OPAD - Earnings call transcript Q3 2021

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Operator

Hello, and welcome to the Offerpad Third Quarter 2021 Conference Call. My name is Brica, and I'll be today's call operator.

Following the presentation today, we will have a Q&A session. [Operator Instructions] I'll now turn the call over to Stefanie Layton, Senior Director of Investor Relations at Offerpad. Stephanie, please go ahead.

Stefanie Layton

afternoon, good and you, everyone. Thank Solutions Welcome XXXX call. quarter to Offerpad earnings third

Officer, and and here me Chairman Chief Brian Burnett with Our Executive today. are Mike Bair; Officer, Chief Financial

today Reform Act XXXX. as call During forward-looking of will Private Litigation the statements the Securities defined management in make

management to as items well and turn our EBITDA. call and under earnings The and are in interest, margin, release after measures. today's the comparable profit about expectations. non-GAAP release other On in metrics Forward-looking on are heading for exclude on quarter the call third makes margin XX, factors as a US financial These alter Offerpad’s Securities will Exchange website the contribution be XX, Form by the contribution financial earnings business financial and Exchange described new Securities to otherwise. certain measures, not management's as of relating quarterly September adjusted and the the to result Offerpad loss, to refer report staples the XX-Q differ and discussed Commission the significantly Commission. events to over Offerpad XX-Q or months statements or future refer on/or GAAP measures profit could Offerpad’s net intend including certain filings risks, law, statements, as our available events non-GAAP adjusted investor.offerpad.com. update the of reconciliations required non-GAAP measures November of XXXX on with applicable forward-looking subsequent uncertain the Brian. whether filed from inherently report and ended now I'll in XXXX Please three uncertainties information, Except XXXX and company's to Form at with does to quarterly

Brian Bair

be also public exceptional going quarter will forward, you I to dynamics year strategy to during our Michael will of to details excited financial about share we with the will today. seeing expectations. Thank our XXXX share progress speak company. first as about results speaking full great cover some a the quarter all I'm and It's more made industry. I you, we're Stefanie. third the our market in and

apart and Offerpad, industry. the strategy we've business experience created flexible model in any cycle. set to model adapt us business from a others Our In real estate in designed

bundle centered provides Our seeks This as customer solution to business such customizable extends options a solution also to the access and services easy service centric individuals transaction center for It model full to for and buying other provide rewards. to beyond selling create approach provide title mortgage, homeowners. solutions.

offer are Our is needs center multiple our approach engagements EXPRESS with where margins. platform. expand creates growth, turn diversified examples FLEX needs. solution our best to variety our customer opportunity services and their which of each customers The cash end-to-end for our in a can can This the choose, and increase homeowner solution listing address great for

existing expanding the strategy to we platform currently ancillary Our grow by offer. into services and increasing markets, is building in our penetration new markets our

disciplined and manner balances long-term increasing share achieving is focus market that with rapidly responsible profitability. goal on a growing our Our in of sustainable

supported by the ability underwriting anticipate has in deep led expertise market what We and for track I'm team's and market and this our for account and our record conditions, is with combine depth actual through changes and in sales our believe data XXXX half vast in market. each changing of estimated very accurately proven Offerpad to less from achieved we've local estate apart. this us changing launched our between strong the real real ultimately to We for. our aggregate those technology time that This first approach Our estate year, estimating than conditions. a adapt expertise knowledge variance proud will sets to prices. real anticipate better we analytics X% account to estate homes and our to sell an underwriting rigorous for local prices

assessing ensure team report, is teams local We from dynamics. mortgage then market rates market address in projecting, addition data weekly reviewed our to are and automated used an by adjust in anticipated This income data and changes adjusting leadership process is our as to proprietary increasing individual decreasing underwriting household such risk. underwriting to summarizing settlement analytics market insight our information our and regarding is and example great fluctuations, for and comes interest our continuously algorithm real-time A conditions. appropriately in to from of or

included approach, and estate expertise solution real way is model, estate transforming our our deep for differentiated experience our an more growth, sell residential real customers, center for strategy provides to easier diversified the and Our a efficient home. buy discipline

speak the this our Our quarter seen success we team's to financial execute. results are ability to already from

