OPAD - Earnings call transcript Q1 2024

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Operator

Good afternoon. Thank you for attending today's Offerpad First Quarter 2024 Earnings Call. My name is Tamia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, [ Taylor Giles ].

You may proceed.

Unknown Executive

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

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

in refer the to inherently uncertainties and risks, Securities uncertain are differ the statements Commission. the business events could with significantly factors to relating our from and Exchange Forward-looking and management's U.S. company's described expectations. filings Please other

as Offerpad Except statements, does intend to or of required a new events as forward-looking alter not otherwise. by applicable future information, law, update whether result or

earnings reconciliations GAAP measures certain measures Offerpad's On financial tables website. items metrics comparable measures. release today's of to first heading the in These on available our of certain earnings under Financial. Non-GAAP Offerpad the management call, quarter the refer non-GAAP The to financial the non-GAAP exclude are in will discussed release

I'll that, to turn With over the call Brian.

Brian Bair

Taylor, joined thanks the call. to Thanks, those who and

a of of call. our top XXXX earnings I increase consecutive in our trajectory discussed continued end we growth. guidance, positive line QX marking quarter the the last of revenue reflecting quarter in versus high $XXX our met XXXX million With and first revenue, of XX% third The

up the We XXX, was sold quarter-over-quarter. Adjusted XX% homes with at also high in EBITDA expectations. met in end of for our coming guidance also line

to the sustainable as cash, ability time in our contribution reach in positive EBITDA services in confident to margin with remain expectations. was platform TTC, grew our Both quarter we and line in adjusted Importantly, margins or improved asset-light and XXXX. gross

and the within factors our our remains the focus macro sellers, Despite locked-in challenges affordability control. ongoing of on

scalability, the expansion execution strong encompassing is platform team's Our platform distinct services. X our of driving

logistics; which the RENOVATE, the platform. Offerpad reminder, technology; management; to cost our BXB include partners a those X ground opportunity and game tap services into allows renovation As within

reach strategies, top-of-funnel for the with help teams. more while in-house home. BXB benefit them conversion Direct us customers closing partners Plus offer and our to an to This enables RENOVATE, providing program homeowners optimized their efficiencies also Similar to integrate receiving allows and of more with

Program best to every finally, Partnership foundation stands for as at and customer. the the our discover Agent served of referral our our goal solution cash with And platform Our offer listing the services.

demonstrating positive X, to and customers quarter feedback extremely and who continues represented and RENOVATE our cost-efficient profit We our receive thrive, contribution XX% grew timely, strong consistently projects from year-over-year interest. overall performance. our XX% after operating renovations. value high-quality financial In RENOVATE of

projects, setting XXX million yielding $XX an than more revenue million run nearly completed achieved significantly in successfully XXXX. and the annual $X in We rate we us above on

Alongside the our higher our Together, other yielding the scale. reshaping of success margins. X contribution total RENOVATE, XX% quarter, to platform represented and services services transactions these asset-light in mix product of continue

These services solution were available. our our currently instrumental markets expanding offer cash is in reach where into not

we core pleased We asset-light our continued these in and of potential seeing conjunction great are the in offering. with performance the cash growth with are businesses

programs, including partner services, partnership and previous agent recently emphasized the homebuilder enhanced APP. our the or significance referral the I agent In of quarter, network program,

to a opt us offer. been referral sell cash agents This APP industry-leading our key program a to As reminder, fees for who contributor has growth. offers our

quarter-over-quarter. In way in those APP from XX% Offerpad. agents works quarter Offerpad best rising them, their the customers with over requests X, APP acquisitions use request and requests total that to of represented for allows XX% by

friction transaction settlement. want: what that the real control. as removes create very recent to estate and they continues consumers of note, a have and founding It's NAR we the platform one-stop to at evolve out Real Offerpad's estate seen to and certainty vision the been important change was gives solutions

home next in more valuable trade customers find be business. this and believe their Offerpad was will exactly of the listing is ability the our than Having a where And home own We platform the to seamless current the why ever. their strongly founded. and is home core

anticipate dealing directly homebuyers and become years, environment. with months more will listing We uniquely this accustomed agents to and over and sellers Offerpad for coming positioned that the new is

We with pleased the year. our start to are strong

services, advancing teams ecosystem asset-light real our strategic Our consumers. growing support are friction on estate, laser-focused partner imperatives: our taking our to the X out more of expanding platform and

I our achieve their hard EBITDA Offerpad positive continued on and progress team you the adjusted world-class members We long-term and want pacing look committed value. forward work dedication year. to thank building remain to updating our to We're the throughout mission. shareholder for to to

I'll now turn the call over to James. James?

