Q4 2023 Redfin Corp Earnings Call
Operator: G'day and welcome to Redfin Corporation's Q4 2023 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star then zero on your telephone keypad.
Good day and welcome to raise couldn't Corporation Q4 2023 earnings call.
At this time, all participants are in listen only mode.
Attrition and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the call.
Jonathan: Please Jonathan.
Jonathan: These telephone keypad.
Operator: Please note that this conference is being recorded. I'd now like to turn the conference over to the Head of Investor Relations, Meg Nunnally. Please go ahead.
Jonathan: Please note that this country is being recorded.
I've got to tell the country say the cheat the head of Investor Relations.
Jonathan: Please go ahead.
Meg Nunnally: Thank you, operator. Good afternoon, and welcome to Redfin's financial results conference call for the fourth quarter ended December 31st, 2023. I'm Meg Nunnally, Redfin's Head of Investor Relations. Joining me on the call today is Glenn Kelman, our CEO, and Chris Nielsen, our CFO. Before we start, note that some of our statements on today's call are forward-looking statements. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but our actual results may turn out to be materially different. Please read and consider the risk factors in our SEC filings together with the content of today's call. Any forward-looking statements are based on our assumptions today, and we don't undertake to update these statements in light of new information or future events. On this call, we will present non-GAAP measures while discussing our financial results.
Investor Relations: Thank you operator, good afternoon, and welcome to Redfin financial results Conference call for the fourth quarter ended December 31 2023.
Meg Natalie: I'm Meg Natalie Redfin as head of Investor Relations.
Meg Natalie: Joining me on the call today is Glenn Kelman, our CEO and Chris Nielsen our CFO.
Speaker Change: Before we start note that some of our teammates on today's call are forward looking.
Speaker Change: We believe our assumptions and expectations related to these forward looking statements are reasonable, but our actual results may turn out to be materially different.
Speaker Change: Please read and consider the risk factors in our SEC filings together with the content of today's call.
Speaker Change: Any forward looking statements are based on our assumptions today.
Speaker Change: To update these statements in light of new information or future events.
Speaker Change: On this call we will present non-GAAP measures, while discussing our financial results. We encourage you to review today's earnings release, which is available on our website at investors Redfin Dot com for more information.
Meg Nunnally: We encourage you to review today's earnings release, which is available on our website at investors.redfin.com, for more information relating to our non-GAAP measures, including the most directly comparable GAAP financial measure and related reconciliations. All comparisons made in the course of this call are against continuing operations for the same period in the prior year, unless otherwise stated. Lastly, we'll be providing a copy of our prepared remarks on our website by the conclusion of today's call, and a full transcript and audio replay will also be available soon after the call. With that, I'll turn it over to Glenn. Thanks, Meg, and hi, everyone.
Speaker Change: Relating to our non-GAAP measures, including the most directly comparable GAAP financial measure and related reconciliation.
Speaker Change: All comparisons made in the course of this call are against continuing operations for the same period in the prior year unless otherwise stated.
Speaker Change: Lastly, we will be providing a copy of our prepared remarks on our website by the conclusion of today's call and a full transcript and audio replay will also be available soon after the call with that I'll turn it over to Glenn.
Speaker Change: Yeah.
Glenn Kelman: Thanks, Meg and hi, everyone read since fourth quarter earnings were in the middle of the range, we gave investors in our last call.
Glenn Kelman: Redfin's fourth-quarter earnings were in the middle of the range we gave investors in our last call. $23 million net loss on $218 million of revenue. Our adjusted EBITDA loss for continuing operations was $13 million, a $27 million improvement over the fourth quarter of 2022. The fourth quarter's only disappointment was a market share decline.
Glenn Kelman: $3 million net loss of $218 million of revenue.
Glenn Kelman: Our adjusted EBITDA loss for continuing operations was $13 million or $27 million improvement over the fourth quarter of 2022.
Glenn Kelman: The fourth quarter's only disappointment was the market share decline the share of home sales brokered by our own agents and through referrals to our partner agents was seven 2%.
Glenn Kelman: The share of home sales brokered by our own agents and through referrals to our partner agents was 0.72%, down from 0.76% in the fourth quarter of 2022 and from 0.78% in the third quarter of 2023. However, our market share had already recovered in January, increasing above the fourth quarter level. We expect share gains to continue in 2024, with much of the revenue from that gain falling to the bottom line. We ended 2023 having lowered full-year operating expenses by $62 million, with fourth-quarter gross margins improving from 25% in 2022 to 34% in 2023. And we have ample opportunities to grow.
Glenn Kelman: From seven 6% in the fourth quarter of 2022 and from seven 8% in the third quarter of 2023.
Our market share already recovered in January increasing above the fourth quarter level.
We expect share gains to continue in 2024 with much of the revenue from that game falling to the bottom line. We ended 2023, having lowered full year operating expenses by $62 million with fourth quarter gross margins improving from 25% in 2022% to 34% in 2020.
Glenn Kelman: Three and we have ample opportunities to grow using comscore to compare redfin dot com online audience to that of our two may historical rivals Redfin Dot Com grew 13 points faster in 2023.
Glenn Kelman: Using ComScore to compare Redfin.com's online audience to that of our two main historical rivals, Redfin.com grew 13 points faster in 2023. To grow sales alongside traffic, we've advanced three initiatives to attract better agents and deliver better service. In some pilot markets, we shifted our agents to all variable pay. In others, we restored commission refunds for customers who signed a buyer's agency agreement. In still others, we required our salespeople to meet customers on their first tour.
Glenn Kelman: The gross sales alongside traffic, we've advanced three initiatives to attract better agents and deliver better service and some pilot markets, we shifted our agents to all variable pay in.
Glenn Kelman: In others, we restored commission refunds for customers, who signed a buyer's agency agreement.
Glenn Kelman: Still others. We've retired excuse me required our salespeople to meet customers on their first tour.
Glenn Kelman: Our agents have embraced these initiatives, and already we're closing more sales. These initiatives are now being broadened to yield a financially meaningful impact in the summer, with all three likely to be nationwide by early 2025. In the meantime, we're working hard to introduce more customers to our brokerage. According to Comscore, fourth-quarter visitors to Redfin.com grew 10% year over year, while the growth rates of our two main historical rivals were 1% and negative 1%. One factor driving our growth is expansion.
Glenn Kelman: Our agents have embraced these initiatives and already we're closing more sales.
Glenn Kelman: These initiatives are now being braun to yield a financially meaningful impact in the summer with all three likely to be nationwide by early 2025.
Glenn Kelman: In the meantime, we are working hard to introduce more customers to our brokerage according to Comscore fourth quarter visitors to redfin Dot com grew 10% year over year, while the growth rates of our two main historical rivals were 1% and negative 1%.
Glenn Kelman: One factor driving our growth is expansion.
Glenn Kelman: Once limited to homebuyers in mostly coastal cities, Redfin.com now spans homes for rent and for sale nationwide. The markets we've opened by adding listings give us room to build our audience for years to come. And Redfin.com keeps getting better, not just bigger. In the fourth quarter, we became the first major site to use artificial intelligence for home shoppers to visualize how a home could be redecorated.
Glenn Kelman: Once limited to homebuyers and most of most of the coastal cities Redfin Dot com now spans homes for rent and for sale nationwide.
Glenn Kelman: The markets, we've opened by adding listings gives us room to build our audience for years to come.
Glenn Kelman: And <unk> dot com keeps getting better not just bigger.
Glenn Kelman: In the fourth quarter, we became the first major site to use artificial intelligence for home shoppers to visualize how home could be redecorated.
Glenn Kelman: First in mid-Atlantic markets, but with plans to expand this spring, Redfin.com is also highlighting more of our agents' local expertise, giving greater prominence to our insights about homes we've toured and capturing new insights about the neighborhood. Here, too, we're exploring the use of artificial intelligence, turning raw notes from an agent's phone into a well-phrased comment.
Glenn Kelman: First in mid Atlantic markets, but with plans to expand this spring.
Glenn Kelman: Redfin Dot Com is also servicing more of our agents local expertise, giving greater prominence to our insights about homes with toward capturing new insights about the neighborhood here too we're exploring the use of artificial intelligence turning raw notes from an agent's phone into a well phrased comment.
Glenn Kelman: Publishing this proprietary information should draw more visitors to our site and, we hope, convince more of those visitors to use a Redfin agent. But to compete for sales, not just traffic, we're expanding the three fourth-quarter initiatives identified at the outset of our call. Since our sales cycle is six months, we won't know for sure how well these initiatives are working until April at best, but the early indications could hardly be better. The most significant of these initiatives is Redfin NET, which replaces agent-based salaries with higher commission. We launched this program as Redfin MAPS but changed its name to avoid any confusion with Remap.
Glenn Kelman: Publishing this proprietary information should draw more visitors to our site and we hope to convince more of those visitors to use a redfin agent.
Glenn Kelman: But to compete for sale not just traffic, we're expanding the three fourth quarter initiatives identified at the outset of our call.
Glenn Kelman: Since our sales cycle is six months, we wont know for sure how well. These initiatives are working until April at best but the early indications could hardly be better.
Glenn Kelman: The most significant of these initiatives as redfin next which replaces agents base salaries with higher commissions.
Glenn Kelman: We launched this program as redfin Max that changed its name to avoid any confusion with Remax as of February 22nd the revenue closed for January and February and the four California markets. Piloting next is up 32% year over year, while the rest of the brokerage is down 1% in.
Glenn Kelman: As of February 22, the revenue closed for January and February in the four California markets piloting NEXT is up 32% year-over-year, while the rest of the brokerage is down 1%. In May, we plan to expand Redfin NEXT to seven more markets out of more than 100 Redfin markets total. With the expansion, NEXT will reach markets that accounted for about a third of Redfin's 2023 brokerage revenue. If the second stage of the pilot goes well, Redfin Next could become a Redfin-wide agent pay plan in early 2025. The next agents we're hiring are coming in large part for the opportunity to meet more customers but will earn traditional splits on the customers they source themselves. Hiring agents who aren't entirely dependent on our site makes Redfin more resilient to housing market volatility, especially now that we've replaced salaries with larger bonuses.
