OPAD - Earnings call transcript Q4 2024

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Operator

Good afternoon. Thank you for attending today's Offerpad Fourth Quarter 2024 Earnings Conference Call. My name is Jalan. I'll be your moderator for today. [Operator Instructions]. turn you over may to Cortney our like Cortney, Read, proceed. now the to conference host, I'd

Cortney Read

Good afternoon, and and Peter Earnings Brian Call. welcome and Knag. to Offerpad's joined Bair; by Fourth today Offerpad's Financial Chairman Chief Chief Officer, I'm Executive Officer, Quarter XXXX

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

company's and the business from management's relating refer to risks, Forward-looking with and U.S. significantly to in the statements expectations. described differ Securities the of are our Except forward-looking as update applicable events by filings statements, not events could required information, inherently factors alter uncertainties new does intend uncertain other and Exchange otherwise. or result Commission. law, or Offerpad a future whether Please as to

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

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

Brian Bair

midpoint you, by our Thank thank for the all today. revenue the and fourth of exceeded we guidance, you In driven offerings. mix a quarter, well-balanced joining Cortney, of

Program. constraints Our resell Partnership pandemic and the residential business, This performed including almost low success the market affordability Cash services despite by and well down commission RENOVATE historically Agent Offer came shifting Program the structures. XX% Direct Program highs, BXB alongside asset-light our the Plus challenges volumes Buyer industry from broader

progress and for delivering on sustainable long-term Through partners business. remain real these focused a we while many making building solutions consumers towards estate conditions,

Program, to achieve year-over-year sustainability market margins. and becoming revenue ensuring while continued the trends adjusted efficiency, well which driving financial from helping over improved agent the increased supporting increasingly contribution volume, EBITDA leading across and Partnership of while quarter stream. by These savings important are cost highlights improve and profitability an in transaction our positioned services, growth Agent operating expansion key engagement CAC different XX% Some include: to asset-light The are conditions.

expanding Our optimizing and to and increased to enhancements product revenue high-margin in and centered have efforts business managing remain have processes quickly our resources Meanwhile, growth. us as efficiency on operations the support scale market the poised effectively recovers. streams,

recent Over earnings to in and X our and flow been specifically quarters, has the positive last years cash key objective. returning

exciting approach strategy cycles; Given with creates Offer the core by: structure and by operational to our while profitability. our acquisition foundational quality business. Cash cost strengthen objectives; maintained market's volumes, inventory efficiencies it strategic trajectory, beyond and disciplined organization. two, portfolio we Offerpad business, services By refining contribution made inventory beyond which ensure had market acquisition approaches optimizing finally, asset-light efficient to revenue all across delivered stable and adjusted our more return high management have leverage These we agile margins diversifying moderating one, our stability strong our

environment. volume scale high-potential we transaction capture criteria result, positioned areas. buy in box that activity, costs With in and As homes unit a specific overhead are acquiring even improved on our ourselves reduced market to profitably expanding focusing we strategically economics, increased lower to

strengthens raise while we and flexibility, our are ramping quarter, opportunities, improving present acquisitions enhance exploring will financial the capital. are market our support long-term to for maximize actively it and acquisitions business scale line and per optimizing additional transactions our We X,XXX to portfolio ourselves allow to To towards success. growth as This margins. other further options

price-related hundreds the learning engage Citrus has estate to market sellers. is of with and QX a and with customers analyzing technology. As conversion within powered to of trends real deliver of mentioned an home market points in data, how enhanced quarter engagement Offerpad X, advancement the offer by By years home minutes which schedule thousands estimated we've real-time continued we quarter, Value pricing machine and Value previous data into customer leverages generate This offers. range provide our momentum Citrus ability launch from to and increasing conditions us inspection rates. enables and immediately. The offers

strategy customer In request alone, effective and in give seeing almost approach increase X,XXX sellers This maintaining reduces volume we January by from exceed timing in continues touch listings expectations Alongside satisfaction control to are decision-making. XX% to and acquisition our quarterly in CAC. key earn nearly more a to has an are Partnership of up improvements, living year-over-year. streamlined to The which allows on acquisition our strong and further steady we a lowering rollout supported a XX% leading advertising, of rooms, been XX% greater over points agents a growth, score. strengthening Agent November, driver and successful in requests increase these Program X% tier, PRO

