Annual Report | 2021
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ___ to ___
Commission file number 001-38160
Redfin Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation
or organization)
74-3064240
(I.R.S. Employer Identification No.)
1099 Stewart Street
Seattle
Suite 600
WA
(Address of Principal Executive Offices)
98101
(Zip Code)
(206) 576-8333
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.001 par value per share
Trading
Symbol
RDFN
Name of each exchange on which registered
The Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
☒ Yes
☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Act.
☐ Yes
☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes
☐ No
Indicate by check mark whether the registrant has submitted electronically every
Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
☒ Yes
☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not
to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its
management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report.
☐
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
☐ Yes
☒ No
As of the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate
market value of the registrant's common stock held by its non-affiliates, computed by reference to the price at
which the common stock was last sold, was $6,440,535,375.
The registrant had 106,396,652 shares of common stock outstanding as of February 10, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
The portions of the registrant's proxy statement to be filed in connection with the registrant’s 2022 Annual
Meeting of Stockholders that are responsive to the disclosure required by Part III of Form 10-K are incorporated
by reference into Part III of this Form 10-K.
Redfin Corporation
Annual Report on Form 10-K
For the Year Ended December 31, 2021
Table of Contents
Business
PART I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Executive Compensation
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Item 16.
Form 10-K Summary
Signatures
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As used in this annual report, the terms "Redfin," "we," "us," and "our" refer to Redfin Corporation and
its subsidiaries taken as a whole, unless otherwise noted or unless the context indicates otherwise. However,
when referencing (i) the 2023 notes, the 2025 notes, and the 2027 notes, the terms “we,” “us,” and “our” refer
only to Redfin Corporation and not to Redfin Corporation and its subsidiaries taken as a whole, (ii) the secured
revolving credit facility with Goldman Sachs, the terms "we," "us," and "our" refer only to RedfinNow Borrower
LLC, and (iii) each warehouse credit facility, the terms "we," "us"," and "our" refer only to Redfin Mortgage,
LLC.
Note Regarding Forward-Looking Statements
This annual report contains forward-looking statements. All statements contained in this report other
than statements of historical fact, including statements regarding our future operating results and financial
position, our business strategy and plans (including the closing of our acquisition, as well as integration, of
RentPath), our market growth and trends, and our objectives for future operations, are forward-looking
statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,”
“would,” “project,” “plan,” "hope," “potentially,” “preliminary,” “likely,” and similar expressions are intended to
identify forward-looking statements. We have based these forward-looking statements largely on our current
expectations and projections about future events and trends that we believe may affect our financial condition,
results of operations, business strategy, short-term and long-term business operations and objectives, and
financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and
assumptions, including those described under Item 1A. Moreover, we operate in a very competitive and rapidly
changing environment. New risks emerge from time to time. It is not possible for our management to predict all
risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends
discussed in this report may not occur and actual results could differ materially and adversely from those
anticipated or implied in the forward-looking statements. Accordingly, you should not rely on forward-looking
statements as predictions of future events. Although we believe that the expectations reflected in the forward-
looking statements are reasonable, we cannot guarantee that the future results, performance, or events and
circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation
to update any of these forward-looking statements for any reason after the date of this report or to conform
these statements to actual results or revised expectations.
Note Regarding Industry and Market Data
This annual report contains information using industry publications that generally state that the
information contained therein has been obtained from sources believed to be reliable, but such information may
not be accurate or complete. While we are not aware of any misstatements regarding the information from these
industry publications, we have not independently verified any of the data from third-party sources nor have we
ascertained the underlying economic assumptions relied on therein.
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Item 1. Business
Overview
PART I
We help people buy and sell homes. Representing customers in over 100 markets in the United States
and Canada, we are a residential real estate brokerage. We pair our own agents with our own technology to
create a service that is faster, better, and costs less. We meet customers through our listings-search website
and mobile application.
We use the same combination of technology and local service to originate mortgage loans and offer title
and settlement services; we also buy homes directly from homeowners who want an immediate sale, taking
responsibility for selling the home while the original owner moves on. Beginning in April 2021, we also offer
digital platforms to connect consumers with available apartments and houses for rent.
Our mission is to redefine real estate in the consumer’s favor.
Representing Customers
Our brokerage efficiency results in savings that we share with our customers. We charge most home
sellers a commission of 1% to 1.5%, compared to the 2.5% to 3% typically charged by traditional brokerages.
Additionally, we refund homebuyers a portion of the commission we earn; the average refund per transaction
was over $1,900 in 2021.
The results of our customer-first approach are clear. We:
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helped customers buy or sell more than 400,000 homes worth more than $200 billion through 2021;
saved customers more than $1 billion, when compared to a 2.5% commission, since our launch in
2006;
drew more than 47 million monthly average visitors to our website and mobile application in 2021, 10%
more compared to 2020;
had customers buy and sell the same home with us at a 53% higher rate than competing brokerages;
sold Redfin-listed homes for nearly $1,650 more on average than competing brokerages’ similar listings
in 2021, according to a study we commissioned; and
had listings on the market for an average of less than 24 days in 2021 compared to the industry
average of more than 28 days, according to a study we commissioned; and, according to the same
study, approximately 88% of Redfin listings sold within 90 days versus the industry average of
approximately 86%.
To serve customers when our own agents can’t due to high demand or geographic limitations, we’ve
developed partnerships with over 10,700 agents at other brokerages. Once we refer a customer to a partner
agent, that agent, not us, represents the customer from the initial meeting through closing, at which point the
agent pays us a portion of her commission as a referral fee.
Complete Customer Solution
Our long-term goal is to combine brokerage, rentals, mortgage, title services, and instant offers to
directly purchase a consumer's home into one solution, sharing information, coordinating deadlines, and
streamlining processes so that a consumer's move is easier and often less costly. As we integrate these
services more closely over time, we believe we can help consumers move much more efficiently than a
combination of stand-alone companies ever could.
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Redfin Mortgage underwrites mortgage loans and, after originating each loan, Redfin Mortgage sells the
loans to third-party mortgage investors. Redfin Mortgage does not intend to retain or service mortgage loans.
Redfin Mortgage has officially launched in 64 markets across 23 states and the District of Columbia. These
markets accounted for 86% of our brokerage's buy-side transactions in 2021. In January 2022, we entered into
an agreement to acquire Bay Equity Home Loans, which is a full-service mortgage lender licensed in 42 states.
We expect to consummate this acquisition during the second quarter of 2022.
Title Forward offers title and settlement services. Title Forward has officially launched in 27 markets
across 13 states and the District of Columbia. These markets accounted for 58% of our brokerage's
transactions in 2021.
RedfinNow buys homes directly from homeowners and resells them to homebuyers. Customers who
sell through RedfinNow typically get less money for their home than they would listing their home with a real
estate agent. However, they get that money faster with less risk and disruption. RedfinNow has officially
launched in 30 markets across 15 states and the District of Columbia. These markets accounted for 85% of our
brokerage's sell-side transactions in 2021.
RentPath offers an end-to-end digital marketing platform that connects consumers with available
apartments and houses for rent across all 50 states and the District of Columbia.
Competition
The residential brokerage industry is highly fragmented, with numerous active licensed agents and
brokerages, and is evolving rapidly in response to technological advancements, changing customer
preferences, and new offerings. We compete primarily against other residential real estate brokerages, which
include franchise operations affiliated with national or local brands, and small independent brokerages. We also
compete with hybrid residential brokerages, which combine Internet technology and brokerage services, and a
growing number of others that operate with non-traditional real estate business models. Competition is
particularly intense in some of the densely populated metropolitan markets we serve, as they are dominated by
entrenched real estate brokerages and are the primary markets for innovative and well-capitalized new entrants.
We believe we compete primarily based on:
access to timely, accurate data about homes for sale;
traffic to our website and mobile application, which themselves are subject to competition against real
estate data websites that aggregate listings and sell advertising to traditional brokers;
the speed and quality of our service, including agent responsiveness and local knowledge;
our ability to hire and retain agents who deliver the best customer service;
the costs of delivering our service and the price of our service to consumers;
consumer awareness of our service and the effectiveness of our marketing efforts;
technological innovation; and
depth and breadth of local referral networks.
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Redfin Mortgage competes with numerous national and local multi-product banks as well as focused
mortgage originators. We compete primarily on service, product selection, interest rates, and origination fees.
Title Forward competes with numerous national and local companies that typically focus solely on these
services. We compete primarily on timeliness of service and fees.
RedfinNow competes with real estate companies whose primary service is buying and selling homes,
and home rental companies that purchase homes and then rent them. We also compete with divisions of
several residential real estate companies. We compete primarily on the prices we offer customers to buy their
homes.
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RentPath competes with companies that provide an online marketplace for residential rental listings and
related digital marketing solutions. We compete primarily on the scope and quality of listings we offer on our
digital platforms, our value-added digital marketing solutions, traffic generated through our websites and mobile
applications, and the breadth of our broader marketing services.
Seasonality
For the impact of seasonality on our business, see "Quarterly Results of Operations and Key Business
Metrics" under Item 7.
Our Lead Agents
Our goal is to be the best employer in real estate. At the heart of this goal is an investment in the real
estate agents who directly help our customers buy and sell homes. We refer to these agents as our lead agents.
Unlike traditional real estate brokerages, where agents work as independent contractors, we employ our lead
agents and pay them a salary, offer them an opportunity to earn additional cash and equity compensation, and
provide them with health insurance and other benefits. As a result, our lead agents in 2021 earned a median
income that was more than two and one-half times as much as agents at competing brokerages. Also in 2021,
our lead agents were, on average, more than two and one-half times more productive than agents at competing
brokerages. Our investment in our lead agents has resulted in a significant competitive advantage in agent
retention, as our lead agents were 17% more likely to stay with us from 2020 to 2021 than agents at competing
brokerages. Our ability to attract, develop, and retain lead agents is critical to our success.
As of December 31, 2021, we had 6,485 employees. For 2021, our average number of lead agents was
2,396. See "Key Business Metrics-Average Number of Lead Agents" under Item 7.
Our Executive Officers
Below is information regarding our executive officers. Each executive officer holds office until his or her
successor is duly elected and qualified or until the officer’s earlier resignation, disqualification, or removal.
• Glenn Kelman, age 51, has served as our chief executive officer since September 2005 and one of our
directors since March 2006.
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Bridget Frey, age 44, has been employed by us since June 2011 and has served as our chief
technology officer since February 2015.
Anthony Kappus, age 41, has been employed by us since March 2014 and has served as our chief
legal officer since May 2021. Mr. Kappus previously served as our senior vice president - legal affairs
from August 2018 to May 2021 and vice president - legal from September 2014 to August 2018.
Scott Nagel, age 56, has been employed by us since July 2007 and has served as our president of
strategic initiatives since April 2021. Mr. Nagel previously served as our president of real estate
operations from May 2013 to April 2021.
Chris Nielsen, age 55, has served as our chief financial officer since June 2013.
Christian Taubman, age 43, has served as our chief growth officer since April 2021. Mr. Taubman
previously served as our chief product officer from October 2019 to April 2021. Prior to joining Redfin,
Mr. Taubman served in several different roles with Amazon (a technology company) from April 2011 to
October 2019. As Director - Smart Home Verticals from December 2017 to October 2019, Mr. Taubman
led employees in product management, software engineering, and program management, with the
mission of helping customers to connect more smart devices to Amazon's Alexa virtual assistant. As
Senior Manager - International Retail Expansion from May 2016 to December 2017, Mr. Taubman led
an initiative to create a faster retail international expansion model. As Senior Manager - Prime Delivery
from April 2011 to May 2016, Mr. Taubman helped launch Amazon's Prime free same-day delivery
benefit in the United States, United Kingdom, and Germany.
Adam Wiener, age 43, has been employed by us since October 2007 and has served as our president
of real estate operations since April 2021. Mr. Wiener previously served as our chief growth officer from
July 2015 to April 2021.
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Our Regulatory Environment
The residential real estate industry is heavily regulated by federal, state, and local governments in the
United States. Because of our complete customer solution approach of combining brokerage, rentals, mortgage,
title services, and instant offers, a customer may be able to receive more than one real estate-related service
from us. Accordingly, some government regulations affect more than one of our operating segments and may
impact our ability to offer multiple services to the same customer.
For example, the Real Estate Settlement Procedures Act of 1974 restricts, with some exceptions,
kickbacks or referral fees that real estate settlement service providers, such as brokerages, mortgage
originators, and title and closing service providers, may pay or receive in connection with the referral of
settlement services. Furthermore, the Fair Housing Act of 1968 (the “FHA”) prohibits discrimination in the
purchase or sale of homes. The FHA applies to real estate agents, mortgage lenders, title companies, and
home sellers, such as RedfinNow, as well as many forms of advertising and communications, including MLS
listings and insights about home listings.
Additionally, our brokerage, mortgage, and title business each requires a license specific to its business
from each state in which it operates, and the licensing requirements vary by state. Furthermore, some of our
employees who provide services for these businesses must also hold individual licenses. These entity and
individual licenses may be costly to obtain and maintain, which may adversely affect our company’s earnings.
Our Website and Public Filings
Our website is www.redfin.com. Through this website, we make available, free of charge, our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to
these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
soon as reasonably practicable after we file such material with, or furnish it to, the U.S. Securities and
Exchange Commission (the "SEC").
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Item 1A. Risk Factors
You should carefully consider the risks described below, together with all other information in this
annual report, before investing in any of our securities. The occurrence of any single risk or any combination of
risks could materially and adversely affect our business, operating results, financial condition, liquidity, or
competitive position, and consequently, the value of our securities. The material adverse effects include, but are
not limited to, not growing our revenue or market share at the pace that they have grown historically or at all,
our revenue and market share fluctuating on a quarterly and annual basis, an extension of our history of losses
and a failure to become profitable, not achieving the revenue and net income (loss) guidance that we provide,
and harm to our reputation and brand.
Risks Related to Our Business and Industry
Our business depends significantly on the health of the U.S. residential real estate industry and
macroeconomic factors.
Our success depends largely on the health of the U.S. residential real estate industry. This industry, in
turn, is affected by changes in general economic conditions, which are beyond our control. Any of the following
factors could reduce the volume of residential real estate transactions, cause a decline in the prices at which
homes are bought and sold, or otherwise adversely affect the industry and harm our business:
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seasonal or cyclical downturns in the U.S. residential real estate industry, which may be due to any
single factor, or a combination of factors, listed below, or factors which are currently not known to us or
that have not historically affected the industry;
slow economic growth or recessionary conditions;
increased unemployment rates or stagnant or declining wages;
inflationary conditions;
low consumer confidence in the economy or the U.S. residential real estate industry;
adverse changes in local or regional economic conditions in the markets that we serve, particularly our
top-10 markets and markets into which we are attempting to expand;
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increased mortgage rates; reduced availability of mortgage financing; or increased down payment
requirements;
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low home inventory levels, which may result from zoning regulations, higher construction costs, and
housing market uncertainty that discourages some home sellers, among other factors;
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lack of affordably priced homes, which may result from home prices growing faster than wages, among
other factors;
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volatility and general declines in the stock market or lower yields on individuals' investment portfolios;
increased expenses associated with home ownership, including rising insurance costs that may result
from more frequent and severe natural disasters and inclement weather;;
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newly enacted and potential federal, state, and local legislative actions, as well as new judicial
decisions, that would affect the residential real estate industry generally or in our top-10 markets, including (i)
actions or decisions that would increase the tax liability arising from buying, selling, or owning real estate, (ii)
actions or decisions that would change the way real estate brokerage commissions are negotiated, calculated,
or paid, and (iii) actions or decisions that would discourage individuals from owning, or obtaining a mortgage on,
more than one home, and (iv) potential reform relating to Fannie Mae, Freddie Mac, and other government
sponsored entities that provide liquidity to the mortgage market;
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changes that cause U.S. real estate to be more expensive for foreign purchases, such as (i) increases
in the exchange rate for the U.S. dollar compared to foreign currencies and (ii) foreign regulatory changes or
capital controls that make it more difficult for foreign purchasers to withdraw capital from their home countries or
purchase and hold U.S. real estate;
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changed generational views on homeownership and generally decreased financial resources available
for purchasing homes; and
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war, terrorism, political uncertainty, natural disasters, inclement weather, health epidemics or
pandemics, and acts of God.
COVID-19 has affected our business and may continue to affect our business.
Our success depends on a high volume of residential real estate transactions throughout the markets in
which we operate. This transaction volume affects many of the ways that we generate revenue, including our
number of real estate services transactions, RedfinNow's ability to sell homes that it owns, the number of loans
our mortgage business originates and resells, and the number of deals our title and settlement business closes.
COVID-19 has affected, and may continue to affect, residential real estate transaction volume.
We believe that COVID-19's impact on our residential real estate transaction volume depends largely
on the existence and prevalence of the two factors described below. If one or both of these factors exists to a
large extent in the markets in which we operate, our residential real estate transaction volume may significantly
decline.
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Prohibitions or limitations on in-person activities associated with residential real estate transactions,
whether imposed (i) by a city, county, or state government through shelter-in-place, stay-at-home, or
similar isolation orders or otherwise or (ii) by us to protect the health of our customers, agents, and
communities.
Lack of consumer desire for in-person interactions and physical home tours that have historically been
important aspects of the home buying and home selling process.
Our real estate services segment, which is our largest segment by gross profit, is concentrated in
certain geographic markets. Our failure to adapt to any substantial shift in the relative percentage of
residential housing transactions from these markets to other markets in the United States could
adversely affect our financial performance.
For the year ended December 31, 2021, our top-10 markets by real estate services revenue consisted
of the metropolitan areas of Boston, Chicago, Denver (including Boulder and Colorado Springs), Los Angeles
(including Santa Barbara), Maryland, Northern Virginia, Portland (including Bend), San Diego, San Francisco,
and Seattle.
Local and regional conditions in these markets may differ significantly from prevailing conditions in the
United States or other parts of the country. Accordingly, events may adversely and disproportionately affect
demand for and sales prices of homes in these markets. Any overall or disproportionate downturn in demand or
home prices in any of our largest markets, particularly if we are unable to increase revenue from our other
markets, could adversely affect growth of our revenue and market share or otherwise harm our business.
Our top markets are primarily major metropolitan areas, where home prices and transaction volumes
are generally higher than other markets. As a result, our real estate services revenue and gross margin are
generally higher in these markets than in our smaller markets. To the extent there is a long-term net migration to
cities outside of these markets, the relative percentage of residential housing transactions may shift away from
the top markets where we have historically generated most of our revenue. Our inability to adapt to any shift,
including failing to increase revenue from other markets, could adversely affect our financial performance and
market share.
Competition in each of our lines of business is intense.
Many of our competitors across each of our businesses have substantial competitive advantages, such
as longer operating histories, stronger brand recognition, greater financial resources, more management, sales,
marketing and other resources, superior local referral networks, perceived local knowledge and expertise, and
extensive relationships with participants in the residential real estate industry, including third-party data
providers such as multiple listing services ("MLSs"). Consequently, these competitors may have an advantage
in recruiting and retaining agents, attracting consumers, and growing their businesses. They may also be able
to provide consumers with offerings that are different from or superior to those we provide. The success of our
competitors could result in our loss of market share and harm our business.
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We may be unable to maintain or improve our current technology offerings at a competitive level or
develop new technology offerings that meet customer or agent expectations. Our technology offerings
may also contain undetected errors or vulnerabilities.
Our technology offerings, including tools, features, and products, are key to our competitive plan for
attracting potential customers and hiring and retaining lead agents. Maintaining or improving our current
technology to meet evolving industry standards and customer and agent expectations, as well as developing
commercially successful and innovative new technology, is challenging and expensive. For example, the nature
of development cycles may result in delays between the time we incur expenses and the time we introduce new
technology and generate revenue, if any, from those investments. Anticipated customer demand for a
technology offering could also decrease after the development cycle has commenced, and we would not be
able to recoup costs, which may be substantial, we incurred.
As standards and expectations evolve and new technology becomes available, we may be unable to
identify, design, develop, and implement, in a timely and cost-effective manner, new technology offerings to
meet those standards and expectations. As a result, we may be unable to compete effectively, and to the extent
our competitors develop new technology offerings faster than us, they may render our offerings noncompetitive
or obsolete. Additionally, even if we implemented new technology offerings in a timely manner, our customers
and agents may not accept or be satisfied by the offerings.
Furthermore, our development and testing processes may not detect errors and vulnerabilities in our
technology offerings prior to their implementation. Any inefficiencies, errors, technical problems, or
vulnerabilities arising in our technology offerings after their release could reduce the quality of our services or
interfere with our customers' and agents' access to and use of our technology and offerings.
We may be unable to obtain and provide comprehensive and accurate real estate listings quickly, or at
all.
We believe that users of our website and mobile application come to us primarily because of the real
estate listing data that we provide. Accordingly, if we were unable to obtain and provide comprehensive and
accurate real estate listings data, our primary channels for meeting customers will be diminished. We get
listings data primarily from MLSs in the markets we serve. We also source listings data from public records,
other third-party listing providers, and individual homeowners and brokers. Many of our competitors and other
real estate websites also have access to MLSs and other listings data, including proprietary data, and may be
able to source listings data or other real estate information faster or more efficiently than we can. Since MLS
participation is voluntary, brokers and homeowners may decline to post their listings data to their local MLS or
may seek to change or limit the way that data is distributed. A competitor or another industry participant could
also create an alternative listings data service, which may reduce the relevancy and comprehensive nature of
the MLSs. If MLSs cease to be the predominant source of listings data in the markets that we serve, we may be
unable to get access to comprehensive listings data on commercially reasonable terms, or at all, which may
result in fewer people using our website and mobile application.
We rely on business data to make decisions and drive our machine-learning technology, and errors or
inaccuracies in such data may adversely affect our business decisions and the customer experience.
We regularly analyze business data to evaluate growth trends, measure our performance, establish
budgets, and make strategic decisions. While our business decisions are based on what we believe to be
reasonable calculations for the applicable period of measurement, there are inherent challenges in measuring
and interpreting the data, and we cannot be certain that the data are accurate. Errors or inaccuracies in the data
could result in poor business decisions, resource allocation, or strategic initiatives. For example, if we
overestimate traffic to our website and mobile application, we may not invest an adequate amount of resources
in attracting new customers or we may hire more lead agents in a given market than necessary to meet
customer demand.
We also use our business data and proprietary algorithms to inform our machine learning, such as in
the calculation of our Redfin Estimate, which provides an estimate on the market value of individual homes. If
customers disagree with us or if our Redfin Estimate fails to accurately reflect market pricing such that we are
unable to attract homebuyers or help our customers sell their homes at satisfactory prices, or at all, customers
may lose confidence in us.
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We may be unable to attract homebuyers and home sellers to our website and mobile application in a
cost-effective manner.
Our website and mobile application are our primary channels for meeting new customers. Accordingly,
our success depends on our ability to attract homebuyers and home sellers to our website and mobile
application in a cost-effective manner. To meet customers, we rely heavily on traffic generated from search
engines and downloads of our mobile application from mobile application stores. We also rely on marketing
methods such as targeted email campaigns, paid search advertising, social media marketing, and traditional
media, including TV, radio, and billboards.
The number of visitors to our website and downloads of our mobile application depend in large part on
how and where our website and mobile application rank in Internet search results and mobile application stores,
respectively. While we use search engine optimization to help our website rank highly in search results,
maintaining or improving our search result rankings is not within our control. Internet search engines frequently
update and change their ranking algorithms, referral methodologies, or design layouts, which determine the
placement and display of a user’s search results. In some instances, Internet search engines may change these
rankings, which may have the effect of promoting their own competing services or the services of one or more
of our competitors. Similarly, mobile application stores can change how they display searches and how mobile
applications are featured. For instance, editors at the Apple App Store can feature prominently editor-curated
mobile applications and cause the mobile application to appear larger than other applications or more visibly on
a featured list.
Additionally, our marketing efforts may fail to attract the desired number of customers for a variety of
reasons, including the possibility that the creative treatment for our advertisements may be ineffective or new
third-party email delivery policies may make it more difficult for us to execute targeted email campaigns.
If we are unable to deliver a rewarding experience on mobile devices, whether through our mobile
website or mobile application, we may be unable to attract and retain customers.
Developing and supporting a mobile website and mobile application across multiple operating systems
and devices requires substantial time and resources. We may not be able to consistently provide a rewarding
customer experience on mobile devices and, as a result, customers we meet through our mobile website or
mobile application may not choose to use our services at the same rate as customers we meet through our
website.
As new mobile devices and mobile operating systems are released, we may encounter problems in
developing or supporting our mobile website or mobile application for them. Developing or supporting our
mobile website or mobile application for new devices and their operating systems may require substantial time
and resources. The success of our mobile website and mobile application could also be harmed by factors
outside of our control, such as:
•
•
•
increased costs to develop, distribute, or maintain our mobile website or mobile application;
changes to the terms of service or requirements of a mobile application store that requires us to change
our mobile application development or features in an adverse manner; and
changes in mobile operating systems, such as Apple’s iOS and Google’s Android, that
disproportionately affect us, degrade the functionality of our mobile website or mobile application,
require that we make costly upgrades to our technology offerings, or give preferential treatment to
competitors' websites or mobile applications.
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Our business model of employing lead agents subjects us to challenges not faced by our competitors.
Our ability to hire and retain a sufficient number of lead agents is critical to our ability to maintain and
grow our market share and to provide an adequate level of service to customers who want to work with
our lead agents.
As a result of our business model of employing our lead agents, our lead agents generally earn less on
a per transaction basis than traditional agents who work as independent contractors at traditional brokerages.
Because our model is uncommon in our industry, agents considering working for us may not understand our
compensation model or may not perceive it to be more attractive than the independent contractor, commission-
driven compensation model used by most traditional brokerages. Additionally, due to the costs of employing our
lead agents, lead agent turnover may be more costly to us than to traditional brokerages. If we are unable to
attract, retain, effectively train, motivate, and utilize lead agents, we will be unable to offset the costs of
employing them and grow our business. We may also be required to change our compensation model, which
could significantly increase our lead agent compensation or other costs.
Also as a result of employing our lead agents, we incur costs that our brokerage competitors do not,
such as base pay, employee benefits, expense reimbursement, training, and employee transactional support
staff. Because of this, we have significant costs that, in the event of downturns in demand in the markets we
serve, may result in us being unable to adjust as rapidly as some of our competitors. In turn, such downturns
may impact us more than our competitors.
Conversely, in times of rapidly rising demand we may face a shortfall of lead agents. To the extent our
customer demand increases from current levels, our ability to adequately serve the additional customers, and in
turn grow our revenue and U.S. market share by value, depends, in part, on our ability to timely hire and retain
additional lead agents. To the extent we are unable to hire, either timely or at all, or retain the required number
of lead agents to serve our customer demand, we will be unable to maximize our revenue and market share
growth. Although we are able to refer excess demand to our partner agents, historically our partner agents have
closed transactions with customers they meet at a lower rate than our lead agents and have generated lower
revenue per transaction.
Referring customers to our partner agents may harm our business.
We refer customers to third-party partner agents when we do not have a lead agent available due to
high demand or geographic limitations. Our dependence on partner agents can be particularly heavy in certain
new markets as we build our operations to scale in those markets or during times of rapidly rising demand for
our services. Our partner agents are independent licensed agents affiliated with other brokerages, and we do
not have any control over their actions. If our partner agents were to provide poor customer service, engage in
malfeasance, or otherwise violate the laws and rules to which we are subject, we may be subject to legal claims
and our reputation and business may be harmed.
Our arrangements with third parties may limit our growth and brand awareness. For example, referring
customers to partner agents potentially redirects repeat and referral opportunities to the partner agents.
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If we do not comply with the rules, terms of service, and policies of REALTOR® associations and MLSs,
our access to and use of listings data may be restricted or terminated.
We must comply with the rules, terms of service, and policies of REALTOR® associations and MLSs to access
and use MLSs' listings data. We belong to numerous REALTOR® associations and MLSs, and each has
adopted its own rules, terms of service, and policies governing, among other things, how MLS data may be
used and how listings data must be displayed on our website and mobile application. These rules typically do
not contemplate multi-jurisdictional online brokerages like ours and vary widely among markets. They also are
in some cases inconsistent with the rules of other REALTOR® associations and MLSs such that we are
required to customize our website, mobile application, or service to accommodate differences between rules of
REALTOR® associations and MLSs. Complying with the rules of each REALTOR® associations andMLS
requires significant investment, including personnel, technology and development resources, and the exercise
of considerable judgment. If we are deemed to be noncompliant with a REALTOR® association or MLS’s rules,
we may face disciplinary sanctions in that association or MLS, which could include monetary fines, restricting or
terminating our access to that MLS’s data, or other disciplinary measures. The loss or degradation of this
listings data could materially and adversely affect traffic to our website and mobile application, making us less
relevant to consumers and restricting our ability to attract customers. It also could reduce agent and customer
confidence in our services and harm our business.
If we fail to comply with the requirements governing the licensing of our brokerage, mortgage, and title
businesses in the jurisdictions in which we operate, then our ability to operate those businesses in
those jurisdictions may be revoked.
