OPEN - Earnings call transcript Q1 2024 | Opendoor Technologies Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Opendoor Technologies First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Kimberly Niehaus, Investor Relations. Please go ahead.

Kimberly Niehaus

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

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

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

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

as believes measures to financial contains are discussion following to company's company certain investors non-GAAP measurements non-GAAP financial The operational the performance. references evaluate these financial useful The measures. supplemental to

see of financial non-GAAP investor.opendoor.com. website GAAP directly most comparable each to metric, reconciliation a measures the our of please at For these

of to Opendoor. I Wheeler, Officer Executive over Chief will now turn Carrie the call

Carrie Wheeler

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

quarter operating commitment first execution the the outlined in key year: reflects performance at the X to results. we our and Our the beginning focus, of principles

remains we profitable business adjusted Our the our building towards of as net growth Star rescaling towards business sustained drive income. future positive a North and

to We in with contribution are within on this making and along ahead our our all acquisitions quarter expectations. EBITDA path X% XXXX Further, of revenue, coming contribution deliver progress results track profit ramp and margin first each target X%. to of quarter remain year-on-year we meaningfully adjusted in range

doubled homes over And marks old Contribution In contribution Notably, acquisition first seventh health XX quarter, our range, target of margin homes seasons was our year-over-year. economics consecutive the that contribution across X%. our nearly generated our margin unit volumes X.X%. quarter demonstrating the this book the we has the excluding above margin was approximately book, our annual market or and environments. within margin new from of

benefit We that of our XXXX in channels. expansion growth our partnership acquisition from will expect further volume

Opendoor an eXp learn amongst end of request continue partnership with Realty went provide another Opendoor. the properties. agents This offer on February, cash for to partnership the the eXp at and sellers way example, their awareness agents For brand working qualifying live, benefits of build enabling Realty's and our for to clients our to easily should about

Association the transact giving market. of on believe by industry in change represents for this details how Realtors year, an positive settlement. on more transparency We important settlement to the began housing this they Early and emerge National proposed consumers choice our

term, In our expect settlement have on to the positive the a near we to impact neutral business.

homes. we revenue does commissions not which us resell are pay rather, from our to a rely on to us our from paid before, those buyers' cost heard As commissions model earning when today, you've we business agents,

consumers sellers, the Over and be transaction our margin. cost saying And form more cash able will more back term, customers will pass to which if Opendoor for yes same to generate means lower decline, the the these lower may the savings we settlement commissions long believe in do costs. of drive spreads,

in that also through We this last transactions Opendoor for and buy commissions homes. transact more this benefit of how We they to consumers more instead to spent decade the the platform may building believe MLS. stands future. on encourage as which directly, settlement We could result consumers including rethink as decrease, the listing sell believe Opendoor

when as And in off major to of how a we life's most about to industry we as We're in important are and positioned the a real digital a consumers has are ramp time during the with transactions. largest more home, and sell certain the offering a a to start We're potential residential for in or and thinking simple, volumes one empowering well how during fashion. platform control consumers XXXX transparent very estate buy strong undergo sustainable durable our a change transactions.

review results now guidance. financial Christy will our and

Christy Schwartz

you, Thank Carrie.

with guidance a This rates as for acquisition We a typical represents quarter, this results Our year. pickup the commitment end disciplined strong driven billion our range. our high operating XX% exceeding business, our unit of volume reflect growth the cost year sequential revenue, first last quarter $X.X with of generating delivered management. of and in and revenue to economics is ongoing in in rescaling the increase by time coinciding first clearance

On end by of coupled quarter made than as the in we to our acquisition the reductions there guidance points of sequentially basis sales. partnership due up homes contribution channels. implied margin spread XXX more side, margin book were of added home fewer XXXX, old X.X% the first contributions year, delivered improved XX% ahead first last primarily first from purchased in range. We Contribution throughout with our the versus high quarter, X,XXX quarter,

contribution X% margin of our within X%. continue We expect target full annual to to year range

of nearly $XXX guidance million. the XX% spend quarter, marketing from fourth sequentially up our the $XXX expenses quarter million and by operating totaled driven below Adjusted XXXX, million increased $XX of for of in

of high loss was the loss EBITDA fourth 'XX. million guidance outperforming EBITDA end from and adjusted Finally, range of in our million, quarter $XX improvement $XX an an the of adjusted

