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Redfin Reports Second Quarter 2023 Financial Results

RDFN

Redfin Corporation (NASDAQ: RDFN) today announced results for its second quarter ended June 30, 2023.

Second Quarter 2023

Second quarter revenue was $275.6 million, a decrease of 21% compared to the second quarter of 2022. Gross profit was $100.2 million, a decrease of 10% year-over-year. Real estate services gross profit was $56.2 million, a decrease of 24% year-over-year, and real estate services gross margin was 31%, compared to 29% in the second quarter of 2022.

Net loss was $27.4 million, compared to a net loss of $78.1 million in the second quarter of 2022. Net loss attributable to common stock was $27.7 million. Net loss per share attributable to common stock, diluted, was $0.25, compared to net loss per share, diluted, of $0.73 in the second quarter of 2022.

“In a declining market, Redfin improved our second-quarter net income by $50 million,” said Redfin CEO Glenn Kelman. “We expect to break-even on an adjusted-EBITDA basis over the next 12 months rather than in 2023, which is a setback, but still we project that our adjusted EBITDA this year will improve by more than $140 million. We lost market share due to one-time setbacks from agent layoffs and the closure of RedfinNow, but we expect to return to quarter-over-quarter gains in the second half, as Redfin.com has been competing better for traffic. The year-over-year change in visitors to Redfin.com was 17 points better in the second quarter than it was for the two largest portals to for-sale listings, an acceleration from our first-quarter advantage of 12 points. Gross margins in our core real-estate-services business improved by nearly two percentage points. We believe Redfin is set up for profitable growth.”

Second Quarter Highlights

  • Secondquarter market share was 0.75% of U.S. existing home sales by units, compared to 0.83% in the second quarter of 2022.
  • Redfin’s mobile apps and website reached more than 52 million average monthly users, compared to 53 million in the second quarter of 2022.
  • Maintained momentum in mortgage cross-selling with 19% attach rates for the second quarter, up from 8% in the second quarter of 2022.
  • Brought Title Forward closing services to Florida and made significant progress in cross-selling, with 57% attach rates in the second quarter, up from 29% in the second quarter of 2022.
  • Experienced an uptick in high-end demand with over 1,300 $1M+ listings since launching the new Redfin Premier brand in the first quarter. In large coastal markets like San Francisco and Los Angeles, Redfin's year-over-year growth in $1M+ pending transactions began outpacing the broader market in June.
  • Began leveraging AI to improve both employee efficiency and the user experience on Redfin.com, including using large language models to assist with internal engineering tasks and to create content at scale for users.
  • Increased the mix of sales to loyalty customers from 35% in the second quarter of 2022 to 37% in the second quarter of 2023, driven by better agent follow-up and pipeline mining efforts.
  • Delivered software to improve customer and agent experience while driving customer contacts and boosting traffic to Redfin:
    • Launched a new design system for all property pages on Redfin.com, improving the visual appearance and making it easier for Redfin teams to create beautiful, scalable features in the future. These improvements also drove significant growth in the number of buyers and sellers contacting Redfin for service.
    • Updated SMS surveys for customers who tour with Redfin Partner Agents, making it easier for them to submit feedback about their experience and improving Redfin’s understanding of tour completion rate.
    • Improved prioritization in Redfin’s support queue, helping high-intent customers get personalized help faster and generating a 1% increase in listing customers.
    • Updated rental contact request process that makes it easier for potential renters to browse additional properties and contact multiple properties at once.

Business Outlook

The following forward-looking statements reflect Redfin's expectations as of August 3, 2023, and are subject to substantial uncertainty.

