Redfin on Thursday reported fourth quarter revenue of $643.1 million and a $0.27 loss per share. Analysts expected revenue of $598 million and loss per share of $0.31.
Despite beating expectations, Redfin shares were down more than 13% in after-hours trading.
In a prepared statement, Redfin CEO Glenn Kelman said the real estate brokerage is prepared to handle an “uncertain market” with its pricing power and on-demand service.
“Redfin is broadening its sources of customer value and corporate income, with title, mortgage, and iBuying now on track to generate gross profits, after years of being subsidized by our brokerage,” he said.
Kelman credited the company’s revenue growth in part to its growing iBuying business, RedfinNow, which sold 600 homes in the quarter, up from 388 in the third quarter. Revenue from Redfin’s Properties division came in at $377 million, with a gross profit of $3.9 million.
“Redfin Now’s contributions to gross profits is a major milestone for a company that had been taking money from the brokerage cash register to fund our ancillary businesses,” Kelman said in a call with analysts.
Redfin’s iBuying progress contrasts to fellow Seattle real estate giant Zillow Group, which is shutting down its home-buying business.
Kelman said there are fewer iBuyers bidding against Redfin on properties it is trying to buy, which narrows the price range of competitor bids.
Redfin’s traditional brokerage business reported $225 million in revenue for the fourth quarter, up 15% year-over-year.
Home prices were up 14.2% in December, while the number of homes sold fell 6.4%, Redfin reported. Redfin economists project that home-price growth is expected to slow by the end of 2022.
Some analysts fear that the U.S. housing market bubble could burst this year. But others say there is not a bubble, and rather “it really is about the fundamentals” of the current supply and demand trends, Jenny Schuetz, a housing researcher at the Brookings Institution, told The New York Times.
Kelman said he expects the inventory crunch to ease in the summer as mortgage rates continue rising, but that low supply trends may not end this year.
“We’re well aware of the economic pressures on homebuyers, but so many people are still so desperate to move,” Kelman said. “The sales for now are still mostly constrained by inventory, not prices or even mortgage rates.”
Redfin said traffic to its apps and website increased 10% last year to more than 47 million average monthly users.
Redfin in January announced its intent to acquire Bay Equity Home Loans for $135 million in cash and stock. The Bay Area-based mortgage lender is active in 42 states and employs 1,200 people, and should provide a boost to Redfin’s lending business.
Shares of Redfin are down more than 25% in 2021.