September 30,
2020 December 31,
2019
(unaudited)
ASSETS
Current assets
Cash $ 250,461 $ —
Prepaid expenses 383,761 —
Total Current Assets 634,222 —

Deferred offering costs — 52,673
Cash and Marketable securities held in Trust Account 414,042,207 —
TOTAL ASSETS $ 414,676,429 $ 52,673

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accrued expenses $ 4,362,316 $ —
Accrued offering costs — 52,673
Advance from related party — 21,631
Promissory note – related party 1,138,497 —
Total Current Liabilities 5,500,813 74,304

Deferred underwriting fee payable 14,490,000 —
TOTAL LIABILITIES 19,990,813 74,304

Commitments

Class A ordinary shares subject to possible redemption, 38,964,589 and no shares at redemption value at September 30, 2020 and December 31, 2019, respectively 389,685,614 —

Shareholders’ Equity (Deficit)
Preferred shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding — —
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 2,435,411 and none issued and outstanding (excluding 38,964,589 and no shares subject to possible redemption) at September 30, 2020 and December 31, 2019, respectively 244 —
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 10,350,000 and one shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively 1,035 —
Additional paid-in capital 11,341,549 —
Accumulated deficit (6,342,826 ) (21,631 )
Total Shareholders’ Equity (Deficit) 5,000,002 (21,631 )
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) $ 414,676,429 $ 52,673

~~The accompanying notes are an integral part of~~

OPENDOOR TECHNOLOGIES INC.

As used in this Quarterly Report on Form 10-Q, unless the ~~unaudited condensed consolidated financial statements.~~

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

~~CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS~~

~~(Unaudited)~~

Three Months
Ended
September 30,

Nine Months
Ended
September 30,

2020 2020
Formation and operating costs $ 6,059,583 $ 6,363,402
Loss from operations (6,059,583 ) (6,363,402 )

Other income:
Interest income 16,290 42,207

Net Loss $ (6,043,293 ) $ (6,321,195 )

Weighted average shares outstanding, basic and diluted (1) 12,179,587 10,111,790

Basic and diluted net loss per ordinary share (2) $ (0.50 ) $ (0.63 )

~~(1)~~	~~Excludes an aggregate of 38,964,589 shares subject to possible redemption.~~
~~(2)~~	Net loss per ordinary share – basic and diluted excludes income attributable to ordinary shares subject to possible redemption of $15,332 and $39,725 for the three and nine months ended September 30, 2020, respectively (see Note 2).

~~The accompanying notes are an integral part of~~context requires otherwise, references to “Opendoor,” the ~~unaudited condensed consolidated financial statements.~~

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

~~CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020~~

~~(Unaudited)~~

Class A
Ordinary Shares

Class B
Ordinary Shares
Additional
Paid-in Accumulated Total
Shareholders’
(Deficit)
Shares Amount Shares Amount Capital Deficit Equity
Balance – January 1, 2020 — $ — 1 $ — $ — $ (21,631 ) $ (21,631 )

Cancellation of Class B ordinary share — — (1 ) — — — —

Issuance of Class B ordinary shares to Sponsor ⁽¹⁾ — — 10,350,000 1,035 23,965 — 25,000

Net loss — — — — — — —

Balance – March 31, 2020 — — 10,350,000 1,035 23,965 (21,631 ) 3,369

Sale of 41,400,000 Units, net of underwriting discount and offering expenses 41,400,000 4,140 — — 391,799,302 — 391,803,442

Sale of 6,133,333 Private Placement Warrants — — — — 9,200,000 — 9,200,000

Ordinary shares subject to redemption (39,570,413 ) (3,957 ) — — (395,724,945 ) — (395,728,902 )

Net loss — — — — — (277,902 ) (277,902 )

Balance – June 30, 2020 1,829,587 183 10,350,000 1,035 5,298,322 (299,533 ) 5,000,007

Change in value of ordinary shares subject to redemption 605,824 61 — — 6,043,227 — 6,043,288

Net loss — — — — — (6,043,293 ) (6,043,293 )

Balance – September 30, 2020 2,435,411 $ 244 10,350,000 $ 1,035 $ 11,341,549 $ (6,342,826 ) $ 5,000,002

~~(1)~~

~~Included an aggregate of up to 1,350,000 shares that were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full (see Note 7).~~

~~The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.~~

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2020~~

~~(Unaudited)~~

Cash Flows from Operating Activities:
Net loss $ (6,321,195 )
Adjustments to reconcile net loss to net cash used in operating activities:
Interest earned on cash and marketable securities held in Trust Account (42,207 )
Changes in operating assets and liabilities:
Prepaid expenses (383,761 )
Accrued expenses 4,362,316
Net cash used in operating activities (2,384,847 )

Cash Flows from Investing Activities:
Investment of cash in Trust Account (414,000,000 )
Net cash used in investing activities (414,000,000 )

Cash Flows from Financing Activities:
Proceeds from issuance of Class B ordinary shares to Sponsor 25,000
Proceeds from sale of Units, net of underwriting discounts paid 406,800,000
Proceeds from sale of Private Placement Warrants 9,200,000
Repayment of advances from related parties (21,631 )
Proceeds from promissory note – related party 1,438,497
Repayment of promissory note – related party (300,000 )
Payment of offering costs (506,558 )
Net cash provided by financing activities 416,635,308

Net Change in Cash 250,461
Cash – Beginning —
Cash – Ending $ 250,461

Non-cash investing and financing activities:
Initial classification of ordinary shares subject to possible redemption $ 396,006,810
Change in value of ordinary shares subject to possible redemption $ (6,321,196 )
Deferred underwriting fee $ 14,490,000
Offering costs included in accrued offering costs $ 264,285

~~The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.~~

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2020~~

~~(Unaudited)~~

~~NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS~~

Social Capital Hedosophia Holdings Corp. II (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on October 18, 2019. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or“Company,” “we,” “us,” and “our,” and similar ~~business combination with one or more businesses (a “Business Combination”).~~

~~The Company is not limited~~references refer to ~~a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage~~Opendoor Technologies Inc. and ~~emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.~~

~~The Company has one subsidiary, Hestia Merger Sub Inc., a~~its wholly owned ~~subsidiary of~~subsidiaries following the ~~Company incorporated in Delaware on September 9, 2020 (“Merger Sub”).~~

As of September 30, 2020, the Company had not commenced any operations. All activity for the period from October 18, 2019 (inception) through September 30, 2020 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and the search for a Business Combination ~~including activities in connection with the proposed acquisition of~~(as defined herein) and to Opendoor Labs Inc., a Delaware corporation (“Opendoor”). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statements for the Company’s Initial Public Offering became effective on April 27, 2020. On April 30, 2020, the Company consummated the Initial Public Offering of 41,400,000 units (the “Units” and, with respect prior to the shares of Class A ordinary shares included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of the over-allotment option to purchase an additional 5,400,000 Units, at $10.00 per Unit, generating gross proceeds of $414,000,000 which is described in Note 3.

~~Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 6,133,333 warrants (the “Private Placement Warrants”) at~~Business Combination.

As a ~~price of $1.50 per Private Placement Warrant in a private placement to SCH Sponsor II LLC (the “Sponsor”), generating gross proceeds of $9,200,000, which is described in Note 4.~~

Transaction costs amounted to $22,196,558 consisting of $7,200,000 of underwriting fees, $14,490,000 of deferred underwriting fees and $506,558 of other offering costs. In addition, at September 30, 2020, cash of $250,461 was held outside of the Trust Account (as defined below) and is available for working capital purposes.

Following the closing of the Initial Public Offering on April 30, 2020, an amount of $414,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.

~~The Company will provide the holders of the Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion~~result of the Business Combination ~~either (i)~~completed on December 18, 2020, Opendoor Labs Inc. share and per share amounts presented in ~~connection with a shareholder meeting called~~this Quarterly Report on Form 10-Q, for periods prior to ~~approve~~ the Business Combination, ~~or (ii)~~have been retroactively converted by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their shares for a pro rata portionapplication of the ~~amount held in~~exchange ratio of 1.618. For more information regarding the ~~Trust Account, calculated as~~business combination, please see “Part I – Item 2. Management’s Discussion and Analysis of ~~two business days prior to~~Financial Condition and Results of Operations – The Business Combination”.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the ~~completion~~meaning of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. The per-share amount to be distributed to the Public Shareholders who redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Company will proceed with a Business Combination only if the Company has net tangible assets, after payment of the deferred underwriting commission, of at least $5,000,001 upon such completion of a Business Combination and, if the Company seeks shareholder approval, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who attend and vote and a general meeting of the Company. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rulesSection 27A of the Securities ~~and Exchange Commission (“SEC”~~Act of 1933, as amended (the “Securities Act”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Company’s Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination and to waive its redemption rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination or seek to sell any shares to the Company in a tender offer in connection with a Business Combination. Additionally, subject to the immediately succeeding paragraph, each public shareholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2020~~

~~(Unaudited)~~

Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 1321E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)~~) will be restricted from redeeming its shares with respect to more~~. All statements other than ~~15%~~statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition; business strategy and plans; expectations regarding the ~~Public Shares without~~impact of COVID-19; market opportunity and expansion and objectives of management for future operations, including our statements regarding the ~~Company’s prior written consent.~~

~~The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares~~benefits and Public Shares held by it in connection with the completion of a Business Combination (and not seek to sell its shares to the Company in any tender offer the Company undertakes in connection with its initial Business Combination) and (b) not to propose an amendment to the Amended and Restated Memorandum of Articles of Association (i) to modify the substance or timing of the ~~Company’s obligation~~roll out of new markets, products, or technology; and efforts to ~~redeem 100%~~remediate our material weaknesses in internal control over financial reporting, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast”, “future”, “intend,” “may,” “might”, “opportunity”, “plan,” “possible”, “potential,” “predict,” “project,” “should,” “strategy”, “strive”, “target,” “will,” or “would”, including their antonyms or other similar terms or expressions may identify forward-looking statements. The absence of ~~the Public Shares if the Company~~these words does not ~~complete~~mean that a Business Combination within Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

~~The Company will have until April 30, 2022 (the “Combination Period”) to consummate a Business Combination. However, if the Company has~~statement is not completed a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount thenforward-looking.

These forward-looking statements are based on deposit in the Trust Account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish the rights of the Public Shareholders as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Public Shareholders and its Board of Directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of a liquidation, the Public Shareholders will be entitled to receive a full pro rata interest in the Trust Account ($10.00 per share, plus any pro rata interest earned on the Trust Fund not previously released to the Company and less up to $100,000 of interest to pay dissolution expenses). There will be no redemption rights or liquidating distributions with respect to the Founder Shares or the Private Placement Warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third party (other than the Company’s independent auditors) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the Trust Accountinformation available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, which involve a number of judgments, risks and uncertainties, including without limitation, risks related to:

•our public securities’ potential liquidity and trading;

•our ability to raise financing in the ~~liquidation~~future;

•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•the impact of the ~~Trust Account due~~regulatory environment and complexities with compliance related to reductions in the value of trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent auditors), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~Liquidity and Going Concern~~

As of September 30, 2020, the Company had $250,461 in its operating bank accounts, $414,042,207 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its ordinary shares in connection therewith and working capital deficit of $4,866,591. As of September 30, 2020, approximately $42,000 of the amount on deposit in the Trust Account represented interest income.

Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.

environment;

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2020~~

~~(Unaudited)~~

On September 30, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $4,000,000. At September 30, 2020, there was $1,138,497 outstanding under the Promissory Note (see Note 5).

The Company may need to raise additional capital through loans or additional investments from its Sponsor, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to (other than pursuant to the Promissory Note), loan the Company additional funds, from time to time or at any time, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s•our ability to ~~continue as a going concern for the next twelve months following the date from when the financial statements are issued. These financial statements do not include any adjustments~~remediate our material weaknesses;

•factors relating to ~~the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.~~

~~Risks~~our business, operations and ~~Uncertainties~~

~~Management continues to evaluate~~ financial performance, including:

▪the impact of the COVID-19 ~~pandemic~~pandemic;

▪our ability to maintain an effective system of internal controls over financial reporting;

▪our ability to grow market share in our existing markets or any new markets we may enter;

▪our ability to respond to general economic conditions;

▪the health of the U.S. residential real estate industry;

▪risks associated with our real estate assets and increased competition in the U.S. residential real estate industry;

▪our ability to manage our growth effectively;

▪our ability to achieve and maintain profitability in the future;

▪our ability to access sources of capital, including debt financing and securitization funding to finance our real estate inventories and other sources of capital to finance operations and growth;

▪our ability to maintain and enhance our products and brand, and to attract customers;

▪our ability to manage, develop and refine our technology platform, including our automated pricing and valuation technology;

▪the success of our strategic relationships with third parties; and

▪other factors detailed under the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q.

Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the ~~industry~~date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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OPENDOOR TECHNOLOGIES INC.

As a result of a number of known and ~~has~~unknown risks and uncertainties, including without limitation the important factors described in the “Risk Factors” section of this Quarterly Report on Form 10-Q and on Part I. Item 1A “ Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”), our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


		June 30, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	1,557,815	$	1,412,665
Restricted cash		131,652		92,863
Marketable securities		200,143		47,637
Mortgage loans held for sale pledged under agreements to repurchase		25,368		7,529
Escrow receivable		32,848		1,494
Real estate inventory, net		2,723,648		465,936
Other current assets ($811 and $373 carried at fair value)		67,149		24,987
Total current assets		4,738,623		2,053,111
PROPERTY AND EQUIPMENT – Net		33,962		29,228
RIGHT OF USE ASSETS		45,581		49,517
GOODWILL		30,945		30,945
INTANGIBLES – Net		7,754		8,684
OTHER ASSETS ($10,000 and $0 carried at fair value)		11,396		4,097
TOTAL ASSETS	(1)	$	4,868,261	$	2,175,582
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities		$	70,900	$	25,270
Current portion of credit facilities and other secured borrowings		1,690,878		346,322
Warrant liabilities - current		38,669		0
Interest payable		4,605		1,081
Lease liabilities - current portion		4,999		20,716
Total current liabilities		1,810,051		393,389
CREDIT FACILITIES – Net of current portion		595,579		135,467

WARRANT LIABILITIES		0		47,349
LEASE LIABILITIES – Net of current portion		44,593		46,625
OTHER LIABILITIES		117		94
Total liabilities	(2)	2,450,340		622,924
COMMITMENTS AND CONTINGENCIES (See Note 17)		0		0







SHAREHOLDERS’ EQUITY:
Common stock, $0.0001 par value; 3,000,000,000 shares authorized; 593,838,919 and 540,714,692 shares issued and outstanding, respectively		59		54
Additional paid-in capital		3,875,552		2,596,012
Accumulated deficit		(1,457,690)		(1,043,449)
Accumulated other comprehensive income		0		41
Total shareholders’ equity		2,417,921		1,552,658
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	4,868,261	$	2,175,582

________________

(1)The Company’s consolidated assets at June 30, 2021 and December 31, 2020 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs: Cash and cash equivalents, $1,002 and $15,849; Restricted cash, $122,379 and $81,408; Real estate inventory, net, $2,605,155 and $460,680; Escrow receivable, $32,686 and $1,364; Other current assets, $27,761 and $5,365; and Total assets of $2,788,983 and $564,666, respectively.