For the third quarter of 2023 we expect:

  • Total revenue between $265 million and $279 million, representing a year-over-year decline between (13)% and (9)% compared to the third quarter of 2022. Included within total revenue are real estate services revenue between $172 million and $182 million, rentals revenue between $46 million and $47 million, mortgage revenue between $35 million and $38 million and other revenue of approximately $12 million.
  • Total net loss is expected to be between $30 million and $21 million, compared to net loss of $90 million in the third quarter of 2022. This guidance includes approximately $25 million in total marketing expenses, $18 million of stock-based compensation and $17 million of depreciation and amortization. Adjusted EBITDA is expected to be between $4 million and $14 million. Furthermore, we expect to pay a quarterly dividend of 30,640 shares of common stock to our preferred stockholder.

Conference Call

Redfin will webcast a conference call to discuss the results at 1:30 p.m. Pacific Time today. The webcast will be open to the public at http://investors.redfin.com. The webcast will remain available on the investor relations website for at least three months following the conference call.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including our future operating results, as described under Business Outlook. We believe our expectations related to these forward-looking statements are reasonable, but actual results may turn out to be materially different. For factors that could cause actual results to differ materially from the forward-looking statements in this press release, please see the risks and uncertainties identified under the heading "Risk Factors" in our annual report for the year ended December 31, 2022, as supplemented by our quarterly report for the quarter ended June 30, 2023, both of which are available on our Investor Relations website at http://investors.redfin.com and on the SEC website at www.sec.gov. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

Non-GAAP Financial Measure

To supplement our consolidated financial statements that are prepared and presented in accordance with GAAP, we also compute and present adjusted EBITDA, which is a non-GAAP financial measure. We believe adjusted EBITDA is useful for investors because it enhances period-to-period comparability of our financial statements on a consistent basis and provides investors with useful insight into the underlying trends of the business. The presentation of this financial measure is not intended to be considered in isolation or as a substitute of, or superior to, our financial information prepared and presented in accordance with GAAP. Our calculation of adjusted EBITDA may be different from adjusted EBITDA or similar non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Our adjusted EBITDA for the three months ended June 30, 2023 and 2022 is presented below, along with a reconciliation of adjusted EBITDA to net loss.

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.

Redfin-F

Redfin Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share amounts, unaudited)

June 30, 2023

December 31, 2022

Assets

Current assets

Cash and cash equivalents

$

118,776

$

232,200

Restricted cash

2,377

2,406

Short-term investments

100,643

122,259

Accounts receivable, net of allowances for credit losses of $2,206 and $2,223

67,753

46,375

Loans held for sale

233,550

199,604

Prepaid expenses

26,042

34,006

Other current assets

9,979

7,449

Current assets of discontinued operations

1,378

132,159

Total current assets

560,498

776,458

Property and equipment, net

49,241

54,939

Right-of-use assets, net

37,270

40,889

Mortgage servicing rights, at fair value

35,503

36,261

Long-term investments

5,473

29,480

Goodwill

461,349

461,349

Intangible assets, net

142,778

162,272

Other assets, noncurrent

11,493

11,247

Noncurrent assets of discontinued operations

1,309

Total assets

$

1,303,605

$

1,574,204

Liabilities, mezzanine equity, and stockholders' equity

Current liabilities

Accounts payable

$

14,661

$

11,065

Accrued and other liabilities

102,568

106,763

Warehouse credit facilities

227,801

190,509

Convertible senior notes, net

23,506

23,431

Lease liabilities

16,234

18,560

Current liabilities of discontinued operations

44

4,311

Total current liabilities

384,814

354,639

Lease liabilities, noncurrent

34,383

36,906

Convertible senior notes, net, noncurrent

834,716

1,078,157

Deferred tax liabilities

255

243

Noncurrent liabilities of discontinued operations

392

Total liabilities

1,254,168

1,470,337

Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares authorized; 40,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

39,936

39,914

Stockholders’ equity

Common stock—par value $0.001 per share; 500,000,000 shares authorized; 113,934,673 and 109,696,178 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

114

110

Additional paid-in capital

791,302

757,951

Accumulated other comprehensive loss

(452

)

(801

)

Accumulated deficit

(781,463

)