Glenn Kelman: In May we plan to expand redfin next to seven more markets out of more than 100 Redfin markets total with the expansion next will reach markets that accounted for about a third of redfin to 2023 brokerage revenues.
Glenn Kelman: The second stage of the pilot goes well redfin next could become our redfin wide agent pay plan in early 2025.
Glenn Kelman: The next agents were hiring are coming in large part to the opportunity to meet more customers, but will earn traditional splits on the customers they source themselves.
Glenn Kelman: Hiring agents, who aren't entirely dependent on our site makes redfin more resilient to housing market volatility, especially now that we've replaced salaries with larger bonuses.
Glenn Kelman: In the four pilot markets, a next agent is profitable after closing four Redfin source sales per year, compared to seven previously. As we gather more data on how many customer introductions our next agents need to be productive, we can be even more aggressive about hiring in 2025. This gives us room to gain share coming out of downturns while limiting our fixed costs headed into downturns. We've had the most success bringing on agents who already know how to be systematic about online opportunities. For example, our next, excuse me, one next agent who had been paying a portal $10,000 to $15,000 per month said he planned to see how it went here at Redfin for a couple of months, but within a few weeks, Another said she'd never had so much support to run her business.
Glenn Kelman: And the four pilot markets a next stage in its profitable after closing for redfin source sales per year compared to seven previously.
Glenn Kelman: As we gather more data on how many customer introductions, our next agents need to be productive we can be even more aggressive about hiring in 2025.
Glenn Kelman: This gives us room to gain share coming out of downturns, while limiting our fixed cost added in the downturns.
Glenn Kelman: We've had the most success, bringing on agents, who already know how to be systematic about online opportunities are.
Glenn Kelman: Our next excuse me one next stage, who had been paying a portal 10000 to $15000 per month that he planned to see how it went here at Redfield for a couple of months, but within a few weeks I started bringing it over my team.
Glenn Kelman: Another said she'd never had so much support to run my business I'm busy and getting good customers from the site.
Glenn Kelman: I'm busy getting good customers from the site. Beyond NEXT, the brokerage's other two initiatives work together to earn a sale from the first meeting between a customer and an agent. All You Can Meet requires a Redfin agent to meet customers on their first home tour.
Glenn Kelman: Beyond next the brokerages other two initiatives worked together to earn a sale from the first meeting between a customer and an agent.
Glenn Kelman: You can meet requires a redfin agent to meet customers on their first home tour and sign and save restores Commission refunds to homebuyers to hire us after that first tour.
Glenn Kelman: And Sign and Save restores commission refunds to homebuyers who hire us after that first tour. We tested each in different pilot markets in part to understand if an emphasis on meeting customers could drive sales gains by itself without a commission refund. The problem these two initiatives address is that portal visitors use agents as a home touring service; customers, or excuse me, consumers who were once likely to hire the first agent they met now use Redfin and other websites to schedule three different tours with three different agents. Because Redfin handles so many tour requests, it uses contractors to handle tours when its employees are unavailable. All You Can Meet assigns customers only to lead agents who make themselves available to host the customer's first tour.
Glenn Kelman: We tested each of different pilot markets in part to understand is that emphasis on meeting customers could drive sales gains by itself without a commission refund.
Glenn Kelman: The problem. These two initiatives address is the portal visitors use agents as a home touring service customers, who or excuse me consumer so were once likely to hire the first stage that they met now use redfin. Another website the schedule three different tourists with three different agents.
Glenn Kelman: Honor. So many tour request redfin uses contractors to handle tours when our employees are unavailable.
Glenn Kelman: All you can meet a science customers only the lead agents, who make themselves available to host the customers first tour.
Glenn Kelman: Agents with more availability get more customers. We still use contractors for subsequent tours, but in the event a lead agent can't break free to host the first tour, we route the customer to a partner agent at a different brokerage, which pays us a referral fee. Since we launched the All You Can Meet initiative on November 15, 2023, Redfin agents in the four pilot markets have gone from hosting 60 to 65 percent of the first tours to hosting virtually all of them. Just last week, we expanded this initiative to reach more than 50 markets. Our Atlanta market manager says that it's restored lead agents as the face of Redfin. Meeting customers on their first tour sets up a Redfin agent to offer a commission refund of 0.25% to 0.5% to customers who hire us before their second home tour.
Glenn Kelman: Agents with more availability get more customers, we still use contractors for subsequent tours, but in the event of lead agent can't break free to host the first store, we route the customer to our partner agents at a different brokerage, which pays us a referral fee.
Glenn Kelman: Since we launched the all you can meet initiative on November 15 2023.
Glenn Kelman: <unk> agents in the four pilot markets have gone from hosting 60% to 65% of first tours to hosting virtually all of them.
Glenn Kelman: Last week, we expanded this initiative to reach more than 50 markets.
Glenn Kelman: Atlanta market manager says it is restored lead agents as the face of redfin.
Glenn Kelman: Meeting customers on their first tour sets up a redfin agent to offer commission refund of <unk>, 5%.
Glenn Kelman: 5% to customers, who hire us before their second home tour.
Glenn Kelman: We memorialize the hiring decision and the refund amount in a buyer's agency agreement. Restoring refunds is a reversal for Redfin, as we concluded in the fall of 2022 that refunds weren't an effective sales tool. But we believe that was because many agents didn't use them as a sales tool, rarely mentioning them to customers and never asking customers for a commitment in exchange for the refund.
Glenn Kelman: We memorialize the hiring decision and the refund amount and a buyer's agency agreement.
Glenn Kelman: Restoring refunds is a reversal for reade said as we concluded in the fall of 2022 that refunds warrants an effective sales tool.
Glenn Kelman: But we believe that was because many agents didn't use the refund is a sales tool rarely mentioning it to customers and never asking customers for our commitment in exchange for the refund. We now expect agents to discuss the refund on the first tour. So customers can decide whether it's worthwhile to sign the buyers agency agreement before the next tour.
Glenn Kelman: We now expect agents to discuss the refund on the first tour, so customers can decide whether it's worthwhile to sign the buyer's agency agreement before the next tour. Our guess is that about half our sales will come from customers who sign the agreement and get the refund, and half will come from customers who later decide to work with us without a refund. This customer incentive, known as Sign and Save, launched in four markets on September 21st and is already increasing sales.
Glenn Kelman: Our guess is that about half of our sales will come from customers, who sign the agreement and get the refunds and.
Glenn Kelman: And half will come from customers, who later decide to work with us without a refund.
Glenn Kelman: This customer incentive known as sign and safe launched in four markets on September 21, and is already increasing sales.
Glenn Kelman: By comparing close rate gains in pilot markets and control markets, we concluded that pilot market homebuyers are 24% more likely to write a winning offer via Redfin within 60 days of their first tour. The 24% increase spanned customers who signed the agreement to get a refund and those who didn't, and it's easily large enough to offset the cost of the refund to those customers who got it.
Glenn Kelman: By comparing close rate gains in pilot markets and control markets. We concluded pilot market homebuyers are 24% more likely to write a wedding offer via redfin within 60 days of their first tour the.
Glenn Kelman: The 24% increase spend customers, who signed the agreement to get a refund and those who didn't.
Glenn Kelman: Easily large enough to offset the cost of the refund those customers who've got it in March we plan to expand the pie to almost every market, excluding only markets and a handful of states that outlook Commission refunds.
Glenn Kelman: In March, we planned to expand the pilot to almost every market, excluding only markets in a handful of states that outlaw commission refunds. We believe a more motivated next agent, set up by our system to meet every customer with an offer few other brokerages can match, will deliver significantly better results. BayEquity, the lender we acquired in April 2022, is also improving sales. In the fourth quarter, a higher proportion of our brokerage's homebuyers used Bay Equity for a mortgage. Attach rates declined from 19% in the second quarter to 18% in the third before bouncing back to 19% in the fourth.
Glenn Kelman: We believe a more motivated next agents set up by our system to meet every customer with an offer few other brokerages can match will deliver significantly better results.
Glenn Kelman: The equity the lender we acquired in April 2022 is also improving sales execution.
Glenn Kelman: In the fourth quarter, a higher proportion of our brokerages homebuyers used pay equity for a mortgage attach rates of decline from 19% in the second quarter to 18% in the third before bouncing back to 19% in the fourth excluding cash buyers pay equities fourth quarter attach rate was 25% up from 22 in the third.
Glenn Kelman: Excluding cash buyers, Bay Equity's fourth-quarter attach rate was 25%, up from 22% in the third quarter and 24% in the second. Projected attach rates for the first quarter of 2024 are even higher. We expect that growth to continue through the rest of 2024, driven by simpler manager incentives and, where the law allows it, new agent incentives. We've also integrated BayEquity deeper into our sales process, automatically alerting loan officers not only when a customer first asks to tour a home but also now when our offer has been accepted. Another basis for optimism is the lending industry itself, which has reduced staff to the point that competitors have been less willing to lose money on loans, giving us room in 2024 for improving gains on sales.
Glenn Kelman: Quarter and 24 in the second.
Glenn Kelman: Projected attach rates for the first quarter of 2024 or even higher.
Glenn Kelman: We expect that growth to continue through the rest of 2024, driven by simpler manager incentives and in markets, where the law allows it new agent incentives we've.
Glenn Kelman: We've also integrated pay equity deeper into our sales process automatically alerting loan officers not only when a customer first ask Vittorio home, but also now in our offer has been accepted.
Glenn Kelman: Another basis for optimism as the lending industry itself, which has reduced staff to the point that competitors have been less willing to lose money on loans.
Glenn Kelman: US room in 2024 for improving gains on sale.
Glenn Kelman: <unk> further in the back half of the year. We also expect to refinance more mortgages with demand coming from our web site, but also from our database of Paas customers.
Glenn Kelman: If rates ease further in the back half of the year, we also expect to refinance more mortgages, with demand coming from our website but also from our database of past customers. Potential improvements in the for-sale market may buoy our brokerage and lending business. But the customers of our rental business are under pressure from higher vacancy rates. Even so, rent generated $3 million in fourth-quarter adjusted EBITDA on 20% year-over-year revenue growth with positive net bookings.
