Opendoor Technologies Inc. (Nasdaq: OPEN), a leading digital
platform for residential real estate transactions, today reported
financial results for its quarter ended December 31, 2021.
Opendoor’s fourth quarter and full year 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.
“In 2021, we saw a significant and durable shift in demand for
our digital product, demonstrated our market leadership, and
delivered exceptional results. By consistently outperforming
expectations, we pulled forward our financial targets by years,
growing revenue 211% year-on-year and exiting 2021 at a revenue
run-rate of over $15 billion. And yet, we are still just scratching
the surface of our opportunity to transform one of the largest,
most antiquated industries in the U.S.” said Eric Wu, Co-founder
and CEO of Opendoor. “In 2022, we will continue to build the best
consumer experience, expand nationwide to service more customers,
and become the digital one-stop-shop that homeowners love and
choose.”
Wu continued, “It is our fundamental belief that in a matter of
years, millions of homebuyers and home sellers will pick a simple,
certain, and fast experience and transact themselves, completely
online. More importantly, we know Opendoor’s digital, seamless
experience is and will continue to be what consumers choose now and
for decades to come.”
Full Year 2021 Key Highlights
- Total revenue of $8.0 billion, up
211% versus 2020, with 21,725 homes sold, up 119% versus 2020
- Gross profit of $730 million, up
232% versus 2020; gross margin of 9.1% versus 8.5% in 2020
- Net loss of $(662) million, versus
$(253) million in 2020, primarily driven by non-cash stock
based compensation of $536 million versus $38 million in 2020
- Adjusted Net Loss of
$(116) million, versus $(175) million in 2020
- Contribution Profit of $525 million, up
377% versus 2020; Contribution Margin of 6.5%, versus 4.3% in
2020
- First year of positive Adjusted EBITDA
of $58 million versus $(98) million in 2020; Adjusted
EBITDA Margin of 0.7% versus (3.8)% in 2020
- Purchased 36,908 homes, up 498% versus
2020
- Launched Opendoor Backed Offers, which
provides homebuyers with the benefits of an all-cash offer when
they bid on their dream home, and Opendoor Complete, which brings
together all of Opendoor’s products and services into a single,
streamlined experience
- More than doubled market footprint to
44 markets
- Expanded buybox coverage by 50% versus
2020, enabling us to offer on over 60% of all transactions in our
active markets
- Real seller conversion of over 35% with
record offers, up 590% versus 2020
- Maintained seller Net Promoter Score of
above 80
- Acquired Pro.com and the team from
Skylight.com, which were leaders in home renovation technology, and
RedDoor.com, a fully digital mortgage brokerage
Fourth Quarter 2021 Key Highlights
- Revenue of $3.8 billion, up 1,435%
versus 4Q20; with 9,794 total homes sold, up 1,054% versus
4Q20
- Gross profit of $272 million,
versus $39 million in 4Q20; gross margin of 7.1%, versus 15.4%
in 4Q20
- Net loss of $(191) million, versus
$(54) million in 4Q20
- Adjusted Net Loss of
$(80) million, versus $(41) million in 4Q20
- Contribution Profit of
$152 million, versus $31 million in 4Q20; 20th
consecutive quarter of positive Contribution Margin which was 4.0%,
versus 12.6% in 4Q20
- Adjusted EBITDA of $0.4 million versus
$(27) million in 4Q20; Adjusted EBITDA Margin of breakeven
versus (10.9)% in 4Q20
- Purchased 9,639 homes, up 378% versus
4Q20
- Grew inventory balance to 17,009 homes,
representing $6.1 billion in value, up 1,208% versus 4Q20
Outlook
- 1Q22 revenue guidance of $4.1 billion -
