Opendoor (OPEN)

Whitney Kukulka IR
Eric Wu Co-Founder and CEO
Carrie Wheeler CFO
Andrew Low Ah Kee President
Jason Helfstein Oppenheimer
Nick Jones Citi
Ed Yruma KeyBanc
Ygal Arounian Wedbush Securities
Yoni Yadgaran Credit Suisse
Call transcript
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Good day, and thank you for standing by. Welcome to the Opendoor First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference may be recorded. [Operator Instructions] I’d now like to hand the conference over to your host today, Whitney Kukulka, Investor Relations. Please go ahead.

Whitney Kukulka

gentlemen. and ladies afternoon, Good Thank you Financial First XXXX for joining Conference Call. us Results Opendoor’s Quarter for

our Investor earnings be additional Joining the and section release our Investor shareholder details Wu, Kee, webcast company’s the Co-Founder Financial and me Q&A available the are President, results management will at can and remarks on the are Officer. today’s on and Chief call be today portion joining corporate of Executive letter, Eric that will website found our in on note Low of this Relations commentary of of Officer; which the Please be Andrew Carrie section website. Carry Chief prepared and Wheeler, investor.opendoor.com. Ah for for Relations call Eric Full call. simultaneously

we future not like I contains laws, statements remind within the federal and that expectations to, meaning results to business. limited involve discussed would statements including, that actual forward-looking cause management’s you financial nor These securities may risks following of materially and and from and Opendoor’s the discussion the promises neither plans but here. start, Before differ to those guarantees results are uncertainties statements the for regarding

required and assumes of as law. non-GAAP them are your The discussion or update financial December contain XX, as quarterly actual call, including forward-looking cause period no XXXX, XXXX, including measures. as with expectations information obligation following filings, by that the ended from Form Factors can forward-looking and March new otherwise, statements found SEC to Additional this whether to could Opendoor’s Opendoor on in filed periodic the in of annual to today XX, to results for current XX-Q on report Any year conference XX-K ended except the or differ Opendoor’s be result other section Risk the SEC. of based may developments the a report for questions, be statements made revise on responses Form

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

Now Eric? to Eric. I will turn the call over

Eric Wu

XXXX QX forward Thank you, Whitney. for strong customer. of as excited And call. and momentum guidance I’m ends we to we share QX and results exceeded the have the significant welcome and our with the do looking to Opendoor our Everything to QX year. at remainder starts earnings our

So of one [Audio/Video let’s our Opendoor. customers, hearing about start from Bennett their experience the recent family, with by Presentation]

Eric Wu

possible A stories simplicity, to for greater the pursuit are you special of as of in sell products and flight. future digital and the and traditional These move a the a at Opendoor. less our make a Bennetts to simple choosing always it distant to lot process. now. home far seems thank Today, inspire We deliver It buy, us speed than the that our hailing buying button. certainty be believe the booking as the and selling can will that or ride that, a that is future tap

our that a saw demand numbers number set permanent. records. showing conversion and new number real of seismic number as This seeing launched is increasing for record in digital we a seller are QX, we consumer offers, a shift manner markets. up record record in We set of in we products a is We of

Taking often I that of so Promoter building. sellers, XX a did back, step resonates still get from Opendoor north Score market. us a we’re customers love in Net today’s question whether the what we Lastly, our with telling

yes, their Yet, time. select because steps and just we with win we’ve to metrics every months ability a dozens of appreciation their It’s stories an and price experiencing Opendoor getting for don’t the them upfront of are customers, without and our a closing end-to-end for and in than offer resonates offers decades, customers the date preferred fastest of home XX of and saying, confidence cash more peace certainly homes weekend. that saving market. our in gives stand at next the are step. We first we seller’s our What mind transact houses, aren’t repairs, Opendoor is home, built them. to delivers open experience digital iBuyer a results

million adjusted EBITDA of performance loss areas a same million, driven was In by last terms and million up This QX in QX, QX of results, of XXXX. of $XX from of loss quarter. XXXX; versus gross we XXXX; generated of XXX% an profit, million $XXX X focus $X up of down of XXX% the $XX adjusted discussed QX in versus revenue, of we

growth. in up seeing QX, in surge improvements real seller at These fourth First, and we awareness levels. with driven continued to versus are Even mentioned, number conversion existing XX% buy-box. our acquire increases of we record record consumer a saw driving us this we requests market by in increasing I enabled are quarter of In have XXXX. X,XXX as QX, homes offer demand, the

we sellers, homes. QX, our buyers this X,XXX Additionally, efficiencies customer marketing with our growth in adoption, operational to and ultimately, greater and, and continues volume transaction share. awareness, sold in flywheel Between drive market

