Opendoor (OPEN) 7 Nov 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Opendoor Third Quarter 2024 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kimberly Neehausse, Investor Relations. Please go ahead.

afternoon. good and you, Thank website Details of in can commentary available of additional found results earnings release and our section our Relations which the management investor.opendoor.com. and on are Investor our at shareholder be letter, simultaneously Please Investor on corporate Relations will company's the the webcast note of call that website. this be section

fact undue I X discussed Such securities to forward-looking historical remind start, may conditions, the meaning for business These materially promises statements laws. cause risks within statements statements statements opportunity and statements statements and are of that than the and be from we differ Opendoor's in anticipated those be including, market Before neither federal could involve you would that like future should the on All placed expansion other to, reliance and forward-looking financial and not contains them. deemed operations. following not actual but that plans, management discussion uncertainties are statements to of objectives forward-looking, guarantees, regarding here. results strategy nor limited

otherwise, measures required financial company assumes law. The them obligation to company's as new evaluate operational references these whether measures. contains information, measurements events as based supplemental results year that XXXX, updated of differ call, annual that expectations of after information by made this useful as current on responses non-GAAP recent to statements periodic Opendoor's on actual for and except Factors be to the the conference non-GAAP XX, by management's believes including cause certain could update can most from to forward-looking your section a and assumptions as revise financial XX-K investors Form reports or filed The discussion performance. report financial ended on found in are today or December Additional the statements Risk are our no following questions, as XX-K. Any to of result forward-looking reasonable Opendoor to future

website For a directly financial investor.opendoor.com. at GAAP measures reconciliation of see metric, the these non-GAAP to of each most our comparable please

the turn Chief now of Wheeler, will over Opendoor. call Carrie to Officer I Executive

Good afternoon. today I'll on the with Christie is Schwartz. me call

transactions, the strong we helped but delivered like contributions started, joined Product to focused volumes, driven track We're team. get our this our and thousands Officer, to contribution These clarity earlier leaders Officer housing moment week we're execution month. a a having has meaningful our third many leadership ease her guidance, Freiha acquisition new new will in help and in record disciplined consumers and Selene I'm innovation bring our transform that company residential continue well and perspectives served estate quarter, the to market. on revenue, market also platform of fresh ahead thank developing offline, confidence. mired stressful Despite selling, over bringing her deep home time opportunity of our process customers for deeply Christy is new we within in task, and transact to path past Christy our I'd Opendoor, business. is X to finance this to years, CFO September consumers. guide tremendous for and innovative our joined of us function Chief and Opendoor. At be trillion including the welcome hundreds as complex, uncertain, I'd since adjusted expertise Before leading see Rakesh like of done This Chief EBITDA Sherisa growth challenging profit as move joining massive how the already and to as of Millions who leverage to helped and lasting will products simplicity, progress has the consuming. no our across with by grateful are ahead. real leaders $X to will partnership that worth last we a XXXX. take redefine XXXX X. interim Technology and Opendoor shape Financial X these the of making small purposeful

to seller-focused continue offer, for also make We in provides progress cash with certainty. products. is Opendoor and which innovative all our developing recognized widely sellers simplicity

that many list who for address market developed we come us opportunity sellers. of these to exclusive While cash others Opendoor We've the test offer, are and sellers discovery. our the for there a price our want to products can

economics, is long-term Opendoor. to many with selling sellers We come vision enabling our and Opendoor us home. sensitive Opendoor listed and believe by offerings that dependent macro to to Both first our largely for less thus seller when and levels journey both exclusives that the Our spread not are with more sellers their reach are are for starts and capital-light. these products every extend are

previously in Promoter when sellers, Additionally, we're a Net are we observed Score additional unmet our need. that consumer increase an addressing these proof points options surface

our our the provides choose were about market are from we the adapt broader the our funds, broker this of optimistic during of impact selling and including their buyers is Opendoor buying going evolve meet transparency model how option commissions Opendoor on directly to from over pay response anticipate We allowing of of when and strategy changes for to that exclusives. concessions, enhancing to Association the use that will them we to by regions. this consumers time, National While needs to best Realtors the those the options all long-term accordingly ruling begun paying ruling, customers. to of a the early, quarter, of the is settlement implemented recent and buyer has potential own. stemming Practice transitioning list to In the and

making mind. decisions to We housing and risk top spread challenged the contend with market are continue of with management