$4.3 billion, up 462% YoY at the midpoint of range
- 1Q22 Adjusted EBITDA1 guidance of $30
million - $40 million, up $37 million YoY at the midpoint of
range
Conference Call and Webcast Details
Opendoor will host a conference call to discuss its financial
results on February 24, 2022, 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 Statements
This 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 officers,
key employees or directors; the impact of the regulatory
environment and complexities with compliance related to such
environment; 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
most recent Annual Report on Form 10-K filed with the Securities
and Exchange Commission (the “SEC”) on February 24, 2022, as
updated by 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 millions, except share amounts which are
presented in thousands, and per share amounts)(Unaudited)
|
Three Months
EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
REVENUE |
$ |
3,822 |
|
|
$ |
249 |
|
|
$ |
8,021 |
|
|
$ |
2,583 |
|
COST OF REVENUE |
|
3,550 |
|
|
|
210 |
|
|
|
7,291 |
|
|
|
2,363 |
|
GROSS PROFIT |
|
272 |
|
|
|
39 |
|
|
|
730 |
|
|
|
220 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
Sales, marketing and operations |
|
225 |
|
|
|
39 |
|
|
|
544 |
|
|
|
195 |
|
General and administrative |
|
117 |
|
|
|
54 |
|
|
|
620 |
|
|
|
153 |
|
Technology and development |
|
32 |
|
|
|
12 |
|
|
|
134 |
|
|
|
58 |
|
Total operating expenses |
|
374 |
|
|
|
105 |
|
|
|
1,298 |
|
|
|
406 |
|
LOSS FROM OPERATIONS |
|
(102 |
) |
|
|
(66 |
) |
|
|
(568 |
) |
|
|
(186 |
) |
DERIVATIVE AND WARRANT FAIR
VALUE ADJUSTMENT |
|
— |
|
|
|
33 |
|
|
|
12 |
|
|
|
8 |
|
LOSS ON EXTINGUISHMENT OF
DEBT |
|
— |
|
|
|
(11 |
) |
|
|
— |
|
|
|
(11 |
) |
INTEREST EXPENSE |
|
(73 |
) |
|
|
(11 |
) |
|
|
(143 |
) |
|
|
(68 |
) |
OTHER INCOME – Net |
|
(16 |
) |
|
|
1 |
|
|
|
38 |
|
|
|
4 |
|
LOSS BEFORE INCOME TAXES |
|
(191 |
) |
|
|
(54 |
) |
|
|
(661 |
) |
|
|
(253 |
) |
INCOME TAX EXPENSE |
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
NET LOSS |
$ |
(191 |
) |
|
$ |
(54 |
) |
|
$ |
(662 |
) |
|
$ |
(253 |
) |
Net loss per share
attributable to common shareholders: |
|
|
|
|
|
|
|
Basic |
$ |
(0.31 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.12 |
) |
|
$ |
(2.31 |
) |
Diluted |
$ |
(0.31 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.12 |
) |
|
$ |
(2.31 |
) |
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
612,516 |
|
|
|
178,975 |
|
|
|
592,574 |
|
|
|
109,301 |
|
Diluted |
|
612,516 |
|
|
|
178,975 |
|
|
|
592,574 |
|
|
|
109,301 |
|
OPENDOOR TECHNOLOGIES
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In millions, except share data)(Unaudited)
|
|
December 31,2021 |
|
December 31,2020 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,731 |
|
|
$ |
1,413 |
|
Restricted cash |
|
|
847 |
|
|
|
93 |
|
Marketable securities |
|
|
484 |
|
|
|
48 |
|
Escrow receivable |
|
|
84 |
|
|
|
1 |
|
Mortgage loans held for sale pledged under agreements to
repurchase |
|
|
7 |
|
|
|
8 |
|
Real estate inventory, net |
|
|
6,096 |
|
|
|
466 |
|
Other current assets ($4 and $— carried at fair value) |
|
|
91 |
|
|
|
24 |
|
Total current assets |
|
|
9,340 |
|
|
|
2,053 |
|
PROPERTY AND
EQUIPMENT – Net |
|
|
45 |
|
|
|
29 |
|
RIGHT OF USE ASSETS |
|
|
42 |
|
|
|
50 |
|
GOODWILL |
|
|
60 |
|
|
|
31 |
|
INTANGIBLES – Net |
|
|
12 |
|
|
|
9 |
|
OTHER ASSETS ($5 and $—
carried at fair value) |
|
|
7 |
|
|
|
4 |
|
TOTAL ASSETS |
|
$ |
9,506 |
|
|
$ |
2,176 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable and other accrued liabilities |
|
$ |