Redfin, as a brokerage, and our agents must comply with the requirements governing the licensing and
conduct of real estate brokerage and brokerage-related businesses in the markets where we operate.
Furthermore, we are also required to comply with the requirements governing the licensing and conduct of
mortgage and title and settlement businesses in the markets where we operate. Due to the geographic scope of
our operations, we and our agents may not be in compliance with all of the required licenses at all times.
Additionally, if we enter into new markets, we may become subject to additional licensing requirements. If we or
our agents fail to obtain or maintain the required licenses for conducting our brokerage, mortgage, and title
businesses or fail to strictly adhere to associated regulations, the relevant government authorities may order us
to suspend relevant operations or impose fines or other penalties.
RedfinNow may overestimate the amount it should pay to purchase a home, and homes owned by it
may significantly decline in value prior to being sold.
RedfinNow uses automated valuations and forecasts in concert with employees with real estate
knowledge to assess what a home is worth and how much to pay for its purchase. This assessment includes
estimates on time of possession, market conditions and proceeds on resale, renovation costs, and holding
costs. The assessment may not be accurate, and RedfinNow may pay too much for the home to realize our
desired investment return. Additionally, following its acquisition of a home, RedfinNow may need to decrease its
anticipated resale price for the home if it discovers a defect in the home that was unknown at the time of
acquisition. This adjustment to the price may also affect our investment return on the home.
Homes that RedfinNow owns may also quickly lose value or become more difficult to sell for an
acceptable price due to changing market conditions, natural disasters, or other forces outside of our control.
RedfinNow's geographic concentration in fifteen states and the District of Columbia particularly exposes it to the
factors affecting home resale value in those states that may not apply to the United States generally. As a result,
we may be required to significantly write down the inventory value of homes and, to the extent we are able to
resell homes at all, resell them at a price that is substantially less than our costs of acquiring and renovating the
homes.
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Our inability, or our third-party contractors and subcontractors' inability, to renovate and repair homes
on a timely and cost efficient basis could adversely affect our holding period and investment return for
homes.
Upon purchasing a home, RedfinNow frequently needs to renovate or repair parts of the home prior to
listing it for resale. RedfinNow relies, in part, on third-party contractors and sub-contractors to make these
renovations and repairs. We and our contractors and sub-contractors may be unable to complete renovations
and repairs in a timely and cost efficient manner due to labor and supply shortages, cost increases, or other
factors outside our control. Additionally, our contractors and sub-contractors may not be able to complete
renovations or repairs within RedfinNow's proposed budget. Furthermore, if the quality of a third-party provider's
work does not meet RedfinNow's expectations, then RedfinNow may need to complete the work itself or engage
another third-party contractor or subcontractor, which may also adversely affect its timeline or budget for
completing renovations or repairs.
A longer than expected period for completing renovations or repairs could negatively impact
RedfinNow's ability to sell a home within its anticipated timeline. This prolonged timing exposes us to factors
that adversely affect the home's resale value and may result in RedfinNow selling the home for a lower price
than anticipated or not being able to sell the home at all. Meanwhile, incurring more than budgeted costs would
adversely affect our investment return on purchased homes.
The net proceeds that Redfin Mortgage receives from its sale of mortgage loans that it originates may
not exceed the loan amount. Additionally, Redfin Mortgage may also be unable to sell its originated
loans at all. In that situation, Redfin Mortgage will need to service the loans and potentially foreclose on
the home by itself or through a third party, and either option could impose significant costs, time, and
resources on Redfin Mortgage. Redfin Mortgage’s inability to sell its originated loans could also expose
us to adverse market conditions affecting mortgage loans.
Redfin Mortgage intends to sell the mortgage loans that it originates to investors in the secondary
mortgage market. Redfin Mortgage's ability to sell its originated loans in the secondary market, and receive net
proceeds from the sale that exceed the loan amount, depends largely on there being sufficient liquidity in the
secondary market and its compliance with contracts with investors who have purchased the loans.
If Redfin Mortgage were unable to sell its originated loans, either initially or following a repurchase, then
it may need to establish a servicing platform or hire a third party to service the loans. Redfin Mortgage does not
currently have a robust servicing platform and establishing such a platform may result in significant costs and
require substantial time and resources from its management. Additionally, Redfin Mortgage may be unable to
retain a third-party servicer on economically feasible terms.
To the extent that Redfin Mortgage is unable to sell its originated loans, either initially or following a
repurchase, we would be exposed to adverse market conditions affecting mortgage loans. For example, we
may be required to write down the value of the loan, which reduces the amount of our current assets.
Additionally, if Redfin Mortgage borrowed under a warehouse credit facility for the loan, then it will be required to
repay the borrowed amount, which reduces our cash on hand that is available for other corporate uses. Finally,
if a homeowner were unable to make his or her mortgage payments, then we may be required to foreclose on
the home securing the loan. Redfin Mortgage does not currently have processes to foreclose a home, and it
may be unable to establish such processes or retain a third party on economically feasible terms to foreclose
the home. Furthermore, any proceeds from selling a foreclosed home may be significantly less than the
remaining amount of the loan due to Redfin Mortgage.
The growth of RentPath's business depends on its ability to attract property managers' advertising
spending.
RentPath's growth depends on advertising revenue generated primarily through property managers.
RentPath's ability to attract and retain advertisers may be adversely affected by any of the following factors:
•
•
•
a prolonged period of high occupancy within rental properties;
declining quantity and quality of renter leads it provides to property managers;
its inability to keep pace with changes in technology and features expected by renters when visiting an
online rental portal;
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•
•
its failure to offer an attractive return on investment to advertisers; and
the inability of property managers to evict tenants for delinquent rent payments.
RentPath does not have long-term contracts with many of its advertisers, and these advertisers may
choose to end their relationships with RentPath with little or no advance notice. As RentPath's existing
subscriptions for advertising terminate, it may not be successful in securing new subscriptions.
We may not realize the anticipated benefits from, and may incur substantial costs related to, our
acquisition of RentPath and our pending acquisition of Bay Equity.
We acquired RentPath on April 2, 2021, and we entered into an agreement to acquire Bay Equity on
January 10, 2022. The anticipated benefits of each acquisition may not come to fruition. We may also be
required to record impairment charges associated with each acquisition. Furthermore, integrating RentPath and
Bay Equity will be challenging and time consuming, and may subject us to additional costs that we have not
anticipated in evaluating the transaction.
Cybersecurity incidents could disrupt our business or result in the loss of critical and confidential
information.
Cybersecurity incidents directed at us or our third-party service providers can range from uncoordinated
individual attempts to gain unauthorized access to information technology systems to sophisticated and targeted
measures known as advanced persistent threats. Cybersecurity incidents are also constantly evolving,
increasing the difficulty of detecting and successfully defending against them. In the ordinary course of our
business, we and our third-party service providers collect and store sensitive data, including our proprietary
business information and intellectual property and that of our customers and employees, including personally
identifiable information. Additionally, we rely on third-parties and their security procedures for the secure
storage, processing, maintenance, and transmission of information that are critical to our operations. Despite
measures designed to prevent, detect, address, and mitigate cybersecurity incidents, such incidents may occur
to us or our third-party providers and, depending on their nature and scope, could potentially result in the
misappropriation, destruction, corruption, or unavailability of critical data and confidential or proprietary
information (our own or that of third parties, including personally identifiable information of our customers and
employees) and the disruption of business operations. Any real or perceived compromises to our security, or
that of our third-party providers, could cause customers to lose trust and confidence in us and stop using our
website and mobile applications. In addition, we may incur significant costs for remediation that may include
liability for stolen assets or information, repair of system damage, and compensation to customers, employees,
and business partners. We may also be subject to government enforcement proceedings and legal claims by
private parties.
We process, transmit, and store personal information, and unauthorized access to, or the unintended
release of, this information could result in a claim for damages, regulatory action, loss of business, or
unfavorable publicity.
We process, transmit, and store personal information to provide services to our customers and as an
employer. As a result, we are subject to certain contractual terms, as well as federal, state, and foreign laws and
regulations designed to protect personal information. While we take measures to protect the security and
privacy of this information, it is possible that our security controls over personal data and other practices we
follow may not prevent the unauthorized access to, or the unintended release of, personal information. If such
unauthorized access or unintended release occurred, we could suffer significant damage to our brand and
reputation, customers could lose confidence in the security and reliability of our services, and we could incur
significant costs to address and fix these security incidents. These incidents could also lead to lawsuits and
regulatory investigations and enforcement actions.
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We rely on third-party licensed technology, and the inability to maintain these licenses or errors in the
software we license could result in increased costs or reduced service levels.
We employ certain third-party software obtained under licenses from other companies in our
technology. Our reliance on this third-party software may become costly if the licensor increases the price for
the license or changes the terms of use and we cannot find commercially reasonable alternatives. Even if we
were to find an alternative, integration of our technology with new third-party software may require substantial
investment of our time and resources.
Any undetected errors or defects in the third-party software we license could prevent the deployment or
impair the functionality of our technology, delay new service offerings, or result in a failure of our website or
mobile application.
We use open source software in some aspects of our technology and may fail to comply with the terms
of one or more of these open source licenses.
Our technology incorporates software covered by open source licenses. The terms of various open
source licenses have not been interpreted by U.S. courts, and if they were interpreted, such licenses could be
construed in a manner that imposes unanticipated restrictions on our technology. If portions of our proprietary
software are determined to be subject to an open source license, we could be required to publicly release the
affected portions of our source code, re-engineer all or a portion of our technologies, or otherwise be limited in
our use of such software, each of which could reduce or eliminate the value of our technologies.
Moreover, our processes for controlling our use of open source software may not be effective. If we do
not comply with the terms of an open source software license, we could be required to seek licenses from third
parties to continue offering our services on terms that are not economically feasible, to re-engineer our
technology to remove or replace the open source software, to discontinue the use of certain technology if re-
engineering could not be accomplished on a timely basis, to pay monetary damages, to make generally
available the source code for our proprietary technology, or to waive certain intellectual property rights.
We may be unable to secure intellectual property protection for all of our technology and
methodologies, enforce our intellectual property rights, or protect our other proprietary business
information.
Our success and ability to compete depends in part on our intellectual property and our other
proprietary business information. To protect our proprietary rights, we rely on trademark, copyright, and patent
law, trade-secret protection, and contractual provisions and restrictions. However, we may be unable to secure
intellectual property protection for all of our technology and methodologies or the steps we take to enforce our
intellectual property rights may be inadequate. Furthermore, we may also be unable to protect our proprietary
business information from misappropriation.
If we are unable to secure intellectual property rights, our competitors could use our intellectual property
to market offerings similar to ours and we would have no recourse to enjoin or stop their actions. Additionally,
any of our intellectual property rights may be challenged by others and invalidated through administrative
processes or litigation. Moreover, even if we secured our intellectual property rights, others may infringe on our
intellectual property and we may be unable to successfully enforce our rights against the infringers because we
may be unaware of the infringement or our legal actions may not be successful. Finally, others may
misappropriate our proprietary business information, and we may be unaware of the misappropriation or unable
to enforce our legal rights in a cost-effective manner. If any of these events were to occur, our ability to compete
effectively would be impaired.
We may be unable to maintain and scale the technology underlying our offerings.
As the number of homebuyers and home sellers, agents, and listings shared on our website and mobile
application and the extent and types of data grow, our need for additional network capacity and computing
power will also grow. Operating our underlying technology systems is expensive and complex, and we could
experience operational failures. If we experience interruptions or failures in these systems for any reason, the
security and availability of our services and technologies could be affected.
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We are subject to a variety of federal, state and local laws, and our compliance with these laws, or the
enforcement of our rights under these laws, may increase our expenses, require management's
resources, or force us to change our business practices.
We are currently subject to a variety of, and may in the future become subject to additional, federal,
state, and local laws. The laws include, but are not limited to, those relating to real estate, brokerage, title,
mortgage, advertising, privacy and consumer protection, labor and employment, and intellectual property. These
laws and their related regulations may evolve frequently and may be inconsistent from one jurisdiction to
another. Additionally, certain of these laws and regulations were created for traditional real estate brokerages,
and it is unclear how they may affect us given our business model that is unlike traditional brokerages or certain
of our services that historically have not been offered by traditional brokerages.
These laws can be costly for us to comply with or enforce. Additionally, if we are unable to comply with
and become liable for violations of these laws, or if courts or regulatory bodies provide unfavorable
interpretations of existing regulations, our operations in affected markets may become prohibitively expensive,
consume significant amounts of management's time, or need to be discontinued.
We are subject to costs associated with defending and resolving proceedings brought by government
entities and claims brought by private parties.
We are from time to time involved in, and may in the future be subject to, government investigations or
enforcement actions and private third-party claims arising from the laws to which we are subject or the contracts
to which we are a party. Such investigations, actions, and claims include, but are not limited to, matters relating
to employment law (including misclassification), intellectual property, privacy and consumer protection, website
accessibility, the Real Estate Settlement Procedures Act of 1974, the Fair Housing Act of 1968 or other fair
housing statutes, cybersecurity incidents, data breaches, commercial or contractual disputes, and exposure to
COVID-19. They may also relate to ordinary-course brokerage disputes, including, but not limited to, failure to
disclose property defects, failure to meet client legal obligations, commission disputes, personal injury or
property damage claims, and vicarious liability based upon conduct of individuals or entities outside of our
control, including partner agents and third-party contractor agents. See Note 8 to our consolidated financial
statements for a discussion of pending third-party claims that we believe may be material to us.
Any such investigations, actions, or claims can be costly to defend or resolve, require significant time
from management, or result in negative publicity. Furthermore, to the extent we are unsuccessful in defending
an action or claim, we may be subject to civil or criminal penalties, including significant fines or damages, the
loss of ability to operate in a jurisdiction, or the need to change certain business practices (including
redesigning, or obtaining a license for, our technology or modifying or ceasing to offer certain services).
In August 2019, Devin Cook, who is one of our former associate agents, filed a complaint against us in
a California state court, alleging that we misclassified her as an independent contractor instead of an employee.
In September 2021, the California court denied our motion for summary judgment to dismiss her claims. To the
extent this California court or other courts (including state and federal courts in California where we face similar,
pending claims) ultimately decide against us on the issue of employee / independent contractor classification for
our associate agents, we may be required to pay significant damages and adopt certain changes in our
business practices. These changes may be costly and time-consuming to implement, entitle our associate
agents to the benefit of wage and hour laws, result in employment and withholding tax and benefit liabilities, and
cause associate agents to opt out of our platform given the loss of flexibility under an employment model.
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Risks Related to Our Indebtedness
We may not have sufficient cash flow to make the payments required by our convertible senior notes,
and a failure to make payments when due may result in the entire principal amount of the convertible
senior notes becoming due prior to the notes' maturity, which may result in our bankruptcy.
We are required to pay interest on our 2023 notes and 2027 notes on a semi-annual basis. In addition,
holders of our convertible senior notes have the right to require us to repurchase their notes upon the
occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the notes
to be repurchased, plus any accrued and unpaid interest. Furthermore, holders of our notes have the right to
convert their notes upon any of the conditions described below:
•
•
•
•
during any calendar quarter, if the last reported sale price of our common stock for at least 20 trading
days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and
including, the last trading day of the immediately preceding calendar quarter is greater than or equal to
130% of the conversion price of the notes on each applicable trading day;
during the five business day period after any five consecutive trading day period in which the trading
price per $1,000 principal amount of the notes for each trading day of the measurement period was less
than 98% of the product of the last reported sale price of our common stock and the conversion rate of
the notes on each such trading day;
if we call any or all of the notes for redemption, at any time prior to the close of business on the
scheduled trading day prior to the redemption date; or
upon the occurrence of specified corporate events.
If any of these conversion features under a tranche of our notes are triggered, then holders of such
notes will be entitled to convert the notes at any time during specified periods at their option. Upon conversion,
we will be required to make cash payments in respect of the notes being converted, unless we elect to deliver
solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any
fractional share). One of the conditional conversion features of our 2023 notes has been triggered and such
notes are convertible through at least March 31, 2022.
Our ability to make these payments depends on having sufficient cash on hand when the payments are
due. Our cash availability, in turn, depends on our future performance, which is subject to the other risks
described in this Item 1A. If we are unable to generate sufficient cash flow to make the payments when due,
then we may be required to adopt one or more alternatives, such as selling assets, refinancing the notes, or
raising additional capital. However, we may not be able to engage in any of these activities or engage in these
activities on desirable terms.
Our failure to make payments when due may result in an event of default under the indentures
governing our convertible senior notes and cause (i) with respect to our 2023 notes, the remaining $23,512,000
aggregate principal amount, (ii) with respect to our 2025 notes, the entire $661,250,000 aggregate principal
amount, and (iii) with respect to our 2027 notes, the entire $575,000 aggregate principal amount, plus, in each
case, any accrued and unpaid interest, to become due immediately and prior to the maturity date. Any such
acceleration of the principal amount could result in our bankruptcy. In a bankruptcy, the holders of our
convertible senior notes would have a claim to our assets that is senior to the claims of holders of our common
stock.
RedfinNow relies on a secured revolving credit facility to finance its purchase of certain homes.
RedfinNow intends to rely on proceeds from the sale of financed homes to repay amounts owed under
such facility, but in certain instances, such proceeds may be insufficient or unavailable to repay the
amounts owed.
Pursuant to a secured revolving credit facility with Goldman Sachs, RedfinNow Borrower, which is a
wholly owned subsidiary of Redfin Corporation, may borrow money to partially fund purchases of homes for our
properties business. RedfinNow Borrower has the option of repaying amounts owed with respect to a particular
financed home upon the sale of such home and using the proceeds from such sale. However, there is no
assurance the sale proceeds will equal or exceed the amounts owed.
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Additionally, in certain instances, RedfinNow Borrower may be required to repay amounts owed with
respect to a financed home prior to the sale of that home. For example, the amount that RedfinNow Borrower is
eligible to borrow for a home, which we refer to as the advance rate, depends, in part, on how long it has owned
that home. As RedfinNow Borrower owns a home past certain time periods, the advance rate decreases and it
becomes obligated to repay all or a portion of the borrowed funds. Additionally, a home must satisfy certain
criteria to be eligible for financing under the facility. If a financed home ceases to satisfy the criteria, then
RedfinNow Borrower must immediately repay all amounts owed with respect to the home. If either of these
scenarios occur, then RedfinNow Borrower will be unable to rely on the proceeds from the sale of the home for
repayment.
In the situations described above, RedfinNow Borrower must use its cash on hand to repay the
amounts owed. To the extent it does not have sufficient cash and is unable to make the required repayments,
then RedfinNow Borrower may default under the facility.
Our inability to comply with the terms of RedfinNow's secured revolving credit facility may adversely
affect our properties business and, in some instances, give the lenders recourse to Redfin Corporation
when the value of the assets securing the facility are insufficient to cover the amounts owed to the
lenders.
Borrowings under our secured revolving credit facility are secured by RedfinNow Borrower's assets,
including the financed homes, as well as the equity interests in RedfinNow Borrower. To the extent RedfinNow
Borrower is unable to make payments when due under the facility, or it or certain other Redfin entities are
unable to comply with the facility's ongoing obligations (including financial covenants of Redfin Corporation),
then an event of default may occur. An event of default would require RedfinNow Borrower to immediately repay
all amounts owned under the facility and cause RedfinNow Borrower to be unable to borrow from the facility. As
a result, our properties business will need to rely solely on our available cash to fund home purchases, and to
the extent cash is unavailable, our properties business would be unable to purchase the homes required for its
growth. Furthermore, an event of default may result in Goldman Sachs owning RedfinNow Borrower's equity
interests or its assets, including any financed homes and cash held by RedfinNow Borrower, and result in our
properties business losing a portion of its assets.
While the lenders' recourse in most situations following an event of default is only to RedfinNow
Borrower or its assets, Redfin Corporation has guaranteed amounts owed under the facility and certain
expenses in situations involving "bad acts" by a Redfin entity. To the extent a Redfin entity commits a "bad act,"
then Redfin Corporation may become obligated to pay such amounts owed or certain expenses.
If Redfin Mortgage is unable to obtain sufficient financing through warehouse credit facilities to fund its
origination of mortgage loans, then we may be unable to grow our mortgage origination business.
Redfin Mortgage relies on borrowings from warehouse credit facilities to fund substantially all of the
mortgage loans that it originates. See Note 15 to our consolidated financial statements for the current terms of
these facilities. To grow its business, Redfin Mortgage depends, in part, on having sufficient borrowing capacity
under its current facilities or obtaining additional borrowing capacity under new facilities. A current facility may
become unavailable if Redfin Mortgage fails to comply with the facility's ongoing obligations, including failing to
satisfy financial covenants applicable to it. New facilities may be not be available on terms acceptable to us.
Additionally, each of Redfin Mortgage's warehouse facilities is uncommitted, which means that the
lender is not obligated to extend a loan even if Redfin Mortgage satisfies all of the borrowing conditions.
Furthermore, under Redfin Mortgage's facility with Flagstar, Flagstar may demand repayment of outstanding
borrowings at any time, even if Redfin Mortgage has not defaulted under the facility.
If Redfin Mortgage were unable to secure sufficient borrowing capacity or if a lender decides to not
extend a loan (or in the case of the Flagstar facility, demand repayment of a loan) even when Redfin Mortgage
is in compliance with the facility's terms, then Redfin Mortgage may need to rely on our cash on hand to
originate mortgage loans. If this cash were unavailable, then Redfin Mortgage may be unable to maintain or
increase the amount of mortgage loans that it originates, which will adversely affect its growth.
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The cross-acceleration and cross-default provisions in the agreements governing our current
indebtedness may result in an immediate obligation to repay all of our outstanding indebtedness.
The indentures governing our convertible senior notes and our warehouse credit facilities contain cross-
acceleration provisions while our secured revolving credit facility contains a cross-default provision. These
provisions could have the effect of creating an event of default under an agreement for our indebtedness,
despite our compliance with that agreement, due solely to an event of default or failure to pay amounts owed
under another agreement for our indebtedness. Accordingly, all or a significant portion of our outstanding
indebtedness could become immediately payable due solely to our failure to comply with the terms of a single
agreement governing our indebtedness.
The transition from the London inter-bank offered rate ("LIBOR") to the secured overnight financing rate
("SOFR") under our secured revolving credit facility may impact our borrowing costs, and the upcoming
discontinuance of one-month LIBOR may result in interest payments under certain of our warehouse
credit facilities being calculated using another reference rate.
Beginning on January 1, 2022, our secured revolving credit facility with Goldman Sachs calculates the
interest rate for borrowings under that facility using compounded SOFR, including a SOFR spread adjustment,
in place of the prior LIBOR-based index. Compounded SOFR and the spread adjustment could result in higher
interest payments by us and might not otherwise correlate over time with the payments that would have been
made on borrowings under the prior LIBOR standard.
The administrator of LIBOR has announced that it will cease publishing one-month LIBOR rates after
June 30, 2023. Certain of our warehouse credit facilities reference one-month LIBOR to determine the interest
rate for our borrowings under the facilities. Although the Alternative Reference Rates Committee has endorsed
SOFR as its preferred replacement for LIBOR, the market transition away from LIBOR towards SOFR may be
complicated, and there is no guarantee that SOFR will become a widely accepted benchmark in place of
LIBOR. The transition process may involve, among other things, increased volatility and illiquidity in markets for
instruments that currently rely on LIBOR and may result in increased borrowing costs or uncertainty under
certain of our warehouse credit facilities.
Risks Related to Our Convertible Preferred Stock
We may be required to make cash payments to our preferred stockholders before our preferred stock's
final redemption date of November 30, 2024, and any cash payments may materially reduce our net
working capital.
On November 30, 2024, we will be required to redeem all shares of our convertible preferred stock then
outstanding and pay accrued dividends on those shares. A preferred stockholder has the option of receiving
cash, shares of our common stock, or a combination of cash and shares for this redemption. However, before
this redemption, we may be required to make cash payments to our preferred stockholders in the two situations
described below, and any such cash payments will reduce our cash available for other corporate uses and may
materially reduce our net working capital.
Dividends accrue on each $1,000 of our outstanding convertible preferred stock at a rate of 5.5% per
year and are payable quarterly. Assuming we satisfy the "equity conditions" (as defined in the certificate of
designation governing our preferred stock), we will pay dividends in shares of our common stock. These
conditions principally include (i) we have ensured the liquidity and transferability of our common stock held by
the preferred stockholders, (ii) we have issued common stock and paid cash to the preferred stockholders, as
required by the certificate of designation, (iii) we are not in bankruptcy or have had a bankruptcy proceeding
instituted against us, and (iv) we have not breached an agreement that governs the preferred stockholders'
rights with respect to the preferred stock and such breach materially and adversely impacts our business or a
preferred stockholder's economic benefits under the agreement. However, if we fail to satisfy these "equity
conditions," then we must pay cash dividends in amount equal to (i) the number of shares of our common stock
that we would have issued as dividends, assuming we satisfied the conditions, multiplied by (ii) the volume-
weighted-average closing price of our common stock for the ten trading days preceding the date the dividends
are payable.
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A preferred stockholder has the right to require us to redeem its preferred stock for cash following the
occurrence of a "triggering event" (as defined in the certificate of designation governing our preferred stock).
These events are similar in nature to the "equity conditions" described above. The cash payment, for each
share of preferred stock, would equal the sum of (i) $1,000, (ii) any accrued dividends on the preferred stock,
and (iii) an amount equal to all scheduled dividend payments (excluding any accrued dividends) on the
preferred stock for all remaining dividend periods from the date the preferred stockholder requests redemption
through November 29, 2024.
Risks Relating to Ownership of Our Common Stock
Our restated certificate of incorporation designates the Court of Chancery of the State of Delaware and
the U.S. federal district courts as the exclusive forums for certain types of actions that may be initiated
by our stockholders. These provisions may limit a stockholder's ability to bring a claim in a judicial
forum that it finds favorable for disputes with us or our directors, officers, or employees, which may
discourage lawsuits with respect to such claims.
Our restated certificate of incorporation provides that, unless we consent in writing to an alternative
forum, the Court of Chancery of the State of Delaware (the "Court of Chancery") will be the sole and exclusive
forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach
of a fiduciary duty owed by any of our directors, officers, or employees to us or our stockholders, (iii) any action
asserting a claim arising pursuant to any provision of the DGCL, our restated certificate of incorporation, or our
restated bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our restated certificate of
incorporation or our restated bylaws, or (iv) any action asserting a claim that is governed by the internal affairs
doctrine. This exclusive forum provision does not apply to actions arising under the Securities Exchange Act of
1934, or, as described below, the Securities Act of 1933.
Our restated certificate of incorporation further provides that, unless we consent in writing to an
alternative forum, the U.S. federal district courts will be the exclusive forum for any complaint asserting a cause
of action arising under the Securities Act of 1933. Notwithstanding this provision, stockholders will not be
deemed to have waived our compliance with the federal securities laws and the rules and regulations
thereunder.
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Table of Contents
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
None.
Item 3. Legal Proceedings
See "Legal Proceedings" under Note 8 to our consolidated financial statements for a discussion of our
material, pending legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Information, Holders of Record, and Dividends
Our common stock is listed on The Nasdaq Global Select Market under the symbol “RDFN.”
As of February 10, 2022, we had 213 holders of record of our common stock.
The holders of our convertible preferred stock are entitled to dividends, which accrue daily based on a
360-day fiscal year at a rate of 5.5% per annum based on the issue price and are payable quarterly in arrears
on the first business day following the end of each calendar quarter. Assuming we satisfy certain conditions, we
will pay dividends in shares of common stock at a rate of the dividend payable divided by $17.95. If we do not
satisfy such conditions, we will pay dividends in a cash amount equal to (1) the dividend shares otherwise
issuable on the dividends multiplied by (2) the volume-weighted average closing price of our common stock for
the ten trading days preceding the date the dividends are payable. Except for the foregoing, we have no
intention of paying cash dividends in the foreseeable future.
Stock Performance Graph
The graph below compares the cumulative total return of a $100 investment in our common stock with
the cumulative total return of the same investment in the S&P 500 Index and the RDG Composite Index. The
period shown commences on July 28, 2017, which was our common stock's first day of trading after our initial
public offering ("IPO"), and ends on December 31, 2021.
Unregistered Sales of Securities
During the period covered by this annual report, we did not sell any equity securities that were not
registered under the Securities Act of 1933.
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Purchases of Equity Securities
During the quarter ended December 31, 2021, there were no purchases of our common stock by or on
behalf of us or any of our affiliated purchasers, as such term is defined in Rule 10b-18(a)(3) under the Securities
Exchange Act of 1934.
Item 6. [Reserved]
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read
together with our consolidated financial statements, the accompanying notes, and other information included in
this annual report. In particular, the risk factors contained in Item 1A may reflect trends, demands,
commitments, events, or uncertainties that could materially impact our results of operations and liquidity and
capital resources.
