Opendoor Technologies Inc. (Nasdaq: OPEN), a leading digital
platform for residential real estate, today reported financial
results for its quarter ended June 30, 2021. Opendoor’s Second
Quarter 2021 financial results and management commentary can be
accessed through the Company’s shareholder letter on the quarterly
results page of Opendoor’s investor relations website at
https://investor.opendoor.com.
“Each quarter, we get the opportunity to reflect on our journey
to redefine how people buy and sell a home and transform the
world’s largest asset class. Last quarter, I spoke to our
tremendous momentum, created by our relentless focus on the
consumer experience, pricing expertise, and operational excellence.
Today, I am proud to share the results of those efforts,” said Eric
Wu, Co-Founder and CEO of Opendoor. “In the second quarter of 2021,
we acquired a record 8,494 homes, generated revenue of
$1.2 billion, and delivered adjusted EBITDA of
$25.6 million, representing growth of 136% in homes acquired,
59% in revenue, and nearly $28 million in adjusted EBITDA
compared to the first quarter. This strong outperformance is
further evidence of the seismic shift in consumer demand towards
the modern real estate experience we are pioneering. Based on our
current momentum, we are operating today at a second half revenue
run rate that is on track to meet the 2023 target we provided at
the time of our December listing.”
Second Quarter 2021 Key Highlights
Unless otherwise stated, all comparisons are on a
quarter-over-quarter basis. We believe that sequential comparisons
better reflect our underlying growth trends given our decision to
pause home acquisitions and actively sell through our inventory
last year due to COVID-19.
- Revenue of $1.2 billion, up 59%
versus 1Q21, with 3,481 total homes sold, up 41% versus 1Q21
- Gross profit of $159 million, up
64% versus 1Q21; gross margin of 13.4%, up 40 basis points versus
1Q21
- Net income of ($144) million,
versus ($270) million in 1Q21
- Adjusted net income of
$2.5 million versus adjusted net income of ($21) million
in 1Q21
- Contribution profit of
$128 million, up 68% versus 1Q21; contribution margin of
10.8%, up 60 basis points versus 1Q21
- Adjusted EBITDA of $26 million
versus ($2) million in 1Q21; adjusted EBITDA margin of 2.2% versus
(0.3%) in 1Q21
- Expanded to 39 markets at the end of
2Q21 with 12 new market launches
- Purchased 8,494 homes, up 136% versus
1Q21
- Grew inventory balance to
$2.7 billion, up 224% versus 1Q21
- Ended the quarter with contracts to
acquire 8,158 homes, representing $3.0 billion in value
Outlook
- 3Q21 revenue guidance of
$1.8 billion - $1.9 billion
- 3Q21 adjusted EBITDA1 guidance of
$15 million - $25 million
Conference Call and Webcast DetailsOpendoor
will host a conference call to discuss its financial results on
August 11, 2021 at 2:00 p.m. Pacific Time. A live webcast of
the call can be accessed from Opendoor’s Investor Relations website
at https://investor.opendoor.com. An archived version of the
webcast will be available from the same website after the call.
Forward Looking StatementsThis press release
contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, as amended.
