Highlights include:

• Revenues increased 3% year-on-year, rising to $278.0 million for the quarter
• Net losses widened to $33.8 million, a 75% increase from Q3 2023's net loss of $19.0 million
• Adjusted EBITDA was $3.9 million
• Market share dips slightly, from 0.78% in 2023 to 0.76% in 2024 (for existing home sales, by units)

Glenn Kelman, CEO at Redfin, said:

"Redfin’s third-quarter results were within our guidance range, and we’re now forecasting fourth-quarter growth in market share and revenues.

"Already, shifting our real estate agents to a commissions-based model has improved close rates, with industry-leading attach rates for mortgage and title services. And now, the growth in our digital businesses and our reductions in headquarters costs will let us fund more demand-generation. With plans to hire hundreds of agents between now and next spring, we’re emerging from a year of record low U.S. home sales ready to go on the attack."

Redfin has made a net loss of over $128 million so far this year at an adjusted EBITDA loss of just over $23.6 million.

The company has also seen YoY traffic to its portal hit in the past 12 months, with 2,000+ fewer visits for the quarter than a year ago, matching similar drops in Q1 and Q2.

Redfin's Mortgage segment experienced marginal growth compared to the same period in 2023, but this increasingly important segment of the business still racked up a loss of more than $4.7 million.

Redfin is forecasting revenues of between $237 million and 247 million in Q4, of which mortgage revenue will generate between $28 million and $32 million.

Net losses are forecasted to fall between -$25 million and -$32 million for the quarter.

The company's struggles go most of the way in explaining why Redfin made circa 100 members of staff redundant in August.

In a lawsuit filed in a Santa Clara court on the 2nd of August, former Matterport Sales Executive Vinatha Kutagula claims that the digital real estate scanning company was engaged in "illegal and unethical practices".

Kutagula was hired in 2021 as Vice President of Customer operations. In 2022 her brief was expanded to include sales and she was promoted to the company's executive leadership team. She was fired from the company in March this year and alleges that her termination was because she raised concerns.

Her lawsuit claims that “She was pushed out of the company because she raised concerns about illegal and unethical practices, business integrity, material risks to financial data, discriminatory behaviors by HR and sales leaders, and an overall toxic workplace”.

In a statement to given to U.S. realtor-facing publication Inman.com, Matterport called the allegations "baseless" and said that it was "proud of its commitment to operating in an ethical, legal and inclusive manner".

Kutagula claims that she was personally targetted by VP of Sales, Rob Hines and Chief Revenue Officer, Jay Remley for raising her concerns to them and to Matterport's CEO RJ Pittman.

In one instance that allegedly occurred in the third quarter of 2023, the suit says that Kutagula told upper management about certain Matterport sales which were closed at a negative margin and which, she said, represented a financial and legal risk to the company.

The suit claims that sales staff "rolled out their own referral incentives for the largest deal for their personal gain" and "manipulated another large, deeply discounted renewal contract". Kutagula claims she periodically worked with Matterport's legal and finance teams to rectify these issues but to no avail.

Perhaps the most serious of the allegations relates to the period in March 2024 when CoStar was in the final stages of setting up a deal to acquire Matterport. According to the suit, as Matterport executives were receiving additional stock and incentives Kutagula "flagged material financial risks" to the CEO. Those risks in question would have seen "a drastic dip in NDR for the second half of 2024", ie the period after the merger deal would have been signed.

The suit claims that Kutagula’s employment was terminated at Matterport within an hour of sharing these concerns with Pittman.

In its second-quarter filings released to the market this week, Matterport reported a revenue increase of 6.7% year-on-year along with a spectacular tripling of net losses which totalled $144 million for the three-month period.

The allegations come at a particularly sensitive time for Matterport. The company is already facing the prospect of having to pay its former CEO, Bill Brown $79 million in a dispute over a share lockup period.

