OPEN - Earnings call 4 2023 | Opendoor Technologies Inc.

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Operator

Thank you for standing by, and welcome to Opendoor's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Kimberly Niehaus, Investor Relations. Please go ahead.

Kimberly Niehaus

Thank you, and good afternoon. Details of our results and additional management commentary are available in our earnings release and shareholder letter, which can be found on the Investor Relations section of our website at investor.opendoor.com. call of simultaneously the this Investor on that section Relations company's note will webcast be the Please corporate website.

objectives I contains including, the are statements start, the but other than securities regarding business and we would reliance to, on could statements historical guarantees, Opendoor's future management remind statements strategy expansion to Before fact plans, of limited you laws. following anticipated nor All discussion of performance, be financial them. forward-looking statements not financial meaning should These within opportunity and market that statements and statements the federal promises like placed that are for deemed forward-looking, operations. conditions, not neither be undue and

may from differ results Such forward-looking cause statements actual those here. involve materially that to risks discussed uncertainties and

performance. measures. Opendoor and following discussion evaluate or Additional contains no assumptions ended XX, on made actual operational expectations financial could result be recent based after in company as measurements the to on by the forward-looking Opendoor's your as forward-looking reports useful periodic from responses supplemental law. The today, call, future questions, XX-K Factors this these Form except that reasonable updated to The cause required to for annual on found XX-K. filed financial and believes are measures as statements are to including differ December most statements Any them section events of references management's to information, current XXXX, certain update year whether of as can Risk by our report new obligation conference information that results the assumes non-GAAP revise of investors a as or company's financial non-GAAP otherwise, to

over metrics, of For call these measures GAAP now Carrie the Officer of of website a each Wheeler, most see Opendoor. turn Executive our at directly the will to Chief comparable non-GAAP please investor.opendoor.com. I to reconciliation financial

Carrie Wheeler

Schwartz, Christy Open Officer; Dod today on with and Capital Also call the Interim Good Fraser, Chief President me is afternoon. and of Financial Exchange.

focus, of sales and our the dynamic XXXX, volume made lowest our market environment For could macro Opendoor, of what share home grew the marked sequentially team Despite QX. progress. every controlling a meaningful execution and we results. We since control, a acquisition quarter and XXXX year by focused on QX we was from level to tripled

new book demonstrating the X.X% the of recent generated of more inventory margin our contribution year, Our of health acquisitions. in

We expenses XX% and in a which also more made in make operating efficient, spend. processes in improvements our excluding in technology resulted adjusted the QX, nearly tooling, of reduction to platform advertising reduction our to year-over-year our

to the with XXXX possible home-selling journey future a these the become built decade residential real way month building can where ago. marked your process cannot With start and suite traditional it provide, in the to foundation for markets. and our the place customers a of improvements, founding, Opendoor's we're place every now XXX,XXX a Since simplicity their something a product a committed the we've we We've over and XX estate across have served to in made sustained rescale of tap profitable business the anniversary. enter growth. Last with XX-year house button, build sell unthinkable certainty. largest to And seller e-commerce with that platform

increased creative investments efficiency made prior of testament XXXX, and partnership Despite to advertising sellers our reductions, spend by efforts. ability we've our we to as attractive to our spread platform, our less Last marketing year year, and the over channels spreads XX% advertising continued marketing maintained attract elevated a versus our aided our our Looking efficient. excited these the awareness, more effectiveness of we're reduced and reach more growth to about levels. spend, through namely

funnel marketing sellers, family getting and spend we creatively. Couch we to and XXXX, to and the spending sell is plan Last streamed offer easy in Sunday, an of we're total proving cash time, quick just during Bowl, it the our our how reach live during widen us. more Super top Opendoor ramp In on half to Atlanta more home to the their

partnership true online quarter, agents, as homebuilders XX% positioned offer Acquisition XXX% for channels, since estate real and are QX. from which These have QX real partnerships versus us our platforms, in increase residential cash branded includes the win-win. the to estate over and continue a fourth effectively and up up

selling also spend. Our us to our partners' their the customers customers attractive of with provides and experience the source acquisitions platforms and offering and a fixed enhances of

channel this an from on volumes in expect XXXX. to continue basis absolute grow to We

