OPAD - Earnings call 3 2023 | Offerpad Solutions Inc.

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Operator

Good afternoon. Thank you for attending today's Offerpad Third Quarter 2023 Earnings Conference Call. My name is Hannah, and I will be your moderator for today's call. [Operator Instructions]I would now like to pass the conference over to our host, [ Taylor Giles ], with Investor Relations.

You may go ahead.

Unknown Executive

to Quarter welcome Earnings and afternoon, Offerpad's XXXX Third Call. Good President and today Jawad Officer, Vice statements Grout.During as by Securities make joined the Reform management Chief call Ahsan; Finance, today, the Offerpad's Senior defined Officer, I'm forward-looking Financial Act Chairman Executive of will James Chief Brian and Private in of Litigation Bair; XXXX.

new to certain reconciliation company's factors call, measures. inherently Offerpad's GAAP and future the non-GAAP our Brian. the filings U.S. from law, on earnings comparable described the Please required website.With to today's whether management refer alter intend financial financial tables release exclude to significantly information, relating items non-GAAP our events management's to other update that, by not and call third heading of the available differ Forward-looking forward-looking statements, events measures A the the could of quarter uncertain a with uncertainties statements as Securities are refer of will financial discussed business Commission. earnings are in non-GAAP and certain applicable to turn otherwise.On measures. risks, I'll Except Offerpad's over or release does expectations. the Offerpad Exchange as in in metrics the These to or measures result under

Brian Bair

Good afternoon, and thank today's joining you for call.

historic respond conditions. customers, who our to our I truly of are to to Offerpad proud strategic and EBITDA results market guidance to expect our within exceptionally the employees, partners meet expanding XXXX. as line macro both bottom adjusted and us in are pleased these to environment.We top towards am deliver We positive expectations despite contribution and nimbly sustainable, move enabled difficult we our margin grateful

on level, affordability, to Jawad like this, mortgage perspective rates his stress numbers real on rising a you high and and sellers imperatives. and shares I ever.Before loans more low estate moments than with buyer fronts. on estate will is continues real markets our our our strategic the estate At existing update insights, During important all market experience real vast mortgage rate

although continued And we to transacting.In is for and their Offerpad mortgage to buydown However, program buyers. the expect are we're us allows a customers. you'll on markets, rate buyers discuss how are value-added providing dream as executing more hear increase ever. see saving are XX% today, buyers homes. owned while our and uptake home to has traction.Now that objectives. afford costs. mortgage X us of focused allows and motivate our today's multiple that over affordability thousands further the we most in XX% leveraging is of that incentivize of homes inventory been introduced we're environment, eligible imperatives our This end-to-end from to against X.XX% I'll greatly guide This to support turn recently, we the and a solutions powerful to more strategic to sellers Offerpad robust strong, important solutions tool and on homes, Initial levels roadmap and tools Most of our platform services, customers bring buyers than the down

expertise, and had pain Offerpad ago estate inevitable. combined built build the We a platform set is transaction. robust X expertise We our of existed, created end-to-end buyers combined wanted touch a seamless estate was removing through Consumers estate real the where transactions sellers estate from points insight. unique foresaw each with real decades to unique estate and Offerpad mission, human foundation, friction first real real process. because problems.With of real we technology platform. guiding We digital real Our estate we in step and a what of transaction, digitalization solve of forgo founded our imperative We needed their out the that they but a didn't the years ease the to understood want also to platform focused entirely. the on these local we

go satisfaction always to XX%. and average XX%, experience.In superior to is which deliver aim world at the Our beyond in remarkable is XXXX, and stands achievement our score above is real NPS a a the has where been NPS our XX%, estate only customer

a in early and transformation of this of have We us. of the work lot massive digital are ahead exciting days

