Redfin’s fourth-quarter revenue falls 25% to $479 million as company shuts down home-flip business – GeekWire

Redfin CEO Glenn Kelman at GeekWire Summit 2018. (GeekWire File Photo / Dan DeLong)

Redfin’s revenue fell 25% in the fourth quarter as the housing market slowed, which has hampered its growth over the past year.

The Seattle real estate giant reported revenue of $479 million, beating expectations and surpassing the high end of its guidance range.

Shares lost 2% in after-hours trading.

The housing market continues to shrink, in part due to rising interest rates caused by persistent inflation. Investors worry that continued macroeconomic headwinds will push home prices lower.

According to Redfin, investors bought about half as many homes in the fourth quarter as they did in the same period of 2021, leading to a record year-over-year decline. Overall, home purchases fell by more than 40% last year.

Redfin has responded to macro headwinds with layoffs and changes to its business model.

Redfin announced in November that it would end its home-flipping program RedfinNow and eliminate 862 jobs, or 13% of its workforce. This was the real estate company’s second round of layoffs in the past year, following an 8% workforce reduction in June.

“We’ve transitioned to more digital margins, reduced expenses, increased our share of online real estate traffic and improved the quality of our sales force,” Redfin CEO Glenn Kelman wrote in a press release.

Kelman said the company expects to own less than $85 million in homes by the end of January and then completely get rid of its inventory by the end of the second quarter.

Analysts were skeptical of those plans given Redfin’s “bearish” outlook for the overall housing market.

In the fourth quarter, Redfin sold 474 homes through its real estate division for an average selling price of $538,788. This accounted for more than 53% of total sales during the period.

“We have either sold or accepted an offer to sell all but 19 of our RedfinNow homes,” Kelman said in the earnings release.

Redfin’s brokerage business is closely related to the housing market, as transaction volume plays a role in how much listing fee revenue is generated.

Redfin brokered 12,743 transactions in the fourth quarter, down 34% from the same period last year. The segment had revenue of $146 million, just above the high end of its guidance range.

Redfin’s stock is up 120% year-to-date but remains well below its record highs set in early 2021. Its market cap sits at about $1 billion.

Some more highlights from the Q4 report:

  • Net loss was $61.9 million compared to $27 million in the same quarter last year.
  • Rental income of $40.9 million was just above the high end of guidance, up from $38.9 million last year.
  • Mortgage income of $28 million was below the low end of guidance and up from $4 million last year. The attachment rate of 17% was flat from last quarter.
  • For the year, Redfin’s average monthly users grew 5% year over year to about 50 million.

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