Finally, as a platform. mitigating in reminder, during improved risk in throughout We meaningfully and the acquisition resulted conversion which spreads seller managing our reduced and our lever spreads are year. XXXX, an conversion volumes important on

where at ahead, Looking growth are late volume QX, based in see translate on we contract to expect to in QX. an we sequential today, acquisition volume would increase in which

but next, returning to quickly of income. outlook our address positive net our goal to adjusted to speak want will I Christy

We on learned to We're ongoing a we've have remain prudent balancing and operating growth in our profitability we're within facing framework. acting lessons Mortgage volatile. at years management strong recent back, but rates approach our uncertainty. risk tailwinds while still taking also macro and

scaling this both expect losses We significant reducing make and to meaningfully year. progress resale acquisition our and in volumes

adjusted in XXXX. we full net don't reaching income positive for quarter However, anticipate a

durably we year. and our and growth, but sustainable around millions way proud the is last now scale building potential in real which over long We've at organized we're driving to and able we our a only do alone offer positive am accomplished in to the platform estate. are guidance. on also term, what buy has has And our so, we what leaner focused team smarter, entire started. Christy and getting back not to the the financial getting I are business that, Today, of energized. will are stand emerged we results We sell the just and transform review ANI.

Christy Schwartz

Thank you, Carrie.

volumes high and margin our cost the of to we end in outlook while across above increase driving as board improvements. results came Our fourth the quarter acquisition continue

providing remain XXXX, enter best-in-class a we our with margins business, As all cost delivering to customer contribution rescaling healthy we while management, and experience. operating disciplined committed

revenue of high the range. million our in $XXX delivered fourth quarter, guidance the above end of We

continue as old resale had progress book make selling year-end. these in and of of contract our of homes inventory not than less We to through on XX

For the year, full we achieved of billion $X.X revenue.

the our resale As risk lower beginning in health. a intentionally This in XXXX, reminder, prior and we resulted XXXX the home year. prioritizing slowed inventory half acquisitions second in of volumes versus management

our from We and the each ahead up per of purchased as month. quarter market of homes saw stabilization, Carrie X,XXX this increasing in X,XXX we prior As third mentioned, of our reduced approximately sequentially quarter. in we spreads quarter, XX% year acquisitions fourth expectations signs resulting homes the

X.X%, of of to of the guidance contribution continued generate end range. quarter, high positive We our in delivering contribution the implied fourth profit ahead margin

ahead While our of contribution reasons. X expectations, declined margin sequentially for

last the our implemented First, response home-level price in drops seasonal clearance quarter to in targets, we market-level decline amplified rates. sell-through to maintain

Second, the from sales be book tail to drag homes overall old our performance. continued a on of

contribution cohort. a health in year, negative inventory. of Notably, our was sales the recent margin generated full acquisition new of X.X%, XXXX, mentioned, of margin from by driven as homes demonstrating X.X% old book the contribution the the For Carrie more book of

$XXX our the EBITDA high in of $XXX was of million the a Adjusted XXXX. XXXX loss ended quarter, million million $XX of with range. versus ahead We guidance loss end in adjusted loss fourth of EBITDA

million quarter, from quarter. from The and QX fourth was QX million in to operating $XXX the Adjusted we continue expected in totaled up sequential the million expenses $XX $XX XXXX. in for increase inventory as down rebuild

made $XXX million, expenses were For structure. year, which the reducing in XXXX, in million down progress operating we've adjusted the full from cost $XXX our XX% reflects

decreased capital, of billion to balance assets, and marketable unrestricted Turning million equity which the includes invested $X.X billion related in valuation inventory $XX in in cash sheet. our quarter. and total by ended the adjustments. and Shareholders' homes We million $X.X in with securities year net $XXX equity of fourth

nonrecourse $X.X billion. borrowing $X.X had which debt of capacity capacity composed and senior mezzanine $X.X of total $X.X We of committed also term was billion revolving facilities, and facilities asset-backed in senior of borrowing credit billion billion

with execution focus drive and will Looking ahead results. to XXXX, to to we continue operate