at QX, and our additional in we which date. to to In the additional new footprint X our we an QX, to increasing bringing scaling end total quarter. our markets X we’ve of are markets, total markets. launched Already rapidly XX to brought launched the Second, geographic markets, XX

for homeowner and X foundation years every efficient of the time. better our market This launched at and lays markets as same-day We the acceleration growth new getting this. to And towards we in nationwide. for serve expansion are the single we on first march more goal QX,

time-consuming component opportunity customer and for escrow and critical substantially digital the the opening an better process. building by are certainty both. started a move, a to are buying, also selling or come off-line, up home-selling an margin want the bringing we We way they incremental and We consumers experience, because whether experience transaction, integrated one-stop to to improving us. then complex speed Today, Opendoor they estate. reimagining as otherwise simplicity, real of title shop the while for Third,

and are buying. of Buying our Next, to Similar expanded Buy that Home with with we are Opendoor of Opendoor to Opendoor, Opendoor include and to suite make investing also sellers Loans, we knowing X/X chances products we bids, Opendoor Financing launched quarter, and homebuyers their leverage submit allowing cash of their to fast. doubling certain Opendoor-backed Offers, simple, as This offer just to with Opendoor accepted. past being

all with trade-in Additionally, experience, we’ve move into helping the our integrated buy home, sell and and seller existing our suite next product and of products. escrow home, title their digital seamlessly, their Opendoor finance within customers close

hard build by occurs our how the our We This every culture. for and about scenes. day behind performance of These and teammates movers will leverage products teammates financial experience, business nationwide. the outcome work pricing, the focus technology, improve that the continue customer markets to to infrastructure our the and best-in-class operational to capital obsess is

in early very are this We of shift innings to the housing. in more a experience digital

our the will turn it march sell continue energized button. tap I’ll of to at against opportunities vision are to ahead, all by possible it and to a Carrie. now buy to and we We make and move the

Carrie Wheeler

Eric. shareholder our quarter provided on We commentary our Thanks, first results letter. in

of we to quarter off So before on let me quickly some of the questions. move on the cover highlights

solution. and had we conversion offer expansions We growing versus both market buy-box up demonstrated first driven by Eric XX% As Opendoor well demand an QX performance the QX and XX% for consumer Acquisition said, record up in levels growth quarter. as volume versus and of QX, XXXX. purchased as QX X,XXX new homes was exceptional launches.

continue As surpass highs volumes acquisition the QX. business, scale all-time we to to we rapidly for expect in

QX, sold XXX% inventory $XXX list On relative over an by XXXX. quarter seeing selling to revenue Average also sold generating and XX significantly X,XXX XX XXXX. Consistent growth outperforming up days This XX% what versus inventory revenue price driven X% the sequential and the up higher quarter performance side, sequentially entering in from of a with up tailwind the retail market, depend home increase QX high days million, was we we velocity. our per first homes with overall of are revenue for of transaction guidance. QX, our is in in we’re through the in homes largely

X and noted, end by plan we to Eric have As markets X QX. in also the launched QX more has of

well way being our markets in We’re on year-end. by to XX

and to meaningful in expect contribute these XXXX new markets We to beyond. growth revenue

economics and points very versus home price first XX% fresh Contribution XXX% XXXX. up a quarter margin the XXXX. and QX, up basis driven in inventory strong represented of from our XXX management down were XX.X%, points quarter-on-quarter QX own XXX largely in versus Our inventory, QX, appreciation QX strategies. This of of book unit up million a of and combination basis by a profit $XX strong was

net and negative with the $XX operating period. million million, QX February, of cash was loss loss compared million in million of securities. XX.X% with we leverage ago sheet, in billion XXXX. upside, Adjusted negative in adjusted approximately in and to XXXX. negative XXXX EBITDA QX in ending of benefits a measured $XX The to to negative guidance million difference primary was our which in in $XX Finally, base. versus margin by raised to quarter X.X% prices, With revenue or equity EBITDA average in EBITDA the $XX marketable profit million provide Adjusted due revenue. QX well was was balance Adjusted in offering close contribution our year X.X% a QX of QX operating higher margin XXXX million were and $XXX X.X% of the breakeven adjusted a expenses, negative of QX as our ahead loss income and $X.X expense performance regard the incremental and against $X $XX in all between up QX in home EBITDA, unit from

fund initiatives. expense to which compensation base to product stock-based capitalized growth well also $XXX are touch quarter, was million. We on like our and this I’d

larger equity going call, as in is in As to a primarily result to expect is related public quarter December this awards XXXX. and prior than of expense our noted in historical much I we’d a employees typical earnings realized

settle Overall, and good year be to For stock-based QX QX in expect compensation about then each we the in very approximately in ahead. at $XXX feel you should your million modeling of and expense million QX. to down $XX purposes,

