OPAD - Earnings call 4 2023 | Offerpad Solutions Inc.

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Operator

Good afternoon. Thank you for attending the Offerpad Fourth Quarter 2023 Earnings Call. My name is Matt, and I'll be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Taylor Giles with Offerpad. Taylor, please go ahead.

Unknown Executive

to Quarter welcome Earnings Fiscal and Call. afternoon, Offerpad's and Fourth XXXX Good by Chief Vice Chairman Bair; joined Offerpad's I'm today and James Principal Officer Finance, and Financial Executive and of Senior President Grout. Interim Brian Officer,

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

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

Brian Bair

quarter seen half in thank despite for in macroeconomic the capabilities, end company execution second prior of margin virtually the last in Thank the volatile our fourth second our market for by pivotal the moment our advancement with to the year a the and we all market and all legacy landscape. Even of the have contribution transition year. meaningful you, quarter and Taylor, year obtained through past and cleared improvements joining difficulties, terms of you a inventory XXXX call. represented The enduring operational challenging of

Our and our of which is with cash offer. commitment vision to core strengths, in our the strong our focus start foundation

part down By of we solid to our ability to we our expenses better. control, and things our fourth involve the ability our solutions, line, product manage doubling renovate prospering on to a quarter. been Our is be delivered agents can alongside never has

Our within sold of $X as negative adjusted all homes were our well $XXX of XXX guidance. revenue million million, EBITDA as

more our partnership year-over-year. are we of EBITDA XXXX discussion in-depth partnership a We our to margin, than grow the after discuss the wins. We contribution And our guidance. second we to of then trajectory, our these imperatives to numbers path in review networks, the continue back profitability, adjusted over before asset-light share programs desired towards transitioning brought X XX% streams, our accounted for expanding grew James for and strategic call growth X,XXX So especially demonstrated coverage. of greatly its sustained points basis which interest, up in our clear our with half revenue agent within ecosystem XXXX. I of will accomplishments, an

a we and improved have we in reach and our this, marketing through of partner also better and sustainable continue and direct acquisition our tech continue engagement. each sight enhance workforce, cost do EBITDA find efficient the To free programs, quarters while line revenue of across stack, roles year. to flow. scope Offerpad's X we and partnership deliverables to XXXX, exit growth in and these During more customer improving adjusted EBITDA spend to adjusted expand last positive our delivering are the plan trends to with the XXXX We of consecutive cash profitability quarter,

accounted for Direct our include services our XXXX from to of the revenue our Combined, asset-light always XXXX. transactions returns yielding markets of estate other that Plus listings activities additional and the For buy instance, markets. Offerpad's through XX% streams real while our we these in and serving unit take customers friction mission in capital highest and optimizing our box, buying with our versus has to are selling product in solutions, lines within XX% included focusing out Offerpad-Renovate. in to

closed In previous a exceptional XXXX, All services years fact, compared we in saw grew contribution home to projects from revenue $X,XXX leap sold incremental in than our $X,XXX other renovation quarter. of renovation XX% together, nearly these business less the significant delivered home. per nearly increase at XXX% by an a margin in and previous per

clients into own capacity Our on top-notch to BXB as momentum our to and rely their customer our renovations, We're national, thereby regional now satisfaction. efficiently working profitability grow with deliver they and to continues with renovation enhancing across commitment clients operations, work. our local extensive country, delivering access to to they cost operators. plug our allowing By and high-quality experience, clients Offerpad's including the gain multifamily single-family and savings

renovate case XX point, executed were larger time because our quality the clients of one they a their turnaround XXXX and to them Offerpad to home quality homes of dissatisfied and We in a program with came of homes the dedication pilot our show year renovation renovations. we this their later, It's during $XX value us preferred quality first them enabled XXX that generate help and to in Over line. this in product to are partner. we revenue renovate could efficiency operating over create. million As

By customers overall offer XX% announced who way or major a to we Offerpad request our in more tailored Our allows has Offerpad program cash enabling for This enhancements offer more industry-leading January, at to growth selling their valuable need, consumers our partnership incentivizing also cash home-selling resource to buying, partners to suits The estate and beyond expand our on program agents. In our tier With generating fee of agents partnership as agents our markets best is the serving Offerpad them behalf while key exact agent a from a offer. top of program. strategy. quarter. for sell area. provided with for utilize cash to point partnership motivated in program XXX,XXX continue real situation, direct meet Offerpad has Max their of to our we influence. in It first region that select marketing late program a their and serve agent partner Pro and services, is resale. agent Since with grown our time, homebuilder the to last is will the subscription advantages. referral an added property list service agents for highly significant agent and and, Max to than benefits reach lever home same program than as Pro an encompasses to the receive tier, network our renovations, requests, network. leverage agents XXXX, referral our requests for our ready agents fee-based clients invite-only designed ability several X% the have acquired

are they'll future. in expanding other list and their anticipated. the have highly potential that available markets to homes to with our defined swiftly subscriptions near zones to sold have sellers Offerpad zones the in for access gain will Meanwhile, they expand plans additional Importantly, Offerpad-owned in available than Max Initial qualified to quicker we zones.

