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Redfin continued its recovery during the fourth quarter, with revenue declining 2 percent year over year to $218.1 million — a near 180° turn from its Q1 and Q2 showings, where annual revenue declines topped 20 percent.
The Seattle-based company’s earnings report showed that gross margins improved, rising 32 percent year over year to $73.2 million as gross profits from real estate services increased 14 percent year over year to $29.9 million. Gross margins from real estate services were 22.5 percent — a 20 percent increase from Q4 2022.
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Much like the previous quarters, the company’s cost-saving measures and focus on increasing digital-margin revenue yielded narrowing net losses. The net loss for Q4 2023 clocked in at $22.9 million, a 170 percent year-over-year decline from Q4 2022 when losses had ballooned to $78.1 million.
The adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss also improved, dropping from $40.2 million in Q4 2022 to $13.5 million in Q4 2023.
Glenn Kelman
“In a dreadful housing market, Redfin got more efficient in the fourth quarter, again improving gross margins and operating margins, even as we laid the foundation for meaningful long-term growth,” Redfin CEO Glenn Kelman said in a written statement before the company’s earnings call Tuesday afternoon.
The company’s efforts during Q4 had a mixed impact on Redfin’s full-year results, as revenues declined 11 percent to $796.7 million. Gross profits increased 7 percent year over year to $329.8 million, but real estate services gross profit declined 13 percent annually to $156.0 million. Real estate services gross margin increased from 22.7 percent in 2022 to 25.2 percent in 2023.
The total full-year net loss decreased 59 percent from $321.1 million to $130.0 million, while the adjusted EBITDA loss declined from $145.1 million to $76.4 million.
Despite its market share declining four basis points to 0.76 percent, Kelman said the company was able to increase the mix of sales to loyalty customers from 32 percent in Q4 2022 to 36 percent in Q4 2023. He also said the company was “the No. 1 brokerage website” in 2023, with Redfin.com reaching 49 million average monthly users in 2023.
“Our site continued to draw visitors from rivals. And new sales initiatives are driving breakthroughs on fronts where Redfin has been stymied for years,” he said.
Kelman touted the company’s variable pay scale and newly-launched “Sign & Save” commission refund program as two benefits for the company in the coming year.
“Our all-variable pay plan is delivering significant revenue growth in major California cities,” he said. “Second, a commission refund to customers who hire a Redfin agent after the first tour seems likely to increase homebuyer close-rates in its first four pilot markets. We expect these projects to pay off throughout 2024 and 2025.”
The CEO didn’t address a potential class-action lawsuit filed on Monday that addresses homesellers who paid a buyer agent in the four years before Redfin announced it was leaving the National Association of Realtors.