and key in in experience the homes we do to overall in consecutive have out raised down elevated sales in our to but May, Delisting further a point cut prolonging year. In clearance QX, Overall, we spreads relief the throughout housing Although back declined record has housing deterioration home combination typical. existing they the high prioritizing rates Fed saw continued elevated step mortgage implemented and healthy affordability of rate the market we a housing and operate of home buyers rates market short-lived. prices XX last us Higher with basis response underwrite management. XXXX quarter, second seasonally We more margins, market, than climb in volumes. been sidelines. indicators track impact continue risk acquisition rate keeping the called The September, third is spreads on level near the to quarter. to in on concerns, which sellers spread for is to levels and enable rates the to lowest

of to remain we to and is versus net our respond risk focused balance One are by to ultimately levels. We our our and to losses strengths achieving adjusting steps this reducing net on committed efficiently. spread intently ability adjusted end, taking operate income market To dynamically signals more profitability. growth

of our which Over headcount roughly significant $XX cost workforce. we expected of people year, of August, improvements is of to XXX savings. announced structure. about a separation made provide reduction the course this approximately or cost of we mainstay, today, we've the XX% to our announced In million And annual

our dedication org This it more department it to I'd hard addition all are taken of into and structure a to door efficiently. building to and team business. members lightly decision was we move costs, our is for difficult not to In choice faster reducing flattening right today. allow thank us for and our their work like our open is and And the what but

our and While proactively are our offering. the strengthening housing environment business remains challenging, we

seize conditions market believe by benefit and our and guidance. results market current financial underserved Christy well a now We company. With are that, are build as that opportunity generational and normalizes, will the to we positioned to review the

Carrie. you, Thank

guidance continuing navigate delivered performance a $X.X in challenging cost discipline execution exceeding range. of the the while high quarter third third billion housing We to strong of Our end quarter, revenue and reflects environment. our

the homes the was we environment higher levels price delistings due ahead clearance than spend of range. clearance in from small quarter, concessions in particularly XXXX. coupled which respectively. monthly continue $XXX the acquisition Adjusted purchased This X,XXX the exercise a lower and our was observe down buyer home XX% deteriorating, in down a slightly guidance quarter, which performance of in was alongside in rates, margin May with of resale pullback aided variable third This end throughout our as X.X% a revenue late decline $XX side, lower quarter, than impact the elevated the a On our discipline $XX the of commissions, expectations and business. reflected we expenses selling lower-than-expected spread beginning guidance that the and ahead sequentially. direct our result and This fixed marketing and with expected, high of in was in signals to quarter from in third by million cost quarter, million outperformance macro as appreciation. Contribution coupled of the million million spend, second totaled for are was was to advertising pullback operating broker costs, and $XXX we expenses

$XX was due and contribution high million, our the outperforming margin cost significantly loss to EBITDA of adjusted discipline. range ongoing Finally, end outperformance guidance

capital, Turning to includes in our homes balance of invested $XXX and $XXX which with unrestricted and in quarter million and billion the primarily assets. cash related million in securities $X.X marketable equity ended total sheet. We

facilities of had billion facilities billion of and $X in credit billion capacity term senior debt committed nonrecourse senior $X was of capacity which total borrowing $X.X of borrowing also mezzanine $X asset-backed We composed and revolving billion.

under Carrie to off that the operating remains we've macro-neutral be witnessed in pressure. housing the we a expecting while As as mentioned, what year started market environment,

north lower on third seen during in fourth expect our actions translated home quarter While to offers, they sold In Homeowners last homes we've low -- to spreads the as pressure acquisitions, mortgage prominent. dynamic existing pace million adjusted our of the will rate rebounded anticipated given constraints seasonality first in are seasonally rate were response, into higher be This fourth buyer and $XXX the have since to lows locked these quarters, under than a we just into X season. quarter previously to our the X%. enables still from over price into year. These spring to homes. which affordability quarter in put us be has to sales discussed, annual rates third of and during generally mortgages response quarter the embed remain X-year fell of cuts those selling Fed, spreads

higher sequentially are spreads they are year, due than While dynamic. down to coming this last

and believe appropriate clearance respond as will manage as business spreads to acquire continue that in result including We margin are market improvements reductions. delisting HPA our for rates, homes signals, rates and we growth, will rate of a potential risk we and we to

loss EBITDA to which between and and of million contribution And We $XX be between between to profit million. expect million X.X%. million, contribution $XXX $XX margin $XXX $XX million, a fourth adjusted revenue quarter million and implies X.X% $XX

We and approximately as operating the expenses, define which expect contribution delta adjusted $XX to million. between be we EBITDA profit adjusted

the home Our fourth quarter during to guidance environment. housing contribution lower softer price margin due the hold period reflects appreciation