imperatives. of X strategic our supports All this

and First is our friction take cash out starting foremost estate, the mission of real the to offer. with

imperative ecosystem imperative to progress our is encompass product of is make services where are. asset-light our Our our to Offerpad's end-to-end and meet that line, great partner customers expanding on reach to to the homeownership. enhance third offering continue second process selling, they buying entire

are customers and X that and return faced, all challenges on Offerpad are moving partners tough so on we toward many decisions profitability proud to and We and to I'm these the and of team, sustained XXXX we optimistic growth. the a our delivering of imperatives. Reflecting grateful

at Financial We us. I'll leadership as robust market in over Thank foundation a finance have of taken Offerpad, senior the years a James? reins map, seamlessly. strategic to Interim Officer call huge you. With operational Principal and turn opportunity over has solid many road a as the ahead now James. he

James Grout

of TTC selling operating Thank to positive scale loss. compared as excluding expect cost fourth adjusted financial continued decreased perspective, million to EBITDA quarter, our you, and and achieve reducing the in spending the in early summer In Brian. XXXX. cost after sustainable an seasonally XXXX. continued quarter, X acquired nearly plan quarters more resulting we a leverage, half when rates over impacted We margin, owned XX% the market. allocate in channels, acquisition in from of normal million, imperatives operating with ensure organization volume, TTC, sold. slowed on needed seasonal should are this our sold our how diligent portfolio our year. In in homes XXX fewer contribution XXX From partnership efficiencies results remain saw a XXXX, historical advertising contract rise a to we efficient which XX% to partially be as of than slight of at capture our had additional which by quarter, before about business in to drive narrow holding were expanded above an the nearly we our with $XX structure the cash, in we risk homes, costs growth was exited in to X% of our only spend our pace of had in XX With while inventory, line $XX entire in to quick decreasing market. We increase homes better through operating excellence streamlined, and XXXX. We we rates to invest Through those or share to We producing XXX is a end the with expenses, focused again XXXX, property back the we This up property-related days, management and transactions the a December. of capture to the position. strong the The year expectations. and strategically the aggregate end down the mortgage is X.X% in quarter days, in request of time across our we legacy see QX in the portfolio. under over January, ultimately

the pace used to quarterly start finance and cash first of X offer continue and we successfully renewed acquisition to has our to growth inventory. our in year, facilities primary we credit business, anticipate result, a the sequential extended our quarter. To improved support As

align rates funding As key adjusted the maintained terms to coming with expected we our mechanics, renewals, we part while of years. size around over advanced and needs these

and supporters partners. remain continue of great business lenders strong Our be working to the

be margin. accounted foundation the momentum how of and second product In lines transactions, of excited nearly offer the product for contribution in of our lines XXXX, our to our producing half cash Although I'm over continues can our time. operations of the transform they of closed about X% asset-light our Offerpad results, asset-light half

should interesting program-driven several the enhancing anticipate partnership By revenue. monetize of Additionally, further buy the offering better box, up opportunities Offerpad that agent Offerpad even generate provide for opens the program request diversifying our agent, of us the increased of to value to the the to we outside Also, XXXX. in introduction fall evolution Pro more our partnership us program agent we Max our volume. allow requests

the Revenue guidance million, landed was quarter the in numbers. $XXX which our range. to Turning within

the our with the due line was Our of The team great temporary limiting consecutive Roughly an at the by did QX realized expectations. from in impact of XXX improvement XX% job title supported homes, in loss unexpected into revenue customers' of sale our year. QX through to quarters was XX% a We've quarter of timeline. Net from challenge, one net a to of of $XX year-over-year. end QX moved and $XX million, the the million working the also improvement partners revenue interruption in improvement overall X income. our now