The following discussion contains forward-looking statements, such as statements regarding our future
operating results and financial position, our business strategy and plans, our market growth and trends, and our
objectives for future operations. See "Note Regarding Forward-Looking Statements" for more information about
relying on these forward-looking statements. The following discussion also contains information using industry
publications. See "Note Regarding Industry and Market Data" for more information about relying on these
industry publications.
When we use the term "basis points" in the following discussion, we refer to units of one‑hundredth of
one percent.
Overview
We help people buy and sell homes. Representing customers in over 100 markets in the United States
and Canada, we are a residential real estate brokerage. We pair our own agents with our own technology to
create a service that is faster, better, and costs less. We meet customers through our listings-search website
and mobile application.
We use the same combination of technology and local service to originate mortgage loans and offer title
and settlement services; we also buy homes directly from homeowners who want an immediate sale, taking
responsibility for selling the home while the original owner moves on. Beginning in April 2021, we also offer
digital platforms to connect consumers with available apartments and houses for rent.
Our mission is to redefine real estate in the consumer’s favor.
Key Business Metrics
In addition to the measures presented in our consolidated financial statements, we use the following
key metrics to evaluate our business, develop financial forecasts, and make strategic decisions.
Monthly average visitors (in thousands)
Real estate services transactions
Brokerage
Partner
Total
Real estate services revenue per transaction
Brokerage
Partner
Aggregate
Aggregate home value of real estate services transactions (in millions)
U.S. market share by value
Revenue from top-10 Redfin markets as a percentage of real estate services
revenue
Average number of lead agents
RedfinNow Homes Sold
Revenue per RedfinNow Home Sold
Year Ended December 31,
2021
47,113
2020
42,862
2019
33,473
76,680
17,899
94,579
60,510
15,290
75,800
11,076
$
10,040
$
3,020
9,551
2,858
8,591
53,235
11,939
65,174
9,326
2,267
8,033
52,503
$
37,359
$
30,532
1.17 %
1.00 %
0.93 %
$
$
62 %
2,396
1,451
63 %
1,757
453
63 %
1,553
503
$
594,268
$
462,883
$
478,146
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Monthly Average Visitors
The number of, and growth in, visitors to our website and mobile application are important leading
indicators of our business activity because these channels are the primary ways we meet customers. The
number of visitors is influenced by, among other things, market conditions that affect interest in buying or selling
homes, the level and success of our marketing programs, seasonality, and how our website appears in search
results. We believe we can continue to increase visitors, which helps our growth.
Given the lengthy process to buy or sell a home, a visitor during one month may not convert to a
revenue-generating customer until many months later, if at all.
When we refer to "monthly average visitors" for a particular period, we are referring to the average
number of unique visitors to our website and our mobile applications for each of the months in that period, as
measured by Google Analytics, a product that provides digital marketing intelligence. Google Analytics tracks
visitors using cookies, with a unique cookie being assigned to each browser or mobile application on a device.
For any given month, Google Analytics counts all of the unique cookies that visited our website and mobile
applications during that month. Google Analytics considers each unique cookie as a unique visitor. Due to third-
party technological limitations, user software settings, or user behavior, it is possible that Google Analytics may
assign a unique cookie to different visits by the same person to our website or mobile application. In such
instances, Google Analytics would count different visits by the same person as separate visits by unique
visitors. Accordingly, reliance on the number of unique cookies counted by Google Analytics may overstate the
actual number of unique persons who visit our website or our mobile applications for a given month.
Our monthly average visitors exclude visitors to RentPath's websites and mobile applications.
Real Estate Services Transactions
We record a brokerage real estate services transaction when one of our lead agents represented the
homebuyer or home seller in the purchase or sale, respectively, of a home. We record a partner real estate
services transaction (i) when one of our partner agents represented the homebuyer or home seller in the
purchase or sale, respectively, of a home or (ii) when a Redfin customer sold his or her home to a third-party
institutional buyer following our introduction of that customer to the buyer. We include a single transaction twice
when our lead agents or our partner agents serve both the homebuyer and the home seller of the transaction.
Additionally, when one of our lead agents represents RedfinNow in its sale of a home, we include that
transaction as a brokerage real estate services transaction.
Increasing the number of real estate services transactions is critical to increasing our revenue and, in
turn, to achieving profitability. Real estate services transaction volume is influenced by, among other things, the
pricing and quality of our services as well as market conditions that affect home sales, such as local inventory
levels and mortgage interest rates. Real estate services transaction volume is also affected by seasonality and
macroeconomic factors.
Real Estate Services Revenue per Transaction
Real estate services revenue per transaction, together with the number of real estate services
transactions, is a factor in evaluating revenue growth. We also use this metric to evaluate pricing changes.
Changes in real estate services revenue per transaction can be affected by, among other things, our pricing, the
mix of transactions from homebuyers and home sellers, changes in the value of homes in the markets we serve,
the geographic mix of our transactions, and the transactions we refer to partner agents and any third-party
institutional buyer. We calculate real estate services revenue per transaction by dividing brokerage, partner, or
aggregate revenue, as applicable, by the corresponding number of real estate services transactions in any
period.
We generally generate more real estate services revenue per transaction from representing
homebuyers than home sellers. However, we believe that representing home sellers has unique strategic value,
including the marketing power of yard signs and digital marketing campaigns, and the market effect of
controlling listing inventory. To keep revenue per brokerage transaction about the same from year to year, we
expect to reduce our commission refund to homebuyers if a greater portion of our brokerage transactions come
from home sellers.
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From 2020 to 2021, the percentage of brokerage transactions from home sellers was essentially
unchanged at approximately 44%.
Aggregate Home Value of Real Estate Services Transactions
The aggregate home value of brokerage and partner real estate services transactions is an important
indicator of the health of our business, because our revenue is largely based on a percentage of each home’s
sale price. This metric is affected chiefly by the number of customers we serve, but also by changes in home
values in the markets we serve. We compute this metric by summing the sale price of each home represented
in a real estate services transaction. We include the value of a single transaction twice when our lead agents or
our partner agents serve both the homebuyer and home seller of the transaction.
U.S. Market Share by Value
Increasing our U.S. market share by value is critical to our ability to grow our business and achieve
profitability over the long term. We believe there is a significant opportunity to increase our share in the markets
we currently serve.
We calculate our market share by aggregating the home value of brokerage and partner real estate
services transactions. Then, in order to account for both the sell- and buy-side components of each transaction,
we divide that value by two-times the aggregate value of U.S. home sales. We calculate the aggregate value of
U.S. home sales by multiplying the total number of U.S. existing home sales by the mean sale price of these
homes, each as reported by the National Association of REALTORS® ("NAR"). NAR data for the most recent
period is preliminary and may subsequently be updated by NAR.
Revenue from Top-10 Redfin Markets as a Percentage of Real Estate Services Revenue
Our top-10 markets by real estate services revenue are the metropolitan areas of Boston, Chicago,
Denver (including Boulder and Colorado Springs), Los Angeles (including Santa Barbara), Maryland, Northern
Virginia, Portland (including Bend), San Diego, San Francisco, and Seattle. This metric is an indicator of the
geographic concentration of our real estate services segment. We expect our revenue from top-10 markets to
decline as a percentage of our total real estate services revenue over time.
Average Number of Lead Agents
The average number of lead agents, in combination with our other key metrics such as the number of
brokerage transactions, is a basis for calculating agent productivity and is one indicator of the potential future
growth of our business. We systematically evaluate traffic to our website and mobile application and customer
activity to anticipate changes in customer demand, helping determine when and where to hire lead agents.
We calculate the average number of lead agents by taking the average of the number of lead agents at
the end of each month included in the period.
RedfinNow Homes Sold
The number of homes sold by RedfinNow is an indicator for investors to understand the underlying
transaction volume growth of our RedfinNow business. This number is influenced by, among other things, the
level and quality of our homes available for sale inventory and market conditions that affect home sales, such as
local inventory levels and mortgage interest rates.
Revenue per RedfinNow Home Sold
Revenue per RedfinNow home sold, together with the number of RedfinNow homes sold, is a factor in
evaluating revenue growth. Changes in revenue per RedfinNow home sold can be affected by, among other
things, the geographic mix of home sales, the types and sizes of homes that it had previously purchased,
pricing of homes listed for sale, and changes in the value of homes in the markets it serves. For any period, we
calculate revenue per RedfinNow home sold by dividing revenue from sales of homes by RedfinNow by the
number of homes sold by RedfinNow during that period.
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Components of Our Results of Operations
Revenue
We generate revenue primarily from commissions and fees charged on each real estate services
transaction closed by our lead agents or partner agents, from the sale of homes, and from subscription-based
product offerings for our rentals business.
Real Estate Services Revenue
Brokerage Revenue—Brokerage revenue includes our offer and listing services, where our lead
agents represent homebuyers and home sellers. We recognize commission-based brokerage revenue upon
closing of a brokerage transaction, less the amount of any commission refunds, closing-cost reductions, or
promotional offers that may result in a material right. Brokerage revenue is affected by the number of brokerage
transactions we close, the mix of brokerage transactions, home-sale prices, commission rates, and the amount
we give to customers.
Partner Revenue—Partner revenue consists of fees paid to us from partner agents or under other
referral agreements, less the amount of any payments we make to homebuyers and home sellers. We
recognize these fees as revenue on the closing of a transaction. Partner revenue is affected by the number of
partner transactions closed, home-sale prices, commission rates, and the amount we refund to customers. If the
portion of customers we introduce to our own lead agents increases, we expect the portion of revenue closed by
partner agents to decrease.
Properties Revenue
Properties Revenue—Properties revenue consists of revenue earned when we sell homes that we
previously bought directly from homeowners. Properties revenue is recorded at closing on a gross basis,
representing the sales price of the home.
Rentals Revenue
Rentals Revenue—Rentals revenue is primarily composed of subscription-based product offerings for
internet listing services, as well as lead management and digital marketing solutions.
Mortgage Revenue
Mortgage Revenue—Mortgage revenue includes fees earned from mortgage origination services.
Other Revenue
Other Revenue—Other services revenue includes fees earned from title settlement services, Walk
Score data services, and advertising. Substantially all fees and revenue from other services are recognized
when the service is provided.
Intercompany Eliminations
Intercompany Eliminations—Revenue earned from transactions between operating segments are
eliminated in consolidating our financial statements. Intercompany transactions primarily consist of services
performed from our real estate services segment for our properties segment.
Cost of Revenue and Gross Margin
Cost of revenue consists primarily of personnel costs (including base pay, benefits, and stock-based
compensation), transaction bonuses, home-touring and field expenses, listing expenses, home costs related to
our properties segment, customer fulfillment costs related to our rentals segment, office and occupancy
expenses, and depreciation and amortization related to fixed assets and acquired intangible assets. Home costs
related to our properties segment include home purchase costs, capitalized improvements, selling expenses
directly attributable to the transaction, and home maintenance expenses.
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Table of Contents
Gross profit is revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of
revenue. Our gross margin has and will continue to be affected by a number of factors, but the most important
are the mix of revenue from our relatively higher-gross-margin real estate services segment and our relatively
lower-gross-margin properties segment, real estate services revenue per transaction, agent and support-staff
productivity, personnel costs and transaction bonuses, and, for properties, the home purchase costs.
Operating Expenses
Technology and Development
Our primary technology and development expenses are building software for our customers, lead
agents, and support staff to work together on a transaction, and building a website and mobile application to
meet customers looking to move. These expenses primarily include personnel costs (including base pay,
bonuses, benefits, and stock-based compensation), data licenses, software and equipment, and infrastructure
such as for data centers and hosted services. The expenses also include amortization of capitalized internal-
use software and website and mobile application development costs as well as amortization of acquired
intangible assets. We expense research and development costs as incurred and record them in technology and
development expenses.
Marketing
Marketing expenses consist primarily of media costs for online and offline advertising, as well as
personnel costs (including base pay, benefits, and stock-based compensation).
General and Administrative
General and administrative expenses consist primarily of personnel costs (including base pay, benefits,
and stock-based compensation), facilities costs and related expenses for our executive, finance, human
resources, and legal organizations, depreciation related to our fixed assets, and fees for outside services.
Outside services are principally comprised of external legal, audit, and tax services. For our rentals business,
personnel costs include employees in the sales department. These employees are responsible for attracting
potential rental properties and agreeing to contract terms, but they are not responsible for delivering a service to
the rental property.
Interest Income, Interest Expense, Income Tax Benefit, and Other Income (Expense), Net
Interest Income
Interest income consists primarily of interest earned on our cash, cash equivalents, and investments.
Interest Expense
Interest expense consists primarily of interest payable on our convertible senior notes and the
amortization of debt discounts and issuance cost related to our convertible senior notes. See Note 15 to our
consolidated financial statements for information regarding interest on our convertible senior notes.
Interest expense also includes interest on borrowings and the amortization of debt issuance costs
related to our secured revolving credit facility. See Note 15 to our consolidated financial statements for
information regarding interest for the facility.
Income Tax Benefit
Income tax benefit primarily relates to the partial release of our valuation allowance as a result of the
intangible assets we acquired in connection with acquiring RentPath.
Other Income (Expense), Net
Other income (expense), net consists primarily of realized and unrealized gains and losses on
investments. See Note 4 to our consolidated financial statements for information regarding unrealized losses on
our investments.
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Table of Contents
Results of Operations
The following tables set forth our results of operations for the periods presented and as a percentage of
our revenue for those periods.
Revenue
Cost of revenue(1)
Gross profit
Operating expenses:
Technology and development(1)
Marketing(1)
General and administrative(1)
Total operating expenses
(Loss) income from operations
Interest income
Interest expense
Income tax benefit
Other income (expense), net
Net loss
(1) Includes stock-based compensation as follows:
Cost of revenue
Technology and development
Marketing
General and administrative
Total
Revenue
Cost of revenue(1)
Gross profit
Operating expenses:
Technology and development(1)
Marketing(1)
General and administrative(1)
Total operating expenses
(Loss) income from operations
Interest income
Interest expense
Income tax benefit
Other income (expense), net
Net loss
Year Ended December 31,
2021
2020
2019
$
1,922,765 $
886,093 $
(in thousands)
1,518,945
403,820
156,718
138,740
218,315
513,773
(109,953)
635
653,983
232,110
84,297
54,881
92,140
231,318
792
2,074
(11,762)
(19,495)
6,107
5,360
—
(1,898)
779,796
635,693
144,103
69,765
76,710
76,874
223,349
(79,246)
7,146
(8,928)
—
223
$
(109,613) $
(18,527) $
(80,805)
Year Ended December 31,
2021
2020
2019
$
13,614
$
8,844
$
(in thousands)
23,275
2,350
15,483
16,564
1,569
9,996
$
54,722
$
36,973
$
6,087
12,362
1,418
7,947
27,814
Year Ended December 31,
2021
2020
2019
(as a percentage of revenue)
100.0 %
79.0
21.0
8.2
7.2
11.4
26.8
(5.8)
0.0
(0.6)
0.3
0.3
(5.8) %
100.0 %
73.8
26.2
9.5
6.2
10.4
26.1
0.1
0.2
(2.2)
—
(0.2)
(2.1) %
100.0 %
81.5
18.5
8.9
9.8
9.9
28.6
(10.1)
0.9
(1.1)
—
0.0
(10.3) %
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Table of Contents
(1) Includes stock-based compensation as follows:
Cost of revenue
Technology and development
Marketing
General and administrative
Total
Comparison of the Years Ended December 31, 2021 and 2020
Year Ended December 31,
2021
2020
2019
(as a percentage of revenue)
0.7 %
1.2
0.1
0.8
2.8 %
1.0 %
1.9
0.2
1.1
4.2 %
0.8 %
1.6
0.2
1.0
3.6 %
Revenue
Real estate services
Brokerage
Partner
Total real estate services
Properties
Rentals
Mortgage
Other
Intercompany elimination
Total revenue
Percentage of revenue
Real estate services
Brokerage
Partner
Total real estate services
Properties
Rentals
Mortgage
Other
Intercompany elimination
Total revenue
Year Ended December 31,
Change
2021
2020
Dollars
Percentage
(in thousands, except percentages)
$
849,288
$
607,513
$
54,046
903,334
880,653
121,877
19,818
13,609
(16,526)
43,695
651,208
209,686
—
15,835
12,377
(3,013)
241,775
10,351
252,126
670,967
121,877
3,983
1,232
(13,513)
$
1,922,765
$
886,093
$
1,036,672
40 %
24
39
320
n/a
25
10
448
117
44.2 %
2.8
47.0
45.8
6.3
1.0
0.8
(0.9)
100.0 %
68.6 %
4.9
73.5
23.7
n/a
1.8
1.4
(0.4)
100.0 %
In 2021, revenue increased by $1,036.7 million, or 117%, as compared with 2020. Included in the
increase was $121.9 million resulting from our acquisition of RentPath, where there were no such revenues in
2020. Excluding these revenues from RentPath, this increase in revenue was primarily attributable to a $671.0
million increase in properties revenue and a $252.1 million increase in real estate services revenue. Properties
revenue increased 320%, primarily driven by a 220% increase in RedfinNow homes sold and a 28% increase in
revenue per RedfinNow home sold. These increases are largely due to our properties business's expansion,
greater customer awareness of that business, and COVID-19's impacts on that business during the prior period.
Brokerage revenue increased by $241.8 million and partner revenue increased by $10.4 million. Brokerage
revenue increased 40% during the period, driven by a 27% increase in brokerage transactions and a 10%
increase in brokerage revenue per transaction. We believe the increase in brokerage transactions was
attributable to higher levels of customer awareness of Redfin and increasing customer demand, while the
increase in brokerage revenue per transaction was driven primarily by increasing home values.
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Table of Contents
Cost of Revenue and Gross Margin
Year Ended December 31,
Change
2021
2020
Dollars
Percentage
(in thousands, except percentages)
Cost of revenue
Real estate services
Properties
Rentals
Mortgage
Other
Intercompany elimination
Total cost of revenue
Gross profit
Real estate services
Properties
Rentals
Mortgage
Other
$
603,320
$
417,140
$
870,052
21,739
26,096
14,264
(16,526)
214,382
—
15,627
9,847
(3,013)
$
1,518,945
$
653,983
$
$
300,014
$
234,068
$
10,601
100,138
(6,278)
(655)
(4,696)
—
208
2,530
186,180
655,670
21,739
10,469
4,417
(13,513)
864,962
65,946
15,297
100,138
(6,486)
(3,185)
Total gross profit
$
403,820
$
232,110
$
171,710
Gross margin (percentage of revenue)
Real estate services
Properties
Rentals
Mortgage
Other
Total gross margin
33.2 %
1.2
82.2
(31.7)
(4.8)
21.0
35.9 %
(2.2)
n/a
1.3
20.4
26.2
45 %
306
n/a
67
45
448
132
28 %
(326)
n/a
(3,118)
(126)
74
In 2021, total cost of revenue increased by $865.0 million, or 132%, as compared with 2020. Included in
the increase was $21.7 million resulting from our acquisition of RentPath, and there were no such expenses in
2020. Excluding these expenses from RentPath, this increase in cost of revenue was primarily attributable to (1)
a $590.6 million increase in home purchase costs and related capitalized improvements by our properties
business, due to more RedfinNow homes having been sold, and (2) a $168.7 million increase in personnel costs
and transaction bonuses, due to increased headcount and increased brokerage transactions, respectively.
Total gross margin decreased 520 basis points as compared with 2020, driven primarily by the relative
growth of our properties business compared to our real estate services and other businesses, and decreases in
real estate services, mortgage, and other gross margin. This was partially offset by the increase in properties
gross margin, and our acquisition of RentPath, which comprises our rentals business.
In 2021, real estate services gross margin decreased 270 basis points as compared with 2020. This
was primarily attributable to a 230 basis point increase in personnel costs and transaction bonuses and a 140
basis point increase in home-touring and field expenses, each as a percentage of revenue. This was partially
offset by a 50 basis point decrease in listing expenses, and a 40 basis point reduction in occupancy and office
expenses, each as a percentage of revenue.
In 2021, properties gross margin increased 340 basis points as compared with 2020. This was primarily
attributable to a 210 basis point decrease in home purchase costs and related capitalized improvements, and a
120 basis point decrease in personnel costs and transaction bonuses, each as a percentage of revenue.
In 2021, mortgage gross margin decreased by 3,300 basis points. This was primarily attributable to a
2,690 basis point increase in personnel costs and transaction bonuses as a percentage of revenue.
In 2021, other gross margin decreased by 2,520 basis points. This was primarily attributable to a 2,620
basis point increase in personnel costs and transaction bonuses as a percentage of revenue.
29
Table of Contents
Operating Expenses
Year Ended December 31,
Change
2021
2020
Dollars
Percentage
(in thousands, except percentages)
Technology and development
$
156,718
$
138,740
218,315
$
84,297
54,881
92,140
72,421
83,859
126,175
282,455
86 %
153
137
122
Marketing
General and administrative
Total operating expenses
Percentage of revenue
Technology and development
Marketing
General and administrative
Total operating expenses
$
513,773
$
231,318
$
8.2 %
7.2
11.4
26.8 %
9.5 %
6.2
10.4
26.1 %
In 2021, technology and development expenses increased by $72.4 million, or 86%, as compared with
2020. Included in the increase was $39.0 million resulting from our acquisition of RentPath, and there were no
such expenses in 2020. Excluding these expenses from RentPath, the increase was primarily attributable to a
$26.4 million increase in personnel costs due to increased headcount.
In 2021, marketing expenses increased by $83.9 million, or 153%, as compared with 2020. Included in
the increase was $36.1 million resulting from our acquisition of RentPath, and there were no such expenses in
2020. Excluding these expenses from RentPath, the increase was primarily attributable to a $43.0 million
increase in marketing media costs as we expanded advertising.
In 2021, general and administrative expenses increased by $126.2 million, or 137%, as compared with
2020. Included in the increase was $71.5 million resulting from our acquisition of RentPath, and there were no
such expenses in 2020. Excluding these expenses from RentPath, the increase was primarily attributable to a
$30.0 million increase in personnel costs due to increased headcount, an $8.9 million increase in transaction
costs from our acquisition of RentPath and our proposed acquisition of Bay Equity, and a $7.0 million increase
in advertising campaign and contractor expenses for recruiting employees and independent contractors. This
was partially offset by a $6.5 million decrease in restructuring expenses, as we had no such restructuring
expenses in 2021.
Interest Income, Interest Expense, Income Tax Benefit, and Other Income (Expense), Net
Year Ended December 31,
Change
2021
2020
Dollars
Percentage
Interest income
Interest expense
Income tax benefit
Other income (expense), net
Interest income, interest expense, income tax benefit,
and other income (expense), net
$
Percentage of revenue
Interest income
Interest expense
Income tax benefit
Other income (expense), net
Interest income, interest expense, income tax benefit,
and other income (expense), net
$
635
$
2,074
$
(1,439)
(in thousands, except percentages)
(11,762)
6,107
5,360
(19,495)
—
(1,898)
7,733
6,107
7,258
340
$
(19,319)
$
19,659
0.0 %
(0.6)
0.3
0.3
0.0 %
0.2 %
(2.2)
—
(0.2)
(2.2) %
(69) %
40
n/a
(382)
102
In 2021, interest income, interest expense, income tax benefit, and other income (expense), net
increased by $19.7 million as compared to the same period in 2020.
Interest income decreased by $1.4 million primarily due lower interest rates on our cash, cash
equivalents, and investments compared to 2020.
30
Table of Contents
Interest expense decreased by $7.7 million due primarily to the implementation of ASU 2020-06, which
eliminates the liability and equity separation models for convertible instruments. As a result, we did not incur an
expense for the accretion of the equity portion of our convertible senior notes during 2021. See Note 1 to our
consolidated financial statements for more information on our adoption of this accounting standard.
Income tax benefit increased by $6.1 million primarily due to a deferred tax liability created through the
RentPath acquisition, and such deferred tax liability was used to realize certain deferred tax assets against
which we had previously recorded a full valuation allowance. We did not have any income tax benefit during
2020. See Note 14 to our consolidated financial statements.
Other income (expense), net increased by $7.3 million primarily due to (1) recording the fair value of
one of our investments during 2021, where we did not have this recording during 2020, and (2) writing down the
fair value of another of our investments during 2020, where we did not have this write down during 2021. See
Note 4 to our consolidated financial statements for more information on our fair value recording.
Comparison of the Years Ended December 31, 2020 and 2019
Revenue
Real estate services
Brokerage
Partner
Total real estate services
Properties
Mortgage
Other
Intercompany elimination
Total revenue
Percentage of revenue
Real estate services
Brokerage
Partner
Total real estate services
Properties
Mortgage
Other
Intercompany elimination
Total revenue
Year Ended December 31,
Change
2020
2019
Dollars
Percentage
(in thousands, except percentages)
$
607,513
$
496,480
$
43,695
651,208
209,686
15,835
12,377
(3,013)
27,060
523,540
240,507
6,097
11,537
(1,885)
111,033
16,635
127,668
(30,821)
9,738
840
(1,128)
$
886,093
$
779,796
$
106,297
22 %
61
24
(13)
160
7
60
14
68.6 %
63.6 %
4.9
73.5
23.7
1.8
1.4
(0.4)
100.0 %
3.5
67.1
30.8
0.8
1.5
(0.2)
100.0 %
In 2020, revenue increased by $106.3 million, or 14%, as compared with 2019. This increase in
revenue was primarily attributable to a $127.7 million increase in real estate services revenue, and a $30.8
million decrease in properties revenue. Brokerage revenue increased by $111.0 million, and partner revenue
increased by $16.6 million. Brokerage revenue increased 22% during the period, driven by a 14% increase in
brokerage transactions and an 8% increase in brokerage revenue per transaction. We believe this increase in
brokerage transactions was attributable to higher levels of customer awareness of Redfin and increasing
customer demand. Mortgage revenue increased $9.7 million, or 160%, as compared with 2019. Other revenue
increased $0.8 million, or 7%, as compared with 2019. This was partially offset by a $30.8 million decrease in
properties revenue. Properties revenue decreased 13%, driven by a 10% decrease in properties transactions
and a 3% decrease in properties revenue per transaction. Properties transactions decreased during the period,
because we had lower average inventory, due in part to pausing making new offers to purchase homes from
mid-March to mid-May in response to COVID-19.
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Table of Contents
Cost of Revenue and Gross Margin
Year Ended December 31,
Change
2020
2019
Dollars
Percentage
(in thousands, except percentages)
Cost of revenue
Real estate services
Properties
Mortgage
Other
Intercompany elimination
Total cost of revenue
Gross profit
Real estate services
Properties
Mortgage
Other
$
417,140
$
373,150
$
214,382
15,627
9,847
(3,013)
245,189
9,978
9,261
(1,885)
$
653,983
$
635,693
$
43,990
(30,807)
5,649
586
(1,128)
18,290
$
234,068
$
150,390
$
83,678
(4,696)
208
2,530
(4,682)
(3,881)
2,276
(14)
4,089
254
88,007
12 %
(13)
57
6
60
3
56 %
0
(105)
11
61
Total gross profit
$
232,110
$
144,103
$
Gross margin (percentage of revenue)
Real estate services
Properties
Mortgage
Other
Total gross margin
35.9 %
(2.2)
1.3
20.4
26.2
28.7 %
(1.9)
(63.7)
19.7
18.5
In 2020, total cost of revenue increased by $18.3 million, or 3%, as compared with 2019. This increase
in cost of revenue was primarily attributable to a $50.7 million increase in personnel costs and transaction
bonuses, due to increased headcount and increased brokerage transactions, respectively. This was partially
offset by a $32.0 million decrease in home purchase costs and related capitalized improvements due to selling
fewer homes by our properties business.
Total gross margin increased 770 basis point as compared with 2019, driven primarily by our properties
business contributing to a lesser proportion of revenue relative to our real estate services and other businesses,
and improvements in real estate services and other gross margin.
In 2020, real estate services gross margin increased 720 basis points as compared with 2019. This was
primarily attributable to a 270 basis point decrease in personnel costs and transaction bonuses, a 220 basis
point decrease in home-touring and field expenses, a 60 basis point decrease in listing expenses, and a 60
basis point decrease in travel and entertainment expenses, each as a percentage of revenue.
In 2020, properties gross margin decreased 30 basis points as compared with 2019. This was primarily
attributable to a 110 basis point increase in personnel costs and transaction bonuses, and a 60 basis point
increase in home selling expenses, each as a percentage of revenue. This was partially offset by a 170 basis
point decrease in home purchase costs and related capitalized improvements as a percentage of revenue.
In 2020, mortgage gross margin increased by 6,500 basis points as compared with 2019. This was
primarily attributable to a 4,990 basis point decrease in personnel costs and transaction bonuses, and a 750
basis point decrease in outside services costs, each as a percentage of revenue.
In 2020, other gross margin increased by 70 basis points as compared with 2019. This was primarily
attributable to a 350 basis point decrease in production costs, a 70 basis point decrease in travel and
entertainment expenses, and a 60 basis point decrease in personal technology expenses, each as a
percentage of revenue. This was partially offset by a 450 basis point increase in personnel costs and
transaction bonuses, each as a percentage of revenue.