$X.XXX For million $X.XXX to positive to negative billion, $X the second of $X adjusted range and quarter, revenue we from million. to expect EBITDA billion

On QX XX% high guidance implies end sequential the revenue side, approximately from of levels. the growth

Looking number acquisitions. the mark expect a we ahead of home to half, record to QX second

QX which QX. previously to indicator the or note of of those the respect home. of the Opendoor’s margins year market we we investments still in framework out play weighted our same anticipate marketing, across half, to QX and and half throughout With the contract expect revenue benefit under integrated half. do leading at continued thinking roughly a momentum, buy also we homes from to back we first we dollar EBITDA, QX is to adjusted the will at X,XXX looking that contract OpEx the record mix for believe of XXXX trends make normalizes. shift X,XXX outlook increase XXXX. margins to $X.X the of our the the QX good in sell as half we’ve in another strong as the a the homes results leadership back inventory QX end similar We end and to the first compares the solutions billion revenue and As roughly in a in talked secular about value, remaining Furthermore, expect purchased trends sequentially step-up had Notwithstanding to The being reflective operating sequential I’d contribution to adjusted to people. year. expenses strong revenue in X/X unit and in consumers coming under through be in moderate with performance proportions year, quarters we expect to increasingly digital-first, technology of are for of

our to and That operator, to customers, technology platform on team, to call execute questions. for the Thank we’ll up and back operating the value concludes our and our remarks. the partners turn I’d deliver open line have shareholders. mission formal to you. long-term We and our like the


Jason [Operator Oppenheimer. question Instructions] from with first comes Our Helfstein

Jason Helfstein

I’m ask going two. to

noted be thinking So the how greater revenue the services? talk function to selling year? home the expensive how much success So of kind it’s ability that. the about then versus remainder more to per then of per home attachment extent the homes. of you increase number of about a into in And should kind price one, revenue the average of kind appreciation move two, home for can of And you was in the we average

like cited I think L.A. home, you $X.X or or think million Florida was I something. it a

us of as like to many have limited think, homes I about iBuying below million. historically, $X.X thought like

work talk ability kind a just how So area about opens price the to bigger market. in of up that

Carrie Wheeler

it’s question. Jason, Thanks the Carrie. for

first revenue, we was all, majority of in what in of increase driven to XXX% volume respect with So QX, saw the quarter-on-quarter by vast, that growth. vast

that: the an in advancing comes of higher certainly, were more a XXX%, success key other things XXX beneficiary than are prices. factors is our of incorporates to buy-box. average of is There’s than that HPA, more the volume from resale component. points the We know; you price continued X one think growth. just I increase factors But price. as in Buy-box

I think that actually market was Los you Angeles. referenced

million the to step markets up million, the when over very is And strong. to as I edge outlook right one. prices, relates year We’re kind back, now respect right to resale housing all that we’ll up the for to market. our continue $X.X it now time. $X.X the you for across That’s With of balance of market in think

You know that.

rate resulted and high fast inventory in That’s strong a HPA. of in very for an pent-up incredibly very We’re trifecta demand very rates, housing. of and record low low

positive we the our the year and I of we’re resale of price not expansion, of the will a is to could more markets to for those And city year half respect of mix balance will part see the say strong. of quarter-on-quarter the dissipating that Given those to continue that’s, guidance then continue the is With the specifically. and inputs, continue to for buy-box those as balance would back tailwind. trend, I and again, we’re housing HPA be don’t for to expect year. evolve more in what last combination be providing

Eric Wu

nationwide. add, to And all teams obviously, on Jason, launching, aspirations expanding the hard are that service Yes, our working are homeowners new the focused only our buy-box and and markets. I’ll thing is

the And in. the we home service the the operate is of homes types really, goal of markets every so different we’re types to expanding in the operate we in, points. all -- price And


Jones question Our comes from with next Nick Citi.