fourth QX margin move Fourth despite This sale margin compared margins operating $XX year cost velocity for fourth This QX X.X% $XXX quarter. Total XX% $XX operating as pricing negative part rose a full million prior to decrease XXXX fourth the as full fourth or Revenue X% compared rates Net from compared $X our last for continue driven $X.X expenses X,XXX in improvement inventory Gross improvement X.X%, the the we million, XX% year our debt the year. over with from early to and of million. X% management in quickly $XX by the was from XX% by advertising QX, was a asset-backed billion, decisions in efficiency X.X%, improvement million significant contribution ended a was quarter to was mortgage improvement of negative for XXXX year $XXX in quarter the a an in for homes improvement XXXX, $XX from in million decreased improved the supported unrestricted of EBITDA the year. in and slight was XX% adjusted to adjusted million to QX large $XX also in last reflecting year. was improvement XX.X% to XX% Gross year up $XXX million, EBITDA and cash, to with optimize from by loss homes. quarter. as in million of from made activities. and quarter expenses from XXXX. spend we quarter to negative the the was a last was driven million, X.X%

XXXX, Sales to expected $XXX we're quarter by the of major and sequential improve, homes improvements supported compared first in forward metrics pace sold. revenue quarter. the between Looking is $XXX seasonally million, expecting producing prior XXX XXX million to most to to

in our EBITDA adjusted XXXX, unpredictable invest XX% the between negative proud growing ready ability made we is questions. on the open meet this acquisitions profitability. With and on to that, I'm As strategic new the the expected to particularly up challenges to our through negative may $XX a This the for and almost the organization to XXXX decisions midpoint. Reflecting gives confidence while create that's in our of be our adapting million, a at on imperatives tough to march $X.X objectives quarter, to adapt to challenging company and execute XXXX, manage We've in bring. call I'll first me return team's the ability million in environment. an to macro year-over-year opportunities year lean

Operator

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

Nicholas Jones

if Two, I could. Great.

a per maybe what to First achievable about that acquiring think XXX homes target initially little on that's than follow-up. the should XXXX? a -- it's month? then the we a was. how in lighter I think And path Is goal

Brian Bair

-- XXX, the that's Yes. Nick, The the looking Brian. goal on we're it's at. obviously

macro dynamics and can control. are on, world what of out We very controlling obviously, focused there we the the

we the our there, And box. want buy of what's so out buying watching on we're in and focused homes interest type as rates happening we're

so And to than, on would is more property the performance do We're focused right homes we're of volume I there, if going we're it. now opportunity say, the buying.

And so that's our focus.

Nicholas Jones

more if the high you there? contribution can services. prepared kind contribution $X,XXX -- that then about is path of there And incremental you contextualize in kind that margin? is Could How about a that much go? can you dollars think profitability, incremental to getting to remarks, key of how adding more from of chop in talked And to Great. margin driver wood other to

Brian Bair

those the Offerpad the I'd Yes. and the really estate true side, then one thing on more there. And are we'll costs what in adversity I'll real that we over some bit the last James we the of jump this. in a one do breakdown like to really on services. focused And is a But X.X felt can been overall, comment the I'll And have years, side really remember, to for is everyone tell had others center then lot lot of we've to said you, of we on headway direct time. long we've a asset-light with I in I've and a about and some allowing solution renovate plus our time we've on getting talk well. lot cutting focus on these of a plug to a the if to that the win wanted focus little specifically that what is had And be you for products.

the the this I I getting of can maybe that do are there. But we I'll asset-light we stuff and is what And environment. the just say sky on limit again, started, so in think think

more James see across we'll little lines homes more let on, more but the starts bit normalize, you'll as the As those about light that. to grow market and start talk think, I'll start asset more to I buying a board, even

James Grout

Nick.

about they're other in exciting EXPRESS what time growing offer really growing. that's our thing one cash the think same of -- lines that is business I business the is So we're the seeing at

that was of sold half just year. And of home per incremental so home margin the $X,XXX the in for $X,XXX contribution per XXXX, second

overall, And our I term, of ultimately, we is the by business where contribution the get to overall. lines of to offer other we is get margin our businesses target the can X% interest. being X% XX% from still cash I to of think after for XX% coming that have, goal think, long that and driven

So to still chop room some there. more

those momentum right some renovate businesses, in of I think lot a good of like a we've especially now. got business

a on just focus have continuing diversify we'll key to So that.

Brian Bair

really Direct you the -- cash -- thing the that out is the have add business, worlds. that them there, cash into X in of to homes it's one I'll almost with one offer And offer of is buy. Plus It's just the we business business segment

So the balance close going up Offerpad And and offer the is customer that other Direct cash is doesn't closing, Plus then that Offerpad to a customer offer, home. home. Offerpad which the gets they get cash section the sheet until the business, experience gets a

that close partners our Direct Plus One of will home.

