Key Points
- Q2 revenue of $295.2 million rose 7% year over year, falling within management guidance.
- Net loss for the quarter was $27.9 million, slightly better than expectations.
- Adjusted EBITDA was break-even, improving from a loss of $6.9 million in Q2 2023.
Real estate tech company Redfin (RDFN 3.74%)reported second-quarter earnings on Tuesday that indicate a mixed performance.
Revenue was up 7% year over year, but Redfin's profitability challenges continued, with a net loss of $27.9 million. The quarter showed improved adjusted EBITDA at break-even, an enhancement from a $6.9 million loss in Q2 2023.
Overall, 's quarter was marked by positive growth trends and ongoing financial pressures.
| Metric | Q2 2024 | Management Expectations | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Total Revenue | $295.2 million | $285-$298 million | $275.6 million | 7% |
| Gross Profit | $109.6 million | - | $100.2 million | 9% |
| Net Loss | $27.9 million | $28-$34 million | $27.4 million | (0.02%) |
| Adjusted EBITDA | Break-even | ($4 to $2 million) | ($6.9 million) | - |
| Real Estate Services Revenue | $187.6 million | $180-$188 million | $180.6 million | (3.8%) |
| Rentals Revenue | $50.9 million | $50-$51 million | $45.4 million | 12.3% |
| Mortgage Revenue | $40.2 million | $39-$42 million | $38.4 million | 4.6% |
Source: Redfin. Note: Management expectations are based on guidance provided on May 7, 2024. YOY = Year over year.
Business Overview
is a real estate company aiming to redefine home-buying and selling by leveraging technology. Redfin offers brokerage, rentals, mortgage, and title services through its digital platforms and employs a lower commission model compared to traditional brokers.
As it manages a tough hampered by elevated interest rates, Redfin's focus has been on cost-saving measures and integrating technology to streamline operations and increase profitability.
Notable Quarterly Developments
While revenue rose 7% year over year, gross profit increased by 9% to $109.6 million from $100.2 million. The growth was driven by better-than-expected performance in the Rentals and Mortgage segments, which posted revenues of $50.9 million and $40.2 million, respectively.
However, the Real Estate Services segment saw a 4% decline in gross profit to $53.7 million. The gross margin for this segment fell from 31% to 29%, reflecting competitive pressures and operational costs. On a positive note, the mortgage attach rate improved to 28%, compared to 24% in Q2 2023, indicating better integration with real estate services.
User engagement remained flat with nearly 52 million average monthly users, consistent with Q2 2023. Despite stagnant user engagement, Redfin increased its market share of U.S. home sales to 0.77%, up from 0.75% in the previous year. This slight market share growth does show Redfin’s competitive edge in a sluggish housing market.
Looking Ahead
For Q3 2024, expects revenue to be between $273 million and $285 million, projecting a modest year-over-year growth of 1% to 6%. The company forecasts a net loss ranging from $22 million to $30 million and adjusted EBITDA between $4 million and $12 million. These projections indicate management's cautious optimism moving forward amid challenging market conditions.
Investors should keep an eye on in cost efficiency and technology integration, as well as potential market shifts that could impact profitability. Any changes in forward guidance or strategic adjustments will be crucial in assessing Redfin’s future growth trajectory.
