Redfin’s confident projections and its strong results were powered by the Properties division, which includes the company’s RedfinNow initiative for buying homes directly from consumers, spiffing them up and selling them. The Properties segment saw a huge spike in revenue and is nearing a break-even point.
Revenue: Redfin reported total revenue of $197.8 million in the second quarter, up 39 percent over a year ago. That was well ahead of analyst expectations of $190.39 million.
The Properties segment brought in $39.9 million in the quarter, a more than 4X increase over the prior year. That shows Redfin is buying and selling a lot more houses than it was a year ago. Redfin’s mortgage and title business saw an 89 percent annual revenue spike in the quarter.
Profit/loss: Redfin turned a profit in a few recent quarters, including last year’s second quarter, but this time around it posted a net loss of $12.6 million, or $0.14 per share. That’s still better than analysts expected: losses of $0.15 per share. The losses this quarter were due to more spending on advertising and investment in software for some of the company’s new businesses.
The Properties segment wasn’t profitable in the quarter, though it is getting close to breaking even, with a small loss of $998,000.
Looking ahead: Redfin is projecting a big quarter ahead, with revenue of $223 million to $233 million, which translates to 59 to 66 percent year-over-year growth. The Properties segment plays a big role in those projections, with Redfin expecting $67 million to $72 million from that division.
These projections are much rosier than analysts predicted, with an average expectation on Yahoo Finance of $195.6 million in revenue for the third quarter.
“The second quarter is a turning point for our company,” Redfin CEO Glenn Kelman said in a statement. “Year-over-year growth in website traffic, brokerage sales, and revenues overall accelerated for the second straight quarter. Our new businesses have built the infrastructure and delivered the results needed for more rapid expansion, with significant margin gains in mortgage and title, and integrated field execution for instant-offers and the brokerage. The years of work we’ve invested in each of these businesses are now positioning us to be the first to deliver a complete solution at a national scale for people moving from one home to the next.”
Shares in the company are up more than 12 percent in after-hours trading. Redfin stock has climbed 25 percent so far this year prior to today’s financial update.
Redfin finds itself in the midst of an incredibly active real estate tech market. Crosstown rival Zillow has re-defined its entire business around buying and selling homes directly. Earlier this week, fast-growing high tech real estate brokerage Compass raised a whopping $370 million to push its valuation north of $6 billion.
Redfin quietly launched a program in April that lets homebuyers without an agent make offers on homes directly through its website, bringing back an initiative the company first tried more than a decade ago. The so-called “Buy-It Button” is part of what Kelman has called Redfin’s second act of changing how homes are bought and sold.
Last month, Redfin teamed up with Opendoor in a surprising home sales partnership in Atlanta and Phoenix. The alliance allows customers in those two cities to request an “instant offer” from Opendoor on Redfin’s website or mobile app to buy the house.
As of the end of the quarter, RedfinNow was available in Dallas, Denver, Los Angeles, San Diego, the Inland Empire, and Orange County.
Redfin opened a new engineering center in Frisco, Texas, a suburb of Dallas. The office is Redfin’s first engineering center outside of Seattle and San Francisco, and it will house teams working on RedfinNow, mortgage and brokerage.
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