Good morning, again. I'm Brad Erickson, covered internet here at. I'm the team in from Seattle, from Redfin, Chris Nielsen in New York. IR, Chris is obviously the CFO, a long time, along. Thanks so much for being here. Yeah, thanks for having us back again. Really appreciate it. Yeah, obviously. It's always funny. So I'm in Portland, they're in Seattle, and so naturally come to New York. Yeah. Yeah, a new person conversation. So, cool. I have a lot of realistic questions, obviously, as usual. Maybe let's start out, just spend a minute on the quarter and kind of what you've been addressing, in your investor calls and meetings since the quarter. And then, obviously we'll open it up. Sure. On profits. And then in addition to that, we had some extra costs associated with our transition to the Next, which is a way that we'll pay our agents differently going forward. I think mostly we've been in the progress in the business, Next most important that way, where at this point we've moved all of our agents over to this paid program. I'm sure they wanna talk about it more, but. It's probably the most important thing that's going on in the business right now. So, you know, we're excited about that sets up for the rest of this year and into 2025, and it's really the key focus area. Got it. That's great. Yeah, so maybe let's start with traffic, right? Something we don't talk about actually historically that much. I think Glenn, Glenn kind of gave a little bit of a tough message, say, "Hey, look, maybe we, we lost a little bit of share of traffic, been struggling a little bit." What's, what's happening there? Is that like a? Teams are just really attentive on making sure we're showing up well on search engine optimization, that we're paying the right amount for traffic from. Probably on that front, the biggest change: gains on our mortgage business, on our title business that then puts in play extra profit dollars that we can apply to bidding more on keywords, so because there's more profit potential from every customer we meet online, we're able to use that to be more aggressive about bidding, and I do think that that's been providing extra catalysts for traffic going forward. Got it. I'm not sure there's an overall here other than really paying attention, making sure we're doing all the right things. website auction inflation going on too from the competition side, or? I wouldn't describe it as outsized. I do think there's more competition this year than there was previously, but we don't view it as fundamentally differently. Yeah. Fundamentally different than that. Got it. And then just in terms of how should investors think about kind of like on a one-to-one basis, traffic translating to market share, like in terms of actual like brokerage transactions? In the long run, traffic is one of the best measures of what our volume is going to look like, our market share is going to look like in shorter periods of time. I think this year included, that may not be the best predictor, and that's just that we continue to see consumers really interested in the possibility of transacting. You see that in traffic. Mm-hmm. So traffic stays at one level, and we see this movement up and down in terms of transactional volume across the whole industry that's more connected to macro-related trends rather than is our traffic specifically. Yeah. Again, in the long run, we think of there being two pieces to our market share growth. Mm-hmm. There's website traffic, and then the second piece of fuel is from agent capacity, agent close rates. Yeah. Being able to pull customers all the way through a transaction. Those are the two levers that we have in the business. Got it. And so we'll keep fighting hard from a traffic standpoint. We have a lot of confidence in the teams who are working on that, and that's where we're up. And then just quickly, maybe a quick word on kind of where you're exposed. I think maybe you'll be making up numbers, a little bit over half the business to like 10 or 12 markets. A lot of coastal concentration in there, a lot of the kind of intuitive big cities, particularly West Coast. And then also in terms of like demographics, right? I think over-indexing younger, younger buyers and sellers, but maybe over-indexing from like a demographic perspective in some level, that sort of thing. Like how is your exposure playing with the market activity that you're seeing? Sure. So you're right, 56% of revenue or so comes from our end market. All right. I wasn't making that. No, good. And those markets tend to be East Coast, West Coast related. I don't think about the opportunity as fundamentally different or the trend being fundamentally different that way. We're not seeing big differences in terms of website traffic activity. There has been this longer-term trend towards people moving from the north, south, and east from the West Coast to the southwest. And we also have been growing our. Markets. And so, again, I don't think that there's any fundamental difference that way. Okay. Agent