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After a rough third quarter, Redfin ended the year on more solid footing, despite continued unprofitability.
The Seattle-based company’s revenue grew 12 percent year over year to $244.3 million, as net losses grew 58.9 percent from $22.9 million to $36.4 million. Redfin’s total gross profits increased 12 percent year over year, to $81.9 million, as real estate services gross profit increased 9 percent to $32.7 million in the same period.
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Real estate services’ gross margin — which is the percentage of a company’s revenue after direct expenses — slid from 22.5 percent in Q4 2023 to 21.9 percent in Q4 2024.
Glenn Kelman | Credit: Redfin
“After recording our fourth straight quarter of revenue growth, with profits improving year-over-year in every business segment, we’re headed into 2025 with more demand, and a bigger and better sales force,” Redfin CEO Glenn Kelman said in a statement Thursday.
“We incurred one-time costs from the transition to paying Redfin agents entirely on commissions, but our agent census is now 25 percent higher than it was just six months ago, and the new hires are out-performing tenured Redfin agents at meeting customers and winning offers,” Kelman added.
For the full year, Redfin’s revenue grew 7 percent year over year to $1.04 billion. Gross profits increased 10 percent year over year to $364.2 million, while real estate services gross profit remained flat at $155.4 million. Like Q4, real estate services gross margin slid, dropping from 25.2 percent in 2023 to 24.2 percent in 2024.
FY net losses reached $164.8 million — a 21 percent annual increase from 2023 ($130.0 million). Adjusted EBITDA loss was $26.5 million, compared to an Adjusted EBITDA loss of $76.4 million in 2023, the release said.
The brokerage’s market share remained flat at 0.76 percent of existing-home sales. Nevertheless, Redfin experienced a third-straight quarter of sequential agent growth as average lead agents increased 14 percent to 1,927. The company experienced a bump in agent attrition after fully shifting to Redfin Next, its commission-based payment model, in October. However, attrition rates have returned to pre-Next levels, Kelman said.
Redfin’s mortgage attach rate — excluding cash transactions — increased from 24 percent in 2023 to 27 percent in 2024. Loyalty sales also experienced a bump, rising from 36 percent in Q4 2023 to 38 percent in Q4 2024.
Kelman lauded the company’s Redfin Teams growth, with 31 percent of Redfin agents now belonging to one of the brokerage’s 250 teams. He also highlighted the growth opportunities from the new partnership with Zillow.
The $100 million deal gives Zillow syndication rights of listings in multifamily buildings with more than 25 units on Redfin’s rental sites, a previous Inman article said. Zillow will also pay to receive leads generated through the syndication for up to nine years. The deal caused some short-term growing pains, as Redfin laid off 450 staffers in its rental division, adding to a list of smaller layoffs the Seattle-based company has enacted over the past two years.
“We now expect real-estate-services gross margins to improve year-over-year throughout 2025, starting in the first quarter,” Kelman said. “And we expect to connect our agents with significantly more demand in 2025. A Zillow rentals partnership will let us compete better for traffic, by doubling the number of high-quality apartment listings on our sites.”
Chris Nielsen
“The $100 million we got from that partnership, coupled with further cost savings from restructurings, will let us increase advertising 38 percent while still earning a full-year Adjusted EBITDA profit,” he added. “Already January demand for our agents is up 5 percent, setting us up for our best year in many years.”
In the company’s earnings call, Redfin Chief Financial Officer Chris Nielsen said the partnership will be fully implemented by July. Nielsen said the partnership will result in decreased rental revenue; however, those losses will be canceled out by decreased expenses.
“Our rentals segment revenue will be comprised primarily of payments from Zillow for apartment seeker leads, as well as the amortization of our deferred revenue from a $100 million initial payment,” he said. “Our first quarter rentals revenue guidance includes approximately $2.5 million in deferred revenue from that initial payment but doesn’t include any revenue from Zillow for leads because the partnership has not yet been implemented.”
“As we make this transition, we expect rental revenue will decrease, but expenses will decrease even more,” he added. “The result is we expect adjusted EBITDA for this segment to be more than triple over 2024 on a run rate basis.”
In addition to the financial benefits, Kelman said the company anticipates the partnership will lead to a traffic boost.
“2024 made us feel like we’ve got to do something about our inventory and it makes us fairly bullish about what will happen in 2025,” he said. “You know, matching another competitor you may not get the same game, but we do feel like we’ve been competing with one hand tied behind our back.”
“So we’re excited about the traffic benefit,” he added. “We think it’ll be immediate for rentals and over time we think we will also do better just generally in traffic. Coupling that with advertising, it should be a good year for traffic.”
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