We contribution loss $XX to X.X%; $XX QX between of EBITDA $X.XX million. contribution and to $XX $XX million billion; billion and be expect margin and revenue between million, adjusted and X.X% a profit implies million our between $X.X which

million, operating adjusted be step-up sequential to and levels. expect We $XXX as approximately a we expenses inventory reramp rebuild marketing

home to approximately quarter purchases QX over flat XXX% be first expect up we from and Additionally, year-over-year.

in the earnest. We we with expect increase typical season will in line seasonality home acquisitions as sequentially, spring QX into selling enter

a focused rescaling on are in business fashion. our XXXX, we sustainable As begin we

improved We benefit of range line of the of took the to contribution to to our call open year now have with margins, well to healthy X% to X%. I'd that and cost operator year the us is achieving target generating of sight turn position accelerate like the an over book we a for line steps structure volumes and throughout to last margin inventory questions. the annual up the a

Operator

[Operator of from Lee of first Instructions] Dae question the JPMorgan. comes line Our

Dae Lee

guess your need this what meaningful certain the transactions income to to to ramp of in on matter timing, see hear, but acquisition reaching levels? Appreciate to you color recover first Or I needs just the just reach do on it adjusted the to a [ one ] profit. volume? net like curious industry target? happen Is

Carrie Wheeler

way. business, intent focused on Carrie. on it we're that. we're I'll take a highly sustainable couple doing things. A Dae, of in it's One the is rescaling but

what half if we those. our will to excess our of not about, second of our into our reduce so and So is We're the right take is we are drive talked macro willing managing acquisitions margin risk. do environment. But range expense ramp target spreads. ANI neutral are there to within lean we're losses to advantage year-on-year. year macro to all lean which to this a of marketing willing well Certainly, of to substantially this now, contribution tailwinds, objective meaningfully not call I'd year, say, at positioned growth what or to margin We're into

when, about not So if. this is

Dae Lee

relative Got it. be of as that set XXXX at I spread where right think guess margin of I your about is to at your And exiting part is target? I now, way right early follow-up. of it? level guess, the contribution to to the And kind the higher and guess Is Like a spread end XXXX? a

Carrie Wheeler

last spreads. made Yes. cost improvements in fed durably year we into back which reducing much When our of substantial we structure,

and why improvements us structure by of So spend those QX we're price they are cost contract the take and growth. today, which into home ramping we leaning and like the year, where stabilization throughout XX% to we're in down combination advertising acquisition why allowed is

Operator

Our Benjamin Deutsche line Black Bank. comes the of of next from question

Jeffrey Seiner

quarter. you exit to decision around seeing those I This is market this Jeff strategy noticed going What on X and to for markets there exited that your the markets led you forward? Ben. are in expansion that change

Dod Fraser

an indication These given were than markets. our one represented not X% certainly next Yes. structure less just more of Happy It's of forward physically They our other where to markets those that it's size take volumes. that. of a X of our to question they're markets small and plans. really, And weren't the located. cost

just it cost a So and was efficiency question. more

Jeffrey Seiner

a just I as guess follow-up you. Got then.

expand your similar about think see of to expense region? of of adding other margin the there similar gross to you a addressable Or capability the as Or at therefore, to kind given doing homes is of contribution that simply impact cost that? region, buy does and of So a contribution a box some matter expanding market, is you? sort it you'll margin come in your in a margins