All statements contained in this press release that do not relate
to matters of historical fact should be considered forward-looking,
including statements regarding our financial condition, anticipated
financial performance, business strategy and plans, market
opportunity and expansion and objectives of management for future
operations. These forward-looking statements generally are
identified by the words “anticipate”, “believe”, “contemplate”,
“continue”, “could”, “estimate”, “expect”, “forecast”, “future”,
“intend”, “may”, “might”, “opportunity”, “plan”, “possible”,
“potential”, “predict”, “project,” “should”, “strategy”, “strive”,
“target”, “will”, or “would”, the negative of these words or other
similar terms or expressions. The absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements are predictions, projections and other statements about
future events that are based on current expectations and
assumptions and, as a result, are subject to risks and
uncertainties. Many important factors could cause actual future
events to differ materially from the forward-looking statements in
this press release, including but not limited to our public
securities’ potential liquidity and trading; our ability to raise
financing in the future; our success in retaining or recruiting, or
changes required in, our offices, key employees or directors; the
impact of the regulatory environment and complexities with
compliance related to such environment; our ability to remediate
our material weaknesses; various factors relating to our business,
operations and financial performance, including, but not limited
to, the impact of the COVID-19 pandemic on our ability to grow
market share; our ability to respond to general economic conditions
and the health of the U.S. residential real estate industry. The
foregoing list of factors is not exhaustive. You should carefully
consider the foregoing factors and the other risks and
uncertainties described under the caption "Risk Factors" in our
annual report on Form 10-K filed with the Securities and Exchange
Commission (the “SEC”) on March 4, 2021, as updated by our
Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2021 and June 30, 2021, and our other filings
with the SEC. These filings identify and address other important
risks and uncertainties that could cause actual events and results
to differ materially from those contained in the forward-looking
statements. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and we assume no obligation and do not
intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise. We do not give any assurance that we will achieve our
expectations.
About Opendoor
Opendoor’s mission is to empower everyone with the freedom to
move. Since 2014, Opendoor has provided people across the U.S. with
a radically simple way to buy, sell or trade-in a home online.
Opendoor currently operates in a growing number of markets across
the U.S.
Contact Information
Investors:Elise WangOpendoor investors@opendoor.com
Media:Sheila Tran / Charles
StewartOpendoorpress@opendoor.com
OPENDOOR TECHNOLOGIES
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)(Unaudited)
|
Three Months
EndedJune 30, |
|
Six Months
EndedJune 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
REVENUE |
$ |
1,185,386 |
|
|
$ |
739,827 |
|
|
$ |
1,932,660 |
|
|
$ |
1,995,622 |
|
COST OF REVENUE |
1,026,615 |
|
|
685,253 |
|
|
1,676,757 |
|
|
1,850,001 |
|
GROSS PROFIT |
158,771 |
|
|
54,574 |
|
|
255,903 |
|
|
145,621 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
Sales, marketing and operations |
96,525 |
|
|
47,265 |
|
|
165,591 |
|
|
128,954 |
|
General and administrative |
190,611 |
|
|
29,323 |
|
|
412,695 |
|
|
58,906 |
|
Technology and development |
24,388 |
|
|
16,838 |
|
|
75,065 |
|
|
32,625 |
|
Total operating expenses |
311,524 |
|
|
93,426 |
|
|
653,351 |
|
|
220,485 |
|
LOSS FROM OPERATIONS |
(152,753 |
) |
|
(38,852 |
) |
|
(397,448 |
) |
|
(74,864 |
) |