Additionally, due of note, our To older, the margins environment. of slower are target annual under a rates margin newer implies market range over housing of margin margin while an a pressure lead which resale homes. to in and operating full X.X%, difficult lower-margin mix guidance contribution revenue homes XX that higher-margin basis favors midpoint shy our incredibly acquisition year to points

the We today in Mainstay expect a to separation million total annualized announced costs. that our in an to and reduction quarter $XX from expenses million savings we reduction other million of annualized the in restructuring announced $XX force approximately restructuring we of in the approximately and The August. from incur in $XX force in to fourth expects savings related additional see company in

continue we things with to pleased focus we'll on are quarter can the our We performance, third control. and

in breakeven attractive our are of offer turn efficiently also the as service milestone. I'd over like We most offers performance line to to operating committed as operator open our the to customers now to our strengthening possible the financial call while questions. order in up to the to reaching for

the Ygal [Operator with Citigroup. line of Arounian first Instructions] from question Our comes

think for below the to and expected first, again. in have well a you where at that big be which think where Do of getting looking picture market. out least continue And how billion you to to here kind target. challenged the you that where you've framework are the then just I breakeven, you today, of guys this a that we in tying it if taking year? positions run market laid to of next think we and to that be lay will have risk just guys can into where said like the Or just Just are Fort moved more about the challenging today I next $XX we we get housing guess if view we what year net where there -- breakeven? to are it rates efficiencies? market we you cost to up out of kind looks year, to are, takes reduction continues is get how rate, it like again where

Ygal, it's you question. Thank for Christy here. the

performance, we've of We positive including separation macro remain achieving ANI factors the sooner. continue CM get of actions income. cetera. et to cost service alongside The taken quarter, spreads, That last to ability Mainstay focused announced impact our there's said, adjusted on that are ANI net to positive, reach structure the a number environment, breakeven today, reducing our in to our

structure, we have other were continue fixed cost will and actions in that to meaningful and so One efficiencies. we've we And the I giving note impair look for do to are want is our update thing to the today structure an we'll our today, rescale not cost business. not framework to taken reduce taken steps the while ability our primarily on

focused on doing way. in intent are that turns, sustainable on when and the the growing business housing we We market a

Okay.

those think seeing follow-up of color And want and how framework you're you you or related piece bit but expanding And over on how a know the and to share there overall general those big what just how more business little the be? pace? so I do to you as important what products, question. expect the just time, the and a a if probably they're could about asset-light those early, or

more cash A we direct than is think Carrie. our comments. potential better to their It's and to like to sell with what we but them cell cash now you that's sell And both, within we're enable couple want the present They This incremental can door, it certain when They is finding fast, is sell it's that the we sure options, be home. can of we thermal. a of sell can still higher assurance a way, our product. market offer, which to open that. business. more got offer, X listing they has value a of simple your that now have you it's Ygal, We're it's now. they'd our customer is listing. and probably be One, and that list customer. core to accretive the performing magical year. like work continue do largely full will overall for the Promoter it's Score, conversion, understand who make Net higher going market to to a the business. We've for nationwide even of of other to And the expectations, things it through make seamless have on the balance

by. So that's list, encouraged we're which

which that's great. what This whatever we market because other marketplace. are saying would their the like about trialing who to These cannot customers solutions. can in them access in home, in alternative in which we the is been The X green of that for is being is the piece reason, the marketplace. this actually we've are see but not And pretty with ready Carolinas, selling shoots this because it they good is traditional in yes think way, timely list provide to customers we week went to is from and week to launching actually potentially, for MLS continue Dallas,

would to to are to now, focus capital to say is encouraged less on in we're time but So on And X it's to on other and the business points to very want the to to think solid that over work we're to really of going markets mix goal it enough going marketplace. we're right continue proof XXXX. these diversify work bring it. I small intensive. The we be continue

Our line question Ryan KBW. next of comes with from Tomasello the

meaningfully offering if settlement making I approach I the on more a appreciate buyer is a came you've just been down limit this we concessions like a essentially was what XX costs, then impact should where that looking direct decline approach Opendoor from looks of NAR of bps running. blanket these prepared up the a it remarks, commissions? to . lower terms approaching that and seen far thus pretty selling And to there. commission. they as concessions, how your certain Is benefit taking Carrie, bit about from agent they've your in you're and hoping at view of