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Table of Contents
Operating Expenses
Technology and development
$
Marketing
General and administrative
Total operating expenses
Percentage of revenue
Technology and development
Marketing
General and administrative
Total operating expenses
Year Ended December 31,
Change
2020
2019
Dollars
Percentage
(in thousands, except percentages)
14,532
(21,829)
15,266
7,969
21 %
(28)
20
4
$
84,297
54,881
92,140
$
69,765
76,710
76,874
$
231,318
$
223,349
$
9.5 %
6.2
10.4
26.1 %
8.9 %
9.8
9.9
28.6 %
In 2020, technology and development expenses increased by $14.5 million, or 21%, as compared with
2019. The increase was primarily attributable to an $11.9 million increase in personnel costs due to increased
headcount and a $2.7 million increase in technology infrastructure expenses, primarily hosted services.
In 2020, marketing expenses decreased by $21.8 million, or 28%, as compared with 2019. The
decrease was primarily attributable to a $20.2 million decrease in marketing media costs as we temporarily
ceased advertising campaigns during the three months ended June 30, 2020 as a result of COVID-19.
In 2020, general and administrative expenses increased by $15.3 million, or 20%, as compared with
2019. The increase was primarily attributable to a $7.9 million increase in direct and incremental costs
associated with our actions taken in response to COVID-19, primarily from severance payments. These costs
were partially offset by $1.3 million of employee retention credits claimed under the CARES Act. These costs for
restructuring are classified as general and administrative expenses for employees across our organization,
including approximately $6.5 million, net, that would otherwise be classified as cost of revenue. We had no such
restructuring expenses for any periods prior to the twelve months ended December 31, 2020. The increase was
also attributable to a $4.0 million increase in personnel costs due to increased headcount, a $2.9 million
increase in outside services costs, primarily legal services and contractors, and a $2.9 million increase in
technology infrastructure expenses, primarily hosted services.
Interest Income, Interest Expense, and Other Income (Expense), Net
Year Ended December 31,
Change
2020
2019
Dollars
Percentage
Interest income
Interest expense
Other income (expense), net
$
2,074
(19,495)
(1,898)
(in thousands, except percentages)
$
7,146
(5,072)
$
(8,928)
223
(10,567)
(2,121)
(71) %
(118)
(951)
Interest income, interest expense, and other income
(expense), net
$
(19,319)
$
(1,559)
$
(17,760)
1,139
Percentage of revenue
Interest income
Interest expense
Other income (expense), net
Interest income, interest expense, and other income
(expense), net
0.2 %
(2.2)
(0.2)
(2.2) %
0.9 %
(1.1)
0.0
(0.2) %
In 2020, interest income decreased by $5.1 million primarily due lower interest rates on our cash, cash
equivalents, and investments compared to 2019. Additionally, interest expense increased by $10.6 million in
2020, due to a $4.6 million loss on the partial extinguishment of our 2023 notes and additional non-cash interest
expense related to the accretion of the debt discount related to our 2025 notes.
33
Table of Contents
Quarterly Results of Operations and Key Business Metrics
The following tables set forth our unaudited quarterly statements of operations data for the most recent
eight quarters, as well as the percentage that each line item represents of our revenue for each quarter
presented. The information for each quarter has been prepared on a basis consistent with our consolidated
financial statements and reflect, in the opinion of management, all adjustments of a normal, recurring nature
that are necessary for a fair presentation of the financial information contained in those statements. The
following quarterly financial data should be read in conjunction with our consolidated financial statements.
Quarterly Results
Revenue
Cost of revenue(1)
Gross profit
Operating expenses:
Three Months Ended
Dec. 31,
2021
Sep. 30,
2021
Jun. 30,
2021
Mar. 31,
2021
Dec. 31,
2020
Sep. 30,
2020
Jun. 30,
2020
Mar. 31,
2020
$ 643,057 $ 540,074 $ 471,315 $ 268,319 $ 244,517 $ 236,916 $ 213,665 $ 190,995
535,033
412,772
345,179
225,961
164,397
143,844
167,626
178,116
108,024
127,302
126,136
42,358
80,120
93,072
46,039
12,879
Technology and development(1)
Marketing(1)
General and administrative(1)
43,894
22,397
66,962
43,658
49,143
54,395
41,488
55,398
59,567
Total
133,253
147,196
156,453
27,678
11,802
37,391
76,871
23,610
7,270
23,601
54,481
Income (loss) from operations
(25,229)
(19,894)
(30,317)
(34,513)
25,639
22,452
12,421
21,190
56,063
37,009
319
17,961
9,482
23,022
50,465
20,274
25,708
24,327
70,309
(4,426)
(57,430)
437
1,103
Interest income
Interest expense
Income tax benefit
Other income (expense), net
163
178
135
159
215
(3,939)
(3,672)
(2,813)
(1,338)
(11,864)
(2,522)
(2,665)
(2,444)
744
1,259
311
4,128
5,052
65
—
(92)
—
45
—
(640)
—
43
—
(1,346)
Net (loss) income
$ (27,002) $ (18,949) $ (27,878) $ (35,784) $ 14,035 $ 34,166 $
(6,611) $ (60,117)
Net (loss) income attributable to
common stock
$ (28,396) $ (20,611) $ (29,756) $ (38,120) $ 12,153 $ 31,983 $
(7,895) $ (60,117)
Net (loss) income per share—diluted $
(0.27) $
(0.20) $
(0.29) $
(0.37) $
0.11 $
0.30 $
(0.08) $
(0.64)
(1) Includes stock-based compensation as follows:
Dec. 31,
2021
Sep. 30,
2021
Jun. 30,
2021
Mar. 31,
2021
Dec. 31,
2020
Sep. 30,
2020
Jun. 30,
2020
Mar. 31,
2020
Three Months Ended
Cost of revenue
$
3,595 $
3,283 $
3,758 $
2,978 $
2,863 $
2,574 $
1,769 $
1,638
Technology and development
Marketing
General and administrative
6,288
736
4,667
5,455
537
3,835
5,771
535
3,679
5,761
542
3,302
4,828
439
3,079
4,964
403
3,407
Total
$ 15,286 $ 13,110 $ 13,743 $ 12,583 $ 11,209 $ 11,348 $
3,124
352
1,960
7,205 $
3,648
375
1,550
7,211
Three Months Ended
Dec. 31,
2021
Sep. 30,
2021
Jun. 30,
2021
Mar. 31,
2021
Dec. 31,
2020
Sep. 30,
2020
Jun. 30,
2020
Mar. 31,
2020
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
(as a percentage of revenue)
83.2
16.8
6.8
3.5
10.3
20.6
(3.8)
—
(0.6)
0.1
0.2
76.4
23.6
8.1
9.1
10.1
27.3
(3.7)
—
(0.7)
0.1
0.8
73.2
26.8
8.8
11.8
12.6
33.2
(6.4)
—
(0.6)
1.1
—
84.2
15.8
10.3
4.4
13.9
28.6
(12.8)
0.1
(0.5)
—
—
67.2
32.8
9.7
3.0
9.6
22.3
10.5
0.1
(4.9)
—
—
60.7
39.3
9.5
5.2
8.9
23.6
15.7
0.1
(1.1)
—
(0.3)
78.5
21.5
8.4
4.4
10.8
23.6
(2.1)
0.2
(1.2)
—
—
93.3
6.7
10.6
13.5
12.7
36.8
(30.1)
0.6
(1.3)
—
(0.7)
(4.1) %
(3.5) %
(5.9) %
(13.2) %
5.7 %
14.4 %
(3.1) %
(31.5) %
Revenue
Cost of revenue(1)
Gross profit
Operating expenses
Technology and development(1)
Marketing(1)
General and administrative(1)
Total
(Loss) income from operations
Interest income
Interest expense
Income tax benefit
Other income (expense), net
Net (loss) income
34
Table of Contents
(1) Includes stock-based compensation as follows:
Dec. 31,
2021
Sep. 30,
2021
Jun. 30,
2021
Mar. 31,
2021
Dec. 31,
2020
Sep. 30,
2020
Jun. 30,
2020
Mar. 31,
2020
Three Months Ended
(as a percentage of revenue)
Cost of revenue
0.6 %
0.6 %
0.8 %
1.1 %
1.2 %
1.1 %
0.8 %
0.9 %
Technology and development
Marketing
General and administrative
1.0
0.1
0.6
1.0
0.1
0.7
1.2
0.1
0.8
2.2
0.2
1.2
2.0
0.2
1.2
2.1
0.2
1.4
1.5
0.2
0.9
1.9
0.2
0.8
Total
2.3 %
2.4 %
2.9 %
4.7 %
4.6 %
4.8 %
3.4 %
3.8 %
Our revenue has typically followed the seasonal pattern of the residential real estate industry. As such,
revenue increases sequentially from the first quarter to the second quarter and sequentially again during the
third quarter. Fourth quarter revenue typically declines sequentially from the third quarter.
We completed our acquisition of RentPath on April 2, 2021. The acquisition increased revenue, cost of
revenue, and operating expenses in the second quarter, third quarter, and fourth quarter of 2021 over their
seasonal pattern, because there were no such results in prior quarters.
As the result of the impact of COVID-19 on customer demand, this pattern was disrupted in 2020.
Beginning in March 2020, COVID-19 began having a negative effect on our customer demand, which negatively
impacted our revenue during the second quarter. Starting in May, customer demand rebounded, resulting in a
sequential increase in revenue from the second quarter to the third quarter. Revenue also increased from the
third quarter to the fourth quarter.
In 2021, revenue again increased from the third quarter to the fourth quarter, largely due to our
properties business's expansion and greater customer awareness of that business.
Cost of revenue typically also has reflected seasonality, and was similarly impacted by COVID-19
during 2020 as revenue was. In 2021, cost of revenue increased from the third quarter to the fourth quarter, due
to selling more homes through our properties business.
Marketing expenses are influenced by seasonal factors and the timing of advertising campaigns. We
have historically spent more on advertising during the first half of the year than the second half of the year.
During 2021, we deferred advertising spending from the first half of the year to the second half of the year,
because we did not have enough lead agents during the first half to serve the strong customer demand we
experienced during that period. During 2020, we ceased most performance and mass media advertising
campaigns in March and April in response to COVID-19. We restarted most performance marketing and mass
media campaigns in May, including running a new television commercial from June through September.
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Table of Contents
Quarterly Key Business Metrics
Monthly average visitors (in
thousands)
Real estate services transactions
Dec. 31,
2021
Sep. 30,
2021
Jun. 30,
2021
Mar. 31,
2021
Dec. 31,
2020
Sep. 30,
2020
Jun. 30,
2020
Mar. 31,
2020
44,665
49,147
48,437
46,202
44,135
49,258
42,537
35,519
Brokerage
Partner
Total
19,428
21,929
21,006
14,317
16,951
18,980
13,828
10,751
4,603
4,755
4,597
3,944
4,940
5,180
2,691
2,479
24,031
26,684
25,603
18,261
21,891
24,160
16,519
13,230
Real estate services revenue per
transaction
Brokerage
Partner
Aggregate
$ 10,900
$ 11,107
$ 11,307
$ 10,927
$ 10,751
$ 10,241
$ 9,296
$ 9,520
2,819
2,990
3,195
3,084
3,123
2,988
2,417
2,535
9,352
9,661
9,850
9,233
9,030
8,686
8,175
8,211
Aggregate home value of real estate
services transactions (in millions)
U.S. market share by value
Revenue from top-10 Redfin markets
as a percentage of real estate
services revenue
$ 13,255
$ 14,926
$ 14,612
$ 9,710
$ 11,478
$ 12,207
$ 7,576
$ 6,098
1.15 %
1.16 %
1.18 %
1.16 %
1.04 %
1.04 %
0.94 %
0.92 %
61 %
62 %
64 %
62 %
63 %
63 %
63 %
61 %
Average number of lead agents
2,485
2,370
2,456
2,277
1,981
1,820
1,399
1,826
RedfinNow Homes Sold
600
388
292
171
83
37
162
171
Revenue per RedfinNow Home Sold $ 622,251
$ 599,010
$ 570,930
$ 525,173
$ 471,551
$ 504,583
$ 444,690
$ 461,916
Similar to our revenue, monthly average visitors to our website and mobile application has typically
followed the seasonal pattern of the residential real estate industry. For 2020, COVID-19 began having a
negative effect on our customer demand in March, which negatively affected our monthly average visitors
during March and April. Starting in May, customer demand rebounded, resulting in a sequential increase in
monthly average visitors from the second quarter to the third quarter.
Liquidity and Capital Resources
As of December 31, 2021, we had cash and cash equivalents of $591.0 million and investments of
$88.6 million, which consist primarily of operating cash on deposit with financial institutions, money market
instruments, U.S. treasury securities, and agency bonds. In January 2022, we transferred $84.2 million of
proceeds from RedfinNow home sales from an account whose deposits are classified as restricted cash into an
account whose deposits are not classified as restricted cash. Accordingly, as of January 31, 2022, we had cash
and cash equivalents of $683.9 million and investments of $87.8 million.
Also, as of December 31, 2021, we had $1,259.8 million aggregate principal amount of convertible
senior notes outstanding across three issuances maturing between July 15, 2023 and April 1, 2027.
Also, as of December 31, 2021, we had 40,000 shares of convertible preferred stock outstanding. See
Note 11 to our consolidated financial statements for our obligations to pay quarterly interest and to redeem any
outstanding shares on November 30, 2024.
On January 10, 2021, we entered into an agreement to acquire Bay Equity. See Note 16 for a
discussion of our potential cash outlay for this acquisition at the closing of the acquisition.
With respect to the cash outlay for our properties business, for the year ended December 31, 2021, we
relied on (i) a combination of our cash on hand and borrowings from a secured revolving credit facility to fund
home purchase prices and (ii) solely on our cash on hand to fund capitalized improvement costs and home
maintenance expenses. See Note 5 to our consolidated financial statements for more information on changes to
inventory related to home purchases and home sales for our properties business. See Note 15 to our
consolidated financial statements for more information regarding the secured revolving credit facility.
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Our mortgage business has significant cash requirements due to the period of time between its
origination of a mortgage loan and the sale of that loan. We have relied on warehouse credit facilities with
different lenders to fund substantially the entire portion of the mortgage loans that our mortgage business
originates. Once our mortgage business sells a loan in the secondary mortgage market, we use the proceeds to
reduce the outstanding balance under the related facility. See Note 15 to our consolidated financial statements
for more information regarding our warehouse credit facilities.
We believe that our existing cash and cash equivalents and investments, together with cash we expect
to generate from future operations, and borrowings from our secured revolving credit facility and our warehouse
credit facilities, will provide sufficient liquidity to meet our operational needs and our growth, complete our
acquisition of Bay Equity, satisfy commitments by our properties business to purchase homes, and fulfill our
payment obligations with respect to our convertible senior notes and convertible preferred stock. However, our
liquidity assumptions may change or prove to be incorrect, and we could exhaust our available financial
resources sooner than we currently expect. As a result, we may seek new sources of credit financing or elect to
raise additional funds through equity, equity-linked, or debt financing arrangements. We cannot assure you that
any additional financing will be available to us on acceptable terms or at all.
Our title and settlement business holds cash in escrow that we do not record in our consolidated
balance sheets. See Note 8 to our consolidated financial statements for more information regarding these
amounts.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Year Ended December 31,
2021
2020
2019
(in thousands)
Net cash (used in) provided by operating activities
$
(301,568) $
Net cash used in investing activities
Net cash provided by financing activities
(576,306)
650,341
61,267 $
(57,119)
694,227
(107,610)
(115,912)
31,883
Net Cash (Used In) Provided By Operating Activities
Our operating cash flows result primarily from cash generated by commissions paid to us from our real
estate services business and sales of homes from our properties business. Our primary uses of cash from
operating activities include payments for personnel-related costs, including employee benefits and bonus
programs, marketing and advertising activities, purchases of homes for our properties business, office and
occupancy costs, and outside services costs. Additionally, our mortgage business generates a significant
amount operating cash flow activity from the origination and sale of loans held for sale.
Net cash used in operating activities was $301.6 million for the year ended December 31, 2021,
primarily attributable to a net loss of $109.6 million, offset by $114.8 million of non-cash items related to stock-
based compensation, depreciation and amortization, amortization of debt discounts and issuances costs, lease
expense related to right-of-use assets, impairment charges related to one of our cost-method investments, and
other non-cash items. Changes in assets and liabilities decreased cash provided by operating activities by
$306.8 million. The primary source of cash related to changes in our assets and liabilities was a $28.9 million
increase in accounts payable and other accrued liabilities related to the timing of vendor payments and payroll
related expenses. The primary use of cash related to changes in our assets and liabilities was a $309.1 million
increase in inventory related to our properties business.
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Net cash provided by operating activities was $61.3 million for the year ended December 31, 2020,
primarily attributable to a net loss of $18.5 million, offset by $77.2 million of non-cash items related to stock-
based compensation, depreciation and amortization expenses, amortization of debt discounts and issuances
costs, and lease expense related to right-of-use assets. Changes in assets and liabilities increased cash used in
operating activities by $2.6 million. The primary sources of cash related to changes in our assets and liabilities
were a $41.2 million increase in accounts payable and other accrued liabilities related to the timing of vendor
payments and payroll related expenses, and a $25.4 million decrease in inventory related to our properties
business. The primary uses of cash related to changes in our assets and liabilities were a $35.5 million increase
in accounts receivable related to the timing of escrow payments in-transit, a $19.5 million increase in net loans
held for sale related to our mortgage business, and a $11.3 million decrease in lease liabilities.
Net cash used in operating activities was $107.6 million for the year ended December 31, 2019,
primarily attributable to a net loss of $80.8 million, offset by $49.2 million of non-cash items related to stock-
based compensation, depreciation and amortization expenses, amortization of debt discounts and issuances
costs, and lease expense related to right-of-use assets. Changes in assets and liabilities increased cash used in
operating activities by $76.0 million driven primarily by an increase of $51.9 million in inventory related to our
properties business and a $16.8 million increase in net loans held for sale related to our mortgage business.
Net Cash Used In Investing Activities
Our primary investing activities include acquisitions of other companies and the purchase of
investments and property and equipment, primarily related to capitalized software development expenses and
leasehold improvements.
Net cash used in investing activities was $576.3 million for the year ended December 31, 2021,
primarily attributable to cash paid for our acquisition of RentPath of $608.0 million, $59.2 million in net
investments in U.S. government securities, and $17.6 million of capitalized software development expenses.
Net cash used in investing activities was $57.1 million for the year ended December 31, 2020, primarily
attributable to $42.4 million in net investments in U.S. government securities, $5.8 million related to equipment,
furnishings and leasehold improvements for new or expansion of existing office space, and $8.9 million of
capitalized software development expenses.
Net cash used in investing activities was $115.9 million for the year ended December 31, 2019,
primarily attributable to $100.4 million in net investments in U.S. treasury securities, $7.9 million related to
equipment, furnishings, and leasehold improvements for new or expansion of existing office space, and $7.1
million of capitalized software development expenses.
Net Cash Provided By Financing Activities
Our primary financing activities have come from (i) our initial public offering in August 2017, (ii) sales of
our common stock and 2023 notes in July 2018, our common stock and convertible preferred stock in April
2020, our 2025 notes in October 2020, and our 2027 notes in March 2021, and (iii) the sale of our common
stock pursuant to stock option exercises and our ESPP. Additionally, we generate a significant amount of
financing cash flow activity due to borrowings from and repayments to our warehouse credit facilities and our
secured revolving credit facility.
Net cash provided by financing activities was $650.3 million for the year ended December 31, 2021,
primarily attributable to $498.9 million in net proceeds from the issuance of our 2027 notes offering, a
$175.8 million increase in net borrowings under our secured revolving credit facility, and $22.8 million in
proceeds from the issuance of common stock pursuant to our equity compensation plans.
Net cash provided by financing activities was $694.2 million for the year ended December 31, 2020,
primarily attributable to $647.5 million in net proceeds from the issuance of our 2025 notes offering, $109.5
million in net proceeds from the issuance of common stock and our convertible preferred stock offering, $21.1
million in proceeds from the issuance of common stock pursuant to our equity compensation plans, a $19.5
million increase in net borrowings under our secured revolving credit facility, and a $17.7 million increase in our
net borrowings under warehouse credit facilities. This was partially offset by $108.1 million used in connection
with repurchases and conversions of our 2023 notes.
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Net cash provided by financing activities was $31.9 million for the year ended December 31, 2019,
primarily attributable to a $16.6 million increase in our net borrowings under warehouse credit facilities and
$16.1 million in proceeds from the issuance of common stock pursuant to our equity compensation plans.
Critical Accounting Policies and Estimates
Discussion and analysis of our financial condition and results of operations are based on our financial
statements, which have been prepared in accordance with GAAP. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and
related disclosure of contingent assets and liabilities, revenue, and expenses at the date of the financial
statements. Generally, we base our estimates on historical experience and on various other assumptions in
accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions.
Critical accounting policies and estimates are those that we consider the most important to the portrayal
of our financial condition and results of operations because they require our most difficult, subjective, or
complex judgments, often as a result of the need to make estimates about the effect of matters that are
inherently uncertain. Based on this definition, we have identified the critical accounting policies and estimates
addressed below. In addition, we have other key accounting policies and estimates that are described in Note 1
to our consolidated financial statements.
Revenue Recognition
Our key revenue components are brokerage revenue, partner revenue, properties revenue, rentals
revenue, mortgage revenue, and other revenue. Of these, we consider the most critical of our revenue
recognition policies to be those related to commissions and fees charged on brokerage transactions closed by
our lead agents, and from the sale of homes. We recognize commission-based brokerage revenue upon closing
of a brokerage transaction, less the amount of any commission refunds, closing-cost reductions, or promotional
offers that may result in a material right. We determined that brokerage revenue primarily contains a single
performance obligation that is satisfied upon the closing of a transaction, at which point the entire transaction
price is earned. We evaluate our brokerage contracts and promotional pricing to determine if there are any
additional material rights and allocate the transaction price based on standalone selling prices.
Properties revenue is earned when we sell homes that were previously bought directly from
homeowners. Our contracts with customers contain a single performance obligation that is satisfied upon a
transaction closing. Properties revenue is recorded at closing on a gross basis, representing the sales price of
the home.
Rentals revenue is primarily recognized on a straight-line basis over the term of the contract, which is
generally less than one year. Revenue is presented net of sales allowances, which are not material.
Mortgage revenue is recognized (1) when an interest rate lock commitment is made to a customer,
adjusted for a pull-through percentage, (2) for origination fees, when the purchase or refinance of a loan is
complete, and (3) when the fair value of our interest rate lock commitments, forward sale commitments, and
loans held for sale are recorded at current market quotes.
We have utilized the practical expedient in ASC 606, Revenue from Contracts with Customers, and
elected not to capitalize contract costs for contracts with customers with durations less than one year. We do
not have significant remaining performance obligations or contract balances.
See Note 1 to our consolidated financial statements for further discussion of our revenue recognition
policy.
Acquired Intangible Assets and Goodwill
We recognize separately identifiable intangible assets acquired in a business combination. Determining
the fair value of the intangible assets acquired requires management’s judgment, often utilizes third-party
valuation specialists, and involves the use of significant estimates and assumptions with respect to the timing
and amounts of future cash flows, discount rates, replacement costs, and asset lives, among other estimates.
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The judgments made in the determination of the estimated fair value assigned to the intangible assets
acquired and the estimated useful life of each asset could significantly impact our consolidated financial
statements in periods after the acquisition, such as through depreciation and amortization expense.
We evaluate intangible assets for impairment whenever events or circumstances indicate that they may
not be recoverable. We measure recoverability by comparing the carrying amount of an asset group to future
undiscounted net cash flows expected to be generated.
Goodwill represents the excess of the purchase price over the fair value of the net tangible assets and
identifiable intangible assets acquired in a business combination. Goodwill is not amortized, but is subject to
impairment testing. We assess the impairment of goodwill on an annual basis, during the fourth quarter, or
whenever events or changes in circumstances indicate that goodwill may be impaired. We assess goodwill for
possible impairment by performing a qualitative assessment to determine whether it is more likely than not that
the fair value of the reporting unit is less than its carrying amount. If we qualitatively determine that it is not more
likely than not that the fair value of the reporting unit is less than its carrying amount, then no additional
impairment steps are necessary.
See Note 2 to our consolidated financial statements for a summary of our valuation of the RentPath
intangible assets, along with their estimated useful lives.
Inventory
Our inventory represents homes purchased with the intent of resale and are accounted for under the
specific identification method. Direct home acquisition and improvement costs are capitalized and tracked
directly with each specific home. Homes are stated in inventory at cost and are reviewed on a home by home
basis. When evidence exists that the net realizable value of a home is lower than its cost, we recognize the
difference as a loss in the period in which it occurs. In determining net realizable value, management must use
judgment and estimates, including assessment of readily available market value indicators such as the Redfin
Estimate and other third-party home value indicators, assessment of a current listing or pending offer price if
either are available, and the value of any improvements made to the home. If a home's estimated market value
is less than the inventory cost then the home is written down to net realizable value. While no material
adjustments were required to our home inventory as of and for the year ended December 31, 2021, material
adjustments may be required in the future due to changing market conditions, natural disasters, or other forces
outside of our control.
See Note 5 to our consolidated financial statements for a summary of our inventory categories and any
net realizable write-downs.
Business Combinations
The results of businesses acquired in a business combination are included in our consolidated financial
statements from the date of acquisition. We record assets and liabilities of an acquired business at their
estimated fair values on the acquisition date. Any excess consideration over the fair value of assets acquired
and liabilities assumed is recognized as goodwill. During the measurement period, which may be up to one year
from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the
corresponding offset to goodwill.
The purchase price allocation process requires our management to make significant estimates and
assumptions. Although we believe the assumptions and estimates made are reasonable, they are inherently
uncertain and based in part on experience, market conditions, projections of future performance, and
information obtained from legacy management of acquired companies. Critical estimates include but are not
limited to:
•
•
•
future revenue, cost of revenue and operating margin projections,
discount rates,
terminal growth rate; and
• market data of comparable guideline companies.
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See Note 2 to our consolidated financial statements for a summary of our business combinations
activities.
Recent Accounting Standards
For information on recent accounting standards, see Note 1 to our consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our primary operations are within the United States and in the first quarter of 2019 we launched limited
operations in Canada. We are exposed to market risks in the ordinary course of our business. These risks
primarily consist of fluctuations in interest rates.
Interest Rate Risk
Our investment policy allows us to maintain a portfolio of cash equivalents and investments in a variety
of securities, including U.S. treasury and agency issues, bank certificates of deposit that are 100% insured by
the Federal Deposit Insurance Corporation, and SEC-registered money market funds that consist of a minimum
of $1 billion in assets and meet the above requirements. The goals of our investment policy are liquidity and
capital preservation. We do not enter into investments for trading or speculative purposes.
As of December 31, 2021, we had cash and cash equivalents of $591.0 million and investments of
$88.6 million. Our investments are composed of available-for-sale securities that consist primarily of U.S.
treasury securities with maturities of two years or less. We believe we do not have any material exposure to
changes in the fair value of these assets as a result of changes in interest rates due to the relatively short-term
nature and risk profile of our portfolio. Declines in interest rates, however, would reduce future investment
income. Assuming no change in our outstanding cash, cash equivalents, and investments during the first
quarter of 2022, a hypothetical 10% change in interest rates, occurring during and sustained throughout that
quarter, would not have a material impact on our financial results for that quarter.
We are exposed to interest rate risk on our mortgage loans held for sale and IRLCs associated with our
mortgage loan origination services. We manage this interest rate risk through the use of forward sales
commitments on both a best efforts whole loans basis and on a mandatory basis. Forward sales commitments
entered into on a mandatory basis are done through the use of commitments to sell mortgage-backed
securities. We do not enter into or hold derivatives for trading or speculative purposes. The fair value of our
IRLCs and forward sales commitments are reflected in other current assets and accrued and other liabilities, as
applicable, with changes in the fair value of these commitments recognized as revenue. The net fair value
change for the periods presented were not material. See Note 4 to our consolidated financial statements for a
summary of the fair value of our forward sales commitments and our IRLCs.
We are subject to interest rate risk on borrowings under our secured revolving credit facility. See Note
15 to our consolidated financial statements for a description of this facility. Changes in the market interest rate
will increase or decrease our interest expense. Assuming no change in the outstanding borrowings under the
facility during the first quarter of 2022, a hypothetical 10% change in interest rates, occurring during and
sustained throughout that quarter, would not have a material impact on our financial results for that quarter.
Foreign Currency Exchange Risk
As our operations in Canada have been limited, and we do not maintain a significant balance of foreign
currency, we do not currently face significant foreign currency exchange rate risk.