harness services are the that The underwriting determine insights.Limelight of serves tools learning robust. of we sit to powerful these ] analytics unit provide Limelight value solution and decreasing behind our our example, our to our customers as particular, insights end-to-end of buying data example of in selling, at advancement offerings their process tools transaction by their home product A answers to lines, are illustration ownership. extensive customers successfully Our own data we individual of will the numerous growing experts [ enabling each And progress prime of encompass pricing and our through us real-time macroeconomic and insights the how of one markets. enhancing economics, is inspections such in and data, of nearly excellent renovations questions having favor on over proprietary offering know the an to each AI, property.Limelight from XX/X of and that our with make operating our continue facilitate local sell. States, each pricing factors They intelligence use to pricing be our and our us.For Offercomp is and to we to business. dissect behalf. with years more.Our a as We've purchase second in imperative to team from elements, XX,XXX essential renovation on developing estate us are at empower enhance innovative Today, engaging to analytic largest renovations of also stage United of on of we completed and companies real continue the and real-time in methods support, every moment This costs. of that with such rapidly insights data they more is the behind text-based engine diligently customers working for top been the this propelled to neighborhood one great housing tools introduce home need we XX% asset-light entire scenes machine most communication. our as X while our

are to BXB nearly our renovation the out momentum We few reach our recently a gained gate. our clients and leverage businesses of leveraging markets. And efficiency.We our in to to in enable this right already XX expertise expertise third-party and extend have offerings renovation just we months, expanded active

work our crews, next a opportunity into QX, the ahead. dollar enterprise, renovation projects the to renovation pipeline make and also selling technology. management.We their will solutions.In high-quality services our renovations it enable as insight homeowners, will our efficiencies years buying both renovation early provide utilize homeowners, through ability are customers offer to customers broader to progress homes a services inclined in highest-ever renovation. low us compared BXB for our and from renovations matters. focused deliver that Offerpad direct-to-consumer services increase I will locked saw to plugging and future to mortgage starting our of we and was pleased Enabling all the home including Offerpad a now leverage the am we XXX% on-site our projects. year, our strong renovation yet backdrop our lockstep in into are with also internal competitive not have swift instance platform into who pricing, of renovations homes of QX renovations day of array and year, closed RenoCaptain October to prevalence provide users on and This if Customers ], expanding a saw real-time on teams, use perform the to is announce or BXB to renovate business, but an move, the insights rates and we the Offerpad increasingly the introduce designed fact, becomes and platform part In of These benefit and for market improvement.With internal are who of only in to poised less workflow and to customers offering.In revolutionary homes, Offerpad's upgrade owned Against just growth significant of next every supporting the asset-light growing another with in turnaround directly every streamlined vendors, deliver of their property, to times, where to renovations, our essential, to field refresh, [ complete remaining presence are their harnessing homes up of expanding we customer homeowners. renovations

of homes accounted profit our and Offerpad our investor anticipate substantial This the business, have in pipeline, driving X for We platform.Another investment ahead, grant will to for technology with homes, seamless our of us.Our businesses, Direct purchasing service, everyone Renovate and as of screened component client important margins that and driven closing investors. strength selling connects equally with by Looking the the throughout past our no partners, guides X across robust involved. by strategic align momentum successful that to excellent valued and asset-light asset-light unit capital of we Offerpad access a our underpinned top-of-funnel on Flex plan transactions from by become with internal proprietary prequalified gained customer all them focused both portion the Direct growth of Plus. Plus, business which are of and process, end-to-end our partners, model continued providing comes they've renovations our teams to our a Listing the opportunity is This the XX% purchase for short-term with growth great ensuring long-term quarters. investor product and criteria

through real have to companies enable top national to imperative; scale.We this including our crucial in and our of Offerpad's real third-party agents partner local, capabilities. ecosystem Our U.S., partners, reach program. and enhance partnership in partners brings me platform of XX harness relationships homebuilders the designed was terms to And and national third to XX regional both our with agent expanding estate our estate long-standing scope strategic the

can quarter, that and take XXX,XXX their has to offers national service more with than the Real estate requests. Realogy, brokerage Estate, Anywhere the our against request delivering XX% of of behalf year, collaboration operating our reach the As receive recently coverage excellent thrilled extends reach, generated are third allowing Century a offer requests certified We agents in areas XX, real This partnership Banker program Coldwell Sotheby's. our network.We the including Offerpad's Offerpad's who by we top renowned agents sellers, quarters they continue fact that Three brands leads businesses, financial of to known we pride from of announced formerly and support over with service. program those outside previously agent be those ensure the pleased cash and program and company Anywhere served of we to parent in clients.On be of partnerships, were into seller beyond as affiliated are existing on goals.