capacity, and obviously we have the new model, Redfin Next and everything. Historically, I think, you know, it was kind of a tough business, right? In some ways, I always felt like you guys had to predict the next six months or nine months of the real estate market and sort of staff appropriately. And when you have such heavy seasonalities, quarter to quarter, right, like another sort of wrinkle to contemplate, difficult to know what to put in your spreadsheet, that type of thing. How is that going lately? And then what is Redfin Next sort of view to maybe help that or ameliorate it a little bit? Sure. So the change is that we've moved our agent compensation from what was previously a combination of stipend to entirely variable. So it used to be about 25% of an agent's compensation. Agents who would have better close rates, they're working with a more expensive component. But that was the genesis of this. And we've seen really good results. We've retained those agents, but we're seeing the impact on close rates as well. So that's exciting. That's fuel for growth in the business. But there is an important byproduct that you're mentioning, which levels out our income statement, levels out the growth and cost ups and downs from a housing macro standpoint. Probably the best example of that is the guidance we gave for Q4 on real estate services, which is 29% gross margin in that business, up about 600 basis points year over year. Yeah. Pretty consistent with the gross margin we had in the third quarter. It used to be the case that gross margins would really fall in the fourth quarter, in the first quarter of the year, because we had this fixed component of compensation that now, again, is more variable with the revenue that we have. So that, that's an important change from a financial results investor standpoint. And then the other thing that goes along with it is that because our business economics don't move as much with different housing market conditions, it does have us more aggressive about hiring agents. Yeah. You know, a year ago, sitting here on this day, we would be really careful about the number of agents we were hiring in each of the local markets, because if we ended up overhired, those would be fixed costs that would be hard to overcome. Yeah. Instead, we're in this spot right now where, we said on the call, we expect to be hiring hundreds of agents into next year. Mm-hmm. Back to my earlier commentary, that's fuel for share gains. Yeah. Yeah. We think things start to set things up. Got it. And then one question we've had is, you know, when you think about the capacity of agents and okay, so like agents are getting a bunch of leads off the site, right? But clearly you're also out hiring some really big producers that produce independent of the leads they're getting from Redfin. How do you, how are you finding that management of making sure you're servicing your core website user customer as well as trying to fulfill that promise of the agent and saying, "Hey, look, you can still go out and make a ton of money on the side in addition to what we feed you"? Like how do you manage that? How does that work? Sure, so this is really important. We wanna make sure that the customers we meet from redfin.com get great service. Yeah. We're happy to have additional transactional volume that the agents we've hired bring along with them, so that's great as well, but the way we monitor this is that we're able to look at the number of customers we introduce to each of these agents. Mm-hmm. What the close rate looks like for those agents, and if we see any kind of deterioration that way on the redfin.com customers, we obviously work directly with those agents. Yeah. To make sure that we either flip that around or ultimately that the agent would need to leave the company because. Yeah. We're incurring costs from a marketing standpoint, having built this technology. We think of internet-related customers, customers who come to the website, to the mobile application as being just a much more efficient channel to meet people. Yeah. So we need to keep the flow of those customers moving along. Got it. And so just to reframe if I could, is it, is the way to think about it that you're seeing such better productivity out of some of these agents that they can still handle all the leads you used to with better close rates and they're adding on their own deals? So effectively, it's all of that's like incremental gross profit dollars. Am I saying any of that wrong? The only other thing I'd add to that is that as we hire more agents, we can also reduce the number of customers each of the agents meet. Yeah. So we leave some capacity for the agents to not only serve customers from redfin.com. Yeah. But also, from their own network of business. Yeah. Maybe just one other comment here, which is. Yeah. Most of the business continues to be from the website itself. Yeah. I expect that generally to be the case. Mm-hmm. We're glad to hire agents who can bring along extra transactions as well. So that's