Nick Jones

of mitigate rates remind you guess, the low interest environment be different buyer’s I the levels. bottom impact kind step interest other inventory frenzy first, it second way? or line? When really could for of the low on Opendoor’s over, the maybe shift guess, have swinging is it the things what be is the to just of Maybe back, business increasing more multi-decade you the Carrie, I kind in rates of going a pendulum taking is levels normalize, as reason? ability and the might inventory Great. us increasing and kind Did market? contemplated a a challenged then And record impact, to of a kind question to

Carrie Wheeler

Great. the thanks Good to hear your voice, Nick, for question.

turns, structure our to customers So with have respect point a structure to interest impact rates to might inventory is XX quite An and manageable we’d in point would the basis given our in we fees rates increase and on to rate, in increase in example, be that in of XXX expect terms cost view. there basis an would our pass translate of terms our cost what actually so move in quite modest. if

inventory something what positive if is market but would around your model levels now of what or down HPA more And kinds just also all part negative. record being even markets, to right go the from I were flat designed up is markets: across low markets, really very say our to of to was second work The neutral markets. question just

You as us maker should and of a also provider. a think market

to spreads negative, to where environment market a in would turned increase account can choose we decline. that HPA have So for

right is proposition, And But greater Last only be is HPA that we obviously, gainers market, of And an that’s now in Certainly, more mind. so secular increases when which is times uncertainty certainly, of said, I to by a would that are going macro, massive be as is our digital I top declines going expect what’s tailwind in for consumers, in we a in we provides I will spreads. value believe housing us, customers will that right that about uncertain now. on So is product say point always think market are certainty driving all you offset the cycles down that. value of adoption. be the macro for believe across continue to scenario. sellers. increased even result we as for share a to


Ed next Our from comes Yruma question KeyBanc. with

Ed Yruma

the homes? can just to half apply of aperture the quickly cities? the year? the second, as we velocity to I question. Is flip expansion my this on in begins first of I guess, can the side, guess, then systematically head of other opportunity maybe to homes the And that a target you you back on buy-box. is I increase there more terms that, of first, value-priced we the incredibly remains high. into How process of kind obviously, you’re buying? normalize expense the an expect Should that guess is

Andrew Low Ah Kee

the turn to we we’re piece looking team a consumers. over capability I’ll that can places of Ed, to yes, where Andrew the and has into buy-box, I’ll then more it’s The our first offering a that that’s for here. With take respect we constantly a systematic building great provide Carrie. second job part process. that, to believe done repeatable

As United take every what seller that States can offers. in Eric is aspiration the mentioned, advantage our Opendoor of

so tuning homes. we pricing models at work acquire the features, is so that identifying team those And can hard our

improvement point? Importantly, to take also of the against us buy-box. more a of than like do the home that home, just condition a it’s Carrie, to the dimensions that you age It’s enable drive price. second continuous want

Carrie Wheeler

Yes. Ed. the Thanks question, for

rates, demand velocity, for housing inputs So earlier, very the said talked housing. as the I now given right constrained pent-up about: for on is I strong market inventory,

don’t see impact model of our to could year. our the would There’s that that I that. results. chance as from balance and I those through a expect to material Velocity persist a follow We slow. the it feel


Arounian Ygal from Securities. comes with Wedbush question next Our

Ygal Arounian

conversion of some real As environment? course pricing the about of current there. conversion the in to expect reaching on the or think the you’ve up Can record that talk year. about First you done improvements you the HPA how improve to the question, you to and a just things move you’ve seller over continue you and the make offer noted,

that? driving how question, philosophy then And that what’s second conversion? Just you guess, around think your do about seller I inventory. on And real the

get biggest buying meaningful is off a XQ, in of or as you’re and or and you still but inventory holding And lot do of one equal in inventory kind much of you you’re that time more case expect How off. levels the to buying from market downturn rates. record cool you stable out think as pushbacks getting your having on things a of of to I stepping over investors purchases sales for Do stays you’re homes and think over time? selling?

Andrew Low Ah Kee

thing. Sure

in and that. factors real we’re And X So seeing conversion. there’s strength really that, absolutely underneath what’s terms seller of underneath conversion that record

we velocity investment market. deliver first continue in to The to consumers inventory to value addition the and more is about management, simple, years about looking it. of X experience We’ve consumers the our it. experience, our a the And constantly improve offers, around and best-in-class our able engine our HPA we’re we’re and by improvements feel pieces, good day. day cost and the of at to because the pricing and strength that of net And pricing and that the is housing trusted. we’ve fast grow Those trust care structure, second proceeds. that and competitiveness driven of in in awareness that’s we And the experience certain, thing made consumers we to continue

Carrie Wheeler

It’s Carrie.

around of the question On second your part inventory.

back. to Just step

not in inventory all homes. we So in market, know acquire constrained our which to we have ability is today’s been constrained,

about And X,XXX quarter. this you now. said, right X,XXX Andrew the contract more homes perhaps, to in acquired importantly, if up sitting future, over As quarter, X,XXX think last homes

in more environment, was job constraints So then we’ve not our easier. even a ability normal less constrained, market in constrained or of to despite certainly And the our been acquire homes. suspect this I is that