Columbus, new with Columbia, launched October. Indianapolis, Kansas Louis, four markets, third City the we During St. launched Ohio in quarter, and

and combined, we As XXXX, new add total of a markets. nearly to the launched to markets we allowing operate have expect X,XXX of today, across in country. us towns new cities XX XXXX Between markets in seven in approximately and XX XXXX

receive customer home to allows our home obtaining Offerpad and buying ancillary loan third XX and markets also mix discounts save rewards By we customers home customers. Since this services by We Offerpad customers our with out services offering. our utilized both program. to their expanded in quarter, rewards, to product of increase XX Offerpad multiple markets this engagement a those of have money, and a when particular selling include bundle bundling launching customers loans. the with in in

our particular history, impacting adjusted have finish sale renovating renovation in example In by to on experienced are the of particular scope hottest strategy caused recognize real appliance homes our basis. by and address of driven a year and markets home-by-home, like exposure, can to from To we estate in While are expectations, quarters home three key mitigate many plans one have the their lingering supply adjusting recent part of home, ability acquisition chain adjustments adjusted exceeded our made to our challenges supplies the listing also there the has particular, this the pandemic. we've to limit society constraints. first This by sell. a We've of ensure timely where for market-by-market backordered the for our strategy our purchasing prevent acquisition renovations. a we

on X to this Even XX to We limit XX, able have expansion, market. average, to with been as the constraints XXXX. of time supply days chain from the delays additional depending on September about

recruiting our Day at than the Our average time X%. from also And acquisition inventory target. in XXX aware than of new more remained broader largely below We're our our remained been talent challenges XXX the nearly low successful our and we At all labor present have crews. renovation Offerpad, owns functions, to market. to with in markets less across sell limited days, challenges attracting of

to advantage. members be for an to team tightens. at members new strategy our renovation top continues the Our Even pool employ

bringing quarter size XXX more of alone, half average the In new ability Our industry, year-to-year rate our the by turnover strength construction demonstrating our to strong. employees. XX%, new total rate, third XXX the remains our hired in members. less we than of we the team culture. the within the more XXXX, our team attract than to is increased In XXXX our renovation talent turnover team August than teams Company-wide,

adaptability mitigating immune While the proven facing, our challenges environment. in has uncertainties macro approach invaluable and the currently flexibility, many are the present differentiated to we're not in

Looking expect in forward, through and appreciation price broader real market year normalize estate we this continue home XXXX. the the of to including will remainder

control buying XX over high the is With of the platform apparent to a a the a benefits One become cooler timing of take the market where sell the days of home. offer. cash advantages and of can plus showings transaction model a more the traditional in no

types center achieving value. team cycles confident all has we tech-enabled in adapt real summary, our disciplined estate model, long profitability differentiated and our strategy deep and shareholder forward. believe of term to to sustainable key Our and growth are experience expertise solution platform and delivering navigating our going In we are ability market

I'm Our Mike. the to to sell we already and simpler customers. we I'll our distinctive execute exceptional over have as more grow continue home will and turn goals. confident, and bring buy to way in to proven rapidly effective call a team now qualities meeting

Mike Burnett

Today, to financial renovations approach XXXX regarding operating economics and financial provide provide unit additional cover regarding results, also details guidance. will I our information update quarter our Brian. year share and our to XXXX third and Thanks, full an underwriting process, our

generated and During this our $XX.X The our of positive marks exceptionally record adjusted quarter revenue by our EBITDA strong quarter mark-to-market of generated $XXX exceeded revenue range in million with $XX.X million $X.X EBITDA adjusted adjusted third million. million. acquisitions. million of number of we as million, record warrant $XX.X business EBITDA the quarter and high-end year-to-date of supernova. guidance of by a of and record number quarter, a homes the of the produce $XX.X combination record third our fourth We revenue the $XX the of loss net profit high-end liability consecutive value exceeded to quarter gross third guidance non-cash a charge we've includes our assumed million of we sold, This reported on

adjustment to non-cash continue this the quarter valuation will are each outstanding. record that We warrants

an charge, to adjusted $X quarter of net the non-cash loss million nearly those our third of compared million, Excluding $X.X was improvement XXXX.