exciting. Yeah. but that's not the primary focus here. Got it. And then just for deals done through website customers versus what, you know, kind of, and the, given the comp structure and everything. Sure. Any margin difference, any more, you know, kind of the economics differences between those types of transactions? Right. So we do pay a higher split to agents who bring the customer via their own network. Yeah. Just to give you a sense, it's probably 30%-40% of the transaction value goes to the agent in the case where it's sourced from redfin.com. Mm-hmm. It's kind of twice that for a customer who's sourced from the agent's own network. Again, we're happy with the economics of that transaction. Yeah. We can make a nice profit on that. If a lot of the volume started to move the direction of agent-sourced volume, it would pressure down on gross margins. Yeah. We've not seen that to be the case, but it would pressure down on gross margins. At the same time, we would have more profit dollars overall. Yeah. And so we would be happy with that trade-off if it turned out. Got it. For me. Any impact you can speak to in terms of the mix between partner business and brokerage? I think historically you're kind of like philosophically you're agnostic to those, but obviously brokerage just adds a lot more gross profit dollars. Like any mixed effects that you see from Redfin Next? Sure, so in the near term here, there's probably a little bit of pressure on the partner business, the mix that goes to partners, because as we're hiring more agents, that's more capacity in the brokerage that probably pulls away at least a little bit. Yeah. From partner transactions. At the same time, our partner team is doing a great job improving close rates on those introductions as well. Yeah. And so it's a little bit of a battle going on between those two dynamics. We're happy about that. Yeah. You know, it'll. Yeah. It'll be great for the business overall as we get close rate improvements across not only the brokerage channel but the partner channel. Got it. And I wanna talk regulatory, obviously, in a bit, but just specifically on this topic, is there anything that's happening in terms of the industry right now making it easier or harder from an agent recruitment standpoint? And then, you know, and obviously that's a Redfin Next question. Right. But also, like, historically, I think a lot of the agents you've recruited actually are coming from outside the industry. Is that still the case or, you know, where are you, where are you finding the folks you're bringing in right now? Sure, so there is a greater focus now on bringing in agents from the industry. Mm-hmm. It goes back to what I was describing at the beginning here, which is we wanted to have agents who were more compelling to customers, particularly of more expensive homes. Mm-hmm. And so that does likely mean someone who comes from within the industry. In terms of how that recruiting is going, I think we've been really encouraged with this full rollout of Next that recruiting has been going well. Mm-hmm. The pitch to an agent is that you'll have the opportunity to meet over 100 customers per year from the website. Yeah. And maintain the customer relationships that you already have. And that combination has just been really powerful so far. Yeah. Yeah. I don't think there's anything in particular that's going on in the industry that's making that easier or more difficult. Mm-hmm. Instead, I think our offering to agents has just gotten stronger and that's. Yeah. What we're seeing in terms of response. Not, not to oversimplify it, but is it fair to say like when you're bringing in maybe some of these higher producing agents, you know, year one at Redfin, their own business plus Redfin, are they making more money than they used to on a net basis? Like is that absolutely fair? I think people wouldn't come over if they didn't believe. Yeah. That they would make more money. Got it. And so the combination, again, that's really compelling to someone who decides to join Redfin is that they realize they're a pretty good agent actually. They've done really well. Yeah. But they wish they knew more customers. Yeah. And so they're willing to kind of make that trade, to be able to get these introductions. Yeah. Got it. Okay. So thinking kind of bigger picture, right? You got the traffic sort of cross currents we talked about. Obviously, the market's gonna do what the market's gonna do. When we think about kind of some of your agent capacity comments, put that into context as to how you're, you know, I don't wanna. We're not allowed to use the word betting in research, by the way. That's a no-no. Right. But, if we're sort of handicapping next year from the market, how do we think about the agent capacity plans you have in place and what do you guys think's gonna happen there? Sure. So we are adding agent capacity. It is mostly because we think that we'll be able to serve customers better adding that capacity. Yep. And the risk of adding agents is actually quite