Redfin (NASDAQ:RDFN) stock sank 10% in Friday premarket trading after the online real estate brokerage platform pushed out its expected adjusted EBITDA break-even timeline by about six months to mid-2024.
“We lost market share due to one-time setbacks from agent layoffs and the closure of RedfinNow, but we expect to return to quarter-over-quarter gains in the second half, as Redfin.com has been competing better for traffic,” said CEO Glenn Kelman.
For Q3 2023, the company expects total revenue to decline 9%-13% Y/Y to about $265M-$279M, falling short of the $288.2M consensus estimate.
Q3 total net loss is expected to be $21M-$30M compared with a net loss of $90M in Q3 2022. That aligns with the Visible Alpha consensus for a loss of $26.4M.
In Q2, net loss was $27.4M vs. $78.1M in the year-ago quarter. Adjusted EBITDA was -$6.93M vs. -$28.8M in Q2 2022.
William Blair analyst Stephen Sheldon called the quarter a mixed one, with revenue about 1% above consensus and total gross profit of $100M about 3% above his estimate. Adjusted EBITDA was about $2M below his estimate and $4M below consensus.
“The fact that management came in on the low end of its profit guidance for the quarter and pushed out its target for positive adjusted EBITDA is likely to disappoint investors,” Sheldon wrote in a note to clients.
The company now expects 2023 adjusted EBITDA of -$45M and sees achieving breakeven adjusted EBITDA for the 12 months ending June 2024. That longer timeframe, vs. achieving breakeven in 2023, as management decided against further cost-cutting to avoid losing more market share, Sheldon said.
Still, he said there are encouraging signs — Real Estate Services unit gross margins incresed 170 basis points Y/Y to 31.1% in Q2 and revenue growth at its rentals business has accelerated, ancillary products continue to perform well, and the company recently entered a partnership with Zillow. He keeps a Market Perform rating on the stock.