(2)The Company’s consolidated liabilities at June 30, 2021 and December 31, 2020 include the following liabilities for which the VIE creditors do not have recourse to Opendoor: Accounts payable and other accrued liabilities, $23,912 and $2,335; Interest payable, $4,541 and $1,059; Current portion of credit facilities and other secured borrowings, $1,666,522 and $339,173; Credit facilities, net of current portion, $599,000 and $135,467; and Total liabilities, $2,293,975 and $478,034, respectively.

See accompanying notes to condensed consolidated financial statements.

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OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
REVENUE	$	1,185,386	$	739,827	$	1,932,660	$	1,995,622
COST OF REVENUE	1,026,615		685,253		1,676,757		1,850,001
GROSS PROFIT	158,771		54,574		255,903		145,621
OPERATING EXPENSES:
Sales, marketing and operations	96,525		47,265		165,591		128,954
General and administrative	190,611		29,323		412,695		58,906
Technology and development	24,388		16,838		75,065		32,625
Total operating expenses	311,524		93,426		653,351		220,485
LOSS FROM OPERATIONS	(152,753)		(38,852)		(397,448)		(74,864)
DERIVATIVE AND WARRANT FAIR VALUE ADJUSTMENT	23,952		122		8,680		(890)

INTEREST EXPENSE	(15,826)		(17,290)		(26,825)		(45,017)
OTHER INCOME – Net	1,012		180		1,636		2,855
LOSS BEFORE INCOME TAXES	(143,615)		(55,840)		(413,957)		(117,916)
INCOME TAX EXPENSE	(190)		(79)		(284)		(199)
NET LOSS	$	(143,805)	$	(55,919)	(414,241)		(118,115)


Net loss per share attributable to common shareholders:
Basic	$	(0.24)	$	(0.66)	$	(0.72)	$	(1.40)
Diluted	$	(0.24)	$	(0.66)	$	(0.72)	$	(1.40)
Weighted-average shares outstanding:
Basic	588,374		84,588		576,941		84,308
Diluted	588,374		84,588		576,941		84,308

See accompanying notes to condensed consolidated financial statements.

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OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
NET LOSS	$	(143,805)	$	(55,919)	$	(414,241)	$	(118,115)
OTHER COMPREHENSIVE INCOME:
Unrealized (loss) gain on marketable securities	(6)		583		(41)		284
COMPREHENSIVE LOSS	$	(143,811)	$	(55,336)	$	(414,282)	$	(117,831)

See accompanying notes to condensed consolidated financial statements.

TABLE OF CONTENTS

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY

EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

(In thousands, except number of shares)

(Unaudited)


	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-March 31, 2021	0	0		0	0		0	0		0	0		0	0		585,691,729	58		3,697,382		(1,313,885)		6		2,383,561



Issuance of common stock in connection with the February 2021 Offering	—	—		—	—		—	—		—	—		—	—		0	0		(28)		—		—		(28)


Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		329,042	—		29		—		—		29
Vesting of restricted stock units	—	—		—	—		—	—		—	—		—	—		3,163,113	0				—		—		0
Common stock issued upon exercise of warrants	—	—		—	—		—	—		—	—		—	—		504,477	—		5,801		—		—		5,801
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		4,150,558	1		6,470		—		—		6,471


Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		165,898		—		—		165,898


Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(6)		(6)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(143,805)		—		(143,805)
BALANCE–June 30, 2021	0	$	0	0	$	0	0	$	0	0	$	0	0	$	0	593,838,919	$	59	$	3,875,552	$	(1,457,690)	$	0	$	2,417,921

	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-December 31, 2020	0	0		0	0		0	0		0	0		0	0		540,714,692	54		2,596,012		(1,043,449)		41		1,552,658



Issuance of common stock in connection with the February 2021 Offering	—	—		—	—		—	—		—	—		—	—		32,817,421	3		857,191		—		—		857,194


Vesting of restricted stock	—	—		—	—		—	—		—	��		—	—		660,269	—		45		—		—		45
Vesting of restricted stock units	—	—		—	—		—	—		—	—		—	—		14,899,985	1		—		—		—		1
Common stock issued upon exercise of warrants	—	—		—	—		—	—		—	—		—	—		504,477	—		5,801		—		—		5,801
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		4,242,075	1		6,736		—		—		6,737


Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		409,767		—		—		409,767


Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(41)		(41)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(414,241)		—		(414,241)
BALANCE–June 30, 2021	0	$	0	0	$	0	0	$	0	0	$	0	0	$	0	593,838,919	$	59	$	3,875,552	$	(1,457,690)	$	0	$	2,417,921

TABLE OF CONTENTS

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY

EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

(In thousands, except number of shares)

(Unaudited)


	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-March 31, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	84,427,317	0		$	60,794	$	(852,679)	$	(281)	$	(792,166)






Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		345,209	—		38		—		—		38


Exercise of stock options	—	—		—	—		—	—		—	—		—	—		210,535	—		275		—		—		275


Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		3,670		—		—		3,670


Other comprehensive gain	—	—		—	—		—	—		—	—		—	—		—	—		—		—		583		583
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(55,919)		—		(55,919)
BALANCE–June 30, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884��	$	257,951	157,952,523	$	1,013,220	84,983,061	$	0	$	64,777	$	(908,598)	$	302	$	(843,519)

	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-December 31, 2019	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	83,748,443	0		$	57,362	$	(790,483)	$	18	$	(733,103)






Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		786,535	—		74		—		—		74


Exercise of stock options	—	—		—	—		—	—		—	—		—	—		448,083	—		701		—		—		701


Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		6,640		—		—		6,640


Other comprehensive gain	—	—		—	—		—	—		—	—		—	—		—	—		—		—		284		284
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(118,115)		—		(118,115)
BALANCE–June 30, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	84,983,061	$	0	$	64,777	$	(908,598)	$	302	$	(843,519)

See accompanying notes to condensed consolidated financial statements.

TABLE OF CONTENTS

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(414,241)	$	(118,115)
Adjustments to reconcile net loss to cash, cash equivalents, and restricted cash (used in) provided by operating activities:
Depreciation and amortization – net of accretion	16,608		20,065
Amortization of right of use asset	4,260		8,712
Impairment of software development costs	2,515		0
Stock-based compensation	403,048		6,640
Derivative and warrant fair value adjustment	(8,680)		890
Gain on settlement of lease liabilities	(5,237)		0
Inventory valuation adjustment	942		7,452
Changes in fair value of derivative instruments	(438)		(527)
Payment-in-kind interest	0		2,704
Dividend-in-kind	143		0
Net fair value adjustments and gain (loss) on sale of mortgage loans held for sale	(2,032)		(829)
Origination of mortgage loans held for sale	(83,360)		(42,636)
Proceeds from sale and principal collections of mortgage loans held for sale	67,566		34,397
Changes in operating assets and liabilities:
Escrow receivable	(31,354)		4,178
Real estate inventories	(2,249,488)		1,035,088
Other assets	(37,057)		10,809
Accounts payable and other accrued liabilities	34,569		(8,881)
Interest payable	96		(3,044)
Lease liabilities	(9,968)		(6,556)
Net cash (used in) provided by operating activities	(2,312,108)		950,347
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(10,957)		(10,753)
Purchase of intangible assets	(240)		0
Purchase of marketable securities	(238,464)		(113,833)
Proceeds from sales, maturities, redemptions and paydowns of marketable securities	85,638		55,666
Purchase of non-marketable equity securities	(10,000)		0

Net cash used in investing activities	(174,023)		(68,920)
CASH FLOWS FROM FINANCING ACTIVITIES:







Proceeds from exercise of stock options	6,739		688
Proceeds from warrant exercise	4,823		0

Proceeds from the February 2021 Offering	886,067		0
Issuance cost of common stock	(28,876)		0

Proceeds from credit facilities and other secured borrowings	3,241,692		824,597
Principal payments on credit facilities and other secured borrowings	(1,438,136)		(1,723,443)
Payment of loan origination fees and debt issuance costs	(2,239)		(2,386)




Net cash provided by (used in) financing activities	2,670,070		(900,544)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	183,939		(19,117)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning of period	1,505,528		684,822
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period	$	1,689,467	$	665,705
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during the period for interest	$	20,526	$	40,333






RECONCILIATION TO CONDENSED CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	$	1,557,815	$	458,058
Restricted cash	131,652		207,647
Cash, cash equivalents, and restricted cash	$	1,689,467	$	665,705

See accompanying notes to condensed consolidated financial statements.

TABLE OF CONTENTS

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

(Unaudited)

1.DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES

Description of Business

Opendoor Technologies Inc. (the “Company” and “Opendoor”) including its consolidated subsidiaries and certain variable interest entities (“VIEs”), is a leading digital platform for buying and selling homes. Opendoor streamlines the home selling and buying transaction and creates an end-to-end experience online. Since its inception through June 30, 2021, the Company had completed over 100,000 home transactions. As of June 30, 2021, the Company operated in 39 markets across the United States. The Company was incorporated in Delaware on December 30, 2013.

Correction of Prior Period Amounts

On April 12, 2021, subsequent to the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, the Acting Director of the Division of Corporation Finance and the Acting Chief Accountant of the SEC issued a Staff Statement (the “Staff Statement”) on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”).

The Company took into consideration the guidance in the Staff Statement and Accounting Standards Codification 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity ("ASC 815-40") and evaluated the Public and Sponsor Warrants (each as defined herein and collectively the "Warrants"). The Warrants were issued in a private placement simultaneously with the closing of the initial public offering of Social Capital Hedosophia Holdings Corp. II (“SCH”), assumed by the Company through the Business Combination (as defined herein) on December 18, 2020, and classified in shareholders' equity as of and for the year ended December 31, 2020. While the Company concluded ~~that while it is reasonably possible that~~ the ~~virus could have~~Public Warrants meet the criteria to continue to be classified in shareholders' equity, the Company concluded the Sponsor Warrants do not meet the scope exception from derivative accounting prescribed by ASC 815-40 and should therefore be recorded as a ~~negative effect~~liability on the Company’s ~~financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable~~consolidated balance sheet at fair value as of the ~~date~~closing of ~~these financial statements.~~the Business Combination, with subsequent changes in their fair value recognized in the Company’s condensed consolidated statement of operations at each reporting date. The accounting for the Sponsor Warrants does not impact the Company's financial statements ~~do not include~~in any ~~adjustments that might result~~reporting periods prior to the Business Combination, as the Company assumed the Warrants through the Business Combination which was accounted for as a reverse recapitalization.

The fair value of the Sponsor Warrants as of the Closing Date on December 18, 2020 and December 31, 2020 amounted to $81.1 million and $47.3 million, respectively. The change in fair value from the ~~outcome~~Closing Date through December 31, 2020 amounted to a gain of ~~this uncertainty.~~

~~NOTE 2. SUMMARY~~$33.8 million. The impact of the misstatement as of December 31, 2020 resulted in an understatement of the private warrants liability of $47.3 million, and an overstatement of accumulated deficit and additional paid-in capital of $33.8 million and $81.1 million respectively.

The Company evaluated the impact of error related to the accounting treatment of Sponsor Warrants with respect to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and determined, based on consideration of quantitative and qualitative factors, that the error had an immaterial impact, individually and in aggregate. As such, the Company corrected its accounting for Sponsor Warrants in its Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.

The following table provides the impact of the correction on the Company's consolidated balance sheet as of December 31, 2020, as presented herein (in thousands):


	Previously Stated		Adjustments	As Corrected
Warrant liabilities	$	0	47,349	$	47,349
Total liabilities	$	575,575	47,349	$	622,924
Additional paid-in capital	$	2,677,155	(81,143)	$	2,596,012
Accumulated deficit	(1,077,243)		33,794	(1,043,449)
Total shareholders' equity	$	1,600,007	(47,349)	$	1,552,658

TABLE OF ~~SIGNIFICANT ACCOUNTING POLICIES~~

CONTENTS

OPENDOOR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)

(Unaudited)

Basis of Presentation

and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared ~~in accordance with~~pursuant to generally accepted accounting principles ~~generally accepted~~ in the United States of America (“GAAP”) ~~for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”)~~. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unauditedThe condensed consolidated financial statements ~~include all adjustments, consisting~~as of ~~a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results~~June 30, 2021 and ~~cash flows~~December 31, 2020 and for the three and six month periods ~~presented.~~

ended June 30, 2021 and 2020 include the accounts of Opendoor, its wholly owned subsidiaries and VIEs where the Company is the primary beneficiary. The accompanying unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements herein.

As a result of the Business Combination completed on December 18, 2020, prior period share and per share amounts presented in the accompanying condensed consolidated financial statements and these related notes have been retroactively converted. See “Note 2— Business Combination” for additional information.

The accompanying interim condensed consolidated financial statements and these related notes should be read in conjunction with the ~~Company’s prospectus for its Initial Public Offering as filed with the SEC on April 29, 2020, as well as~~consolidated financial statements and related notes included in the Company’s ~~Current Reports~~Annual Report on Form ~~8-K, as filed with the SEC on April 30, 2020 and May 6, 2020. The interim results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected~~10-K for the year ~~ending~~ended December 31, 2020 ~~or for any future periods.~~

~~Principles of Consolidation~~

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

~~Emerging Growth Company~~

~~The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”~~(“Annual Report”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote filed on ~~executive compensation and shareholder approval of any golden parachute payments not previously approved.~~

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

March 4, 2021.

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2020~~

~~(Unaudited)~~

Use of Estimates

TABLE OF CONTENTS

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or ~~disclosure in the condensed consolidated financial statements.~~

as noted)

~~ITEM~~

Item 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Social Capital Hedosophia Holdings Corp. II. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to SCH Sponsor II LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

~~Special Note Regarding Forward-Looking Statements~~

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’sManagement’s Discussion and Analysis of Financial Condition and Results of ~~Operations” regarding~~Operations.

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read together with the ~~Company’s~~historical condensed consolidated financial ~~position, business strategy~~statements and the plans and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements. Suchrelated notes that appear in this Quarterly Report on Form 10-Q.

This discussion may contain forward-looking statements ~~relate to future events or future performance, but reflect management’s~~based upon current ~~beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance~~expectations that involve risks and ~~results discussed in the forward-looking statements. For information identifying important factors that could cause~~uncertainties. Our actual results tomay differ materially from those anticipated in ~~the~~these forward-looking statements please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the SEC on April 29, 2020. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of ~~new information, future events~~various factors, including those set forth under “Risk Factors” or ~~otherwise.~~

in other parts of this Quarterly Report on Form 10-Q, and in “Part I - Item 1A. Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”).