(693,307

)

Total stockholders’ equity

9,501

63,953

Total liabilities, mezzanine equity, and stockholders’ equity

$

1,303,605

$

1,574,204

Redfin Corporation and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share amounts, unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Revenue

275,556

349,049

489,639

571,865

Cost of revenue(1)

175,366

237,813

331,311

408,980

Gross profit

100,190

111,236

158,328

162,885

Operating expenses

Technology and development(1)

47,141

46,822

94,804

92,343

Marketing(1)

33,033

55,922

73,436

98,111

General and administrative(1)

61,765

68,523

131,204

124,664

Restructuring and reorganization

6,106

12,406

7,159

18,115

Total operating expenses

148,045

183,673

306,603

333,233

Loss from operations

(47,855

)

(72,437

)

(148,275

)

(170,348

)

Interest income

2,704

554

6,110

774

Interest expense

(1,766

)

(2,217

)

(3,688

)

(4,429

)

Income tax expense

(233

)

(159

)

(643

)

(293

)

Gain on extinguishment of convertible senior notes

20,083

62,353

Other expense, net

(145

)

(264

)

(379

)

(2,175

)

Net loss from continuing operations

$

(27,212

)

$

(74,523

)

$

(84,522

)

$

(176,471

)

Net (loss) income from discontinued operations

(146

)

(3,623

)

(3,634

)

7,519

Net loss

$

(27,358

)

$

(78,146

)

$

(88,156

)

$

(168,952

)

Net loss from continuing operations

(27,212

)

(74,523

)

(84,522

)

(176,471

)

Dividends on convertible preferred stock

(297

)

(350

)

(523

)

(1,144

)

Net loss from continuing operations attributable to common stock—basic and diluted

$

(27,509

)

$

(74,873

)

$

(85,045

)

$

(177,615

)

Net loss from continuing operations per share attributable to common stock—basic and diluted

$

(0.25

)

$

(0.70

)

$

(0.77

)

$

(1.66

)

Weighted-average shares to compute net loss per share attributable to common stock—basic and diluted

111,678,417

107,396,575

110,895,358

107,032,381

Net loss attributable to common stock—basic and diluted

$

(27,655

)

$

(78,496

)

$

(88,679

)

$

(170,096

)

Net loss attributable to common stock per share—basic and diluted

$

(0.25

)

$

(0.73

)

$

(0.80

)

$

(1.59

)

Net loss

$

(27,358

)

$

(78,146

)

$

(88,156

)

$

(168,952

)

Other comprehensive (loss) income

Foreign currency translation adjustments

34

(58

)

38

Unrealized (loss) gain on available-for-sale debt securities

(17

)

217

407

778

Comprehensive loss

$

(27,375

)

$

(77,895

)

(87,807

)

(168,136

)

(1) Includes stock-based compensation as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Cost of revenue

$

3,001

$

3,615

$

7,136

$

6,605

Technology and development

8,241

6,768

16,368

13,877

Marketing

1,254

894

2,499

1,937

General and administrative

5,025

4,009

10,345

8,118

Total

$

17,521

$

15,286

$

36,348

$

30,537

Redfin Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands, unaudited)

Six Months Ended June 30,

2023

2022

Operating Activities

Net loss

$

(88,156

)

$

(168,952

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

34,146

31,140

Stock-based compensation

36,582

33,601

Amortization of debt discount and issuance costs

2,029

2,899

Non-cash lease expense

9,578

7,096

Impairment costs

113

Net (gain) loss on IRLCs, forward sales commitments, and loans held for sale

(4,565

)

2,721

Change in fair value of mortgage servicing rights, net

599

(878

)

Gain on extinguishment of convertible senior notes

(62,353

)

Other

(1,794

)

3,170

Change in assets and liabilities:

Accounts receivable, net

(14,069

)

(6,791

)

Inventory

114,232

(19,297

)

