Earnings season for Seattle companies

Redfin and Expedia both had great earnings calls last week with Redfin stock up 20% and Expedia up 10%. These are definitely two companies to track over the next few quarters.

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Redfin is interesting right now because one of their main competitors, Zillow, is betting the future of the company on “iBuying” (instant cash offers), while Redfin is taking a more measured approach by partnering with Opendoor for iBuying in most markets.

It’s an unusual flip because Zillow traditionally ran a high margin business selling leads to agents, while Redfin had a lower margin business selling houses. Now it’s reversed, and Zillow has the low margin house flipping business, and Redfin has the high margin lead gen business. I’m guessing it will be harder to move from a high margin business to a low margin one, but we’ll see how these strategies play out.

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Meanwhile at Expedia, Chairman Barry Diller recently stepped in to run the company, and last week he announced a bunch of cost cutting initiatives and plans to simplify Expedia’s brands. (He also said HomeAway is a dumb name that “means nothing to no one,” and I totally agree 😂)

On his very open call with analysts, he promised to change the company culture, drive $300-500M of cost savings, cut Expedia’s ancillary brands, focus on direct traffic so they are less reliant on SEO, and unify customer data. Seems like a good strategy, and he certainly has a lot of skin in the game (he owns 29% of the company) to go execute.

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