DERIVATIVE AND WARRANT FAIR
VALUE ADJUSTMENT |
23,952 |
|
|
122 |
|
|
8,680 |
|
|
(890 |
) |
INTEREST EXPENSE |
(15,826 |
) |
|
(17,290 |
) |
|
(26,825 |
) |
|
(45,017 |
) |
OTHER INCOME – Net |
1,012 |
|
|
180 |
|
|
1,636 |
|
|
2,855 |
|
LOSS BEFORE INCOME TAXES |
(143,615 |
) |
|
(55,840 |
) |
|
(413,957 |
) |
|
(117,916 |
) |
INCOME TAX EXPENSE |
(190 |
) |
|
(79 |
) |
|
(284 |
) |
|
(199 |
) |
NET LOSS |
$ |
(143,805 |
) |
|
$ |
(55,919 |
) |
|
$ |
(414,241 |
) |
|
$ |
(118,115 |
) |
Net loss per share
attributable to common shareholders: |
|
|
|
|
|
|
|
Basic |
$ |
(0.24 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.72 |
) |
|
$ |
(1.40 |
) |
Diluted |
$ |
(0.24 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.72 |
) |
|
$ |
(1.40 |
) |
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
588,374 |
|
|
84,588 |
|
|
576,941 |
|
|
84,308 |
|
Diluted |
588,374 |
|
|
84,588 |
|
|
576,941 |
|
|
84,308 |
|
OPENDOOR TECHNOLOGIES
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share data)(Unaudited)
|
|
June 30,2021 |
|
December 31,2020 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,557,815 |
|
|
$ |
1,412,665 |
|
Restricted cash |
|
131,652 |
|
|
92,863 |
|
Marketable securities |
|
200,143 |
|
|
47,637 |
|
Mortgage loans held for sale pledged under agreements to
repurchase |
|
25,368 |
|
|
7,529 |
|
Escrow receivable |
|
32,848 |
|
|
1,494 |
|
Real estate inventory, net |
|
2,723,648 |
|
|
465,936 |
|
Other current assets ($811 and $373 carried at fair value) |
|
67,149 |
|
|
24,987 |
|
Total current assets |
|
4,738,623 |
|
|
2,053,111 |
|
PROPERTY AND
EQUIPMENT – Net |
|
33,962 |
|
|
29,228 |
|
RIGHT OF USE ASSETS |
|
45,581 |
|
|
49,517 |
|
GOODWILL |
|
30,945 |
|
|
30,945 |
|
INTANGIBLES – Net |
|
7,754 |
|
|
8,684 |
|
OTHER ASSETS ($10,000 and $0
carried at fair value) |
|
11,396 |
|
|
4,097 |
|
TOTAL ASSETS |
|
$ |
4,868,261 |
|
|
$ |
2,175,582 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable and other accrued liabilities |
|
$ |
70,900 |
|
|
$ |
25,270 |
|
Current portion of credit facilities and other secured
borrowings |
|
1,690,878 |
|
|
346,322 |
|
Warrant liabilities - current |
|
38,669 |
|
|
— |
|
Interest payable |
|
4,605 |
|
|
1,081 |
|
Lease liabilities - current portion |
|
4,999 |
|
|
20,716 |
|
Total current liabilities |
|
1,810,051 |
|
|
393,389 |
|
CREDIT FACILITIES – Net of
current portion |
|
595,579 |
|
|
135,467 |
|
WARRANT LIABILITIES |
|
— |
|
|
47,349 |
|
LEASE LIABILITIES – Net of
current portion |
|
44,593 |
|
|
46,625 |
|
OTHER LIABILITIES |
|
117 |
|
|
94 |
|
Total liabilities |
|
2,450,340 |
|
|
622,924 |
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
Common stock, $0.0001 par value; 3,000,000,000 shares authorized;
593,838,919 and 540,714,692 shares issued and outstanding,
respectively |
|
59 |
|
|
54 |
|
Additional paid-in capital |
|
3,875,552 |
|
|
2,596,012 |
|
Accumulated deficit |
|
(1,457,690 |
) |
|
(1,043,449 |
) |
Accumulated other comprehensive income |
|
— |
|
|
41 |
|
Total shareholders’ equity |
|
2,417,921 |
|
|
1,552,658 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
4,868,261 |
|
|
$ |
2,175,582 |
|
OPENDOOR TECHNOLOGIES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)(Unaudited)
|
Six Months
EndedJune 30, |
|
2021 |
|
2020 |
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
Net loss |
$ |
(414,241 |
) |
|
$ |
(118,115 |
) |
Adjustments to reconcile net loss to cash, cash equivalents, and
restricted cash (used in) provided by operating activities: |
|
|
|
Depreciation and amortization – net of accretion |
16,608 |
|
|
20,065 |
|
Amortization of right of use asset |
4,260 |
|
|
8,712 |
|
Impairment of software development costs |
2,515 |
|
|
— |
|
Stock-based compensation |
403,048 |
|
|
6,640 |
|
Derivative and warrant fair value adjustment |
(8,680 |
) |
|
890 |
|
Gain on settlement of lease liabilities |
(5,237 |
) |
|
— |
|
Inventory valuation adjustment |
942 |
|
|
7,452 |
|