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

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

at-the-market morning, which X next us Additionally, established market transactions this we to equity open sell through the up ATM allows or in to $XXX within million program, an years.

discipline. with income feel XXXX, in we $XXX balance we achieving note demonstrated shareholders' towards generated repurchases are We equity, net are our We convertible and making as sheet progress adjusted which over our of positive managing with million ensure putting utilizing and cost program fund to us the provides flexibility ATM be patient place we of are need that to optimizing to growth future this plan our in the capital. it. prudent in we should We

$X.X of and quarter adjusted between a and and $XX million, ahead, billion revenue profit expect X.X% and $XX $XX be EBITDA to contribution billion, we million between to contribution million million. Looking second between implies $X.X margin X.X%, loss our $XX which

expenses be approximately We to $XXX expect operating adjusted million.

in latter of seasonality over second tailwinds marketing and home the spend, Additionally, contracts This, of we with result homes purchases the quarter. acquisition continued quarter. marketing of have should in uptick part alongside our X,XXX result increased coupled as the seen in in an a spend

Given quarter, on be the our peak flat expect the selling we acquisitions or during lower can basis sequential season the in second modestly to quarter. a third

year. first the for quarterly trough quarter should be this purchases the However,

basis execution the our range decrease and with adjusted a while net year-over-year remain losses during pleased the increase delivering are We to quarter. XXXX, should our first income on operating which for margin annual our quarter contribution each in track acquisitions efficiently, in year. on We substantially target

to up line call operator turn over to like now to the I'd questions. the for the open

Operator

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

Dae Lee

I have X.

appreciate around rate week So -- those change acquisition through which one, outlook forward. the I how like going And picked going clearance rate, the -- the up for the color that But curious kind that, of should macro your year. this mortgage again expectations for I after conditions guess forward? impact your first

Dod Fraser

Sure, Dae. It's Dod. start. Happy to

the for XX out months if last we input reiterating set most we the -- for to have and is what the are in of zoom perspective macro is how sort letter, in of a been think we the and manage key and us in plus on on terms how really I -- growth continued we focused said from what stability. And margins. and you that are price spreads

continue we to demand. of so see balance And supply and a

pieces volumes this of We added tailwind going impacts points half is year, that one shareholder for the this that be terms in letter how of the and of sorry, -- and release even around up. should or market business in the quarter, do And spreads. with rate year of transaction a actually the think that some we the back seasonality

is And for the year, spread really it rest as of typically this to primary time we is spreads, the of for so that carry the but add-on right volume increase changes to now, year. do relates driver the have happy the trajectory which of

Carrie Wheeler

To put acquisitions in context.

quarter. year-on-year. almost as a QX, year-on-year double QX year-on-year, remarks, year-on-year sorry, up over guide it, guide And So which be up we for -- the in said XX% then doubled would we XX% the call our up, -- doubled first in acquisitions in

Dae. a So headwind. for the It's certainly, macro has tailwind not been a us, been

And QX, really really we're with into terms the X%, feeding guide ended that's we're in feel growth new But that was market in about contracts in buy listings and and only of with up of showed control, XX% like quarter. a box good fact where pleased we growth. the quarter what in our the in solid sequentially XX% terms acquisition QX feels focusing where in up acquisition for a we

So we're gains proof this share in to acquisition of and going just as momentum. we're control doing to in we what moment, it's can and terms focus what on

Dae Lee

then Okay. a Great. And as follow-up.

increase your moderate adjusted OpEx mostly more quarter first much like was sequentially hiring. expected, as an as to due Sounds

plan? So more does moderate hiring was because with -- was according like think your is can was less? guys two, on change volume? view that Or because you do you going mean ramp to And in guess, twofold, marketing more that a there the I