Overview

Opendoor’s mission is to empower everyone with the freedom to move and make it possible to buy, sell and move at the tap of a button. We are transforming what has historically been a ~~blank check company incorporated~~complex, uncertain, time-consuming and mostly offline process into a simple, online experience. Since our inception in 2014, we have built scalable pricing capabilities, technology-enabled centralized operations, and a suite of digital-first consumer products. These investments have enabled us to help customers buy or sell homes in over 100,000 transactions and expand our footprint to 39 markets across the ~~Cayman Islands on October 18, 2019 formed for~~country. Most importantly, we have scaled rapidly while delighting our customers with an experience that brings simplicity, certainty and speed to the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Publichome selling and buying process.

February 2021 Offering ~~and the sale of the Private Placement Warrants, our~~

On February 9, 2021, we completed an underwritten public offering (the “February 2021 Offering”) in which we sold 32,817,421 shares ~~debt or a combination of cash, shares and debt.~~

~~The issuance of additional ordinary shares or preferred shares in a business combination:~~

	●	may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
	●	~~may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights senior to those afforded our ordinary shares;~~
	●	could cause a change of control if a substantial number of our ordinary shares is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present directors and officers;
	●	~~may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;~~
	●	~~may adversely affect prevailing market prices for our units, ordinary shares and/or warrants; and~~
	●	~~may not result in adjustment to the exercise price of our warrants.~~

~~Similarly, if we issue debt or otherwise incur significant indebtedness, it could result in:~~

	●	~~default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;~~
	●	acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
	●	~~our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;~~
	●	~~our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;~~
	●	~~our inability to pay dividends on our ordinary shares;~~
	●	using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
	●	~~limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;~~
	●	~~increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and~~
	●	limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

~~We expect to continue to incur significant costs in the pursuit~~ of our ~~acquisition plans. We cannot assure you that our plans~~common stock at a public offering price of $27.00 per share, including the exercise in full by the underwriters of their option to ~~complete a Business Combination will be successful.~~

~~Recent Developments~~

~~On September 15, 2020, we entered into the Merger Agreement, pursuant~~purchase up to ~~which all outstanding~~4,280,533 additional shares of common stock, which was completed on February 11, 2021. We received aggregate net proceeds from the February 2021 Offering of approximately $859.5 million after deducting underwriting discounts and commissions and offering expenses payable by us. We currently intend to use the net proceeds from this offering to invest in increasing existing market penetration, to expand into new markets, and for working capital and general corporate purposes.

The Business Combination

We entered into a Merger Agreement with SCH, a special purpose acquisition company, on September 15, 2020. Pursuant to the Merger Agreement, Merger Sub, a newly formed subsidiary of SCH, merged with and into Opendoor Labs Inc. Upon the consummation of the Closing on December 18, 2020, the separate corporate existence of Merger Sub ceased; Opendoor Labs Inc. survived and became a wholly owned subsidiary of SCH, which was renamed Opendoor Technologies Inc.

The Business Combination was accounted for as a reverse recapitalization, in accordance with GAAP. Under the guidance in ASC 805, Opendoor Technologies was treated as the “acquired” company for financial reporting purposes. Opendoor Labs Inc. was deemed the accounting predecessor of the combined business, and Opendoor Technologies, as the parent company of the combined business, was the successor SEC registrant, meaning that our financial statements for previous periods will be ~~cancelled~~disclosed in ~~exchange~~the registrant’s future periodic reports filed with the SEC. The Business Combination had a significant impact on our reported financial position and results as a consequence of the reverse recapitalization. The most significant changes in Opendoor Technologies’ reported financial position and results are a net increase in cash of $970 million. The increase in cash includes approximately $600 million in proceeds from the private placement (“PIPE Investment”) consummated substantially simultaneously with the Business Combination, offset by additional transaction costs for the ~~right~~Business Combination. The transaction costs for the Business Combination are approximately $44 million, of which $14.5 million represents deferred underwriter fees related to ~~receive,~~SCH’s initial public offering.

As a result of the Business Combination, we became an SEC-registered and Nasdaq-listed company, and have hired additional personnel and implemented procedures and processes to address public company regulatory requirements and customary practices. We have incurred and expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal and

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

administrative resources. We estimate that these incremental costs will be approximately $15 million for the ~~reservation~~year ending December 31, 2021.

Business Impact of COVID-19

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported and subsequently spread worldwide. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. In response to the COVID-19 pandemic and the consequent health risks, we substantially ceased purchasing additional homes in March 2020 to safeguard the health and safety of our customers and employees. After ensuring our ability to close transactions safely, seeing the lifting of shelter-in-place mandates, and retooling certain operational processes to enable “contactless” transactions, we resumed making offers to purchase homes in select markets in May 2020. We resumed operations across all of our markets by the end of August 2020.

Despite pausing new acquisitions in March 2020, we continued to sell down inventory at a healthy pace, leading to a low point in home inventory of $152 million as of September 30, 2020 compared to inventory of $1,312 million as of December 31, 2019. As our revenues are dependent on inventory levels available for sale, our top line was pressured due to limited inventory. Accordingly, we experienced sequential, quarter-over-quarter declines in revenue in the ~~aggregate,~~second, third and fourth quarters of 2020. We have been actively rebuilding our inventory since August 2020 and ended the second quarter of 2021 with $2,724 million in inventory. Likewise, we returned to sequential revenue growth in the first and second quarters of 2021 and we expect this trend to continue for the remainder of the year. See “— Components of Our Results of Operations — Revenue.”

Our Business Model

Revenue and margin model

We acquire homes directly from individual sellers and resell those homes to buyers, including both individual consumers and institutional investors. Upon acquiring a home, we typically make necessary renovations and repairs before listing it for sale on our website, our mobile app, Multiple Listing Services (“MLS”) and other online real estate portals. Our average hold period for homes purchased since January 2020, from acquisition to resale, ranged from 70 to 100 days and varied by market. Home sales comprise the vast majority of our revenues today, but we expect increasing contribution from adjacent services as our current offerings mature and we introduce additional services over time.

To achieve our long-term margin objectives, we must both maintain pricing accuracy as the business expands and increase customer adoption of our newer services, such as Opendoor Home Loans, Buy with Opendoor, and List with Opendoor. We also plan to achieve operating leverage by growing our revenue at a faster pace than our fixed cost base, which includes general and administrative as well as technology and development expenses. Given the size of the opportunity in front of us, we plan to invest aggressively in the near term and appropriately balance trade-offs between growth and margin as we scale.

Offers

We generate demand for our services through organic awareness and word-of-mouth, paid media spend, and partnership channels such as our relationships with homebuilders and online portals. Home sellers can visit our website or mobile app and answer a few questions about their home’s condition, features and upgrades. For eligible homes, customers receive an initial home valuation range, which can be refreshed at any time through their personalized seller dashboard. The majority of our initial offers are algorithmically generated and do not require any human intervention.

In order to finalize our offer, we conduct a free assessment to confirm all of the home details and identify any repairs that may need to be performed. We have developed purpose-built software to guide home assessment workflows and collect over 100 unique data points regarding a home’s condition and quality, which we incorporate as structured data into our underlying pricing models. Once completed, we finalize our offer, taking into consideration any necessary repairs, and produce the purchase agreement for the seller. Our objective is to provide a competitive cash offer to sellers and we believe this approach builds trust with our potential customers. Our business model is designed to generate margins from our service charge to sellers and adjacent products and services associated with a transaction, and not from the spread between acquisition price and resale price.

We closely track the number of ~~shares~~potential sellers who accept the Opendoor offer versus listing their home on the MLS, and this conversion rate is an important factor for our growth.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Home acquisition and renovation

Once a seller has received and accepted our final purchase offer, we enable the seller to close the transaction on a flexible timeline. This is a particularly important feature to sellers, as their home sale can accommodate other life events (including the purchase of their next home) and further differentiates our service from a traditional sale. Depending on the condition of the home, we leverage our vetted contractor network within each market to complete required repairs and upgrades. Our repair scopes are focused on high-return investments and ensuring the home is in market-ready condition. We continuously refine and adjust our repair strategies based on our operating experience in markets and reviewing neighborhood-level resale outcomes.

Home resale

Post-renovation, we market our homes across a wide variety of channels to generate buyer awareness and demand. These include the Opendoor website and mobile app, local MLS and syndication across real estate portals. We also generate buyer awareness through Opendoor signage for listed properties. Efficiently turning our inventory, inclusive of repairing, listing, and reselling the home, is important to our financial performance, as we bear holding costs (including utilities, property taxes and insurance) and financing costs during our ownership period.

As part of the listing and marketing process, we determine an appropriate pricing strategy for each home. Our proprietary pricing engine helps automate many of these steps, including relevant adjustments over time. We measure our inventory performance compared to local market trends, and our pricing models can incorporate granular, relative demand signals to optimize pricing and sell-through across the portfolio. Our resale models, in conjunction with our pricing team, aim to maximize resale margin while maintaining appropriate transaction velocity and overall inventory health.

When we receive an acceptable offer on a given home, we enter into a resale contract. Buyers will then typically conduct an inspection on the property, finalize their mortgage application process and ultimately take possession of the home upon closing of the transaction.

Factors Affecting our Business Performance

Market Penetration in Existing Markets

Residential real estate is one of the largest consumer markets, with approximately $1.9 trillion of home value transacted annually. Given we operate in a highly fragmented industry and offer a differentiated value proposition to the incumbent agent-led transaction, we believe there is significant opportunity to expand our share in our existing cities. By providing a consistent, high-quality and differentiated experience to our customers, we hope to continue to drive positive word-of-mouth, awareness and trust in our platform. We believe this creates a virtuous cycle, whereby more home sellers will request an offer from Opendoor, allowing us to deepen our market penetration.

Expansion into New Markets

Since our inception in 2014, we have expanded into 39 markets as of June 30, 2021. The following table represents the number of markets as of the periods presented:


	June 30,	March 31,	Year Ended December 31,
(in whole numbers)	2021	2021	2020	2019	2018
Number of markets (at period end)	39	27	21	21	18

After launching 12 markets in 2018, we focused on centralizing our operations platform in 2019 for long-term scalability. We launched three additional markets in 2019 and did not launch any markets in 2020, primarily due to COVID-19. We plan to double the markets we serve by the end of 2021 and have launched 18 new markets in the first half of the year. We believe our centralized systems will allow for a higher velocity and lower cost market launch process in the future. We are able to launch a market with only a small field team focused on home assessments and subcontractor oversight, with all other key functions managed centrally, including marketing, customer sales and support and pricing.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

We view the first year of a market launch as an investment period during which we refine our pricing models, renovation strategies and cost structure. Historically, we have seen Contribution Margin for purchase cohorts in new markets reach positive, steady-state levels approximately one year after initial launch. The significant number of new market launches in 2018 contributed to our lower Contribution Margin in 2019; as those same markets matured, we were able to improve Contribution Margin performance in 2020.

We are making substantial investments to support our market launches in 2021, which will impact both Contribution Margin and Adjusted EBITDA as these new markets mature.

Adjacent Services

We believe home sellers and buyers value simplicity and convenience. To that end, we are building an online, integrated suite of home services, which currently include title insurance and escrow services, listing and real estate brokerage services, and mortgage services. We believe that vertically integrating services that are adjacent to the core real estate transaction will allow us to deliver a superior, seamless experience to the consumer. Our success with title insurance services helps validate our thesis that customers prefer an online, integrated experience. We expect that these adjacent services will also be accretive to our Contribution Margin.

We will continue to evaluate new ways to improve our end-to-end solution and expect to invest in additional adjacent products and services over time.

Unit economics

We view Contribution Margin and Contribution Margin after Interest as key measures of unit economic performance. Our long-term financial performance depends, in part, on continuing to expand unit margins through the following initiatives:

•Pricing engine optimization and enhancements, especially as we enter new markets and expand our reach in existing markets.

•Lowering platform costs through process refinement, greater automation and self-service, and more efficient forms of financing.

•Successful introduction of additional services that supplement the core transaction margin profile.

Seasonality

The residential real estate market is seasonal, with greater demand from home buyers in the spring and summer, and typically weaker demand in late fall and winter. We expect our financial results and working capital requirements to reflect seasonal variations over time, although our growth and market expansion have obscured the impact of seasonality in our historical financials and may continue to do so. That said, we generally expect stronger sequential revenue growth in the first quarter of the year versus the third and fourth quarters.

Risk management

We have invested significant time and resources into our pricing engine and inventory management systems. Our engineering, data science and pricing teams collectively focus on pricing accuracy for both home acquisition and disposition, as well as managing our inventory health across markets.

While residential real estate markets are subject to fluctuations, as with any market, we believe we are well-positioned to manage our inventory risk exposure due to the following:

•Our business model is based on transaction velocity and short-duration hold times, with our average days in possession typically ranging from 70 to 100 days for homes acquired since January 2020. We have historically concentrated our home purchases on the more liquid segments of the residential real estate market, thus limiting our duration risk. Moreover, residential real estate prices tend to move gradually relative to other asset classes, which meaningfully reduces our exposure to price fluctuations during our ownership period.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

•Our pricing models and inventory management systems are designed to recalibrate to market signals on a daily basis. Accordingly, changing market conditions are reflected in our pricing for new acquisitions, leaving only previously-acquired inventory at risk to potential market volatility. In addition, we employ sophisticated resale pricing management systems that allow as to optimize sell-through and margin using real-time, local market demand information, including down to an individual home level. We believe that the quality and scale of information we utilize in our inventory management decisions provides us with a structural advantage over individual sellers or agents in the traditional home selling process.

•At any moment in time, a significant portion of our ~~Common Stock~~inventory is under resale contract; this means we have already found buyers for those homes and are in the process of closing the resale transactions. This further limits our exposure to the remaining homes in inventory.

•Our listed homes are not occupied and are in resale condition given the repairs and renovations we perform. We believe that this increases the salability and liquidity of our portfolio.

•Our operations across 39 markets and multiple price and home types allow us to benefit from significant diversification effects. Individual buyers and sellers or local operators are exposed to price and behavioral effects that are associated with specific markets or home segments. Our scale and diverse coverage allow us to mitigate such exposures across a wider range of markets and home segments so that our overall risk per home decreases as we increase the breadth of markets, price points and home types that we operate in.

We will continue to make substantial investments in our pricing systems and risk management functions.

Inventory Financing

Our business model is working capital intensive and inventory financing is a key enabler of our growth. We rely on our access to non-recourse asset-backed financing facilities, which consist of senior credit facilities and asset-backed mezzanine term debt facilities, to finance our home acquisitions. See “—Liquidity and Capital Resources — Debt and Financing Arrangements.”

Non-GAAP Financial Measures

In addition to our results of operations below, we report certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”).

These measures have limitations as analytical tools when assessing our operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net income. We may calculate or present our non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures we report may not be comparable with those of companies in our industry or in other industries.

Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest

To provide investors with additional information regarding our margins and return on inventory acquired, we have included Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest, which are non-GAAP financial measures. We believe that Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest are useful financial measures for investors as they are supplemental measures used by management in evaluating unit level economics and our operating performance in our key markets. Each of these measures is intended to present the economics related to homes sold during a given period. We do so by including revenue generated from homes sold (and adjacent services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in inventory as of the end of the period. Contribution Profit provides investors a measure to assess Opendoor’s ability to generate returns on homes sold during a reporting period after considering home purchase costs, renovation and repair costs, holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs attributable to homes sold during a reporting period. We believe these measures facilitate meaningful period over period comparisons and illustrate our ability to generate returns on assets sold after considering the costs directly related to the assets sold in a given period.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest are supplemental measures of our operating performance and have limitations as analytical tools. For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in inventory at the end of the period, costs required to be recorded under GAAP in the same period. These measures also exclude the impact of certain restructuring costs that are required under GAAP. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is gross profit.

Adjusted Gross Profit / Margin

We calculate Adjusted Gross Profit as gross profit under GAAP adjusted for (1) inventory impairment in the current period, (2) inventory impairment in prior periods, and (3) restructuring in cost of revenue. Inventory impairment in the current period is calculated by adding back the inventory impairment charges recorded during the period on homes that remain in inventory at period end. Inventory impairment in prior periods is calculated by subtracting the inventory impairment charges recorded in prior periods on homes sold in the current period. We define Adjusted Gross Margin as Adjusted Gross Profit as a percentage of revenue.

We view this metric as an important measure of business performance as it captures gross margin performance isolated to homes sold in a given period and provides comparability across reporting periods. Adjusted Gross Profit helps management assess home pricing, service fees and renovation performance for a specific resale cohort.

Contribution Profit / Margin

We calculate Contribution Profit as Adjusted Gross Profit, minus (1) holding costs incurred in the current period on homes sold during the period, (2) holding costs incurred in prior periods on homes sold in the current period, and (3) direct selling costs incurred on homes sold during the current period. The composition of our holding costs is described in the footnotes to the reconciliation table below. Contribution Margin is Contribution Profit as a percentage of revenue.

We view this metric as an important measure of business performance as it captures the unit level performance isolated to homes sold in a given period and provides comparability across reporting periods. Contribution Profit helps management assess inflows and outflows directly associated with a specific resale cohort.

Contribution Profit / Margin After Interest

We define Contribution Profit After Interest as Contribution Profit, minus interest expense under our senior credit facilities incurred on the homes sold during the period. This may include interest expense recorded in periods prior to the period in which the sale occurred. Our senior credit facilities are secured by our homes in inventory. For our senior revolving credit facilities, drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold. See “— Liquidity and Capital Resources — Debt and Financing Arrangements.” We do not include interest expense associated with our mezzanine term debt facilities in this calculation as we do not view such facilities as reflective of our expected long term capital structure and cost of financing. Contribution Margin After Interest is Contribution Profit After Interest as a percentage of revenue.

We view this metric as an important measure of business performance. Contribution Profit After Interest helps management assess Contribution Margin performance, per above, when fully burdened with expected long-term costs of financing.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

The following table presents a reconciliation of our Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest to our gross profit, which is the most directly comparable GAAP measure, for the periods indicated:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except percentages)	2021			2020			2021			2020
Gross profit (GAAP)	$	158,771		$	54,574		$	255,903		$	145,621
Gross Margin	13.4		%	7.4		%	13.2		%	7.3		%
Adjustments:
Inventory impairment – Current Period(1)	922			1,231			928			2,661
Inventory impairment – Prior Periods(2)	(19)			(6,581)			(119)			(10,210)
Restructuring in cost of revenue(3)	—			1,901			—			1,901
Adjusted Gross Profit	$	159,674		$	51,125		$	256,712		$	139,973
Adjusted Gross Margin	13.5		%	6.9		%	13.3		%	7.0		%
Adjustments:
Direct selling costs(4)	(26,813)			(22,128)			(44,153)			(58,776)
Holding costs on sales – Current Period(5)(6)	(2,666)			(2,383)			(7,216)			(11,680)
Holding costs on sales – Prior Periods(5)(7)	(2,633)			(6,517)			(1,635)			(10,864)
Contribution Profit	$	127,562		$	20,097		$	203,708		$	58,653
Contribution Margin	10.8		%	2.7		%	10.5		%	2.9		%
Adjustments:
Interest on homes sold – Current Period(8)(9)	(3,110)			(3,155)			(6,892)			(13,276)
Interest on homes sold – Prior Periods(8)(10)	(1,587)			(5,309)			(1,040)			(10,329)
Contribution Profit After Interest	$	122,865		$	11,633		$	195,776		$	35,048
Contribution Margin After Interest	10.4		%	1.6		%	10.1		%	1.8		%

________________

(1)Inventory impairment — Current Period is the inventory valuation adjustments recorded during the period presented associated with homes that remain in inventory at period end.

(2)Inventory impairment — Prior Periods is the inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.

(3)Restructuring in cost of revenue consists mainly of severance and employee termination benefits that were recorded to cost of revenue due to a reduction in workforce in Q2 2020 following the outbreak of the COVID-19 pandemic.

(4)Represents selling costs incurred related to homes sold in the relevant period. This primarily includes broker commissions, external title and escrow-related fees and transfer taxes.

(5)Holding costs include mainly property taxes, insurance, utilities, association dues, cleaning and maintenance costs. Holding costs are included in Sales, marketing, and operations on the condensed consolidated statements of operations.

(6)Represents holding costs incurred in the period presented on homes sold in the period presented.

(7)Represents holding costs incurred in prior periods on homes sold in the period presented.

(8)This does not include interest on mezzanine term debt facilities or other indebtedness. See “— Liquidity and Capital Resources — Debt and Financing Arrangements.”

(9)Represents the interest expense under our senior credit facilities incurred on homes sold for the current period during the period.

(10)Represents the interest expense under our senior credit facilities incurred on homes sold for the current period during prior periods.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Adjusted Net Income (Loss) and Adjusted EBITDA

We also present Adjusted Net Income (Loss) and Adjusted EBITDA, which are non-GAAP financial measures that management uses to assess our underlying financial performance. These measures are also commonly used by investors and analysts to compare the underlying performance of companies in our industry. We believe these measures provide investors with meaningful period over period comparisons of our underlying performance, adjusted for certain charges that are non-recurring, non-cash, not directly related to our revenue-generating operations or not aligned to related revenue.

Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental measures of our operating performance and have important limitations. For example, these measures exclude the impact of certain costs required to be recorded under GAAP. These measures also include impairment costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in inventory at the end of the period, impairment costs required to be recorded under GAAP in the same period. These measures could differ substantially from similarly titled measures presented by other companies in our industry or companies in other industries. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is net loss.

Adjusted Net Income (Loss)

We calculate Adjusted Net Income (Loss) as GAAP net loss adjusted to exclude non-cash expenses of stock-based compensation, derivative and warrant fair value adjustment, intangible amortization, and payroll tax on initial RSU release. It also excludes non-recurring restructuring charges, gain on lease termination, and convertible note payment-in-kind (“PIK”) interest and issuance discount amortization. Adjusted Net Income (Loss) also aligns the timing of impairment charges recorded under GAAP to the period in which the related revenue is recorded in order to improve the comparability of this measure to our non-GAAP financial measures of unit economics, as described above. Our calculation of Adjusted Net Income (Loss) does not currently include the tax effects of the non-GAAP adjustments because our taxes and such tax effects have not been material to date.

Adjusted EBITDA

We calculated Adjusted EBITDA as Adjusted Net Income (Loss) adjusted for depreciation and amortization, property financing and other interest expense, interest income, and income tax expense. Adjusted EBITDA is a supplemental performance measure that our management uses to assess our operating performance and the operating leverage in our business.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

The following table presents a reconciliation of our Adjusted Net Income (Loss) and Adjusted EBITDA to our net loss, which is the most directly comparable GAAP measure, for the periods indicated:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except percentages)	2021			2020			2021			2020
Net loss (GAAP)	$	(143,805)		$	(55,919)		$	(414,241)		$	(118,115)
Adjustments:
Stock-based compensation	164,216			3,669			403,048			6,639
Derivative and warrant fair value adjustment(1)	(23,952)			(122)			(8,680)			890
Intangibles amortization expense(2)	591			1,068			1,171			2,148
Inventory impairment – Current Period(3)	922			1,231			928			2,661
Inventory impairment — Prior Periods(4)	(19)			(6,580)			(119)			(10,210)
Restructuring(5)	—			12,435			79			13,324
Convertible note PIK interest and discount amortization(6)	—			2,713			—			5,408

Gain on lease termination	—			—			(5,237)			—
Payroll tax on initial RSU release	5,124			—			5,124			—
Other(7)	(602)			(1)			(399)			(45)
Adjusted Net Income (Loss)	$	2,475		$	(41,506)		$	(18,326)		$	(97,300)
Adjustments:
Depreciation and amortization, excluding amortization of intangibles and right of use assets	7,894			5,850			16,328			10,896
Property financing(8)	12,284			8,564			19,264			26,774
Other interest expense(9)	3,542			6,013			7,561			12,835
Interest income(10)	(806)			(662)			(1,673)			(3,342)
Income tax expense	190			80			284			199
Adjusted EBITDA	$	25,579		$	(21,661)		$	23,438		$	(49,938)
Adjusted EBITDA Margin	2.2		%	(2.9)		%	1.2		%	(2.5)		%

________________

(1)Represents the gains and losses on our warrant liabilities, which are marked to fair value at the end of each period.

(2)Represents amortization of intangibles acquired in the OSN and Open Listings acquisitions which contribute to revenue generation and are recorded as part of purchase accounting. The acquired intangible assets have useful lives ranging from 2 to 5 years and amortization is expected until the intangible assets are fully amortized.

(3)Inventory impairment — Current Period is the inventory impairment charge recorded during the period presented associated with homes that remain in inventory at period end.

(4)Inventory impairment — Prior Periods is the inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.

(5)Restructuring costs consist mainly of employee termination benefits, relocation packages and retention bonuses as well as costs related to the exiting of certain non-cancelable leases. In 2020, these costs related mainly to a reduction in workforce implemented in April 2020 as well as our exercise of the early termination option related to our San Francisco headquarters.

(6)Includes non-cash payment-in-kind (“PIK”) interest and amortization of the discount on the convertible notes issued from July through November 2019. We exclude convertible note PIK interest and amortization from Adjusted Net Income (Loss) since these are non-cash in nature and were converted into equity in September 2020 when the Company entered into the Convertible Notes Exchange Agreement with the convertible note holders.

(7)Includes primarily gain or loss on disposal of fixed assets, gain or loss on interest rate lock commitments, gain or loss on the sale of marketable securities, and sublease income.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

(8)Includes interest expense on our asset-backed debt facilities.

(9)Includes amortization of debt issuance costs and loan origination fees, commitment fees, unused fees, and other interest related costs on our asset-backed debt facilities.

(10)Consists mainly of interest earned on cash, cash equivalents and marketable securities.

Components of Our Results of Operations

Revenue

We generate revenue primarily from the sale of homes that we previously acquired from homeowners. In addition, we generate revenue from additional services we provide to both home sellers and buyers, which consists primarily of title insurance and escrow services, Buy with Opendoor, List with Opendoor and Opendoor Home Loans.

Due to the pause in home purchases following the outbreak of the COVID-19 pandemic, our inventory levels began to meaningfully decline in March 2020. We experienced sequential, quarter-over-quarter declines in revenue in the second, third, and fourth quarters of 2020. We resumed operations in all markets in August 2020 and have been actively rebuilding our inventory, leading to sequential growth in balances for the fourth quarter of 2020 and the first two quarters of 2021. Likewise, we returned to sequential revenue growth in the first quarter of 2021 and expect this trend to continue for the remainder of the year.

Home sales revenue from selling residential real estate is recognized when title to and possession of the property has transferred to the buyer and we have no continuing involvement with the property, which is generally the close of escrow. The amount of revenue recognized for each home sale is equal to the ~~quotient obtained by dividing (x) $5,000,000,000 by (y) $10.00. See Note 6 to Item 1 above for a description~~sale price of the ~~Merger Agreement~~home net of any concessions.

Cost of Revenue

Cost of revenue includes the property purchase price, acquisition costs, direct costs to renovate or repair the home and real estate inventory valuation adjustments, if any. These costs are accumulated in real estate inventory during the ~~transactions contemplated thereby.~~

~~Results~~property holding period and charged to cost of revenue under the specific identification method when the property is sold. Additionally, for our revenue other than home sales revenue, cost of revenue consists of any costs incurred in delivering the service, including associated headcount expenses such as salaries, benefits and stock-based compensation.

Other Operating Expenses

Sales, Marketing and Operations

Expense

Sales, marketing and operations expense consists primarily of resale broker commissions (paid to the home buyers’ real estate agents, if applicable), resale closing costs, holding costs related to real estate inventory including utilities, property taxes and maintenance, and expenses associated with product marketing, promotions and brand-building. Sales, marketing and operations expense also includes any headcount expenses in support of sales, marketing, and real estate operations such as salaries, benefits and stock-based compensation.

General and Administrative Expense

General and administrative expense consists primarily of headcount expenses, including salaries, benefits and stock-based compensation for our executive, finance, human resources, legal and administrative personnel, third-party professional services fees and rent expense.

We ~~have neither engaged~~incurred a significant increase in any operations nor generated any operating revenues to date. Our only activities from inception through September 30, 2020 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and the search for a Business Combination, including activities in connection with the potential acquisition of Opendoor. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating incomestock-based compensation in the ~~form~~first half of ~~interest income on marketable securities held in the Trust Account. We incur expenses~~2021 as a result of ~~being~~certain performance-based awards and historical RSUs satisfying their liquidity event vesting conditions. The increase in stock-based compensation impacts each line item within Other operating expenses. We expect stock based compensation to decline beginning in the third quarter of 2021 given that a ~~public company (for legal,~~majority of the expense related to certain performance-based awards has been recognized as of June 30, 2021.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Technology and Development Expense

Technology and development expense consists primarily of headcount expenses, including salaries, benefits and stock-based compensation for employees in the design, development, testing, maintenance and operation of our mobile applications, websites, tools and applications that support our products. Technology and development expense also includes amortization of capitalized software development costs.

Derivative and Warrant Fair Value Adjustment

Derivative and warrant fair value adjustment consists of unrealized and realized gains and losses as a result of marking our warrants and embedded derivatives related to the Convertible Notes to fair value at the end of each reporting period and subsequent settlement through exercise of warrants and conversion of the Convertible Notes to equity.

Interest Expense

Interest expense consists primarily of interest paid or payable and the amortization of debt discounts and debt issuance costs. Interest expense varies period over period, primarily due to fluctuations in our inventory volumes and changes in LIBOR, which impact the interest incurred on our senior revolving credit facilities (see “— Liquidity and Capital Resources — Debt and Financing Arrangements”).

We expect our overall interest expense to increase as inventory increases. Subject to market interest rate drivers, we will evaluate opportunities to reduce our borrowing costs over the long-term, including through limiting our reliance on the higher cost mezzanine term debt facilities and exploring new sources of financing.

Other Income — Net

Other income-net consists primarily of interest income from our investment in marketable securities.