positive account its reinforced on business. for our of now program the total through acquisitions result, XX% a impact our As acquisitions,

addition, some operating completing processes. benefiting another partners our and strong XXX and million projects at business generating strong in driver Despite RENOVATE experienced refining RENOVATE levels, In reduced remains a teams quarter, revenue. our BXB over revenue delivered $X from we

from XX% increased new Notably, offerings per our reflecting For revenue year, to RENOVATE the omni. million renovation and $XX,XXX, Offerpad up ] our in generated $XX plant full $XX,XXX over service year-over-year. [ expanded revenue, average

Overall, we from the by priorities diversifying optimizing to operational focused on scale, types investors strategic are revenue add operators. local As our our institutional partners of mix improving all business and we we and to remain and continue efficiency. sizes

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

Peter Knag

Brian. you, Thank

have the efficiencies few process improvements, enhancements. cost Over business we months, and concentrated including past on

These ensure times engagement margins with optimized higher varying offer efforts align focus refined ongoing to market and driving on customer response our and accelerated conditions. cost has resilience inspection and structures process Our volume. financial

XX% of end over for fourth XXX with the quarter, and contract inventory homes XXX had under in resale. At not the for days we owned

dynamics. place trends with in market margins at higher remained seasonal of acquiring aligning and strategy Our fewer homes

QX approach to our with During QX, in inventory compared we line X% management. acquired decline XXX homes, to a

process in prepare demand XXXX. by acquisition driven quarter However, Offer Cash our product, our anticipated the end increased for towards we on improvements activity to

remains a While anticipate key to asset RENOVATE, interest our the XXXX. contributed Direct in momentum XX% profit Program into We Offer including Plus Cash in of contribution of and areas after services, margin, over XXXX. total Agent driver Partnership continued business contribution these moving

our XX% quarter for revenue was XX% to in primarily $XXX in the strategic Year-over-year, declined acquisition XX%, million $XX.X totaled homes quarter a Fourth sold. decreased earlier million, a landing of upper half due in reduction the Net XXX revenue range sold year-over-year. homes loss base with of and year. the decrease guidance

with million, resulted loss totaled decrease from adjustments had XX% management was a cost before a million Net QX We in business million, enhancements and XX% normalize. previous of representing sold to half revenue the $XX XXXX. year, full following in and compared sales increase reflecting consistent year. decreasing as the to initiatives. $XXX Homes performance temporary anticipated improvements acquisition acquisition in an from days, second the improvement a These in the $XX average XXX expectations cash QX QX cycles of For or time year. metric this in

was margin million. X.X%, gross the Gross $XX.X quarter for profit at but

costs, improvement Agent from Partnership management the gross a advertising cost million reflecting X.X%, a supported reduction improvement property-related expansion efficiencies, by $X.X totaled and efforts. million a year-over-year prior improved the $XX.X expenses, year, excluding Program full sequential For was million, XX% and $X.X Operating year. margin

$XX relentless progress nearly of our annual towards on additional taking million in make focus by we we're removing Through cost lowering steps profitability. million in XXXX, operating big excellent XXXX, efficiencies, After expenses to cost. $XX continue

cost You process should into loss and the on XXXX for efficiencies. continue focus $X.X Adjusted EBITDA expect QX $XX.X improvement decreasing was million we sequentially. cost maintain million to as

million year, full $XX XXXX. million improvement the loss to ] XX% over was or For adjusted [ EBITDA $XX.X

cash of million, exceeding unrestricted the total $XX the our million carried with value totaled incorporating As liquidity quarter's inventory. end, net of when $XX

asset-backed we a rise, expect while maintaining using increase leverage volumes acquisition to our position. financial strong As facilities

Additionally, capital to beyond capital to discussions opportunities enhance asset-backed engage begun facilities and market core potentially position partnerships. our in our market we've

with of sold. to to Looking to in XXX first ahead, range homes XXX expect revenue we the million $XXX quarter $XXX million be

also anticipate better as on slightly achieving leverage. We continue EBITDA we focusing adjusted operating

focused stability As long-term acquisition XXXX, you. Offerpad positioning we cost and remain discipline Thank on we growth. for increasing maintaining and enter activity,

now for will call open questions. the We

Operator

[Operator Instructions].

