On a mixed Q1 earnings call where his company beat revenue targets while also seeing its net losses continuing to grow, and in the shadow of a recently settled lawsuit related to alleged fair housing violations, Redfin CEO Glenn Kelman was fired up yesterday. He pushed back against critics and defended his company’s practices, despite a $4 million payment over accusation its policies excluded non-white communites.
While Redfin reported that the company exceeded revenue guidance by almost $30 million, growing 123% year-over-year at $597.3 million, the $90.8 million net loss increased proportionally to revenue. Redfin also reported a 10.6% drop in real estate service gross margins, attributable to an increase in personnel and transaction expenses in a lower inventory market, according to CFO Chris Nielsen.
In the conference call following the earnings report, Kelman used the analogy of a marathon, admitting that Redfin investors have seen some tough times recently (the company’s stock is down 70% this calendar year) but that adversity is where they will thrive.
“The point of maximum suffering is when those best prepared for it will win,” he promised.
Against a more “volatile phase” of the housing market, Kelman said the company would be diversifying and becoming more disciplined, aiming for “major net income improvements—not in the distant future, but now.” That translates to profitability or break-even this year, and net income in 2024.
The company, he claimed, is best positioned to weather the storm and come out on top, saying that most of its leadership came together in the shadow of the 2008 financial crisis.
“We were fashionable, and now we’re unfashionable,” he said. “As we reminded you on the day of our IPO, we are used to that, in a way that probably none of competitors are. Our executive team came together in the depths of the great financial crisis and built their business on the certainty that another downturn could come.”
Redfin’s stock was up more than 5% Friday morning amid a broader market selloff.
A question from an investor late in the call asked Kelman to respond to the lawsuit Redfin recently settled, where the company agreed to change how it uses price points to decide what kind of services to offer a given area. Fair housing advocates who spearheaded the lawsuit compared the policies to redlining—referring to the now illegal racial discrimination perpetuated by federal agencies and the housing industry for decades.
Kelman defended the practice, even as his company agreed to modify how it implemented these price policies and take significant steps to combat racism and increase diversity within the company.
“We feel that it’s very clear across the free market that price is the only fair way to …….