Matterport's shareholders recently voted to accept CoStar's proposed $1.6 billion takeover deal. Although CoStar group has not commented on either lawsuit, it may well be digging deeper.

• Total revenue of $572 million, up 13% year-on-year.
• Adjusted EBITDA of $134 million representing a 20% improvement.
• Net loss narrowed to $17 million in Q2 from $35 million in Q2 of 2023.

The other significant revelation to come from Zillow's report was that its co-founder Rich Barton has stepped down from his position as CEO to be replaced by Jeremy Wacksman who had previously been the company's Chief Operating Officer.

In his first comments as CEO, Wacksman sounded an upbeat note on revenue growth and nearing profitability.

“Zillow outperformed the residential real estate industry for the eighth consecutive quarter, delivering better-than-expected revenue across the business,”

“We’re executing well, continually shipping exceptional products and services in Zillow’s housing super app as we build the digital future of real estate. With an increasingly diversified and growing business, we are on our way to deliver strong GAAP profitability over time and meet our 2024 expectations to deliver double-digit revenue growth and modestly expand our Adjusted EBITDA margin. We are well positioned to capture more of our total addressable market and help more people get home.”

In a letter to shareholders, Zillow's management highlighted the performance of the Rentals and Mortgages segments. While Rentals racked up $117 in revenue representing a 29% year-on-year improvement, the Mortgages segment grew an impressive 42% generating $34 million.

In rentals, Zillow has joined forces with traditional rival Realtor.com in order to compete against CoStar-owned Apartments.com which claims market leadership. The partnership seems to be paying off, especially in the multifamily segment which saw revenue growth of 44% in Q2.

Zillow's Mortgages segment saw a 125% year-on-year increase in purchase loan origination volume to $756 million in Q2 and is reportedly achieving attach rates in the mid-teens in its so-called 'Enhanced Markets' where it tests new models.

Zillow's Residential segment—which houses its flagship Premier Agent product as well as ShowingTime+ and Follow Up Boss—still accounts for over 70% of company revenue. While the segment did not see the same dramatic growth as Rentals and Mortgages, it did grow 8% year-on-year with Zillow saying the business outperformed both the residential real estate industry's total transaction value and its own guidance.

Wacksman gets Zillow top job after 15 years as Barton steps aside

After fifteen years at the company, Jeremy Wacksman was announced as Zillow's new CEO in a release accompanying Zillow's quarterly results.

Wacksman joined Zillow from Microsoft and has held positions in the portal firm's product, marketing and operations departments. In an article posted on LinkedIn, former CEO Barton paid tribute to Wacksman and revealed that the company had been shaping his ascension for some time.

"We organized most of the company around Jeremy three years ago when we promoted him to chief operating officer (COO).  He has been supported by an exceptional team — amazing talent who have a clear strategy, high accountability, and high trust in one another.  Under Jeremy’s leadership, they have successfully positioned the company to go after, and execute well against, the multiple large, complex, interconnected opportunities ahead of us."

"His tenure as COO has been a time of particularly impressive innovation for Zillow.  Jeremy operationalized Zillow’s housing super app strategy while maintaining strong cost discipline, diversifying our revenue base and growing Rentals and Mortgages. He successfully championed the Follow Up Boss and ShowingTime acquisitions, helping us deliver on our goal to provide agent partners and the broader industry with the best software solutions to power their businesses.  He also organized, elevated, and recruited talent that makes up Zillow’s critical R&D, sales, and marketing operations."

"The Zillow business is in great shape financially, strategically, operationally, and organizationally, consistently outperforming the residential real estate industry.  We are executing well and methodically shipping great software and services in the Zillow housing super app that aim to digitize and integrate home buying, selling, financing, and renting, empowering consumers and partners alike."

"Jeremy is right and ready to be CEO of Zillow now, and I’m excited to support him as he leads us through our next chapter of building the digital future of real estate."