Our with the Colantuoni Jefferies. John from question company, comes first

John Colantuoni

the and the while Maybe box buyback the you Can that unit a systems continuing expanding you've give buy contributing also on you improved box. more grow starting with you're faster bit and can buy adjusting provide to instituted helped to talk you little and detail that how economics? processes on confidence build that systems the

what into for a doing you're can schedule elements more to spoke you there? process little inspections. to it second, make And you simplifying consumers of to provide the to going just seamless more receive bit offers context and offer Maybe be certain exactly

Brian Bair

Sure. Awesome.

The basically moving market the buy with expanding range, start is So as that. about far up price dynamics, home first interesting [indiscernible] really What's box, happened, I'll median into we for John. get is price price of very the question, affordability. were market-specific. we in this when home as and difficult -- are the -- the the and doing what in now obviously, focused first we're because interesting really right when saw to What's we transition first-time lower, a on it's homebuyers the

a really we've what XXX and we X point. really the expanded buy box focused it remove up so were the done And to where price to around

XXX maybe XXX price another. and one allows Now on of buyers we're coming us sale the house another really their to market. out points that to find Basically, are that equity XXX from into the to to moving

important. been that's really So

the And the into first other really question asked ties one. actually you

done cash what the we've really process. And so is enhance offer

go website, well. helps to So about allows does price in they what customers house so were customer our range with a few get instantly more us minutes. really and price about schedule us visibility us when even they'll to is point their But face-to-face our inspection up their within process as then just it that within to to allows us new And the to their tell the more get the they their buying, also a what other gives withou products. inspection can also also which it which talk to schedule to home, higher on now as exactly room we a living days, they

work as if doesn't whatever offer them options a their give list them to home well. we for so for can cash And reason,

been seller so the process. really far they engagement finding has customer so where the really are And in strong,

Operator

comes question the company, Nick next from with JMP. Jones Our

Luke Edward Meindl

guess acquisition for industry the target, think how we're we This month just is given X,XXX quarter-to-quarter with Luke throughout from particularly that are ramp conditions should a still tough about that the experiencing? standpoint, per on Nick. I year

Peter Knag

our products in other [indiscernible] our are highlight is Luke, Thank [ so important, that Northstar ]. as discussed, the platform Yes. you too, X,XXX that is through the adjusted to as we've mix But across head services margins I'd EBITDA of all towards be flow cash types products important we and those as we the with then different positive positive. year and really move that, after

quarter, So really not identified at to as bit, and on we're we've the around to really be an mix quarter Northstar into we towards moving -- for a X,XXX little sequentially given but and last X year, be X,XXX to the depend get operational we're going first but drivers homes won't from quarter, homes perspective. does we first there's we that named for as expect second either, we year, get level guidance into we as that that our ] -- it be [ going

done that Partnership we've to in platform at more and the process that the and Offer also that products, us stay going and done Cash Plus RENOVATE. allow wider the Agent is and the services, improvements One it's then buy to changes are homes Direct products margins we've to other the

We're we to expect expect we as that on hit rate ready guidance that. year. we're be a executing also And but the the exit not to to to be that when homes, exit neighborhood run EBITDA on focused So we we basis, exactly adjusted in to alongside we give X,XXX breakeven as also year.

