“It’s been a wild year”: Redfin losses significantly lower than expected

The Seattle-based firm reported a $6.6M net loss, $214 million in revenue in Q2

Redfin CEO Glenn Kelman (iStock, Redfin)
Redfin CEO Glenn Kelman (iStock, Redfin)

Redfin’s second quarter wasn’t quite as terrible as the national brokerage and listings site had projected. The Seattle-based residential firm logged a net loss of $6.6 million in the second quarter of 2020 instead of the $21 to $26 million in losses it anticipated.

Redfin also reported $214 million in revenue, an 8 percent year-over-year increase. Back in May, the company projected that it would pull in between $179 million and $189 million. Redfin’s losses for the quarter hovered at $6.6 million, compared to the $12.6 million seen in the second quarter of 2019.

Still, the company’s brokerage business saw a 12 percent decline in revenue compared to the same quarter last year. CEO Glenn Kelman noted, however, that those losses were confined to April.

“It’s been a wild year, ” Kelman said. “We responded quickly in the downturn. Now we’re scrambling to capture demand, blowing out our financial projections from just a few months ago. We’re running naked through the jungle with the bowie knife clenched between our teeth, which is the way Redfin was born to be.”

Redfin’s market share dropped 0.01 percentage points, which Kelman attributed to western regions of the U.S. shutting down during the pandemic. He said he expects market share to grow in the third and fourth quarters and said the company has “never seen such a sharp increase in home-buying intent.”

After Redfin furloughed roughly 40 percent of its agents and laid off 11 percent of its workforce, Kelman said 83 percent of the firm’s furloughed agents returned to work.

He expects the company will hire more agents to meet increasing demand. However, Kelman still struck a cautious tone for what lies ahead for the housing market.

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“Against the backdrop of double-digit unemployment, a second surge of coronavirus infections and widespread protests, the strength of the housing market almost feels eerie,” he said.

“A big question for next year is whether Americans will get back to work before [federal mortgage] forbearance expires,” Kelman added. “This disparity between the white collar home buyers and others worried about keeping their homes, coupled with the speed of the downturn and then the recovery, made it hard to call the 2020 housing market.”

The company expects to finalize its diversity targets in December, and will add a new board member by the end of the year to bring a different perspective of the company “at the highest level,” Kelman said.

In May, Kelman wrote a blog post about strengthening Redfin’s commitment to supporting its minority employees, a pledge some former employees criticized based on their own experiences with the company.

Kelman also mentioned that the self-tour tool that Redfin launched in March, Direct Access, has shown that smart phone-enabled locks lead to more people making offers on a home.

He said that the tool doesn’t just attract “looky-loos,” or people who want to throw parties in empty spaces. He said it was an “awesome part of the future whether there’s a pandemic or not.”

Write to Kathryn Brenzel at kathryn@therealdeal.com