continued homes after acquired were quarter our in profit sold, home and for year-over-year unit strength as by growth Our well supported strong per home evidenced continued the a interest as contribution third in as increase results XX% sold. our in economics, by

XXX% due impacted quarter this slowdown seven and by acquired X,XXX the pandemic part was This increase which by offers opened sequential to QX our the QX over for XX% in a volume homes, Request conditions. XXXX, and of the a geographic acquisition we new increasing, is year. demand negatively from markets caused we increase

are value accuracy our driven components maintaining to positive in margins. by investments expanding underwriting The contribution addition greater market In to and our our marketing, to proposition. acquisitions penetration, consumer increased key process awareness and of

and those ancillary on efficiencies, level us is are mitigates risk unit underwriting projected each the process our in based in underwriting comprehensive into light underwrite automation, return technology our This models dynamics and incorporate and process approach supporting incorporated touch manner. high based We assessments. allow a in The process allows a We we underwriting dynamics, of individual in-house to navigating enough flexible asset mix homes estate and combines Our of experts. of believe advanced level on process specific segment moderating markets, such valuation leading home for real The underwriting risk account And to components the offerings. maintain a is price service our addition diversity local market to our accuracy from and unique perspective on economics as our expertise technologies, highly to of a risk. to shifts to investment market is improved of powered even that markets. geographic for accuracy changes designed which estate in of proactively the while our drives appreciation. real scalable underwriting

is critical the in our process. Another renovations business element model

Our internal chain supply teams and exclusive constraints with talent nearly specialty despite executing country and across contractors has industry-wide the to allowed addressed. continue our the renovations labor Brian numerous relationships

and by of appetite in-house talent move Our sizes creating jobs, processes multiple our projects logistics impacts larger different of sizes varying internal allow on efficiency. directly Box simultaneously Buy financial teams with and of also an performance between take to combination our projects to maximum types systems a and renovation managing opportunity. The

additional with able many our to or less internal renovation navigate a paired structure broader scope consistency of larger specialty renovation projects We relationships allowing provides our because to with team have and traditional predictability, contractors projects. us confidently undertake robust control, been

Our home fee, increased transaction support investment service supporting to In increased the our value renovations services to our our margins. the on value, manage return all price and sustainable efficiently goal stream profitability. of additional an to proven appreciation, ancillary and ability overall long-term renovation creates model, contribute

XXX% X,XXX third record a increase XXXX over sequential the a sold quarter of the quarter. XX% we quarter, second and This representing a increase over homes,

buying Our results. was by homes renovating financial reinforced the right homes selling track record at quarter's and profitably this for price efficiently

homes home XXXX. million as per the our profitability profit then metrics. and and quarter to calculating in more XXX% compared third the prior to to third the QX conservatively, to prior increased quarter, for XX.X% XX% underwriting Gross quarter at economics. unit in current compared came metric the the to year margin the $XX profit when we Contribution compared uncertainty to in the quarter, In Turning to Gross for is interest increased the QX conditions. X.X% account we fewer year. metric for $XX,XXX due efficiency were increased to this use pandemic after numbers of home, in

were XXXX augmented three economics the strong unit quarters levels by of Our price market unusually the home first in of appreciation. through form of tailwinds high

of call guidance, XXXX and second we with appreciation normalize As the to in QX profit to and our estate assumption has close is markets. Consistent in QX moderate continuously and operating as XXXX. We price business our each head discussed begun expected this quarter, level prior of constantly incorporated into margin second and into we quarter out adapt and from the the our real changing environment to gross across sequentially our as assumptions both expectations. contribution metrics line declined the navigate geographic to adjust we with home our

the basis improved as structure, again of exercise to grow strong showing Because to revenue. we base this quarter, our support approach, while costs ability initiatives. we overall to demonstrated continue year-over-year, of our cost investments cost making strategy. growth XXX operating revenue our We prudent a operating with Total value once discipline X.X% our our our as to of have this growth percent points leverage

debt September, and $XXX Turning facility million. this of total base, aggregate increasing our completed capacity mezzanine third lender is increased total these by capacity to senior our a since million over we credit a our year. beginning over to Through borrowing to while our structure, the secured our loan, of capital senior $X sources borrowing billion $XXX of diversifying capacity in

improved capital rapidly, discipline plan. effectively growing capital We substantially focused and position of proactive to on and long-term and precision price growth has further our our our are and the will shareholder thoughtful confident we financial efficiency that our us structure expand we to our continue While execution, execute management, remain improve to competitively operational access against and deliver business as value.

