2024’s third quarter dragged down Redfin’s financials, according to the company’s latest earnings report.
Redfin’s revenue declined to $278 million, down from $295 million during Q2 2024, but was up 3% year-over-year from Q3 2023’s $269 million. The company also saw a net loss of $33.8 million, a larger loss than $27.9 million in Q2 2024 and $19 million in Q3 2023. Adjusted EBITDA was $4 million, down $8 million from Q3 2023.
During the earnings call, CEO Glenn Kelman said: “I owe our shareholders an apology. We moved heaven and earth to make money in 2024, but we fell short of our goal. We’ll keep driving toward profits. Our 2024 profits will be an improvement of about $125 million over 2022, when U.S. existing-home sales were 20% higher than forecast for 2024.”
Looking at the raw numbers, Redfin Chief Financial Officer Chris Nielsen attributed the results to the company’s increased operating expenses. (Redfin’s operating expenses were $129 million, up $5 million from 2023.)
“The increase was primarily attributable to a $4 million increase in marketing media costs and a $3 million increase in restructuring costs,” explained Nielsen. “These increases were partially offset by a $4 million decrease in amortization expense, as the intangible technology assets acquired with our rentals business completed their amortization.”
Kelman previously said (during Redfin’s Q2 earnings report) that the buyer response to lower mortgage rates had been concerningly muted and this has hampered sales. He continued that observation during the Q3 earnings call:
“In my 19 years of running Redfin, I’ve never seen homebuyers react so slowly to a rate drop that lowered monthly payments by hundreds of dollars, then so unflinching as those savings disappeared.”
He continued, noting the political climate can explain the attitude of buyers—and now, potentially shift it.
“More and more, we live in our own reality. And that reality is increasingly political. In September and even in October, a common source of anxiety among homebuyers has been the election, not just higher rates. With the election now over, many people who put off plans to buy or sell a home over the last two years may have run out of reasons to wait. Home sales may increase in 2025, but the housing market and the world are so volatile that no one can say for sure.”
When highlighting the role agents play in Redfin, Kelman noted that the company’s shift to a commissions-based model has improved close rates. Going into 2025, Kelman cited a “likely undiminished marketshare, a better sales force and a cost structure that gives us room to go on the attack” as ways for Redfin to improve next year.
“Shifting our real estate agents to a commissions-based model has improved close rates,” said Kelman. “Over the past year, almost every dollar of revenue growth has fallen to the bottom-line, and now we’re preparing to grow. Rising brokerage close rates, and what we believe are industry-leading mortgage and title attach rates, should let us monetize an online audience better than any other real estate site.”
Kelman also cited Redfin’s continued strength, and ability to affect change, when recapping their “pro consumer” approach to clear cooperation:
“We’ve just been pleased to see that so far, the National Association of REALTORS® has supported that. And if it were to change, we run the largest brokerage website in America, so if we get into some battle with other brokerages about how we’re going to market listings privately on our own website, we think we’re in a better position than other brokerages because of our website’s reach. So that’s our position.”
For the full Redfin Q3 2024 earnings report, click here.