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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID No.34)
Consolidated Balance Sheets
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity
Index to Notes to Consolidated Financial Statements
Page
43
47
48
49
51
54
42
Index to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Redfin Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Redfin Corporation and subsidiaries (the
"Company") as of December 31, 2021 and 2020, the related consolidated statements of comprehensive loss,
cash flows, and changes in mezzanine equity and stockholders' equity, for each of the three years in the period
ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as
of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the
United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2022, expressed an
unqualified opinion on the Company's internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, effective on January 1, 2021, the Company has changed its
method of accounting for convertible senior notes due to adoption of Accounting Standards Update No.
2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on the Company's financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates
to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any
way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to
which it relates.
Business Combinations – Valuation of Intangible Assets Acquired — Refer to Footnotes 1, 2, and 9 to
the financial statements
Critical Audit Matter Description
43
Index to Consolidated Financial Statements
In April 2021, the Company completed the acquisition of RentPath Holdings, Inc. (“RentPath”). The Company
accounted for the acquisition under the acquisition method of accounting for business combinations.
Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their
respective estimated fair values, including identified intangible assets of $211 million that were composed of
acquired trade names of $70 million, customer relationships of $80.5 million, and developed technology of $60.5
million.
In estimating the fair values of the RentPath intangible assets, management utilized the following valuation
methodologies:
•
•
•
Trade names – relief from royalty method under the income approach
Customer relationships – multi-period excess earnings method
Developed technology – replacement cost method
Each method used for determining the estimated fair value of each intangible asset required management to
make significant estimates and assumptions, as follows: trade names – selection of the revenue growth rate,
royalty rate, and discount rate; customer relationships – selection of the discount rate and revenue growth rate;
and, developed technology – number of months to recreate the underlying application.
Given the significant judgments made by management to estimate the fair value of the identified intangible
assets, performing audit procedures to evaluate the reasonableness of these estimates and assumptions
described above required a high degree of auditor judgment and an increased extent of effort, including the
need to involve our fair value specialists.
How the Critical Audit Matter was Addressed in the Audit
Our audit procedures related to the valuation methodologies, and the associated significant estimates and
assumptions described above, included the following:
• We tested the effectiveness of internal controls over the valuation of the intangible assets, including
management’s controls over the selection of the significant estimates and assumptions described
above.
• We assessed the reasonableness of management’s estimates and assumptions included in the future
revenue forecast and in the number of months to recreate the underlying platform by comparing the
projections and other assumptions to historical results, or information, and certain peer companies.
• We evaluated whether the key assumptions were consistent with evidence obtained in other areas of
the audit.
• With the assistance of fair value specialists, we evaluated the reasonableness of the (1) selection of
valuation methodologies and (2) valuation assumptions such as discount rate and royalty rate, among
others, by:
◦
◦
◦
◦
Testing the source information underlying the determination of the valuation assumptions and
testing the mathematical accuracy of the calculations.
Evaluating the selected royalty rate against market data of comparable licensing agreements,
as well as conducting quantitative assessments of the underlying profit split analysis.
Developing a range of independent estimates for certain key assumptions such as the discount
rate and long-term growth rate and comparing those to the valuation assumptions selected by
management.
Comparing the estimated weighted average return on assets, internal rate of return, and the
weighted average cost of capital used in the valuation models and evaluating their consistency
with one another.
/s/ Deloitte & Touche LLP
Seattle, Washington
February 17, 2022
We have served as the Company's auditor since 2013.
44
Index to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Redfin Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Redfin Corporation and subsidiaries (the
“Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated
Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31,
2021, of the Company and our report dated February 17, 2022, expressed an unqualified opinion on those
financial statements.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from
its assessment the internal control over financial reporting at RentPath Holdings, Inc (“RentPath”), which was
acquired on April 2, 2021, and whose financial statements constitute 3.1% of total assets (after excluding
goodwill and intangible assets which were integrated with the Company’s systems and control environment),
6.3% of revenues, and 39.3% of net loss of the consolidated financial statement amounts as of and for the year
ended December 31, 2021. Accordingly, our audit did not include the internal control over financial reporting at
RentPath.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.
45
Index to Consolidated Financial Statements
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Seattle, Washington
February 17, 2022
46
Index to Consolidated Financial Statements
Redfin Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
Assets
Current assets
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net of allowances for credit losses of $1,298 and $160
Inventory
Loans held for sale
Prepaid expenses
Other current assets
Total current assets
Property and equipment, net
Right-of-use assets, net
Long-term investments
Goodwill
Intangible assets, net
Other assets, noncurrent
Total assets
Liabilities, mezzanine equity, and stockholders' equity
Current liabilities
Accounts payable
Accrued and other liabilities
Warehouse credit facilities
Secured revolving credit facility
Convertible senior notes, net
Lease liabilities
Total current liabilities
Lease liabilities, noncurrent
Convertible senior notes, net, noncurrent
Payroll tax liabilities, noncurrent
Deferred tax liabilities
Total liabilities
Commitments and contingencies (Note 8)
Series A convertible preferred stock—par value $0.001 per share; 10,000,000 shares
authorized; 40,000 and 40,000 shares issued and outstanding at December 31, 2021 and
2020, respectively
Stockholders’ equity
Common stock—par value $0.001 per share; 500,000,000 shares authorized; 106,308,767
and 103,000,594 shares issued and outstanding at December 31, 2021 and 2020,
respectively
Additional paid-in capital
Accumulated other comprehensive (loss) income
Accumulated deficit
Total stockholders’ equity
December 31,
2021
2020
$
591,003 $
127,278
33,737
69,594
358,221
35,759
22,948
7,524
925,276
20,544
131,561
54,719
49,158
42,539
12,131
4,898
$
$
1,246,064
1,240,826
58,671
54,200
54,828
409,382
185,929
12,898
43,988
44,149
11,922
9,186
1,830
8,619
2,021,972 $
1,360,520
12,546 $
118,122
33,043
199,781
23,280
15,040
401,812
55,222
1,214,017
—
1,201
1,672,252
5,644
82,644
39,029
23,949
22,482
11,973
185,721
49,339
488,268
6,812
—
730,140
39,868
39,823
106
682,084
(174)
(372,164)
309,852
103
860,556
211
(270,313)
590,557
Total liabilities, mezzanine equity, and stockholders’ equity
$
2,021,972 $
1,360,520
See Notes to the consolidated financial statements.
47
Index to Consolidated Financial Statements
Redfin Corporation and Subsidiaries
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts)
Revenue
Service
Product
Total revenue
Cost of revenue
Service
Product
Total cost of revenue
Gross profit
Operating expenses
Technology and development
Marketing
General and administrative
Total operating expenses
(Loss) income from operations
Interest income
Interest expense
Income tax benefit
Other income (expense), net
Net loss
Dividends on convertible preferred stock
Net loss attributable to common stock—basic and diluted
Net loss per share attributable to common stock—basic and diluted
Weighted-average shares used to compute net loss per share attributable to
common stock—basic and diluted
Net loss
Other comprehensive income
Foreign currency translation adjustments
Unrealized gain on available-for-sale securities
Year Ended December 31,
2021
2020
2019
$
1,042,112 $
674,345 $
880,653
1,922,765
648,660
870,285
1,518,945
403,820
156,718
138,740
218,315
513,773
(109,953)
635
211,748
886,093
437,484
216,499
653,983
232,110
84,297
54,881
92,140
231,318
792
2,074
(11,762)
(19,495)
6,107
5,360
—
(1,898)
539,288
240,508
779,796
390,504
245,189
635,693
144,103
69,765
76,710
76,874
223,349
(79,246)
7,146
(8,928)
—
223
$
$
$
(109,613) $
(18,527) $
(80,805)
(7,269)
(4,454)
(116,882) $
(22,981) $
(1.12) $
(0.23) $
—
(80,805)
(0.88)
104,683,460
98,574,529
91,583,533
$
(109,613) $
(18,527) $
(80,805)
6
379
(3)
172
33
9
Comprehensive loss
$
(109,228) $
(18,358) $
(80,763)
See Notes to the consolidated financial statements.
48
Index to Consolidated Financial Statements
Redfin Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Operating Activities
Net loss
Adjustments to reconcile net loss to net cash (used in) provided by operating
activities:
Depreciation and amortization
Stock-based compensation
Amortization of debt discount and issuance costs
Non-cash lease expense
Impairment costs
Loss on repurchases and conversions of convertible senior notes
Net loss (gain) on IRLCs, forward sales commitments, and loans held for
sale
Other
Change in assets and liabilities:
Accounts receivable, net
Inventory
Prepaid expenses and other assets
Accounts payable
Accrued and other liabilities, deferred tax liabilities, and payroll tax
liabilities, noncurrent
Lease liabilities
Origination of loans held for sale
Proceeds from sale of loans originated as held for sale
Net cash (used in) provided by operating activities
Investing activities
Purchases of property and equipment
Purchases of investments
Sales of investments
Maturities of investments
Cash paid for acquisition
Net cash used in investing activities
Financing activities
Proceeds from the issuance of convertible preferred stock, net of issuance
costs
Proceeds from the issuance of common stock, net of issuance costs
Proceeds from the issuance of common stock pursuant to employee equity
plans
Tax payments related to net share settlements on restricted stock units
Borrowings from warehouse credit facilities
Repayments to warehouse credit facilities
Borrowings from secured revolving credit facility
Repayments to secured revolving credit facility
Cash paid for secured revolving credit facility issuance costs
Proceeds from issuance of convertible senior notes, net of issuance costs
Purchases of capped calls related to convertible senior notes
Payments for repurchases and conversions of convertible senior notes
Principal payments under finance lease obligations
Other financing payables
Net cash provided by financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Year Ended December 31,
2021
2020
2019
$
(109,613) $
(18,527) $
(80,805)
46,906
54,722
4,989
11,630
—
—
815
(4,227)
(7,149)
(309,063)
(12,248)
3,059
25,791
(13,268)
(986,982)
993,070
(301,568)
(27,492)
(146,274)
98,687
106,773
(608,000)
(576,306)
—
—
22,772
(27,066)
942,993
(948,979)
624,828
(448,996)
(527)
561,529
(62,647)
(2,159)
(796)
(10,611)
650,341
(6)
14,564
36,973
12,038
9,204
2,063
4,634
(1,921)
(349)
(35,496)
25,432
2,333
2,086
39,092
(11,312)
(677,310)
657,763
61,267
(14,686)
(198,172)
7,887
147,852
—
9,230
27,814
6,385
6,940
—
—
(493)
(662)
(3,861)
(51,896)
(3,293)
(394)
7,422
(7,209)
(395,354)
378,566
(107,610)
(15,533)
(136,265)
11,486
24,400
—
(57,119)
(115,912)
39,801
69,701
21,072
(16,852)
662,278
(644,551)
89,619
(70,115)
(4)
647,486
—
(108,061)
(221)
4,074
694,227
(3)
—
—
16,107
(5,126)
388,586
(372,017)
4,444
—
(922)
—
—
—
(72)
883
31,883
32
Net change in cash, cash equivalents, and restricted cash
(227,539)
698,372
(191,607)
Cash, cash equivalents, and restricted cash:
Beginning of period
End of period
Supplemental disclosure of cash flow information
49
945,820
247,448
$
718,281 $
945,820 $
439,055
247,448
Index to Consolidated Financial Statements
Cash paid for interest
Non-cash transactions
$
7,592 $
4,958 $
2,460
Stock-based compensation capitalized in property and equipment
Property and equipment additions in accounts payable and accrued and
other liabilities
Leasehold improvements paid directly by lessor
Issuance of common stock for repurchases and conversions of convertible
senior notes
4,059
659
1,334
—
2,348
1,682
37
98,397
1,280
223
6,230
—
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash
As of December 31,
2021
2020
2019
$
$
591,003 $
925,276 $
127,278
20,544
718,281 $
945,820 $
234,679
12,769
247,448
See Notes to the consolidated financial statements.
50
Index to Consolidated Financial Statements
Redfin Corporation and Subsidiaries
Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity
(in thousands, except share amounts)
51
Index to Consolidated Financial Statements
Series A Convertible
Preferred Stock
Common Stock
Shares
Amount
Shares
Amount
Balance, December 31, 2018
Issuance of common stock pursuant to employee stock purchase
program
Issuance of common stock pursuant to exercise of stock options
Issuance of common stock pursuant to settlement of restricted stock
units
Common stock surrendered for employees' tax liability upon settlement
of restricted stock units
Stock-based compensation
Other comprehensive income
Net loss
Balance, December 31, 2019
Issuance of convertible preferred stock, net
Issuance of common stock as dividend on convertible preferred stock
Issuance of common stock, net
Equity component of convertible senior notes, net
Issuance of common stock pursuant to employee stock purchase
program
Issuance of common stock pursuant to exercise of stock options
Issuance of common stock pursuant to settlement of restricted stock
units
Common stock surrendered for employees' tax liability upon settlement
of restricted stock units
Issuance of common stock in connection with repurchase of convertible
senior notes
Issuance of common stock in connection with conversion of convertible
senior notes
Stock-based compensation
Other comprehensive income
Net loss
Balance, December 31, 2020
Issuance of convertible preferred stock, net
Issuance of common stock as dividend on convertible preferred stock
Issuance of common stock pursuant to employee stock purchase
program
Issuance of common stock pursuant to exercise of stock options
Issuance of common stock pursuant to settlement of restricted stock
units
Common stock surrendered for employees' tax liability upon settlement
of restricted stock units
Cumulative-effect adjustment from accounting changes
Purchases of capped calls related to convertible senior notes
Issuance of common stock in connection with conversion of convertible
senior notes
Stock-based compensation
Other comprehensive loss
Net loss
Balance, December 31, 2021
93,001,597 $
93 $ 583,097 $
(251,786) $
42 $
331,446
— $
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
40,000
39,823
90,151,341 $
490,717
1,666,162
966,037
(272,660)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
61,280
4,484,305
—
320,609
2,011,938
1,490,506
(439,131)
—
—
—
—
—
—
—
—
2,056,180
—
—
—
—
13,310
—
—
—
Additional
Paid-in
Capital
90 $ 542,829 $
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
(170,981) $
— $
371,938
—
2
1
—
—
—
—
6,732
9,568
(1)
(5,126)
29,095
—
—
—
—
—
—
—
—
(80,805)
—
—
—
—
—
42
—
6,732
9,570
—
(5,126)
29,095
42
(80,805)
—
—
4
—
—
2
2
—
2
—
—
—
—
—
—
69,697
165,257
8,174
12,703
(2)
(16,852)
(701)
(138)
39,321
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(18,527)
—
—
—
—
—
—
—
—
—
—
—
169
—
—
—
69,701
165,257
8,174
12,705
—
(16,852)
(699)
(138)
39,321
169
(18,527)
40,000 $
39,823
103,000,594 $
103 $ 860,556 $
(270,313) $
211 $
590,557
—
—
—
—
—
—
—
—
—
—
—
—
45
—
—
—
—
—
—
—
—
—
—
—
—
122,560
334,248
1,709,324
1,559,425
—
—
—
2
2
—
—
13,787
8,978
(2)
(458,152)
(1)
(27,066)
—
—
40,768
—
—
—
—
—
—
—
—
—
(170,240)
(62,647)
(63)
58,781
—
—
—
—
—
—
—
—
7,762
—
—
—
—
(109,613)
—
—
—
—
—
—
—
—
—
—
(385)
—
—
—
13,787
8,980
—
(27,067)
(162,478)
(62,647)
(63)
58,781
(385)
(109,613)
40,000 $
39,868
106,308,767 $
106 $ 682,084 $
(372,164) $
(174) $
309,852
52
Index to Consolidated Financial Statements
See Notes to the consolidated financial statements.
53
Index to Consolidated Financial Statements
Index to Notes to Consolidated Financial Statements
Note 1:
Note 2:
Note 3:
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
Note 9:
Note 10:
Note 11:
Note 12:
Note 13:
Note 14:
Note 15:
Note 16:
Description of Business and Summary of Significant Accounting Policies
Business Combinations
Segment Reporting and Revenue
Financial Instruments
Inventory
Property and Equipment
Leases
Commitments and Contingencies
Acquired Intangible Assets and Goodwill
Accrued and Other Liabilities
Mezzanine Equity
Equity and Equity Compensation Plans
Net Loss per Share Attributable to Common Stock
Income Taxes
Debt
Subsequent Events
Page
55
63
65
66
70
71
71
72
74
75
75
76
79
80
83
86
54
Index to Notes
Redfin Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except share and per share amounts)
Note 1: Description of Business and Summary of Significant Accounting Policies
Description of Business—Redfin Corporation was incorporated in October 2002 and is headquartered
in Seattle, Washington. We operate an online real estate marketplace and provide real estate services,
including assisting individuals in the purchase or sale of their home. We also provide title and settlement
services, originate and sell mortgages, and buy and sell homes directly from homeowners. In addition, we use
digital platforms to connect consumers with rental properties. We have operations located in multiple states
across the United States and certain provinces in Canada.
Basis of Presentation—The consolidated financial statements and accompanying notes have been
prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
Certain amounts presented in the prior period consolidated balance sheets have been reclassified to
conform to the current period financial statement presentation. The change in classification does not affect
previously reported total assets, total liabilities, mezzanine equity, or stockholders' equity in the consolidated
balance sheets. Additionally, amounts presented in the prior period consolidated statements of cash flows have
been reclassified to conform to the current period financial statement presentation. The change in classification
does not affect previously reported cash flows from operating activities, investing activities, or financing
activities in the consolidated statements of cash flows.
Principles of Consolidation—The consolidated financial statements include the accounts of Redfin
and its wholly owned subsidiaries, including those entities in which we have a variable interest and of which we
are the primary beneficiary. Intercompany transactions and balances have been eliminated.
Certain Significant Risks and Business Uncertainties—We operate in the residential real estate
industry and are a technology-focused company. Accordingly, we are affected by a variety of factors that could
have a significant negative effect on our future financial position, results of operations, and cash flows. These
factors include: negative macroeconomic factors affecting the health of the U.S. residential real estate industry,
the impact of COVID-19 on the residential real estate industry, negative factors disproportionately affecting
markets where we derive most of our revenue, intense competition in the U.S. residential real estate industry,
our inability to maintain or improve our technology offerings, our failure to obtain and provide comprehensive
and accurate real estate listings, errors or inaccuracies in the business data that we rely on to make decisions,
and our inability to attract homebuyers and home sellers to our website and mobile application.
Use of Estimates—The preparation of consolidated financial statements, in conformity with GAAP,
requires our management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and results of operations during the respective periods. Our estimates include, but are not limited to,
valuation of deferred income taxes, stock-based compensation, net realizable value of inventory, capitalization
of website and software development costs, the incremental borrowing rate for the determination of the present
value of lease payments, recoverability of intangible assets with finite lives, fair value of our mortgage loans
held for sale, fair value of reporting units for purposes of allocating and evaluating goodwill for impairment,
current expected credit losses on certain financial assets, and fair value of assets acquired and liabilities
assumed in connection with our acquisition of RentPath. The amounts ultimately realized from the affected
assets or ultimately recognized as liabilities will depend on, among other factors, general business conditions
and could differ materially in the near term from the carrying amounts reflected in the consolidated financial
statements.
Cash and Cash Equivalents—We consider all highly liquid investments originally purchased by us
with original maturities of three months or less at the date of purchase to be cash equivalents.
Restricted Cash—Restricted cash primarily consists of cash that is specifically designated to repay
borrowings under warehouse credit facilities and the secured revolving credit facility. As of December 31, 2021,
our restricted cash balance included $84,210 of deposits that were in excess of the amounts required as
repayment under our secured revolving credit facility agreement but were legally restricted as to withdrawal as
of December 31, 2021. These funds were disbursed to us in January 2022 and subsequently transferred to
cash and cash equivalents in January 2022.
55
Index to Notes
Accounts Receivable, Net and Allowance for Credit Losses—We have three material classes of
receivables: (i) real estate services receivables, (ii) receivables from the sale of homes through our properties
business, and (iii) receivables from customers in relation to our rentals business. Accounts receivable related to
these classes represent closed transactions for which cash has not yet been received. The majority of our
transactions are processed through escrow and collectibility is not a significant risk. For transactions not directly
processed through escrow, we establish an allowance for expected credit losses based on historical experience
of collectibility, current external economic conditions that may affect collectibility, and current or expected
changes to the regulatory environment in which we operate our businesses. We evaluate for changes in credit
quality indicators on an annual basis or in the event of a material economic event or material change in the
regulatory environment in which we operate.
Investments—We have two types of investments: (i) investments in marketable securities that are
available to support our operational needs, which are included in our consolidated balance sheets as short-term
and long-term investments, and (ii) equity investments reported at fair value, which are included in our
consolidated balance sheet as short-term investments.
Marketable Securities
Our short-term and long-term investments consist primarily of U.S. treasury securities, including
inflation protected securities, and other federal or local government issued securities. Available-for-sale debt
securities are recorded at fair value, and unrealized holding gains and losses are recorded as a component of
accumulated other comprehensive (loss) income. Securities with maturities of one year or less and those
identified by management at the time of purchase to be used to fund operations within one year are classified
as short-term. All other securities are classified as long-term. We evaluate our available-for-sale debt securities,
both ones classified as cash equivalents and as investments, for expected credit losses on a quarterly basis. An
expected credit loss reserve is charged against the fair value of an available-for-sale debt security when it is
identified, with a credit loss charged against net earnings. We review factors to determine whether an expected
credit loss exists based on credit quality indicators, such as the extent to which the fair value as of the reporting
date is less than the amortized cost basis, present value of cash flows expected to be collected, the financial
condition and prospects of the issuer, adverse conditions specifically related to the security, and any changes to
the credit rating of the security by a rating agency. Realized gains and losses are accounted for using the
specific identification method. Purchases and sales are recorded on a trade date basis.
Fair Value—We account for certain assets and liabilities at fair value. Fair value is defined as the
exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value must maximize the use of observable
inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value
measurements defines a three-level valuation hierarchy for disclosures as follows:
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted
quoted prices in markets that are not active, or other inputs that are observable such as quoted prices for similar
assets or liabilities in active markets, or can be corroborated by observable market data.
Level 3—Unobservable inputs that are supported by little or no market activity and require us to develop
our own assumptions.
The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level
of input that is significant to the fair value measurement. Our financial instruments consist of Level 1, Level 2,
and Level 3 assets and liabilities.
Concentration of Credit Risk—Financial instruments that potentially subject us to concentrations of
credit risk are primarily cash and cash equivalents and investments. We generally place our cash and cash
equivalents and investments with major financial institutions we deem to be of high-credit-quality in order to limit
our credit exposure. We maintain our cash accounts with financial institutions where deposits exceed federal
insurance limits.
56
Index to Notes
Inventory—Our inventory represents homes purchased with the intent of resale and are accounted for
under the specific identification method. Direct home acquisition and improvement costs are capitalized and
tracked directly with each specific home. Homes are stated in inventory at cost and are reviewed on a home by
home basis. If a home's estimated market value is less than the inventory cost then the home is written down to
net realizable value.
We classify inventory into three categories: homes for sale, homes not available for sale, and homes
under improvement. Homes for sale represent homes that are currently listed on the market for sale. Homes not
available for sale are generally recently purchased homes that have been temporarily rented back to the prior
owner and are not listed on the market for sale. The rental period is typically less than 30 days. Homes under
improvement are homes that are in the process of being prepared to be listed for sale.
Variable Interest Entities—In connection with establishing a secured revolving credit facility to support
the financing of homes that it purchases, RedfinNow formed a special purpose entity called RedfinNow
Borrower, which is a wholly owned subsidiary of Redfin Corporation. We have determined that RedfinNow
Borrower is a variable interest entity (“VIE”) and that we are the primary beneficiary of the variable interest in
RedfinNow Borrower based on our power to direct the activities that most significantly impact the economic
outcomes of the entity through our role in designing the entity and managing the homes purchased and sold by
the entity. We have a potentially significant variable interest in the entity based upon our equity interest held in
the VIE. As we have concluded that we are the primary beneficiary, we have included the accounts of the VIE in
our consolidated financial statements. The lender of the secured revolving credit facility does not have recourse
against the general credit of the primary beneficiary beyond the circumstances disclosed in Note 15. See Note
15 for a summary of the secured revolving credit facility, including outstanding borrowings associated with the
VIE and related collateral.
Loans Held for Sale—Redfin Mortgage, a wholly owned subsidiary of Redfin Corporation, originates
residential mortgage loans. We have elected the fair value option for all loans held for sale and record these
loans at fair value. Gains and losses from changes in fair value and direct loan origination fees and costs are
recognized in net gain on loans held for sale. The fair value of loans held for sale is in excess of the contractual
principal amounts by $660 and $1,353, respectively, as of December 31, 2021 and December 31, 2020. The
mortgage loans we originate are intended to be sold in the secondary mortgage market within a short period of
time following origination. Mortgage loans held for sale primarily consist of single-family residential loans
collateralized by the underlying home. Mortgage loans held for sale are recorded at fair value based on either
sale commitments or current market quotes for mortgage loans with similar characteristics. Interest income
earned or expense incurred on loans held for sale is captured as a component of income from operations.
Other Current Assets—Other current assets consist primarily of miscellaneous non-trade receivables
and interest rate lock commitments from mortgage origination operations (see Derivative Instruments below).
Derivative Instruments—Redfin Mortgage is party to IRLCs with customers resulting from mortgage
origination operations. IRLCs for single-family mortgage loans that Redfin Mortgage intends to sell are
considered free-standing derivatives. All free-standing derivatives are required to be recorded on our
consolidated balance sheets at fair value. Since Redfin Mortgage can terminate a loan commitment if the
borrower does not comply with the terms of the contract, and some loan commitments may expire without being
drawn upon, these commitments do not necessarily represent future cash requirements.
Interest rate risk related to the residential mortgage loans held for sale and IRLCs is offset using
forward sales commitments. We manage this interest rate risk through the use of forward sales commitments on
both a best efforts whole loans basis and on a mandatory basis. Forward sales commitments entered into on a
mandatory basis are done through the use of commitments to sell mortgage-backed securities. We do not enter
into or hold derivatives for trading or speculative purposes. Changes in the fair value of IRLCs and forward
sales commitments are recognized as revenue, and the fair values are reflected in other current assets and
accrued and other liabilities, as applicable. We estimate the fair value of an IRLC based on current market
quotes for mortgage loans with similar characteristics, net of origination costs and fees adjusting for the
probability that the mortgage loan will not fund according to the terms of commitment (referred to as a pull-
through factor). The fair value measurements of our forward sales commitments use prices quoted directly to us
from our counterparties.
57
Index to Notes
Property and Equipment—Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives. Depreciation and amortization is included in cost of
revenue, marketing, technology and development, and general and administrative and is allocated based on
estimated usage for each class of asset.
Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of
the related asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated
statements of operations. Repair and maintenance costs are expensed as incurred.
Costs incurred in the preliminary stages of website and software development are expensed as
incurred. Once an application has reached the development stage, direct internal and external costs relating to
upgrades or enhancements that meet the capitalization criteria are capitalized in property and equipment and
amortized on a straight-line basis over their estimated useful lives. Maintenance and enhancement costs
(including those costs in the post-implementation stages) are typically expensed as incurred, unless such costs
relate to substantial upgrades and enhancements to the websites (or software) that result in added functionality,
in which case the costs are capitalized.
Capitalized software development activities placed in service are amortized over the expected useful
lives of those releases. We view capitalized software costs as either internal use, or market and product
expansion. Currently, internal use and expansion useful lives are estimated at two to three years.
Estimated useful lives of website and software development activities are reviewed annually, or
whenever events or changes in circumstances indicate that intangible assets may be impaired, and adjusted as
appropriate to reflect upcoming development activities that may include significant upgrades or enhancements
to the existing functionality.
Intangible Assets—Intangible assets are finite lived and mainly consist of trade names, developed
technology, and customer relationships and are amortized over their estimated useful lives ranging from three to
ten years. The useful lives were determined by estimating future cash flows generated by the acquired
intangible assets. Fair values are derived by applying various valuation methodologies including the income
approach and cost approach, using critical estimates and assumptions that include the revenue growth rate,
royalty rate, discount rate, and cost to replace.
Impairment of Long-Lived Assets—Long-lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
Recoverability of assets to be held and used is measured first by a comparison of the carrying amount of an
asset to future undiscounted net cash flows expected to be generated by the asset. If such asset were
considered to be impaired, an impairment loss would be recognized in the amount by which the carrying value
of the asset exceeds its fair value. To date, no such impairment has occurred.
Goodwill—Goodwill represents the excess of the purchase price over the fair value of the net tangible
assets and identifiable intangible assets acquired in a business combination. Goodwill is not amortized, but is
subject to impairment testing. We assess the impairment of goodwill on an annual basis, during the fourth
quarter, or whenever events or changes in circumstances indicate that goodwill may be impaired.