Income Tax Expense

We record income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial ~~reporting, accounting~~statement and ~~auditing compliance),~~income tax basis of existing assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. We recognize the effect on deferred income taxes of a change in tax rates in income in the period that includes the enactment date.

We record a valuation allowance to reduce our deferred tax assets and liabilities to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as ~~well as~~noted)

Results of Operations

The following tables set forth our results of operations for ~~due diligence expenses in connection with searching for, and completing, a Business Combination.~~

~~For~~ each of the periods presented:


	Three Months Ended June 30,				Change in
(in thousands, except percentages)	2021		2020		$		%
Revenue	$	1,185,386	$	739,827	$	445,559	60	%
Cost of revenue	1,026,615		685,253		341,362		50	%
Gross profit	158,771		54,574		104,197		191	%
Operating expenses:
Sales, marketing and operations	96,525		47,265		49,260		104	%
General and administrative	190,611		29,323		161,288		550	%
Technology and development	24,388		16,838		7,550		45	%
Total operating expenses	311,524		93,426		218,098		233	%
Loss from operations	(152,753)		(38,852)		(113,901)		293	%
Derivative and warrant fair value adjustment	23,952		122		23,830		N/M

Interest expense	(15,826)		(17,290)		1,464		(8)	%
Other income-net	1,012		180		832		462	%
Loss before income taxes	(143,615)		(55,840)		(87,775)		157	%
Income tax expense	(190)		(79)		(111)		141	%
Net loss	$	(143,805)	$	(55,919)	$	(87,886)	157	%

N/M - Not meaningful.


	Six Months Ended June 30,				Change in
(in thousands, except percentages)	2021		2020		$		%
Revenue	$	1,932,660	$	1,995,622	$	(62,962)	(3)	%
Cost of revenue	1,676,757		1,850,001		(173,244)		(9)	%
Gross profit	255,903		145,621		110,282		76	%
Operating expenses:
Sales, marketing and operations	165,591		128,954		36,637		28	%
General and administrative	412,695		58,906		353,789		601	%
Technology and development	75,065		32,625		42,440		130	%
Total operating expenses	653,351		220,485		432,866		196	%
Loss from operations	(397,448)		(74,864)		(322,584)		431	%
Derivative and warrant fair value adjustment	8,680		(890)		9,570		N/M

Interest expense	(26,825)		(45,017)		18,192		(40)	%
Other income-net	1,636		2,855		(1,219)		(43)	%
Loss before income taxes	(413,957)		(117,916)		(296,041)		251	%
Income tax expense	(284)		(199)		(85)		43	%
Net loss	$	(414,241)	$	(118,115)	$	(296,126)	251	%

N/M - Not meaningful.

Revenue

Revenue increased by $445.6 million, or 60%, for the three months ended ~~September~~June 30, 2021 compared to the three months ended June 30, 2020. The increase in revenue was primarily attributable to higher sales volumes, driven by our efforts to rebuild inventory, as well as higher average revenue per home. We sold 3,481 homes during the three months ended June 30, 2021, compared to 2,924 homes during the three months ended June 30, 2020, representing an increase of 19%, while revenue per home sold increased 35% between periods. Average resale prices were positively impacted by home price appreciation and buybox expansion.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Revenue decreased by $63.0 million, or 3%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The decrease in revenue was primarily attributable to lower sales volumes in the first quarter of 2021 compared to the first quarter of 2020, reflecting the decline in inventory levels in response to the COVID-19 pandemic. See “— Business Impact of COVID-19”. During the second quarter of 2021, we ~~had~~returned to pre-COVID inventory levels and revenue increased by $445.6 million or 60% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, reflecting higher sales volumes as well as higher revenue per home. We sold 5,943 homes during the six months ended June 30, 2021, compared to 7,832 homes during the six months ended June 30, 2020, representing a ~~net loss~~decrease of ~~$6,043,293, which consisted~~24%, while revenue per home sold increased 28% between periods. Average resale prices were positively impacted by home price appreciation and buybox expansion.

Cost of ~~operating costs~~Revenue and Gross Profit

Cost of ~~$6,059,583,~~revenue increased by $341.4 million, or 50%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. This increase was primarily attributable to higher sales volumes and a 26% increase in cost of revenue per home as a result of inventory mix and buybox expansion. The increase in cost of revenue per home is consistent with the 35% increase in revenue per home.

Cost of revenue decreased by $173.2 million, or 9%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. This decrease in cost of revenue was primarily attributable to lower sales volumes, offset by ~~interest income on cash~~a 20% increase in cost of revenue per home as a result of inventory mix and ~~marketable securities held~~buybox expansion.

Gross profit margin improved from 7.4% to 13.4% for the three months ended June 30, 2020 and June 30, 2021, respectively. For the same periods, Adjusted Gross Margin improved from 6.9% to 13.5%. Gross margin improvement was primarily due to a combination of healthy inventory mix, home price appreciation and the effectiveness of our inventory resale systems. In addition, we saw gains in home renovation efficiency and margins associated with adjacent services. Contribution Margin increased from 2.7% to 10.8% for the same periods, due largely to a higher Adjusted Gross Margin as well as improvements in direct selling and holding costs. See “— Non-GAAP Financial Measures.”

Gross profit margin improved from 7.3% to 13.2% for the six months ended June 30, 2020 and June 30, 2021, respectively. For the same periods, Adjusted Gross Margin improved from 7.0% to 13.3%. Gross margin improvement was primarily due to a combination of healthy inventory mix, home price appreciation and the effectiveness of our inventory resale systems. In addition, we saw gains in home renovation efficiency and margins associated with adjacent services. Contribution Margin increased from 2.9% to 10.5% for the same periods, due largely to a higher Adjusted Gross Margin as well as improvements in direct selling and holding costs. See “— Non-GAAP Financial Measures.

Other Operating Expenses

Sales, Marketing and Operations. Sales, marketing and operations increased by $49.3 million, or 104%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. The increase was primarily attributable to a $33.4 million increase in advertising expense as we increased marketing in an effort to ramp up acquisition volumes in both existing and new markets. In addition, property holding costs increased by $6.3 million consistent with increased inventory levels and headcount expenses, including salaries, benefits and stock-based compensation increased $6.3 million consistent with the increase in headcount.

Sales, marketing and operations increased by $36.6 million, or 28%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase was primarily attributable to a $45.8 million increase in advertising expense as we increased marketing in an effort to ramp up acquisition volumes in both existing and new markets. In addition, stock based compensation increased $7.5 million reflecting both an increase in headcount as well as the recognition of stock based compensation beginning in the ~~Trust Account~~first quarter of ~~$16,290.~~

~~For each~~2021 when the February 2021 Offering satisfied the liquidity event vesting condition of certain RSUs. The increases were partially offset by a $13.6 million decrease in resale broker commissions due to lower sales volumes, lower broker commission rates, and a higher mix of institutional buyers. In addition, severance costs decreased by $6.0 million as a result of the ~~nine~~workforce restructuring in the second quarter of 2020.

General and Administrative. General and administrative increased by $161.3 million, or 550%, for the three months ended ~~September~~June 30, ~~2020, we had a net loss~~2021 compared to the three months ended June 30, 2020. The increase was primarily attributable to $153.7 million of ~~$6,321,195, which consisted~~additional stock based compensation from the commencement of ~~operating costs~~expense recognition of ~~$6,363,402, offset by interest income on cash~~certain performance awards following

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and ~~marketable securities held~~Analysis of Financial Condition and Results of Operations

(Tabular amounts in ~~the Trust Account of $42,207.~~

~~Liquidity~~thousands, except share and ~~Going Concern~~

~~Until~~ per share data and ratios, or as noted)

the consummation of the ~~Initial Public Offering, our only source~~Business Combination in December 2020 as well as the expense recognition of certain restricted stock units ("RSUs") upon the fulfillment of the liquidity ~~was an initial purchase of ordinary shares~~event vesting condition satisfied by the ~~Sponsor~~February 2021 Offering.

General and ~~loans~~administrative increased by $353.8 million, or 601%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase was primarily attributable to $349.2 million of additional stock based compensation from ~~our Sponsor.~~

~~On April 30, 2020, we consummated~~ the ~~Initial Public Offering~~commencement of ~~41,400,000 Units, inclusive~~expense recognition of certain performance awards following the consummation of the ~~underwriters’ election~~Business Combination in December 2020 as well as the expense recognition of certain RSUs upon the fulfillment of the liquidity event vesting condition satisfied by the February 2021 Offering.

Technology and Development. Technology and development increased by $7.6 million, or 45%, for the three months ended June 30, 2021 compared to ~~fully exercise their option~~the three months ended June 30, 2020. The increase was primarily attributable to a $5.4 million increase in stock based compensation reflecting both an increase in headcount as well as the recognition of stock based compensation beginning in the first quarter of 2021 when the February 2021 Offering satisfied the liquidity event vesting condition of certain RSUs.

Technology and development increased by $42.4 million, or 130%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase was primarily attributable to a $39.7 million increase in stock based compensation reflecting both an increase in headcount as well as the recognition of stock based compensation beginning in the first quarter of 2021 when the February 2021 Offering satisfied the liquidity event vesting condition of certain RSUs.

Derivative and Warrant Fair Value Adjustment

Derivative and warrant fair value adjustment increased by $23.8 million for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. The gain for the three months ended June 30, 2021 was attributable to a decrease in the fair value of the Sponsor Warrants of $24.0 million which is primarily attributable to the decline in the Company's stock price over this period. In June 2021, we announced the redemption of all outstanding warrants to purchase ~~an additional 5,400,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $414,000,000. Simultaneously with the closing~~shares of the ~~Initial Public Offering, we consummated~~Company’s common stock on July 9, 2021.

Derivative and warrant fair value adjustment increased by $9.6 million for the ~~sale of 6,133,333 Private Placement Warrants~~six months ended June 30, 2021 compared to the ~~Sponsor at~~six months ended June 30, 2020. The gain for the six months ended June 30, 2021 was primarily attributable to a ~~price of $1.50 per Private Placement Warrant generating gross proceeds of $9,200,000.~~

~~Following~~decrease in the ~~Initial Public Offering, the exercise~~fair value of the ~~over-allotment option~~Sponsor Warrants of $8.7 million which is primarily attributable to the decline in ~~full and~~ the ~~sale~~Company's stock price over this period. In June 2021, we announced the redemption of all outstanding warrants to purchase shares of the ~~Private Placement Warrants,~~Company’s common stock on July 9, 2021.

Interest Expense

Interest expense decreased by a ~~total of $414,000,000~~nominal amount for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Interest expense decreased by $18.2 million, or 40%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The decrease was ~~placed~~primarily attributable to a 19% decrease in the ~~Trust Account,~~average outstanding balance of our higher interest bearing mezzanine term loans and ~~we had $1,452,394~~lower interest rates on our senior credit facilities, partially offset by a 16% increase in the average outstanding balance of ~~cash held outside~~our senior credit facilities due to the increase in inventory levels. The decrease in interest expense is also due to the elimination of ~~the Trust Account, after payment of costs~~interest expense related to the ~~Initial Public Offering,~~Convertible Notes which were converted into equity in September 2020.

Other Income — Net

Other income – net increased by a nominal amount for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Other income – net decreased by a nominal amount for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and ~~available~~Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Income Tax Expense

Income tax expense increased by a nominal amount for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity have historically consisted of cash generated from our operations and from financing activities. As of June 30, 2021, we had cash and cash equivalents of $1,557.8 million, marketable securities of $200.1 million and total outstanding balances on our credit facilities and other secured borrowings of $2,289.9 million. In addition, we had undrawn borrowing capacity of $2,038.5 million under our asset-backed senior credit facilities (as described further below), of which $437.5 million is fully committed.

We have incurred losses from inception through June 30, 2021 and expect to incur additional losses for the foreseeable future. Our ability to service our debt, fund working capital, ~~purposes.~~ capital expenditures and business development efforts will depend on our ability to generate cash from operating activities, which is subject to our future operating success, and obtain inventory acquisition financing on reasonable terms, which is subject to factors beyond our control, including general economic, political and financial market conditions.

We ~~incurred $22,196,558~~expect our working capital requirements to continue to increase in ~~transaction~~the immediate future, as we seek to increase our inventory and expand into more markets across the United States. We believe our cash, cash equivalents, and marketable securities together with cash we expect to generate from future operations and borrowings, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report on Form 10-Q. The discussion below does not include transactions that occurred subsequent to June 30, 2021. See “Part I – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 18. Subsequent Events” for additional information regarding transactions subsequent to the balance sheet date.

Debt and Financing Arrangements

Our financing activities include short-term borrowing under our asset-backed senior revolving credit facilities, the issuance of long-term asset-backed senior and mezzanine term debt, borrowing under our mortgage repurchase financing, and new issuances of equity. Historically, we have required access to external financing resources in order to fund growth, expansion into new markets and strategic initiatives and we expect this to continue in the future. Our access to capital markets can be impacted by factors outside our control, including economic conditions.

We primarily use non-recourse asset-backed financing facilities, consisting of asset-backed senior credit facilities and asset-backed mezzanine debt facilities to provide financing for our real estate inventory purchases and renovations. Our business is capital intensive and maintaining adequate liquidity and capital resources is needed as we continue to scale and accumulate additional inventory. While there can be no assurances that these trends will continue, we have observed increased availability and engagement for this lending product across a variety of financial institutions and we have seen improved terms and an increase in our borrowing capacity over the last two years. We actively manage our relationships with multiple financial institutions and seek to optimize duration, flexibility, efficiency and cost of funds.

Our asset-backed facilities are each collateralized by a specified pool of assets, consisting of real estate inventory, restricted cash and equity interests in certain consolidated subsidiaries of Opendoor that directly or indirectly own our real estate inventory.

Our real estate-owning subsidiaries’ assets and credit generally are not available to satisfy the debts and other obligations of any other Opendoor entities except to the extent other Opendoor entities are also a party to the relevant financing arrangements. Our asset-backed financing facilities are non-recourse to Opendoor except for limited guarantees provided by an Opendoor subsidiary for certain obligations in situations involving “bad acts” by an Opendoor entity and certain other limited circumstances that are generally under our control.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Our senior credit facilities generally advance 80% to 90% of our cost basis in the underlying properties upon acquisition and our mezzanine term facilities will finance up to 100% of our cost basis in the underlying properties upon acquisition. The maximum initial advance rates for a given financed property vary by facility and generally decrease on a fixed timeline that varies by facility based on the length of time the property has been financed and any other facility-specific adjustments.

