Redfin’s 2022 year was difficult, there is no doubt. Redfin laid off 470 employees in June, which is roughly 8% of its workforce. In November, it shut down its struggling iBuying company and cut an additional 860 jobs.
These challenges, along with the rapidly cooling housing market, volatile mortgage rate environment, led to the firm’s 2022 net loss of $321.1 million. The losses in Q4 alone were $61.9 million, an increase of $109.6 million from 2021. The firm’s revenue was $2.284 billion higher than 2021, even though it only generated $749.7million in revenue for the fourth quarter of 2022. The fourth quarter revenue fell 25% year-over-year.
Redfin executives remain optimistic despite the challenges and headwinds.
Redfin’s CFO Chris Nielsen told investors and analysts that 2022 was a difficult year but that the company had taken the right steps to position Redfin for long term profitable growth. Chris spoke on Thursday’s fourth quarter earnings call. “We enter 2023 with appropriately conservative plans, the knowledge that recovery may be fragile, but it is comforting seeing the year start in line with our expectations.
Redfin’s fourth quarter loss of 2.2% of its average monthly website visitors and mobile app visitors year-over-year was the CEO Glenn Kelman’s top priority. However, the number of searches for homes for sale on Google fell 33%. Comscore data also shows that Redfin visitor numbers surpassed Zillow’s December.
Kelman stated to investors that in order to improve our long-term competitiveness, we must draw visitors away not only from one but all of our major competitors.
Redfin’s rising attach rates for ancillary service are also a reason for optimism among executives. Prior to Redfin’s acquisition Bay Equity in the early 2022, the highest attach rate for the firm was 8%. The attach rate was 17% in Q4 and has remained steady since Q3.
Title Forward, Redfin’s title service, saw a jump in eligible brokerage customers using the service from 12% to 44% in its fourth quarter 2021 to 2022.
Kelman stated that “as the lending industry completes their adjustment to lower volume, price competitio may ease and as the housing market recovers our brokerage lending and title business will be well-positioned for growth.”
Kelman sees potential for future growth in Rent., which Redfin “acquired from bankruptcy” in April 2021.
“In every quarter 2021, net bookings, which is a measure of annualized revenue Rent. Kelman stated that net bookings, which are sales to new customers, were negative from $4 million to $5million and barely positive in 2022’s first half. “Rent.’s fourth-quarter revenue increased year over year by 5% for the first time since 2017. Revenue grew by 6% compared to the third quarter in 2022. Rent.’s revenue growth is expected to accelerate in 2023.
Kelman plans to continue his growth by looking to Redfin’s partner and employee agents. Kelman is pleased with the rise in repeat or referral business transactions that Redfin agents closed during the fourth quarter. These types of transactions accounted to 34% of Q4 sales, up from 32% last year.
Kelman stated that Redfin’s agents are now more capable of driving loyalty sales than ever before.