Opendoor Technologies Inc. (Nasdaq: OPEN), a leading digital
platform for residential real estate transactions, today reported
financial results for its quarter ended March 31, 2022.
Opendoor’s first quarter of 2022 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.
“We are proud to report our first quarter of
positive net income as we exceeded our expectations across all of
our key metrics,” said Eric Wu, Co-founder and CEO of Opendoor.
“For the past eight years, we have been working on the rare
opportunity to transform the $2.3 trillion housing industry. We
have made significant progress toward reshaping a broken, offline
process into a digital, seamless experience for our customers.”
Wu continued: “We have also focused on building a
durable, generational company. This means we align our goals and
teams against both growing customers and driving sustainable margin
expansion, operating with a focus on building the lowest cost
structure, and having a culture of discipline around pricing and
risk management across periods of uncertainty. The result of this
hard work is the capability to grow and protect margins across
economic cycles.”
First Quarter 2022 Key
Highlights
- Highest quarterly
revenue of $5.2 billion, up 590% versus 1Q21; with 12,669
total homes sold, up 415% versus 1Q21, demonstrating rapid consumer
adoption of our product offerings
- Record gross profit of
$535 million, versus $97 million in 1Q21, up 452% versus
prior year; gross margin of 10.4%, versus 13.0% in 1Q21
- First quarter of
positive net income of $28 million, versus $(270) million
in 1Q21
- Adjusted Net Income of
$99 million, versus $(21) million in 1Q21
- Record Contribution
Profit of $332 million, versus $76 million in 1Q21, up
337% versus prior year; 21st consecutive quarter of positive
Contribution Margin which was 6.4%, versus 10.2% in 1Q21
- Adjusted EBITDA of
$176 million versus $(2) million in 1Q21; fourth
consecutive quarter of positive Adjusted EBITDA and three times
higher than what was generated in all of 2021; Adjusted EBITDA
Margin of 3.4% versus (0.3)% in 1Q21
- Inventory balance of
13,360 homes, representing $4.7 billion in value, up 455%
versus 1Q21
- Purchased 9,020 homes,
up 151% versus 1Q21
- Launched San Francisco
Bay Area, bringing us to 45 markets at the end of 1Q22
Outlook
- 2Q22 revenue guidance
of $4.1 billion - $4.3 billion, up 254% YoY at the midpoint of
range
- 2Q22 Adjusted EBITDA1
guidance of $170 million - $190 million, up 604% YoY at the
midpoint of range
Conference Call and Webcast
Details
Opendoor will host a conference call to discuss its
financial results on May 5, 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
EndedMarch 31, |
|
2022 |
|
2021 |
REVENUE |
$ |
5,151 |
|
|
$ |
747 |
|
COST OF REVENUE |
|
4,616 |
|
|
|
650 |
|
GROSS PROFIT |
|
535 |
|
|
|
97 |
|
OPERATING EXPENSES: |
|
|
|
Sales, marketing and operations |
|
276 |
|
|
|
69 |
|
General and administrative |
|
101 |
|
|
|
222 |
|
Technology and development |
|
40 |
|
|
|
51 |
|
Total operating expenses |
|
417 |
|
|
|
342 |
|
INCOME (LOSS) FROM OPERATIONS |
|
118 |
|
|
|
(245 |
) |
WARRANT FAIR VALUE ADJUSTMENT |
|
— |
|
|
|
(15 |
) |
INTEREST EXPENSE |
|
(68 |
) |
|
|
(11 |
) |
OTHER (LOSS) INCOME – Net |
|
(22 |
) |
|
|
1 |
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
28 |
|
|
|
(270 |
) |