137 |
|
|
$ |
25 |
|
Non-recourse asset-backed debt - current portion |
|
|
4,240 |
|
|
|
339 |
|
Other secured borrowings |
|
|
7 |
|
|
|
7 |
|
Interest payable |
|
|
12 |
|
|
|
1 |
|
Lease liabilities - current portion |
|
|
4 |
|
|
|
21 |
|
Total current liabilities |
|
|
4,400 |
|
|
|
393 |
|
NON-RECOURSE ASSET-BACKED
DEBT – Net of current portion |
|
|
1,862 |
|
|
|
136 |
|
CONVERTIBLE SENIOR NOTES |
|
|
954 |
|
|
|
— |
|
WARRANT LIABILITIES |
|
|
— |
|
|
|
47 |
|
LEASE LIABILITIES – Net of
current portion |
|
|
42 |
|
|
|
47 |
|
Total liabilities |
|
|
7,258 |
|
|
|
623 |
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
Common stock, $0.0001 par value; 3,000,000,000 shares authorized;
616,026,565 and 540,714,692 shares issued, respectively;
616,026,565 and 540,714,692 shares outstanding, respectively |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
3,955 |
|
|
|
2,596 |
|
Accumulated deficit |
|
|
(1,705 |
) |
|
|
(1,043 |
) |
Accumulated other comprehensive (loss) income |
|
|
(2 |
) |
|
|
— |
|
Total shareholders’ equity |
|
|
2,248 |
|
|
|
1,553 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
9,506 |
|
|
$ |
2,176 |
|
OPENDOOR TECHNOLOGIES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In millions)(Unaudited)
|
Year EndedDecember 31, |
|
|
2021 |
|
|
|
2020 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
Net loss |
$ |
(662 |
) |
|
$ |
(253 |
) |
Adjustments to reconcile net loss to cash, cash equivalents, and
restricted cash (used in) provided by operating activities: |
|
|
|
Depreciation and amortization |
|
47 |
|
|
|
39 |
|
Amortization of right of use asset |
|
8 |
|
|
|
24 |
|
Stock-based compensation |
|
536 |
|
|
|
38 |
|
Warrant fair value adjustment |
|
(12 |
) |
|
|
(31 |
) |
Gain on settlement of lease liabilities |
|
(5 |
) |
|
|
— |
|
Inventory valuation adjustment |
|
56 |
|
|
|
8 |
|
Changes in fair value of derivative instruments |
|
— |
|
|
|
23 |
|
Change in fair value of equity securities |
|
(35 |
) |
|
|
— |
|
Payment-in-kind interest |
|
— |
|
|
|
4 |
|
Net fair value adjustments and gain (loss) on sale of mortgage
loans held for sale |
|
(4 |
) |
|
|
(3 |
) |
Origination of mortgage loans held for sale |
|
(196 |
) |
|
|
(128 |
) |
Proceeds from sale and principal collections of mortgage loans held
for sale |
|
197 |
|
|
|
126 |
|
Changes in operating assets and liabilities: |
|
|
|
Escrow receivable |
|
(83 |
) |
|
|
12 |
|
Real estate inventories |
|
(5,656 |
) |
|
|
834 |
|
Other assets |
|
(52 |
) |
|
|
3 |
|
Accounts payable and other accrued liabilities |
|
76 |
|
|
|
(4 |
) |
Interest payable |
|
4 |
|
|
|
(3 |
) |
Lease liabilities |
|
(13 |
) |
|
|
(7 |
) |
Net cash (used in) provided by operating activities |
|
(5,794 |
) |
|
|
682 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
Purchase of property and equipment |
|
(33 |
) |
|
|
(17 |
) |
Purchase of intangible assets |
|
(1 |
) |
|
|
— |
|
Purchase of marketable securities |
|
(486 |
) |
|
|
(175 |
) |
Proceeds from sales, maturities, redemptions and paydowns of
marketable securities |
|
92 |
|
|
|
170 |
|
Purchase of non-marketable equity securities |
|
(15 |
) |
|
|
— |
|
Acquisitions, net of cash acquired |
|
(33 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(476 |
) |
|
|
(22 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
Proceeds from issuance of Series E preferred stock |
|
— |
|
|
|
2 |
|
Proceeds from issuance of convertible senior notes, net of issuance
costs |
|
953 |
|
|
|
— |
|
Purchase of capped calls related to convertible senior notes |
|
(119 |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
15 |
|
|
|