Operator

company, Our next Ryan KBW. with the Tomasello from comes question

Ryan Tomasello

capital the what pending talking say, can the and a raise, capital quarter. looking this on would purchase our the last but to I obviously, of that capital say follow-up around volume about? best guys just you time to do of raised what X,XXX much is that of option dependent say you on point there? a you you raise you're to How regarding this you're limited then did can is And target what at something anything mean, similar Just else or size structure just you consider

Brian Bair

Yes.

a So we from first capital of a we way. perspective, -- all, path have either

get there, on conversations, are right capital We We that it's finalized probably that next but looking the quarter. is of we have the structure. something will we a TBD. haven't course, opportunities, still more we're information right And cost at it's capital markets in important, and of

-- say do either that only -- moderate, I'd we across liquidity we couple balance that in and banks but But the million have foremost, our also on of inventory asset-backed equity now -- want we have and regardless something with did with and strong as going with with third first I small quarter our partners. last just that also $XX that path partners before, we those highlight percentage. the way, the different net of cash the in stay to I'd or we quarters, have we ended about between our and a back then a highlight, very sheet relationships same have whether we those we've highlighted course

to down XX moderated end the year. at of the that So

the in and million the net homes, capital. we rest ended Some XX of the equity the it, in that's of

focused -- alternatives, strategic to at at us still we at enabling operate prepared to strategic from one, we're we're that in looking cost which we're improvements, so perspective pillars second through are Brian critical markets be we his is process a talked move it capital which So -- a and not the there's as volumes profitable; in X but we and looking remarks. on: is outs, lower

our last really into then partnership platform investing everything services. developing the the titration our And question. deeper the then in and products pillar and business products And and in out else markets is finally, agent

at looking we but highlight purposes. and operational that for it's options, capital are think those markets to we important So it's

is other I at of looking it cost looking focus on that liquidity, The enhancing something is reason. at also thing to that unrestricted we're flexibility we're capital. and our that for it cash want our of our gives course, But

our to reasons to initiatives. different options. the of we're get couple try cost as alongside a cost-out at there's want of looking capital And best some So that we well

Ryan Tomasello

real for follow-up Great. you And in the mentioned organized digesting just then world commission still your and estate briefly, all guess another remarks prepared Brian. to I just structures. changes

Now quarter the what that of just the that may terms market have how may impact provide, seeing not be you take Offerpad under any of another Brian, in evolving seeing you're our or we can update of in commissions, on belt, that? to the advantage you're

Brian Bair

Yes.

like we're the little of I the settled confusion seeing -- bit. I Partnership it's seeing where out a benefit Agent of Program. overall, still think I feel think The that's from on structures. the our a you're -- commission bit there some growth in

are to We what starting the to us on that that have more we offer can the put an it that's grow. and more pay market, to they for with us submit agents so home continues to first see before

opportunity have and As do just to center feel be buyers, we and want talk for to a solution but want about be not to solution an agents we lot, center a we platforms, we everyone, sellers builders for brokerages and we and and a that.

pause think little settled bit. it a still But top I commission settled little that's place. getting helping on things everyone's bit now, There's think think think, of and all it's I significant, So us in I took I but Program. when our definitely mind Partnership think, Agent a I are a right sits,

Operator

Our K. Dae the comes question company, Lee JPMorgan. from next with

Dae Lee

Home like quarter, down how thinking revised was pace. the On target one, what you biggest factor guys guys have acquisition about drove are you you [indiscernible] first into acquisition the that first heading as

more curious happen like acquiring more you to like homes? you needs -- confident for in driving guys just And what's So what to that? for be to

for And is does of are then you is still at target is cash better, slightly margin clarify normal that kind business contribution that core adjusted And your for EBITDA end year-over-year? your Or could meaning, then that assume XQ quarter-over-quarter? of the guide what secondly, range? lower

Brian Bair

in just as part jump Home the me Let far acquisitions. first on operationally as

be not early selling more to into have in -- an the maybe -- rates volumes aggressive be going Obviously, flat, now, it's a going the We of of those. but flat reducing spring at we're year-over-year. were bit more been getting out came we to XXXX, little election. anticipating it they're with transaction as but Right expecting season, increase, and to increase Fed through some the reducing