James Grout

Brian. you, Thank

was quarter our plan we various solidly businesses. see first continue among as to on The growth

improved leverage, to from which operating operating and efficient of channels, partner us We also drive our helping more productivity down are spend ad drive continue expenses. all

towards deliver the in us We're efficiencies ultimately, our positive and EBITDA This of incremental highlighted cost flow. XXXX quarter. on million track free in to execute is enabling more than goal cash $XX adjusted last to we

and QX owned days to the X.X% significant XXX on XXX half We improvement our which sold. This seasonal be with is a increase a roughly the of year in inventory, were over healthy only with end exited position. had portfolio of contract XX.X%. prior from at from the in We a our those normal homes of year

expectations. quarter-over-quarter quarter and days, up the our line aggregate an had sold seasonal of with Homes XXX in in TTC

We to seasonally in the down quarter. expect TTC come second

XX% pace XXX% the of request last we we slowdown QX the improved in year, at year. end homes saw after acquisition to quarter, We the and quarter, acquired As XXX mentioned year-over-year. start the the volume and market to in up compared the

approach we compared the to more to flat in a acquisitions be to maintain continue to to and slightly thus rates, rise conservative up mortgage acquisitions expect will With QX. recent

and X/X business to roughly our provided show will we feel strategic As after but leads. foundation to MAX, In our of our this about Brian continue priority. partner first agents to quarter, It's be our these with our out the working interest, through box strong said, of revenue additional continue confident margin monetize is contribution continue. cash buy our rollout we early approach offer to of our momentum. services asset-light APP momentum the to in a expect they Diversifying of and services still

We're RENOVATE, of on the additional to expand a without efficient in way a way. enter projects progress for local market strategic us which clients and RENOVATE we us pleased upfront Minneapolis allowing into introduces a becoming In is markets with for building working This capital any to more begin presence offering, in City. investment. particularly quarter, began an existing and Oklahoma the

We up revenue quarter-over-quarter. of the the at In XXX million was end guidance XX% of also at end sold guidance, homes, and the quarter-over-quarter. quarter, up top our our top $XXX range first and XX%

million XX% Net million, represents an XX% improvement year-over-year. or was a loss improvement a was coming year-over-year. $XX.X from Fourth EBITDA $X.X XX% adjusted quarter million in flat quarter-over-quarter. million, or $XX QX $XX negative and as This decrease expected

more in improvement than quarter first X.X%, first the Gross and basis point by for of significantly improvement quarter an strength driven transactions. margin million, profit cash services margin X.X% of asset-light total more last our the last XXX% Gross was in was quarter XXX $XX year. XX% our the of from X.X% than up at of largely expanded business offer a from year-over-year, and contribution

credit the driven margin, and That's holding onetime activities. our million year-over-year, property-related prior and $X Operating where million impacted efficiencies $XX.X advertising expenses, down up positively a contribution costs up excluding quarter in XX% spend cost and when OpEx. selling from management by were QX,

parent and $XX We SPV X the million $XXX level ended cash, quarter debt of with $XXX million in asset-backed unrestricted million level first in inventory and debt.

our As the expected a we X coming QX, primary terms years. in and and to advance size key funding with our reminder, align finance mechanics to our of facilities in around inventory used extended while rates needs adjusting maintain credit

to the XXX again pace quarter. XXX With homes $XXX quarter's adjusted expanded to we're revenue approximately in profitability. EBITDA. between expecting focus contribution producing and Looking operating follow second $XXX the to We're million, supported by forward expecting on leverage sold. improvement margins, acquisitions, breakeven is to our expected previous sequential Sales million

as in invest continue positive Looking We're to we in of at closing strategically services. to and our balance year. the be sustainable adjusted the asset-light on EBITDA pleased grow

open that, I'll questions. With call the for

Operator

from Instructions] with first The comes Nick question Jones Securities. [Operator JMP

