Redfin reported $606.9 million in second-quarter revenue, a 29 percent increase compared to the second quarter of 2021, in an earnings report released Thursday afternoon following the close of markets.

Redfin reported growing revenue alongside declining profits in the second quarter of 2022, as the housing market took a turn for the worse.

Redfin reported $606.9 million in second-quarter revenue, a 29 percent increase compared to the second quarter of 2021, in an earnings report released Thursday afternoon following the close of markets. The company’s gross profit, however, clocked in at $118 million, a 6 percent annual decrease, and its real estate services growth profit hovered at $74.1 million, down 16 percent from last year, according to the report.

Redfin’s real estate services gross margin stood at 29 percent, compared to 35 percent in the previous year. The company’s adjusted EBITDA was at $28.6 million, compared to $2.8 million in the second quarter of 2021.

Redfin CEO Glenn Kelman pinned the declining profits on the shift that the housing market took following a steep rise in mortgage rates, which now sit at approximately 5 percent.

“The housing market took a turn for the worse in the second quarter,” Kelman said in a statement. “There will be more market ups and downs in the road ahead, but our whole engine to drive traffic, brokerage share, customer value and monetization is running more efficiently than ever.”

The second quarter marked the first time in five years as a publicly traded company that Redfin has fallen short of its revenue projections, Kelman said during an Aug. 4 call with investors.

Businesses owned by Redfin are feeling the heat. According to Kelman, its mortgage business Bay Equity has cut its gross profit per loan in half as rates have shot up, but he remains hopeful about the business’s potential.

“When rates stabilize and Bay Equity can raise prices on new loans, and also refinance many of our 2022 loans, we’ll have the potential to generate more profits from a customer than any other broker,” he said. “This acquisition can change the fundamental physics of our business.”

RedfinNow, the companies iBuyer, has proved to be the most effected by market forces, Kelman said. The properties segment earned $6.8 million during the second quarter, an increase from $5 million at the same time last year. But due to a sharp decline in homebuying demand, the company expects to sell the homes they purchased in April and May at a loss.

Despite the road bumps, Kelman said he expects RedfinNow to remain a key part of the business.

“That won’t be enough to sink our battleship,” he said. “Our forecast assumes home prices keep declining moderately through the rest of 2022, but we still expect our properties division to earn a significant gross profit for the full year.”

The second half of 2021 saw the online brokerage lay off 8 percent of its staff in an effort to cut costs, following similar cost cutting measures by companies including Compass.

Despite the choppy waters, the company reached a market share of 0.82 percent of U.S. existing home sales during the second quarter, an increase of five basis points from last year, and it expanded its listing coverage from 91 percent to 94 percent of the U.S. population.

In the first quarter of the year, Redfin reported a net loss of nearly $91 million despite raking in a better-than-expected $597 million in revenue. The company reported a gross profit of nearly $73 million in the first quarter of the year, but that’s before accounting for common stock expenses.

The deteriorating demand for homes has had a similar effect on Redfin’s bottom line as it has on those of other real estate companies.

But CEO Glenn Kelman has said that recent steps the company has taken — including adding rentals to its real estate portal, hiring new agents and expanding its mortgage business through the acquisition of Bay Equity — will help position the company to gain market share.

“We think that we will gain share as these agents season,” Kelman said in May. “That’s especially true in the places where we’ve hired the most agents like in the southeast.”

And indeed, the company’s imprint was growing in the first quarter, even as it posted net losses. Redfin reported its market share in the first three months of the year grew to nearly 1.2 percent of existing home sales by value. Its number of monthly site users grew to 51 million — an 11 percent increase.

Looking forward, the company predicted the third quarter would bring in revenues between $590 million and $627 million, representing annual growth between 9 and 16 percent. It also predicted a net loss of between $87 million and $79 million.

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