Wacksman has also been appointed to Zillow's Board of Directors with Barton staying on in an advisory capacity as co-executive chairman alongside fellow co-founder, Lloyd Frink.

• Revenue was up 7% year-on-year to $295 million.
• Market share was 0.77% of U.S. existing home sales, compared to 0.75% in the second quarter of 2023.
• The gross profit margin for Real Estate Services was 29%, compared to 31% in the second quarter of 2023.

The Seattle-based brokerage has now racked up 14 straight quarters posting a net loss. The latest bottom-line figure was a loss of $27.9 million bringing total net losses since the beginning of 2021 to over $665 million.

Although in comments accompanying a press release Redfin CEO, Glenn Kelman said that the company's Adjusted EBITDA "should be about breakeven this year", Redfin's losses stand out like a sore thumb when compared to its brokerage competitors Compass and eXp which both made healthy profits in the same period.

Redfin has traditionally been able to point to its popularity as a discovery portal but in an increasingly competitive environment, the company's traffic numbers for the second quarter also seem to have stagnated.

Redfin reported 52 million average monthly users for its mobile app and website, the same as in the corresponding period in 2023. Meanwhile, CoStar-backed Homes.com reported 148 million to its network in the period and Realtor.com’s latest figure (via News Corp’s Q4 in May) stood at 72 million.

Redfin pulled out of iBuying in 2022 but has maintained its mortgages division which has been inching its way towards profitability since the $135 million acquisition of Bay Equity Home Loans at the start of 2022. The second quarter saw Redfin achieve a 28% attach rate (up 4 percentage points year-on-year) while originating well over 3,000 mortgages.

The company is increasingly moving away from paying agents a fixed salary and towards the pay-for-performance commission split model employed by its competitors with Kelman telling analysts that it plans to scale up hiring across the country throughout the rest of the year.

• Revenue stood at $1.5 billion, down 24% vs 2023 but up 28% vs Q1.
• Gross profit was $129 million, versus $149 million in Q2 of 2023 and $114 million in Q1.
• Gross Margin was 8.5%, versus 7.5% in Q2 3023 and 9.7% in Q1.

The quarter saw Opendoor exceed its guidance on revenue, contribution margin and Adjusted EBITDA with CEO Carrie Wheeler saying the company made "meaningful progress" in brand awareness, NPS score and structural efficiencies.

Wheeler also told analysts and shareholders that Opendoor had deliberately throttled down its iBuying during the period having predicted a market slowdown.

"During the back half of the second quarter, we began responding to signals that indicated additional slowing in the housing market. We are making decisions that appropriately balance growth, margin, and risk in what continues to be a challenging environment. While the housing cycle will eventually recover, the improvements we are making in the business are enduring. We continue to expect to make meaningful progress in both increasing acquisitions and reducing Adjusted Net Losses this year, as compared to 2023."

Founded in 2014, Opendoor is one of the original iBuyers and is one of the few left operating in the North American market. The company has endured sustained losses and since founder Eric Wu stepped down as CEO in 2022 it has been trying to pivot towards becoming a marketplace business.

The company expects a rough third quarter with revenue guidance of between $1.2 and $1.3 billion and an Adjusted EBITDA loss of between $60-70 million.

The ruling handed down by Judge George H. Wu essentially means that both sides must exchange information related to the case. In requesting the discovery motion CoStar was keen for Move to reveal the exact nature of its complaint against Kaminsky and how the ex-Realtor.com Editor's actions allegedly damaged its business.

The legal spat between the two portal rivals began earlier this month when Move filed a lawsuit against CoStar claiming that its former News & Insights Editor James Kaminsky "stole confidential business information" and "established surreptitious, undetected ongoing access to allow himself (and thus CoStar) to spy on Move's highly confidential documents."

Since then Move has filed for a preliminary injunction—essentially an attempt to have the court block "any further unauthorized access" to the documents at the centre of the case—and CoStar has put Kaminsky on administrative leave "out of an abundance of caution".