Christy Schwartz

This Thanks question, Dave. for is the here. Christy

reminder, our marketing, variable our SG&A. of X our is fixed pieces: So main as costs, a adjusted our OpEx composed

refine. out and Our to are make we our fixed and of costs system to continuing costs, take meaningful continuing reductions

that of is seeing you're in what outperformance. the some And

the increase vary went increases expect our did we the will remainder to of with marketing, spend the It we that and part variable it marketing up volumes. for we then our had is quarter-over-quarter, as $XX Our million And don't SG&A year. meaningful indicated.

so And was to for and is QX, QX. guided million in $XXX $XXX it we've million where

Operator

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

Ygal Arounian

all? here, strategy the thinking but the following on And like strategy me start aligning first heart change kind spike on to on up sounds let rates. rate acquisition it recent question with your just no the -- thinking of thinking buying the about selling Just with really of and market impacting or kind what's at that how you're maybe if path, the and expansion season, about you're And current just an -- box is how update then on and of buy that's that. strategy and your things

Carrie Wheeler

Hey, first Carrie. say question? It's it seasonality bit quite I wasn't a a or... your just you on Can Ygal. question Is more little brand that. and following

Ygal Arounian

little yes, Well, buying that's into part market we've you're you're if of increase selling that's the the been expectations meaningful And the with and rates, key of It couple heart market in mortgage if spike thinking over more past but -- sounds just that season. recent a has And how part the soften that, curious and seen things? on in key impacting seasonal consideration. any like the a of the about any not, the coinciding bit the taking pretty weeks it's might market? the the core that of of or rate

Carrie Wheeler

we're that watching certainly, mean and in do will of this bit market little We time those in we signals kind telling start is trending we're the us expect spring increase I on year all taking the be time, terms we we're is of what did in the Yes. the of prices. all closely and shareholder rates in clearance a very season. bit spreads where selling letter the a offering that to the today sold post because homes about talk

less have slightly of them So reflected and spreads. in those to we'd to homes gain a higher expect

to down those certainly add coming given And make Dod, do every every reflecting that? want the may So increases. are day, team. be with recent adjustments are week what pipe, rate to we the we on you

Dod Fraser

Yes.

although from on the there's perspective. think a is of a I see add key slight rate and listing some to of charts on in in listing change terms And sort acquisition which shareholder new only letter, we're of observing if sort of lag input of there, we look you thing what really the really the changes haven't you at can recent the the a our volumes, is back of seen targets. meaningful the to the back driver

Ygal Arounian

a helpful. thinking on detail on bit That's now? maybe about the should little this? how more offering, works. equity And ATM Okay. Why that? more Can you bit just be do color little a we of more it How

Dod Fraser

Yes. setting on just with balance start level where perspective. I are mean I I'd a think from we sheet

So can see capacity. $X.X capital, cash, we've financials, $X in as total you our over got from debt $X billion billion billion

So about against executing our base. current good capital -- with think we feel plan I very our business

next gives us years. ATM over the to raise equity the us X ability Really, for the opportunistically

to structured, they're at discount it's we that I And a a market, important. of fee so and do at how program. no think It's really market. there's lower X-year because

view business to that, ways as we get for fund growth. wanted but as of we we is really and tool a future out one So us there. could a to opportunistically This it toolkit many implement it

interesting. businesses post like there biotech, COVID. programs putting list a companies of REIT It's in these but actually place, growing capital-intensive are sector in the is These especially common very technology or

think has sort be. of people they Carvana how realize useful has Tesla Zillow one, has I can one. one,

repurchasing earlier, do $XXX year Christy's not the this be don't so quarter. use we ATM point in it patient equity. to immediately. the and to notes, plan We'll utilize we over last creating opportunistic this, million to plan were with And in We convertible