We perform impairment tests of goodwill at our reporting unit level. In order to test for goodwill
impairment, we compare fair value of the reporting unit to its carrying value, including goodwill. If the fair value
of the reporting unit is less than its carrying amount, goodwill is written down for the amount by which the
carrying amount exceeds the reporting unit's fair value. However, the loss recognized cannot exceed the
carrying amount of goodwill. We use discounted cash flow models and market data of comparable guideline
companies to determine the fair value of a reporting unit. The assumptions used in these models are consistent
with those we believe a market participant would use. We have the option to perform a qualitative assessment
of goodwill rather than completing the impairment test. We consider macroeconomic conditions, industry and
market considerations, cost factors, overall financial performance, other relevant entity-specific events, potential
events affecting the reporting units, and changes in the fair value of our common stock. We must assess
whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If we
conclude this is the case, we must perform the testing discussed above. Otherwise, we do not need to perform
any further assessment. See Note 9 for more information.
58
Index to Notes
The aggregate carrying value of goodwill was $409,382 and $9,186 at December 31, 2021 and 2020,
respectively. There have been no accumulated impairments to goodwill.
Other Assets, Noncurrent—Other assets consists primarily of leased building security deposits and
the noncurrent portion of prepaid assets.
Leases—The extent of our lease commitments consists of operating leases for physical office locations
with original terms ranging from one to 11 years and finance leases for vehicles with terms of four years. We
have accounted for the portfolio of leases by disaggregation based on the nature and term of the lease.
Generally, the leases require a fixed minimum rent with contractual minimum rent increases over the term of the
lease. Leases with an initial term of twelve months or less are not recorded in the consolidated balance sheets,
but rather lease expense is recognized on a straight-line basis over the term of the lease.
When available, the rate implicit in the lease to discount lease payments to present value would be
used; however, none of our significant leases as of December 31, 2021 provide a readily determinable implicit
rate. Therefore, we must estimate our incremental borrowing rate for each portfolio of leases to discount the
lease payments based on information available at lease commencement.
We have evaluated the performance of existing leases in relation to our leasing strategy and have
determined that most renewal options would not be reasonably certain to be exercised.
The right-of-use asset and related lease liability are determined based on the lease component of the
consideration in each lease contract. We have evaluated our lease portfolio for appropriate allocation of the
consideration in the lease contracts between lease and nonlease components based on standalone prices and
determined the allocation per the contracts to be appropriate.
Mezzanine Equity—We have issued convertible preferred stock that we have determined is a financial
instrument with both equity and debt characteristics and is classified as mezzanine equity in our consolidated
financial statements. The instrument was initially recognized at fair value net of issuance costs. We reassess
whether the instrument is currently redeemable or probable to become redeemable in the future as of each
reporting date, in which, if the instrument meets either criteria, we will accrete the carrying value to the
redemption value based on the effective interest method over the remaining term. To assess classification, we
review all features of the instrument, including mandatory redemption features and conversion features that may
be substantive. All financial instruments that are classified as mezzanine equity are evaluated for embedded
derivative features by evaluating each feature against the nature of the host instrument (e.g. more equity-like or
debt-like). Features identified as embedded derivatives that are material are recognized separately as a
derivative asset or liability in the consolidated financial statements. We have evaluated our convertible preferred
stock and determined that its nature is that of an equity host and no material embedded derivatives exist that
would require bifurcation on our consolidated balance sheets. See Note 11 for more information.
Foreign Currency Translation—Our international operations generally use their local currency as their
functional currency. Assets and liabilities are translated at exchange rates in effect at the balance sheet date.
Income and expense accounts are translated at the average monthly exchange rates during the year. Resulting
translation adjustments are reported as a component of other comprehensive income and recorded in
accumulated other comprehensive (loss) income on our consolidated balance sheets.
Income Taxes—Income taxes are accounted for using an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the consolidated balance sheets and tax bases of assets and liabilities at the applicable
enacted tax rates. We establish a valuation allowance for deferred tax assets if it is more likely than not that
these items will expire before we are able to realize their benefits or if future deductibility is uncertain.
59
Index to Notes
We account for uncertainty in income taxes in accordance with ASC 740, Income Taxes. Tax positions
are evaluated utilizing a two-step process, whereby we first determine whether it is more likely than not that a
tax position will be sustained upon examination by the tax authority, including resolutions of any related appeals
or litigation processes, based on technical merit. If a tax position meets the more-likely-than-not recognition
threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The
tax position is measured as the largest amount of benefit that is greater than 50% likely to be realized upon
ultimate settlement. Subsequent adjustments to amounts previously recorded impact the financial statements in
the period during which the changes are identified. We recognize interest and penalties related to unrecognized
tax benefits as income tax expense.
Convertible Senior Notes—In accounting for the issuance of our convertible senior notes, we treat the
instrument wholly as a liability, in accordance with the adoption of ASU 2020-06, Debt—Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06").
Issuance costs are amortized to expense over the respective term of the convertible senior notes.
For conversions prior to the maturity of the notes, we will settle using cash, shares of our common
stock, or a combination of cash and shares of our common stock, at our election. The carrying amount of the
instrument (including unamortized debt issuance costs) is reduced by cash and other assets transferred, with
the difference reflected as a reduction to additional paid-in capital. The indentures governing our convertible
senior notes allow us, under certain circumstances, to irrevocably fix our method for settling conversions of the
applicable notes by giving notice to the noteholders. Our election to irrevocably fix the settlement method could
affect the calculation of diluted earnings per share when applicable. We have no plans to exercise our rights to
fix the settlement method.
Revenue Recognition—We generate revenue primarily from commissions and fees charged on each
real estate services transaction closed by our lead agents or partner agents, from the sale of homes, and from
subscription-based product offerings for our rentals business. Our key revenue components are brokerage
revenue, partner revenue, properties revenue, rentals revenue, mortgage revenue, and other revenue.
We have utilized the allowable practical expedient in the accounting guidance and elected not to
capitalize costs related to obtaining contracts with customers with durations of less than one year. We do not
have significant remaining performance obligations.
Revenue earned but not received is recorded as accrued revenue in accounts receivable on our
consolidated balance sheets, net of an allowance for credit losses. Accrued revenue consisting of commission
revenue is known and is clearing escrow, and therefore it is not estimated.
Nature and Disaggregation of Revenue
Real Estate Services Revenue
Brokerage Revenue—Brokerage revenue includes our offer and listing services, where our lead
agents represent homebuyers and home sellers. We recognize commission-based brokerage revenue upon
closing of a brokerage transaction, less the amount of any commission refunds, closing-cost reductions, or
promotional offers that may result in a material right. The transaction price is generally calculated by taking the
agreed upon commission rate and applying that to the home's selling price. Brokerage revenue primarily
contains a single performance obligation that is satisfied upon the closing of a transaction, at which point the
entire transaction price is earned. We are not entitled to any commission until the performance obligation is
satisfied and are not owed any commission for unsuccessful transactions, even if services have been provided.
In conjunction with providing offering and listing services to our customers, we may offer promotional pricing or
additional discounts on future services. This results in a material right to our customers and represents an
additional performance obligation, for which the transaction price is allocated based on standalone selling
prices. Amounts allocated to a promise to provide future listing or offering services at a significant discount are
initially recorded as contract liabilities. Our promotional pricing and additional discounts have not resulted in a
material impact to timing of revenue recognition. The balance of the corresponding contract liabilities are
included in accrued and other liabilities on our consolidated balance sheets. See Note 10 for more information.
60
Index to Notes
Partner Revenue—Partner revenue consists of fees paid to us from partner agents or under other
referral agreements, less the amount of any payments we make to homebuyers and home sellers. We
recognize these fees as revenue on the closing of a transaction. The transaction price is a fixed percentage of
the partner agent's commission. The partner agent or other entity related to our referral agreements directly
remits the referral fee revenue to us. We are neither entitled to referral fee revenue, nor is our performance
obligation satisfied, until the related referred home's sale closes.
Properties Revenue
Properties Revenue—Properties revenue consists of revenue earned when we sell homes that we
previously bought directly from homeowners. Properties revenue is recorded at closing on a gross basis,
representing the sales price of the home. Our contracts with customers contain a single performance obligation
that is satisfied upon a transaction closing. We do not offer warranties for sold homes, and there are no
continuing performance obligations following the transaction close date.
Rentals Revenue
Rentals Revenue—Rentals revenue is primarily composed of subscription-based product offerings for
internet listing services, as well as lead management and digital marketing solutions.
Rentals revenue is recorded as a component of service revenue in our consolidated statements of
comprehensive loss. Revenue is recognized upon transfer of control of promised service to customers over time
in an amount that reflects the consideration we expect to receive in exchange for those services. Revenues
from subscription-based services are recognized on a straight-line basis over the term of the contract, which
generally have a term of less than one year. Revenue is presented net of sales allowances, which are not
material.
The transaction price for a contract is generally determined by the stated price in the contract, excluding
any related sales taxes. We enter into contracts that can include various combinations of subscription services,
which are capable of being distinct and accounted for as separate performance obligations. We allocate the
transaction price to each performance obligation in the contract on a relative stand-alone selling price basis.
Generally, the combinations of subscription services are fulfilled concurrently and are co-terminus. Our rentals
contracts do not contain any refund provisions other than in the event of our non-performance or breach.
Mortgage Revenue
Mortgage Revenue—Mortgage revenue includes fees earned from mortgage origination services.
Mortgage revenue is recognized (1) when an interest rate lock commitment is made to a customer, adjusted for
a pull-through percentage, (2) for origination fees, when the purchase or refinance of a loan is complete, and (3)
when the fair value of our interest rate lock commitments, forward sale commitments, and loans held for sale
are recorded at current market quotes. Mortgage origination services are not subject to the guidance in ASC
606, Revenue from Contracts with Customers, as the scope of the standard does not apply to revenue on
contracts accounted for under ASC 860 Transfers and Servicing.
Other Revenue
Other Revenue—Other services revenue includes fees earned from title settlement services, Walk
Score data services, and advertising. Substantially all fees and revenue from other services are recognized
when the service is provided.
Intercompany Eliminations
Intercompany Eliminations—Revenue earned from transactions between operating segments are
eliminated in consolidating our financial statements. Intercompany transactions primarily consist of services
performed from our real estate services segment for our properties segment.
61
Index to Notes
Cost of Revenue—Cost of revenue consists primarily of personnel costs (including base pay, benefits,
and stock-based compensation), transaction bonuses, home-touring and field expenses, listing expenses, home
costs related to our properties segment, customer fulfillment costs related to our rentals segment, office and
occupancy expenses, and depreciation and amortization related to fixed assets and acquired intangible assets.
Home costs related to our properties segment include home purchase costs, capitalized improvements, selling
expenses directly attributable to the transaction, and home maintenance expenses.
Technology and Development—Technology and development expenses primarily include personnel
costs (including base pay, bonuses, benefits, and stock-based compensation), data licenses, software and
equipment, and infrastructure such as for data centers and hosted services. The expenses also include
amortization of capitalized internal-use software and website and mobile application development costs as well
as amortization of acquired intangible assets. We expense research and development costs as incurred and
record them in technology and development expenses.
Advertising and Advertising Production Costs—We expense advertising costs as they are incurred
and production costs as of the first date the advertisement takes place. Advertising costs totaled $119,278,
$42,919, and $62,536 in 2021, 2020, and 2019 respectively, and are included in marketing expenses.
Advertising production costs totaled $2,303, $256, and $2,029 in 2021, 2020, and 2019, respectively, and are
included in marketing expenses.
Stock-based Compensation—We account for stock-based compensation by measuring and
recognizing as compensation expense the fair value of all share-based payment awards made to employees,
including stock options and restricted stock unit awards, and shares forecasted to be issued pursuant to our
ESPP, in each case based on estimated grant date fair values. Stock-based compensation expense is
recognized over the requisite service period on a straight-line basis. The Black-Scholes-Merton option-pricing
model is used to determine the fair value of stock options and shares forecasted to be issued pursuant to our
ESPP. For restricted stock unit awards and restricted stock unit awards with performance conditions, we use the
market value of our common stock on the date of grant to determine the fair value of the award. For restricted
stock unit awards with market conditions, the market condition is reflected in the grant date fair value of the
award using a Monte Carlo simulation.
In valuing stock options and shares forecasted to be issued pursuant to our ESPP, we make
assumptions about expected life, stock price volatility, risk-free interest rates and expected dividends.
Expected Life—The expected term was estimated using the simplified method allowed under guidance
from the SEC as our historical share option exercise experience does not provide a reasonable basis upon
which to estimate the expected term.
Volatility—The expected stock price volatility for our common stock was estimated by taking the
average historical price volatility for industry peers based on daily price observations. Industry peers consist of
several public companies in the real estate and technology industries.
Risk-Free Rate—The risk-free interest rate is based on the yields of U.S. treasury securities with
maturities similar to the expected term of the options for each option group.
Dividend Yield—We have never declared or paid any cash dividends and do not presently plan to pay
cash dividends in the foreseeable future. Consequently, an expected dividend yield of zero was used.
Business Combinations—The results of businesses acquired in a business combination are included
in our consolidated financial statements from the date of acquisition. We record assets and liabilities of an
acquired business at their estimated fair values on the acquisition date. Any excess consideration over the fair
value of assets acquired and liabilities assumed is recognized as goodwill. During the measurement period,
which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and
liabilities assumed with the corresponding offset to goodwill.
Recently Adopted Accounting Pronouncements—In August 2020, the Financial Accounting
Standards Board issued authoritative guidance under ASU 2020-06, Debt—Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.
62
Index to Notes
This guidance removes the liability and equity separation models for convertible instruments with a cash
conversion feature or beneficial conversion feature. As a result, companies will more likely account for a
convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as
a single unit of account). In addition, the guidance simplifies the settlement assessment that issuers perform to
determine whether a contract in their own equity qualifies for equity classification. Finally, the guidance requires
entities to use the if-converted method to calculate earnings per share for all convertible instruments.
We early adopted the new standard as of January 1, 2021 using the modified retrospective approach.
The cumulative effect of initially applying the new standard was recognized as an adjustment to accumulated
deficit. Upon the adoption of the new standard we recognized the following adjustments:
Ending Balance as of
December 31, 2020
ASU 2020-06
Adjustments
Beginning Balance as of
January 1, 2021
Convertible senior notes, net
$
22,482 $
2,723 $
Convertible senior notes, net, noncurrent
Additional paid-in capital
Accumulated deficit
488,268
860,556
(270,313)
159,755
(170,240)
7,762
25,205
648,023
690,316
(262,551)
The $7,762 adjustment to accumulated deficit represents a reduction to non-cash interest expense
related to the accretion of the debt discount under the historical separation model.
Recently Issued Accounting Pronouncements—None applicable.
Note 2: Business Combinations
On April 2, 2021, we acquired, for $608,000 in cash, all of the equity interests of RentPath Holdings,
Inc., as reorganized following an internal restructuring of the entity and certain of its wholly owned subsidiaries
(as reorganized, "RentPath" and such acquisition, the "RentPath Acquisition"). In connection with the internal
restructuring, certain assets and liabilities related to the business of providing digital media services to clients in
the residential real estate business were transferred to RentPath, and the remaining assets and liabilities were
transferred to a wind-down company. We acquired RentPath to enter into the real estate rentals market.
The results of operations and the fair values of the assets acquired and liabilities assumed have been
included in the consolidated financial statements since the date of acquisition. RentPath is reported in our
rentals segment in Note 3. During the year ended December 31, 2021, RentPath contributed $121,877 to
revenue. The goodwill recognized in connection with our acquisition of RentPath is primarily attributable to the
anticipated synergies from future growth of the combined business and is not expected to be deductible for tax
purposes. We are currently evaluating the reporting unit allocation of goodwill.
63
Index to Notes
The following table summarizes the fair value of assets acquired and liabilities assumed as a result of
the RentPath Acquisition. As of December 31, 2021, the amount allocated to the opening balance of deferred
tax liabilities assumed in the RentPath Acquisition is provisional and subject to revision as more detailed
analyses are completed and additional information about the amount of this balance becomes available:
Cash and cash equivalents(1)
Accounts receivable
Prepaid expenses
Other current assets
Property and equipment, net
Operating lease right-of-use assets
Intangible assets
Goodwill
Total assets
Accounts payable
Accrued and other liabilities(1)
Lease liabilities
Lease liabilities and deposits, noncurrent
Payroll tax liabilities, noncurrent
Deferred tax liabilities
Total liabilities
Total purchase consideration
$
$
334
7,726
5,483
416
3,103
12,330
211,000
400,196
640,588
(1,355)
(9,412)
(1,264)
(11,066)
(1,030)
(8,461)
(32,588)
608,000
(1) On April 2, 2021, $334 of cash and cash equivalents owed to a wind-down company remained in RentPath's primary operating account due to the timing of
bank transfers and wires. The cash and cash equivalents were recorded at fair value along with an offsetting due-to liability on April 2, 2021.
RentPath acquisition-related costs consisted of external fees for advisory, legal, and other professional
services and totaled approximately $7,925 for the year ended December 31, 2021. These costs were expensed
as incurred and recorded in general and administrative costs in our consolidated statements of comprehensive
loss.
Identifiable Intangible Assets—The following table provides the fair values of the RentPath intangible
assets, along with their estimated useful lives:
Trade names
Developed technology
Customer relationships
Total
Estimated Fair
Value
Estimated Useful
Life
(in years)
$
$
70,000
60,500
80,500
211,000
10
3
10
The identifiable intangible assets include trade names, developed technology (an application platform),
and customer relationships. Trade names primarily relate to the RentPath brand. Developed technology relates
to the RentPath website and mobile application, which are the primary channels for meeting customers.
Customer relationships represent customer contracts existing at the acquisition date. The fair values of trade
names, developed technology, and customer relationships are derived by applying the relief from royalty
method, replacement cost method, and multi-period excess earnings method, respectively. Critical estimates in
valuing the intangible assets include revenue growth rate, royalty rate, discount rate, and number of months to
recreate the underlying application.
64
Index to Notes
Unaudited Pro Forma Financial Information—The following table presents unaudited pro forma
financial information for the years ended December 31, 2021 and 2020. The pro forma financial information
combines our results of operations with that of RentPath as though the companies had been combined as of
January 1, 2020. The pro forma information is presented for informational purposes only and is not indicative of
the results of operations that would have been achieved if the RentPath Acquisition had taken place at such
time. The pro forma financial information presented below includes adjustments for bankruptcy costs,
depreciation and amortization, provision for income taxes, transaction costs, and interest expense related to
debt that would not have been incurred if we had consummated the RentPath Acquisition on January 1, 2020:
Revenue
Net loss
Year Ended December 31,
2021
2020
$
1,965,689 $
(122,833)
1,080,482
(50,161)
Material non-recurring adjustments made in the pro forma financial information disclosed above were
$77,613 and $34,283 for the years ended December 31, 2021 and 2020, respectively. These adjustments
primarily relate to the reorganization costs that would not have been incurred if we had consummated the
RentPath Acquisition on January 1, 2020 and decreased expense in the periods specified. These adjustments
also include an income tax benefit resulting from the RentPath Acquisition, which assumes that we had
consummated the RentPath Acquisition on January 1, 2020.
Note 3: Segment Reporting and Revenue
In operation of the business, our management, including our chief operating decision maker ("CODM"),
who is also our chief executive officer, evaluates the performance of our operating segments based on revenue
and gross profit. We do not analyze discrete segment balance sheet information related to long-term assets,
substantially all of which are located in the United States. All other financial information is presented on a
consolidated basis. We have six operating segments and four reportable segments, real estate services,
properties, rentals, and mortgage. As a result of our acquisition of RentPath, we added the rentals segment and
determined it is a reportable segment because RentPath met the quantitative thresholds under ASC 280,
Segment Reporting. Our CODM evaluates the rentals segment as a stand-alone business; accordingly, we are
separately reporting the segment's operating expenses from our consolidated operating expenses. Our
mortgage operating segment does not meet the reportable segment quantitative thresholds set forth in ASC
280, but due to our anticipated acquisition of Bay Equity, we have moved our mortgage segment from the
"other" segment and now present it as a standalone reportable segment. We have reflected this change to the
earliest period presented for comparability purposes. These changes had no impact on our previously reported
consolidated net revenue, (loss) income from operations, net loss, or net loss per share.
We generate revenue primarily from commissions and fees charged on each real estate services
transaction closed by our lead agents or partner agents, from the sale of homes, and from subscription-based
product offerings for our rentals business. Our key revenue components are brokerage revenue, partner
revenue, properties revenue, rentals revenue, mortgage revenue, and other revenue.
65
Index to Notes
Information on each of the reportable and other segments and reconciliation to consolidated net loss is
as follows:
Revenue
Real estate services (brokerage)
Real estate services (partner)
Properties
Rentals
Mortgage
Other
Intercompany eliminations
Total
Cost of revenue
Real estate services
Properties
Rentals
Mortgage
Other
Intercompany eliminations
Total
Gross Profit
Real estate services
Properties
Rentals
Mortgage
Other
Total
Real estate services, properties, mortgage, and other operating expenses
Rentals operating expenses
Interest income
Interest expense
Income tax benefit
Other income (expense), net
Net loss
Note 4: Financial Instruments
Derivatives
Year Ended December 31,
2021
2020
2019
$
849,288 $
607,513 $
54,046
880,653
121,877
19,818
13,609
43,695
209,686
—
15,835
12,377
(16,526)
(3,013)
496,480
27,060
240,507
—
6,097
11,537
(1,885)
$
1,922,765 $
886,093 $
779,796
603,320
870,052
21,739
26,096
14,264
417,140
214,382
—
15,627
9,847
(16,526)
(3,013)
373,150
245,189
—
9,978
9,261
(1,885)
$
1,518,945 $
653,983 $
635,693
300,014
10,601
100,138
(6,278)
(655)
234,068
(4,696)
—
208
2,530
150,390
(4,682)
—
(3,881)
2,276
$
403,820 $
232,110 $
144,103
367,269
146,504
635
231,318
—
2,074
(11,762)
(19,495)
6,107
5,360
—
(1,898)
223,349
—
7,146
(8,928)
—
223
$
(109,613) $
(18,527) $
(80,805)
Our primary market exposure is to interest rate risk, specifically U.S. treasury and mortgage interest
rates, due to their impact on mortgage-related assets and commitments. We use forward sales commitments on
whole loans and mortgage-backed securities to manage and reduce this risk. We do not have any derivative
instruments designated as hedging instruments.
Forward Sales Commitments—We are exposed to interest rate and price risk on loans held for sale
from the funding date until the date the loan is sold. Forward sales commitments on whole loans and mortgage-
backed securities are used to fix the forward sales price that will be realized at the sale of each loan.
66
Index to Notes
Interest Rate Lock Commitments—Interest rate lock commitments ("IRLCs") represent an agreement
to extend credit to a mortgage loan applicant. We commit (subject to loan approval) to fund the loan at the
specified rate, regardless of changes in market interest rates between the commitment date and the funding
date. Outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of
commitment through the loan funding date or expiration date. Loan commitments generally range between 30
and 90 days and the borrower is not obligated to obtain the loan. Therefore, IRLCs are subject to fallout risk,
which occurs when approved borrowers choose not to close on the underlying loans. We review our
commitment-to-closing ratio ("pull-through rate") as part of an estimate of the number of mortgage loans that will
fund according to the IRLCs.
December 31,
2021
2020
$
70,550 $
67,485
130,109
88,923
Forward sales commitments
Notional Amounts
IRLCs
follows:
The locations and amounts of gains (losses) recognized in revenue related to our derivatives are as
Instrument
Forward sales commitments
IRLCs
Classification
Service revenue
Service revenue
$
Year Ended December 31,
2021
2020
2019
518 $
(641)
(184) $
1,342
96
176
Fair Value of Financial Instruments
In May 2020, we purchased preferred stock of Matterport, Inc. ("Matterport"), then a privately held
company. In July 2021, Matterport became a publicly traded company through a business combination
transaction with a special purpose acquisition vehicle. In connection with the transaction, we received
Matterport's publicly traded Class A common stock in exchange for the preferred stock that we owned. We
previously recorded our investment at cost because the preferred stock did not have a readily determinable fair
value, but upon receipt of the publicly traded common stock, we recorded our investment at fair value. The
increase in value is recorded in other income (expense), net in our consolidated statements of comprehensive
loss for the year ended December 31, 2021, and is included in adjustments to reconcile net loss to net cash
used in operating activities, as a component of other, in our consolidated statement of cash flows for the year
ended December 31, 2021. The balance is included in short-term investments on our consolidated balance
sheets.
67
Index to Notes
A summary of assets and liabilities related to our financial instruments, measured at fair value on a
recurring basis and as reflected on our consolidated balance sheets, is set forth below:
Balance at
December 31,
2021
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash equivalents
Money market funds
Total cash equivalents
Short-term investments
U.S. treasury securities
Agency bonds
Equity securities
Loans held for sale
Prepaid expenses and other current assets
Forward sales commitments
IRLCs
Total prepaid expenses and other current assets
Long-term investments
U.S. treasury securities
Total assets
Liabilities
Accrued and other liabilities
Forward sales commitments
IRLCs
Total liabilities
$
$
$
$
509,971 $
509,971 $
— $
509,971
509,971
16,718
11,906
5,113
35,759
138
1,191
1,329
16,718
11,906
5,113
—
—
—
—
54,828
54,828
—
—
—
—
35,759
138
—
138
—
635,624 $
598,536 $
35,897 $
93 $
60
153 $
— $
—
— $
93 $
—
93 $
—
—
—
—
—
—
—
1,191
1,191
—
1,191
—
60
60
Assets
Cash equivalents
Money market funds
U.S. treasury securities
Total cash equivalents
Short-term investments
U.S. treasury securities
Loans held for sale
Prepaid expenses and other current assets
Forward sales commitments
IRLCs
Total prepaid expenses and other current assets
Long-term investments
Agency bonds
Total assets
Liabilities
Accrued and other liabilities
Forward sales commitments
IRLCs
Total liabilities
Balance at
December 31,
2020
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
886,261 $
886,261 $
— $
6,100
892,361
131,561
42,539
34
1,781
1,815
6,100
892,361
131,561
—
—
—
—
11,922
11,922
—
—
—
42,539
34
—
34
—
$
1,080,198 $
1,035,844 $
42,573 $
$
$
507 $
10
517 $
— $
—
— $
507 $
—
507 $
—
—
—
—
—
—
1,781
1,781
—
1,781
—
10
10
There were no transfers into or out of Level 3 financial instruments during the years ended
December 31, 2021 and 2020.
The significant unobservable input used in the fair value measurement of IRLCs is the pull-through rate.
Significant changes in the input could result in a significant change in fair value measurement.
68
Index to Notes
The following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs:
Key Inputs
Valuation Technique
December 31, 2021
December 31, 2020
Weighted-average pull-through rate
Market pricing
71.1%
72.3%
The following is a summary of changes in the fair value of IRLCs for the period ended December 31,
2021:
Balance, net—January 1, 2021
Issuances of IRLCs
Settlements of IRLCs
Net loss recognized in earnings
Balance, net—December 31, 2021
Changes in fair value recognized during the period relating to assets still held at December 31, 2021
$
$
$
1,771
18,415
(18,827)
(228)
1,131
(641)
The following table presents the carrying amounts and estimated fair values of our convertible senior
notes that are not recorded at fair value on our consolidated balance sheets:
Issuance
Net Carrying
Amount
Estimated Fair
Value
Net Carrying
Amount
Estimated Fair
Value
December 31, 2021
December 31, 2020
2023 notes
2025 notes
2027 notes
$
23,280 $
34,487 $
22,482 $
650,783
563,234
593,366
467,814
488,268
—
59,894
802,083
—
The difference between the principal amounts of our 2023 notes, our 2025 notes, and our 2027 notes,
which were $23,512, $661,250, and $575,000, respectively, and the net carrying amounts of the notes
represents the unamortized debt discount and debt issuance costs. See Note 15 for additional details. The
estimated fair value of each tranche of convertible senior notes is based on the closing trading price of the notes
on the last day of trading for the period, and is classified as Level 2 within the fair value hierarchy, due to the
limited trading activity of the notes. As of December 31, 2021, the difference between the net carrying amount of
the notes and their estimated fair values represented the notes' equity conversion premium. Based on the
closing price of our common stock of $38.39 on December 31, 2021, the if-converted value of the 2023 notes
exceeded the principal amount of $23,512, while the if-converted values of the 2025 notes and 2027 notes were
less than the principal amounts of $661,250 and $575,000, respectively. Refer to Note 15 for additional details
on the convertible senior notes.
See Note 11 for the carrying amount of our convertible preferred stock.
Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as
property and equipment, goodwill and other intangible assets, equity investments, and other assets. These
assets are measured at fair value if determined to be impaired.