low under this program. That's probably, just back to it, that's probably the biggest change. Yeah. Where. Yeah. Again, two years ago, we would've been really, really thoughtful about how many existing home sales are there going to be next year, because if we overhired relative to that, it'd be expensive for the company. Yeah. And instead, we can just see there's plenty of opportunity right now. And so we'll continue to add agent capacity, in proportion to the kinds of volumes that we're expecting, for customer contact. Yeah. But without a lot of risk associated with it. Got it. Okay. So if you put that all together, and I know, I mean, Glenn's always a very honest communicator, on the. He is. On the conference call, which we love. It's great. You know, he basically said, "Look, with the traffic and the market share stuff, like that's unacceptable, but we're gonna get back to sort of share gains." Like that's the goal, and you've laid out a lot of the inputs to that. Historically, that was kind of like basis points at a time, right? Is that still kind of the general framework of what you guys target? It is. I think that the fuel we're adding right now is agent capacity. Mm-hmm. And I think that's the place we've felt like there was a greater opportunity. Yeah. And for sure, our intent here, having navigated a lot of ups and downs in the housing market, is to get back to the long-term share gains. Yeah. That we've seen. Yeah. Yeah. Got it. We haven't spent any time on the mortgage business. It's been a few years. Yeah. And the Bay Equity deal, which is, which has gone well, I think. What's the, what's the update? And I guess as you kind of look to scale and ramp, like what, what are the challenges you're facing? Initially, it was, you know, a year or two ago, the conversation was like, "Get the product right. Right. Or, "Get the relationship set between the brokers and so forth and the loan officers." Where are we now? Like what are the impediments to further scale, further ramp? Sure. So. Or gating factors, I should say. Yeah. So we've gone now from low single-digit attach rate to most recent quarter, 27%. Mm-hmm. 27% of buyers on redfin.com end up getting a mortgage through our internal service, through Bay Equity. We think that that's industry leading. It's been a lot of progress. Yeah. We can see that markets are above 40%. Mm-hmm. So we've got good evidence that it can be even higher than that. I think we've gotten to this place through really good relationship building between the agents and the loan officers. Mm-hmm. We know already that there are some things that we can do electronically to make sure that the customer introduction happens, even if the agent. Yeah. is not completely on top of it at that moment. And then in addition to that, it continues to really be a point of emphasis with each of our agents that we do have an expectation, not that the customer's going to get their mortgage from Bay Equity. Mm-hmm. That's up to the customer, obviously, but instead that the agent is making that introduction. Yeah. That's just critical. Yeah. To all this. Yeah. So, I think we're really encouraged with the progress we've seen today. The Bay Equity team has done just a fantastic job serving those customers. Yeah. And so it's gone just about as well as we would've anticipated in terms of that kind of attach rate. And we can see that there's more room to run from there. Yeah. Yeah. And I'd make a similar comment, maybe even stronger, as it relates to our title business. So those are the two that connect directly to the brokerage, where we do wanna serve the customer all the way through and generate extra profit dollars doing that. And on the title business, we've seen attach rates above 60%. Yeah. That's frankly higher than I would've even expected a few years ago. Yeah. So the team's done just a fantastic job there. And it does create this extra opportunity to earn profits and be able to reinvest that from a marketing standpoint. Yeah. Are there other opportunities, parts of the transaction you guys think about? We think of this combination as being the primary one. Mm-hmm. I don't expect we would add to our offerings in that way. Okay. Certainly not through any kind of directly owned business. Yeah. It is just because these three things go together so naturally. Yeah. And so. Yeah. Are so important for the customer. Yeah. And then just talk about margins. And obviously, you guys kind of break things out today, but. Yeah. Where are we? Where can this go? Sure. I specifically, too, one question I get asked about mortgage in particular, what actually drives the leverage, right? 