Changes in fair value of derivative instruments |
(438 |
) |
|
(527 |
) |
Payment-in-kind interest |
— |
|
|
2,704 |
|
Dividend-in-kind |
143 |
|
|
— |
|
Net fair value adjustments and gain (loss) on sale of
mortgage loans held for sale |
(2,032 |
) |
|
(829 |
) |
Origination of mortgage loans held for sale |
(83,360 |
) |
|
(42,636 |
) |
Proceeds from sale and principal collections of mortgage loans held
for sale |
67,566 |
|
|
34,397 |
|
Changes in operating assets and liabilities: |
|
|
|
Escrow receivable |
(31,354 |
) |
|
4,178 |
|
Real estate inventories |
(2,249,488 |
) |
|
1,035,088 |
|
Other assets |
(37,057 |
) |
|
10,809 |
|
Accounts payable and other accrued liabilities |
34,569 |
|
|
(8,881 |
) |
Interest payable |
96 |
|
|
(3,044 |
) |
Lease liabilities |
(9,968 |
) |
|
(6,556 |
) |
Net cash (used in) provided by operating
activities |
(2,312,108 |
) |
|
950,347 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
Purchase of property and equipment |
(10,957 |
) |
|
(10,753 |
) |
Purchase of intangible assets |
(240 |
) |
|
— |
|
Purchase of marketable securities |
(238,464 |
) |
|
(113,833 |
) |
Proceeds from sales, maturities, redemptions and paydowns of
marketable securities |
85,638 |
|
|
55,666 |
|
Purchase of non-marketable equity securities |
(10,000 |
) |
|
— |
|
Net cash used in investing activities |
(174,023 |
) |
|
(68,920 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
Proceeds from exercise of stock options |
6,739 |
|
|
688 |
|
Proceeds from warrant exercise |
4,823 |
|
|
— |
|
Proceeds from the February 2021 Offering |
886,067 |
|
|
— |
|
Issuance cost of common stock |
(28,876 |
) |
|
— |
|
Proceeds from credit facilities and other secured borrowings |
3,241,692 |
|
|
824,597 |
|
Principal payments on credit facilities and other secured
borrowings |
(1,438,136 |
) |
|
(1,723,443 |
) |
Payment of loan origination fees and debt issuance costs |
(2,239 |
) |
|
(2,386 |
) |
Net cash provided by (used in) financing
activities |
2,670,070 |
|
|
(900,544 |
) |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH |
183,939 |
|
|
(19,117 |
) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning of
period |
1,505,528 |
|
|
684,822 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period |
$ |
1,689,467 |
|
|
$ |
665,705 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during
the period for interest |
$ |
20,526 |
|
|
$ |
40,333 |
|
RECONCILIATION TO CONDENSED CONSOLIDATED BALANCE SHEETS: |
|
|
|
Cash and cash equivalents |
$ |
1,557,815 |
|
|
$ |
458,058 |
|
Restricted cash |
131,652 |
|
|
207,647 |
|
Cash, cash equivalents, and restricted cash |
$ |
1,689,467 |
|
|
$ |
665,705 |
|
Non-GAAP Financial Measures
To provide investors with additional information regarding the
Company’s financial results, this press release includes references
to certain non-GAAP financial measures that are used by management.
The Company believes these non-GAAP financial measures including
Adjusted Gross Profit, Contribution Profit, Contribution Profit
After Interest, Adjusted Net Loss, Adjusted EBITDA, and any such
non-GAAP financial measures expressed as a Margin, are useful to
investors as supplemental operational measurements to evaluate the
Company’s financial performance.
The non-GAAP financial measures should not be considered in
isolation or as a substitute for the Company’s reported GAAP
results because they may include or exclude certain items as
compared to similar GAAP-based measures, and such measures may not
be comparable to similarly-titled measures reported by other
companies. Management uses these non-GAAP financial measures for
financial and operational decision-making and as a means to
evaluate period-to-period comparisons. Management believes that
these non-GAAP financial measures provide meaningful supplemental
information regarding the Company’s performance by excluding
certain items that may not be indicative of the Company’s recurring
operating results.