Glenn Kelman: Potential improvements in the for sale market may buoy, our brokerage and lending businesses, but the customers of our rentals business are under pressure from higher vacancy rates, even though rent generated $3 million of fourth quarter, adjusted EBITDA, 20% year over year revenue growth with positive.
Glenn Kelman: Net bookings this is the second consecutive quarter of adjusted EBITDA profits for a business that as recently as the first quarter of 2023 lost $9 $7 million and adjusted EBITDA.
Glenn Kelman: To grow revenue and earn a full year adjusted EBITDA profit in a more challenging market. We're now integrating rents and redfin human resources finance and legal departments as well as technology infrastructure, starting this summer and continuing through the first quarter of 2025, we expect significant savings from <unk>.
Glenn Kelman: This is the second consecutive quarter of adjusted EBITDA profits for a business that, as recently as the first quarter of 2023, lost $9.7 million in adjusted EBITDA. To grow revenue and earn a full-year adjusted EBITDA profit in a more challenging market, we're now integrating rent and Redfin, human resources, finance, and legal departments, as well as technology infrastructure. Starting this summer and continuing through the first quarter of 2025, we expect significant savings from migrating to one cloud platform, one HR system, one finance system, and one benefits plan. These efficiency gains will let us invest more in rent.com and apartmentguide.com and more in rent, sales, and industry markets, which will still run from Atlanta. Redfin and Rent will work together to increase tenant inquiries for Rent's customers, drawing on Redfin's expertise in attracting visitors from search engines, using machine learning to engage those visitors, and experimenting at scale to generate more leasing demand from our audience. These efforts will take months to bear fruit, but should lead to a larger, more profitable rental marketplace. RAND is part of a larger initiative to generate more revenue from digital sources.
Glenn Kelman: Grading to one cloud platform, one HR system, one finance system, one benefits plan.
Glenn Kelman: These efficiency gains will let us invest more in rent dot com and apartment guide dot com and more in rent sales and industry marketing, which will still run from Atlanta.
Redfin and rent will work together to increase tenant inquiries for rents customers drawing on redfin expertise that attracting visitors from search engines using machine learning to engage those visitors and experimenting at scale to generate more leasing demand from our audience.
Glenn Kelman: Efforts will take months to bear fruit, but should lead to a larger more profitable rentals marketplace.
Glenn Kelman: Rent as part of a larger initiative to generate more revenue from digital sources. Our other business segment, which consists of title forward in digital channels grew fourth quarter revenues to $10 million up 54% year over year tighter.
Glenn Kelman: Title forward grew fourth quarter revenues, 32% and is generating its first full year gross profit since 2019.
Glenn Kelman: Our digital businesses, which include our mortgage marketplace display ads on redfin Dot com lead generation for builders and Syndicating walk score to other real estate sites grew fourth quarter revenue of 101%.
Glenn Kelman: We've now hired an experienced leader to build our display ads business and expect further revenue increases in 2024.
Glenn Kelman: Our other business segment, which consists of Title Forward and Digital Channels, grew fourth quarter revenues to $10 million, up 54% year-over-year. Title Forward grew fourth quarter revenues 32% and is generating its first full year gross profit since 2019. Our digital businesses, which include a mortgage marketplace, display ads on redfin.com, lead generation for builders, and syndicating Walk Score to other real estate sites, grew fourth-quarter revenue 101%. We've now hired an experienced leader to build our display ads business and expect further revenue increases in 2024. Before turning the call over to Chris, let's discuss the housing market, which is still almost entirely driven by mortgage interest rates. Our concern has been that 2024 will turn out like 2023, when rates approached 6% in January, then rose, peaking above 8% in October. Rates subsequently declined, approaching 6.5% in mid-December, until climbing again to above 7% in February 2024. This recent rate increase has dampened 2024 demand.
Glenn Kelman: Before turning the call over to Chris, let's discuss the housing market, which is still almost entirely driven by mortgage interest rates are concerned to spend at 2024 will turn out like 2023 when rates approach, 6% in January then rose, peaking above 8% on October <unk>.
Glenn Kelman: Subsequently declined approaching six 5% in mid December until climbing again to above seven in February 2020 for.
Glenn Kelman: This recent rate increase has dampened 2020 for demand but.
Glenn Kelman: But the people now coming into the housing market know, what they're getting into having become more accustomed to mortgage rate volatility.
Glenn Kelman: Tom also seem to recognize that when rates do either the market is likely to get more competitive already our agents have reported are mostly seasonal resurgence in bidding wars at one extreme of Fremont, California listing got 50 offers last week.
Glenn Kelman: Redfin listing demand increased sharply coming into 2024, but moderated in February home buying demand wasn't as strong, but it has held up better.
Glenn Kelman: Customers asking the tour their first listing with redfin all the way through the book sales.
Glenn Kelman: Industry wide seasonally adjusted existing home sales increased in January to an annualized rate of 4.0 million after being below 4.0 million since September.
Glenn Kelman: If there isn't a significant further increase in mortgage interest rates, we expect 2024 home sales.
Glenn Kelman: But the people now coming into the housing market know what they're getting into, having become more accustomed to mortgage rate volatility. Some also seem to recognize that when rates do ease, the market is likely to get more competitive. Already, our agents have reported a mostly seasonal resurgence in bidding wars. At one extreme, a Fremont, California, listing got 50 offers last week.
Glenn Kelman: At or above the 4.0 million level through the first half if there is any mortgage rate relief in the spring the second half could be much stronger.
Glenn Kelman: We aren't counting any chickens until they hatch to minimize the first quarter loss since we usually incur in anticipation of our busy season redfin deferred mass media advertising until the second quarter posted our sales kickoff virtually unlimited first quarter business travel to employees and sales.
Glenn Kelman: Redfin's listing demand increased sharply coming into 2024 but moderated in February. Home buying demand wasn't as strong, but it's held up better, from customers asking to tour their first listing with Redfin all the way through to closing sales. Industry-wide, seasonally adjusted existing home sales increased in January to an annualized rate of $4.0 million after being below $4.0 million since September.
Rather than waiting for a major housing market recovery redfin plans to grow at least modestly through market share gains by competing better for traffic and for sales.
Glenn Kelman: And then much faster when the housing market recovers.
Speaker Change: Taken away Chris.
Chris Nielsen: Thanks, Glenn fourth quarter closed a challenging year for the housing industry still we're pleased with the work we've done to improve profitability and position the business to capture growth when the market begins to recover.
Glenn Kelman: If there isn't a significant further increase in mortgage interest rates, we expect 2024 home sales to remain at or above the $4.0 million level through the first half. If there is any mortgage rate relief in the spring, the second half could be much stronger. We aren't counting any chickens until they hatch. To minimize the first quarter losses, we usually incur in anticipation of our busy season.
Speaker Change: Fourth quarter revenue was $218 million down 2% from a year ago.
Speaker Change: At the same time gross profit of $73 million was up 32% year over year and total gross margin expanded from 25% to 34%.
Speaker Change: Each of our segments increased gross margin year over year, and our higher margin rentals and other segments grew faster than the rest of the business.
Glenn Kelman: Redfin deferred mass media advertising until the second quarter, posted its sales kickoff virtually, and limited first quarter business travel to employees and sales. Rather than wait for a major housing market recovery, Redfin plans to grow at least modestly through market share gains by competing better for traffic and for sale. And then, much faster, when the housing market recovers.
Speaker Change: Our adjusted EBITDA loss of $13 million was up from a loss of $40 million in the prior year.
Speaker Change: For the full year 2023, our adjusted EBITDA loss was $76 million up from $145 million from the prior year.
Speaker Change: We've been saying for several quarters that were working towards a goal of trailing 12 month adjusted EBITDA breakeven by the first half of 2024. This is still possible, but less certain now given have mortgage interest rates has started this year, but we're on track for full year profit.
Chris Nielsen: Thanks, Glenn. The fourth quarter closed a challenging year for the housing industry. Still, we're pleased with the work we've done to improve profitability and position the business to capture growth when the market begins to recover. Fourth quarter revenue was $218 million, down 2% from a year ago. At the same time, gross profit of $73 million was up 32% year-over-year, and total gross margin expanded from 25% to 34%. Each of our segments increased gross margin year over year, and our higher-margin rentals and other segments grew faster than the rest of the business. Our adjusted EBITDA loss of $13 million was up from a loss of $40 million in the prior year. For the full year 2023, our adjusted EBITDA loss was $76 million, up from $145 million in the prior year.
Speaker Change: Turning to our segment results for the fourth quarter real estate services, which includes our brokerage and partner businesses generated $133 million in revenue.
Speaker Change: One 9% year over year broker.
Speaker Change: Brokerage revenue was down 11% on a 20% decrease in brokerage transactions, partially offset by a 12% increase in brokerage revenue per transaction.
Speaker Change: The increase in revenue per brokerage transaction was driven by the reduction of our Homebuyer Commission refund revenue from concierge renovations and a 4% increase in average home prices.
Speaker Change: Revenue from our partners increased 19% on a 16% increase in transactions and mix shift to higher value houses.
Speaker Change: Real estate services gross margin was 22, 5% up 450 basis points year over year.
Chris Nielsen: We've been saying for several quarters that we're working towards a goal of trailing 12-month adjusted EBITDA breakeven by the first half of 2024. This is still possible, but less certain now, given how mortgage interest rates have started this year, but we're on track for full-year profits. Turning to our segment results for the fourth quarter, real estate services, which includes our brokerage and partner businesses, generated $133 million in revenue, down 9% year over year. Brokerage revenue was down 11% on a 20% decrease in brokerage transactions, partially offset by a 12% increase in brokerage revenue per transaction.
Speaker Change: This is primarily driven by a 590 basis point decrease in personnel costs and transaction bonuses and a 100 basis point decrease in home touring and field expenses, partially offset by a 190 basis point increase in seller home improvement expenses, each as a percentage of revenue.
Net loss for real estate services in the fourth quarter was $21 million up from a net loss of $28 million in the prior year and adjusted EBITDA loss of $7 million up from a loss of $16 million in the prior year.