Asset-backed Senior Credit Facilities

The table below summarizes our asset-backed senior credit facilities as of June 30, 2021:


June 30, 2021	Borrowing Capacity		Outstanding Amount		Weighted Average Interest Rate		End of Revolving / Withdrawal Period	Final Maturity Date
Revolving Facility 2018-2	$	750,000	$	8,003	2.85	%	September 23, 2022	December 23, 2022
Revolving Facility 2018-3	400,000		80,897		3.25	%	May 26, 2024	May 26, 2024
Revolving Facility 2019-1	600,000		202,672		2.85	%	June 30, 2023	June 30, 2023
Revolving Facility 2019-2	1,030,000		1,003,609		2.66	%	July 8, 2023	July 8, 2023
Revolving Facility 2019-3	675,000		371,342		3.25	%	August 22, 2022	August 21, 2023
Term Debt Facility 2021-S1	400,000		150,000		3.48	%	April 1, 2024	April 1, 2025
Total	$	3,855,000	$	1,816,523

In some cases, the undrawn borrowing capacity amounts under the asset-backed senior credit facilities as reflected in the table are not fully committed and any borrowings above those amounts are subject to the applicable lender’s discretion. As of June 30, 2021, the Company had fully committed borrowing capacity with respect to asset-backed senior credit facilities of $2,057.7 million The total outstanding amount presented above includes $1,666.5 million of current liabilities and $150.0 million of non-current liabilities; the carrying value of the non-current liabilities is reduced by issuance costs ~~including $7,200,000~~ of ~~underwriting fees, $14,490,000~~$267 thousand. .

The revolving or withdrawal period end dates and final maturity dates reflected in the table above are inclusive of ~~deferred underwriting fees~~any extensions that are at the sole discretion of the Company. Certain of our asset-backed senior credit facilities also have additional extension options that are subject to lender approval that are not reflected in the table above. Historically, we have had success in renewing these facilities to the extent we have wished to do so.

Asset-Backed Mezzanine Term Debt Facilities

In addition to the asset-backed senior credit facilities, we have issued asset-backed mezzanine term debt facilities which are subordinated to the related senior facilities. The table below summarizes our asset-backed mezzanine term debt facilities as of June 30, 2021:


June 30, 2021	Borrowing Capacity		Outstanding Amount		Interest Rate		End of Draw Period	Final Maturity Date
Term Debt Facility 2016-M1	$	149,000	$	149,000	10.00	%	October 31, 2023	March 31, 2025
Term Debt Facility 2020-M1	300,000		300,000		10.00	%	January 23, 2023	January 23, 2026
Total	$	449,000	$	449,000
	Issuance Costs		(3,154)
	Carrying Value		$	445,846

See “Part I – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 7. Credit Facilities and ~~$506,558~~Long-Term Debt” for additional information regarding our non-recourse asset-backed financing facilities.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of ~~other costs.~~

Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Mortgage Financing

We primarily use debt financing to fund our mortgage loan originations. In 2019 we entered into a master repurchase agreement to finance substantially all of the mortgage loans that we originate. Once our mortgage business sells a loan in the secondary mortgage market, we use the sale proceeds to reduce the outstanding balance under the repurchase facility.

The following table summarizes certain details related to our mortgage financing (in thousands, except interest rates):


June 30, 2021	Borrowing Capacity		Outstanding Amount		Weighted Average Interest Rate		End of Revolving Period	Final Maturity Date
Repo Facility 2019-R1	$	50,000	$	24,355	1.85	%	May 26, 2022	May 26, 2022

See “Part I – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 7. Credit Facilities and Long-Term Debt” for additional information regarding our master repurchase agreement.

Cash Flows

The following table summarizes our cash flows for the periods presented:


	Six Months Ended June 30,
(in thousands)	2021		2020
Net cash (used in) provided by operating activities	$	(2,312,108)	$	950,347
Net cash used in investing activities	$	(174,023)	$	(68,920)
Net cash provided by (used in) financing activities	$	2,670,070	$	(900,544)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	183,939	$	(19,117)

Net Cash (Used in) Provided by Operating Activities

Net cash (used in) provided by operating activities was $(2,312.1) million and $950.3 million for the six months ended June 30, 2021 and 2020, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, cash used in operating activities was ~~$2,384,847. Net loss~~primarily driven by the $2,249.5 million increase in inventory and a $31.4 million increase in escrow receivables correlated to the increase in revenue during the first half of ~~$6,321,195~~2021. For the six months ended June 30, 2020, net cash provided by operating activities was primarily driven by a $1,035.1 million decrease in inventory, as we substantially paused purchasing additional homes in March 2020 in response to the COVID-19 pandemic and the consequent health risks. The impact of the change in operating working capital was partially offset by ~~interest earned on~~our net loss, net of non-cash items, of $72.2 million.

Net Cash Used in Investing Activities

Net cash used in investing activities was $174.0 million and $68.9 million for the six months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021, cash used in investing activities primarily consisted of the $152.8 million increase in marketable securities and the $10.0 million purchase of a strategic investment in a privately held incompany. For the ~~Trust Account of $42,207 and changes in operating assets and liabilities, which provided $3,978,555 of cash from operating activites.~~

~~As of September~~six months ended June 30, 2020, ~~we had~~ cash ~~and marketable securities held~~used in ~~the Trust Account of $414,042,207. We may withdraw interest to pay our income taxes, if any. We intend to use substantially all~~investing activities primarily consisted of the ~~funds held~~$58.2 million increase in marketable securities.

Net Cash Provided by (Used in) Financing Activities

Net cash provided by (used in) financing activities was $2,670.1 million and $(900.5) million for the ~~Trust Account, including any amounts representing interest earned on~~six months ended June 30, 2021 and 2020, respectively. For the ~~Trust Account, excluding deferred underwriting commissions,~~six months ended June 30, 2021, cash provided by financing activities was primarily attributable to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

As of September 30, 2020, we had cash of $250,461 held outside the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to (other than pursuant to the Promissory Note), loan us additional funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no$1,803.6 million net proceeds from our ~~Trust Account would~~asset-backed debt facilities and $886.1 million in proceeds from the February 2021 Offering, net of $28.9 million of issuance costs. For the six months ended June 30, 2020, cash used in financing activities was primarily attributable to the net repayment of $898.8 million to our asset-backed debt facilities as we reduced inventory levels in response to COVID-19.

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OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Contractual Obligations and Commitments

There have been no material changes outside the ordinary course of business in our commitments under contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, except for the categories of contractual obligations included in the table below, which have been updated to reflect our contractual obligations as of June 30, 2021:


	Payment Due by Year
(in thousands)	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Senior revolving credit facilities(1)	$	1,677,511	$	1,677,511	$	—	$	—	$	—
Senior and mezzanine term debt facilities(2)	811,629		50,120		100,240		661,269		—
Mortgage financing(3)	24,375		24,375		—		—		—

Purchase commitments(4)	2,962,277		2,962,277		—		—		—
Total	$	5,475,792	$	4,714,283	$	100,240	$	661,269	$	—

______________

(1)Represents the principal amounts outstanding as of June 30, 2021. Includes estimated interest payments, calculated using the variable rate in existence at period end over an assumed holding period of 90 days. Borrowings under the senior revolving credit facilities are payable as the related inventory is sold. The payment is expected to be ~~used~~within one year of June 30, 2021.

(2)Represents the principal amounts outstanding as of June 30, 2021 and interest payments assuming the principal balances remain outstanding until maturity. The final maturity dates of the senior and mezzanine term debt facilities vary, as discussed above.

(3)Represents the principal amounts outstanding as of June 30, 2021. The facility provides short-term financing between the origination of a mortgage loan and when Opendoor Home Loans sells the loan to an investor. Included estimated interest payments, calculated using the variable rate in existence at period end over the Company’s average holding period for ~~such repayment. Up~~mortgage loans.

(4)As of June 30, 2021, we were under contract to ~~$1,500,000 of such loans may be convertible into warrants, at a~~purchase 8,158 homes for an aggregate purchase price of ~~$1.50 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.~~

On September 30, 2020, we issued the Promissory Note to the Sponsor, pursuant to which we may borrow up to an aggregate principal amount of $4,000,000. At September 30, 2020, there was $1,138,497 outstanding under the Promissory Note.

We may need to raise additional capital through loans or additional investments from our Sponsor, officers, directors, or third parties. As discussed above, our officers, directors and Sponsor may, but are not obligated to (other than pursuant to the Promissory Note), loan us additional funds, from time to time or at any time, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. These conditions raise substantial doubt about our ability to continue as a going concern.

$2,962.3 million.

Off-Balance Sheet ~~Financing~~ Arrangements

We did not have ~~no obligations, assets or liabilities, which would be considered~~any off-balance sheet arrangements as of ~~September~~June 30, ~~2020. We do not participate in transactions that create relationships with unconsolidated entities or~~2021.

Critical Accounting Policies and Estimates

Discussion and analysis of our financial ~~partnerships, often referred to as variable interest entities,~~condition and results of operations are based on our financial statements, which ~~would~~ have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

~~Contractual Obligations~~

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, administrative and support services, provided to the Company. We began incurring these fees on April 28, 2020 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and the Company’s liquidation.

~~The underwriters are entitled to a deferred fee of $0.35 per unit, or $14,490,000~~prepared in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.

~~Critical Accounting Policies~~

accordance with GAAP. The preparation of ~~condensed consolidated~~these financial statements ~~and related disclosures in conformity with accounting principles generally accepted in the United States of America~~ requires ~~management~~us to make estimates and ~~assumptions~~judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue, and expenses at the date of the ~~condensed consolidated~~ financial ~~statements,~~statements. Generally, we base our estimates on historical experience and ~~income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:~~

~~Class A Ordinary Shares Subject to Possible Redemption~~

~~We account for our ordinary shares subject to possible conversion~~on various other assumptions in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary sharesGAAP that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are consideredwe believe to be ~~outside~~reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of ~~our control~~judgment and ~~subject to occurrence~~(2) the use of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our condensed consolidated balance sheets.

~~Net Loss Per Ordinary Share~~

~~We apply the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption, which are not currently redeemable~~different judgments, estimates and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.

~~Recent Accounting Standards~~

~~Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would~~assumptions could have a material ~~effect~~impact on ~~our~~the condensed consolidated financial statements.

Based on this definition, critical accounting policies and estimates are discussed in “Part II – Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in the Annual Report. There have been no significant changes to these critical accounting estimates during the first six months of 2021, except as noted below. In addition, we have other key accounting policies and estimates that are described in “Part I – Item 1. Financial Statements –Notes to Condensed Consolidated Financial Statements – Note 1. Description of Business and Accounting Policies” in this Quarterly Report on Form 10-Q.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in thousands, except share and per share data and ratios, or as noted)

Public and Sponsor Warrants

On April 30, 2020, SCH consummated its initial public offering of 41,400,000 units, consisting of one share of Class A common stock and one third of one warrant exercisable for Class A common stock, at a price of $10.00 per unit. Each whole warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share (the “Public Warrants”). Simultaneously with the closing of the IPO, SCH completed the private placement of 6,133,333 warrants to SCH’s sponsor at a price of $1.50 per warrant (the “Sponsor Warrants”). Each Sponsor Warrant allows the sponsor to purchase one share of Class A common stock at $11.50 per share. As of December 31, 2020, there were 19,933,333 warrants outstanding.

The Sponsor Warrants and shares of common stock issuable upon the exercise of Sponsor Warrants may not be transferred, assigned, or sold until 30 days after the completion of a Business Combination. Additionally, the Sponsor Warrants are eligible for cash and cashless exercises, at the holder’s option, and are redeemable only if the Reference Value, as defined in the Warrant Agreement, is less than $18.00 per share. If the Sponsor Warrants are held by someone other than the sponsors and certain permitted transferees, the Sponsor Warrants will redeemable and exercisable on the same basis as the Public Warrants.

We evaluated the Public and Sponsor Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity, and concluded that the Sponsor Warrants do not meet the criteria to be classified in shareholders’ equity. Specifically the exercise and settlement features for the Sponsor Warrants preclude them from being considered indexed to the Company’s own stock given that a change in the holder of the Sponsor Warrants may alter the settlement of the Sponsor Warrants. Since the holder of the instrument is not an input to a standard option pricing model, a consideration with respect to the indexation guidance, a change in the holder for the Sponsor Warrants impacting their value means the Sponsor Warrants are not indexed to the Company’s own stock. Since the Private Warrants meet the definition of a derivative under ASC 815, we recorded these warrants as liabilities on the balance sheet at fair value upon the consummation of the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statement of operations at each reporting period. The Company concluded that the Public Warrants, which do not have the same exercise and settlement features as the Sponsor Warrants, meet the criteria to be classified in shareholders' equity.

The Public Warrants are publicly traded and thus had an observable market price. As of June 30, 2021, following the Company providing notice of redemption with respect to the Public Warrants and the Sponsor Warrants on June 9, 2021, the Company valued the Sponsor Warrants based upon their settlement value.

Recent Accounting Pronouncements

For information on recent accounting standards, see “Part I – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 1. Description of Business and Accounting Policies”.

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~~ITEM~~

Item 3. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks in the ordinary course of our business. These risks primarily consist of fluctuations in interest rates.

Interest Rate Risk

We are subject to market risk by way of changes in interest rates on borrowings under our inventory financing facilities and mortgage financing repurchase agreement. As of ~~September~~June 30, 2021 and December 31, 2020 we had outstanding borrowings of $1,690.9 million and $346.3 million, respectively, which bear interest at a floating rate based on a London Interbank Offered Rate (“LIBOR”) reference rate plus an applicable margin. Accordingly, fluctuations in market interest rates may increase or decrease our interest expense. We may use interest rate cap derivatives, interest rate swaps or other interest rate hedging instruments to economically hedge and manage interest rate risk with respect to our variable floating rate debt. Many of our floating rate debt facilities also have LIBOR floors. Assuming no change in the outstanding borrowings on our credit facilities, we estimate that a one percentage point increase in LIBOR would increase our annual interest expense by approximately $13.9 million and $4.4 million as of June 30, 2021 and December 31, 2020, respectively.

In July 2017 the U.K. Financial Conduct Authority announced its intention to phase out LIBOR rates by the end of 2021. It is not possible to predict the effect of any changes in the methods by which the LIBOR is determined, or any other reforms to LIBOR that may be enacted in the United States or elsewhere. Such developments may cause LIBOR to perform differently than in the past, including sudden or prolonged increases or decreases in LIBOR, or cease to exist, resulting in the application of a successor base rate under our senior revolving credit facilities, which in turn could have unpredictable effects on our interest payment obligations under our senior revolving credit facilities.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations or financial condition. If our costs were ~~not~~to become subject to ~~any market or interest rate risk. Following the consummation~~significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability to do so could harm our business, results of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in certain U.S. government securities with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

operations and financial condition.

~~ITEM~~

Item 4. ~~CONTROLS AND PROCEDURES~~

~~Disclosure~~Controls and Procedures.

Inherent Limitations on Effectiveness of Controls

In designing and evaluating our disclosure controls and procedures, ~~are controls and other procedures~~management recognizes that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosureany controls and procedures, ~~include, without limitation,~~no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures ~~designed to ensure~~must reflect the fact that ~~information~~there are resource constraints and that management is required to ~~be disclosed~~apply judgment in ~~our reports filed or submitted under~~evaluating the ~~Exchange Act is accumulated~~benefits of possible controls and ~~communicated~~procedures relative to ~~our~~their costs.