X as And to and headway so paths can significant to And continue like we I it both grow. said, they that. I in make feel

Operator

JPMorgan. line of the Lee Dae from is with question Next

Dae Lee

Great.

EBITDA one, first adjusted on your year. The reach the for expectations to profit

are year now? profitable the year a get to And adjusted or clarify, assuming [indiscernible] I follow-up. then you for what that and macro expecting full to the are you EBITDA Just have for conditions was

James Grout

Yes.

our what So EBITDA year Currently, go flat profitable. prices, expectations there, planning right now, a think, right transaction overall, he's costs, little seeing let flat about more Brian to now, a in macro bit perspective, we're full I are from but I'll a flat the around standpoint, from interest for be rates. planning adjusted

So produce that. of or adjusted should year tailwinds in following year not investing there sort period improvements overall, is growth to sequential really of from to ultimately profitability. see some there, the rates a first trying expectations EBITDA of throughout anything then increases any we quarter full in kind like and the inventory But bake decreasing

Dae Lee

guys homes I are It a you in acquiring. more a have Okay. the that underwriting of you're sounds follow-up. guess, with Great. and like buyers I risk-off

mind in if guys see well? as like guess, that, I to, need volume to with do the you that's with business what So operate true,

Brian Bair

last we couldn't Sorry, to Sorry, last. part what have off, hear I on see the -- side? what the the last cut the part, Dae

Dae Lee

business as like see growth volume or operate to process It need mind more drive in the operating guys you guys are well. a what now. to focus for you guess, I right sounds for

you more need we to volume? do for go what see after So guys to

Brian Bair

Yes.

we than So And right, each I've up mortgage volume to the easiest mentioned down lot is saw of Xs in very line ramp over a up. we been general. of -- to saw before they've do -- in more specific November one is product calls, that's ramp the metrics market-specific assumption-based, is almost we -- doing, in -- in -- ramp what else think up, example, hit the and everything would market different quarter, that's the just I volatility X to the is mean, December. like rates the we fourth then can they well, rates. I hit and in anything for high of

buyers mortgage sellers And would so obviously just But that the of have into the what's The rates mortgage definitely and the current locked about is, equity we world, interesting you affordability macro talk their have more you consistency -- on lock-in lock-in in the side. when then effect. there. they're

And so both to happen. something them of desperately want

you and you that see And -- can down sellers buy. just see and interest want then drop now willing see can as rates to it. buyers to You below sell can X,

now right so that so is And sensitive.

really that closely. watching we're So

affordability will tie overall Just into that.

more So more see there, need everything down too. to again, is to sell they it But right back just the sellers very and And to means. there. getting doesn't any interest and where willing were affordability can by you just so now it's rate-driven consistency, go consistency

Operator

of line is the Stifel. Tomasello Ryan with Next question from

Ryan Tomasello

quick of gross seemed offerings refresher just you maybe if the assume sources? a a meaningful. for the revenue give to that? be from revenue us relative fee partnership be meaningful the renovation, these agent volume of things I efficiencies, the addition and those driver. funneling how the involved, can It programs, a to can would membership a measure behind more that, traditional there's to material overview added helpful if you some looks around more perspective. just Any more that service economics expense model of asset-light like volume a margin perks reminder, various be and a would in then And It like that model,

understand trying to behind the and general, offer economics in noncash model products. the revenue Just

Brian Bair

and as from get scale into our want is a level as Sure. we let we services people there. the high one the Yes. it get some can high the that go details asset-light and more some services. and and as level, thing faster to fast James of But especially products -- of fast, accomplish to I'll out yes, to

the the us whatever get So cash them to they been could moment. offer that home a and They a come for customer consumer potentially or we've list -- always giving focused on to or their best at choice. works

our a they that of in so use program upscale the with have in on that to And agents of scale services, scaling using can to so market scale that we the scale the they that's renovation offer, landscape backdrop. some the remarks, in list be giving the fairly even those quickly. sold included the this our they see need, able mentioned ability home our prepared that open teams into agents And help even our been house to that to knowing is to we renovation cash us programs, XX the of basically as faster services. offer been upgrade able ability as the even the cash includes a that a market have in are insurance plug others to -- or but And also lot and the

doing. James an So we And -- again, meet consumes really -- want a use we're the But everybody, feedback, whether good about and to launched fast when quickly. But and bit want want scaling talk to there we fairly directly, they're for are, zones, of side. the economics to they I'll we the from the at, where that for the agents things let we're little very, be customer want agent like that we them. to that no it, matter a I it's some solution find we're in said, very the getting scaling