8 |
|
Proceeds from warrant exercise |
|
22 |
|
|
|
— |
|
Proceeds from Business Combination and PIPE offering |
|
— |
|
|
|
1,014 |
|
Proceeds from the February 2021 Offering |
|
886 |
|
|
|
— |
|
Issuance cost of common stock |
|
(29 |
) |
|
|
(43 |
) |
Proceeds from non-recourse asset-backed debt |
|
11,499 |
|
|
|
1,309 |
|
Principal payments on non-recourse asset-backed debt |
|
(5,838 |
) |
|
|
(2,130 |
) |
Proceeds from other secured borrowings |
|
192 |
|
|
|
125 |
|
Principal payments on other secured borrowings |
|
(192 |
) |
|
|
(121 |
) |
Payment of loan origination fees and debt issuance costs |
|
(47 |
) |
|
|
(3 |
) |
Net cash provided by financing activities |
|
7,342 |
|
|
|
161 |
|
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
|
1,072 |
|
|
|
821 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning of
period |
|
1,506 |
|
|
|
685 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period |
$ |
2,578 |
|
|
$ |
1,506 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during
the period for interest |
$ |
122 |
|
|
$ |
57 |
|
DISCLOSURES OF NONCASH FINANCING ACTIVITIES: |
|
|
|
Conversion of preferred stock to common stock |
$ |
— |
|
|
$ |
1,386 |
|
Issuance of issuer stock rights in extinguishment of the 2019
Convertible Notes |
$ |
— |
|
|
$ |
213 |
|
Recognition of warrant liability |
$ |
— |
|
|
$ |
81 |
|
Issuance of common stock in extinguishment of warrant
liabilities |
$ |
(35 |
) |
|
$ |
— |
|
RECONCILIATION TO CONDENSED CONSOLIDATED BALANCE SHEETS: |
|
|
|
Cash and cash equivalents |
$ |
1,731 |
|
|
$ |
1,413 |
|
Restricted cash |
|
847 |
|
|
|
93 |
|
Cash, cash equivalents, and restricted cash |
$ |
2,578 |
|
|
$ |
1,506 |
|
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) Income, 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 senior 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 valuation adjustment in the current
period, (2) inventory valuation adjustment in prior periods, and
(3) restructuring in cost of revenue. Restructuring in cost of
revenue reflects the costs associated with the reduction in our
workforce in 2020, a portion of which were related to personnel
included in cost of revenue. Inventory valuation adjustment in the
current period is calculated by adding back the inventory valuation
adjustments recorded during the period on homes that remain in
inventory at period end. Inventory valuation adjustment in prior
periods is calculated by subtracting the inventory valuation
adjustments 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
certain costs incurred on homes sold during the current period
including: (1) holding costs incurred in the current period,
(2) holding costs incurred in prior periods, and
(3) direct selling costs. 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 non-recourse asset-backed
senior debt 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 asset-backed senior
debt facilities are secured by our real estate inventory and cash.
In addition to our senior debt facilities, we use a mix of debt and
equity capital to finance our inventory and that mix will vary over
time. In addition, we expect to continue to evolve our cost of
financing as we include other debt sources beyond mezzanine
capital. As such, in order to allow more meaningful period over
period comparisons that more accurately reflect our asset
performance rather than our evolving financing choices, we do not
include interest expense associated with our mezzanine term debt
facilities in this calculation. 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 burdened
with the cost of senior financing.