Kaminsky has also released a statement via his lawyers explaining his actions as having been motivated by privacy concerns and a desire to help himself in his job search after being laid off by Move in January 2024.

“Before leaving Move and ultimately returning my laptop computer to Move, I did not have time to carefully prune the selection of emails that I wanted to delete for personal privacy purposes, so I erased the majority of my emails and electronic files to prevent them from being seen by the technology personnel who would be processing my computer return.”

“I had no interest in saving these documents, sharing these documents, or using those documents for any reason beyond short term help in generating job hunting materials for myself. I gave myself what I assumed would be temporary access to them in the most transparent and public way I know: literally putting my name on them.”

CoStar's CEO, Andy Florance backed his employee in comments made on stage at the Inman Connect real estate agent event yesterday in Las Vegas saying that his firm would not let Kaminsky "be the fall guy" for Move's legal action which he called "a PR stunt".

A deadline for the parties sharing the discovery information has been set for August 5th with Move's motion for a preliminary injunction set for September 23rd.

CoStar's lawyers will also be paying close attention to court proceedings on the other side of the country as Matterport—the subject of a $1.6 billion acquisition bid from CoStar—appealed a Delaware court ruling granting its former CEO the right to claim $79 million.

The issue relates to company by-laws that Matterport introduced before going public in 2021 that restricted shareholders from selling stock as the company stabilized. Brown challenged these bylaws in a 2022 lawsuit, arguing that his shares were excluded from the lockup period and was right to do so in the opinion of the Judge.

In May a judge ruled that Brown was entitled to compensation from Matterport but not the $141 million he had originally sued for.

The digital twin specialist filed the appeal on Tuesday a few days after its shareholders voted overwhelmingly in favour of accepting CoStar's bid.

CoStar has not commented directly on the court proceedings but there is a possibility that if Matterport's appeal is unsuccessful the acquisition deal could run into difficulty.

• Revenue was $678 million, a 12% increase year-on-year.
• Net income for the period stood at $19 million, down from $101 million in Q2 of 2023.
• Residential revenue for Q2 stood at $26.2 million, up 106% year-on-year and up 41% compared to Q1.

Double-digit quarterly revenue growth seems to be the minimum acceptable standard for CoStar with the S&P 500 company having now registered more than 50 consecutive quarters of double-digit year-on-year growth.

CoStar's latest figures were fuelled in large part by its rentals marketplace Apartments.com which saw revenue climb 18% year-on-year to $264 million. CoStar's other major revenue driver is its eponymous real estate information service which saw revenue grow 10% to $253 million.

Despite currently representing less than 4% of the company's overall business, shareholders and analysts were focused on CoStar's Residential segment. The company has been making headlines as it pushes into the world of residential real estate portals with a $1 billion marketing investment for Homes.com in the U.S.

Despite comfortably beating its guidance and market consensus on an Adjusted EBITDA basis ($41 million in Q2) companywide net income was down significantly largely thanks to the continuing investment needed to climb the portal ladder. However, CoStar's founder and CEO, Andy Florance pointed to some notable gains for the Homes.com brand in comments accompanying the release

“Homes.com net new bookings through June reached over $55 million, a significant milestone as it took Apartments.com two years to achieve those results. Our Homes.com Network had 148 million monthly average unique visitors in the second quarter, according to Google Analytics, maintaining our position as one of the top two most heavily trafficked residential property marketplaces in the U.S. Our unaided brand awareness continues to climb and reached 27% in June 2024 as a result of our aggressive brand marketing campaign."

The traffic figure, which has been at the centre of a PR war with rival Realtor.com, represents a 73% increase compared to 2023 with the Homes.com portal generating 99 million of the 148 million monthly average unique visitors to CoStar's US residential network—a 173% increase which "far exceeds" company expectations for this stage of the portal's development according to Florance.

