Better-than-expected second-quarter earnings lifted shares of discount real estate brokerage Redfin in after-hours trading Thursday.
Revenue for the quarter was $197.8 million, up 39% from a year ago, while the company reported a net loss of $12.6 million, compared with income of $3.2 million in the second quarter of 2018. Net loss per share was $0.14. All measures were better than analyst estimates.
“The second quarter is a turning point for our company,” CEO Glenn Kelman said in a statement, pointing to expansion of the company’s mortgage business and “instant-offers,” Redfin’s on-demand home-buying service. “The years of work we’ve invested in each of these businesses are now positioning us to be the first to deliver a complete solution at a national scale for people moving from one home to the next.”
Since 2006, the Seattle-based company has expanded to 90 markets, selling more than 170,000 homes worth upwards of $85 billion with a promise of lower transaction costs. Redfin pegs its market share at 0.94%.
But progress on its loftier goal—to make the whole residential real estate process more consumer friendly through tech—has been slow. Most U.S. housing is bought and sold the same way it has been for decades. Thursday’s better-than-expected report comes as a number of real estate companies new and old are announcing new digital-first services they also claim will remove friction.
The startup Opendoor said earlier Thursday that buyers can now use its app to browse, book self-guided tours and submit bids on any home for sale in Dallas-Fort Worth, Phoenix and Raleigh-Durham. Opendoor’s primary business so far is high-tech home-flipping. Homeowners sell their homes to the company online, and then Opendoor spruces up the place and tries to quickly resell it. Zillow believes a similar model will make up the majority of its business within five years.
Compass, a direct Redfin competitor in pairing human agents with homegrown software, on Tuesday announced it had raised a $370 million round of funding at a $6.4 billion valuation. (Redfin’s market cap is about $1.6 billion.) Last week, Realogy—parent company for brokerage brands including Coldwell Banker, Century 21 and Sotheby’s International Realty—announced a partnership with Amazon to connect home buyers with agents.
It is not yet clear whether Redfin will come out ahead when, and if, technology manages to really change the makeup of the residential real estate market. Shares have gained 27% so far this year, although the closing price of $17.72 on Thursday was down from a 2019 peak of $23.45.
For the third quarter, Redfin is forecasting revenue between $223 million and $233 million, which would equal year-over-year growth of between 59% and 66%. Net income is expected in the range of $3.4 million to $6.4 million.
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I am a staff writer covering real estate. Come for the outrageous homes, stay for the insights on what gets built and why. Previously I wrote about the future of money including fintech, Millennials and the economy at large, as well as news from the markets.I graduated from the University of Pennsylvania where I majored in English and minored in art history but mostly worked at the student newspaper – The Daily Pennsylvanian. You can follow me on Twitter @SamSharf and email me at email@example.com.
Source: Redfin Reports Better-Than-Expected Earnings As Real Estate Tech Startups Seize Momentum