Last quarter, in August 2023, Redfin predicted that their next quarterly total revenue would fall between $265 million and $279 million.
Lo and behold, they were right. Redfin’s third quarter 2023 financial results, released Nov. 2, 2023 (chronicling finances from July 1 to September 30, 2023), showed a total quarterly revenue of $269 million. While this may seem like a substantial decline year-over-year (Redfin’s revenue in Q3 2022 was $600.5 million), it should be noted that 2022 was the last grasp of a market high.
Redfin’s gross profit this quarter was $98.3 million—$54.1 million of which came from real estate services. This result was an 8% increase from gross profit in Q3 2022. The company did ultimately operate at a net loss—a $19 million sized one, to be precise. That said, this is a sizably smaller loss than the $90.2 million the company reported in Q3 2022, both in plain cash value and proportionally to the total revenue of the quarter. For Redfin shareholders, net loss per share attributable to common stock was $0.17 (compared to $0.83 last quarter).
Given the company’s focus on technology, the earnings report highlights website/app visitor statistics. This quarter saw an average of 51 million monthly users, up 1% year-over-year—the first year-over-year gain in users. Similarly, the company also reports a year-over-year increase in loyalty customers (36% of business compared to previous 33%). Redfin’s customer base evidently likes what they see.
In the physical realm, Redfin has previously cited that an increasing number of home sales come from new construction, so the report mentions a new construction partnership to originate new listings.
The theme of this earnings call is that Redfin is weathering a poor market and positioning itself to do better once the winds shift.
CEO Glenn Kelman, on the earnings call webcast, gave this prepared remark about residential market conditions:
“Now like Satan in ‘Paradise Lost,’ surveying the dismal expanse of rocks, caves, lakes, fens, bogs and dens of his new home in hell, I feel a twinge of optimism. If homes were only a speculative asset, our sales prospects would indeed be grim, but most people buy a home to move to a better life. Those plans can be deferred from 2022 to 2023, but not forever.”
For Q 4 2023, Redfin projects total revenue of $211 to $226 million, with a net loss between $18 to $27 million.
But what challenges lie ahead for Redfin?
The company has distanced itself from the National Association of REALTORS® (NAR), with Kelman resigning his board seat on October 2 and beginning a nationwide withdrawal of Redfin employees from NAR membership.
The Implications of this move will appear in Q4 2023.