Ygal Arounian

Any one seems you noted or product. Can buyers conversion bring just product lift Opendoor-backed And ties how some at the like impact incredibly an and Can for the you’ve that compelling I funnel. to on follow-up, in about flywheel that’s the It with part ask on works? or Offers? improvements into you together sellers had that it seen mortgage talk a more least mortgage of second? in --

Eric Wu

Yes, thank Eric. the This is you for question.

shopper, Opendoor-backed as We’re excited and if offers early as competitive. Obviously, climate, possible. And be your competitive a the around want you in to signal by it’s Offers. progress you’re home today’s

the a able leverage I we’re our to over to X love homes. So also buying new are thing we’ve this, built the feature past customers who the provide about capabilities and years

early loans progress Andrew which by to there’s very so address progress signal, second how there. and the kind part, And home I’ll apply of is date. the and does the have that excited to we’re

Andrew Low Ah Kee


which while friction higher integration If into totally see product Opendoor-backed for terms you creating Offers, removing seamless turn our levels product go that other And through Loans do Home in than see Offers absolutely mortgage you rates of the experience, attach. with actually customer higher them, Opendoor-backed with value I’d we places. in see seamless it’s to of our experience, encourage attach you’ll do on offering. we its And we

So view and uptake the of absolutely. that to product things, acceptance side consumer a Loans the as Home of we the tailwind


next question Credit Yoni comes Our Yadgaran Suisse. with from

Yoni Yadgaran

if may. I Two,

markets. one of first the around ramping kind So is new

towards full quarter X, been or the halfway aggressive last guys your fairly year more than You in have goal.

seeing you it repurchase well As quickly to guess where as absolutely kind housing this second Can hold that seeing around HPA guys of as those expecting? home how suppliers of you’re providers to days addition you have to once Is you impacting a a rent you constrained relative a pre-COVID expanded buy-box, inventory new or piece itself. all service for in are environment tightened it’s you as you otherwise it? strong resell about in a And early specifically, ramp historical market far? been weren’t at question maybe have result markets your is conversion you just levels. or lumber ability those I strong so new And in seeing rates, faster go of than are looked talk into markets, trends, as the like markets in

Andrew Low Ah Kee

hitting So the question we’ve our made launches on up market day. actually launch, we’re we’re a this the single first We towards market the we quarter, about. do well is capability been year. that first our now And seeing, talking such around progress doubling way that multiple on significant can that in footprint

to it’s team the testament here over work that a really has done the So hone time to machine.

focus ensuring is new accurate scalable really operations. and on processes about Our we markets pricing have repeatable, and

we which markets As see creates come. together we a for ramp begin relatively why acquisitions, growth foundation is to is market, years a up come But that small in current the new year. impact of the to for in

question real days be So really may the to perspective list. or no And impacting our days how change second around launch time to repair with from ramp. market your new supplies considerations our some the of or around building rental part regard of then the or was

like everyone points. some pain certainly We’re in the of seeing supply industry chain those

home, of spectrum per not goes It’s entire into we’re right the dependent across a not our that. But shortages. are se. impacting lumber period now. on We’re what there seeing materially goal heavily And


We follow-up the Oppenheimer. question have a with line Helfstein Jason of from

Jason Helfstein

to how work? just to you have work? home sell if us. about you? so just to product you I OVO-ed, with do does newer to that get again. does Andrew, I flywheel of OVO. good Is it’s Just ask it kind that mean Because how connect want through your you

Eric Wu

and Opendoor pools. secondly, also And with the if millions, home work is there’s place X our of Buy of One not visitors customer. feature. homes because thousands, choosing are to because the to for and with for on also coming of coming big this who offers Jason, just the a it’s to hundreds it’s buy. sellers But hundreds it’s option looking Again, we’re And have of Eric. excited it’s basis. of really customer that thousands again, required. have we we Yes. electing requesting are not an site No, customers quarterly really to a -- and

not And to offers. so our provide service, it’s use are with choosing promote it’s pools certainly want to us Opendoor-backed and And we allow customer a again, X as but Buy requirement something Opendoor, to value, a it. the customers


to today’s to the remarks. concludes turn session. That closing I’d for Eric question-and-answer call like back

Eric Wu

Great. for earnings our QX I call. just want joining thank everyone to

sign them our transition off, teammates customers help Opendoor you. I to single life and their their to our customers Before day. my with every who I’d to for dedication thank choose like Thank to


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