Prepaid expenses and other assets

8,868

(2,852

)

Accounts payable

2,812

5,964

Accrued and other liabilities, deferred tax liabilities, and payroll tax liabilities, noncurrent

(4,522

)

5,529

Lease liabilities

(10,790

)

(8,042

)

Origination of mortgage servicing rights

(579

)

(964

)

Proceeds from sale of mortgage servicing rights

738

774

Origination of loans held for sale

(1,922,690

)

(1,641,377

)

Proceeds from sale of loans originated as held for sale

1,888,706

1,587,759

Net cash used in operating activities

(11,115

)

(168,500

)

Investing activities

Purchases of property and equipment

(6,213

)

(12,131

)

Purchases of investments

(76,866

)

(82,184

)

Sales of investments

65,099

12,946

Maturities of investments

59,383

19,425

Cash paid for acquisition, net of cash, cash equivalents, and restricted cash acquired

(97,341

)

Net cash provided by (used in) investing activities

41,403

(159,285

)

Financing activities

Proceeds from the issuance of common stock pursuant to employee equity plans

5,665

9,258

Tax payments related to net share settlements on restricted stock units

(11,096

)

(3,743

)

Borrowings from warehouse credit facilities

1,920,487

1,628,684

Repayments to warehouse credit facilities

(1,883,196

)

(1,572,033

)

Borrowings from secured revolving credit facility

326,025

Repayments to secured revolving credit facility

(369,266

)

Cash paid for secured revolving credit facility issuance costs

(764

)

Principal payments under finance lease obligations

(53

)

(414

)

Repurchases of convertible senior notes

(183,019

)

Net cash (used in) provided by financing activities

(151,212

)

17,747

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(58

)

(42

)

Net change in cash, cash equivalents, and restricted cash

(120,982

)

(310,080

)

Cash, cash equivalents, and restricted cash:

Beginning of period

242,246

718,281

End of period

$

121,264

$

408,201

Redfin Corporation and Subsidiaries

Supplemental Financial Information and Business Metrics

(unaudited)

Three Months Ended

Jun. 30, 2023

Mar. 31, 2023

Dec. 31, 2022

Sep. 30, 2022

Jun. 30, 2022

Mar. 31, 2022

Dec. 31, 2021

Sep. 30, 2021

Monthly average visitors (in thousands)

52,308

50,440

43,847

50,785

52,698

51,287

44,665

49,147

Real estate services transactions

Brokerage

13,716

10,301

12,743

18,245

20,565

15,001

19,428

21,929

Partner

3,952

3,187

2,742

3,507

3,983

3,417

4,603

4,755

Total

17,668

13,488

15,485

21,752

24,548

18,418

24,031

26,684

Real estate services revenue per transaction

Brokerage

$

12,376

$

11,556

$

10,914

$

11,103

$

11,692

$

11,191

$

10,900

$

11,107

Partner

2,756

2,592

2,611

2,556

2,851

2,814

2,819

2,990

Aggregate

10,224

9,438

9,444

9,725

10,258

9,637

9,352

9,661

U.S. market share by units(1)

0.75

%

0.79

%

0.76

%

0.80

%

0.83

%

0.79

%

0.78

%

0.78

%

Revenue from top-10 Redfin markets as a percentage of real estate services revenue

55

%

53

%

57

%

58

%

59

%

57

%

61

%

62

%

Average number of lead agents

1,792

1,876

2,022

2,293

2,640

2,750

2,485

2,370

Mortgage originations by dollars (in millions)

$

1,282

$

991

$

1,036

$

1,557

$

1,565

$

159

$

242

$

258

Mortgage originations by units (in ones)

