Redfin, the Seattle-based technology-focused brokerage, posted a net loss of $38.6 million in the first quarter of 2018, and revenue of $79.9 million, a year-over-year increase of 33 percent. Last quarter, the company reported a net loss of $1.8 million and it reported a loss of $28.1 million in the first quarter of 2017.
“Our profits are always worse in the first quarter as we hire agents, run ads and host home tours to set up sales in the second and third quarter,” Redfin CEO Glenn Kelman said today, in a conference call with investors.
The company’s rise in revenue has been steady since it went public and raised $138 million on its initial public offering (IPO) on July 28, 2017.
At the end of 2017, Redfin reported $370 million in revenue, a 37 percent year-over-year increase in revenue from 2016. The increase in revenue resulted in a net loss of $15 million — an improvement over its $22.5 million loss in 2016. In the fourth quarter, the company reported a 43 percent increase in revenue year-over-year to $95.8 million
“In the first quarter of 2018, Redfin maintained the elevated market-share growth we saw last quarter, with revenue above our guidance range, and net income near the top of our guidance range,” said Kelman in a release. “What drove that growth is the power of our 1% pricing for listing a home.”
Redfin’s stock has seen its share of ups and downs since its IPO. After opening around $15 per share and closing the first day at $21.72 per share — and skyrocketing to as high as $31.32 per share on December 29, 2017 — it’s at $22.93 per share at the time of the earnings release.
Year-over-year traffic saw an increase of 28 percent over the first quarter of 2017 on Redfin’s website and mobile.
In the first quarter of 2018, Redfin expanded its 1 percent listing fee program to the San Francisco Bay Area. The program lets sellers pay just a one percent fee of the final sale price to Redfin as opposed to paying a fee to the selling agent.
Redfin, last year, announced it would be getting into the iBuyer business of buying and selling homes with Redfin Now. The typical seller will net less money from the sale of the home, but sell it more quickly, according to Kelman.
In the first quarter, Redfin raised the limit of capital it would invest in buying homes to $20 million and thanks to the program’s early results, it plans on raising that threshold to $25 million. Only two of the homes purchased in the fourth quarter of 2017 remain unsold and Kelman said he expects the homes will sell by June.
Redfin also expanded Redfin Mortgage to Minnesota, Pennsylvania and Virginia, bringing its total to six states. The company additionally has plans to launch in more states in the coming months. In the the first quarter of 2018, Redfin Mortgage provided 40 loans, which doubled the total from the fourth quarter of 2017.
“With this more aggressive approach we expect Redfin Now to keep growing,” Kelman said, adding that the company expects most of the homes to sell for a gain.
Redfin reached a market share of 0.73 percent of U.S. existing home sales by value in the first quarter, which marked just a slight 0.02 percent increase from the previous quarter.
Looking ahead to the second quarter, Redfin expects revenue between $134.8 million and $139.1 million, which would represent year-over-year growth of between 29-33 percent. It also expects net income to rebound to fall between $1 million and $1.5 million in the next quarter.