INCOME TAX EXPENSE |
|
— |
|
|
|
— |
|
NET INCOME (LOSS) |
$ |
28 |
|
|
$ |
(270 |
) |
Net income (loss) per share attributable to common
shareholders: |
|
|
|
Basic |
$ |
0.05 |
|
|
$ |
(0.48 |
) |
Diluted |
$ |
0.04 |
|
|
$ |
(0.48 |
) |
Weighted-average shares outstanding: |
|
|
|
Basic |
|
619,137 |
|
|
|
565,381 |
|
Diluted |
|
640,785 |
|
|
|
565,381 |
|
|
|
|
|
|
|
|
|
|
OPENDOOR TECHNOLOGIES INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In millions, except share
data)(Unaudited) |
|
|
|
|
|
|
|
March 31,2022 |
|
December 31,2021 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
2,312 |
|
|
$ |
1,731 |
|
Restricted cash |
|
|
444 |
|
|
|
847 |
|
Marketable securities |
|
|
464 |
|
|
|
484 |
|
Escrow receivable |
|
|
58 |
|
|
|
84 |
|
Mortgage loans held for sale pledged under agreements to
repurchase |
|
|
11 |
|
|
|
7 |
|
Real estate inventory, net |
|
|
4,664 |
|
|
|
6,096 |
|
Other current assets ($4 and $4 carried at fair value) |
|
|
126 |
|
|
|
91 |
|
Total current assets |
|
|
8,079 |
|
|
|
9,340 |
|
PROPERTY AND EQUIPMENT – Net |
|
|
49 |
|
|
|
45 |
|
RIGHT OF USE ASSETS |
|
|
45 |
|
|
|
42 |
|
GOODWILL |
|
|
60 |
|
|
|
60 |
|
INTANGIBLES – Net |
|
|
10 |
|
|
|
12 |
|
OTHER ASSETS ($5 and $5 carried at fair value) |
|
|
29 |
|
|
|
7 |
|
TOTAL ASSETS |
|
$ |
8,272 |
|
|
$ |
9,506 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable and other accrued liabilities |
|
$ |
132 |
|
|
$ |
137 |
|
Non-recourse asset-backed debt - current portion |
|
|
2,660 |
|
|
|
4,240 |
|
Other secured borrowings |
|
|
10 |
|
|
|
7 |
|
Interest payable |
|
|
6 |
|
|
|
12 |
|
Lease liabilities - current portion |
|
|
6 |
|
|
|
4 |
|
Total current liabilities |
|
|
2,814 |
|
|
|
4,400 |
|
NON-RECOURSE ASSET-BACKED DEBT – Net of current portion |
|
|
2,113 |
|
|
|
1,862 |
|
CONVERTIBLE SENIOR NOTES |
|
|
955 |
|
|
|
954 |
|
LEASE LIABILITIES – Net of current portion |
|
|
43 |
|
|
|
42 |
|
Total liabilities |
|
|
5,925 |
|
|
|
7,258 |
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
Common stock, $0.0001 par value; 3,000,000,000 shares authorized;
622,918,512 and 616,026,565 shares issued, respectively;
622,918,512 and 616,026,565 shares outstanding, respectively |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
4,028 |
|
|
|
3,955 |
|
Accumulated deficit |
|
|
(1,677 |
) |
|
|
(1,705 |
) |
Accumulated other comprehensive (loss) income |
|
|
(4 |
) |
|
|
(2 |
) |
Total shareholders’ equity |
|
|
2,347 |
|
|
|
2,248 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
8,272 |
|
|
$ |
9,506 |
|
|
|
|
|
|
|
|
|
|
|
OPENDOOR TECHNOLOGIES INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
millions)(Unaudited) |
|
|
|
Three Months
EndedMarch 31, |
|
2022 |
|
2021 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income (loss) |
$ |
28 |
|
|
$ |
(270 |
) |
Adjustments to reconcile net income (loss) to cash, cash
equivalents, and restricted cash provided by (used in) operating
activities: |
|
|
|
Depreciation and amortization |
|
18 |
|
|
|
10 |
|
Amortization of right of use asset |
|
2 |
|
|
|
2 |
|
Stock-based compensation |
|
67 |
|
|
|
239 |
|
Warrant fair value adjustment |
|
— |
|
|
|
15 |
|
Gain on settlement of lease liabilities |
|
— |
|
|
|
(5 |
) |
Inventory valuation adjustment |
|
8 |
|
|
|
— |
|
Change in fair value of equity securities |
|
22 |
|
|
|
— |
