhelming it improves be competitive higher at when does. of gross did why the rates. close plan. advantage the it's with we're what sale discovered margins a sales. to that paying is it But higher modeled is sales, our brokerage the we you have it than or business. actually other agent

And they're end. then the more they're then high second, doing better independent. at third, And

let All margin. of over those us get leverage

did us could carry So individual they sales the the a where they revenue so managers transitioned we in some August, we contributors to or for cut left company.

worst And problem that you. Francisco, some San the to only about agent of one happy this by for said, where solve in is part we that first I'm my experience markets is had just Chris said, early an the driven job of too NEX meeting manager. And

a read month questions. once you them can if have You

new you modeling about points then that about is we think talk improvement, this And something 'XX be might want but as 'XX realistic plan? don't to basis guidance, know I XXX under

Chris, is talking about? what's XXX points basis

that for firstly, shift on gross about question, quarter. answer should think to the being to in business you is estate services real the Redfin our of as And margin. fourth neutral This Next

So basis, that Glenn agents. reduced described pay a fixed But Next compensation, did we on the bonuses we've transaction per than for we salary the do higher the previously. under

dollars this fixed really, and so in moving taking or salary is that about And transaction on to bonuses. previously were

script. in seasonal. is, part, QX The tried the gain that to emphasize We in

summer, because for more agent. volatile So in and the that's lower our the it's margins were

the in agent paying We significant shines. margin So they while make sustain salaries. don't hey, damage to the have then But to sun winter, used when we anymore.

quarters when see of you rollout full on October that X across of hope the can we Next So that start we XXXX. lapping

Instructions]. question comes And Colantuoni Jefferies. [Operator from next John from our

Vincent John. for is This on

source in the business. one quick have to look maybe you planned for funding the a some on of those where advertising XXXX? examples further efficiencies Just you here of areas for some in could ramp that

is us growth. sacred what's investments Tough our question, in public. is But open to the when to general recall

better back the fund a also drives which cycle, experience, in engaging, and improve a So funding we're just search long that traffic. better having brings recommendations, to fairly with listing close rates. going drive can to going users technologies building to investments help intelligence site artificial to And we're to sales fund to be continue overall us

invest intelligence ones who of is table. in transact. everything which have are else out So when good touch to been artificial identify bet most customers with a to and contact us on That's likely the we

now questions Glenn back Instructions]. remarks. to there any would like this closing for [Operator turn floor further at appear to time. I And no be to the

your you that in appreciate so much Only to Thank along we me listening questions. right and Chris all months. X for of

conclude does today's participation. thank We This you. you conference. for Thank your

your disconnect and a may time, at You wonderful have this lines day.