Dod Fraser

accuracy. buy expanding box more is in pricing about goal Our

we so accurately so buy believe buy system box. box contribution that the expanded can the price margin we improves, our same can our we deliver And we and across pricing as expand

Operator

from Nick line question of comes Securities. the Jones of next Our JMP

Nicholas Jones

still of time? maybe over X% guess delivered of you're book as being but to X%. some why I just range you north that margin maybe to increasing I contribution that beyond So gets and X% targeting expanding guess clarity new comfortable kind range X.X%, not X% the of what yet. to X%

Carrie Wheeler

X.X%. I spreads, why was CM the year's I'd about our we Carrie. that's last it's given And great, on new contribution last we're book, to year say X% reaffirming mean at which set we margin realized this a X% Nick, where year, target. is X.X% spreads. was level, very our that high

we the X% X% and we again, to So risk, level a within for to the deliver where that we're margin that spreads balancing interplay growth year. to of want reduced

Nicholas Jones

think Helpful. listed homes days, outperforming And in took those it to on of you in, that I XX% kind the versus are the the that market. XX% it. homes Got over -- down you're are XXX then kind and markets of was

they time? the can of kind Given does of And the the time, how those terms kind model the XXXX? ultimately, go end hold maybe sit kind selecting expect as of markets? average today time of long in neutral and kind what over the of I standard in in the of market kind over as what's homes versus where like outperformance you're we we is percentage guess that market

Dod Fraser

Yes.

-- -- are to we sit about a really So business sheet so than then for And want as be them to hold I in on be shorter want think portfolio balance the homes faster we days think we from homes slower. longer, perspective, we on market. we that management period, market, our the selling early

homes number. goal specific management. more older are think on of and not days But get much be market. there's of question that's that disciplined market, XXX cohort to management our want specific outperform sort to outperforming for We So is appropriate that trying we're to we to homes. about on X risk to market target to It's your XX a of portfolio

Operator

Our line of next Citi. Ygal of the comes Arounian from question

Unknown Analyst

Ygal. could how on the if Max season. [ acquisitions macro, pace neutral the anything acquisitions are was you're seeing expectations ] kind got You through rest us head we your comment on how of the of think walk and year, getting I into about home for of spring market through your you for as the wondering you the

Carrie Wheeler

Carrie. [ it's ], Max

increase guidance, a I'll a which of in XXX% see So meaningful high up year-on-year. QX our being XXXX XXXX. should at over was repeat you level, acquisitions some

for we're this first going year as seeing seeing ramp of back growth people see kind thinking expect time into given see just in we're Super quarter. acquisition post seasonality, we're we'd the to to in So of about getting now, selling contracts right good What month-to-month. the a Bowl,

growth should January, which than see in us than QX. turn we're you why March see from going higher sequential expect indicated QX, And like we is to over to higher QX contracts acquisition into February February. So those closes

for year. what I So first the in of terms you half that's tell can the acquisition of pacing

Unknown Analyst

And then focused Or more kind model is XP as business? on updates XXXX? as core into any the a there on you follow-up, we look just of -- are the

Carrie Wheeler

we're our the That But all flow to cash model. business say I both. plan our get there. core on say I'd us is gets back current positive would about to today, focused back sell-direct

year that important market. buyers and we're and cost We've Our product we us focus product. us, committed say But low sheet right? to before short on in We're strategic. will into about long to I it, our it supply, make market structure that's for we record long-term balance to like market on having fit supply, We're want said allow but a certainly great term, scale it. doing tough term, deliver has that's been experimentation single that. continue consistently connecting low market this evolve for sure marketplace challenging. year X Marketplace a sellers, to a that we would the remain we against

Operator

America. of Next of Nagle of question Curtis comes the line from Bank

Curtis Nagle

should we would Assuming operating one I in guess in given And should something expenses marketing $XXX -- $XX think a there's, right accounted expenses in little the to operating million higher maybe about how like 'XX? is. think, be think Positive delta costs? first bit that? quarterly about guess terms Or adjusted What way above the what's a million that I that that? for the see. in be I the XQ. Let's of