Lastly, we our I'm full are our pleased that XXXX once increasing again. update as outlook, year to share guidance we

with Specifically, midpoint increase million X,XXX of range. selling an XXX sold the revenue along we in average about prices, an midpoint driving units. number for of This, by increase range homes to our increase to our the is the of $XXX of

midpoint profitable topline increase the demonstrating of full million generating of midpoint the by execution Additionally, our the EBITDA adjusted for profit the adjusted $XX.X of our setting expectation year. $X of our of range growth, positive by million increase we EBITDA gross range the and

reflecting of our execution of HPA estate of this continue, our first our In the position operational the operating our company question-and-answer to the third the the full We quarter offsetting residential nearly begin the $X of in as expect now call model the quarter, normalization the from turn strength year fourth results quarters the capitalize differentiated impact business the session. well quarter and to expenses while success public through higher conclusion, environment. highlight first three costs the I'll partially on over the and real operator to in growth market. potential trillion to of

Operator

Thill now first is phone Thank The you. [Operator session Instructions] the The question-and-answer from question line Brent open. on Jefferies. of

Brent, So. go ahead. please

Brent Thill

decision to just And follow-up maybe good obviously continuing us about -- the market And those from just walk through Thank leave. kind why really view your to a talk bit in you see in profitability dynamics? a bottom-line? dynamics and for you on the overall such your walk you're through you of as of the you. if Brian, little upside maybe can industry good overall to kind there levers Mike, the of Can

Brian Bair

what to want think the ago, Yes, about iBuying, seen to in more hey their we've coming an until change more first. for starting -- pendulum up But, the tell I'll up I'll a was there I iBuyer. journey and week jump people Brian, in you in

it out down company. from to I've for operations think a I This the business this and chat people, news technology what is much execution shocking is as the is. tried a of lot logistics rooftops was comes I a years as to and saying it keep real came so, to And is, and but as that logistics estate

And of was in to that about. a most eight last is we've execution Overall six so a seen from than be months less price any like seeing months which markets; talked side, most supply going you're We're to in key. the the lack supply. two appreciation, of business, normalize still market home starting we've markets to is nationally see our massive what

you price to fairly home going so instead on one home. home, if market the quality right sell, XX getting might quickly, and and two it's a get it's sell going or So good offers, to it's of offers that on you

So overall the strong. been strength of is the market

think every control I think consumer can we're option to for us this more the as everyday, don't far customers and month that as this I seeing this the certainty. you model, is out more reach argue and anyone wanting best

going. So the we're and very where bullish on industry

Mike Burnett

this is Mike. Yeah,

we've on see cooling time last nice of a we the knew And time we properties, were we creating part a and levers retail I aged and into managing that as doing also least, eye of inventory keeping inventory In side. good portfolio what We the the of this to conditions. on terms we months. and over of suspected well. of that acquired the keeping line in of an of profitability, that a lot that accordingly. managing spent underwrote going lot the a a spent on job and we’ve solid call We our say At job underwrite would done three year as going latter some

I'm of through very terms standpoint operating the the as OpEx pleased as the costs with gone of In to contain quarter. business, been as expense side an we've from one well that well the thing we've able

we’ve off percent it's for gathering, the think sales I to except increased in really the that of we're each and marketing we paid lines where of So showing us. marketing those basis, as on increases and invest continue for we're a metrics better operating top-line and on revenue year-over-year definitely investment revenue

Brent Thill

Great. Thank you.