Nicholas Jones

there maybe the profit is kind think supply volume, can advertising go an Can maybe given as to over invest opting that move? you contribution time? high to us, are RENOVATE and interest and after people in after some I And low opportunity profit piece, how kind contribution XX% like remind renovate given is range. opposed transaction I low of interest The of growth there the to guess, accelerate

James Grout

on RENOVATE. of part you and think but missed question, margins around take that begin, can very was your we advertising where Nick, hop RENOVATE first it I'll then in the to contribution go. Maybe, Brian, part and the I

Brian Bair

a Yes. focused vacant the -- BXB Right our lot now, the we've of that. homes, focused been on been growth of on the line,

because which with as will We perfectly, or opportunity And trapped be mortgage that eventually -- are far in Nick, homes there in you but much longer. homeowners rates. big their staying -- side, is their a will into as of interested very right -- now hit evolve the equity BXC it in

more we And and so about. that that's what you'll something are continue definitely exploring

James Grout

terms Nick, -- Yes. the contribution in then, of on margin. And

of right, overall. is that the You're roughly RENOVATE kind in performing business range XX%

quarter-by-quarter thing turned the we've think that it's of on. kind consistent fairly since I been --

customized to start type directly could expand a getting If as could we that I material on get what could start little now, Right scale. work. us think start that into pretty in we're to to. primarily consumers to institutions the customizable expand getting that expand. thing that maybe into with little with working is will where potentially that bit a And more at more work it RENOVATE, allow you doing that's be over seeing are bit time working work, we more

focusing a more and level, stay But terms that teams way, effective pretty them for from contribution the margin that flat should of from platform so got margin we've the right in perspective. we'll our utilizing on efficiency be overall in now, an just institutional

Nicholas Jones

Got philosophically, we kind to it. how increasing at are see eye you of think you EBITDA Helpful. increase an can more And sure kind start which sales acquisitions and you home investing current making versus then of be sustainable focus volumes? Kind of when getting to kind profitable growth, there's I on profitability. in can on, balancing of meaningfully as

is a terms there of higher base? chop good rates higher I sight longer, wood increasingly are I having So current shape cost expensively where more in I to rates guess, the navigate, to volume? is in we're business you thinking than, are cutting? of to of guess, about how guess, line Or cost or the kind If lower

James Grout

really Yes. especially positioned and product a with We've the years. entire lines navigating just asset-light over we I this of like right where some X.X last made other now are on talked of environment lot progress that we about. the

as -- the performance cash right offer and business, home there as far on at still focused that we the buy sensitivity very affordability We're look we we're turning our that very, on again. each for as As as cautious right high the very being growth extensive of now. to is now

bit So little that's X X we to have buying up the buy more price our more a expand of funnel of XXX the to XXX points. box started to to

products definitely components I there and the more now and right So the that But we'll on then kind we're we're don't X yet product on focused I well. And equation, the start to cautious being on in XXX% our that. then, jumping seeing with volume to think in of of Nick, it's really other there's decent side -- But making that. the turn, cost buying that. start time sure think cash as offer

of there, market being traditional our we've second advertising our done past advertising, on and spend over to dial really a on OpEx of sense. the and there more X the this mix first kind new for work looks norm this And request, X things being like. in former the channel of the years The lot efficiencies what

in things up And trying sell, kind partnership homeowner been actually trying and right by Overall, when first to of leveraging the find their of rather but driven that. our like XX%. networks year-over-year than our they're over down quarter to ramping point CAC we've that's at a we've where

our work We So lead we're there. that cost good done pretty per a in the like spot we've in on actually of with pretty terms the curve. frontier pleased we're feel efficient

think opportunities And we that there find so the I a invest efficiency is if from standpoint, marketing good from standpoint. there to

sort we've of done then work, you the couple what have structure moved that pretty we -- And the And we've tough as and the we our make about know, we've setup side, a OpEx are the now. past right there, most and decisions done the lot effective the around folks areas sure more years in optimize we I the on the the right that we feel right like right made looks over like people of of good areas. have feel and that traditional to structure the to

just it's all we that really is there volume expansion the -- allowed about operating think our a Right and now, to I leverage increasing of us optimizing and figure just out a teams business remain to renovation sure RENOVATE now. new every so example good right? where of -- making And being get and way we utilize efficient over those every spending time, dollar we're every right -- ROI dollar