Speaker Change: The increase was attributable to higher gross margin and lower operating expenses, which more than offset lower revenues.
Speaker Change: Our rental segment posted its fifth straight quarter of growth with revenue of $49 million or 20% year over year increase.
Chris Nielsen: The increase in revenue per brokerage transaction was driven by the reduction in our homebuyer commission refund, revenue from concierge renovations, and a 4% increase in average home price. Revenue from our partners increased 19% on a 16% increase in transactions and a mixed shift to higher-value housing. Real estate services gross margin was 22.5%, up 450 basis points year over year. This was primarily driven by a 590 basis point decrease in personnel costs and transaction bonuses and a 100 basis point decrease in home, touring, and field expenses, partially offset by a 190 basis point increase in seller home improvement expenses, each as a percentage of revenue. Net loss for real estate services in the fourth quarter was $21 million, up from a net loss of $28 million in the prior year.
Speaker Change: Rental gross margin was 77, 5% up from 76, 4% a year ago.
Speaker Change: Net loss for the for rentals was $10 million up from a net loss of $22 million in the prior year.
Speaker Change: Adjusted EBITDA for the fourth quarter was $3 million, our second straight quarter of positive adjusted EBITDA for the rental segment.
Our mortgage segment generated $26 million in revenue down 8% year over year.
Speaker Change: Mortgage gross margin was four 6% up from a negative eight 9% a year ago. This was primarily driven by a decrease in personnel costs as a percentage of revenue.
Speaker Change: Net loss for mortgage was $5 million up from a loss of $12 million in the prior year.
Speaker Change: Adjusted EBITDA loss was $5 million compared to a $10 million loss in the prior year.
Speaker Change: Our other segment generated revenue of $10 million up 54% year over year as both our title in digital revenues and new businesses grew.
Other segment gross margin was 46% up from seven 4% a year ago net.
Speaker Change: Net income was $2 million compared to a $1 million loss in the prior year and adjusted EBITDA was positive $3 million compared to a negative $1 million in the prior year.
Chris Nielsen: And adjusted even though the loss was $7 million, up from a loss of $16 million in the prior year. The increase was attributed to higher gross margin and lower operating expenses, which more than offset lower revenue. Our rental segment posted its fifth straight quarter of growth with revenue of $49 million, a 20% year-over-year increase. Reynolds gross margin was 77.5%, up from 76.4% a year ago. The net loss for rental properties was $10 million, up from a net loss of $22 million in the prior year. Adjusted EBITDA for the fourth quarter was $3,000,000.
Speaker Change: Turning back to our consolidated results total operating expenses were $117 million down $25 million a year over year.
Speaker Change: The decrease was primarily attributable to $13 million and lower restructuring expenses $3 million and lower marketing expenses and $2 million and lower personnel expenses.
Speaker Change: Net loss was $23 million compared to a net loss from continuing operations of $27 million in the prior year or <unk> $62 million, including discontinued operations.
Speaker Change: This was within our 27 million to $18 million last guidance range includes a $25 million gain on the extinguishment of notes, which was anticipated in our guidance.
Chris Nielsen: Our second straight quarter of positive adjusted EBITDA for the rental segment. Our mortgage segment generated $26 million in revenue, down 8% year over year. Mortgage gross margin was 4.6%, up from a negative 8.9% a year ago. This is primarily driven by a decrease in personnel costs as a percentage of revenue. The net loss for mortgage was $5 million, up from a loss of $12 million in the previous year. The adjusted EBITDA loss was $5 million, compared to a $10 million loss in the prior year.
Speaker Change: Adjusted EBITDA loss was $13 million in line with our guidance range.
Speaker Change: Diluted loss per share attributable to common stock was <unk> 20, compared with a loss of 25.
Speaker Change: One year ago.
Speaker Change: Now turning to our financial expectations for the first quarter for the first quarter of 2020 for total revenue is expected to be flat on the low end or grow 4% on the high end real estate services revenue is expected to decline, 1% on the low end or about 3% on the high end with gross margin around 14% to <unk>.
Chris Nielsen: Our other segment generated revenue of $10 million, 54% year-over-year, as both our title and digital revenue businesses grew. Other segment gross margin was 40.6%, up from 7.4% a year ago. Net income was $2 million, compared to a $1 million loss in the prior year.
Speaker Change: 17%, we do not expect a material change in revenue per brokerage transaction as a result.
Speaker Change: Higher refund that Glenn mentioned earlier.
Speaker Change: Rentals revenue is expected to continue to grow between 13% and 16% mortgage revenue is expected to decline between 20% and 11%. Finally other segment revenue is expected to grow between 28% and 29%.
Chris Nielsen: And adjusted EBITDA was positive $3 million compared to a negative $1 million in the prior year. Turning back to our consolidated results, total operating expenses were $117 million, down $25 million year over year. The decrease is primarily attributable to $13 million in lower restructuring expenses, $3 million in lower marketing expenses, and $2 million in lower personnel expenses. The net loss is $23 million compared to a net loss from continuing operations of $27 million in the prior year, or $62 million, including discontinued operations. This was within our $27 million to $18 million loss guidance range and included a $25 million gain on the extinguishment of notes, which was anticipated in our guidance. Our adjusted epithel loss was $13 million, in line with our guidance.
Speaker Change: Total net loss is expected to be between $72 million $65 million adjusted EBITDA loss from continuing operations is expected to be between $36 million and $29 million.
Speaker Change: And with that let's take your questions.
Speaker Change: Yeah.
Thank you, ladies and gentlemen, we will now be conducting the question and answer session.
Speaker Change: So Christian please with several things one any kind of key pad.
Christian: A confirmation tone will indicate your line is into Christian Q.
Christian: He might still choose to lead the question queue.
Christian: Call participants, making use of speaking equipment may be needed to reach pick up the handset before pressing this talkies.
Christian: Okay, It's Christian.
Christian: I'll be behind <unk> Securities. Please go ahead.
Christian: Yeah, Hi, thank you.
Christian: A couple of questions from me just on next.
Speaker Change: Great to hear.
Speaker Change: Breakeven on this one.
Chris Nielsen: The diluted loss per share attributable to common stock was $0.20 compared with a loss of $0.25 one year ago. Now, turning to our financial expectations for the first quarter. The first quarter of 2024, total revenue is expected to be flat on the low end or grow 4% on the high end. Real estate services revenue is expected to decline 1% on the low end or grow 3% on the high end, with gross margin around 14% to 17%. We do not expect a material change in revenue per brokerage transaction as a result of the home buyer refund that Glenn mentioned earlier. Rental revenue is expected to continue to grow between 13% and 16%, while mortgage revenue is expected to decline between 20% and 11%.
Speaker Change: Faster.
As you know most of your Commission model, but my question is on the on the flip side of this I E.
Speaker Change: If they're in a healthy market.
Speaker Change: Does it actually cap.
Speaker Change: The reduced profitability and living in that as well because you know.
Speaker Change: It's more of a variable structure.
Question I had is on rentals. So you heard from some little a few weeks ago and they were.
Speaker Change: Seeing a continuing trend in windows.
Speaker Change: Hmm.
Speaker Change: Wondering if there's a disconnect.
Mike: Mark It's Mike.
Mike: Have you seen slowdown in your book.
Mike: And maybe for Chris.
Mike: Chris said on the last question, but.
Mike: Sort of the goalpost of.
Mike: Getting to EBITDA breakeven by first half.
Mike: We are now looking at full year 'twenty four how should we think about that.
Mike: Chris why don't I take the first two and you can handle the third.
Speaker Change: On next week.
Speaker Change: We are not worried about capping the upside we think that the gross margin profile for redfin source deals will be <unk>.
Chris Nielsen: Finally, other segment revenue is expected to grow between 28% and 29%. Total net loss is expected to be between $72 million and $65 million. Adjusted EBITDA loss from continuing operations is expected to be between $36 million and $29 million.
Chris Nielsen: <unk> or better to what it has been with our salaried employee model.
Chris Nielsen: Yes next to agents start doing more.
Chris Nielsen: Self source sales, where they bring customers to us that will have a different margin profile, but it will just be incremental gross profit and I think thats less driven by the cycle than it is.
Operator: And with that, let's take your questions. Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star then 1 on your telephone keypad. Confirmation 10 will indicate Petty Line is in the question queue. You may press star 2 to leave the question queue. For participants making use of speech equipment, it may be necessary to pick up the handset before pressing the start key.
Chris Nielsen: Just the mix of business that different next agents will offer redfin, but it should be incremental gross profit growth.
Chris Nielsen: And monetizing our website it should be a similar gross margin.
Chris Nielsen: The larger point is.
In a bull market is that next will allow us to be more aggressive about hiring because we have fewer fixed costs.
Chris Nielsen: We can add agent capacity I think the critique of redfin has sometimes been that extreme market volatility has meant that we were one step behind in a downturn because we couldnt lay people off fast enough and then we were one step behind and a sudden rally because we couldn't hire people fast enough, but because.
Navid Khan: Our first question comes from Navid Khan of B Raleigh Securities. Please go ahead. Yeah, hi.
Glenn Kelman: Thank you. I have just a couple of questions for you. So just on next, great to hear the breakeven on this one is much faster versus your traditional model. But my question is on the flip side of this, i.e. If you're in a healthy market, there's actually a gap. The other question I had is around rentals, so we heard from Zillow a few weeks ago, and they were seeing continuing strength in rentals. I was wondering if there's a disconnect in different markets where we should be seeing a slowdown in your rental book. And maybe for Chris, as the last question on that, sort of the goalposts of getting to even breakeven in the first half, are we looking at 48-24? How should we think about that? Chris, why don't I take the first two and you can handle the third?
Chris Nielsen: The next stage and is profitable with almost.
Chris Nielsen: Half the number of sales that are salaried employee is.
Chris Nielsen: We can be more aggressive about hiring those agents without carrying so much fixed cost. So I think it actually gives us upside in a bull market.
Chris Nielsen: On the rental segment.
Chris Nielsen: Zillow might be more bullish than we are it's just a matter of degree.