|
Net fair value adjustments and gain (loss) on sale of mortgage
loans held for sale |
|
(1 |
) |
|
|
(1 |
) |
Origination of mortgage loans held for sale |
|
(46 |
) |
|
|
(32 |
) |
Proceeds from sale and principal collections of mortgage loans held
for sale |
|
43 |
|
|
|
32 |
|
Changes in operating assets and liabilities: |
|
|
|
Escrow receivable |
|
26 |
|
|
|
(18 |
) |
Real estate inventory |
|
1,416 |
|
|
|
(375 |
) |
Other assets |
|
(28 |
) |
|
|
(8 |
) |
Accounts payable and other accrued liabilities |
|
2 |
|
|
|
16 |
|
Interest payable |
|
(5 |
) |
|
|
— |
|
Lease liabilities |
|
(2 |
) |
|
|
(10 |
) |
Net cash provided by (used in) operating activities |
|
1,550 |
|
|
|
(405 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchase of property and equipment |
|
(10 |
) |
|
|
(4 |
) |
Purchase of marketable securities |
|
(28 |
) |
|
|
(34 |
) |
Proceeds from sales, maturities, redemptions and paydowns of
marketable securities |
|
22 |
|
|
|
23 |
|
Purchase of non-marketable equity securities |
|
(25 |
) |
|
|
(10 |
) |
Capital returns of non-marketable equity securities |
|
3 |
|
|
|
— |
|
Net cash used in investing activities |
|
(38 |
) |
|
|
(25 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Proceeds from exercise of stock options |
|
2 |
|
|
|
— |
|
Proceeds from the February 2021 Offering |
|
— |
|
|
|
886 |
|
Issuance cost of common stock |
|
— |
|
|
|
(29 |
) |
Proceeds from non-recourse asset-backed debt |
|
2,292 |
|
|
|
673 |
|
Principal payments on non-recourse asset-backed debt |
|
(3,622 |
) |
|
|
(423 |
) |
Proceeds from other secured borrowings |
|
45 |
|
|
|
31 |
|
Principal payments on other secured borrowings |
|
(41 |
) |
|
|
(31 |
) |
Payment of loan origination fees and debt issuance costs |
|
(10 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
(1,334 |
) |
|
|
1,107 |
|
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
|
178 |
|
|
|
677 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning of
period |
|
2,578 |
|
|
|
1,506 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period |
$ |
2,756 |
|
|
$ |
2,183 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during
the period for interest |
$ |
68 |
|
|
$ |
9 |
|
DISCLOSURES OF NONCASH ACTIVITIES: |
|
|
|
Stock-based compensation expense capitalized for internally
developed software |
$ |
4 |
|
|
$ |
5 |
|
RECONCILIATION TO CONDENSED CONSOLIDATED BALANCE SHEETS: |
|
|
|
Cash and cash equivalents |
$ |
2,312 |
|
|
$ |
2,040 |
|
Restricted cash |
|
444 |
|
|
|
143 |
|
Cash, cash equivalents, and restricted cash |
$ |
2,756 |
|
|
$ |
2,183 |
|
|
|
|
|
|
|
|
|
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. 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, and (2) inventory valuation adjustment in prior
periods. 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 EndedMarch 31, |
(in millions, except percentages and homes sold, or as
noted) |
|
2022 |
|
2021 |
Gross profit (GAAP) |
|
$ |
535 |
|
|
$ |
97 |
|
Gross Margin |
|
|
10.4 |
% |
|
|
13.0 |
% |
Adjustments: |
|
|
|
|
Inventory valuation adjustment – Current Period(1)(2) |
|
|
8 |
|
|
|
— |
|
Inventory valuation adjustment – Prior Periods(1)(3) |
|
|
(31 |
) |
|
|
— |
|
Adjusted Gross Profit |
|
$ |
512 |
|
|
$ |
97 |
|
Adjusted Gross Margin |
|
|
9.9 |
% |
|
|
13.0 |
% |
Adjustments: |
|
|
|
|
Direct selling costs(4) |