Operator

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

Nicholas Jones

I nice guess positive been of I mentioning a to net on last and income. the guess one path EBITDA few quarters. maybe over It's adjusted cadence

maybe the weak Are from to adjusted or not but the kind As we weaker year, throughout year maybe EBITDA, we kind And of of here? it path next year? of think is about as think on right we XQ of then being even confident kind you I year, are kind QX? of a of shaping rest quarter that can linear the guess, as a positive to get this maybe

Carrie Wheeler

substantially seen Hey, Nick, are what acquisitions level And we X% about the is reduce all XXXX. the this path increasing at for I are indicating What together losses good delivering system. to for our quarter is feel of that it's And margin within a we've on contribution Carrie. target. I'll that. we say X% we would that of in goes to high take year-on-year every

the you giving of guiding without kind business. is substantially fall good specifics said the on improve bottom in to So just EBITDA where that or we're to of to we're kind going about the line subsequent quarters, I path feeling of

Nicholas Jones

a Got Carrie. And Helpful. it. maybe higher-level question, then

ago, was the damages selling-and-buying urgency the kind that while ecosystem I look the that might think At said DOJ kind You NAR, Do level, mentioned complaints create MLS. I the settlement is of you of or and the starting some they and the the the a at be secular NAR of is original it to in there's that kind a taking a might NAR of with marketplace that bypass to think their the And a closer headlines dominance comments the MLS, Opendoor? long-term are there your this for high think wane? look in you potentially whatever, folks tailwind this XXX-plus that sense potentially of experience. start years

Carrie Wheeler

choice want of in with is the all they how and Opendoor. good comments. consumers, in to I a terms question. Like is transparency giving to just we engage that for good this of I all, of an for more my that's hand and positive, anything about good And agent. homebuyers 's And want It's this agency Yes. first mean think consumers. net clarify for

off the so it's The reason of what's is set in is to this platform. I need the available been wasn't of going talking up the understand I about don't or homebuyers sellers, sale. really I an we think context I We MLS. in I can about talk I it need thing because dial agent well advice some great this direct Or Everyone that. decide MLS There's this in get. we're because think But democratic. a amount to have kind homes can may certain transaction. for says

place can e-commerce-like a your can and is directly only Opendoor. Like the place with home The you sell transaction only the only today you home directly have the in an buy platform we industry. direct

advantage So no matter estate of how we're real that. the well to set take up evolves, ecosystem really

to want get buyer the with forehand, what do if to consumer for about whatever right to do to want homes. it, And touring representation want our including like agreement agent come they talk having and you there's give is We them still total of could they in to a them. tour agency way lots an

the So my but about go the comments off really about supportive were of enabling to like MLS. We're not consumers MLS, direct.

Operator

comes from the Oppenheimer. with Helfstein Our next question line Jason of

Charles Larkin

is This on Chad for Jason.

slightly but nice under purchased homes the sequentially, a So there contract. increase in homes sequential were was down

just -- And that something back So confidence just going on lean Or giving Is to what's into I that's seasonality? more then normal is like there? there anything you another have buying? just one.

Carrie Wheeler

about mean I slowed enough, the their said we a home. and great the market Yes. of also they offer I customer when close deal choice has

on the another growth because year-over-year like focus close may contract think, may to quarter. quarter showing. about, the focus I quarter-to-quarter in like in proposing the one on slip -- I This So and we're be less the is for close

point, versus contracts of really Q Chad, nice the quarter XX% had the of like nice your of end with we to like QX. in really And a number

I X,XXX the down is what guess a is So -- momentum, going make really slightly I too I wouldn't strong feeds the wouldn't into guide feeds much of QX. and momentum QX. too in through that quarter, just versus I'm over what for into acquisitions make really nice contract saying that

Charles Larkin

Yes. the there? then the run? enough. can just you long anything Fair eXp be that of kind And And partnership, how just on over share could meaningful else

Dod Fraser

give very Happy Yes. to early. a context It's little still there. more

So end. launch, February, we steady since just in in seeing but launched February. just weekly growth low sort of it's like We're

and the sort their the of eXp key agents into is think I really our has there So reach it agent network community. in XX,XXX piece broaden helps growing.