Adjusted Gross Profit, Contribution Profit and Contribution
Profit After Interest
To provide investors with additional information regarding our
margins and return on inventory acquired, we have included Adjusted
Gross Profit, Contribution Profit and Contribution Profit After
Interest, which are non-GAAP financial measures. We believe that
Adjusted Gross Profit, Contribution Profit and Contribution Profit
After Interest are useful financial measures for investors as they
are supplemental measures used by management in evaluating unit
level economics and our operating performance in our key markets.
Each of these measures is intended to present the economics related
to homes sold during a given period. We do so by including revenue
generated from homes sold (and adjacent services) in the period and
only the expenses that are directly attributable to such home
sales, even if such expenses were recognized in prior periods, and
excluding expenses related to homes that remain in inventory as of
the end of the period. Contribution Profit provides investors a
measure to assess Opendoor’s ability to generate returns on homes
sold during a reporting period after considering home purchase
costs, renovation and repair costs, holding costs and selling
costs. Contribution Profit After Interest further impacts gross
profit by including interest costs attributable to homes sold
during a reporting period. We believe these measures facilitate
meaningful period over period comparisons and illustrate our
ability to generate returns on assets sold after considering the
costs directly related to the assets sold in a given period.
Adjusted Gross Profit, Contribution Profit and Contribution
Profit After Interest are supplemental measures of our operating
performance and have limitations as analytical tools. For example,
these measures include costs that were recorded in prior periods
under GAAP and exclude, in connection with homes held in inventory
at the end of the period, costs required to be recorded under GAAP
in the same period. These measures also exclude the impact of
certain restructuring costs that are required under GAAP.
Accordingly, these measures should not be considered in isolation
or as a substitute for analysis of our results as reported under
GAAP. We include a reconciliation of these measures to the most
directly comparable GAAP financial measure, which is gross
profit.
Adjusted Gross Profit / Margin
We calculate Adjusted Gross Profit as gross profit under GAAP
adjusted for (1) inventory impairment in the current period,
(2) inventory impairment in prior periods, and (3) restructuring in
cost of revenue. Inventory impairment in the current period is
calculated by adding back the inventory impairment charges recorded
during the period on homes that remain in inventory at period end.
Inventory impairment in prior periods is calculated by subtracting
the inventory impairment charges recorded in prior periods on homes
sold in the current period. We define Adjusted Gross Margin as
Adjusted Gross Profit as a percentage of revenue.
We view this metric as an important measure of business
performance as it captures gross margin performance isolated to
homes sold in a given period and provides comparability across
reporting periods. Adjusted Gross Profit helps management assess
home pricing, service fees and renovation performance for a
specific resale cohort.
Contribution Profit / Margin
We calculate Contribution Profit as Adjusted Gross Profit, minus
(1) holding costs incurred in the current period on homes sold
during the period, (2) holding costs incurred in prior periods
on homes sold in the current period, and (3) direct selling
costs incurred on homes sold during the current period. The
composition of our holding costs is described in the footnotes to
the reconciliation table below. Contribution Margin is Contribution
Profit as a percentage of revenue.
We view this metric as an important measure of business
performance as it captures the unit level performance isolated to
homes sold in a given period and provides comparability across
reporting periods. Contribution Profit helps management assess
inflows and outflows directly associated with a specific resale
cohort.
Contribution Profit / Margin After Interest
We define Contribution Profit After Interest as Contribution
Profit, minus interest expense under our senior credit facilities
incurred on the homes sold during the period. This may include
interest expense recorded in periods prior to the period in which
the sale occurred. Our senior credit facilities are secured by our
homes in inventory. For our senior revolving credit facilities,
drawdowns are made on a per-home basis at the time of purchase and
are required to be repaid at the time the homes are sold. We do not
include interest expense associated with our mezzanine term debt
facilities in this calculation as we do not view such facilities as
reflective of our expected long term capital structure and cost of
financing. Contribution Margin After Interest is Contribution
Profit After Interest as a percentage of revenue.
We view this metric as an important measure of business
performance. Contribution Profit After Interest helps management
assess Contribution Margin performance, per above, when fully
burdened with expected long-term costs of financing.