Despite impressive traffic figures, the $55 million in sales represents something of a slowdown in the growth pace for CoStar's Residential flagship.

In an investor call, Florance attributed the figure to how the company uses its sales teams internally and a gap between what agent customers are used to receiving from a portal and the new 'your listing, your lead' model that Homes.com is selling to them. The CEO admitted that...

"...after two decades of agents being used to buying leads off of lead diversion sites in order to get buyer agency, there is definitely an education process [needed]."

In its investor presentation, CoStar highlighted the growth at its British challenger portal OnTheMarket which it claims now has close to 17,000 agent branches advertising (for context, Rightmove's figure for FY24 was 17,875). It also said that average monthly visits for OnTheMarket in June were 35 million, up 78% compared to June 2023.

Little mention was made of Matterport the virtual tour software market leader that CoStar agreed to acquire for $1.6 billion back in April. The deal is still in the works with Matterport shareholders due to vote on the merger later this week. In May a Delaware judge ruled that the California-based software provider is liable to pay its former CEO $76 million in damages.

Move Inc., the holding company behind Realtor.com, sued CoStar Group (Homes.com) last week for accessing sensitive files via a controversial hire.

The lawsuit claims Kaminsky accessed sensitive documents at least 37 times since leaving Realtor.com in January 2024 and being snapped up by CoStar in March.

CoStar has already rebuked the lawsuit as a PR stunt, but now Move Inc. has added another layer of seriousness to its allegations.

The injunction appears to surround three "key confidential files" that Move seeks to pause Kaminsky's and CoStar's access to during the ongoing lawsuit.

The injunction request would:

...restrain and enjoin Defendants CoStar Group, Inc. and James Kaminsky from any further unauthorized access of the following Move-owned files, and from any use or disclosure of Move’s confidential and trade secret information contained in the files.

It seeks only to stop further unlawful use of specific misappropriated files, preserve evidence, and help Move determine what happened to its stolen information.

Move Inc. does not include a request for Kaminsky to be removed from his role at CoStar—nor that CoStar should not be able to construct and distribute new products.

The so-called Portal War in the United States continues to threaten to burst into flames, and once again CoStar was quick to pour water (or is it gasoline?) on the filing with the firm's general counsel Gene Boxer calling the injunction request "a knee-jerk filing":

"CoStar welcomes the chance to litigate this case on the merits, where Realtor.com and Mr. [Damian] Eales [Realtor.com’s CEO] will no longer be able to hide behind press-statements dressed up as legal arguments.

"Realtor.com’s motion confirms that they’re using a mid-level employee as a pawn, and that they have zero evidence of any involvement by CoStar. None. As we have said from the beginning, this is a PR stunt, and it is backfiring spectacularly.

"Even more telling is the admission in their motion that Realtor.com knew of Mr. Kaminsky’s purportedly improper conduct at least as early as June 3rd, yet they made no attempt to contact him or CoStar to inquire about such conduct. Instead, they waited a month to take any action. And instead of trying to resolve this directly with the parties involved, they went straight to court and the media to tout their filing."

For once, Zillow gets to sit back, relax, and enjoy the show...

Simonelli rejoins Virginia-based CoStar from brokerage firm Compass where he was Senior Vice President of Investor Relations. Previously, he served as CoStar's Vice President of Investor Relations from 2011 to 2019.

A press release on CoStar's corporate website calls Simonelli "one of the top investor relations professionals in the United States" and states that he will be responsible for executing the firm's communication strategies and maintaining relations with institutional investors.

CoStar Group also announced the promotion of Cyndi Eakin to the position of Chief Accounting Officer. Eakin joined CoStar in 2016 and previously served as Group Controller and Head of Investor Relations.