OPENDOOR TECHNOLOGIES
INC.RECONCILIATION OF GAAP TO NON-GAAP
MEASURES(In millions, 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 December 31, |
|
Year Ended December 31, |
(in millions,
except percentages and homes sold, or as noted) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
|
Gross profit (GAAP) |
|
$ |
272 |
|
|
|
$ |
39 |
|
|
$ |
730 |
|
|
$ |
220 |
|
Gross Margin |
|
|
7.1 |
% |
|
|
|
15.4 |
% |
|
|
9.1 |
% |
|
|
8.5 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
Inventory valuation adjustment – Current Period(1)(2) |
|
|
24 |
|
|
|
|
— |
|
|
|
39 |
|
|
|
— |
|
Inventory valuation adjustment – Prior Periods(1)(3) |
|
|
(17 |
) |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(11 |
) |
Restructuring in cost of revenue(4) |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Adjusted Gross
Profit |
|
$ |
279 |
|
|
|
$ |
38 |
|
|
$ |
769 |
|
|
$ |
211 |
|
Adjusted Gross Margin |
|
|
7.3 |
% |
|
|
|
15.4 |
% |
|
|
9.6 |
% |
|
|
8.2 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
Direct selling costs(5) |
|
|
(99 |
) |
|
|
|
(5 |
) |
|
|
(195 |
) |
|
|
(73 |
) |
Holding costs on sales – Current Period(6)(7) |
|
|
(12 |
) |
|
|
|
(1 |
) |
|
|
(47 |
) |
|
|
(17 |
) |
Holding costs on sales – Prior Periods(6)(8) |
|
|
(16 |
) |
|
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(11 |
) |
Contribution
Profit |
|
$ |
152 |
|
|
|
$ |
31 |
|
|
$ |
525 |
|
|
$ |
110 |
|
Homes sold in period |
|
|
9,794 |
|
|
|
|
849 |
|
|
|
21,725 |
|
|
|
9,913 |
|
Contribution Profit
per Home Sold (in thousands) |
|
$ |
16 |
|
|
|
$ |
37 |
|
|
$ |
24 |
|
|
$ |
11 |
|
Contribution Margin |
|
|
4.0 |
% |
|
|
|
12.6 |
% |
|
|
6.5 |
% |
|
|
4.3 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
Interest on homes sold – Current Period(9)(10) |
|
|
(12 |
) |
|
|
|
(1 |
) |
|
|
(42 |
) |
|
|
(18 |
) |
Interest on homes sold – Prior Periods(9)(11) |
|
|
(13 |
) |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
(10 |
) |
Contribution Profit After Interest |
|
$ |
127 |
|
|
|
$ |
31 |
|
|
$ |
482 |
|
|
$ |
82 |
|
Contribution Margin After Interest |
|
|
3.3 |
% |
|
|
|
12.2 |
% |
|
|
6.0 |
% |
|
|
3.2 |
% |
________________
(1) Inventory valuation adjustment includes
adjustments to record real estate inventory at the lower of its
carrying amount or its net realizable value.
(2) Inventory valuation adjustment — Current
Period is the inventory valuation adjustments recorded during the
period presented associated with homes that remain in inventory at
period end.
(3) Inventory valuation adjustment — Prior
Periods is the inventory valuation adjustments recorded in prior
periods associated with homes that sold in the period
presented.
(4) 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 the
second quarter of 2020 following the outbreak of the COVID-19
pandemic.
(5) 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.
(6) Holding costs include mainly property
taxes, insurance, utilities, homeowners association dues, cleaning
and maintenance costs. Holding costs are included in Sales,
marketing, and operations on the Condensed Consolidated Statements
of Operations.
(7) Represents holding costs incurred in the
period presented on homes sold in the period presented.
(8) Represents holding costs incurred in prior
periods on homes sold in the period presented.
(9) This does not include interest on
mezzanine term debt facilities or other indebtedness.
(10) Represents the interest expense under our
asset-backed senior debt facilities incurred during the period on
homes sold in the current period.
(11) Represents the interest expense under our
asset-backed senior debt facilities incurred during prior periods
on homes sold in the current period.
