Redfin Posts Yearly Losses of $321m as iBuying Sell-Off and Market Conditions Bite

The Seattle-based brokerage and portal operator Redfin saw revenue fall 25% in the fourth quarter of 2022 as adverse market conditions continue to impact its business. Notable points from the company's Q4 report to the market included:

• Q4 revenue was slightly above guidance at $479 million but down on the previous year's comparison figure of $643 million.
• Net loss of $321 million for the year ($109m FY21) and $62 million for the quarter ($27m Q4 FY21).
• Reached market share of 0.8% of homes sold in the U.S. for the year.
• Redfin’s mobile apps and website reached nearly 44 million average monthly users in the fourth quarter. For the year, Redfin reached a record of nearly 50 million average monthly users, an increase of 5% compared to 2021.

Like almost all real estate companies operating in the United States, Redfin had to retrench and cut jobs in 2022. Adverse market conditions continue to affect the company with all segments reporting a net loss for the fourth quarter.

“Redfin in the fourth quarter of 2022 set ourselves up to earn adjusted EBITDA in 2023, which would be an improvement in profits of nearly $200 million, even in a major housing downturn,” said Redfin CEO Glenn Kelman.

“We shifted to more digital-margin revenue, lowered expenses, increased our share of online real estate traffic, and improved the quality of our sales force. The discipline to make adjusted EBITDA this year can make us very profitable when the housing market recovers. We also bought $143 million of debt for $84 million in cash. We have either sold or accepted an offer to sell all but 19 of our RedfinNow homes. Our revenues and net income exceeded the guidance we gave investors in our November earnings report.”

One bright spot for Redfin was its rentals marketplace which grew 5% in Q4 compared to the comparison period as the company's integration of RentPath (purchased in April 2021 for $608 million) continues to progress.

Like fellow portal operator Zillow, Redfin is desperate to build up its mortgage business and last year paid $135 million for Bay Equity Home Loans to supercharge its originations business.

To some extent, the tactic is paying off with volumes increasing and the company boasting mortgage attach rates of 17% in Q4, up from 8% in Q2.

Another thing Redfin has in common with its Seattle neighbour is that it has thrown in the iBuying towel. Whereas Zillow announced its iBuying exit in November 2021 and had the stock off its books by Q3 2022, Redfin announced its exit a year later and is still selling off stock. The company sold 474 homes in Q4 and 2,044 throughout 2022.

The continuing sell-off of homes in a down market contributed to Redfin's Net loss of $341 million for the year and $62 million in Q4.