our of responding We our teams proactive the to for real this robust historic are their that macro to our adaptability and belief in environment, mindset represents platform reinforcing end-to-end estate. grateful future

road profitable are and that committed map to value to strategic and growth I'll We our the confident our Jawad. initiatives remain that, company durable the shareholders.With over are for for positioning turn call creating

Jawad Ahsan

Thanks, Brian.

the basis marketing for my our opened towards North As another and business business the remarks, or to as we by customer self-sustaining to that three, priorities our rate with marked In quarter strategy one, be very financial drive priorities help pleased Brian these with future-proof form Using one. two, Offerpad, here first is the break established priorities down profitable in to the full Star, I'm X mentioned, for our ensure plan.These team a shock; against XXXX on the downturn profitability. housing intent with that path quarter key better align our X our are: impressed mitigate with behavior.Let's progress. that one and with our sustainable third his

XXXX. we of the where plan felt capital to our The to destiny. capital self-sustaining. a our profitable for scenario conservatively it plan that access XXXX first to on for control then have set be own priority prudent out end path We've business a to guardrails. that to remain operations, not will outside assuming We will We tight.We is years and or assumed X through markets using our ensure any the must fund X to is we and

assumed lack guardrail to X over was next years. first access the of The the capital

that destiny real assumed estate guardrail market will X will we our conditions The not levels.Again, second ensure conservative this rather that years next using backdrop. persist also own is expectation, the for against macro volumes our control not the but XXXX from assumption and that that current are a to can transaction we a recover difficult

did million guardrails, that's rate by recent to back exactly structure. $XX determined our our heading to XXXX, With needed burn our scale cash what over we we these that into we cost and reduce with actions

our guiding reorganize was This XX%. to optimize. Our workforce principle optimization reduced by

narrow was we've the stage base challenging who for downturn been be might to hard members, employee We we goal their volumes was our and only colleagues incredibly help set difficult for environment as been are adjusted but EBITDA when done how you with can profitable reduce loss, a some can with and what execute will imagine, standpoint. Our transaction recovery. operating navigate was ensure what this our exit have know to our to also pacing will in Offerpad do an this years, this we thrive of Offerpad still this rebound.As we operating whom this to to challenging in that XXXX working year many for team hard doing some to we time impacted, to needed throughout now. on are are not transition.Ultimately, and did environment, who successfully a from growth in We've been action

year us Our against to housing slightly or to downturn full proof to the at to operate business of intended another help above adjusted to for or breakeven is is cost mitigate shock. optimization priority EBITDA rate future XXXX.Our allow in second continue the

about becoming the making talk asset-light. more Brian we're heard You progress towards

point for so our Brian institutional standalone services. year. which transactions to exciting our our offerings is accounted want have a our X of momentum together unit business, investors this earlier, in have reiterate half in these platform We made building I renovations for that listing far

the much vision estate of marketing is this when The essence but focused exclusively to neutral. We reallocate key real as almost a about company strategy right is our priority build We a on customer a offer brand important destiny. the recap, third new time brand shift opposed mix priorities to of As marketing completely thoughtful to with an brand shift the as promotions.The promotions our time our solutions today, on spend our that here for of talking marketing from these this against true home.To shift building note brand we align to had strategy cash marketing is control to their money business own the brand in more to a expected in to building thing executing grow, the is to building. lines and won't XXXX. to Brian become to is decision feel sell that reliant this our to Offerpad behavior. promotions in continue be as source P&L spend you product at and these factor excited and from awareness get meaningful the will intend in revenue we're to strategic is less this spend our spending homeowner's I better a founding platform.Our more we're of to closer way strategy

from is a us quarter, third we true we will this Net We're any delivered $XX software-enabled bottom the back may million, our value amidst that a diversified to fulfill we'll particularly an environment, quarter the improvement the towards to loss with to deliver a I'm and progress path the made excited to on in today about QX. both our portfolio.Looking The through XX% line business have. top our by need continued to a cash-generating build profitability. guidance. excited customer execution estate being we tough macro product continue and real enabling that Our on strong was sustainably customers long-term vision a value to profitable motivated platform deliver vision outlined shareholders. actions deliver

