Citi has raised its price target for Redfin (RDFN, Financial) to $9.20, up from the previous $7.30, while maintaining a Neutral rating on the stock. According to the analyst's report, the company's first-quarter revenue and adjusted EBITDA surpassed expectations. However, Redfin has refrained from providing guidance for the second quarter, citing its pending acquisition as the reason.
RDFN Key Business Developments
Release Date: February 27, 2025
- Revenue: $244 million for Q4 2024, up 12% year over year.
- Adjusted EBITDA Loss: $3 million for Q4 2024, improved from a $13 million loss in the prior year.
- Net Loss: $36 million for Q4 2024, compared to a $23 million net loss in the prior year.
- Real Estate Services Revenue: $149 million for Q4 2024, up 12% year over year.
- Real Estate Services Gross Margin: 21.9%, down 60 basis points year over year.
- Rentals Revenue: $52 million for Q4 2024, a 5% increase year over year.
- Rentals Gross Margin: 76.2%, down from 77.5% a year ago.
- Mortgage Revenue: $30 million for Q4 2024, up 15% year over year.
- Mortgage Gross Margin: 10.9%, up from 4.6% a year ago.
- Title Revenue: $9 million for Q4 2024, up 58% year over year.
- Title Gross Margin: 26.2%, up from 2.2% a year ago.
- Monetization Revenue: $4 million for Q4 2024, up 9% year over year.
- First Quarter Revenue Guidance: Expected between $214 million and $225 million, down 5% to flat year over year.
- First Quarter Real Estate Services Revenue Guidance: Between $126 million and $131 million.
- First Quarter Adjusted EBITDA Loss Guidance: Expected between $39 million and $32 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Redfin Corp (RDFN, Financial) reported a 12% increase in fourth-quarter revenue, reaching $244 million, marking the fourth consecutive quarter of growth.
- The company's sales force expanded by 25%, with new hires outperforming tenured agents in key sales metrics.
- A new partnership with Zillow is expected to double the number of high-quality apartment listings on Redfin's platform, enhancing competitiveness and strengthening the balance sheet with a $100 million payment.
- Redfin Corp (RDFN) plans to increase advertising spending by 38% in 2025, supported by increased profits from the Zillow partnership and recent layoffs, aiming to drive demand and market share.
- The company expects real estate gross margins to approach 30% in 2025, with significant improvements anticipated in the first and second quarters due to cost reductions and increased agent productivity.
Negative Points
- Redfin Corp (RDFN) reported an adjusted EBITDA loss of $3 million for the fourth quarter, which was below guidance due to higher-than-expected agent pay.
- The transition to the Redfin Next pay plan resulted in higher-than-expected one-time transition costs, impacting fourth-quarter profits.
- Real estate services market share remained flat year over year at 0.72%, with the company foregoing short-term share gains for expected future revenue growth.
- The company's first-quarter profits are expected to be down approximately $8 million year over year, partly due to a $17 million investment in advertising.
- Redfin Corp (RDFN) anticipates a significant decrease in rentals revenue as the Zillow partnership is implemented, although expenses are expected to decrease even more.