Christy Schwartz

Thank you Christy. it's Curtis, for question. the

for realize to million half the from fourth and to biggest in allowed a our just make cost performance QX to and million expect We $XXX XQ the in and of be And advertising, of some we it's the as saving is operations. we bump of us continued increasing execution to unpack continue progress million. our $XX that throughout the us teams initiatives. from reramping, versus saw that other change, -- continuing marketing XQ to strong We quarter, to is timing guided about hiring guidance that year. half to some our out is $XXX And of QX QX the meaningful which increase to we're the roughly P&L. the smooth So reflection from

Curtis Nagle

guys sort marketing, that for the Super of staying one for be perhaps Like the marketing the year. offers about Maybe done, So people And the big with metrics this week? helpful. really ad a of really on guess this it made shot? year? would have to like of or that of and plans I the That's rest kind a the right? post just love Okay. is Bowl any push traffic of terms like lift first you right? in Is I that obviously you can't indicative inquiring hear in

Carrie Wheeler

a Curtis, it's mix marketing Are asking you Carrie. question?

Curtis Nagle

question Well, Super That's just your marketing. Bowl very splashy ad, you was, the of brand first right, so a of had point right? form

of that again, brand kind that So is ramp-up, in of to a of see talking indicative about you for you in the of do then in the as rest just kind terms response first that been marketing -- we've and how big just what And year. right, of from do about week think the ad?

Carrie Wheeler

I Super creative discipline, of year didn't actually were our you Bowl to ad buy has not know, spending... We all to Yes. marketing as mean We as team. a we be -- cost this a been clear. credit

Curtis Nagle

Fair enough.

Okay.

Carrie Wheeler

we and Super be before and job we live of putting to half and we a around a Bowl the part did the in game, and us had I did team Atlanta. lot the Yes, we did stuff the that of want Bowl in during And were ad -- in of a Okay. room. conversation, then Super way, time think part pre-run good by our of

to awareness year, a will in saw year, tell I'd of I efficient Bowl is of spreads boats big early -- how the found down think is Atlanta is. I was it's our that became marketing marketing too have of into some impact That But brand being is say would terms that. in less say last higher spend our definitely for impact where The what some spend, if the in pickup of about level, efficient. that leaned really I the And though, those. about spend evidence thing time all and you took channels, think lifts what response more substantially. we traffic us. specifically. this about were When one. we Super you one because We we So in think tell of think to brand mean, we

and finding spend increases all that brand across increased And had our So we we're something lower though even our actually year, awareness, conversion spend, maintained proud avenues. brand of. we're really we actually, we last

partnerships, we'll continue from lean there's the efficient they're perspective, a very to cost into acquisition and customer then because And paid.

to creative this. should you more from So expect see

expect should You we're sure we but more the going making do to to it with brand, overall manage see envelope.

Operator

[Operator next Tomasello of line Our from Instructions] of the comes question KBW. Ryan

Ryan Tomasello

of more absolute you you rate be define if one an the the and generally how important is into accurate plays ramp volatility, a difference how statement? variables so, your volatility of on just volumes. necessarily rates. macro you between to if like downward And It there willingness is that in helpful can from that volatility, Is perspective if seems not if sense, it'd the level elaborate on focus but just versus a makes upward that rates

Dod Fraser

keeping on buyers Yes, impacts sidelines. and think cover rate volatility by that, really through market sellers happy Yes, overall the to the flows and Ryan. I

seen the seen see if supply So look I the numbers and where demand. our metrics that of rates and you come letter in the shareholder have it -- at on why you've well, you increases we can down think as you've and and back in that is

of the buyers, for balance really, demand. think care balance I sellers and us, least, so at supply about the we of and And most

in what see stay to that seen really where we've we've focused. And we're to leading year-to-date, seeing a the what sellers we seen on balance historically. so right And between what line that's with and based price relative now and buyers, stability we and and is continue