3,131

2,444

2,631

3,720

3,860

414

591

671

(1) Prior to the second quarter of 2022, we reported our U.S. market share based on the aggregate home value of our real estate services transactions, relative to the aggregate value of all U.S. home sales, which we computed based on the mean sale price of U.S. homes provided by the National Association of REALTORS® (“NAR”). Beginning in the second quarter of 2022, NAR (1) revised its methodology of computing the mean sale price, (2) restated its previously reported mean sale price beginning from January 2020 (and indicated that previously reported mean sale price prior to January 2020 is not comparable), and (3) discontinued publication of the mean sale price as part of its primary data set. Due to these changes, as of the second quarter of 2022, we report our U.S. market share based on the number of homes sold, rather than the dollar value of homes sold. Our market share by number of homes sold has historically been lower than our market share by dollar value of homes sold. We also stopped reporting the aggregate home value of our real estate services transactions.

Redfin Corporation and Subsidiaries

Supplemental Financial Information

(unaudited, in thousands)

Three Months Ended June 30, 2023

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Revenue(1)

$

180,641

$

45,356

$

38,426

$

11,133

$

$

275,556

Cost of revenue

124,447

10,427

34,266

6,226

175,366

Gross profit

56,194

34,929

4,160

4,907

100,190

Operating expenses

Technology and development

28,044

16,304

734

1,118

941

47,141

Marketing

16,004

15,938

1,054

16

21

33,033

General and administrative

20,961

25,305

6,724

1,044

7,731

61,765

Restructuring and reorganization

6,106

6,106

Total operating expenses

65,009

57,547

8,512

2,178

14,799

148,045

(Loss) income from continuing operations

(8,815

)

(22,618

)

(4,352

)

2,729

(14,799

)

(47,855

)

Interest income, interest expense, income tax expense, gain on extinguishment of convertible senior notes, and other expense, net

28

(91

)

153

20,553

20,643

Net (loss) income from continuing operations

$

(8,815

)

$

(22,590

)

$

(4,443

)

$

2,882

$

5,754

$

(27,212

)

(1) Included in revenue is $0.1 million from providing services to our discontinued properties segment.

Three Months Ended June 30, 2023

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Net (loss) income from continuing operations

$

(8,815

)

$

(22,590

)

$

(4,443

)

$

2,882

$

5,754

$

(27,212

)

Interest income(1)

(77

)

(3,686

)

(153

)

(2,467

)

(6,383

)

Interest expense(2)

3,990

1,766

5,756

Income tax expense

43

83

107

233

Depreciation and amortization

5,264

10,235

994

307

329

17,129

Stock-based compensation(3)

12,297

3,709

823

561

131

17,521

Acquisition-related costs(4)

8

8

Restructuring and reorganization(5)

6,106

6,106

Gain on extinguishment of convertible senior notes

(20,083

)

(20,083

)

Adjusted EBITDA

$

8,746

$

(8,680

)

$

(2,239

)

$

3,597

$

(8,349

)

$

(6,925

)

(1) Interest income includes $3.7 million of interest income related to originated mortgage loans for the three months ended June 30, 2023.

(2) Interest expense includes $4.0 million of interest expense related to our warehouse credit facilities for the three months ended June 30, 2023.

(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program. See Note 12 to our consolidated financial statements for more information.

(4) Acquisition-related costs consist of fees for external advisory, legal, and other professional services incurred in connection with our acquisition of other companies.

(5) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention due to the restructuring and reorganization activities from our acquisitions of Bay Equity and Rent., and from our June 2022, October 2022, and March 2023 workforce reductions.

Three Months Ended June 30, 2022

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Revenue(1)

$

251,809

$

38,248

$

53,098

$

5,894

$

$

349,049

Cost of revenue

177,698

7,901

46,316

5,898

237,813

Gross profit

74,111

30,347

6,782

(4

)

111,236

Operating expenses

Technology and development

27,696

14,871

1,904

1,189

1,162

46,822

Marketing

40,765

13,086

1,843

71

157

55,922

General and administrative

24,341

21,824

9,450

850

12,058

68,523

Restructuring and reorganization

12,406

12,406

Total operating expenses

92,802

49,781

13,197

2,110

25,783

183,673

Loss from continuing operations

(18,691

)

(19,434

)

(6,415

)

(2,114

)

(25,783

)

(72,437

)

Interest income, interest expense, income tax expense, and other expense, net

(123

)

232

(35

)

11

(2,171

)

(2,086

)

Net loss from continuing operations

$

(18,814

)

$

(19,202

)

$

(6,450

)

$

(2,103

)

$

(27,954

)

$

(74,523

)

(1) Included in revenue is $4.7 million from providing services to our discontinued properties segment.

