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Redfin’s performance was a mixed bag during the third quarter, as revenues grew and net losses widened amid stubborn market headwinds.
The Seattle-based company’s revenue grew 3 percent year over year to $278.0 million, as net losses grew 77.8 percent from $19.0 million to $33.8 million. Redfin’s total gross profits increased 4 percent year over to $101.9 million; however, real estate services gross profit declined 10 percent year-over-year to $48.7 million. Real estate services’ gross margin — which is the percentage of a company’s revenue after direct expenses — slid from 30 percent in Q3 2023 to 28 percent in Q3 2024.
The Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also declined 49.3 percent to $3.9 million, according to the earnings report.
Glenn Kelman
Despite the hiccups in Redfin’s top-line results, CEO Glenn Kelman said the brokerage and portal company’s performance aligned with the guidance range and puts them on track to end the year on solid footing.
“Redfin’s third-quarter results were within our guidance range, and we’re now forecasting fourth-quarter growth in market share and revenues,” Kelman said in a written statement before the company’s Thursday earnings call. “Already, shifting our real estate agents to a commissions-based model has improved close rates, with industry-leading attach rates for mortgage and title services.”
Redfin’s market share contracted slightly during the quarter, dropping from 0.78 percent to 0.76 percent. Nevertheless, Redfin experienced a second straight quarter of sequential agent growth as average lead agents increased 1 percent to 1,757. The share of loyalty sales increased 2.77 percent to 37 percent, with the mortgage attachment rate growing 22.7 percent year over year to 27 percent.
The company credited its agent growth to the success of Redfin Next, its commission-based payment model that launched nationwide in October. Redfin Next enables agents to keep their full-time W-2 status and traditional benefits while getting variable commission splits of 70 percent to 75 percent based on the average home price in their market.
In a previous Inman article, Redfin Chief of Real Estate Services Jason Aleem said Next significantly improved the brokerage’s retention and recruitment efforts, with top producers in their biggest markets breaking seven figures in commissions in 2024.
“Redfin Next has empowered our agents to amplify their businesses and unlocked the opportunity for them to earn more money, while also inspiring other entrepreneurial agents to join us,” Aleem told Inman in October. “Having the best agents in the industry is critical to our mission to make real estate better for consumers, and with Redfin Next, we know we can continue to grow our impact.”
Redfin also pointed to team-building program Redfin Teams, artificial-intelligence-powered home design tool Redfin Redesign, and Redfin Rentals, as examples of the company’s innovation and long-term growth opportunities.
“And now, the growth in our digital businesses and our reductions in headquarters costs will let us fund more demand generation,” Kelman said. “With plans to hire hundreds of agents between now and next spring, we’re emerging from a year of record low U.S. home sales ready to go on the attack.”
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