Chris Nielsen: <unk> 23 was a really strong market for rentals marketplaces. There was at least a 20 point tailwind in the market and that is moderating slightly because more buildings are coming online.
Chris Nielsen: I think there is some lease up opportunities.
Chris Nielsen: On next... We are not worried about capping the upside. We think that the gross margin profile for Redfin source deals will be similar or better to what it has been with our salary employee model. If Next agents start doing more, where they bring customers to us, that will have a different margin profile, but it will just be incremental gross profit, and I think that's less driven by the cycle than it is by just the mix of business that different NEXT agents will offer Redfin, but it should be incremental gross profit growth, and monetizing our website, it should be a similar gross margin. The larger point in a bull market is that NEXT will allow us to be more aggressive about hiring. Because we have fewer fixed costs, we can add agent capacity.
Chris Nielsen: You are the vendor chosen to help fill those buildings, but most of the customers who are just trying to maintain their buildings have more budget pressure because they are having a hard time.
Chris Nielsen: Just meeting their loan covenants and keeping our buildings full.
Chris Nielsen: Yeah.
Chris Nielsen: And this is Chris I can comment on our profit targets, we are still working to profits.
Chris Nielsen: Trailing 12 month basis through the first half of this year I'm not sure I have a lot to add other than my comment, which is that still possible, but less certain and the big variable here. It's about revenue growth in the second quarter. We don't have a lot of visibility to that at this point and we know that it will be subject to mortgage interest rates, which have started the year.
Chris Nielsen: I think the critique of Redfin has sometimes been that extreme market volatility has meant that we were one step behind in a downturn because we couldn't lay people off fast enough, and then we were one step behind in a sudden rally because we couldn't hire people fast enough. But because the next agent is profitable with almost half the number of sales that a salaried employee makes,
Chris Nielsen: Higher than we expected them to and so that's the piece that we'll be watching.
But really this is about the revenue growth in that in that next period as opposed to anything else.
Speaker Change: Thank you Glenn Thank you Chris.
Speaker Change: Our next question comes from Tom White of D.
Glenn Kelman: We can be more aggressive about hiring those agents without carrying so many fixed costs. So I think it actually gives us upside in a bull market on the rental segment. Zillow might be more bullish than we are. It's just a matter of degree.
Tom White: Davidson. Please go ahead.
Tom White: Oh, great. Thanks for taking my question, maybe just a follow up on the EBITDA.
Tom White: Or kind of cash flow timetable and I guess the question is more of a I guess related to your liquidity the balance sheet looks strong in terms of cash and equivalents I think it's nearly $200 million, but Chris maybe could you just walk us through like your kind.
Glenn Kelman: 2023 was a really strong market for rental marketplaces. There was at least a 20-point tailwind in the market, and that is moderating slightly because more buildings are coming online. So I think there are some lease-up opportunities if you are the vendor chosen to help fill those buildings. But most of the customers who are just trying to maintain their buildings have more budget pressure because they are having a hard time just meeting their loan covenants and keeping their buildings full.
Tom White: Kind of required sort of debt.
Tom White: Debt pay down or paying down on the on the warehouse over the next 12 months.
Tom White: Just kind of trying to think about.
Tom White: Your cash needs on that front relative to the $75 million kind of minimum cash balance you have to keep as part of that Apollo deal like.
Tom White: Maybe just.
Tom White: You can describe how you sort of you guys are feeling about that like do you feel like you've got the flexibility to kind of do what you need to do to reposition the company for growth once the market picks up.
Chris Nielsen: And this is Chris. I can comment on our profit targets. We are still working to profits on a trailing 12 month basis through the first half of this year. I'm not sure I have a lot to add other than my comment, which is that it's still possible, but less certain.
Speaker Change: Yes, the short answer to your question is we do feel good about our capital position. So at the end of the quarter, we had $195 million of cash and equivalents on the balance sheet. It's important to note also that we have another $125 million that we could draw from Apollo as part of the transaction so that get.
Glenn Kelman: And the big variable here is revenue growth in the second quarter. We don't have a lot of visibility into that at this point. And we know that it will be subject to mortgage interest rates, which have started the year really higher than we expected them to. And so that's the piece that we'll be watching. But really, this is about revenue growth in that next period, as opposed to anything else. Thank you, Glenn.
Speaker Change: There's plenty of capacity there against the notes that we have due in 2025, which are now down to 193. After the purchases that we've been making so again, we feel like we've got plenty of capital to manage the business here, we're focused on driving profits and beyond that.
Speaker Change: But we do feel like we've got the right flexibility to continue to navigate the business through all of that.
Chris Nielsen: Thank you, Chris. Our next question comes from Tom White of D.A. Davidson.
Speaker Change: Oh.
Speaker Change: Okay, great. Thanks for clarifying.
Speaker Change: The next question it comes from Dae Lee of Jpmorgan. Please go ahead.
Tom White: Please go ahead. Great, thanks for taking my question. Maybe just a follow-up on EBITDA or some kind of cash flow timetable. I guess the question is more related to your liquidity. You know, the balance sheet looks strong in terms of cash and equivalents. I think it's nearly $200 million.
Jason S. Deleeuw: Great. Thanks for taking my questions I have two first one.
Jason S. Deleeuw: Going up on Us index.
Jason S. Deleeuw: Curious to hear about some early feedback has been like.
Speaker Change: If you noticed on the phone keeps shifting.
Speaker Change: In the performance between your next season is done.
Speaker Change: Paul.
Sure I just want to make sure I heard the question.
Chris Nielsen: But, Chris, maybe you could just walk us through your kind of required debt paydown or paying down on the warehouse over the next 12 months and just kind of trying to think about, you know, your cash needs on that front relative to the 75 million kind of minimum cash balance you have to keep as part of that Apollo deal. Maybe you can describe how you're sort of you guys are feeling about that. Like, do you feel like you've got the flexibility to kind of do what you need to do to reposition the company for growth once the market picks up? Thanks. Yeah, the short answer to your question is that we do feel good about our capital position. So, at the end of the quarter, we had $195 million of cash and equivalents on the balance sheet.
Paul: Could you repeat how has the reception been among the agents we hired.
Paul: Yes. So what are the early feedback has been like among Asians that you hired.
Paul: If you are noticing any key differences in performance between your next agents.
Paul: Our traditional agents.
Paul: Great well the feedback has been first contact quality has been better than they'd expected many of them have been.
Paul: Paying to meet customers through other websites, but redfin just has a long history of meeting its own dog food where the.
Paul: The opportunities we generate are served by our own employees. So that feedback loop over many many years has just made us focus on qualification more maybe than other websites and so agents have been pleased that the.
Paul: The quantity of especially the quality of opportunities that theyre getting maybe the second point is that they are happy about what we call a business in a box that to.
Chris Nielsen: It's important to note also that we have another $125 million that we could draw from Apollo as part of the transaction. So that gives us plenty of capacity there against the notes that we have due in 2025, which are now down to $193 after the purchases that we've been making. So again, we feel like we've got plenty of capital to manage the business here. We're focused on driving profits and beyond that. But we do feel like we've got the right flexibility to continue to navigate the business through all of this. Okay, great, thanks for the clarification. The next question comes from Deleeuw of J.P. Morgan. Please go ahead. Great, thanks for taking the questions. I have two.
Paul: To succeed is in Asia, and especially at scale you sometimes have to hire a transaction coordinator you might want some people to help you with tours on the weekends people here are setup from day, one to be top producers, where all of that infrastructure is taken care of and then they love the systems.
Paul: The challenges are making sure we support not just the brand of redfin, but the brand of the agent that scenario, where other brokerages have really excel.
Paul: And then just making sure we support their autonomy. These are people who are used to working for themselves. They are more entrepreneurial we see it as a feature not a bug and so far it's just been fantastic.
Jason S. Deleeuw: First one, following up on Redfin, I'm just curious to hear what the early feedback has been like and if you noticed any key differences in the performance between your next agents and your traditional agents in high performance. Sure, I just want to make sure I heard the question. Could you repeat, how has the reception been among the agents we hired? Yeah, so what has the early feedback been like among the agents that you hired? And if you're noticing any key differences in performance between your next agents and your traditional agents, great. Well, the feedback has been, first, that contact quality has been better than they'd expected. Many of them have been... paying to meet customers through other websites, but Redfin just has a long history of eating its own dog food where.
Paul: So we're really excited about that they behave differently to get to the second part of your question, mostly in terms of how they view the opportunities that they get from our site as precious but also as the starting point for building their business. So it's not just I'm going to get a sale from this one customer but use it to generate referrals. So they are mining our customer database.
Paul: They are surprised how much access they have to pass customers of redfin in their neighborhoods and Theyre, just working harder and not just to work off the new opportunities, but to create sales from the repeat and referral business.
Paul: So those are the main differences, it's really rejuvenated the culture of <unk> not just among these new hires but among all of the other Asia to see how aggressive the new hires are about prosecuting these opportunities it's been fantastic.
Jason S. Deleeuw: The second point is that they're happy about what we call a business in a box. To succeed as an agent, especially at scale, you sometimes have to hire a transaction coordinator. You might want some people to help you with tours on the weekends. People here are set up from day one to be top producers, where all of that infrastructure is taken care of. And then they love the system.
Paul: Okay, and I guess as a follow up it's great to hear that you guys are expecting to gain shares plenty plenty before so first of all just curious why serves as declines in <unk>.
Paul: Wondering what gives you the confidence in your share gain expectations as we move through the year.
Paul: Well the three sales initiatives, we outlined are what give us confidence close rate has been declining for.
Glenn Kelman: The challenges are making sure we support not just the brand of Redfin but the brand of the agent. That's an area where other brokerages have really excelled, and then just making sure we support their autonomy.
Paul: Many many years so to include in this print and actual close rate gain from this signed and save program, where we tie the commission refunds to our buyers agency agreement.
Glenn Kelman: You know, these are people who are used to working for themselves. They are more entrepreneurial. We see that as a feature, not a bug.
Paul: That is the seismic result from my perspective, and I know it's still early.