Adjusted Net Loss and Adjusted EBITDA
We also present Adjusted Net 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 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
inventory valuation adjustments that were recorded in prior periods
under GAAP and exclude, in connection with homes held in inventory
at the end of the period, inventory valuation adjustments 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 Loss
We calculate Adjusted Net Loss as GAAP net loss adjusted to
exclude non-cash expenses of stock-based compensation, equity
securities fair value adjustment, derivative and warrant fair value
adjustment, and intangibles amortization expense. It also excludes
non-recurring payroll tax on initial RSU release, restructuring
charges, loss on extinguishment of debt, gain on lease termination,
legal contingency accrual, and convertible note payment-in-kind
(“PIK”) interest and issuance discount amortization. Adjusted Net
Loss also aligns the timing of inventory valuation adjustments
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 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 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 Loss and Adjusted EBITDA to our net loss, which is the most
directly comparable GAAP measure, for the periods indicated:
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(in millions,
except percentages) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
|
Net loss (GAAP) |
|
$ |
(191 |
) |
|
|
$ |
(54 |
) |
|
$ |
(662 |
) |
|
$ |
(253 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
71 |
|
|
|
|
29 |
|
|
|
536 |
|
|
|
38 |
|
Equity securities fair value adjustment(1) |
|
|
16 |
|
|
|
|
— |
|
|
|
(35 |
) |
|
|
— |
|
Derivative and warrant fair value adjustment(1) |
|
|
— |
|
|
|
|
(33 |
) |
|
|
(12 |
) |
|
|
(8 |
) |
Intangibles amortization expense(2) |
|
|
2 |
|
|
|
|
1 |
|
|
|
4 |
|
|
|
4 |
|
Inventory valuation adjustment – Current Period(3)(4) |
|
|
24 |
|
|
|
|
— |
|
|
|
39 |
|
|
|
— |
|
Inventory valuation adjustment — Prior Periods(3)(5) |
|
|
(17 |
) |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(11 |
) |
Restructuring(6) |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
31 |
|
Convertible note PIK interest and discount amortization(7) |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
8 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
|
11 |
|
|
|
— |
|
|
|
11 |
|
Gain on lease termination |
|
|
— |
|
|
|
|
— |
|
|
|
(5 |
) |
|
|
— |
|
Payroll tax on initial RSU release |
|
|
— |
|
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
Legal contingency accrual |
|
|
14 |
|
|
|
|
4 |
|
|
|
14 |
|
|
|
4 |
|
Other(8) |
|
|
1 |
|
|
|
|
2 |
|
|
|
— |
|
|
|
1 |
|
Adjusted Net
Loss |
|
$ |
(80 |
) |
|
|
$ |
(41 |
) |
|
$ |
(116 |
) |
|
$ |
(175 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization, excluding amortization of
intangibles and right of use assets |
|
|
9 |
|
|
|
|
5 |
|
|
|
33 |
|
|
|
22 |
|
Property financing(9) |
|
|
62 |
|
|
|
|
6 |
|
|
|
119 |
|
|
|
38 |
|
Other interest expense(10) |
|
|
10 |
|
|
|
|
4 |
|
|
|
24 |
|
|
|
22 |
|
Interest income(11) |
|
|
(1 |
) |
|
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(5 |
) |
Income tax expense |
|
|
— |
|
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Adjusted
EBITDA |
|
$ |
0.4 |
|
|
|
$ |
(27 |
) |
|
$ |
58 |
|
|
$ |
(98 |
) |
Adjusted EBITDA Margin |
|
|
— |
% |
|
|
(10.9)% |
|
|
0.7 |
% |
|
(3.8)% |
________________
(1) Represents the gains and losses on certain
financial instruments, which are marked to fair value at the end of
each period.
(2) Represents amortization of
acquisition-related intangible assets. The acquired intangible
assets have useful lives ranging from 1 to 5 years and
amortization is expected until the intangible assets are fully
amortized.
(3) Inventory valuation adjustment includes
adjustments to record real estate inventory at the lower of its
carrying amount or its net realizable value.
(4) Inventory valuation adjustment — Current
Period is the inventory valuation adjustment charge recorded during
the period presented associated with homes that remain in inventory
at period end.
(5) Inventory valuation adjustment — Prior
Periods is the inventory valuation adjustments recorded in prior
periods associated with homes that sold in the period
presented.
(6) 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.
(7) Includes non-cash payment-in-kind (“PIK”)
interest and amortization of the discount on the convertible notes
issued from July through November 2019 (the “2019 Convertible
Notes”). We exclude convertible note PIK interest and amortization
from Adjusted Net 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.
(8) 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 available for sale
securities, and sublease income.
(9) Includes interest expense on our
non-recourse asset-backed debt facilities.
(10) Includes amortization of debt issuance
costs and loan origination fees, commitment fees, unused fees,
other interest related costs on our asset-backed debt facilities,
interest expense related to the 2026 convertible senior notes
outstanding, and interest expense on other secured borrowings.
(11) 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 valuation adjustment and equity securities fair value
adjustment. 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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