69
Index to Notes
The cost or amortized cost, gross unrealized gains and losses, and estimated fair market value of our
cash, money market funds, restricted cash, available-for-sale investments, and equity securities were as
follows:
Cash
Fair Value
Hierarchy
N/A
Money markets funds
Level 1
Restricted cash
N/A
U.S. treasury
securities
Agency bonds
Equity securities
Total
Level 1
Level 1
Level 1
Cash
Fair Value
Hierarchy
N/A
December 31, 2021
Cost or
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Cash, Cash
Equivalents,
Restricted
Cash
Short-term
Investments
$
81,032 $
— $
— $
81,032 $
81,032 $
— $
509,971
127,278
71,749
11,900
500
—
—
1
6
4,613
—
—
509,971
127,278
509,971
127,278
—
—
—
—
(204)
71,546
—
—
11,906
5,113
—
—
—
16,718
54,828
11,906
5,113
—
—
$ 802,430 $
4,620 $
(204) $ 806,846 $
718,281 $
33,737 $
54,828
Long-term
Investments
—
December 31, 2020
Cost or
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Cash, Cash
Equivalents,
Restricted
Cash
Short-term
Investments
$
32,915 $
— $
— $
32,915 $
32,915 $
— $
Long-term
Investments
—
Money markets funds
Level 1
Restricted cash
N/A
U.S. treasury
securities
Agency bonds
Total
Level 1
Level 1
886,261
20,544
137,502
11,900
—
—
159
22
—
—
—
—
886,261
20,544
137,661
11,922
886,261
20,544
—
—
6,100
131,561
—
—
—
—
—
11,922
$ 1,089,122 $
181 $
— $ 1,089,303 $
945,820 $ 131,561 $
11,922
As of December 31, 2021 and 2020, the aggregate fair value of available-for-sale debt securities in an
unrealized loss position totaled $54,671 and $0, with aggregate unrealized losses of $204 and $0, respectively.
We have evaluated our portfolio of available-for-sale debt securities based on credit quality indicators for
expected credit losses and do not believe there are any expected credit losses. In addition, as of December 31,
2021 and 2020, we had not made a decision to sell any of our debt securities held, nor did we consider it more
likely than not that we would be required to sell such securities before recovery of our amortized cost basis. Our
portfolio consists of U.S. government securities, all with a high quality credit rating issued by various credit
agencies.
As of December 31, 2021 and 2020, we had accrued interest of $86 and $108, respectively, on our
available-for-sale investments, of which we have recorded no expected credit losses. Accrued interest
receivable is presented within other current assets in our consolidated balance sheets.
Note 5: Inventory
The components of inventory were as follows:
Properties for sale
Properties not available for sale
Properties under improvement
Inventory
December 31,
2021
2020
$
$
119,410 $
16,377
222,434
358,221 $
17,153
7,225
24,780
49,158
70
Index to Notes
Inventory costs include direct home purchase costs and any capitalized improvements, net of inventory
reserves, which reflect the lower of cost or net realizable value write-downs applied on a specific home basis.
As of December 31, 2021 and 2020, lower of cost or net realizable value write-downs were $2,364 and $29,
respectively. These write-downs are included within the changes in inventory in net cash (used in) provided by
operating activities in our consolidated statements of cash flows. During the year ended December 31, 2021, we
purchased 2,021 homes with an inventory value of $1,034,916 and sold 1,450 homes with an inventory value of
$738,809. During the year ended December 31, 2020, we purchased 394 homes with an inventory value of
$158,269 and sold 453 homes with an inventory value of $182,906.
Note 6: Property and Equipment
The components of property and equipment were as follows:
Leasehold improvements
Website and software development costs
Computer and office equipment
Software
Furniture
Property and equipment, gross
Accumulated depreciation and amortization
Construction in progress
Property and equipment, net
Useful Lives (years)
2021
2020
December 31,
Shorter of lease term
or economic life
$
2 - 3
3 - 5
3
7
33,455 $
50,439
14,216
1,871
8,091
108,072
(59,766)
10,365
$
58,671 $
29,558
33,278
7,765
1,858
7,450
79,909
(41,614)
5,693
43,988
Depreciation and amortization expense for property and equipment amounted to $20,047, $14,076, and
$8,742 for the years ended December 31, 2021, 2020, and 2019, respectively. We capitalized software
development costs, including stock-based compensation, of $19,175, $11,414, and $8,396 during the years
ended December 31, 2021, 2020, and 2019, respectively.
Note 7: Leases
The components of lease expense were as follows:
Lease Cost
Operating lease cost:
Operating lease cost(1)
Operating lease cost(1)
Total operating lease cost
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease cost
Classification
Cost of revenue
Operating expenses
Cost of revenue
Cost of revenue
Year Ended December 31,
2021
2020
$
$
$
$
9,437 $
6,123
15,560 $
492 $
73
565 $
8,571
4,370
12,941
130
20
150
(1) Includes lease expense with initial terms of twelve months or less of $1,464 and $998 for the year ended December 31, 2021 and 2020.
71
Index to Notes
Maturity of Lease Liabilities
Operating
Financing
Lease Liabilities
Other Leases
Operating
Total Lease
Obligations
$
17,234 $
574 $
929 $
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Interest(1)
Present value of lease liabilities
$
$
16,224
14,653
11,233
10,495
6,434
76,273 $
7,636
68,637 $
561
475
156
—
—
334
312
193
18
—
1,766 $
1,786 $
141
1,625
(1) Includes interest on operating leases of $2,674 and financing leases of $73 due within the next twelve months.
18,737
17,119
15,440
11,582
10,513
6,434
79,825
5.2
3.5
4.4 %
5.4 %
December 31,
2021
2020
4.8
3.2
4.4 %
5.4 %
Year Ended December 31,
2021
2020
$
$
16,421 $
14,207
83
347
7,677 $
1,333
20
102
1,186
669
Lease Term and Discount Rate
Weighted-average remaining operating lease term (years)
Weighted-average remaining finance lease term (years)
Weighted-average discount rate for operating leases
Weighted-average discount rate for finance leases
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases
Operating cash outflows from finance leases
Financing cash outflows from finance leases
Right-of-use assets obtained in exchange for lease liabilities
Operating leases
Finance leases
Note 8: Commitments and Contingencies
Legal Proceedings
Below is a discussion of our material, pending legal proceedings. Except as discussed below, we
cannot estimate a range of reasonably possible losses given the preliminary stage of these proceedings and the
claims and issues presented. In addition to the matters discussed below, from time to time, we are involved in
litigation, claims, and other proceedings arising in the ordinary course of our business. Except for the matters
discussed below, we do not believe that any of our pending litigation, claims, and other proceedings are material
to our business.
Lawsuit by David Eraker—On May 11, 2020, David Eraker, our co-founder and former chief executive
officer who departed Redfin in 2006, filed a complaint through Appliance Computing III, Inc. (d/b/a Surefield)
("Surefield"), which is a company that Mr. Eraker founded and that we believe he controls, in the U.S. District
Court for the Western District of Texas, Waco Division. The complaint alleges that we are infringing patents
claimed to be owned by Surefield without its authorization or license. Surefield is seeking an unspecified
amount of damages and an injunction against us offering products and services that allegedly infringe the
patents at issue. On July 15, 2020, we filed a counterclaim against Surefield to allege that (i) we are not
infringing on the patents that Surefield has alleged that we are infringing and (ii) the patents claimed by
Surefield are invalid. This counterclaim asks the court to declare judgment in our favor.
72
Index to Notes
Lawsuit Alleging Violations of the Fair Housing Act—On October 28, 2020, a group of ten
organizations filed a complaint against us in the U.S. District Court for the Western District of Washington. The
organizations are the National Fair Housing Alliance, the Fair Housing Center of Metropolitan Detroit, the Fair
Housing Justice Center, the Fair Housing Rights Center in Southeastern Pennsylvania, the HOPE Fair Housing
Center, the Lexington Fair Housing Council, the Long Island Housing Services, the Metropolitan Milwaukee Fair
Housing Council, Open Communities, and the South Suburban Housing Center. The complaint alleges that
certain of our business policies and practices violate certain provisions of the Fair Housing Act (the “FHA”). The
plaintiffs allege that these policies and practices (i) have the effect of our services being unavailable in
predominantly non-white communities on a more frequent basis than predominantly white communities and (ii)
are unnecessary to achieve a valid interest or legitimate objective. The complaint focuses on the following
policies and practices, as alleged by the plaintiffs: (i) a home's price must exceed a certain dollar amount before
we offer service through one of our lead agents or partner agents and (ii) our services and pricing structures are
available only for homes serviced by one of our lead agents and those same services and pricing structures
may not be offered by one of our partner agents. The plaintiffs seek (i) a declaration that our alleged policies
and practices violate the FHA, (ii) an order enjoining us from further alleged violations, (iii) an unspecified
amount of monetary damages, and (iv) payment of plaintiffs’ attorneys' fees and costs. In December 2021, we
offered to settle the plaintiffs' claims for an amount that is not material to our consolidated financial statements
taken as a whole, and we accrued a legal settlement expense for our settlement offer, net of funds we expect to
receive from our insurance carrier.
Lawsuits Alleging Misclassification—On August 28, 2019, Devin Cook, who is one of our former
independent contractor licensed sales associates, whom we call associate agents, filed a complaint against us
in the Superior Court of California, County of San Francisco. The plaintiff initially pled the complaint as a class
action and alleged that we misclassified her as an independent contractor instead of an employee. The plaintiff
also sought representative claims under California’s Private Attorney General Act ("PAGA"). On January 30,
2020, the plaintiff filed a first amended complaint dismissing her class action claim and asserting only claims
under PAGA. On September 24, 2021, the court denied our motion for summary judgment to dismiss the
plaintiff’s remaining claims under PAGA, holding that at this stage of the proceeding, we had not proved that we
properly classified associate agents as independent contractors under California law. The plaintiff continues to
seek unspecified penalties for alleged violations of PAGA.
On November 20, 2020, Jason Bell, who is one of our former lead agents as well as a former associate
agent, filed a complaint against us in the U.S. District Court for the Southern District of California. The complaint
is pled as a class action and alleges that, (1) during the time he served as an associate agent, we misclassified
him as an independent contractor instead of an employee and (2) during the time he served as a lead agent, we
misclassified him as an employee who was exempt from minimum wage and overtime laws. The plaintiff also
asserts representative claims under PAGA. The plaintiff is seeking unspecified amounts of unpaid overtime
wages, regular wages, meal and rest period compensation, waiting time and other penalties, injunctive and
other equitable relief, and plaintiff's attorneys' fees and costs. On August 12, 2021, the court granted our motion
to compel arbitration on the plaintiff’s non-PAGA claims and stayed the plaintiff’s PAGA claims pending
resolution of the arbitration. Following the court’s grant, the plaintiff filed an arbitration demand.
On March 24, 2021, Anthony Bush, who is one of our former associate agents, filed a complaint against
us in the Superior Court of California, County of Alameda. The complaint alleges that, during the time he served
as an associate agent, we misclassified him as an independent contractor instead of an employee. The plaintiff
also asserts representative claims under PAGA. The plaintiff is seeking unspecified amounts of unpaid overtime
wages, regular wages, meal and rest period compensation, penalties, injunctive, and other equitable relief, and
plaintiff's attorneys' fees and costs. On September 27, 2021, the court granted our motion to stay the plaintiff’s
action pending resolution of the PAGA claims brought against us by Devin Cook described above. The plaintiff
has since filed an arbitration demand, and we have filed a motion to stay the arbitration pending resolution of
the claims brought against us by Devin Cook described above.
Other Commitments
Other commitments relate to homes that are under contract to purchase through our properties
business but that have not closed, and network infrastructure for our data operations.
Future payments due under these agreements as of December 31, 2021 are as follows:
73
Index to Notes
2022
2023
2024
2025
2026
Thereafter
Homes Under
Contract
Other
Commitments
$
15,690 $
—
—
—
—
—
17,392
2,938
1,087
—
—
—
Total future minimum payments
$
15,690 $
21,417
Our title and settlement business holds cash in escrow at third-party financial institutions on behalf of
homebuyers and home sellers. As of December 31, 2021, we held $9,905 in escrow and did not record this
amount on our consolidated balance sheets. We may be held contingently liable for the disposition of the cash
we hold in escrow.
Note 9: Acquired Intangible Assets and Goodwill
Acquired Intangible Assets—The following table presents the gross carrying amount and
accumulated amortization of intangible assets:
December 31, 2021
December 31, 2020
Weighted-
Average
Useful
Life
(years)
10
3.3
10
Trade names
Developed technology
Customer relationship
Gross
Accumulated
Amortization
Net
Gross
Accumulated
Amortization
Net
$
71,040 $
(6,004) $
65,036 $
1,040 $
(650) $
63,480
81,360
(17,285)
(6,662)
46,195
74,698
2,980
860
(1,862)
(538)
390
1,118
322
$ 215,880 $
(29,951) $ 185,929 $
4,880 $
(3,050) $
1,830
Our intangible assets are amortized on a straight-line basis over their respective estimated useful lives
to a split between general and administrative and cost of revenue for customer relationships and trade names;
and developed technology intangible assets are split between general and administrative expense, cost of
revenue, and technology and development expense in our consolidated statements of comprehensive loss.
Amortization expense amounted to $26,901 and $488 for the years ended December 31, 2021 and 2020,
respectively.
The following table presents our estimate of remaining amortization expense for intangible assets that
existed as of December 31, 2021:
2022
2023
2024
2025
2026
Thereafter
Estimated remaining amortization expense
Goodwill—The following table presents the carrying amount of goodwill:
Balance as of December 31, 2020
Goodwill resulting from acquisition
Balance as of December 31, 2021
$
$
$
$
35,705
35,705
20,458
15,050
15,050
63,961
185,929
9,186
400,196
409,382
74
Index to Notes
Note 10: Accrued and Other Liabilities
The components of accrued and other liabilities were as follows:
Accrued compensation and benefits
Miscellaneous accrued and other liabilities
Payroll tax liability deferred by the CARES Act
Customer contract liabilities
Total accrued and other liabilities
Note 11: Mezzanine Equity
December 31,
2021
2020
$
$
78,437 $
25,217
7,760
6,708
118,122 $
49,238
22,906
6,812
3,688
82,644
On April 1, 2020, we issued 4,484,305 shares of our common stock, at a price of $15.61 per share, and
40,000 shares of our preferred stock, at a price of $1,000 per share, for aggregate gross proceeds of $110,000.
We designated this preferred stock as Series A Convertible Preferred Stock (our "convertible preferred stock").
Our convertible preferred stock is classified as mezzanine equity in our consolidated financial statements as the
substantive conversion features at the option of the holder precludes liability classification. We have determined
there are no material embedded features that require recognition as a derivative asset or liability.
We allocated the gross proceeds of $110,000 to the common stock issuance and the convertible
preferred stock issuance based on the standalone fair value of the issuances, resulting in a fair valuation of
$40,000 for the preferred stock, which is also the value of the mandatory redemption amount.
As of December 31, 2021, the carrying value of our convertible preferred stock, net of issuance costs, is
$39,868, and holders have earned unpaid stock dividends in the amount of 30,640 shares of common stock.
This stock dividend was issued on January 3, 2022. These shares are included in basic and diluted net loss per
share attributable to common stock, as described in Note 13. As of December 31, 2021, no shares of the
preferred stock have been converted, and the preferred stock was not redeemable, nor probable to become
redeemable in the future as there is a more than remote chance the shares will be automatically converted prior
to the mandatory redemption date. The number of shares of common stock reserved for future issuance
resulting from dividends, conversion, or redemption with respect to the preferred stock was 2,622,177 as of the
issuance date.
Dividends—The holders of our convertible preferred stock are entitled to dividends. Dividends accrue
daily based on a 360 day fiscal year at a rate of 5.5% per annum based on the issue price and are payable
quarterly in arrears on the first business day following the end of each calendar quarter. Assuming we satisfy
certain conditions, we will pay dividends in shares of common stock at a rate of the dividend payable divided by
$17.95. If we do not satisfy such conditions, we will pay dividends in a cash amount equal to (i) the dividend
shares otherwise issuable on the dividends multiplied by (ii) the volume-weighted average closing price of our
common stock for the ten trading days preceding the date the dividends are payable.
Participation Rights—Holders of our convertible preferred stock are entitled to dividends paid and
distributions made to holders of our common stock to the same extent as if such preferred stockholders had
converted their shares of preferred stock into common stock and held such shares on the record date for such
dividends and distributions.
Conversion—Holders may convert their convertible preferred stock into common stock at any time at a
rate per share of preferred stock equal to the issue price divided by $19.51 (the "conversion price"). A holder
that converts will also receive any dividend shares resulting from accrued dividends.
Our convertible preferred stock may also be automatically converted to shares of our common stock. If
the closing price of our common stock exceeds $27.32 per share (i) for each day of the 30 consecutive trading
days immediately preceding April 1, 2023 or (ii) following April 1, 2023 until 30 trading days prior to November
30, 2024, for each day of any 30 consecutive trading days, then each outstanding share of preferred stock will
automatically convert into a number of shares of our common stock at a rate per share of preferred stock equal
to the issue price divided by the conversion price. Upon an automatic conversion, a holder will also receive any
dividend shares resulting from accrued dividends.
75
Index to Notes
Redemption—On November 30, 2024, we will be required to redeem any outstanding shares of our
convertible preferred stock, and each holder may elect to receive cash, shares of common stock, or a
combination of cash and shares. If a holder elects to receive cash, we will pay, for each share of preferred
stock, an amount equal to the issue price plus any accrued dividends. If a holder elects to receive shares, we
will issue, for each share of preferred stock, a number of shares of common stock at a rate of the issue price
divided by the conversion price plus any dividend shares resulting from accrued dividends.
A holder of our convertible preferred stock has the right to require us to redeem up to all shares of
preferred stock it holds following certain events outlined in the document governing the preferred stock. If a
holder redeems as the result of such events, such holder may elect to receive cash or shares of common stock,
as calculated in the same manner as the mandatory redemption described above. Additionally, such holder will
also receive, in cash or shares of common stock as elected by the holder, an amount equal to all scheduled
dividend payments on the preferred stock for all remaining dividend periods from the date the holder gives its
notice of redemption.
Liquidation Rights—Upon our liquidation, dissolution, or winding up, holders of our convertible
preferred stock will be entitled to receive cash out of our assets prior to holders of the common stock.
Note 12: Equity and Equity Compensation Plans
Common Stock—As of December 31, 2021 and 2020, our amended and restated certificate of
incorporation authorized us to issue 500,000,000 shares of common stock with a par value of $0.001 per share.
Preferred Stock—As of December 31, 2021 and 2020, our amended and restated certificate of
incorporation authorized us to issue 10,000,000 shares of preferred stock with a par value of $0.001.
Amended and Restated 2004 Equity Incentive Plan—We granted stock options under our 2004
Equity Incentive Plan, as amended ("2004 Plan"), until July 26, 2017, when we terminated it in connection with
our IPO. Accordingly, no shares are available for future issuance under our 2004 Plan. Our 2004 Plan continues
to govern outstanding equity awards granted thereunder, all of which are fully vested. The term of each stock
option under the plan is no more than 10 years, and each stock option generally vests over a four-year period.
2017 Equity Incentive Plan—Our 2017 Equity Incentive Plan ("2017 EIP") became effective on July
26, 2017 and provides for issuance of incentive and nonqualified common stock options and restricted stock
units to employees, directors, officers, and consultants. The number of shares of common stock initially
reserved for issuance under our 2017 EIP was 7,898,159. The number of shares reserved for issuance under
our 2017 EIP will increase automatically on January 1 of each calendar year beginning on January 1, 2018, and
continuing through January 1, 2028, by the number of shares equal to the lesser of 5% of the total outstanding
shares of our common stock as of the immediately preceding December 31 or an amount determined by our
board of directors. The term of each stock option and restricted stock unit under the plan will not exceed 10
years, and each award generally vests between two and four years.
We have reserved shares of common stock for future issuance under our 2017 EIP as follows:
Stock options issued and outstanding
Restricted stock units outstanding
Shares available for future equity grants
Total shares reserved for future issuance
December 31,
2021
2020
4,019,011
4,617,425
15,205,854
23,842,290
5,733,738
4,459,743
11,309,377
21,502,858
76
Index to Notes
2017 Employee Stock Purchase Plan—Our 2017 Employee Stock Purchase Plan ("ESPP") was
approved by the board of directors on July 27, 2017, and enables eligible employees to purchase shares of our
common stock at a discount. Purchases will be accomplished through participation in discrete offering periods.
We initially reserved 1,600,000 shares of common stock for issuance under our ESPP. The number of shares
reserved for issuance under our ESPP will increase automatically on January 1 of each calendar year beginning
after the first offering date and continuing through January 1, 2028, by the number of shares equal to the lesser
of 1% of the total outstanding shares of our common stock as of the immediately preceding December 31 or an
amount determined by our board of directors. On each purchase date, eligible employees will purchase our
common stock at a price per share equal to 85% of the lesser of (i) the fair market value of our common stock
on the first trading day of the offering period, and (ii) the fair market value of our common stock on the purchase
date.
We have reserved shares of common stock for future issuance under our ESPP as follows:
Shares available for issuance at beginning of period
Shares issued during the period
Total shares available for issuance at end of period
December 31,
2021
2020
4,039,667
(334,248)
3,705,419
3,330,271
(320,609)
3,009,662
The weighted-average grant date fair value and the assumptions used in calculating fair values of
shares forecasted to be issued pursuant to our ESPP are as follows:
Expected life
Volatility
Risk-free interest rate
Dividend yield
Weighted-average grant date fair value
For the Offering
Period beginning
July 1, 2021
For the Offering
Period beginning
January 1, 2021
0.5 years
74.50%
0.05%
—%
$22.79
0.5 years
61.49%
0.09%
—%
$21.41
Stock Options—Option activity for the year ended December 31, 2021 was as follows:
Outstanding at January 1, 2021
Options exercised
Options forfeited or cancelled
Outstanding at December 31, 2021
Options exercisable at December 31, 2021
Number Of
Options
Weighted-
Average
Exercise Price
5,733,738 $
(1,709,324)
(5,403)
4,019,011 $
3,869,011 $
7.23
5.34
10.80
8.02
7.27
Weighted-
Average
Remaining
Contractual
Life (years)
Aggregate
Intrinsic Value
4.39 $
352,076
3.73 $
3.59 $
122,038
120,404
The fair value of stock option awards was estimated at the grant date with the following weighted-
average assumptions:
Expected life
Volatility
Risk-free interest rate
Dividend yield
Weighted-average grant date fair value
2021
0 years
—%
—%
—%
$—
December 31,
2020
0 years
—%
—%
—%
$—
2019
6.5 years
33.76%
2.12%
—%
$3.22
77
Index to Notes
The grant date fair value of our stock options is recorded as stock-based compensation over the stock
options' vesting period. We have not granted stock options since 2019, when we granted stock options subject
to performance conditions ("PSOs"), with a target of 150,000 shares and a maximum of 300,000 shares, to our
chief executive officer. The options have an exercise price of $27.50 per share and have the same performance
and vesting conditions as the restricted stock units subject to performance conditions that we granted in 2019.
We determined that vesting is probable and have accrued compensation expense for the PSOs. These PSOs
completed their requisite service and measurement period as of December 31, 2021 and therefore there is no
remaining unrecognized stock-based compensation. However, the PSOs have not vested because our board of
directors has not determined and certified the PSOs' achievement level.
The fair value of stock options vested and the intrinsic value of stock options exercised are as follows:
Fair value of options vested
Intrinsic value of options exercised
Year Ended December 31,
2021
2020
2019
$
793 $
2,228 $
90,920
55,822
4,747
20,811
Restricted Stock Units—Restricted stock unit activity for the year ended December 31, 2021 was as
follows:
Outstanding at January 1, 2021
Granted
Vested
Forfeited or canceled
Outstanding or deferred at December 31, 2021(1)
Restricted Stock
Units
Weighted-
Average Grant
Date Fair Value
4,459,743 $
2,424,523
(1,559,425)
(707,416)
4,617,425 $
27.44
44.82
25.70
27.60
37.13
(1) Starting with the restricted stock units granted to them in June 2019, our non-employee directors have the option to defer the issuance of common stock
receivable upon vesting of such restricted stock units until 60 days following the day they are no longer providing services to us or, if earlier, upon a change in
control transaction. The amount reported as vested excludes restricted stock units that have vested but whose settlement into shares have been deferred. The
amount reported as outstanding or deferred as of December 31, 2021 includes these restricted stock units. As no further conditions exist to prevent the
issuance of the shares of common stock underlying these restricted stock units, the shares are included in the basic and diluted weighted shares outstanding
used to calculate net loss per share attributable to common stock. The amount of shares whose issuance have been deferred is not considered material and is
not reported separately from stock-based compensation in our consolidated statements of changes in mezzanine equity and stockholders’ equity.
The grant date fair value of restricted stock units is recorded as stock-based compensation over the
vesting period. As of December 31, 2021, there was $152,632 of total unrecognized stock-based compensation
related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.75
years.
As of December 31, 2021, there were 335,383 restricted stock units subject to performance and market
conditions ("PSUs") outstanding at 100% of the target level. Depending on our achievement of the performance
and market conditions, the actual number of shares of common stock issuable upon vesting of PSUs will range
from 0% to 200% of the target amount. For each PSU recipient, the awards will vest only if the recipient is
continuing to provide service to us upon our board of directors, or its compensation committee, certifying that
we have achieved the PSUs' related performance or market conditions. Stock-based compensation expense for
PSUs with performance conditions will be recognized when it is probable that the performance conditions will be
achieved. For PSUs with market conditions, the market condition is reflected in the grant date fair value of the
award and the expense is recognized over the life of the award. Stock-compensation expense associated with
the PSUs is as follows:
Expense associated with the current period
Expense due to reassessment of achievement related to prior periods
Total expense
Year Ended December 31,
2021
2020
2019
$
$
6,314 $
2,664 $
—
190
6,314 $
2,854 $
894
(610)
284
78
Index to Notes
Compensation Cost—The following table details, for each period indicated, (i) our stock-based
compensation net of forfeitures, and the amount capitalized in internally developed software and (ii) includes
changes to the probability of achieving outstanding performance-based equity awards, each as included in our
consolidated statements of comprehensive loss:
Cost of revenue
Technology and development(1)
Marketing
General and administrative
$
13,614 $
8,844 $
23,275
2,350
15,483
16,564
1,569
9,996
Total stock-based compensation
$
54,722 $
36,973 $
6,087
12,362
1,418
7,947
27,814
Year Ended December 31,
2021
2020
2019
(1) Net of $4,059, $2,348 and $1,280 of stock-based compensation expense capitalized for internally developed software for the years ended December 31,
2021, 2020 and 2019, respectively.
Note 13: Net Loss per Share Attributable to Common Stock
Net loss per share attributable to common stock is computed by dividing the net loss attributable to
common stock by the weighted-average number of common shares outstanding. We have outstanding stock
options, restricted stock units, options to purchase shares under our ESPP, convertible preferred stock, and
convertible senior notes, which are considered in the calculation of diluted net income per share whenever
doing so would be dilutive.
We calculate basic and diluted net loss per share attributable to common stock in conformity with the
two-class method required for companies with participating securities. We consider our convertible preferred
stock to be a participating security. Under the two-class method, net loss attributable to common stock is not
allocated to the preferred stock as its holders do not have a contractual obligation to share in losses, as
discussed in Note 11.
The calculation of basic and diluted net loss per share attributable to common stock was as follows:
Numerator:
Net loss
Dividends on convertible preferred stock
Net loss attributable to common stock—basic and diluted
Denominator:
Weighted-average shares—basic and diluted(1)
Net loss per share attributable to common stock—basic and diluted
$
$
$
Year Ended December 31,
2021
2020
2019
(109,613) $
(18,527) $
(80,805)
(7,269)
(4,454)
—
(116,882) $
(22,981) $
(80,805)
104,683,460
98,574,529
91,583,533
(1.12) $
(0.23) $
(0.88)
(1) Basic and diluted weighted-average shares outstanding include (i) common stock earned but not yet issued related to share-based dividends on our
convertible preferred stock, and (ii) restricted stock units whose settlement into common stock were deferred at the option of certain non-employee directors.
The following outstanding shares of common stock equivalents were excluded from the computation of
the diluted net loss per share attributable to common stock for the periods presented because their effect would
have been anti-dilutive.
2023 notes as if converted
2025 notes as if converted
2027 notes as if converted
Convertible preferred stock as if converted
Stock options outstanding(1)
Restricted stock units outstanding(1)(2)
Total
Year Ended December 31,
2021
2020
2019
769,623
9,119,960
6,147,900
2,040,000
4,019,011
4,589,696
838,821
9,119,960
—
2,040,000
5,733,738
4,443,315
—
—
—
—
7,792,181
5,023,412
26,686,190
22,175,834
12,815,593
79
Index to Notes
(1) Excludes 335,383 incremental PSUs and 150,000 incremental PSOs that could vest, assuming applicable performance criteria and market conditions are
achieved at 200% of target, which is the maximum achievement level. See Note 12 for additional information regarding PSUs and PSOs.
(2) Excludes 27,729 restricted stock units whose settlement into common stock were deferred at the option of certain non-employee directors as of
December 31, 2021.