Glenn Kelman: And so far, it's just been fantastic, so we're really excited about that. They behave differently, to get to the second part of your question, mostly in terms of how they view the opportunities that they get from our site as precious but also as a starting point for building their business.
Paul: <unk>, we're just judging off the first 60 to 90 days this cohort of customers who met us in November December how many of them have closed.
Paul: So thats a very positive sign in to see also this very strong revenue growth in these high end coastal markets like La San Francisco, San Diego, and Orange County, where we have had real share problems for two or three years.
Glenn Kelman: So it's not just, I'm going to get a sale from this one customer, but I'm going to use it to generate referrals. So they are mining our customer database. They're surprised at how much access they have to past customers of Redfin in their neighborhoods. And they're just working harder, not just to work off new opportunities, but to create sales from repeat and referral business. So those are the main differences.
Paul: Again, it's a massive reversal and so all of these initiatives started.
Paul: In September or October.
Paul: Some of them in November and Theyre, just now taking hold and the fact that we seem to be three for three that all three are working.
Glenn Kelman: It's really rejuvenated the culture of Redfin, not just among these new hires but among all of the other agents who see how aggressive the new hires are about prosecuting these opportunities. It's been fantastic.
Paul: Really makes a difference and the proof there is that we've scaled them very quickly.
Paul: Normally we take a year or so because the benefit is quite marginal it's hard to identify you have to wait for the data to cure over a long period of time, but sometimes the result is so big and obvious you just push the button and let it go bigger and so if things hold up the way that they are we're going to have a really good year because traffic has always been.
Glenn Kelman: And I guess as a follow-up, it's great to hear that you guys are expecting to gain shares through 2024. So first of all, just curious why shares have declined in 4Q and wondering what gives you the confidence in your share gain expectations as we go? Well, the three sales initiatives we outlined are what give us confidence.
Paul: And our strength of Redfin and now we're coupling that with really great sales execution.
Glenn Kelman: Close rates have been declining for many, many years. So to include in this print an actual close rate gain from this sign and save program where we tie the commission refund to a buyer's agency agreement is a seismic result from my perspective. And I know it's still early because we're just judging the first 60 or 90 days of this cohort of customers who met us in November and December, how many of them have closed. But it's a very positive sign.
Paul: So as for Q4 what happened.
Paul: Oh, no I mean part of it is that we sometimes tell our listing customers not to put their homes on the market in November and December I don't think other brokerages or as aggressive about that a traditional agent. If he has an opportunity to activate a listing.
Paul: She is going to take it whereas at redfin, we tend to think that it's in the customer's best interest not to list during the holidays and to push it out until January but that doesn't explain all of it sometimes you just have mixed sales results.
Glenn Kelman: And to see also this very strong revenue growth in these high-end coastal markets like LA, San Francisco, San Diego, and Orange County, where we have had real share problems for two or three years, that again is a massive reversal. And so all of these initiatives started in September or October, some of them in November, and they're just now taking hold. And the fact that we seem to be three for three, that all three are working, really makes a difference. And the proof there is that we've scaled them very quickly. You know, normally we take a year or so because the benefit is quite marginal. It's hard to identify.
Paul: And now that we're doing something different I think we're going to have much different sales results.
Paul: I was not happy about the share count in Q4, and I'm very excited about it going forward I think we're on the right track.
Speaker Change: Great. Thank you look forward to it.
Speaker Change: Thank you the next.
Speaker Change: She comes from John Campbell of Stephens, Inc. Please go ahead.
John Campbell: Hey, guys good afternoon.
John Campbell: So Glenn.
Glenn Kelman: You have to wait for the data to cure for a long period of time, but sometimes the result is so big and obvious, you just push the button and let it go bigger. And so if things hold up the way that they are, we're going to have a really good year because traffic has always been a strength of Redfin, and now we're coupling that with really great sales execution. So, as for Q4, what happened? I don't know.
John Campbell: Maybe on a big picture industry question I might be looking too far into this but it seems like the new sign and save program is.
John Campbell: Basically implying that you guys see a future I guess the potential and the buyer Agency agreement. My question is do you think the industry eventually lines with you and that the buyer agency agreement becomes a new standard in time.
John Campbell: Partly yes, I mean thats already happened in markets like D.
John Campbell: D C area market in Seattle.
Glenn Kelman: I mean, part of it is that we sometimes tell our listing customers not to put their homes on the market in November and December. I don't think other brokerages are as aggressive about that. A traditional agent, if he or she has an opportunity to activate a listing, he or she is going to take it. Whereas, at Redfin, we tend to think that it's in the customer's best interest not to list during the holidays and to push it out until January. But that doesn't explain all of it.
John Campbell: Required for buyers to sign a buyer's agency agreement I think some of this is about legal and regulatory compliance. Some of it is just an ethical mandate that people should not hire a buyer's agent without realizing it this should know what that buyer's agent charges and they should know what services are entail they should know when they are committed.
John Campbell: And so this is good salesman ship, but it's also just an above board way to treat a customer now the reason that I said, partly is that we're also seeing some trends where more listing agents are selling homes directly to home buyers. So I think there is just going to be more consumer choice job in some cases.
Glenn Kelman: Sometimes you just have mixed sales results. And now that we're doing something different, I think we're going to have much different sales results. I was not happy about the share price in Q4, and I'm very excited about it going forward. I think we're on the right track. Great. Thank you. I look forward to it.
John Campbell: Consumers explicitly going to decide that I want somebody on my side that I want my own agent.
John Campbell: And other times the agent.
John Campbell: The listing agent excuse me will be the one handling both sides of the sale of the buyer is going to go directly to that listing agent I don't think thats going to be the majority of cases, but I do think theres going to be clear consumer choices and more consumer power that's great.
Glenn Kelman: Thank you. The next question comes from John Campbell of Stephens Inc. Please go ahead.
John Campbell: Hey guys, good afternoon. So Glenn, maybe on a bigger picture industry question, I might be looking too far into this, but it seems like the new sign and save program is basically implying that you guys see a future, I guess, potential in the buyer agency agreement. My question is, do you think the industry will eventually align with you and that the buyer agency agreement becomes a new standard in time? Partly, yes.
Speaker Change: Yeah. Thanks, a lot of sense I'm surprised you didn't throw in a plug for redfin direct so maybe if you could talk about that and where that might have a spot in the new world.
Speaker Change: Oh man I never Miss an opportunity to give a plug China. If you could size, but we've obviously built software that makes it easier for buyers to submit offers directly.
Glenn Kelman: I mean, that's already happened in markets like the D.C. area market, and in Seattle; it's required for buyers to sign a buyer's agency agreement. I think some of this is about legal and regulatory compliance. Some of it is just an ethical mandate that people should not hire a buyer's agent without realizing it. They should know what that buyer's agent charges, and they should know what services are entailed.
Speaker Change: To redfin listing agents because we wanted to support this capability for.
Speaker Change: For buyers to work without a buyer's agent and the challenge that we've had when trying to scale that beyond redfin listings is that many traditional listing agents do not welcome direct buyer contact and I think that is changing because there is so much pressure on listing agents to support more consumer choice and as that pressure mounts.
Glenn Kelman: They should know when they're committed. And so this is good salesmanship, but it's also just an aboveboard way to treat a customer. Now, the reason that I said partly is that we're also seeing some trends where more listing agents are selling homes directly to homebuyers. So I think there is just going to be more consumer choice, John. In some cases, a consumer is explicitly going to decide that they want somebody on my side, that they want their own agent. And other times, the agent, the listing agent, excuse me, will be the one handling both sides of the sale. The buyer is going to go directly to that listing agent.
Speaker Change: Right.
Speaker Change: Our of Redfin will be fully unleashed chart how's that for a plug.
Speaker Change: Excellent good run down if I can squeeze in maybe one more the mortgage segment. Obviously you guys are doing great with the attach rates youre doing as good as you can do with what the market's giving you. Obviously eventually we're going to we're going to see lower rates whenever that might be I'm curious about where you guys are capacity wise are you in a good spot loan officer.
Speaker Change: You know wise and then also.
Speaker Change: Are you is the business position, where you can capitalize on refi as that comes back as well.
Speaker Change: We've been worried about being able to capitalize on refunds. So hopefully we stay ahead of that I think rates have to drop.
Glenn Kelman: I don't think that's going to be the majority of cases, but I do think there's going to be clear consumer choices and more consumer power. That's great. Yeah, makes a lot of sense. I'm surprised you didn't throw in a plug for Redfin Direct. Maybe if you could talk about that and where that might have a spot in the new world. Oh man, I never miss an opportunity to give a
Speaker Change: Another 75 basis points before the refi opportunity becomes significant.
Speaker Change: But traditionally pay equity was doing a third to half of its business in refi don't quite quote me on that but I think it was something like that.
Speaker Change: They do have capacity they have capacity just because of the whole lending industry Hess capacity. Most lenders are still anxious to do more business, but also because they just got a great recruiting proposition. There are so many lenders who have been working with redfin agents.
Glenn Kelman: I was trying to be concise, but we've obviously built software that makes it easier for buyers to submit offers directly to Redfin listing agents because we wanted to support this capability for buyers to work without a buyer's agent. And the challenge that we've had when trying to scale that beyond Redfin listings is that many traditional listing agents do not welcome direct buyer contact. And I think that is changing because there is so much pressure on listing agents to support more consumer choice. And as that pressure mounts... The power of Redfin will be fully unleashed, John! How's that for a plug?
Speaker Change: Who have joined back equity because now they see that redfin agents are not going to recommend that lender unless they have the full power of red since one stop shop. The economics are better we can offer the consumer a better value. The integration is better so it's a more seamless experience and so those lenders are.
Speaker Change: Under pressure to join pay equity slash redfin, instead of hanging their own shingle and Thats made it easy for us to add loan officer capacity when we need to.
Speaker Change: Okay, great and it's made it easier recruiting top talent is always hard but made it easier.
Glenn Kelman: Excellent. Good to run down. If I can squeeze in, maybe one more.
Speaker Change: Thanks Scott.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, just a reminder, it's not competition have open space topping one any telephone keypad piece is something that Christian Q.
