Redfin Corp (RDFN)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $221.0M (-2% y/y) with gross profit of $70.6M; net loss widened to $92.5M (diluted EPS -$0.73) as restructuring and higher marketing spend weighed on results .
• Real estate services gross margin improved to 16% (from 15% in Q1 2024) but came in below prior guidance of 17–18%; adjusted EBITDA loss was $32.0M vs $27.6M last year, consistent with elevated advertising and restructuring costs .
• Management did not host an earnings call and withdrew Q2 2025 guidance due to the pending Rocket Companies acquisition announced March 10; CEO said profits were at the “high end” of prior guidance ranges .
• Commercial momentum includes 32% y/y increase in lead agents, 40% of sales from loyalty customers, and record mortgage cross‑sell attach rate (29% excl. cash), supported by the Zillow rentals partnership and product updates (iOS dark mode) .

What Went Well and What Went Wrong

What Went Well

• “Redfin profits were at the high end of the guidance we gave investors,” highlighting operational control despite macro and restructuring headwinds .
• Lead agent count +32% y/y to an average of 2,190; loyalty sales reached 40% of total sales (vs 35% last year), reinforcing Next commission model traction .
• Record mortgage cross‑sell attach (29% excl. cash; inclusive 23%), and the Zillow rentals partnership expected to drive long‑term rentals profitability .

What Went Wrong

• Net loss widened to $92.5M and adjusted EBITDA loss increased to $32.0M, reflecting higher marketing ($39.3M) and $20.9M restructuring, including transition and partnership-related costs .
• Real estate services gross margin landed at 16%, below prior guidance of 17–18% for Q1 2025; total visitors fell y/y to ~45.7M monthly average (from ~48.8M) and market share slipped to 0.75% (from 0.77%) .
• Rentals and mortgage revenues declined y/y (mortgage revenue $29.3M vs $33.8M; rentals revenue $52.3M vs $49.5M but with business mix shifting and transition costs elevating OpEx) .

Financial Results

Note: Q4 2024 adjusted EBITDA is inconsistent across sources (press release narrative vs reconciliation and CFO remarks); CFO commentary and reconciliation indicate a loss of ≈$3M .

Segment revenue and gross profit (Q1 2025 vs Q1 2024)

Key margins

KPIs and business metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Redfin profits were at the high end of the guidance we gave investors… loyalty sales increased 40% y/y… and [employees] have been over the moon about Rocket’s vision of a home‑ownership platform” — Glenn Kelman, CEO .
• Zillow becomes Redfin’s exclusive provider of multifamily rental listings; expected to “drive long‑term profits” for rentals .
• Redfin Next continues to build momentum: welcomed 360+ new agents; ended March with 2,265 lead agents .

Q&A Highlights

Note: Redfin did not host a Q1 2025 earnings call due to the pending Rocket transaction . Key themes from the prior quarter’s Q&A (Q4 2024) shaping current narrative:

• Marketing ramp and profitability: Q1 marketing +$15M y/y, with expectation of significant adjusted EBITDA in 2025; leverage improves in H2 .
• Rentals partnership economics: revenue down meaningfully (not 90%), EBITDA to more than triple run-rate as costs fall; larger lead-generation marketplace expected .
• Agent hiring ramp: lead agent count >2,200 by late Feb; experienced agents shorten ramp and improve close rates .
• Redfin Next economics: margin neutrality vs prior model, reduced fixed comp, support staff efficiencies .
• Macro tone: cautious on rates/tariffs; market recovery slow and uneven .

Estimates Context

• Wall Street consensus (S&P Global Capital IQ) for Q1 2025 was unavailable due to a CIQ mapping issue for RDFN; as a result, we cannot present EPS/revenue vs S&P Global consensus for this quarter. Values would normally be retrieved from S&P Global, but data was unavailable for this ticker at this time.*

Key Takeaways for Investors

• Q1 delivered within revenue and net loss guidance, but real estate services margin missed the guided range; watch margin recovery as agent entitlements and support costs normalize and newer agents ramp to close .
• The salesforce expansion and loyalty-driven mix are strategic positives; sustained attach rate gains (mortgage/title) and monetization (Zillow rentals partnership) should lift contribution margins in 2H as transitions complete .
• Elevated Q1 marketing aligns with share‑gain strategy; expect improved operating leverage beyond Q2 as mass media winds down and rentals cost base declines .
• Q2 guidance withdrawn amid Rocket deal; near‑term stock reaction likely tied to merger process milestones and regulatory approvals rather than standalone fundamentals .
• Segment trends: rentals revenue above guidance with margin strength; mortgage down y/y on volume but cross‑sell improving; title scaling profit; monetization steady — supports diversified earnings mix .
• Execution risk remains: restructuring costs, margin trajectory under Next, and macro housing softness; however, leading indicators (agent count, loyalty, attach) support medium‑term margin and share recovery .
• Actionable: focus on margin cadence vs guidance in real estate services, progress on rentals EBITDA run‑rate post partnership cutover, and any merger‑related updates that could recalibrate expectations .

Citations:

• Q1 2025 8-K and exhibit (financials, commentary, guidance withdrawal): .
• Press release Q1 2025 (financials, segment detail, KPIs): .
• Q4 2024 8-K and earnings call transcript (prior guidance, themes): .
• Q3 2024 8-K and earnings call transcript (operational, tech themes): .