OPENDOOR TECHNOLOGIES
INC.RECONCILIATION OF GAAP TO NON-GAAP
MEASURES(In thousands, except percentages, and homes
sold)(Unaudited)
The following table presents a reconciliation of our Adjusted
Gross Profit, Contribution Profit and Contribution Profit After
Interest to our gross profit, which is the most directly comparable
GAAP measure, for the periods indicated:
|
|
Three Months Ended |
(in thousands,
except percentages) |
|
June 30, 2021 |
|
March 31, 2021 |
|
June 30, 2020 |
Gross profit (GAAP) |
|
$ |
158,771 |
|
|
|
$ |
97,132 |
|
|
|
$ |
54,574 |
|
|
Gross Margin |
|
13.4 |
|
% |
|
13.0 |
|
% |
|
7.4 |
|
% |
Adjustments: |
|
|
|
|
|
|
Inventory impairment – Current Period(1) |
|
922 |
|
|
|
20 |
|
|
|
1,231 |
|
|
Inventory impairment – Prior Periods(2) |
|
(19 |
) |
|
|
(114 |
) |
|
|
(6,581 |
) |
|
Restructuring in cost of revenue(3) |
|
— |
|
|
|
— |
|
|
|
1,901 |
|
|
Adjusted Gross
Profit |
|
$ |
159,674 |
|
|
|
$ |
97,038 |
|
|
|
$ |
51,125 |
|
|
Adjusted Gross Margin |
|
13.5 |
|
% |
|
13.0 |
|
% |
|
6.9 |
|
% |
Adjustments: |
|
|
|
|
|
|
Direct selling costs(4) |
|
(26,813 |
) |
|
|
(17,340 |
) |
|
|
(22,128 |
) |
|
Holding costs on sales – Current Period(5)(6) |
|
(2,666 |
) |
|
|
(2,126 |
) |
|
|
(2,383 |
) |
|
Holding costs on sales – Prior Periods(5)(7) |
|
(2,633 |
) |
|
|
(1,426 |
) |
|
|
(6,517 |
) |
|
Contribution
Profit |
|
$ |
127,562 |
|
|
|
$ |
76,146 |
|
|
|
$ |
20,097 |
|
|
Homes sold in period |
|
3,481 |
|
|
|
2,462 |
|
|
|
2,924 |
|
|
Contribution Profit
per Home Sold |
|
$ |
37 |
|
|
|
$ |
31 |
|
|
|
$ |
7 |
|
|
Contribution Margin |
|
10.8 |
|
% |
|
10.2 |
|
% |
|
2.7 |
|
% |
Adjustments: |
|
|
|
|
|
|
Interest on homes sold – Current Period(8)(9) |
|
(3,110 |
) |
|
|
(2,333 |
) |
|
|
(3,155 |
) |
|
Interest on homes sold – Prior Periods(8)(10) |
|
(1,587 |
) |
|
|
(902 |
) |
|
|
(5,309 |
) |
|
Contribution Profit
After Interest |
|
$ |
122,865 |
|
|
|
$ |
72,911 |
|
|
|
$ |
11,633 |
|
|
Contribution Margin After
Interest |
|
10.4 |
|
% |
|
9.8 |
|
% |
|
1.6 |
|
% |
________________
(1) |
Inventory impairment — Current Period is the inventory valuation
adjustments recorded during the period presented associated with
homes that remain in inventory at period end. |
(2) |
Inventory impairment — Prior
Periods is the inventory valuation adjustments recorded in prior
periods associated with homes that sold in the period
presented. |
(3) |
Restructuring in cost of revenue
consists mainly of severance and employee termination benefits that
were recorded to cost of revenue due to a reduction in workforce in
Q2 2020 following the outbreak of the COVID-19 pandemic. |
(4) |
Represents selling costs incurred
related to homes sold in the relevant period. This primarily
includes broker commissions, external title and escrow-related fees
and transfer taxes. |
(5) |
Holding costs include mainly
property taxes, insurance, utilities, association dues, cleaning
and maintenance costs. Holding costs are included in Sales,
marketing, and operations on the condensed consolidated statements
of operations. |
(6) |
Represents holding costs
incurred in the period presented on homes sold in the period
presented. |
(7) |
Represents holding costs
incurred in prior periods on homes sold in the period
presented. |
(8) |
This does not include interest
on mezzanine term debt facilities or other indebtedness. |
(9) |
Represents the interest expense
under our senior credit facilities incurred on homes sold for the
current period during the period. |
(10) |
Represents the interest expense
under our senior credit facilities incurred on homes sold for the
current period during prior periods. |
Adjusted Net Income (Loss) and Adjusted
EBITDA
We also present Adjusted Net Income (Loss) and Adjusted EBITDA,
which are non-GAAP financial measures that management uses to
assess our underlying financial performance. These measures are
also commonly used by investors and analysts to compare the
underlying performance of companies in our industry. We believe
these measures provide investors with meaningful period over period
comparisons of our underlying performance, adjusted for certain
charges that are non-recurring, non-cash, not directly related to
our revenue-generating operations or not aligned to related
revenue.
Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental
measures of our operating performance and have important
limitations. For example, these measures exclude the impact of
certain costs required to be recorded under GAAP. These measures
also include impairment costs that were recorded in prior periods
under GAAP and exclude, in connection with homes held in inventory
at the end of the period, impairment costs required to be recorded
under GAAP in the same period. These measures could differ
substantially from similarly titled measures presented by other
companies in our industry or companies in other industries.
Accordingly, these measures should not be considered in isolation
or as a substitute for analysis of our results as reported under
GAAP. We include a reconciliation of these measures to the most
directly comparable GAAP financial measure, which is net loss.
Adjusted Net Income (Loss)
We calculate Adjusted Net Income (Loss) as GAAP net loss
adjusted to exclude non-cash expenses of stock-based compensation,
derivative and warrant fair value adjustment, intangible
amortization, and payroll tax on initial RSU release. It also
excludes non-recurring restructuring charges, gain on lease
termination, and convertible note payment-in-kind (“PIK”) interest
and issuance discount amortization. Adjusted Net Income (Loss) also
aligns the timing of impairment charges recorded under GAAP to the
period in which the related revenue is recorded in order to improve
the comparability of this measure to our non-GAAP financial
measures of unit economics, as described above. Our calculation of
Adjusted Net Income (Loss) does not currently include the tax
effects of the non-GAAP adjustments because our taxes and such tax
effects have not been material to date.
Adjusted EBITDA
We calculated Adjusted EBITDA as Adjusted Net Income (Loss)
adjusted for depreciation and amortization, property financing and
other interest expense, interest income, and income tax expense.
Adjusted EBITDA is a supplemental performance measure that our
management uses to assess our operating performance and the
operating leverage in our business.
The following table presents a reconciliation of our Adjusted
Net Income (Loss) and Adjusted EBITDA to our net loss, which is the
most directly comparable GAAP measure, for the periods
indicated:
|
|
Three Months Ended |
(in thousands,
except percentages) |
|
June 30, 2021 |
|
March 31, 2021 |
|
June 30, 2020 |
Net loss (GAAP) |
|
|
(143,805 |
) |
|
|
$ |
(270,436 |
) |
|
|
$ |
(55,919 |
) |
|
Adjustments: |
|
|
|
|
|
|
Stock-based compensation |
|
164,216 |
|
|
|
238,832 |
|
|
|
3,669 |
|
|
Derivative and warrant fair value adjustment(1) |
|
(23,952 |
) |
|
|
15,272 |
|
|
|
(122 |
) |
|
Intangibles amortization expense(2) |
|
591 |
|
|
|
580 |
|
|
|
1,068 |
|
|
Inventory impairment – Current Period(3) |
|
922 |
|
|
|
20 |
|
|
|
1,231 |
|
|
Inventory impairment — Prior Periods(4) |
|
(19 |
) |
|
|
(114 |
) |
|
|
(6,580 |
) |
|
Restructuring(5) |
|
— |
|
|
|
79 |
|
|
|
12,435 |
|
|
Convertible note PIK interest and discount amortization(6) |
|
— |
|
|
|
— |
|
|
|
2,713 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
Gain on lease termination |
|
— |
|
|
|
(5,237 |
) |
|
|
— |
|
|
Payroll tax on initial RSU release |
|
5,124 |
|
|
|
— |
|
|
|
— |
|
|
Other(7) |
|
(602 |
) |
|
|
203 |
|
|
|
(1 |
) |
|
Adjusted Net Income
(Loss) |
|
$ |
2,475 |
|
|
|
$ |
(20,801 |
) |
|
|
$ |
(41,506 |
) |
|
Adjustments: |
|
|
|
|
|
|
Depreciation and amortization, excluding amortization of