Operator

Ryan with Tomasello from comes question Stifel. next The

Ryan Tomasello

on from products. the following contribution Just the offer up noncash

represented -- quarter. in it in mentioned think the around of I the those was services X/X margins prepared contribution remarks, you

say from you're cash you mix we expect guide offer versus over evolve a noncash that the offer on the Can products? should mix the the How of year? in assuming XQ course perspective to what the

James Grout

we think Yes. cash the areas got of is noncash now, expect what versus potential some that maybe the upside the remainder -- on it is with that piece the overall some terms we're offer fairly -- think the year right of we've here, should consistent Ryan, business I RENOVATE what momentum seeing we're was of with seeing the with of for the that mix offer I in probably there. what

thing, the QX. actual one improving guided line, here the is fallen I line we though, bottom think have dollars look in that we contribution as EBITDA at to adjusted margin bottom to

side in there So that's well. the margin offer some see expansion overall as going cash to

overall, think set I will think, it variability some just be perspective well business it the But -- now. a overall, a I when is look you right percentage might from as offer fluctuate purely at quarter-to-quarter the So it pretty here as volume cash in mix, has it.

Ryan Tomasello

And prepared a you helpful. onetime clarify mentioned then I in believe that $X OpEx the remarks. That's comment million benefited the another credit to Okay. just you made line.

wrong, what quarter? was? in the heard me included that but any that on And Forgive more gave you color was guide into initial I if if exactly that the heading

-- what have assume but would loss credit, EBITDA million, to if $X that? of we which I'm million if back would closer imply about And just out me would EBITDA I that an thinking $XX been let wrong. know excluding

James Grout

Yes.

adjusted So clarify, to compensation of really, in the that 'XX. in just was onetime for QX related And that's quarter. just

you're more go of that so rate in is QX reflective run OpEx the So seeing more forward.

Ryan Tomasello

heard squeeze that in And Okay. I'll a My one then mistake. I just just here. wrong. last

in overall balance the your Just of term? the you the terms position and Can over liquidity intermediate to for able sheet. growth being the capital terms discuss just comfort with the self-fund plans of current business in

plans that talked be update you the on the do operations, any having of putting know to that but a space in right be OpEx about of there terms I right to front side helpful. would and self-funding able

James Grout

and been on add our we $XX million obviously the have ending feel purchased from liquidity pretty homes takes cash. But have managing you the what I the right? to We've we're it that or in equity towards with making we're sure there. When the at a we Yes. balance our around of million. we mean, overall, the homes sheet, -- actively good discount that capturing portfolio, -- $XX balance about fee working a just quarter closer service sheet up and we from

the of have over homes total well the it, combine of, you equity as million in well, portfolio it's liquidity. when that actually of anticipated out kind call our So we $XXX

main increase we're higher rate no from that. or in rates overall, like a perspective cuts to transactions are going or that from environment for longer, forecast I thing anything an necessary think the from tailwinds around is of get

that here. around within sure making we're capabilities managing prudent our So we're being very

Operator

comes JPMorgan. following Lee from Dae question The with

Dae Lee

Great. I have X.

on XQ one bit. a first revenue midpoint the seasonality the go So outlook, your at does little normal against

can But I a how revenue range end? the click can of think EBITDA approximately get what you given help about a on bit just at talked you And And rates outcomes? are driver. and wide little to a have each follow-up. a being double explain scenarios I you that breakeven contemplated

James Grout

Yes.

is very from growing I we're other cash we've influenced expecting still still we're offer those, the as revenue by a business. these much been revenue not So of side -- as there. much But obviously standpoint, think the services,

And adjusted we've range XXX a the despite so an from it's variability EBITDA homes perspective. ton that profitability of not our a standpoint, from guide provided, of That's approximately breakeven.

the part think end in I main market. is of overall mortgage pace here thing we the rise and the and rates first saw the QX of at QX

homes -- are the a necessarily homes not this quickly Eventually expectations, in they expecting means of isn't think TTCs for thing just honestly expectations. sell get the homes main quarter first the we're thing. that is I week, we're move more our transition of performing expecting overall revenue the offer bit That norm puts market, isn't underwriting, it's and But is an our in little overall. to metric us. that the bad with here a the variability And big longer will writing if as deal. new a in just that don't for the they and against kind

Dae Lee

And then of to a it's behaviors just it. kind in you partners interact on of any with that if settlement, know you early, Got sellers, still as I follow-up, changes immediate the or NAR buyers funnel. but curious see the

