Redfin Rounds Out 2024 with Mixed Financial Results and Strategic Shifts

Redfin, the Seattle-based real estate brokerage, closed out 2024 on a mixed note, with revenue growth that met expectations but profits that fell short due to ongoing adjustments to its business model and restructuring efforts. The company reported a 12% increase in revenue for the fourth quarter, reaching $244.3 million, and a 7% year-over-year increase for the full year, totaling $1.04 billion. However, Redfin’s net loss for the quarter widened to $36.4 million, or 29 cents per share, exceeding investor estimates of 23 cents per share. This compares to a net loss of just under $30 million in the same period a year prior. For the full year, the net loss deepened to $164.8 million, up from a $130 million loss in 2023.

Redfin Next Drives Agent Growth but Adds Costs

A key driver of Redfin’s financial performance in 2024 was the national rollout of Redfin Next, the company’s new commission split model, which launched in October. The model appears to be paying off, as Redfin saw a 14% year-over-year increase in lead agents at the end of 2024, with 1,927 agents on board. This momentum continued into early 2025, with agent count surpassing 2,200 by late February—a 13% increase in less than two months. CEO Glenn Kelman expressed optimism about the quality of new hires, noting that they are generally more experienced agents. Kelman emphasized that the rapid expansion of the sales force is a key part of Redfin’s aggressive growth strategy for 2025.

Despite the positive trends in agent growth and revenue, the transition to Redfin Next has come at a cost. The model has required significant investment, contributing to the wider net loss in the fourth quarter. Additionally, the company has undergone “several restructurings” over the past year, including layoffs in its rentals division following a lucrative but costly exclusive syndication agreement with Zillow worth $100 million. Kelman acknowledged the pain of these restructuring efforts but framed them as necessary steps to position the company for future growth.

Restructurings and Cost-Cutting Measures

Redfin’s restructuring efforts have been particularly significant in early 2025. The company laid off staff in its rentals division as part of the Zillow deal, which Kelman described as “especially painful.” These cuts are part of a broader strategy to reduce costs and focus resources on growth initiatives. Kelman highlighted that the savings from these restructuring efforts will be reinvested into a targeted marketing campaign in the first quarter of 2025. This campaign will focus on attracting sellers who are looking for lower listing fees during a period of economic uncertainty.

Kelman emphasized that growing market share will be a key priority for Redfin in 2025, as he does not anticipate a significant recovery in home sales. By trimming staff and expanding its sales force, Redfin aims to achieve positive EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2025, after falling short by $26.5 million in 2024. Despite these challenges, Kelman expressed confidence in the company’s ability to execute on its growth strategy and improve profitability over time.

Private Listings Debate and Market Dynamics

Kelman also weighed in on the debate over private listings and the Clear Cooperation Policy, reiterating his stance that pocket listings are detrimental to consumers. He argued that private listings are less compelling in a slow market, where inventory is growing and homes are staying on the market longer. “As the market softens, where it gets harder to sell a house… it just seems harder to make the argument that you want to debut a listing without getting maximum exposure,” Kelman said. His comments reflect Redfin’s commitment to transparency and consumer-centric practices, even as the broader industry grapples with the rise of private listings.

Key Financial Metrics and Outlook

Redfin’s financial performance in 2024 was marked by both progress and challenges. The company saw revenue growth, with $1.04 billion for the full year, and a 7.7% increase in transactions for the fourth quarter, reaching 14,363. However, site traffic declined slightly, with 43 million average monthly users, down 3% from the previous year. The company ended the fourth quarter with $124.7 million in cash and cash equivalents, down from $149.8 million at the end of 2023. Adjusted EBITDA improved slightly, with a loss of $2.9 million in the fourth quarter, compared to a $13.5 million loss a year earlier. For the full year, the adjusted EBITDA loss was $26.5 million, an improvement over the $76.4 million loss in 2023.

Despite these mixed results, Redfin’s leadership remains focused on growth and market share expansion in 2025. The company’s investments in Redfin Next and its restructuring efforts reflect a strategic bet on capturing more of the real estate market, even as economic uncertainty and slower home sales pose challenges. While Redfin’s stock dipped 11% in after-hours trading following the earnings report, Kelman’s confidence in the company’s direction suggests that Redfin is positioning itself for long-term success, even if the short-term road remains bumpy.