Evaluation of Disclosure Controls and Procedures

Our management, ~~including~~with the participation of our Chief Executive Officer and Chief Financial Officer, ~~to allow timely decisions regarding required disclosure.~~

~~Evaluation of Disclosure Controls and Procedures~~

~~As required by Rules 13a-15 and 15d-15 under~~evaluated the ~~Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the~~ effectiveness ~~of the design and operation~~ of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of ~~September 30, 2020.~~the end of the period covered by this Quarterly Report on Form 10-Q. Based ~~upon their~~on that evaluation,our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2021, due to the material weaknesses described below, our disclosure controls and procedures ~~(as defined in Rules 13a-15 (e) and 15d-15 (e) under~~were not effective at the ~~Exchange Act) were effective.~~

~~Changes in Internal Control Over Financial Reporting~~

~~During~~reasonable assurance level.

Material Weaknesses

Management identified the ~~most recently completed fiscal quarter, there has been no change~~following control deficiencies that constituted a material weakness in our internal control over financial reporting for the year ended December 31, 2020 related to our general information technology controls, including the design and implementation of access and change management controls. Additionally, key components of the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) have not been fully implemented, including control and monitoring activities related to: (1) electing and developing general controls activities over technology to support the achievement of objectives; and (2) electing, developing, and performing ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning.

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The material weakness identified in our internal control over financial reporting primarily related to insufficient Information Technology (“IT”) general controls over our accounting and proprietary systems used in our financial reporting process. Specifically, our systems lacked controls over access and program change management that are needed to ensure access to financial data is adequately restricted to appropriate personnel.

Remediation Activities

Management has been actively engaged in remediating the above described material weakness since the fourth quarter of 2020. In conjunction with the implementation of our Sarbanes-Oxley Compliance program, we have made significant progress in implementing remedial actions during the six months ended June 30, 2021, which included the following:

•Our Chief Information Security Officer has implemented certain key policies and processes to strengthen our information technology environment;

•Based on a comprehensive risk assessment that identified material financial reporting risks, we have identified and documented appropriate business processes and controls and also strengthened related policies and procedures; and

•Addressed segregation of duties conflicts by segregating conflicting roles and removing unnecessary user access and implemented access and change management controls, including ticketing processes, for many key systems.

As of June 30, 2021, management is continuing its remediation efforts focused on implementing new or redesigning existing controls and completing the controls documentation, which will be followed by our internal control effectiveness assessments.

In addition, as a result of the correction of prior period amounts as described in “Part I – Item 1. Financial Statements –Notes to Condensed Consolidated Financial Statements – Note 1. Description of Business and Accounting Policies” management has concluded that the Company had an additional material weakness as of December 31, 2020 related to the accounting and classification of significant and unusual transactions. The significant & unusual transaction review performed to evaluate the accounting for the Business Combination was incomplete in that a thorough analysis of the Warrants was not performed under Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”). Specifically, while the equity classification of warrants with provisions similar to those of the Sponsor Warrants was historically broadly accepted industry practice, our management did not sufficiently analyze the propriety of this classification and did not identify the error in this accounting practice until the SEC’s issuance of the Staff Statement on April 12, 2021. This material weakness resulted in the correction of our consolidated financial statements as of and for the year ended December 31, 2020. This deficiency is a result of our previously smaller accounting team as a private company coupled with insufficient controls to ensure the completeness of all material components of each significant and unusual transaction evaluated. To remediate this material weakness we:

•hired additional personnel subsequent to the Business Combination and are continuing to expand our team in order to have sufficient capacity to thoroughly evaluate all material components of each significant and unusual transaction; and

•revisited our controls over accounting for significant and unusual transactions in conjunction with the implementation of the Company's Sarbanes-Oxley Compliance program in 2021. The Company has enhanced these controls with a focus on ensuring the analysis is complete and includes each of the material components of the transaction and needs to evaluate the enhanced controls for a period of effectiveness before they can be deemed remediated.

The process of implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. As we continue to evaluate and take actions to improve our internal control over financial reporting, we may take additional actions to address control deficiencies or modify certain of the remediation measures described above. Our management and board of directors will continue to work with our auditors and other outside advisors to ensure that our controls and procedures are adequate and effective.

While significant progress has been made to enhance our internal control over financial reporting, we are still in the process of implementing, documenting and testing these processes, procedures and controls. Additional time is required to complete implementation and to assess and ensure the sustainability of these procedures. We believe the above actions will be effective in remediating the material weaknesses described above and we will continue to devote significant time and attention to these remedial efforts. However, the material weaknesses cannot be considered remediated until the applicable remedial

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controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Notwithstanding the material weaknesses, management has concluded that the financial statements included elsewhere in this Quarterly Report present fairly, in all material respects, our financial position, results of operations and cash flows in conformity with GAAP.

Changes in Internal Control over Financial Reporting

Other than as described above, there have been no material changes in our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2021 that materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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PART II -– OTHER INFORMATION

~~ITEM~~

Item 1. ~~LEGAL PROCEEDINGS.~~

~~None.~~

Legal Proceedings.

In August 2019, the Federal Trade Commission (“FTC”) sent a civil investigative demand to Opendoor Labs Inc., our wholly-owned subsidiary, seeking documents and information relating primarily to statements in our advertising and website comparing selling homes to us with selling homes in a traditional manner using an agent and relating to statements that our offers reflect or are based on market prices. Thereafter, we responded cooperatively to the civil investigative demand and related follow-up requests from the FTC. On December 23, 2020, the FTC notified us that they intend to recommend that the agency pursue an enforcement action against us and certain of our officers, if we are unable to reach a negotiated settlement acceptable to all parties. The FTC has indicated that they believe certain of our advertising claims relating to the amount of our offers, the repair costs charged to home sellers, and the amount of net proceeds a seller may receive from selling to us versus selling in the traditional manner were inaccurate and/or inadequately substantiated. We are engaged in settlement negotiations with the FTC. There can be no assurances that we will be successful in negotiating a favorable settlement.

In addition to the foregoing, we are currently and have in the past been subject to legal proceedings and regulatory actions in the ordinary course of business. We do not anticipate that the ultimate liability, if any, arising out of any such matters will have a material effect on our financial condition, results of operations or cash flows. In the future, we may be subject to further legal proceedings and regulatory actions in the ordinary course of business and we cannot predict whether any such proceeding or matter will have a material effect on our financial condition, results of operations or cash flows.

~~ITEM~~

Item 1A. ~~RISK FACTORS.~~

~~Factors that could cause~~Risk Factors.

In the course of conducting our ~~actual results~~business operations, we are exposed to ~~differ materially from those in this Quarterly Report include~~a variety of risks. These risks are generally inherent to the U.S. residential real estate industry or otherwise generally impact iBuyers like us. Any of the risk factors we described in "Part I – Item 1A. Risk Factors," in our ~~final prospectus filed with the SEC on April 29, 2020. As~~Annual Report or described below, have affected or could materially adversely affect our business, financial condition and results of ~~the date~~operations. The market price of ~~this Quarterly Report, other than~~shares of our common stock could decline, possibly significantly or permanently, if one or more of these risks and uncertainties occurs. Certain statements in “Risk Factors” are forward-looking statements. See “Forward-Looking Statements.”

Except as ~~described~~set forth below, there have been no material changes to the Company's risk factors ~~disclosed~~since the Annual Report.

Risks Related to Our Business and Industry

The COVID-19 pandemic adversely affected our business in 2020. The extent to which COVID-19 will impact our future operations is uncertain and cannot be predicted at this time.

Our success depends on a high volume of residential real estate transactions throughout the markets in which we operate. This transaction volume affects all of the ways that we generate revenue, including our ability to acquire new homes and generate associated service fees, our ability to sell homes that we own, the generation of commissions from our brokerage business, the number of loans our mortgage business originates and resells, and the number of transactions our title and settlement business closes. The COVID-19 pandemic significantly and adversely affected our business beginning in March 2020 when governmental authorities put in place limitations on in-person activities related to the sale of residential real estate. As a result of these restrictions and safety concerns for our customers and employees, we paused acquisitions of homes beginning in March 2020 and sold down the home inventory on our platform during the second and third quarters of 2020. We resumed making acquisitions of homes across all of our markets in August 2020.

Although we believe we have successfully adapted our operations to date to effectively execute on our business model during the ongoing COVID-19 pandemic, there remains uncertainty as to COVID-19’s overall impact on the U.S. economy, the impact of variants, future limitations that may be imposed by governmental authorities on processes and procedures attendant to residential real estate transactions as a result of COVID-19, and long-term trends in consumer spending on real estate transactions, among other things. We cannot predict the extent to which our transaction volumes and financial results may be adversely affected by the foregoing.

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We have identified material weaknesses in our ~~final prospectus~~internal control over financial reporting and may identify additional material weaknesses in the future or fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.

We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As previously disclosed, we identified a material weakness related to our general information technology controls, including the design and implementation of access and change management controls. Additionally, key components of the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework have not been fully implemented, including control and monitoring activities relating to: (1) electing and developing general control activities over technology to support the achievement of objectives; and (2) electing, developing, and performing ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning. We recently identified a further material weakness related to the accounting and classification of significant and unusual transactions, which led to the correction of prior period amounts described in “Part I – Item 1. Financial Statements –Notes to Condensed Consolidated Financial Statements – Note 1. Description of Business and Accounting Policies.”

We have engaged a third-party consultant, are in the process of designing and implementing measures to improve our internal control over financial reporting and have begun expanding our accounting, legal and IT security teams to remediate these material weaknesses. While we are designing and implementing measures to remediate the material weaknesses, we cannot predict the success of such measures or the outcome of our assessment of these measures at this time. We can give no assurance that these measures will remediate the deficiencies in internal control or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations.

As a public company, beginning with our second annual report on Form 10-K, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for future annual reports on Form 10-K to be filed with the SEC.

~~The securities~~ This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will also be required to attest to the effectiveness of our internal control over financial reporting in future annual reports on Form 10-K to be filed with the SEC. We will be required to disclose changes made in our internal controls and procedures on a quarterly basis. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, the applicable stock exchange or other regulatory authorities, which ~~we invest~~would require additional financial and management resources. We have begun the ~~funds held in~~process of compiling the ~~Trust Account could bear a negative rate of interest, which could reduce~~system and processing documentation necessary to perform the ~~value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.~~

~~The proceeds held in the Trust Account are invested only in U.S. government treasury obligations~~evaluation needed to comply with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it maySection 404 in the future, ~~adopt similar policies in the United States. In the event that~~but we ~~are unable~~may not be able to complete our ~~initial business combination or make certain amendments to our Amended~~evaluation, testing and ~~Restated Memorandum and Articles of Association our public shareholders are entitled to receive their pro-rata share of the proceeds held~~any required remediation in ~~the Trust Account, plus any interest income not released to us, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by public shareholders.~~

a timely fashion.

~~ITEM~~

Item 2. ~~UNREGISTERED SALES~~Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Equity Securities

None.

Use of Proceeds

On April 30, 2020, SCH consummated its initial public offering, generating total gross proceeds of $414.0 million, inclusive of units sold to the underwriters in connection with the exercise of their over-allotment option in full. Simultaneously with the consummation of the initial public offering, SCH consummated a private placement of warrants to its sponsor, SCH Sponsor II LLC, generating total additional proceeds of $9.2 million.

Following the initial public offering and the sale of the private placement warrants, a total of $414.0 million was placed in a trust account. After deducting payments to existing shareholders of $0.1 million in connection with their exercise of redemption rights, the payment of the $14.5 million of deferred underwriting fees and a total of $22.9 million in expenses in

TABLE OF ~~EQUITY SECURITIES AND USE OF PROCEEDS.~~

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OPENDOOR TECHNOLOGIES INC.

connection with the Business Combination paid from the trust account, the remainder of the trust account was transferred to our balance sheet to fund our operations and continued growth. As of the date of this Quarterly Report on Form 10-Q, the proceeds of these transactions have been fully applied.

Issuer Purchases of Equity Securities

None.

~~ITEM~~

Item 3. ~~DEFAULTS UPON SENIOR SECURITIES.~~

Defaults Upon Senior Securities.

None.

~~ITEM~~

Item 4. ~~MINE SAFETY DISCLOSURES.~~

Mine Safety Disclosures.

Not applicable.

~~ITEM~~

Item 5. ~~OTHER INFORMATION.~~

~~None.~~

Other Information.

The following tables showing the correction of prior period amounts should be read in conjunction with Note 1 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q. This correction affected our consolidated balance sheet, consolidated statement of operations, consolidated statement of changes in temporary equity and shareholders’ equity (deficit) and consolidated statement of cash flows for year ended December 31, 2020.

The Company determined, based on consideration of quantitative and qualitative factors, that the error had an immaterial impact, individually and in aggregate. As such, the Company corrected its accounting for Sponsor Warrants in its Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.

The following table provides the impact of the correction on the Company's consolidated balance sheet as of December 31, 2020 (in thousands):


	As of December 31, 2020
	Previously Stated		Adjustments	As Corrected
Warrant liabilities	$	—	47,349	$	47,349
Total liabilities	$	575,575	47,349	$	622,924
Additional paid-in capital	$	2,677,155	(81,143)	$	2,596,012
Accumulated deficit	(1,077,243)		33,794	(1,043,449)
Total shareholders' equity	$	1,600,007	(47,349)	$	1,552,658

The following table provides the impact of the correction on the Company's consolidated statement of operations for the year ended December 31, 2020 (in thousands):


	Year Ended December 31, 2020
	Previously Stated		Adjustments		As Corrected
DERIVATIVE AND WARRANT FAIR VALUE ADJUSTMENT	$	(25,941)	33,794		$	7,853
LOSS BEFORE INCOME TAXES	$	(286,697)	33,794		$	(252,903)
NET LOSS	$	(286,760)	33,794		$	(252,966)
Net loss per share attributable to common shareholders:
Basic	$	(2.62)	$	0.31	$	(2.31)
Diluted	$	(2.62)	$	0.31	$	(2.31)

Other than changes made to reflect the impact of the recognition of the fair value of the Sponsor Warrants liability at the Closing Date to additional paid-in capital and the subsequent remeasurement of the fair value of the warrant liability at

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December 31, 2020 to accumulated deficit, there have been no changes to the Company's consolidated statement of temporary equity and shareholders’ equity (deficit) (in thousands).


	Year Ended December 31, 2020
	Previously Stated		Adjustments	As Corrected
Additional paid-in capital	$	2,677,155	(81,143)	$	2,596,012
Accumulated deficit	$	(1,077,243)	33,794	$	(1,043,449)
Total shareholders' equity	$	1,600,007	(47,349)	$	1,552,658

The following table provides the impact of the correction on the Company's consolidated statement of cash flows for the year ended December 31, 2020 (in thousands):


	Year Ended December 31, 2020
	Previously Stated		Adjustments	As Corrected
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(286,760)	33,794	$	(252,966)
Adjustments to reconcile net loss to cash, cash equivalents, and restricted cash provided by (used in) operating activities:
Warrant fair value adjustment	$	2,622	(33,794)	$	(31,172)
DISCLOSURES OF NONCASH FINANCING ACTIVITIES:
Recognition of warrant liability	$	—	81,143	$	81,143

TABLE OF CONTENTS

OPENDOOR TECHNOLOGIES INC.