Glenn Kelman: The mortgage segment, obviously, you guys are doing great with the attached rates. You're doing as good as you can with what the market's giving you. Obviously, eventually, we're going to see lower rates, whatever that might be. I'm curious about where you guys are capacity-wise.
Speaker Change: Our next question comes from Jay Mccanless, Hopefully dish Securities. Please go ahead.
Jay Mccanless: Hey, good afternoon, everyone.
Jay Mccanless: Just staying on mortgage for a second I'm surprised at the level of revenue decline you're forecasting given you expect real estate services to show at least a small gain maybe talk about the disconnect between those two.
Glenn Kelman: Are you in a good spot loan officer-wise? And then also, is there a business position where you can capitalize on a refi as that comes back as well? We've been worried about being able to capitalize on refunds, so hopefully, we stay ahead of that. I think rates have to drop. Another 75 basis points before the refi opportunity becomes significant, but traditionally, Bay Equity was doing a third to half of its business in refi. Don't quite quote me on that, but I think it was something like that.
Speaker Change: Sure well.
Jay Mccanless: I do think it's possible that we generate more revenue in the mortgage business. So thats one potential outcome here. Another thing just to remember is that there's a little bit of a timing difference and the recognition of revenue and real estate services, which we get at the time that the transaction closes versus mortgage.
Jay Mccanless: Where we book some of the revenue upfront, but the revenue in mortgage tends to be a little less volatile and that's probably what you're seeing between the fourth quarter and the first quarter.
Glenn Kelman: And they do have capacity. They have capacity just because the whole lending industry has capacity. Most lenders are still anxious to do more business, but also because they just got a great recruiting proposition. There are so many lenders who have been working with Redfin agents who have joined BayEquity because now they see that Redfin agents are not going to recommend that lender unless they have the full power of Redfin's one-stop shop. The economics are better, we can offer the consumer better value, and the integration is better, so it's a more seamless experience.
Jay Mccanless: 2024.
Jay Mccanless: We're really encouraged with the attach rates we have seen in the first part of this year going back to glenn's earlier commentary and and so that has us quite optimistic as the year goes on.
Jay Mccanless: Okay.
Then the second question I had.
Speaker Change: Could you potentially quantify how big the demand decline was from January to February.
Glenn Kelman: And so those lenders are under pressure to join BayEquity slash Redfin instead of hanging their own shingle. And that's made it just easy for us to add loan officer capacity. Not easy, but it made it easier. Recruiting top talent is always hard, but it made it easier. Thanks a ton.
Speaker Change: No I don't think we can.
Speaker Change: And it's not just that we're seeing.
Speaker Change: In case, you're about it its a seasonal.
Speaker Change: Business there are so many factors.
Speaker Change: We kind of argued in preparing for this call whether or not the.
Speaker Change: This January to February it feels different than than 2023 is January to February.
Jay McCandless: Ladies and gentlemen, just a reminder, if you'd like to ask a question, you're welcome to press star then 1 on your telephone keypad to place yourself in the question queue. Our next question comes from Jay McCandless of Redbush Securities. Please go ahead. Hey, good afternoon, everyone.
Speaker Change: Maybe sales are pulling through a little bit better we can't tell if that's our sales execution or if the market's like that there was a commentary in the prepared remarks.
Speaker Change: Buyers just being more accustomed to rate volatility they know what they're getting into they are not as easily phase.
Chris Nielsen: Just staying on mortgage for a second. I'm surprised at the level of revenue decline you're forecasting given you expect real estate services to show at least a small gain. Maybe you could talk about the disconnect between those two.
Speaker Change: So.
Speaker Change: I don't know if we can prove it but it just feels a little bit better than last year, and certainly we're better prepared for it.
Speaker Change: We were starting to gear up last year and now we feel like we're not gonna be fooled again that we're going to be more careful about it.
Glenn Kelman: Sure. Well, you know, I do think it's possible that we could generate more revenue in the mortgage business. So that's one potential outcome here. Another thing just to remember is that there's a little bit of a timing difference in the recognition of revenue and real estate services, which we get at the time that the transaction closes versus mortgage, where we book some of the revenue up front. So revenue and mortgage tend to be a little less volatile, and that's probably what you're seeing between the fourth quarter and the first quarter of 2024. We are really encouraged with the attach rates we've seen in the first part of this year, going back to Glenn's earlier commentary. And so that has us quite optimistic as the year goes on. And then the second question I had was, could you potentially quantify how big the demand decline was from January to February? No, I don't think we can.
Speaker Change: Got it and then the last one I had I think Chris you made this comment about mortgage rates being higher so far this year than what you guys were expecting I guess, what is kind of the rents in house expectations for mortgage rates this year, especially with a lot of economists calling for mortgage rates to dip in the back half.
Speaker Change: For the year versus the front now.
Chris Nielsen: So that's very much what our.
Speaker Change: Please go ahead.
Speaker Change: Sorry, Chris No no no.
Chris Nielsen: That's that's very much what our economics team has been indicating is that they expect that rates will come down as the year goes on and my commentary was really that.
Chris Nielsen: Rates did tick up in the first part of this year and I think we're all watching now what three trajectory looks like over the next few months.
Speaker Change: Okay, great. Thanks for taking my questions.
Speaker Change: The next question comes from these new brands.
Speaker Change: Please go ahead.
Glenn Kelman: And it's not just that we're being cagey about it; it's a seasonal business, there are so many factors. We kind of argued in preparing for this call whether or not this January to February feels different than 2023's January to February. And maybe sales are pulling through a little bit better. But we can't tell if that's our sales execution or if the market's like that. There was commentary in the prepared remarks about buyers just being more accustomed to rate volatility. They know what they're getting into. They're not as easily fazed.
Hi, Thank you for taking my question. This is nothing on behalf of God Nagel.
New Brands: Can you throw some light on what are they.
Nothing: Has been demanded it reads over the past few months, John where the volumes look better but have you seen any pullback with lead snowball at 7% and pricing not easing and secondly, what is your view on supply in our guide.
Nothing: How much do you think it can improve with walnuts.
Speaker Change: Great luck. Thank you.
Speaker Change: Well in answer to your first question about volatility of the market is still very much driven by mortgage interest rates.
Glenn Kelman: So, I don't know if we can prove it, but it just feels a little bit better than last year, and certainly we're better prepared for it. You know, we were starting to gear up last year, and now we feel like we're not going to be fooled, and be more careful.
Speaker Change: Maybe one degree less than it was six to nine months ago.
Speaker Change: Some people just put off their home buying plans for six months for nine months for 12 months at some point.
Glenn Kelman: And then the last one I had, Chris, you made this comment about mortgage rates being higher so far this year than what you guys were expecting. I guess what is the Redfin House expectation for mortgage rates this year, especially with a lot of economists calling for mortgage rates to dip in the back half of the year versus the front half? And that's very much what our economics team has been indicating, is that they expect rates to come down as the year goes on. And my commentary was really that, you know, rates did pick up in the first part of this year. And I think we're all watching now what the trajectory looks like over the next, Okay, great. Thanks for taking my question. The next question comes from Winston Branson of Bank of America. Please go ahead.
Speaker Change: They have priced into all of their calculations, a mortgage rate of around 7% and I think if rates.
Speaker Change: Keep going up there is always a breaking point for different cohorts of homebuyers.
Speaker Change: But it's been slightly more elastic than it has been in the past I used to feel like man.
Speaker Change: It would be just the tiniest tick up and people would say no mouse.
Speaker Change: Now it just feels.
Speaker Change: But people are a little more hearty about it.
Speaker Change: As for supply.
Speaker Change: And that's going to be a long term problem and the U S economy.
Speaker Change: When you have this much mortgage interest rate volatility and you're guaranteeing people loans for 30 years youre going to have a long term.
Winston Branson: Hi, thank you for taking my question. This is Nitin on behalf of Kurt Nagel. Can you throw some light on how volatile buyer demand has been related to rates over the past few months? January volumes look better, but have you seen any pullback with rates now over 7% and pricing not easing? And secondly, what is your view on home supply and how did it, how much do you think it can improve with owners still very rate locked? Thank you. Well, in answer to your first question about volatility, the market is still very much driven by mortgage interest rates, but maybe one degree less than it was six to nine months ago. Some people just put off their home buying plans for six months, for nine months, for 12 months, and at some point...
Speaker Change: Problem with resale inventory.
Speaker Change: That should ease a little bit every year again, you just have some powerful demographic forces boomers are holding onto their homes longer and millennials are waiting longer to buy a home, but that can't last forever and.
Speaker Change: So we do think that the supply problems are going to use and also.
Speaker Change: Construction has gotten a little better too.
Thank you.
Speaker Change: Thank you. Thank you.
Speaker Change: Good.
Speaker Change: On the jeans.
Speaker Change: Ladies and change and then just to remind any consultation coupons, which means two things one I'm just trying to think keypad two cases, something the question queue.
Speaker Change: Our next question comes from.
Speaker Change: Ian.
Ian: Citigroup. Please go ahead.
Ian: Okay.
Ian: Good afternoon guys.
Ian: Given how important this is for you guys just want to expand a little bit more.
Ian: On the agent model a on the push to move.
Glenn Kelman: They have priced into all of their calculations a mortgage rate of around 7%. And I think if rates keep going up, there's always a breaking point for different cohorts of homebuyers, but it's been slightly more elastic than it has been in the past. I used to feel like a man, and Howard B.
Ian: More of the lower profitability transactions to partners.
Ian: Clearly continuing to step into that how is that going relative to your expectations. That's something you.
Ian: Expected to do more of and then just any more incremental color on on Redfin next.
Glenn Kelman: It was the tiniest hiccup, and people would say no mom, and now it just feels like people are a little more hardy. As for supply, that's going to be a long-term problem in the U.S. economy when you have this much mortgage interest rate volatility and you're guaranteeing people loans for 30 years, you're going to have a long-term problem with resale inventory. That should ease a little bit every year. Again, you just have some powerful demographic forces. Boomers are holding on to their homes longer.
Ian: What what are some of the signals and Youre looking for.
Ian: You talked about going to a third of markets and can that potentially.