Ryan Tomasello

hit the capacity And then like borrowing hundred the capital sufficient the few down around shareholder from capacity to letter it And came just breakeven by targets. quarter-over-quarter. on language structure, you million looks the removed a

and you're floating just have as the Just capacity in commentary to that you to clarify capacity. second, bought into longer-term dip you And move the in billion that rate volume, higher-cost of the thinking especially back debt. about $XX beyond Obviously, converts. some how the

to Just convert. the any on updated thoughts there capital allocation

Dod Fraser

not any Yes. signal trying Certainly change. to

capital So the can on we current base, debt equity point. with we're our both ANI get breakeven and side, to comfortable that

this have much in this We are how and capacity COVID, capacity. like have. to we -- always you have us do modulating unused don't Lenders saw

and think capacity, I something working like the is we've reduce past. they've in to on, unused lenders for they and with been that been there our So us

that the near that our these And very think finance fixed full and term, about use focused the to I we facilities year. to fact for of the facilities term we're ability cash on comfortable really very have sort those on we through feel debt hand are business. our

And quite feel side. comfortable so the really capital on

I future of bit you out zoom buybacks year. -- we think about look, talk think note alluded there, last X don't we and obviously if did to, But as convertible we last about decisions. a sort capital you question your

We be capital on will always front. the opportunistic

Operator

comes of Our next Ng Goldman Sachs. from line question of Mike the

Michael Ng

in acquisitions? on any Is talk increasing a spending. spend, would why increase that just marketing there step-up spend. just if pace more said top flat about marketing could should because relationship assuming of of you see a OpEx of your sequentially? incremental bit earlier then And the spending. between regarding funnel marketing because a and your widen you only I is differently, wondering of I little had I'm that direct question of marketing acquisitions direct the benefits it was follow-up the and from pace of the

Carrie Wheeler

Carrie. it's Mike,

is marketing That's It's drive of we've to of be talking all right? and expense drive of that terms are to directly in story. will like I investment one. flat longer-term partnerships correlated, up advertising fuel a volumes. of first is the That definitely It's the not for and is the less awareness. about mean growth not advertising year. be but There acquisition brand going we're it's first QX. payoff and the like been part of fixed spend between things seeing how certainly, things XX% sequentially, brand all, So we in correlation half

So year. chunk you, always about that chunk just should biggest see half good to as get which for QX from quieter the we told That's the was of we the step-up for sellers marketing. half we'll the year, of very up up in that back biggest And to Christy but said, year is step a We're going part evaluate our the comfortable to to first the of have. tend of marketing We the that, be with -- in tend we're QX, of we the probably spend budget into what year. are the the quiet. because course

So given marketing our investment today, feel spreads we've are yes, -- good about we the where about sized. we feel good

Dod Fraser

One and added Carrie think I this -- point, alluded earlier. to

dollars. If you we business, through advertising think our flow spend about how things

in is offers in acquisition And contracts first so quarter. each month seen the uptick an and we've what

sequentially dollar through quarter. spend And as that in so we to the from really, impact closes which, the said, be to we expect is flows of first quarter, up second the

Operator

turn I Madam? Wheeler, for would closing back to the now conference remarks. CEO, Carrie like to

Carrie Wheeler

Thanks.

more the can hear us thank able to excited agile be in you in all, work a everyone, to Hopefully, XXXX to and for just done be We've and today. fashion. sustainable we're about beyond. business hard of I how want you, up XXXX rescale set say to be to from us. the joining for leaner, First we're

if. not when, said, I As

you. execution, XXXX, with heading be to deploying same principles, we'll forward Thank into speaking We're looking the results. quarter. focus, you next operating So

Operator

This Thank concludes conference participating. today's for call. you

may You now disconnect.

Opendoor (OPEN) 15 Feb 242023 Q4 Earnings call transcript