“I’m delighted to welcome Rich back to CoStar Group and announce Cyndi’s promotion,” said Andy Florance, Founder and Chief Executive Officer of CoStar Group. “As we enter another era of growth for the company, I believe Rich’s experience with CoStar Group’s ambitious plans and track record of success, combined with his residential real estate industry experience, will be more relevant than ever to CoStar Group. His ability to liaise with our shareholders takes on a renewed importance. And Cyndi’s prior experience as our Controller and most recent experience in Investor Relations make her uniquely suited to oversee our accounting function. I look forward to seeing both Cyndi and Rich thrive in these new roles.”

The hires come hot on the heels of the appointment of former Freddie Mac executive, Christian Lown as CoStar looks to freshen up its leadership as it pursues its goal of taking number two spot from Newscorp-owned Realtor.com.

REA Group fully acquires Realtair

Melbourne-based Australian portal giant REA Group fully acquired the remaining shares in Realtair in June, following its acquisition of a 37% stake in the company in 2020.

Realtair is an end-to-end property sales platform that streamlines the way agents connect with property owners, while its suite of products enables agents to create a customisable digital listing presentation, sign agreements on the spot, and manage auction and private treaty transactions.

Owen Wilson, CEO at REA Group, said:

"We are focused on helping our customers to better manage their workflow, increase efficiencies, and grow their business. Realtair’s products will enhance our ability to deliver this and we’re excited by the long-term opportunities that our ongoing investment in Realtair presents.

"REA Group is well placed to help customers win more listings and with the added value that Realtair provides during the sales process, we can streamline the home buying experience for consumers."

Propi raises undisclosed funding from Second Century Ventures

The El Salvador-based digital brokerage Propi has become the first Central American company to receive funding from the US-based Second Century Ventures.

Second Century Ventures, part of the National Association of Realtors (NAR), provided an undisclosed but "significant" investment to Propi, which raised a pre-seed round worth $2.5 million in 2023.

José Mario Ávila, CEO of Propi, said:

"We are very excited about the investment from Second Century Ventures.

"We are the first investment in Central America from one of the most important investment funds in the world in proptech, which validates our model and direction. They do not invest in just anyone, in their portfolio there are world-renowned companies such as DocuSign."

Propi will also participate in the REACH accelerator program led by the NAR.

Online Marketplaces interviewed Propi in May 2023. You can read it in full here.

Directly raises $1.4M to expand "unique" blockchain and cryptocurrency startup

Directly, a blockchain and cryptocurrency proptech startup based out of Dubai, has raised $1 million from Singapore-based VC firm V3V Ventures and—interestingly— a further $350,000 from dietary and nutritional lifestyle app Eatr, another investee of V3V.

Directly works with property developers to incorporate blockchain technology into the local real estate market and facilitate cryptocurrency transactions. The company was founded in 2021 and claims to have facilitated 500+ transactions.

Ilya Govyadko, CEO at Directly, said:

"We are thrilled to have V3V Ventures as our partner. Their investment will accelerate our growth and enhance our ability to offer unique solutions in the real estate market.

"This partnership is a significant step towards our goal of becoming the leading real estate agency in Dubai."

Off-market specialist Invisible Homes raises $1.1 million after extending funding round

The UK-based startup Invisible Homes has raised £800,000 ($1.1 million) after extending its funding round.

A portal that connects buyers with London estate agents’ off-market property listings, Invisible Homes initially surpassed its initial funding target of £600,000 in May and has now raised a further £300,000 from new and existing investors.

The firm says it will use the new funds to boost marketing spend and attract more buyers in London, with further investment in its AI-driven technology.

Mark Wells, founder and chief executive at Invisible Homes, said:

"The funding of £800,000 allows us to speed up our growth plans from our current central and west London footprint, to cover the whole of London and the Home Counties in the next two years."

Invisible Homes was founded in 2018 by former London estate agent Mark Wells, allowing homebuyers to connect with boutique agents and bid on properties in London before they appear on major portals like Rightmove, Zoopla, and OnTheMarket.