The name of the game for Redfin in 2025 is recovery.
As part of that, Redfin has initiated a cost-optimization strategy that heavily relies on a mass-advertising “monetization” approach supported by a new deal with Zillow, company leadership said on an earnings call yesterday. On the chopping block, however, are agent benefits and a slew of jobs.
While fourth quarter revenue was up 12% from a year ago at $244 million, profits were lower than anticipated due to higher than expected commission payouts to agents. Net loss was $36 million, compared to $23 million in the prior year, primarily due to underestimating the payout cost by about $4 million in the fourth quarter.
It’s part of growing pains, per president and CEO Glenn Kelman, who said that lead agent count increased 25% to more than 2,200 since the third quarter.
As Redfin manages the “one-time transition costs” of its swiftly growing agent force, it expects sales to grow in the spring as new hires begin closing deals. New talent, he said, has already been outperforming tenured Redfin agents.
“We expect the recovery to be similar to the one that ended the great financial crisis,” he said. “Slow in coming, initially gradual, but because homeownership is so important to American culture, hopefully very long.”
Agent force, however, may not be enough to provide a sufficient cushion.
While Redfin expects U.S. home sales to strengthen across the summer—with inventory pressure easing after the first quarter because 2024 started with an annualized rate of 4.3 million existing home sales last February compared to a year of 3.9 million in September—he said the balance between buyers and sellers has been “volatile and mixed.”
With the market plagued by high real estate prices as a result, Kelman said it’s making it hard for homebuyers to turn out to afford a home. In Cincinnati, he said agents report bidding wars across a wide range of prices.
For these reasons, the company is pivoting to getting market share as a core 2025 strategy.
Redfin and Zillow partner
Earlier this month, the company inked a $100 million deal with Zillow that will allow the real estate marketplace to post rental listings on Redfin’s site.The transactions will help Redfin compete better for traffic, said Kelman, along with helping to fund a 38% increase in advertising this year.
While he expects first-quarter profits to be down about $8 million year-over-year as the company ramps up the partnership, he said January demand is already up 5% and should increase more in future months. The crux is a mass media campaign that didn’t start until January 13 and goes through June.
Redfin’s advertising push includes better ad targeting of the rental audience as it publishes more listings. Additionally, last quarter, the company said it was able to, for the first time, invest in broader homebuyer campaigns on Google and Facebook based on mortgage and title revenues, not just home sales, as it continues to sell mortgage and title services.
This digital advertising push for both the sales and rentals audience has been coined “monetization.” Kelman said earning a set amount for every inquiry on apartments on its sites “makes it easier to scale our audience through direct marketing campaigns and search site improvements.”
He said the company can profitably invest in sites such as rent.com and apartmentguide.com, along with technology, to tap into a large, lucrative audience of apartment seekers that it can more easily connect to property managers.
“Even without a traffic increase driven by more listings, and even setting aside Zillow’s $100 million upfront payment, we believe that the money the Zillow-Redfin partnership pays us for each rental lead will increase our profits,” said Kelman.
Business optimizations come at a cost
To cut additional costs, the company previously announced it would be laying off about 450 rent employees, many of which are in sales and sales support roles, between February 21 and June 30. This is in addition to the layoffs of senior Redfin personnel in January.
The company said it is also cutting out some benefits such as vacation pay that agents “care less about than their bonus.”
In the first quarter, the company expects $21 million to $24 million in restructuring charges—about $18 to $21 million attributed to the Zillow partnership and approximately $3 million associated with the January reduction in force.
Through the monetization strategy, Redfin earned $15 million in 2024 adjusted EBITDA—up 46% from 2023. It expects further growth from direct sales to advertisers who previously accessed Refin’s audience through ad networks.
“We’ve gone through several restructurings in 2024. And then we had an especially painful one at the beginning of 2025 because we wanted to put all the chips in the table on growth and to spend less on staffing,” said Kelman. “Coupling that with the Zillow partnership has just given us more room to invest in driving demand. And when you pair that with 25% more agents, when we think those agents are better, we’ve got good prospects here to make money and to take share.”
Revenue highlights:
- Real estate services (includes brokerage and partner businesses): $149 million — +12% YoY
- Rental segment: $52 million — +5% YoY
- Mortgage segment: $30 million — + 5% YoY
- Title segment: $9 million — +58% YoY
- Monetization segment: $4 million — 9% YoY