Operator

the question Boone line now from Andrew Securities. We have JMP Brent. you, the from Thank on next

you're ahead go ready. when please Andrew, So

Andrew Boone

thanks guys, taking Two Hi, please. questions. for my

The response you first, to I hear as from I'd that feed X% summer. this love guys you're move seeing any think a to consumers

seeing you and and your in adoption? of headwinds And there? are consumer Thanks two, everything the and been just what you're so you combating if so of on talk seeing in you that's challenge whether labor number terms plans else, much. guys hiring just just market, And think just about about that then the terms can any

Brian Bair

been This the Yeah. of internalize what second far labor, first. take seeing we we're those of -- is And it's Yeah, lot the in things. helpful markets, those very as operations. I'll that supply, a as kind one very,

teams renovation foreman, very much, are so project And a we're Offerpads, markets of with from helpful employees the renovation swinging managers, Our a that are that what that's been helpful. director, getting so of we're employees people that's buying. lot also they and of the very Offerpads, down hammers smart

buy For there's example, certain ourselves because it's it's We're time, down longer Again, let's getting a slow shortage that, selling and not what that every market, Windows. on technology and execute having hold of a or is in and we're We a they're and if trouble to we're be with renovating sure XXX in buying, we'd one through highly get smart window make to want going data our going to like focused on days. metrics. smart. obviously process, those

that. that's So

we're adaption And variation testing, had too home appreciation – of we to that that seen balance price to during got are the – a the low to the price still it's the trying we're early compared On tell now. during we now the little what different home fees offers appreciation, fee, because a that the tailwind and testing it's obviously, with fee we to that right to things It's have lot. good fee. risk

that sign I well, of, So lot and we're as more we're Like coming seeing and I is more a said, good. people think great. and of are which contracts executing seeing lot overall people a adoptions been

Andrew Boone

Great. Thank you, guys.

Operator

Ben Thank Cantor We from your now Sir, you, ahead, Andrew. opened have Sherlund I’ve please Fitzgerald. question a of go line.

Unidentified Analyst

the is This return. guys. [ph] on Cantor Ben Sherlund. on great from Clarke Killian Hey, Congrats

turnaround? speed You're change think speak you. as And the of in you days. of as a perspective, how really that market timeline that XX% Thank than at the from stabilizes? less Can turnaround speed what's that impressed your might the you homes follow-up, that do to XXX around housing driving

Brian Bair

Yeah.

– So that sauce mean, beginning had our on that –that we've sure of is really I the secret that that's Offerpad, very that making X,XXX this I've said model something entire the this eye since you going for you long easiest buy do the overpay, profitable that thing to for and it's but home you'll buy times, you not time, is own you. and homes, home a be if a

out we that sure and markets our with comes also markets, we management of then every data hitting – our our have And that of it anticipating. that analytics, So have making we through our focused with asset dedicated one are directors our are game houses ground that want those but teams. highly they're turn on we're really hitting and times and those

expect And write way so a a little wanting we different shorter. some with homes bit little the also hold segmentations is underwrite we to to some we – that and longer

minute – is of we TTC, we performs time. we're the to home, the call everything the So home sell cash and right sure core that we the what making that really executing minute that home, from do own time in based to the upon we

credit I recently And out seen with even challenges issues with supply that, team. so, the to a that lot of the our – with give of some there, we've

of standpoint, now supplies, market, of been, – well, that's the hitting again, I is we're from. where portfolio. from business core where this of very, average and on over to going certain that mean, across only supply and what its very the that's know will We in were or times. weekly, we're still success portfolio as come on. that own think – But focused and days we we our for meet renovation with low I a we general, on days XXX XXX that, the maybe up from of market challenges Each homes that's five entire have each days have

Unidentified Analyst

our questions. Thanks Okay. taking Great. really That's helpful. for

Brian Bair

soon. with you great to you joining look Awesome, forward very positive you results And well, thank Sure. It's the Thank everyone. call all the seeing today. with for much. we sharing everyone

Operator

Thank you again does call. Thank you. conclude This joining. all, for today’s

You may your now disconnect lines.

Offerpad Solutions (OPAD) 11 Nov 212021 Q3 Earnings call transcript