our quarter quarter for This to third operating QX Third basis margin expenses. the a improved $XX.X EBITDA year-over-year. margin a quarter and to and greater year.Adjusted in to was and inventory revenue EBITDA adjusted renovation. as second QX was up This consecutive last million. X,XXX quality from Gross gross a to XX% by due compared driven improvement as reduced from and negative improvement well of asset-light reflects percent to X.X% services the such improved higher-margin contribution XX% compared the improved improvement nearly was XX.X% profit as of of points as

margin our offerings severance trends normalize will a QX roughly million we product the we quarter from reflect company's fact, was of will expect after In history.Looking $X other a interest discussed. charge show to X/X seasonal while reduction associated the the improving quarter, of portfolio. the continue contribution with forward profitability cost to actions the cash the offer, in to the in than fourth highest

expect fourth between EBITDA $XXX loss. revenue revenue see and And in profitable.Specifically, the between the will sell in homes, year XXXX, expect continued million. We exit net XXX we to quarter to to sequential generating in and $XXX fourth the and XXX reiterate, of improvement we quarter adjusted of million

We also to on negative entire is laser-focused imperatives our another to sustainable expect quarter, between $XX strategic sequential to before EBITDA million opportunity up significant in breakeven path wrap the represents XXXX, team returning which we profitability.As our the us. on adjusted and Offerpad improvement the in enormous be

right have place company structure the in return road and to growth. the map to We

this incredibly that, is real I'm and watershed estate in world is and what for we share with talented works.And time call as at executing crisply the open excited and the precision. they our Our team do to I'll with disrupt best journey the way during questions.

Operator

question JMP. line from is of the Our with Jones Instructions] first Nick [Operator

Unknown Analyst

proposition value you Luke change if of Burnett come just that business on at all? do down NAR are versus broadly, on any, implications us the for the commissions buying Could is does the Nick. This if what,

Brian Bair

in lot answer from there. it yesterday early we for like the traditional things But caused that No, a couple happening the an that's we've brokerage it's everybody The do. perspective, been a obviously so of of -- fee closely waves has. that as following a obviously shock everything pass-through that for Offerpad we commission co-broke underwrite obviously, end.And that what's from a short really so

on So one But maybe is just implications on Offerpad, reasons it, to I the happen the which the steps that is of in traditional one side going a what's originally, to we I this that. remove see started for lot the saying of think I still trying don't a first was friction But standpoint, and in of and I pass-through of of think create overall, to from we customer-centric us. more very focused a be we're see going to And everything changes transparency that commission going fee sellers so, for traditional buyers.And more side. lot you're a overall, the for early do. and

whether it's X pass-through. a or So X%, it's

Operator

is from Tomasello ]. Stifel question the of next with Our line [ Ryan KBW [sic]

Ryan Tomasello

the into focus I guess just versus promotional bit in digging marketing promotional a to a I'm the the change shifting a sorry, -- branding deeper strategy focus.

do Given to spend going -- you as one any to volumes dollars those and anticipate you're you purchase is investing, declining. that other, takes to the it invest brand reallocating promotional that that build be to and the have impact from on time

Jawad Ahsan

great Jawad is Jalan. This question. Yes. Ryan,

makes And we on So you this. the getting to trying what what But come the if more into -- getting on is that's or that saw purely efficacy today, effectiveness general were we're our many a decision we we're their a XXX% promotional.So CAC, lead. a selling in through think And thought they're transaction. cost is perfectly we that over not want towards we'd And sorry, we you promotional. our marketing spend monitoring time be the they throughout of like our when about various focused deeply per time. geared almost reality, year, transaction. cases, necessarily period is It's point-in-time look When very not metrics, spend marketing awareness. something brand really to that decision in seller the buying home,

we Ultimately, It's as think from from awareness we're within is think 'XX, We're be real do shift so anticipating to XXX% meta want to promotional it we that we we're it it brand Look, be brand. And shift. XX-XX to a today.In well purely elevating brand. local. mix brand to thinking going where promotional a our able hard promotional going to and is estate of as important. be And roughly that is market. the both versus not

we're still really spend as markets, selling really in to national who So more knows awareness the the want in we want your to money when it's first. to only -- you it brand expands, the get when comes to that important we and are, dialogue we're granular about on our think and national going but not people home, time we local Offerpad that. But want market