James Grout

each I kind walk through to So Ryan, one. Sure. of them one really guess by just of quickly

range renovation across way kind average reno cost capturing service markets. a right there model customers. the in an an be and about various now works on we some like good side, renovate anywhere momentum progress fee. of really in XX% to were revenue of And of can fee effectively these board that. top from XX% the renovation the or $XX,XXX think service mentioned, average The cost a from On to good we're you seeing It is so then the and are

this through So at, a call the an comes or XX% our margin, -- EXPRESS all in with a and it, plus that's resource business, shared that. perspective, overhead gross folks markets with from from minus. Overall,

nice a operations. of value-accretive on to it's existing kind So overall business line to our tack

On of assigning from underwriting the all we're very up the we're customer whoever that Direct ultimate in, is. Plus home experience, happening side, we're and like the a it's that we're similar over the or overall, home, buyer that is contract until request what's closing at of where perspective, Brian the transitioning time mentioned, comes closing. way managing Effectively, the request

And so on or -- we're capturing for our service home. fees that, as that the that revenue project for

high at gross So really, through very a margin. comes that

then gross talked the margin since XX%-plus just this high type kind also there it's interesting side, very gross where that of this on a service overall margins just the through. And This is Brian through comes at a there. fee effectively a through. think Again, piece. listing I service coming thing is

capital again of that's subscription fee at a that back price a we're to that out, and motivated that XX%-plus Offerpad closed be market agent offer for come being leads and -- products that the leads engaged through going margin agents able through listings overall ultimately gross with and the to types through in there. And a type get percent is invest other and there. mechanism highly engage fee to just that referral on, our to is again, of sales so upfront that access coming great them For to services referring those it's can all the willing should are the within very -- order

coming subscription-based another gross ultimately. type that's a kind XX% of as type again, So fee margin through,

Ryan Tomasello

color. that helpful. Very all follow-up And here. appreciate Really just Great. a

mainly You the in I of is the that annualization if think, so, those color coming mentioned efficiencies another you year? Or efficiencies realize incremental? XXXX. are last $XX expect of Is of any on expense million, from? by drove to you that savings driven where any cost And

James Grout

both. great Yes, bit a of little question. It is

optimize kind of the continue So we to through end the did year. cost the of structure

of through is part going from standpoint. that to be that coming So

a is And marketing that from focus invest what part other CAC and perspective to a business. into for of going then, The what attention our we in invested program. in of direct amount generate be need to kind to lot leads the order necessary overall, and of our partnership means the

So year, but we'll what really the more I at view we're the well. year the then the as forward efficiencies of tied annualization to management of the carry expense doing end also kind some marketing throughout part

Operator

Next Goldman line is of the from question Ng with Michael Sachs.

Michael Ng

in bit of the encouraging facilities. was of those some the the more It to of facilities. about hear little and renewal if extension changes X was the terms a credit I just wondering you about talk could

think basis. percentage of today capacity think you was what should prices just go-forward we there size. a capacity said what your home the purchase And Like you renewed? about on target current into on and adjustment how how an I and translates was is could us the remind selling that

James Grout

Good Yes. question.

our the new an now, to uncommitted million a ability imminent in that volume we're had we about But and expect just billion prudent, standpoint, million in capacity, changes the the we of and business right expectations now, year Historically, perspective uncommitted the of given right $XXX with from that don't is $XXX-ish a about -- felt from the there. $X pretty of ended little made overall renewals side another sheet So we now the seeing year our of kind for committed of total. capacity with the over here, out flex we where for of capacity capacity with committed $XXX and capacity right of balance overall. overall a debt. We ended changes -- total coming and time we've bit bit were what million the had up of outstanding

feel place. put we good very about those renewals we that in again, So

us allow rates be terms that we with homes to Importantly, of we amount efficient advance those purchase key that our maintain and and do. capital around really funding mechanics the really

Operator

over I for question-and-answer Chairman and The now call has turn concluded. CEO, will session remarks. Bair, closing the to Brian

Brian Bair

All right.

proud Just and and But the call. their up and getting into thank for everyone asset-light scale everyone joining for team these the I and hard getting all of work, and you XXXX. the really the going appreciate services way

Operator

the That you conference call. participation. concludes your Thank for

disconnect now may You your lines.

Offerpad Solutions (OPAD) 26 Feb 242023 Q4 Earnings call transcript