Brian Bair

still. about of And why from Offerpad Dae, nothing that's we're there definitely for -- through world some as real some remarks, note. closely. out it's been No, long instant access in talking is prepared There that think that I buyers but need estate are our mentioned other in think the be Brian. on not I of some watching changing, channels something But time. opportunity I There's to a sellers focused there's early allow yet. and buyers It's our we've and nothing things instantly yet. or that's homes obviously that very of access for to we sorted the things an and and to the it

Operator

question next Jefferies. The Colantuoni comes with from John

John Colantuoni

a Can determine start whether Great. KPIs that as something over talk a little that away? you're the the market time and or expansions. that time using measurement to frame into characterize year few the near you'd markets years or It's term when since you about been expanding new right to a paused you is criteria it's for

to those to And turning meaningful about capabilities and to or you time. more the in a services start need that scale growth way order platform over to Talk of services. of sort in unlock make investments sort

James Grout

the prior had, tenure anywhere bps and current Thanks, market take we're to probably we're about Brian closer John. markets, and X% of This overall that pass the perspective, of our expansion of I main to From and to is any transition, share. James. between market. we're it our today of services, think existing all looking kind depending market market across at say, kind just we market penetration I'll on markets. expanding other whatnot. Overall, these the And market, over share market a given the in that the thing as is of X% there. market, XX in status

we capture we when wood the still at of that perspective, look a from there's markets. markets, so offer a our And existing -- into our mainly to can opportunity go cash chop and to in from expand new lot

are we're really a right so new as we the remarks, in ability out. maximizing these as But our new as as is in expand where are out focus catch to expanding and markets will the And and way. starting we focused existing add, to mentioned new they're tools, building things services the into prepared getting that's teams we're I foot, utility now, on the of

but that market. we're every of And our services, all services mean offering so -- some not of might part in it our

utilize future. in the and manner very we teams RENOVATE efficient projects and not Oklahoma there. continue quarter case But homes efficient and Minneapolis planning line a in a those that's to nice past for driving And to the started this overall. where us City. drive request there near accretion in We're way not bottom to is volume currently purchase advertising it with doing We're

evolve start quarters. several for you'll us expansion think over that see next strategy I to overall the market so kind And of

Brian Bair

as services. as And far Yes. the platform

spent slow, for the offer been what As RENOVATE. last seen seen of we've been in focused we've the developing extremely with products as in years. we've there mentioning, -- been we've happy a Like business hyper really over we've the just lot right cash we've with on lot a time growth even And more year. a of RENOVATE X.X

come limit our from As even transaction RENOVATE technology call see is what the you're sky rental our more a as better we the to speed captain that developing every process which awesome internally, pick volume volumes and "the We're really on going get to up, matters and in side. to and there." is of the help with efficiency more day

side. On the Direct Plus

homes path more that partner look fixed and SFR that homes home want don't on do there investors our same homes, and other time as to at to scale platform type on buy those balance our we see opportunity, we conversion we that flipped, at obviously, coming the close on As more certain so a and is offer want to those we up, focus there. investors we to of the sheet

volume give bit. Direct that starts and the normalize can transaction the see the to whoever to want as for really accomplish money the up to there world starts Plus, just there, little pick a home and whatever you'll most customers So customer the

with own even sellers, that what mortgage variability to choosing it's that we're seeing one the business, us across. we're From we're that Acquiring we're on is now, on I now And as the turn thing to -- the can want get what right machine in to sure more we're machine. we we through cautious seeing world cash we're being the buying, the markets. that turn homes that and on from the are going make request right offer what that our seeing activity not

it's in the is where as going That's Again, getting will we awareness grow those. comfortable concern we've and be cash if asset-light that can built. to you're people that. I But market least other -- something are that coming where that And brand and judge ramping to into as buying my ramp opportunity business meantime, enough first, like up -- the bit, that up along and feel next what's business. the to it's "plug" from offer we've awesome going And can services feel over our plug the we come an and more other with companies at. continue machine into these little

we've So I'm a we've X.X excited over about lot built made progress of there. years. what the really

Operator

concluded. question-and-answer your First The has XXXX This the participation. Quarter concludes Offerpad session Earnings Call. for Thank you

your may now You disconnect lines.

Offerpad Solutions (OPAD) 6 May 242024 Q1 Earnings call transcript