Three Months Ended June 30, 2022

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Net loss from continuing operations

$

(18,814

)

$

(19,202

)

$

(6,450

)

$

(2,103

)

$

(27,954

)

$

(74,523

)

Interest income(1)

(1

)

(2,929

)

(12

)

(540

)

(3,482

)

Interest expense(2)

1,958

2,214

4,172

Income tax expense

(230

)

33

356

159

Depreciation and amortization

4,551

9,511

1,070

318

272

15,722

Stock-based compensation(3)

9,670

2,739

780

441

1,656

15,286

Acquisition-related costs(4)

1,507

1,507

Restructuring and reorganization(5)

12,406

12,406

Adjusted EBITDA

$

(4,593

)

$

(7,183

)

$

(5,538

)

$

(1,356

)

$

(10,083

)

$

(28,753

)

(1) Interest income includes $2.9 million of interest income related to originated mortgage loans for the three months ended June 30, 2022.

(2) Interest expense includes $2.0 million of interest expense related to our warehouse credit facilities for the three months ended June 30, 2022.

(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program. See Note 12 to our consolidated financial statements for more information.

(4) Acquisition-related costs consist of fees for external advisory, legal, and other professional services incurred in connection with our acquisition of other companies.

(5) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention due to the restructuring and reorganization activities from our acquisitions of Bay Equity and Rent., and from our June and October 2022 workforce reductions.

Six Months Ended June 30, 2023

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Revenue(1)

$

307,937

$

88,226

$

74,915

$

18,561

$

$

489,639

Cost of revenue

235,941

20,192

63,479

11,699

331,311

Gross profit

71,996

68,034

11,436

6,862

158,328

Operating expenses

Technology and development

56,939

32,268

1,377

2,342

1,878

94,804

Marketing

41,064

30,264

2,034

26

48

73,436

General and administrative

40,579

51,607

13,653

2,097

23,268

131,204

Restructuring and reorganization

7,159

7,159

Total operating expenses

138,582

114,139

17,064

4,465

32,353

306,603

(Loss) income from continuing operations

(66,586

)

(46,105

)

(5,628

)

2,397

(32,353

)

(148,275

)

Interest income, interest expense, income tax expense, gain on extinguishment of convertible senior notes, and other expense, net

73

(151

)

268

63,563

63,753

Net (loss) income from continuing operations

$

(66,586

)

$

(46,032

)

$

(5,779

)

$

2,665

$

31,210

$

(84,522

)

(1) Included in revenue is $1.2 million from providing services to our discontinued properties segment.

Six Months Ended June 30, 2023

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Net (loss) income from continuing operations

$

(66,586

)

$

(46,032

)

$

(5,779

)

$

2,665

$

31,210

$

(84,522

)

Interest income(1)

(157

)

(6,176

)

(268

)

(5,668

)

(12,269

)

Interest expense(2)

6,605

3,687

10,292

Income tax expense

86

151

406

643

Depreciation and amortization

9,696

20,387

1,982

523

1,432

34,020

Stock-based compensation(3)

21,890

7,325

2,081

1,122

3,930

36,348

Acquisition-related costs(4)

8

8

Restructuring and reorganization(5)

7,159

7,159

Impairment(6)

113

113

Gain on extinguishment of convertible senior notes

(62,353

)

(62,353

)

Adjusted EBITDA

$

(35,000

)

$

(18,391

)

$

(1,136

)

$

4,042

$

(20,076

)

$

(70,561

)

(1) Interest income includes $6.2 million of interest income related to originated mortgage loans for the six months ended June 30, 2023.