directly are The eXp about expansion of into And as and quite brand well their excited application we we're workflows. opportunities. actually product specific with the the understanding our embedded of sort so is

really it to made we so eXp And and our agents product. for utilize simple easy

earlier, back for we're and is the on This transparency to talking what said for side customers. Carrie option And when like their and of another they're going to choice customers. -- them

Operator

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

Ryan Tomasello

the comments seasonal Just trying through on volumes. different to purchase cadence of parse the

be I your on expect think sequentially XX shareholder volumes XQ remarks, in purchase prepared purchase to increase to that in Page to you actually you decline in letter, quarter. you the expecting every flat volumes say But modestly. said in are you

So clarify from volumes seasonality? am I be you just thinking about with And should that perspective, can something XQ then missing a we beyond commentary? normal there? And just seasonal QX, how

Dod Fraser

Yes.

talk Let and me it. parse

the versus I that is Ryan, distinct, to think question with the piece on think I year-over-year quarter-over-quarter XQ. specific your

increasing year-over-year, every So we're quarter.

in What in be say we X,XXX And letter did over is we quarter, the the slightly of second in quarter flat third first the also would lowest to the down quarter. year. have said the the then

quarter. So XQ the will above be first

around some headwinds great tailwinds and volumes got marketing but XQ of spreads. are you've tends some Given low got you've to how on where unfold, market and we market given sort spend,

that was the the Ryan. think is we quarter-over-quarter year-over-year what so -- distinction, were versus And I

Ryan Tomasello

the then, But think decline. scenario, commission could comparisons, suggest worse in a more to consensus NAR the extreme a just would folks of helpful. entertain Got most at more again, industry homebuyers That's international respect even the scenario Clearly, the from side. really and with, And least a on opinion, using something fewer you to expect terms compression be talk that. for maybe agents, substantially that settlements extreme Okay. rates I in moment, with to perhaps structure. listing

-- pivot where value again, relative all-in rates commissions. perhaps in it's prevailing guess, a lower a rate to of I proposition there model is is costs the just the terms in Opendoor rate terms transaction scenario, the and to providing there benchmark clearing of to needs entertain the commission that that is

Carrie Wheeler

we things. of get Well, a I guess that a is One you in transaction. something provide traditional couple can't

fall-through we traditional like open and provide that uncertainty the of houses, rate simplicity, listing. certainty, amount all friction no and on doing different. no So with listings, providing something goes incredible utmost spec, doing no very repairs We're utmost just no

traditional right? paying meet for the just to today, margin And and through that we -- in certainty of targets. now fee, -- a and there's simplicity have incremental to it's We our service an that's And charge provide. this the listing are we spread, part premium a premium for we're paying people spreads, that

that sorry, I fee more more think event in compression. -- the there is spread

think to I the across, that's trying bring Ryan. point you're

with have adjust there's incredible And which can worry and something at just is prop. a like why think a we're value we have of an our like converting will providing a ability is We such market. in lot don't I different, so reasonable continue lot a to the a price. that I we about to deliver when again, whether premium product it, there's high value, Because

buyer us. some a interim probably the as There be broker may ultimately, benefits extent said, it's the probably neutral. to pass-through. come down, we've It's commissions like To

question how market we'll fees post responds over to change will July, we'll real see kind. like, seller the be be So listing time. do and in respond how prepared the And

Operator

hand the call back closing over at And time. I'm Wheeler Carrie I'd currently this no to like to showing for questions further remarks.

Carrie Wheeler

our challenging today. you've the next pleased look everyone, are is can is for year. to market really we results. on housing further team joining sure, quarter. focused. but thanks, off well, you The driving are updating we and we are results progress And see Hopefully, this Just staying Hopefully, that executing kick to with for us you forward we heard

Operator

conference for participation. you today's concludes This your call. Thank

disconnect. now may You

Opendoor (OPEN) 2 May 242024 Q1 Earnings call transcript