intangibles and right of use assets |
|
7,894 |
|
|
|
8,434 |
|
|
|
5,850 |
|
|
Property financing(8) |
|
12,284 |
|
|
|
6,980 |
|
|
|
8,564 |
|
|
Other interest expense(9) |
|
3,542 |
|
|
|
4,019 |
|
|
|
6,013 |
|
|
Interest income(10) |
|
(806 |
) |
|
|
(867 |
) |
|
|
(662 |
) |
|
Income tax expense |
|
190 |
|
|
|
94 |
|
|
|
80 |
|
|
Adjusted
EBITDA |
|
$ |
25,579 |
|
|
|
$ |
(2,141 |
) |
|
|
$ |
(21,661 |
) |
|
Adjusted EBITDA Margin |
|
2.2 |
|
% |
|
(0.3 |
) |
% |
|
(2.9 |
) |
% |
________________
(1) |
Represents the gains and losses on our warrant liabilities, which
are marked to fair value at the end of each period. |
(2) |
Represents amortization of
intangibles acquired in the OSN and Open Listings acquisitions
which contribute to revenue generation and are recorded as part of
purchase accounting. The acquired intangible assets have useful
lives ranging from 2 to 5 years and amortization is expected
until the intangible assets are fully amortized. |
(3) |
Inventory impairment — Current
Period is the inventory impairment charge recorded during the
period presented associated with homes that remain in inventory at
period end. |
(4) |
Inventory impairment — Prior
Periods is the inventory valuation adjustments recorded in prior
periods associated with homes that sold in the period
presented. |
(5) |
Restructuring costs consist
mainly of employee termination benefits, relocation packages and
retention bonuses as well as costs related to the exiting of
certain non-cancelable leases. In 2020, these costs related
mainly to a reduction in workforce implemented in April 2020 as
well as our exercise of the early termination option related to our
San Francisco headquarters. |
(6) |
Includes non-cash
payment-in-kind (“PIK”) interest and amortization of the discount
on the convertible notes issued from July through
November 2019. We exclude convertible note PIK interest and
amortization from Adjusted Net Income (Loss) since these are
non-cash in nature and were converted into equity in September 2020
when the Company entered into the Convertible Notes Exchange
Agreement with the convertible note holders. |
(7) |
Includes primarily gain or loss
on disposal of fixed assets, gain or loss on interest rate lock
commitments, gain or loss on the sale of marketable securities, and
sublease income. |
(8) |
Includes interest expense on our
asset-backed debt facilities. |
(9) |
Includes amortization of debt
issuance costs and loan origination fees, commitment fees, unused
fees, and other interest related costs on our asset-backed debt
facilities. |
(10) |
Consists mainly of interest
earned on cash, cash equivalents and marketable securities. |
1 Opendoor has not provided a quantitative reconciliation of
forecasted Adjusted EBITDA to forecasted GAAP net income (loss)
within this press release because the Company is unable, without
making unreasonable efforts, to calculate certain reconciling items
with confidence. These items include, but are not limited to,
inventory impairment and stock-based compensation with respect to
future grants and forfeitures. These items, which could materially
affect the computation of forward-looking GAAP net income (loss),
are inherently uncertain and depend on various factors, some of
which are outside of the Company’s control. For more information
regarding the non-GAAP financial measures discussed in this press
release, please see “Use of Non-GAAP Financial Measures” below.
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