(2) Interest expense includes $6.6 million of interest expense related to our warehouse credit facilities for the six months ended June 30, 2023.

(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program. See Note 11 to our consolidated financial statements for more information.

(4) Acquisition-related costs consist of fees for external advisory, legal, and other professional services incurred in connection with our acquisition of other companies.

(5) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention due to the restructuring and reorganization activities from our acquisitions of Bay Equity and Rent., and from our June 2022, October 2022, and March 2023 workforce reductions.

(6) Impairment consists of an impairment loss due to subleasing one of our operating leases.

Six Months Ended June 30, 2022

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Revenue(1)

$

429,295

$

76,292

$

56,015

$

10,263

$

$

571,865

Cost of revenue

331,482

15,094

51,834

10,570

408,980

Gross profit

97,813

61,198

4,181

(307

)

162,885

Operating expenses

Technology and development

54,435

29,154

4,251

2,225

2,278

92,343

Marketing

71,608

24,128

1,871

125

379

98,111

General and administrative

47,333

46,015

10,974

1,562

18,780

124,664

Restructuring and reorganization

18,115

18,115

Total operating expenses

173,376

99,297

17,096

3,912

39,552

333,233

Loss from operations

(75,563

)

(38,099

)

(12,915

)

(4,219

)

(39,552

)

(170,348

)

Interest income, interest expense, income tax expense, and other expense, net

(123

)

701

(35

)

12

(6,678

)

(6,123

)

Net loss from continuing operations

$

(75,686

)

$

(37,398

)

$

(12,950

)

$

(4,207

)

$

(46,230

)

$

(176,471

)

(1) Included in revenue is $10.0 million from providing services to our discontinued properties segment.

Six Months Ended June 30, 2022

Real estate
services

Rentals

Mortgage

Other

Corporate
overhead

Total

Net loss from continuing operations

$

(75,686

)

$

(37,398

)

$

(12,950

)

$

(4,207

)

$

(46,230

)

$

(176,471

)

Interest income(1)

(1

)

(3,247

)

(13

)

(759

)

(4,020

)

Interest expense(2)

2,235

4,427

6,662

Income tax expense

(434

)

33

694

293

Depreciation and amortization

8,569

18,867

1,372

573

618

29,999

Stock-based compensation(3)

19,810

4,979

1,381

810

3,557

30,537

Acquisition-related costs(4)

2,424

2,424

Restructuring and reorganization(5)

18,115

18,115

Adjusted EBITDA

$

(47,307

)

$

(13,987

)

$

(11,176

)

$

(2,837

)

$

(17,154

)

$

(92,461

)

(1) Interest income includes $3.2 million of interest income related to originated mortgage loans for the six months ended June 30, 2023.

(2) Interest expense includes $2.2 million of interest expense related to our warehouse credit facilities for the six months ended June 30, 2023.

(3) Stock-based compensation consists of expenses related to stock options, restricted stock units, and our employee stock purchase program. See Note 11 to our consolidated financial statements for more information.

(4) Acquisition-related costs consist of fees for external advisory, legal, and other professional services incurred in connection with our acquisition of other companies.

(5) Restructuring and reorganization expenses primarily consist of personnel-related costs associated with employee terminations, furloughs, or retention due to the restructuring and reorganization activities from our acquisitions of Bay Equity and Rent., and from our June 2022, October 2022, and March 2023 workforce reductions.

Reconciliation of Adjusted EBITDA Guidance to Net Loss Guidance

(unaudited, in millions)

Q3 2023

Low

High

Net loss

(30)

(21)

Depreciation and amortization

17

17

Stock-based compensation

18

18

Adjusted EBITDA

4

14

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