And that's putting with seeing so increase services a optimistic in place. from year. buy expanding we're cautiously about more the slight But maybe our box, where

the really But also, just key that a buying want and the be I to think that it's questions want stays [indiscernible] or normal, more buying demand getting And inventory. buying feel can homes sure and period buy is we few we that of that we and than of opportunities we're renovate shortest homes in more time. buyer we the make sell weaker right buy and as of a to

just different things been buyers, said, can there's an out offer we're pockets do process they exactly our those or is thing on for type little so And want that different like see and to we're different But of can homes. to what large to we've And is in mean to on able away knowing homes from I I HOAs is we sell we different where the different of things before all there's small to by there been one areas have one as focused choose HOAs, right more buy. high a lots. where which from on markets to buy we because lot high the right their we're affordability. a Homes of staying homes areas And going the great. more and has another making of point Town of now buying want I that. homes first, bit

good where but margins homes the of And what with buy. really been has far as there opportunities can that's more can the right the giving we think as also are volume right getting Program We right opportunity. buy we as Partnership the Agent The well.

Peter Knag

Okay. Dae, EBITDA. jump adjusted I'll in And on

going So we're And We're the we're quarter So be volume, with -- given platform adjusted visibility Offer That's our Cash across have given will right? doing into also already we're doing QX, the the what the or of with a right? and of the funnel that that's products for we guidance it's what adjusted across perspective. services. along execute EBITDA in quarter, second the the We've process. across that. for the from year. the quarter will what that and from lot you call, sequentially have in again, EBITDA timing And quarter line improved perspective. then a Offer Cash new expecting, to second year. a other second going deeper So into half to across We're through around using our do anchored and we'll XX-K back of improve

reductions that of then breakeven reaching expense and again positive. stress I'd EBITDA is adjusted part

think in As fixed took did call. out I to $XX to we aware, the ready And on million in get million We it, but there additional XXXX. we're roughly from you're cost probably next our another we'll effectively that $XX be outs will to guide earnings not XXXX. cost some

all seeing we're to us the from in our there. take confidence proven the reduce top line is And of operating expense so going together and that to what's ability

Brian Bair

really of on either or there within global I'll the We're obviously, it. of giving that it. just doing on we on talent, It's the enhancements the Cash much a we're near that that's Offer looking some actually our capital we're end leverage performance-based thing we there things the integrating with and at it, seller a here, headcount offshore looking say and leveraging then technology, end experience. at optimizations, of range talent one that better there's compensation. offer as sit -- one other lot ways global minutes. we're Resource of the There's that is and leveraging X opportunities savings

to a looking things are So are operations those at we -- category things we're of into more as get We put look every at. operational X section that going efficiency. to it really

Operator

with the Goldman from Sachs. company, question next Our comes Ng Michael

Michael Ng

to as just those respond clear exclusive cooperation was on industry, potential that? for Brian, changes, and one offer could your to to any changes I more participant of whether have if just observer or inventory any provide a I you of and may Brian. how have off-market pad wondering an anything the that's perspective like

Brian Bair

especially last changes obviously we're a lot year. of now, the Right happened in over seeing

I continue see think we'll to changes.

on so you that -- the commission that's pay, pass-through definitely the are we of do. highest there's cost end, One ways back can that couple our different it. look a We at we especially

that side us ways so homes. compensation help we drive on to And do either basically agents and and more have to two of there's not we our it. can obviously can -- pay leverage opportunities sell compensation We lever or to much as to make more the

are And agent there. at it. so two definitely community different we far are between ways the finding the we buyers leveraging now, out look homes, and Right fewer

on side. our So commission we the definitely leverage agent community

the So I a to look settles little but more, continue selling bit And do expand. this are in this we'll take at in grow thing a a as and as time bit. we all little think things

anywhere out [ more ] to commission and reaching is. of things the comfortable commissions cobalt seeing what the Agents You're asking X% range. from and X% getting

want this market they our knowing have we out want we to commissions and to right and end their we'll know helping. now, that having we're are depending negotiate take as Offerpad, agents, said, reach a When of at environment, in are leveraging they lead they'll conditions. on at what commissions. all be times, that, agents, as definitely Where continue to on But back don't it's to we look both

Operator

participation, today's the rest enjoy and call. day. Thank your your conclude will That of you for conference

Offerpad Solutions (OPAD) 24 Feb 252024 Q4 Earnings call transcript