|
|
(136 |
) |
|
|
(18 |
) |
Holding costs on sales – Current Period(5)(6) |
|
|
(16 |
) |
|
|
(2 |
) |
Holding costs on sales – Prior Periods(5)(7) |
|
|
(28 |
) |
|
|
(1 |
) |
Contribution Profit |
|
$ |
332 |
|
|
$ |
76 |
|
Homes sold in period |
|
|
12,669 |
|
|
|
2,462 |
|
Contribution Profit per Home Sold (in
thousands) |
|
$ |
26 |
|
|
$ |
31 |
|
Contribution Margin |
|
|
6.4 |
% |
|
|
10.2 |
% |
Adjustments: |
|
|
|
|
Interest on homes sold – Current Period(8)(9) |
|
|
(16 |
) |
|
|
(2 |
) |
Interest on homes sold – Prior Periods(8)(10) |
|
|
(26 |
) |
|
|
(1 |
) |
Contribution Profit
After Interest |
|
$ |
290 |
|
|
$ |
73 |
|
Contribution Margin After
Interest |
|
|
5.6 |
% |
|
|
9.8 |
% |
________________
(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) 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, homeowners 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 asset-backed senior debt facilities incurred
during the period on homes sold in the current period.
(10) Represents the interest
expense under our asset-backed senior debt facilities incurred
during prior periods on homes sold in the current period.
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 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 income (loss).
Adjusted Net Income (Loss)
We calculate Adjusted Net Income (Loss) as GAAP net
income (loss) adjusted to exclude non-cash expenses of stock-based
compensation, marketable equity securities fair value adjustment,
warrant fair value adjustment, and intangibles amortization
expense. It also excludes non-recurring gain on lease termination
and legal contingency accrual. Adjusted Net Income (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 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
income (loss), which is the most directly comparable GAAP measure,
for the periods indicated:
|
|
Three Months EndedMarch 31, |
(in millions, except percentages) |
|
2022 |
|
2021 |
Net income (loss) (GAAP) |
|
$ |
28 |
|
|
$ |
(270 |
) |
Adjustments: |
|
|
|
|
Stock-based compensation |
|
|
67 |
|
|
|
239 |
|
Equity securities fair value adjustment(1) |
|
|
22 |
|
|
|
— |
|
Warrant fair value adjustment(1) |
|
|
— |
|
|
|
15 |
|
Intangibles amortization expense(2) |
|
|
2 |
|
|
|
— |
|
Inventory valuation adjustment – Current Period(3)(4) |
|
|
8 |
|
|
|
— |
|
Inventory valuation adjustment — Prior Periods(3)(5) |
|
|
(31 |
) |
|
|
— |
|
Gain on lease termination |
|
|
— |
|
|
|
(5 |
) |
Legal contingency accrual |
|
|
3 |
|
|
|
— |
|
Adjusted Net Income (Loss) |
|
$ |
99 |
|
|
$ |
(21 |
) |
Adjustments: |
|
|
|
|
Depreciation and amortization, excluding amortization of
intangibles and right of use assets |
|
|
9 |
|
|
|
9 |
|
Property financing(6) |
|
|
58 |
|
|
|
7 |
|
Other interest expense(7) |
|
|
10 |
|
|
|
4 |
|
Interest income(8) |
|
|
— |
|
|
|
(1 |
) |
Adjusted EBITDA |
|
$ |
176 |
|
|
$ |
(2 |
) |
Adjusted EBITDA Margin |
|
|
3.4 |
% |
|
(0.3 |
)% |
________________
(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 adjustments
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) Includes interest expense on
our non-recourse asset-backed debt facilities.
(7) 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.
(8) 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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