Note 14: Income Taxes
Our deferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The following table represents the significant components of our deferred tax assets and liabilities for the
periods presented:
December 31,
2021
2020
Deferred income tax assets
Net operating loss carryforwards
Business interest limitation carryforwards
Tax credit carryforwards
Stock-based compensation
Compensation accruals
Lease liabilities
Accruals and reserves
Fixed assets
Gross deferred income tax assets
Valuation allowance
$
143,917 $
35,234
18,828
7,117
7,606
17,396
4,542
3,887
238,527
(176,872)
61,655
(48,250)
—
(13,465)
(1,141)
(62,856)
(1,201) $
57,763
—
12,422
6,011
7,026
17,540
1,004
1,075
102,841
(44,307)
58,534
(514)
(45,616)
(12,404)
—
(58,534)
—
Total deferred income tax assets, net of valuation allowance
Deferred income tax liabilities
Intangible assets
Convertible senior notes
Right-of-use assets
Other
Total deferred income tax liabilities
Net deferred income tax assets and liabilities
$
The valuation allowance increased by $132,565 during the year ended December 31, 2021.
The valuation allowance decreased by $17,967 and increased by $24,264 during the years ended
December 31, 2020 and 2019, respectively.
In determining the realizability of the net U.S. federal and state deferred tax assets, we consider
numerous factors including historical profitability, estimated future taxable income, prudent and feasible tax
planning strategies, and the industry in which we operate. Management reassesses the realization of the
deferred tax assets each reporting period, which resulted in a valuation allowance against the full amount of our
U.S. deferred tax assets for all periods presented. To the extent that the financial results of our U.S. operations
improve in the future and the deferred tax assets become realizable, we will reduce the valuation allowance
through earnings.
The following table represents our net operating loss ("NOL") carryforwards as of December 31, 2021
and 2020:
Federal
Various states
Foreign
December 31,
2021
2020
$
611,296 $
18,777
3,213
227,751
12,576
2,050
Federal NOL carryforwards are available to offset federal taxable income and begin to expire in 2025,
with NOL carryforwards of $320,123 generated after 2017 available to offset future U.S. federal taxable income
over an indefinite period. State NOL carryforwards are available to offset future taxable income and began to
expire in 2021. NOL carryforward periods for the various states jurisdictions generally range from 5 to 20 years.
Foreign NOL carryforward periods for foreign federal and provincial jurisdictions are generally 20 years.
80
Index to Notes
Net research and development credit carryforwards of $18,828 and $12,422 are available as of
December 31, 2021 and 2020, respectively, to reduce future tax liabilities. The research and development credit
carryforwards begin to expire in 2026.
Deductible but limited federal business interest expense carryforwards of $149,710 and $867 are
available as of December 31, 2021 and 2020, respectively, to offset future U.S. federal taxable over an
indefinite period.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, substantial changes
in our ownership may limit the amount of NOL and income tax credit carryforwards that could be utilized
annually in the future to offset taxable income and income tax liabilities. Any such annual limitation may
significantly reduce the utilization of the NOLs and income tax credits before they expire. A Section 382
limitation study performed as of March 31, 2017 determined that we experienced an ownership change in 2006
with $1,506 of the 2006 NOL, and $32 of the 2006 research and development tax credit unavailable for future
use. Furthermore, in connection with the acquisition of RentPath, RentPath experienced an ownership change
that triggered Section 382. As of September 30, 2021, RentPath completed a Section 382 limitation study and,
based on this analysis, we do not expect a reduction in our ability to fully utilize RentPath’s pre-change NOLs.
The components of loss before benefit for income taxes for the years ended December 31, 2021, 2020,
and 2019 were $(114,262), $(17,582), and $(79,518), for federal purposes, respectively, and $(1,458), $(945),
and $(1,287), for foreign purposes, respectively.
The following table is a reconciliation of the U.S. federal income tax at statutory rate to our effective
income tax rate:
U.S. federal income tax at statutory rate
State taxes (net of federal benefit)
Stock-based compensation
Permanent differences
Federal research and development credit
Change in valuation allowance
Other
Acquisition costs
Extinguishment of 2023 Notes
Effective income tax rate
December 31,
2021
2020
2019
21.00 %
21.00 %
21.00 %
9.06
14.88
(0.12)
5.41
(41.89)
(1.62)
(1.44)
—
5.28 %
25.23
69.14
(1.03)
20.42
(132.88)
1.32
—
(3.20)
— %
4.71
1.20
(0.97)
2.45
(29.73)
1.34
—
—
— %
We recorded an income tax benefit of $6,107 for the year ended December 31, 2021, which is primarily
a result of a deferred tax liability created through our April 2, 2021 acquisition of RentPath and can be used to
realize certain deferred tax assets against which we had previously recorded a full valuation allowance. Our
deferred income tax benefit was partially offset by current state income tax expense recorded for the year
ended December 31, 2021. We did not record any tax benefits for the years ended December 31, 2020 and
2019.
The difference between the U.S. federal income tax at statutory rate of 21% for the years ended
December 31, 2021, 2020, and 2019, and our effective tax rate in all periods is primarily due to a full valuation
allowance related to our U.S. deferred tax assets. For the year ended December 31, 2020, the difference
between our estimated statutory state income tax rate of 7.09% and the state income tax rate of 25.23% as
reported in the rate reconciliation is primarily due to the impact of tax deductions for stock-based compensation
which provide permanent and favorable differences between pre-tax operating losses for financial reporting
purposes and losses reported for income tax purposes. Our reported state income tax rate of 25.23% differs
from our effective state income tax rate of 0% primarily due to a full valuation allowance related to our state
deferred tax assets.
81
Index to Notes
The following table summarizes the components of our income tax benefit for the periods presented:
Current income tax expense:
U.S. - State
Total current income tax expense
Deferred income tax benefit:
U.S. - State
Total deferred income tax benefit
Total income tax benefit
December 31,
2021
2020
2019
$
$
1,215 $
1,215
(7,322)
(7,322)
(6,107) $
— $
—
—
—
— $
—
—
—
—
—
We account for uncertainty in income taxes in accordance with ASC 740. Tax positions are evaluated
utilizing a two-step process, whereby we first determine whether it is more likely than not that a tax position will
be sustained upon examination by the tax authority, including resolutions of any related appeals or litigation
processes, based on technical merit. If a tax position meets the more-likely-than-not recognition threshold, it is
then measured to determine the amount of benefit to recognize in the financial statements. The tax position is
measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate
settlement.
The following table summarizes the activity related to unrecognized tax benefits:
Unrecognized benefit—beginning of year
Gross decreases—prior year tax positions
Gross increases—current year tax positions
Unrecognized benefit—end of year
December 31,
2021
2020
$
$
3,105 $
32
1,555
4,692 $
2,159
—
946
3,105
All of the unrecognized tax benefits as of December 31, 2021 and 2020 are accounted for as a
reduction in our deferred tax assets. Due to our valuation allowance, none of the $4,692 and $3,105 of
unrecognized tax benefits would affect our effective tax rate, if recognized. We do not believe it is reasonably
possible that our unrecognized tax benefits will significantly change in the next twelve months.
We recognize interest and penalties related to unrecognized tax benefits as income tax expense. There
was no interest or penalties accrued related to unrecognized tax benefits for each year ended December 31,
2021 and 2020 and no liability for accrued interest or penalties related to unrecognized tax benefits as of
December 31, 2021.
Our material income tax jurisdictions are the United States (federal) and Canada (foreign). As a result of
NOL carryforwards, we are subject to audit for all tax years for federal and foreign purposes. All tax years
remain subject to examination in various other jurisdictions that are not material to our consolidated financial
statements.
82
Index to Notes
Note 15: Debt
Warehouse Credit Facilities—To provide capital for the mortgage loans that it originates, Redfin
Mortgage, our wholly owned mortgage origination subsidiary, utilizes warehouse credit facilities that are
classified as current liabilities on our consolidated balance sheets. Borrowings under each warehouse credit
facility are secured by the related mortgage loan, and rights and income related to the loans. The following table
summarizes borrowings under these facilities as of the periods presented:
December 31, 2021
December 31, 2020
Lender
Borrowing
Capacity
Outstanding
Borrowings
Western Alliance Bank
$
50,000 $
Texas Capital Bank, N.A.
Flagstar Bank, FSB
40,000
25,000
Total
$ 115,000 $
17,089
11,852
4,102
33,043
Weighted-
Average
Interest Rate
on Outstanding
Borrowings
Borrowing
Capacity
Outstanding
Borrowings
3.00 % $
50,000 $
3.01 %
3.00 %
40,000
15,000
—
$ 105,000 $
18,277
12,903
7,849
39,029
Weighted-
Average
Interest Rate
on Outstanding
Borrowings
3.25 %
3.35 %
3.00 %
—
Borrowings under the facility with Western Alliance Bank mature on June 15, 2022 and generally bear
interest at a rate equal to the greater of (i) one-month LIBOR plus 2.25% or (ii) 3.00%. Redfin Corporation has
agreed to make capital contributions in an amount as necessary for Redfin Mortgage to satisfy its adjusted
tangible net worth financial covenant under the agreement, but it was not obligated to make any such capital
contributions as of December 31, 2021.
Borrowings under the facility with Texas Capital Bank, N.A. mature on September 14, 2022 and
generally bear interest at a rate equal to the greater of (i) the rate of interest accruing on the outstanding
principal balance of the loan minus 0.25% or (ii) 2.95%. Redfin Corporation has guaranteed Redfin Mortgage’s
obligations under the agreement.
Borrowings under the facility with Flagstar Bank, FSB ("Flagstar") generally bear interest at a rate equal
to the greater of (i) one-month LIBOR plus 2.00% or (ii) 3.00%. This facility does not have a stated maturity
date, but Flagstar may terminate the facility upon 30 days prior notice. Redfin Mortgage would be required to
pay all amounts owed to Flagstar upon the facility's termination.
Secured Revolving Credit Facility—To provide capital for the homes that it purchases, RedfinNow
has, through a special purpose entity called RedfinNow Borrower, entered into a secured revolving credit facility
with Goldman Sachs Bank, N.A. ("Goldman Sachs"). Borrowings under the facility are secured by RedfinNow
Borrower's assets, including the financed homes, as well as the equity interests in RedfinNow Borrower. The
following table summarizes borrowings under this facility as of the period presented:
December 31, 2021
December 31, 2020
Lender
Borrowing
Capacity
Outstanding
Borrowings
Weighted-
Average
Interest Rate
on Outstanding
Borrowings
Borrowing
Capacity
Outstanding
Borrowings
Weighted-
Average
Interest Rate
on Outstanding
Borrowings
Goldman Sachs Bank USA
$ 200,000 $
199,781
3.30 % $
100,000 $
23,949
4.40 %
The facility matures on July 12, 2022, but we may extend the maturity date for an additional six months
to repay outstanding borrowings. Goldman Sachs may, at its sole option, finance a portion of RedfinNow
Borrower's acquisition costs of qualified homes that have been purchased. The portion financed is based, in
part, on how long the qualifying home has been owned by a Redfin entity. Each new borrowing under the facility
on and after January 12, 2021 generally bears interest at a rate of one-month LIBOR (subject to a floor of
0.30%) plus 3.00%. For borrowings under the facility on and after March 24, 2020, each new borrowing
generally bears interest at a rate of one-month LIBOR (subject to a floor of 0.50%) plus an additional rate
agreed upon between RedfinNow Borrower and Goldman Sachs.
83
Index to Notes
RedfinNow Borrower must repay all borrowings and accrued interest upon the termination of the facility,
and it has the option to repay the borrowings, and the related interest, with respect to a specific financed home
upon the sale of such home. In certain situations involving a financed home remaining unsold after a certain
time period or becoming ineligible for financing under the facility, RedfinNow Borrower may be obligated to
repay all or a portion of the borrowings, and related interest, with respect to such home prior to the sale of such
home. In instances involving "bad acts," Redfin Corporation has guaranteed repayment of amounts owed under
the facility, in some situations, and indemnification of certain expenses incurred, in other situations.
As of December 31, 2021 and 2020, RedfinNow Borrower had $567,128 and $65,191 of total assets,
respectively, of which $337,630 and $47,620 related to inventory, and $101,064 and $11,818 in cash and cash
equivalents, respectively.
For the years ended December 31, 2021 and 2020 we amortized $324 and $619 of the debt issuance
costs and recognized $3,946 and $643 of interest expense, respectively.
Convertible Senior Notes—We have issued convertible senior notes with the following characteristics:
Issuance
2023 notes
2025 notes
2027 notes
Maturity Date
July 15, 2023
October 15, 2025
April 1, 2027
Stated
Cash
Interest
Rate
1.75 %
— %
0.50 %
Effective
Interest
Rate
First Interest
Payment Date
Semi-Annual
Interest Payment
Dates
Conversion
Rate
2.45 % January 15, 2019
January 15; July 15
0.42 % —
—
0.90 % October 1, 2021
April 1; October 1
32.7332
13.7920
10.6920
We issued our 2023 notes on July 23, 2018, with an aggregate principal amount of $143,750.
Subsequent to the issuance date, we repurchased or settled conversions of an aggregate of $120,238 of our
2023 notes. On July 20, 2021, our 2023 notes became redeemable by us, but we did not exercise our
redemption right during the three months ended December 31, 2021.
We issued our 2025 notes on October 20, 2020, with an aggregate principal amount of $661,250.
We issued our 2027 notes on March 25, 2021 and April 5, 2021, with an aggregate principal amount of
$575,000.
The components of the convertible senior notes are as follows:
Issuance
Aggregate Principal
Amount
Unamortized Debt
Discount
Unamortized Debt
Issuance Costs
Net Carrying Amount
2023 notes
2025 notes
2027 notes
$
23,512 $
661,250
575,000
— $
—
—
232 $
10,467
11,766
23,280
650,783
563,234
December 31, 2021
Issuance
Aggregate Principal
Amount
Unamortized Debt
Discount
Unamortized Debt
Issuance Costs
Net Carrying Amount
2023 notes
2025 notes
$
25,626 $
661,250
2,776 $
163,077
368 $
9,905
22,482
488,268
December 31, 2020
84
Index to Notes
2023 notes
Contractual interest expense
Amortization of debt discount
Amortization of debt issuance costs
Total interest expense
2025 notes
Contractual interest expense
Amortization of debt discount
Amortization of debt issuance costs
Total interest expense
2027 notes
Contractual interest expense
Amortization of debt discount
Amortization of debt issuance costs
Total interest expense
Total
Contractual interest expense
Amortization of debt discount
Amortization of debt issuance costs
Total interest expense
$
$
$
2021
Year End December 31,
2020
2019
413 $
2,113 $
—
189
4,735
623
602 $
7,471 $
2,516
5,405
724
8,645
—
—
2,760
2,760 $
2,187
—
1,705
—
5,693
346
6,039 $
—
—
—
$
3,892 $
— $
2,600
—
4,654
2,113
10,428
969
$
7,254 $
13,510 $
—
—
—
—
—
—
—
—
2,516
5,405
724
8,645
Conversion of Our Convertible Senior Notes
Prior to the free conversion date, a holder of each tranche of our convertible senior notes may convert
its notes in multiples of $1,000 principal amount only if one or more of the conditions described below is
satisfied. On or after the free conversion date, a holder may convert its notes in such multiples without any
conditions. The free conversion date is April 15, 2023 for our 2023 notes, July 15, 2025 for our 2025 notes, and
January 1, 2027 for our 2027 notes.
The conditions are:
•
•
•
•
during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our
common stock for at least 20 trading days (whether or not consecutive) during a period of 30
consecutive trading days ending on, and including, the last trading day of the immediately preceding
calendar quarter is greater than or equal to 130% of the applicable conversion price on each applicable
trading day;
during the five business day period after any five consecutive trading day period in which the trading
price per $1,000 principal amount of the applicable notes for each trading day of the measurement
period was less than 98% of the product of the last reported sale price of our common stock and the
applicable conversion rate on each such trading day;
if we call any or all of the applicable notes for redemption, at any time prior to the close of business on
the scheduled trading day prior to the redemption date; or
upon the occurrence of specified corporate events.
With respect to our 2023 notes, the first condition described above was satisfied during the quarter
ended December 31, 2021. As a result, our 2023 notes will be convertible at a holder's option during the quarter
ending March 31, 2022, and have been classified as current liabilities on our consolidated balance sheet as of
December 31, 2021.
85
Index to Notes
We intend to settle any future conversions of our convertible senior notes by paying or delivering, as the
case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at
our election. We apply the if-converted method to calculate diluted earnings per share when applicable. Under
the if-converted method, the denominator of the diluted earnings per share calculation is adjusted to reflect the
full number of common shares issuable upon conversion, while the numerator is adjusted to add back interest
expense for the period.
Classification of Our Convertible Senior Notes
Historically, we had separated our 2023 notes and our 2025 notes into liability and equity components.
With our adoption of ASU 2020-06 on January 1, 2021, using the modified retrospective approach, this
accounting treatment is no longer applicable. All of our convertible senior notes are now accounted for wholly as
liabilities. The difference between the principal amount of the notes and the net carrying amount represents the
unamortized debt discount, which we record as a deduction from the debt liability in our consolidated balance
sheets. This discount is amortized to interest expense using the effective interest method over the term of the
notes.
See Note 4 for fair value information related to our convertible senior notes.
2027 Capped Calls—In connection with the pricing of our 2027 notes, we entered into capped call
transactions with certain counterparties (the “2027 capped calls”). The 2027 capped calls have initial strike
prices of $93.53 per share and initial cap prices of $138.56 per share, in each case subject to certain
adjustments. Conditions that cause adjustments to the initial strike price and initial cap price of the 2027 capped
calls are similar to the conditions that result in corresponding adjustments to the conversion rate for our 2027
notes. The 2027 capped calls cover, subject to anti-dilution adjustments, 6,147,900 shares of our common stock
and are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of
the 2027 notes, with such reduction or offset, as the case may be, subject to a cap based on the cap price. The
2027 capped calls are separate transactions, and not part of the terms of our 2027 notes. As these instruments
meet certain accounting criteria, the 2027 capped calls are recorded in stockholders’ equity and are not
accounted for as derivatives. The cost of $62,647 incurred in connection with the 2027 capped calls was
recorded as a reduction to additional paid-in capital on our consolidated balance sheets.
Note 16: Subsequent Event
Agreement to Acquire Bay Equity—On January 10, 2022, we and Ruby Merger Sub LLC ("Merger
Sub"), one of our wholly owned subsidiaries, entered into a merger agreement to acquire Bay Equity LLC (“Bay
Equity”). Pursuant to the merger agreement, Merger Sub will merge with and into BE Holdings, LLC ("BE
Holdings"), which owns all of the equity interests of Bay Equity, and BE Holdings will continue as the surviving
entity and become a wholly owned subsidiary of Redfin as of the closing of the acquisition. Bay Equity is a
national, full-service mortgage lender.
The purchase price for the acquisition will be a $72,500 premium to BE Holdings’s tangible book value
as of the closing date (the “Purchase Price”). Based on Bay Equity' estimated tangible book value as of
December 31, 2021, the purchase price would have been $135,000 if we closed the acquisition on December
31, 2021. After deducting certain transaction expenses from the Purchase Price (such resulting amount, the
“Merger Consideration”), we will pay two-thirds of the Merger Consideration in cash and one-third of the Merger
Consideration in shares of our common stock, subject to certain adjustments contemplated by the Merger
Agreement.
The closing is subject to customary conditions, including (i) the absence of any court or regulatory order
prohibiting the closing, (ii) the attainment of certain regulatory approvals and of consents from certain
contractual counterparties, and (iii) agreement of certain Bay Equity executives, loan officers, and other
employees to continue their employment with Bay Equity after the closing.
Amendment of Secured Revolving Credit Facility—On February 9, 2022, we increased the
borrowing capacity of our secured revolving credit facility to $400,000 and extended its maturity date to August
9, 2023.
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Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive and principal financial officers,
evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934), as of the end of the period covered by this Annual Report. Based on such
evaluation, our principal executive and principal financial officers have concluded that as of such date, our
disclosure controls and procedures were effective at the reasonable assurance level described below.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934. Our management,
with the participation of our principal executive and principal financial officers, evaluated the effectiveness of our
internal control over financial reporting using the framework set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on this
assessment, management concluded that Redfin Corporation maintained effective internal control over financial
reporting as of the end of the period covered by this Annual Report. Deloitte & Touche LLP, our independent
registered public accounting firm, has issued an attestation report on our internal control over financial reporting,
and this attestation report appears in Item 8.
As permitted by SEC guidance, our management has excluded from its evaluation of the effectiveness
of our internal control over financial reporting the internal control over financial reporting of RentPath, which we
acquired on April 2, 2021. RentPath constituted 3.1% of our total assets (after excluding goodwill and intangible
assets which were integrated with our systems and control environment), 6.3% of our revenues, and 39.3% of
our net loss, of the consolidated financial statement amounts as of and for the year ended December 31, 2021.
Changes in Internal Control Over Financing Reporting
In connection with the evaluation required by Rule 13a-15(d) under the Securities Exchange Act of
1934, there were no changes in our internal control over financial reporting that occurred during the quarter
ended December 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management does not expect that our disclosure controls and procedures or our internal control
over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within our company have been
detected. The design of any system of controls is also based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be
detected.
Item 9B. Other Information
None.
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Table of Contents
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item is incorporated by reference to our proxy statement to be filed in
connection with our 2022 Annual Meeting of Stockholders by April 30, 2022.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to our proxy statement to be filed in
connection with our 2022 Annual Meeting of Stockholders by April 30, 2022.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by this Item is incorporated by reference to our proxy statement to be filed in
connection with our 2022 Annual Meeting of Stockholders by April 30, 2022.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference to our proxy statement to be filed in
connection with our 2022 Annual Meeting of Stockholders by April 30, 2022.
Item 14. Principal Accounting Fees and Services
The information required by this Item is incorporated by reference to our proxy statement to be filed in
connection with our 2022 Annual Meeting of Stockholders by April 30, 2022.
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Table of Contents
Item 15. Exhibits, Financial Statement Schedules
PART IV
The financial statements and financial statement schedules required to be filed as part of this annual
report are included under Item 8.
The exhibits required to be filed as part of this Annual Report are listed below. Exhibits 10.1 through
10.15 constitute management contracts or compensatory plans or arrangements. Notwithstanding any language
to the contrary, Exhibits 32.1, 32.2, 101, and 104 shall not be deemed to be filed as part of this annual report for
purposes of Section 18 of the Securities Exchange Act of 1934.
Incorporated by Reference
Exhibit
Number
Exhibit Description
Filing
Exhibit
2.1
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
Merger Agreement, dated as of January 10, 2022, by and among Redfin
Corporation, Ruby Merger Sub LLC, BE Holdco, LLC, and Brett McGovern
Restated Certificate of Incorporation
Restated Bylaws
Amended and Restated Certificate of Designation, Rights and Limitations of
Series A Convertible Preferred Stock
Form of Common Stock Certificate
Description of Common Stock
Indenture, dated as of July 23, 2018, between Redfin Corporation and Wells
Fargo Bank, National Association
Form of Convertible Senior Note due 2023 (contained in exhibit 4.3)
Indenture, dated as of October 20, 2020 between Redfin Corporation and
Wells Fargo Bank, National Association
Form of Convertible Senior Note due 2025 (contained in exhibit 4.5)
Indenture, dated as of March 25, 2021, between Redfin Corporation and
Wells Fargo Bank, National Association
Form of Convertible Senior Note due 2027 (contained in exhibit 4.7)
Amended and Restated 2004 Equity Incentive Plan and forms of award
agreements thereunder
2017 Equity Incentive Plan and forms of award agreements thereunder
Form of Restricted Stock Unit Award Notice and Restricted Stock Unit
Award Agreement under the 2017 Equity Incentive Plan (February 2019)
Form of Notice of Performance-Based Restricted Stock Unit Award and
Performance-Based Restricted Stock Unit Award Agreement under the 2017
Equity Incentive Plan (June 2018)
Form of Performance-Based Stock Option Notice and Award Agreement
(June 2019)
Form of Restricted Stock Unit Notice and Award Agreement for Non-
Employee Directors (May 2019)
Form of Indemnification Agreement
Form of Change in Control Severance Agreement
Amended and Restated Offer Letter by and between Redfin Corporation and
Glenn Kelman, dated June 27, 2017
Amended and Restated Offer Letter by and between Redfin Corporation and
Bridget Frey, dated June 27, 2017
Amended and Restated Offer Letter by and between Redfin Corporation and
Anthony Kappus, dated February 9, 2022
Amended and Restated Offer Letter by and between Redfin Corporation and
Scott Nagel, dated June 27, 2017
Amended and Restated Offer Letter by and between Redfin Corporation and
Chris Nielsen, dated June 27, 2017
8-K
10-Q
8-K
8-K
S-1/A
8-K
8-K
8-K
8-K
8-K
8-K
S-1
10-K
10-Q
8-K
8-K
10-Q
S-1/A
10-Q
S-1
S-1
S-1
10-K
2.1
3.1
3.1
3.1
4.1
4.1
4.1
4.1
4.1
4.1
4.2
10.2
10.3
10.1
10.1
10.1
10.2
10.1
10.1
10.4
10.5
10.6
10.6
Offer Letter by and between Redfin Corporation and Christian Taubman,
dated October 13, 2019
10-K
10.13
Filing
Date
Jan. 11,
2022
Sept. 8,
2017
Jan. 26,
2022
June 15,
2020
July 26,
2017
July 23,
2018
July 23,
2018
Oct. 20,
2020
Oct. 20,
2020
March 25,
2021
March 25,
2021
June 30,
2017
Feb. 22,
2018
May 8,
2019
June 6,
2018
June 6,
2019
Aug. 1,
2019
July 17,
2017
Nov. 5,
2020
June 30,
2017
June 30,
2017
June 30,
2017
Feb. 22,
2018
Feb. 12,
2020
Filed
Herewith
X
X
89
10.15
10.16
21.1
23.1
24.1
31.1
31.2
32.1
32.2
101
104
Table of Contents
Amended and Restated Offer Letter by and between Redfin Corporation and
Adam Wiener, dated June 27, 2017
10-K
10.10
8-K
10.1
Form of Registration Rights Agreement by and among Redfin Corporation,
Brett McGovern, as the member representative, and each member party
thereto
List of Subsidiaries
Consent of Deloitte & Touche LLP, Independent Registered Public
Accounting Firm
Power of Attorney (contained in "Signatures")
Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)
Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350
Interactive Data Files
Cover page interactive data file, submitted using inline XBRL (contained in
Exhibit 101)
Item 16. Form 10-K Summary
None.
Feb. 14,
2019
Jan. 11,
2022
X
X
X
X
X
X
X
X
X
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Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Redfin Corporation
(Registrant)
February 17, 2022
(Date)
By /s/ Glenn Kelman
Glenn Kelman
Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below
constitutes and appoints Glenn Kelman and Chris Nielsen, and each of them, as his or her true and lawful
attorneys-in-fact and agents with full power of substitution, for him or her in any and all capacities, to sign any
and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or his or her or their substitute or substitutes, may lawfully do or cause to be done or by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated:
Table of Contents
Name
Title
Date
/s/ Glenn Kelman
Glenn Kelman
/s/ Chris Nielsen
Chris Nielsen
/s/ David Lissy
David Lissy
/s/ Robert Bass
Robert Bass
/s/ Julie Bornstein
Julie Bornstein
/s/ Kerry Chandler
Kerry Chandler
/s/ Austin Ligon
Austin Ligon
/s/ Robert Mylod, Jr.
Robert Mylod, Jr.
/s/ James Slavet
James Slavet
/s/ Selina Tobaccowala
Selina Tobaccowala
Chief Executive Officer and Director
(Principal Executive Officer)
February 17, 2022
Chief Financial Officer (Principal Financial
and Accounting Officer)
February 17, 2022
Chairman of the Board of Directors
February 17, 2022
Director
February 17, 2022
Director
February 17, 2022
Director
February 17, 2022
Director
February 17, 2022
Director
February 17, 2022
Director
February 17, 2022
Director
February 17, 2022
Annual Report | 2021
Directors
Robert Bass
Former Vice Chairman
Deloitte
David H. Lissy
Chairman
Bright Horizons Family Solutions
Julie Bornstein
Co-Founder and Chief Executive Officer
The Yes
Robert Mylod, Jr.
Managing Partner
Annox Capital
Kerry Chandler
Chief Human Resources Officer
Bombas
Glenn Kelman
Chief Executive Officer
Redfin
Austin Ligon
Co-Founder and former Chief Executive Officer
CarMax
Brad Singer
Former Chief Operating Officer and Partner
ValueAct Capital
James Slavet
Partner
Greylock Partners
Selina Tobaccowala
Chief Digital Officer
Openfit
Executive Officers
Glenn Kelman
Chief Executive Officer
Bridget Frey
Chief Technology Officer
Anthony Kappus
Chief Legal Officer
Chris Nielsen
Chief Financial Officer
Christian Taubman
Chief Growth Officer
Adam Wiener
President of Real Estate Operations
We will provide to each stockholder as of April 18, 2022, upon the written request of the stockholder, a copy of our
annual report on Form 10-K for the year ended December 31, 2021, including the financial statements and financial
statement schedules. We will provide this annual report, other than exhibits, without charge. Please direct your
request to: Redfin Corporation, 1099 Stewart Street, Suite 600, Attn: Corporate Secretary, Seattle, WA 98101.
Annual Report | 2021