'Cause it's obviously I recognize like it's super at subscale levels, right? Very dilutive from a gross margin perspective. What allows that to sort of grow up over time? Yeah, so in the mortgage business, there are probably two factors here. One is what's the competitiveness of the rate environment? What's right now the situation is there's excess industry capacity that presses down on margins across the whole industry, so I do expect over time some of that capacity will come out. We would believe over time also that some more of the capacity gets absorbed, as industry volumes return, but the thing that we can control is just our cost of serving that customer. Yeah. So there's underwriting activity. There are funding activities. Again, there's just an intense focus on getting as much efficiency as we can out of that portion of the business. Yeah. Even as there continues to be more gain on sale opportunities. Yeah. Got it. So from a profitability standpoint, on these two, that's the mortgage division. On the title business, we don't break out all the results there. It's included in our other segment, but we've been really pleased with the gross margin improvement in that business. Yeah. It's been even better than, again, I would've expected a couple of years ago. Mm-hmm. So that's kind of where we are. Got it. Cool. Stop for a moment. Is there any questions? No? All right. We'll continue. Let's talk. I think. Oh, sorry. I apologize. Yeah. You're talking about, Sorry about that. Yeah, just curious if you've analyzed or looked at your convertibles, and monitored those conversion prices and see if you were thinking about taking advantage of that? Yeah, so the question here is related to balance sheet. We've been quite active over the last couple of years repurchasing our own convertible notes, most notably the notes that are due in 2025. Mm-hmm. Over time, we've seen good discounts on that transaction. We continue to think about this in a similar kind of way, which is, what's the return on investment? What's the discount associated with that? And how does that compare to our cost of capital elsewhere? So as we see good opportunities there, we've been really aggressive about it. Any others? No? Let's talk regulatory a little bit, and I guess kind of two questions. I mean, one, the standard, like what are you seeing, right, in terms of. Mm-hmm. Buyer commission levels just in general? And two, just, I guess, somewhat related, are you guys doing anything on the buyer commission side from your perspective internally? At times, you've made some changes that have had some gross margin impact, that sort of thing. I realize not totally connected. No. But sort of, but yeah, maybe just talk about that if you could? Sure. So there's an industry change that's gone into effect this year where there are different regulatory requirements in terms of how you meet a buyer and then what fee disclosure there is to that buyer. Those changes happened in the middle of the summer. We've provided the evidence that we can on this, which is we've not seen a lot of change in terms of the aggregate or average fees that are charged before and after that period of time. I think the color commentary here from our agents is that with that additional fee disclosure, we do know that customers are asking more questions about the fees, in some cases debating or negotiating those fees. I think that's particularly been true for more expensive homes. So that's the anecdote. But again, when you look at the aggregate data, we've not seen a lot of change. Yeah. In those fee structures over time. I was curious, like in our checks, we've definitely heard instances where the listing agent is actually charging more in this moment because, of course, if you're technically, optically not responsible for that as a seller, right, there's an opportunity there. Does that, I don't know, does that make you guys relatively more attractive in some way as you're talking to prospective sellers? I think that we've long believed that fees should be lower. We've had lower fees than our competition. Yeah. That continues to be the case today. I do think there's at least some possibility that the balance between buyer fees and seller fees changes over time as a result of this. Yeah. Because there's different value that each of those parties can bring to the transaction. Yeah. Yeah. But it's still probably too early to say that that's, you know, the most likely outcome in all of this. Yeah. Yeah. Just in terms of our business and the way we've approached this, which is it really goes all the way back to last year at this time where we put in place a program that if a customer signs an agreement with us early in the transaction. Mm-hmm. We charge 25 basis points lower than our standard fee. We found that to be just a super effective tool to build the customer relation is what I was just talking about. Yeah. How, and I mean, a little bit of a follow-on to the earlier question, but like how critical are those targets from a liquidity perspective for the next, say, 12-18 months? I think it's really important from a liquidity standpoint. It's also just important to set up in terms of anything that we would wanna do in the capital markets over time. Yeah. We'll continue to be opportunistic that way. Got it. I think we're out of time, but Chris, always great to see you. Thanks for being here. Yeah. Thank you, Brad. Yeah. Thanks. Thanks.