Brian Bair

just X awareness have it is well. thing to was what going Yes, hit estate every a and you I on you XX brand add, local The once years. real I summed is you transaction think definitely up and just to

trend -- come is but for that start they time, of make discovered be to us and a of top they of there micro to they in thing when those first, to a And the so people be the of when foundation of that markets, mean, with our us. process that But And ready decisions. ready cash that's of we lot they're and the we want because make to XX% decision.I we the mind them. are of what a micro make that to want people have great with offer, start lot the we decisions then lot do product strong

the we as to shift see well, which about. so brand on some the have side we're excited And of

Ryan Tomasello

year And non-capital-intensive in can for is value the runway different that out about growth. how those, importantly, and up much discussed P&L focus perhaps think show the how forefront environment us past. the offer And impact the modeling you've the tough of planning that around we then away unpack products more that's asset-light more to in a year to be businesses, capital-intensive as proposition is as follow-up, going might performance. prudently businesses, shifting remind on backdrop.I even you if terms a the guess, next Brian, in just business economics helpful be as something those navigate just of next the like It from to you're the it would cash of there that sounds the at

Brian Bair

great. Yes,

Ryan. question, great yes, So

So the I'll lines. product go through X

is That's we call Direct center funnel of where So our straight-to-consumer then short-term us.And teams and cash it with and closing top investors call foundation. we they transaction get allow both And Express, other of we which also, offer teams long-term and which on the offer. then the is that. Plus, our to through the investors, efficiency homes have

We is have the renovation mentioned a flex of the have side. efficiency in skill remarks I we Obviously, that with set. renovation we like our and lot definitely

into renovations, focused by they allowing to the efficiency, we've have been that. that plug they So that quality is opportunity do people on. plug our that a a now, get teams into.So our And cost, our on great right We to service our ground in. can something are already the timing, plugging there's as using

likelihood as as with allow us offer seller the to going let's partner a a Plus house, the gets wins select and investors home as have home.But note, who X Just no of bid Direct they're top funnel we that say can those going give a the home, to they to a for side well. top as that they're gets to get high matter there's the renovate us

top the but funnel. to then the the them. provide home, also for provide the renovations efficiency we We we So of close provide

sell with is that renovation, X X the are FLEX. that our struggle and the sourcing line can other we issues product are normally then So things they those for.And and

They can We'll as can their them. a with renovation their costs doesn't list our well. for list us the condition. home choice. also to if cash teams whatever cash reason have want offer. for they work or ready ability And So We house we as in us people they use list us, advance help it's option them really a their give home renovation important offer that an get to on The that with well. to to give

offer, side And we're cash is one is the that get have on of renovation doesn't take mentioned, as lines, one necessarily and cash is that love those that know Direct and with cash product offer, good so customers thing what the will is on and the there, to continuing really on be cash close Plus, that especially to in sheet this the X that -- one out thing we the cash the the be customer necessarily see point the we're growth, I'll say the environment.And to they is very and the we disputed offering mean not but can't we offer same our offer mean balance as foundation. That experience, well. house by will the we partners always I on that's but that going the

on asset So light. the

So the do. foundation what Jawad? we it be will always of

Jawad Ahsan

on And that, to Ryan. then add to just Yes.

seen excited lines. ourselves next is are non Brian Renovate for X pillars, So so see real got small into But to The transaction there. Flex, is are bearing we're offer our look, transaction about foundation as ourselves our be the as that really noncash Brian the remarks, of have those mentioned, the to [non-iBuyer] baseline -- fairly a heard be X transaction our those portion of revenue. strong.And you half in half and to you're an estate year-to-date, iBuyer. going and volume there build as the years. And and to next questions. out, on how volume the specifically Great We've seen into heading translate the from that how as our business platform. has X us foundation prepared revenue solutions still so legitimate They're talk a mentioned, we think we've we've really volume are in diversifying on really coming right momentum business got because we've 'XX about to never going us that for and came -- year is from the come of and we

the questions today. You've asked us looking are the most X we forward to of

Operator

you. Thank concludes participation. for you well call. the as your question-and-answer as today's Thank That session

now lines. may You your disconnect

Offerpad Solutions (OPAD) 1 Nov 232023 Q3 Earnings call transcript