~~ITEM~~

Item 6. ~~EXHIBITS.~~

Exhibits.

The following is a list of exhibits ~~are~~ filed as part of ~~or incorporated by reference into,~~ this Quarterly Report on Form 10-Q.

~~No.~~		~~Description of Exhibit~~
~~2.1~~		~~Agreement and Plan of Merger, dated as of September 15, 2020, by and among the Company, Hestia Merger Sub Inc. and Opendoor Labs Inc. (included as Annex A to the proxy statement/prospectus). (2)~~
~~3.1~~		~~Amended and Restated Memorandum and Articles of Association of the Company. (1)~~
~~10.1~~		~~Sponsor Support Agreement, dated September 15, 2020, by and among SCH Sponsor II LLC, the Company, each officer and director of the Company and Opendoor Labs Inc. (3)~~
~~10.2~~		~~Opendoor Holders Support Agreement, dated September 15, 2020, by and among the Company, Opendoor Labs Inc. and certain stockholders of Opendoor Labs Inc. (4)~~
~~10.3~~		~~Promissory Note, dated September 30, 2020, issued to SCH Sponsor II LLC.~~
31.1*		~~Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
31.2*		~~Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
32.1**		~~Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
32.2**		~~Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS*		~~XBRL Instance Document~~
101.CAL*		~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.SCH*		~~XBRL Taxonomy Extension Schema Document~~
101.DEF*		~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB*		~~XBRL Taxonomy Extension Labels Linkbase Document~~
101.PRE*		~~XBRL Taxonomy Extension Presentation Linkbase Document~~

Exhibit

No.

Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

2.1

Agreement and Plan of Merger, dated as of September 15, 2020, by and among Social Capital Hedosophia Corp. II, Hestia Merger Sub Inc. and Opendoor Labs Inc.

8-K

001-39253

2.1

09/17/2020

3.1

Certificate of Incorporation of Opendoor Technologies Inc.

8-K

001-39253

3.1

12/18/2020

3.2

Bylaws of Opendoor Technologies Inc.

S-1/A

333-251529

3.3

01/15/2021

4.1

Specimen Common Stock Certificate of Opendoor Technologies Inc.

S-4/A

333-249302

4.5

11/06/2020

4.2

Warrant Agreement, dated April 27, 2020, between Social Capital Hedosophia Holdings Corp. II. and Continental Stock Transfer & Trust Company, as warrant agent

8-K

001-39253

4.1

04/30/2020

4.3

Amendment to Warrant Agreement, dated March 22, 2021, between Opendoor Technologies Inc. and American Stock Transfer & Trust Company, LLC, as warrant agent

10-Q

001-39253

4.3

05/12/2021

10.1

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (Canada) Under 2020 Incentive Award Plan

31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (as formatted as Inline XBRL and contained in Exhibit 101)

	*	~~Filed herewith.~~
	**	~~Furnished.~~
	~~(1)~~	~~Previously filed as exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 30, 2020 and incorporated by reference herein.~~
	~~(2)~~	~~Previously filed as exhibit 2.1 to the Company's Registration Statement on Form S-4 filed on October 5, 2020 and incorporated by reference herein.~~
	~~(3)~~	~~Previously filed as Annex B to the proxy statement/prospectus included in the Company's Registration Statement on Form S-4 filed on October 5, 2020 and incorporated by reference herein.~~
	~~(4)~~	~~Previously filed as Annex C to the proxy statement/prospectus included in the Company's Registration Statement on Form S-4 filed on October 5, 2020 and incorporated by reference herein.~~
	+	~~Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.~~

________________

* Filed herewith.

** Furnished herewith.

# Indicates management contract or compensatory plan.

OPENDOOR TECHNOLOGIES INC.

SIGNATURES

Pursuant to the requirements of the Securities ~~Exchange~~ Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP. II~~

OPENDOOR TECHNOLOGIES INC.

~~Date: November 4, 2020~~

~~/s/ Chamath Palihapitiya~~

Date:

~~Name:~~August 11, 2021

~~Chamath Palihapitiya~~By:

/s/ Eric Wu

~~Title:~~

Name:

Eric Wu

Title:

Chief Executive Officer

~~(Principal Executive Officer)~~

Date:

August 11, 2021

By:

/s/ Carrie Wheeler

~~Date: November 4, 2020~~

~~/s/ Steven Trieu~~

~~Name:~~

~~Steven Trieu~~

Name:

Carrie Wheeler

~~Title:~~

Title:

Chief Financial Officer

~~(Principal Financial and Accounting Officer)~~


Title of each class				Trading Symbol(s)		Name of each exchange on which registered
~~Units, each consisting of one Class A ordinary share and one-third of one redeemable warrant~~			~~IPOB.U~~	~~New York Stock Exchange~~
~~Class A ordinary shares,~~Common stock, $0.0001 par value ~~$0.0001~~ per share	OPEN		~~IPOB~~		~~New York~~The Nasdaq Stock ~~Exchange~~
~~Redeemable warrants, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50~~		~~IPOB WS~~	~~New York Stock Exchange~~Market LLC

¨
Large accelerated filer	¨☐	Accelerated filer	☐
xNon-accelerated filer	x☒	Smaller reporting company	☒
	x	Emerging growth company	☐


	June 30, 2021		December 31, 2020
Work-in-process	$	1,025,954	$	183,004
Finished goods	1,697,694		282,932
Total real estate inventory	$	2,723,648	$	465,936


	December 31, 2020
	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash	$	709,924	$	—	$	—	$	709,924	$	709,924	$	—
Money market funds	618,197		—		—		618,197		618,197		—
Commercial paper	81,037		1		0		81,038		81,038		—
Corporate debt securities	29,891		26		(2)		29,915		3,506		26,409
Asset-backed securities	12,518		19		(4)		12,533		0		12,533
U.S. agency securities	6,993		2		0		6,995		0		6,995
U.S. Treasury securities	1,700		0		0		1,700		0		1,700
Total	$	1,460,260	$	48	$	(6)	$	1,460,302	$	1,412,665	$	47,637


	Less than 12 Months				12 Months or Greater				Total
December 31, 2020	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	19,296	$	0	$	0	$	0	$	19,296	$	0
Corporate debt securities	7,538		(2)		$	0	$	0	7,538		(2)
Asset-backed securities	4,611		(4)		$	0	$	0	4,611		(4)
Total	$	31,445	$	(6)	$	0	$	0	$	31,445	$	(6)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	September 30, 2020			December 31, 2019
		(unaudited)
ASSETS
Current assets
Cash	$	250,461		$	—
Prepaid expenses		383,761			—
Total Current Assets		634,222			—


Deferred offering costs		—			52,673
Cash and Marketable securities held in Trust Account		414,042,207			—
TOTAL ASSETS	$	414,676,429		$	52,673

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accrued expenses	$	4,362,316		$	—
Accrued offering costs		—			52,673
Advance from related party		—			21,631
Promissory note – related party		1,138,497			—
Total Current Liabilities		5,500,813			74,304

Deferred underwriting fee payable		14,490,000			—
TOTAL LIABILITIES		19,990,813			74,304

Commitments

Class A ordinary shares subject to possible redemption, 38,964,589 and no shares at redemption value at September 30, 2020 and December 31, 2019, respectively		389,685,614			—

Shareholders’ Equity (Deficit)
Preferred shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding		—			—
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 2,435,411 and none issued and outstanding (excluding 38,964,589 and no shares subject to possible redemption) at September 30, 2020 and December 31, 2019, respectively		244			—
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 10,350,000 and one shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		1,035			—
Additional paid-in capital		11,341,549			—
Accumulated deficit		(6,342,826	)		(21,631	)
Total Shareholders’ Equity (Deficit)		5,000,002			(21,631	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	414,676,429		$	52,673

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020			2020
Formation and operating costs	$	6,059,583		$	6,363,402
Loss from operations		(6,059,583	)		(6,363,402	)

Other income:
Interest income		16,290			42,207

Net Loss	$	(6,043,293	)	$	(6,321,195	)

Weighted average shares outstanding, basic and diluted (1)		12,179,587			10,111,790

Basic and diluted net loss per ordinary share (2)	$	(0.50	)	$	(0.63	)

	Class A Ordinary Shares						Class B Ordinary Shares					Additional Paid-in			Accumulated			Total Shareholders’ (Deficit)
	Shares			Amount			Shares			Amount		Capital			Deficit			Equity
Balance – January 1, 2020		—		$	—			1		$	—	$	—		$	(21,631	)	$	(21,631	)

Cancellation of Class B ordinary share		—			—			(1	)		—		—			—			—

Issuance of Class B ordinary shares to Sponsor ⁽¹⁾		—			—			10,350,000			1,035		23,965			—			25,000

Net loss		—			—			—			—		—			—			—

Balance – March 31, 2020		—			—			10,350,000			1,035		23,965			(21,631	)		3,369

Sale of 41,400,000 Units, net of underwriting discount and offering expenses		41,400,000			4,140			—			—		391,799,302			—			391,803,442

Sale of 6,133,333 Private Placement Warrants		—			—			—			—		9,200,000			—			9,200,000

Ordinary shares subject to redemption		(39,570,413	)		(3,957	)		—			—		(395,724,945	)		—			(395,728,902	)

Net loss		—			—			—			—		—			(277,902	)		(277,902	)

Balance – June 30, 2020		1,829,587			183			10,350,000			1,035		5,298,322			(299,533	)		5,000,007

Change in value of ordinary shares subject to redemption		605,824			61			—			—		6,043,227			—			6,043,288

Net loss		—			—			—			—		—			(6,043,293	)		(6,043,293	)

Balance – September 30, 2020		2,435,411		$	244			10,350,000		$	1,035	$	11,341,549		$	(6,342,826	)	$	5,000,002


	Notional Amount		Fair Value Derivatives
June 30, 2021			Asset		Liability
Interest rate lock commitments	$	57,853	$	811	$	0


December 31, 2020	Outstanding Amount		Weighted Average Interest Rate
Revolving Facility 2018-1	$	0	4.28	%
Revolving Facility 2018-2	0		4.36	%
Revolving Facility 2018-3	25,385		4.19	%
Revolving Facility 2019-1	32,535		3.58	%
Revolving Facility 2019-2	230,352		3.08	%
Revolving Facility 2019-3	50,901		3.60	%
Total	$	339,173


December 31, 2020	Outstanding Amount		Weighted Average Interest Rate
Repo Facility 2019-R1	$	7,149	1.94	%


June 30, 2021	Balance at Fair Value		Level 1		Level 2		Level 3
Marketable securities:





Mutual fund	$	200,143	$	200,143	$	0	$	0
Mortgage loans held for sale pledged under agreements to repurchase	25,368		0		25,368		0
Other current assets:
Interest rate lock commitments	811		0		0		811
Total assets	$	226,322	$	200,143	$	25,368	$	811
Warrant liabilities - current:
Sponsor Warrants	38,669		0		38,669		0


Total liabilities	$	38,669	$	0	$	38,669	$	0


	June 30, 2021
	Carrying Value		Fair Value		Level 1		Level 2
Assets:
Cash and cash equivalents	$	1,557,815	$	1,557,815	$	1,557,815	$	0
Restricted cash	131,652		131,652		131,652		0
Other assets:
Non-marketable equity securities	10,000		10,000		0		10,000
Liabilities:
Credit facilities and other secured borrowings	$	2,286,457	$	2,289,878	$	0	$	2,289,878


	Warrants		Embedded Conversion Option		Interest rate lock commitments
Balance as of March 31, 2021	$	0	$	0	$	414



Additions	0		0		1,934
Origination/Terminations	0		0		(1,667)
Net change in fair value	0		0		130
Balance as of June 30, 2021	$	0	$	0	$	811

Balance as of December 31, 2020	0		0		$	0



Additions	0		0		2,348
Origination/Terminations	0		0		(1,667)
Net change in fair value	0		0		130
Balance as of June 30, 2021	$	0	$	0	$	811


	Warrants		Embedded Conversion Option		Interest rate lock commitments
Balance as of March 31, 2020	$	5,550	$	41,697	$	0





Net change in fair value	(122)		0		0
Balance as of June 30, 2020	$	5,428	$	41,697	$	0

Balance as of December 31, 2019	4,538		41,697		$	0





Net change in fair value	890		0		0
Balance as of June 30, 2020	$	5,428	$	41,697	$	0


	June 30, 2021		December 31, 2020
Internally developed software	$	57,128	$	47,823
Computers	7,999		5,511
Security systems	3,246		681
Furniture and fixtures	2,791		3,279
Software implementation costs	1,962		1,680
Leasehold improvements	1,959		2,456
Office equipment	1,936		2,056
Total	77,021		63,486
Accumulated depreciation and amortization	(43,059)		(34,258)
Property and equipment – net	$	33,962	$	29,228


June 30, 2021	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Remaining Weighted Average Useful Life (Years)
Customer relationships	$	7,400	$	(3,272)	$	4,128	3.2
Trademarks	5,400		(2,162)		3,238		3.2
Developed technology	3,161		(2,932)		229		1.0
Non-competition agreements	100		(100)		0		0
Intangible assets – net	$	16,061	$	(8,466)	$	7,595


Fiscal Years	(In thousands)
Remainder of 2021	$	1,281
2022	2,428
2023	2,320
2024	1,566
Total	$	7,595


	Number of Options (in thousands)	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balance-December 31, 2020	24,158	$	1.91	5.4	$	502,767

Exercised	(4,242)	1.63
Forfeited	(173)	2.72
Expired	(2)	3.02
Balance-June 30, 2021	19,741	$	1.84	5.0	$	310,914
Exercisable-June 30, 2021	16,305	$	1.66	4.5	$	261,938


	Number of RSUs (in thousands)	Weighted- Average Grant-Date Fair Value
Unvested and outstanding-December 31, 2020	46,525	$	10.88
Granted	24,470	20.96
Vested	(14,900)	6.62
Forfeited	(547)	8.93
Unvested and outstanding-June 30, 2021	55,548	$	16.48


	Number of Restricted Shares (in thousands)	Average Grant-Date Fair Value
Unvested-December 31, 2020	2,148	$	3.74
Granted	0	0
Vested	(621)	3.58
Unvested-June 30, 2021	1,527	$	3.80
Vested and outstanding-June 30, 2021	0	0

	●	outstanding warrants, in whole and not in part, upon a minimum of 30 days’ prior written notice of redemption (“Redemption Period”). There are two scenarios in ~~whole and not in part;~~
	●	~~at a price of $0.01 per Public Warrant;~~
	●	~~upon not less than 30 days’ prior written notice of redemption to each warrant holder and~~
	●	~~if, and only if, the reported last sale price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on~~ which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like).

	●	~~in whole and not in part;~~
	●	at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the “fair market value” of the Class A ordinary shares;
	●	if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like); and
	●	if the Reference Value is less than $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

Description	Level		September 30, 2020
Assets:
Cash and Marketable securities held in Trust Account		1	$	414,042,207