Redfin (RDFN +0.00%) reported first-quarter results on May 8. The residential real estate company is enjoying robust demand for its services. To meet this demand, Redfin is incurring large losses as it rapidly expands its operations.
Redfin results: The raw numbers
|
Metric |
Q1 2019 |
Q1 2018 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$110.1 million |
$79.9 million |
38% |
|
Net loss |
($67.2 million) |
($36.4 million) |
N/A |
|
Net loss per share |
($0.74) |
($0.44) |
N/A |
Data source: Redfin Q1 2019 earnings release.
What happened with Redfin this quarter?
Redfin's brokerage revenue grew 15% year over year to $85.9 million. That marked an acceleration from the fourth quarter's 13% growth.
Redfin's low fees help its customers save significant sums when buying and selling a home. In turn, the company is quickly gaining market share; Redfin's share of U.S. existing home sales by value increased 10 basis points to 0.83%.
Moreover, Redfin's ancillary businesses are expanding at an even faster pace. Revenue in the RedfinNow home-flipping business increased to $21.4 million from $3.1 million in the prior-year quarter. And revenue in the company's other businesses, which are generated primarily by Redfin's mortgage and title services, soared 59%.
In all, Redfin's total revenue jumped 38% to $110.1 million in the first quarter.
However, the company's operating losses also grew larger, mainly due to a planned increase in marketing expenses designed to further fuel growth. Redfin delivered a net loss of $67.2 million, or $0.74 per share, compared to a loss of $36.4 million, or $0.44 per share, in the prior-year period.
Redfin wants to dial up even more growth. Images source: Getty Images.
Looking forward
For the second quarter, Redfin is guiding for revenue to rise 29% to 35%, up to a range of $183.7 million to $193.1 million. Management is also forecasting a net loss of $11.3 million to $14.7 million, compared to net income of $3.2 million in the year-ago quarter.
During a conference call with analysts, CEO Glenn Kelman said that he expects growth to remain strong in the year ahead, noting that the company had "as much demand as we could handle" at times in March and April.
"Our growth over the next two quarters will largely be limited only by the number of real estate agents, lenders, and renovations professionals we hired earlier this year, when demand in Redfin's business and in the overall market was less certain," Kelman said.
Thus, the company intends to boost its employee headcount to meet this demand and accelerate growth in the coming quarters.
