Zillow and Redfin both reported Q4 2022 earnings last week. It was a picture of divergent fortunes.

Zillow’s core business was down about 20 percent year-over-year, but remains profitable. When you consider that the Fed effectively stun-gunned the market a third of the way through the year, 20 percent looks pretty damn good. The Opendoor partnership launched in three markets (seller leads!), the apartments business is showing signs of life after being flummoxed by Costar’s Apartments.com a few years back, the Showingtime acquisition is being put to work levering up Premier Agent margins and a product for listing agents is coming together.

In other words, we think they’re doing well.

Redfin, on the other hand, lost a lot of money, lost market share and continues to struggle with its acquisition of a rental business in 2021 and a mortgage business in 2022. The company expects to lose between $116 and $105 million in Q1 of 2023, which is about 45 percent of its total cash on hand. Moreover, the company is having to make hard philosophical concessions, indicating that it will increase its reliance on non-Redfin agents in order to improve gross margins.

In response to an analyst’s question on this point, CEO Glenn Kelman actually said “So last year, we just asked ourselves, is it more expensive to employ agents than we realize?”