In its second earnings call since going public in July, web-based brokerage service Redfin announced a 35-percent spike in year-over-year revenue

In its second earnings call since going public in July, web-based brokerage service Redfin announced a 35-percent spike in year-over-year revenue to $109.5 million and gross profits of $39.3 million, resulting in net income of $10.6 million for the third quarter, according to an earnings report from the company released Thursday afternoon.

Redfin Now, a four-month-old service that allows the brokerage to buy homes directly from customers, generated $3.4 million in revenue while traffic to the company’s website and mobile app grew 38 percent year-over-year, a deceleration from second-quarter growth of 43 percent.

“Redfin’s brokerage market-share gains accelerated again in the third quarter, with strong traffic growth and steadily increasing sales in all of our new businesses,” said Redfin CEO Glenn Kelman during the third-quarter earnings call. “We also invested in making our service better and more efficient over the coming years while delivering better-than-expected earnings in the quarter, pairing long-term thinking with financial discipline.”

Following two quarters of moderate hiring, from 1,010 agents in the first quarter of 2017 to 1,028 in the second, new recruiting was stagnant during the third quarter, when sales activity typical wanes. Kelman, however, emphasized 2018 would be a growth year, with accelerated third-quarter hiring in anticipation of higher traffic.

“Given growth and traffic and customers contacting our agents, we believe we would have had higher revenues if I hadn’t been so cautious about hiring agents this time last year,” he added.

Gross profits at Redfin, meanwhile, soared to $39.3 million, a 27-percent increase from $30.9 million in the third quarter of 2016, Kelman said, with total real estate revenue growing by 32 percent.

Redfin tallied a net income of $10.6 million, compared to $5.7 million during the same period last year. Depreciation and amortization grew to $1.8 million, up from $1.6 million in the third quarter of 2016.

Fourth-quarter revenue at Redfin is projected to hover between $89.2 million and $93.2 million, a potential growth of up to 40 percent compared to the fourth quarter of 2016, Kelman said. Net losses may clock in at $6 million, up from $5.3 million reported in the same period last year.

Launched in 2004, the Seattle-based company raised $138.5 million in its initial public offering, which had been viewed by many investors as a test balloon for a broader market of tech-forward real estate services like Compass, which this week announced $100 million in Series E funding. Breaking from traditional brokerages, Redfin has drawn criticism from investors for a commission model that charges home sellers as little as 1 percent as opposed to 3 percent on average. Analysts have questioned whether Redfin’s commission model can be profitable.

In 2016, Redfin reported losses of $22.5 million on revenue of $267.2 million, according to a prospectus filed in July with the Securities and Exchange Commission. In the first quarter of this year, the 13-year-old company reported losses of $28.1 million on $59.9 million in revenue.

Leading up to Thursday’s earnings report, shares of Redfin stock rose to $23.20.  Shares are now trading 22 percent higher then when the company went public in July.

Email Jotham Sederstrom

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×