Those earnings represent an increase of 30 percent compared to the fourth quarter of 2017, the company revealed. Redfin also saw a net loss in the final three months of 2018 of $12.2 million, compared $1.8 million during the same period in 2017.

Redfin beat analyst expectations Thursday when it reported that it earned $124.1 million in revenue during the fourth quarter of 2018.

Those earnings represent an increase of 30 percent compared to the fourth quarter of 2017, the company also revealed. Redfin also saw a net loss in the final three months of 2018 of $12.2 million, compared $1.8 million during the same period in 2017.

During a call to discuss the earnings Thursday evening, Redfin CEO Glenn Kelman said that the higher losses during the fourth quarter of 2018 were due in part to increased spending on advertising. He also said that ad spending would go up in 2019, further increasing the company’s losses this year.

However, those ads should pay off over time, making the company profitable by 2021.

“We feel sure these investments are good bets,” Kelman said of the ad spending.

Leading up to Thursday’s report, analysts had expected Redfin’s revenue to hit $116.61 million, up 21.8% from the same quarter a year ago. The company’s stock seesawed in after hours trading following the report, before leveling off at more than a dollar above the day’s closing price.

Credit: Google

For all of 2018, Redfin saw $486.9 million in revenue, up 32 percent year-over-year. The company saw a net loss of $42 million in 2018, up from $15 million in 2017.

Last quarter, Redfin just barely beat analyst expectations after the company reported $140.3 million in revenue, a 28 percent year-over-year increase.

Kelman spent a significant portion of Thursday’s call discussing Redfin Now, his company’s iBuyer program. In 2019, Redfin is “mainlining” the program, Kelman said, and will expand it to between three and five markets — though he did not say which ones.

Significantly, however, Kelman revealed that “most customers who get a Redfin now offer don’t take it.”

“The pricing, you know, approaches a 10 percent discount once you include all the costs and fees,” Kelman explained. “But there are many customers who want to see that and we believe that offering that choice increases the total number of homes that we sell.”

Kelman compared Redfin Now to fast food.

“Just as McDonald’s customers are asked about getting fries with their burger, it now seems likely that many homeowners will want to consider a Redfin Now offer alongside our listing presentation,” Kelman said.

Kelman also discussed the housing market during the call Thursday, saying that he believes it is “getting stronger” and supply should increase in the coming months.

“Homebuyers seem more confident now than they did in the second half of 2018,” Kelman explained.

In addition to revenue numbers, Redfin also reported Thursday that it had an overall U.S. market share of 0.81 percent by volume during the fourth quarter of 2018, which is an increase of 0.10 percentage points over the same period in 2017. The company now operates in 89 markets and has access to 77 percent of the U.S. population.

Thursday’s earnings report comes amid a period of rapid growth for Redfin. In January, for example, the company announced plans to expand its brokerage services and listing database to Toronto and Canada. Redfin has also recently expanded its iBuyer program and taken on capital from major investors.

Redfin’s obvious ambitions also recently prompted one analyst to identify the company as a good acquisition prospect for online retailer Amazon. The idea, according to Jack Micenko of the Susquehanna Financial Group, was that Amazon would get access to Redfin’s data, while Redfin would suddenly have vast resources to fuel further growth.

Kelman didn’t comment on that proposal Thursday, but did say that his company wants to serve all of its customers’ real estate needs.

“Our 2019 strategy is to take responsibility for every part of a customer’s move,” he explained.

Email Jim Dalrymple II

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