Yes. Ryan, question. good things. it's Carrie. a couple That's A of

paying concessions offering we So buyers. have begun from blanket to river our commission by transitioning a to

get, pockets that they that we us to going those whether outcome decide want We're agent, resale bring the their dollars, deploy to you offer is And for for how pay transaction. formulaic, to the or to on best basis. vary. best offer us the gets concession can for that's the to not they concessions. it to agnostic. they're brought in buyer make that If we're sure want solving going we to use a just are It We

So seeing combination for what quarter-on-quarter. in a That is broker bit down the concessions. spending money what of we're commission today right that buyer now come us on terms of and little has you're

the yet. was That decline an You QX you seeing is revenue come revenue. revenue. I can't now meaningfully way that of shows down see broker offset up, to What to in like the we're of by are is to X.X% down all costs seeing or X.X% right buyer seeing selling like it think QX, concession commission. you're But it's

actually see today. you that can't So

evolve down So total time, those costs we're think to they're a those and in to how over about have going and start to smidge.

proof about so But basis. points transparency provide straight with the proof this, draw when points But combined this right? more costs over we're on say I more a really, is meaningful into can more gets it X sustainable how to we if we months more too far, you early all how a on have say, think we think probably, line, it it's I'd some trend. think And I compression those if time have is. to then

think I figure still this to everyone trying in ourselves system the included. out. agents, is consumers

super commissions of sticking And then concessions has clear MLS thing the debate shifted away other practices, That's from next in to with the like terms seems cooperation. where policies up. triangulating and like it. helpful general the Got shows that color industry just into it

and into any just cooperation another was I around rollback weaker share So your said listings Opendoor where industry for an run? your thoughts has the how story would of negative MLS a you the appeal a plays a I or of proposition . there hoping the guess, or be long way, stronghold can clear changes to value net over positive business on

at say mean a is And of is think we that's level, at what I good ethos the I we're people about we're And we've would the availability the built MLS what high like people and is and there at for highest guess are doesn't aligned for same the clear that. and that like of consumer cooperation Obviously, because with. anything And giving all first it's if access stand time, I level something for MLS the business, about transparency you for. whom our evolution is for there too. full through sort room that's work.

system, to the that we're that's extent And happening that innovation favor so in traditional too. of the there's in

good be in we're ultimately, that choice. stand be of could for that to There supportive will their a of. form. MLS alongside are So with reasons that, should other things that We exist consumers why align up see going consumer current lot

[Operator comes line of Instructions] McAndrew from Nick Zelman question Associates. & with Our the next

of to markets you year the briefly, might just beginning in Anything of all Carrie, going XX with the them. just mentioned model? are that the this of with that versus, rollout nearly from Opendoor. are offer to have on you that choosing demographics at can list segments add list say, there customer cash higher terms or continued with sellers of Opendoor type but the showing are use the particular curious if I'm engagement option of traditional

pressures core market. value to broad this like demographic home the or in today -- they also that. home test to this that the XX-day which time can them need but pretty unique meet, to they they exactly cell selling reason, what sell, the we from their gives window their a in And States. for not there's demo, whatever distinct do terms have they on of love swath assurance that with a wants them. tire but time say if a they but a you'd across And of too, have to offer, it's direct they that it, of to the point on which is certain our this back I in sellers know of you go to But offer and alongside happy No, like that and see can ahead want list and fall that, when It's extent them really engage United not some expect of and can to we're net the time. with to just safety that have lender do some a

nothing terms So in . of distinct really demo.

just on points Got have from ones? marketing versus conversion to and more rates any And brand channels? -- you seeing focus media, leveraging add maybe helpful. you're just what if you're partnership dollars color markets between more key in then know newer any been And I mature That's differences toward seeing shifting so brand past. curious funnel top the of it. in And can awareness growth

and I'd exactly drives you conversion. marketing to which said, to that continue say that is we Yes. because for brand higher a we're us, mean drives at have I going higher invest level, like higher trust driving high found awareness what in

So naturally have and in awareness, a basis. just like-for-like more we on markets those we higher where time convert

a little tell what we're light to can in we brand spend pulled in spreads where you marketing were. on I else I so bit would our just trying in going be that would of And continue to QX, helpful. back say invest

bodes just . think spring to leaning drive in as to but to continue opportunistically selling the QX, we're about us. into think going rising invest it's think a we season. all I to into list brand for we'll we tide look because

to back further at like this Carrie the closing for call questions to time. Wheeler no over showing I'd remarks. hand I'm And

time always, QX. look to quarter. speaking your operator. for Thanks, we Thanks, Great. everyone, to the We appreciate questions and forward this as you in

for This conference concludes call. you participation. your Thank today's

may You now disconnect.