Seattle-based tech brokerage Redfin reported $ 140.3 million in revenue Thursday during the third quarter of 2018, marking a 28 percent year-over-year increase compared to a year earlier.
Redfin’s revenue beat predictions from analysts, who had expected an increase of only 27 percent to $ 139.01 million.
The company also reported net income of $ 3.5 million, which was down from $ 10.6 million compared to the third quarter of 2017.
Its net income per share for the quarter was $ 0.04, beating analysts estimates of $ 0.02.
In addition, Redfin saw a 19 percent increase in web traffic last quarter, CEO Glenn Kelman said in an earnings call Thursday afternoon.
Kelman spent much of the call discussing the possibility of a weakening housing market, a trend he said would continue “at least through November.” And though sales are unlikely to strengthen in the immediate term, Kelman said that buyers could come back to the market after they adjust to the “new normal” of higher interest rates, and if the economy remains strong.
“It’s also possible that there’s a more significant correction and we’re ready for that,” he said, adding later that “we are not ending the year market wide with a bang, but with a whimper.”
Redfin is slowing its hiring for 2019, with Kelman explaining that the company will add fewer agents than in the past thanks to the slowing market and “because of our conviction that we can get more from our agents.”
Despite the challenges, Redfin plans to spend between $ 40 and $ 60 million on mass media marketing 2019. That’s up from $ 12 million spent on marketing in 2018.
“We feel that this level of spending can remain relatively constant over time as revenue grows,” Kelman added.
Thursday’s earnings come after several quarters of significant growth for the company. In August, Redfin announced that during the second quarter of 2018 it generated $ 142.6 million revenue, which was an increase of 36 percent year-over-year. The company reported net income of $ 3.2 million at that time, which was down from the previous year.
In the first quarter of 2018, Redfin reported revenue of $ 79.9 million. Though that was a 33 percent year-over-year increase, the company still ended up with a net loss of $ 36 million that quarter.
During Thursday’s call, Kelman said that Redfin’s “profits are seasonal so we still expect to run at a loss for the year.”
He also said that the company sees its title and mortgage businesses as growth areas, with “far more” investment going to the mortgage side of the company in particular in 2019. The goal, Kelman, explained, is to make the process of moving easier and much faster, which is a comprehensive goal that few other real estate companies have embraced.
A declining market could have a variety of impacts on Redfin, and the broader industry. Kelman said that it was unclear how the trend might impact RedfinNow, the company’s all-cash ibuyer program for home sellers, though transactions have so far declined but not altogether evaporated.
“People still took us up on it,” he said of the cash offers.
The company’s earnings report reiterates that it is “committed to the long-term expansion of RedfinNow.”
Kelman also said that “we believe American’s migration to affordable cities is a long term trend.”
But whatever happens to the market and American’s buying habits, Kelman insisted that Redfin was prepared.
“We feel like our business model is built like a brick outhouse,” he said. “We can sell houses faster, for more money at a lower fee.”