Ian: Become more it looks like that's been more successful than you expected and it's been ramping quicker than expected.
Ian: Well first on the push to partners, we do expect that to continue from year to year from month to month.
Ian: It's subject to the <unk> of the housing market. So.
Ian: Once we have hired a certain number of agents, we're going to keep them busy.
Glenn Kelman: Millennials are waiting longer to buy, but that can't last forever. So we do think that the supply problems are going to ease, and I'll... construction has gotten a little, Thank you. Apologies.
Ian: Taking more demand from partners or sending demand partners, but mostly we've been pretty careful about adding brokerage head count because of this long term shift to partners and this push to have a more digital margin at redfin, which I think you see across the entire print.
Ygal Arounian: Ladies and gentlemen, just a reminder, if you'd like to ask a question, you're welcome to press star then 1 on your telephone keypad to place yourself in the question queue. Our next question comes from Ygal Arounian of Citigroup. Please go ahead.
Ian: There's just higher gross margins and real estate services and across the business overall.
Ian: So that is the long term trend there might be some volatility and the mix between partners and employees for month to month.
Glenn Kelman: Hey, good afternoon, guys. Given how important this is for you guys, I just want to expand a little bit more on the agent model. A, on, you know, the push to move, you know, more of the lower-profitability transactions to partners. You're clearly continuing to step into that. How's that going relative to your expectations? Is that something you, you know, expect to do more of? And then, you know, just any more incremental color on Redfin next? And, you know, what are some of the signals that you're looking for?
Ian: But mostly its going in one direction.
Ian: And as for next maybe the only commentary that we havent provided us about how eager the other markets are for it there are plenty of sales initiatives.
Ian: Redfin headquarters voice on different markets and sales leaders are often quite conservative they want to keep doing what they've been doing they don't like as much change that is not the case with redfin next I have never seen so many employees lined up saying please cut myself. So I can have a higher.
Glenn Kelman: You know, you talked about going into a third of the markets, and that could potentially become more. It looks like, you know, that it's been more successful than you expected, and it's been ramping quicker than expected. Well, first on the push for partners, we do expect that to continue from year to year, from month to month, subject to the exigencies of the housing market. Once we've hired a certain number of agents, we're going to keep them busy, taking more demand from partners or sending demand to partners, but mostly, we've been pretty careful about adding brokerage headcount because of this long-term shift of partners and this push to have a more digital margin at Redfin, which I think you see across the entire print, higher gross margins in real estate services and across the business overall.
Ian: Bonus.
Ian: First.
Ian: Run for next where you have a two week payroll run.
Ian: Somebody got a 90 or $91000 a commission check I don't know that we've ever had a check like that in January and it was just for two weeks the word spreads like wildfire markets are clamoring for it.
Ian: And the only reason that we're not rolling it out even faster is we just don't want to screw it up right now we've got one initiatives sign and say, which trades Commission refunds for buyers agency agreement that we're scaling across the company.
Ian: In 2024, we think thats going to significantly lift close rates will expand next.
Ian: Somewhat more cautiously just because recruiting and change management for the existing employees is a lift.
Glenn Kelman: So that is the long-term trend. There might be some volatility in the mix between partners and employees from month to month, but mostly it's going in one direction. And as for next, maybe the only commentary that we haven't provided is about how eager the other markets are for it. There are plenty of sales initiatives that Redfin headquarters foist on different markets, and sales leaders are often quite conservative. They want to keep doing what they've been doing. They don't like as much change.
Ian: But every single market manager it seems like most of our agents are clamoring for it and I've talked to a bunch of the agents were recruiting.
Ian: And it's just an amazing level of talent is really really exciting if you pair kind of the best brokerage website with.
Ian: The best agents.
Ian: Take the world by storm.
Ian: So early days, but we feel pretty excited about it we feel as good as we could after just 30 40 days of doing it in 2024.
Glenn Kelman: That is not the case with Redfin Next. You know, I have never seen so many employees lined up saying, please cut my salary so I can have a higher bonus. The first run for Next, where you have a two-week payroll run, somebody got a $90,000 or $91,000 commission check. I don't know that we've ever had a check like that in January, and it was just for two weeks.
Speaker Change: Okay. Thanks, Glenn.
Speaker Change: Follow up I guess on the point on traffic I guess one of the biggest.
Speaker Change: Let's say debate areas right now and among investors is.
Speaker Change: Maybe a little bit of what's going on in the competitive environment.
Speaker Change:
Glenn Kelman: The word spreads like wildfire, markets are clamoring for it, and the only reason that we're not rolling it out even faster is that we just don't want to screw it up. Right now, we've got one initiative, Sign and Save, which trades commission refunds for a buyer's agency agreement that we're scaling across the company in 2024. We think that's going to significantly lift close rates. We'll expand next, somewhat more cautiously just because recruiting and change management for the existing employees is a challenge, um, but every single market manager, it seems like most of our agents are clamoring for it. And I've talked to a bunch of the agents we're recruiting, and there's just an amazing level of talent.
Speaker Change: Bit of a step up in marketing spend to see at least from.
Speaker Change: A key competitor and lots of discussion and debate on how that might play out and you'll from from your seat as you guys are kind of seeing this play out what you think about it with you.
Speaker Change: <unk> and how you kind of.
Speaker Change: Plants are.
Speaker Change: I don't know.
Speaker Change: But against that is the right way to think about it but just stopped playing against some of what youre seeing there on the competitive side. Thanks.
Speaker Change: I don't want to be cocky about this to be honest I spent half the super Bowl in the bathroom or upstairs, making nachos because I did want to see these competitor at.
Speaker Change: But.
Speaker Change: According to the early reports from.
Glenn Kelman: It's really, really exciting if you pair kind of the best brokerage website with it at that stage. You're going to take the world by storm. So, early days, but we feel pretty excited about it. We feel as good as we could after just, you know, 30, 40 days of doing it in 2024. Thanks, Glenn. On a follow-up, I guess, on the point about traffic, I guess one of the biggest, Let's say debate areas right now among investors is maybe a little bit of what's going on in the competitive environment, you know, a bit of a step up in marketing spend, to say the least, from a key competitor. And, you know, lots of discussion and debate on how all this might play out.
Speaker Change: Similar web and other sites to compare traffic, we still got more traffic on Super Bowl Sunday.
Speaker Change: A company promising to spend billions of dollars and.
Speaker Change: Our basic thesis is that the best product wins, if you build a better mousetrap the world beats a path to your door and we really believe in the quality of our website I think there was sort of this <unk>.
Speaker Change: $19 99 Dot com thesis that advertising dollars was the way to win.
But mostly I thought we'd left that behind and I know that.
Speaker Change: When you get into some kind of advertising war depresses margins across the segment.
Speaker Change: Just the competitive dynamic we're certainly aware that there are better capitalized competitors out there.
Glenn Kelman: And, you know, from your seat, as you guys are kind of seeing this play out, what you think about it, what your strategy is, and, you know, how you kind of, you know, plan to, I don't know, refute that is the right way to think about it, but just plan against some of what you're seeing there on the competitive. I don't want to be cocky about this, but to be honest, I spent half the Super Bowl in the bathroom or upstairs making nachos because I didn't want to see these competitor ads.
Speaker Change: But things have gone better than we could have hoped I have been really worried about this last year.
Speaker Change: In June and July we just hold our traffic team here at Comms, it's coming on strong it's going to last a long time to keep your head down and keep working.
Speaker Change: And we Werent sure what the effect would be.
Speaker Change: But now we know we've taken a punch and we're still standing.
Speaker Change: And actually we are still growing so.
Speaker Change: Feel pretty good about it.
Speaker Change: All right that's really helpful.
Glenn Kelman: But- According to early reports from similar websites and other sites to compare traffic, we still got more traffic on Super Bowl Sunday, a company promising to spend zillions of dollars. Our basic thesis is that the best product wins. If you build a better mousetrap, the world will beat a path to your door. And we really believe in the quality of our website. I think there was sort of this.
Speaker Change: I agree with the quality of the risk do you have anything to add on that one.
Speaker Change: Yes.
Don: Hi, Don.
Don: Thank you guys.
Speaker Change: Alright go could go.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Okay with the quality of the website.
Speaker Change: Helpful comments thanks.
Speaker Change: Yeah, well I think that's all the questions.
Speaker Change: As always we just wanted to say how much we appreciate the analyst community for following our dairy moves if.
Glenn Kelman: 1999.com thesis that advertising dollars were the way to win. But mostly, I thought we'd left that behind, and I know that when you get into some kind of advertising war, it depresses margins across the segment, and changes the competitive dynamic. We're certainly aware that there are better-capitalized competitors out there.
Speaker Change: If you have further questions, Chris and Meg will handle them one on one with you.
Speaker Change: But here's to a great 2024, let's go get them.
Speaker Change: Thank you ladies unchanged means that concludes todays event. Thank you for attending and you may now disconnect your lines.
Speaker Change: [music].
Glenn Kelman: But things have gone better than we could have hoped. I've been really worried about this last June and July, told our traffic team here at Comcast.
Glenn Kelman: It's coming on strong. It's going to last a long time. Keep your head down and keep working, and we weren't sure what the effect would be.
Glenn Kelman: And now we know, we've taken a punch and we're still standing, and actually, we're still growing, so I feel pretty good about it. That's really helpful. I agree with the quality of the website. Chris, do you have anything to add to that one? I don't.
Chris Nielsen: Thank you, guys. There you go, keep going. Thank you to those who gave the quality of the website helpful comments. Thank you. Yeah, well, I think that's all the questions.
Glenn Kelman: As always, we just wanted to say how much we appreciate the analyst community for following our daring moves. If you have further questions, Chris and Meg will handle them one-on-one with you, but here's to a great 2020. Let's go get them!
Operator: Thank you. Ladies and gentlemen, that concludes today's event. Thank you for attending and you may now disconnect your line. © BF-WATCH TV 2021, © The Ultimate Parody Site! © BF-WATCH TV 2021 © BF-WATCH TV 2021 © BF-WATCH TV 2021, ??? ??? ??? ???
Speaker Change: Yes.