Opendoor Technologies Inc. (Nasdaq: OPEN), a leading e-commerce
platform for residential real estate transactions, today reported
financial results for its second quarter ended June 30, 2024.
Opendoor’s second quarter 2024 financial results and management
commentary can be accessed through the Company’s shareholder letter
on the “Quarterly Reports” page of Opendoor’s investor relations
website at https://investor.opendoor.com.
“We are proud of our second quarter performance and the progress
we’ve made in building a platform where all customers can begin
their home selling journey. Revenue, Contribution Margin, and
Adjusted EBITDA exceeded the high end of our guidance, and our
acquisitions outperformed expectations, growing nearly 80%
year-over-year. We continue to make meaningful progress increasing
brand awareness, delivering industry-leading seller NPS, expanding
our product offerings, and driving structural efficiencies across
our platform that we expect will benefit the Company for years to
come,” said Carrie Wheeler, CEO of Opendoor.
Wheeler continued, “During the back half of the second quarter,
we began responding to signals that indicated additional slowing in
the housing market. We are making decisions that appropriately
balance growth, margin, and risk in what continues to be a
challenging environment. While the housing cycle will eventually
recover, the improvements we are making in the business are
enduring. We continue to expect to make meaningful progress in both
increasing acquisitions and reducing Adjusted Net Losses this year,
as compared to 2023.”
Second Quarter
2024 Key Highlights
- Revenue of $1.5 billion, down
(24)% versus 2Q23 and up 28% versus 1Q24; with 4,078 total homes
sold, down (24)% versus 2Q23 and up 32% versus 1Q24
- Gross profit of $129 million,
versus $149 million in 2Q23 and $114 million in 1Q24;
Gross Margin of 8.5%, versus 7.5% in 2Q23 and 9.7% in 1Q24
- Net (loss) income of
$(92) million, versus $23 million in 2Q23 and
$(109) million in 1Q24
- Inventory balance of $2.2 billion,
representing 6,399 homes, up 94% versus 2Q23 and up 19% versus
1Q24
- Purchased 4,771 homes, up 78% versus
2Q23 and up 38% versus 1Q24
- Ended the quarter with 1,793 homes
under contract for purchase, up 29% versus 2Q23 and down (31)%
versus 1Q24
Non-GAAP Key Highlights*
- Contribution Profit (Loss) of
$95 million, versus $(90) million in 2Q23 and
$57 million in 1Q24; Contribution Margin of 6.3%, versus
(4.6)% in 2Q23 and 4.8% in 1Q24
- Adjusted EBITDA of $(5) million,
versus $(168) million in 2Q23 and $(50) million in 1Q24;
Adjusted EBITDA Margin of (0.3)%, versus (8.5)% in 2Q23 and (4.2)%
in 1Q24
- Adjusted Net Loss of
$(31) million, versus $(197) million in 2Q23 and
$(80) million in 1Q24
*See “—Use of Non-GAAP Financial Measures” below for further
details and a reconciliation of such non-GAAP measures to their
nearest comparable GAAP measures.
Third Quarter
2024 Financial Outlook
- 3Q24 revenue guidance of $1.2 billion
to $1.3 billion
- 3Q24 Contribution Profit1 guidance of
$35 million to $45 million
- 3Q24 Adjusted EBITDA1 guidance of $(70)
million to $(60) million
Conference Call and Webcast Details
Opendoor will host a conference call to discuss its financial
results on August 1, 2024, 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.
About Opendoor
Opendoor’s mission is to power life’s progress, one move at a
time. Since 2014, Opendoor has provided people across the U.S. with
a simple and certain way to buy and sell a home. Opendoor currently
operates in markets nationwide.
For more information, please visit www.opendoor.com
Forward Looking StatementsThis press release
contains certain forward-looking statements within the meaning of
Section 27A 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 the current and
future health and stability of the real estate housing market and
general economy; anticipated future results of operations and
financial performance, including our third quarter 2024 financial
outlook and our ability to balance growth, margin and risk in a
challenging environment; the health and status of our financial
condition and whether we will be able to increase acquisitions and
improve Adjusted Net Loss through the remainder of 2024 in a
potentially slowing housing market; whether efficiencies we have
implemented across our platform will result in future benefits; and
business strategy and plans, including plans to continue to invest
in our products. These forward-looking statements generally are
identified by the words “anticipate”, “believe”, “contemplate”,
“continue”, “could”, “estimate”, “expect”, “forecast”, “future”,
“guidance”, “intend”, “may”, “might”, “opportunity”, “outlook”,
“plan”, “possible”, “potential”, “predict”, “project”, “should”,
“strategy”, “strive”, “target”, “vision”, “will”, or “would”, any
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 that can cause actual results to
differ materially from those in such forward-looking statements.
The factors that could cause or contribute to actual future events
to differ materially from the forward-looking statements in this
press release include but are not limited to: the current and
future health and stability of the economy, financial conditions
and residential housing market, including any extended downturn or
slowdown; changes in general economic and financial conditions
(including federal monetary policy, interest rates, inflation,
actual or anticipated recession, home price fluctuations, and
housing inventory), as well as the probability of such changes
occurring, that may impact demand for our products and services,
lower our profitability or reduce our access to future financings;
actual or anticipated fluctuations in our financial condition and
results of operations; changes in projected operational and
financial results; our real estate assets and increased competition
in the U.S. residential real estate industry; our ability to
operate and grow our core business products, including the ability
to obtain sufficient financing and resell purchased homes;
investment of resources to pursue strategies and develop new
products and services that may not prove effective or that are not
attractive to customers and/or partners or that do not allow us to
compete successfully; our ability to acquire and resell homes
profitably; our ability to grow market share in our existing
markets or any new markets we may enter; our ability to manage our
growth effectively; our ability to expeditiously sell and
appropriately price our inventory; our ability to access sources of
capital, including debt financing and securitization funding to
finance our real estate inventories and other sources of capital to
finance operations and growth; our ability to maintain and enhance
our products and brand, and to attract customers; our ability to
manage, develop and refine our digital platform, including our
automated pricing and valuation technology; our ability to comply
with multiple listing service rules and requirements to access and
use listing data, and to maintain or establish relationships with
listings and data providers; our ability to obtain or maintain
licenses and permits to support our current and future business
operations; acquisitions, strategic partnerships, joint ventures,
capital-raising activities or other corporate transactions or
commitments by us or our competitors; actual or anticipated changes
in technology, products, markets or services by us or our
competitors; our ability to protect our brand and intellectual
property; our success in retaining or recruiting, or changes
required in, our officers, key employees and/or directors; the
impact of the regulatory environment within our industry and
complexities with compliance related to such environment; any
future impact of pandemics or epidemics, including any future
resurgences of COVID-19 and its variants, or other public health
crises on our ability to operate, demand for our products and
services, or general economic conditions; changes in laws or
government regulation affecting our business; and the impact of
pending or future litigation or regulatory actions. 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 15, 2024, as updated by our
periodic reports and 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, except as required by law, 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.
Contact Information
Investors:investors@opendoor.com
Media:press@opendoor.com
_____________________1 Opendoor has not provided a
quantitative reconciliation of forecasted Contribution Profit
(Loss) to forecasted GAAP gross profit (loss) nor a 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 gross profit (loss) and 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” following the financial tables below.
|
OPENDOOR TECHNOLOGIES INC.FINANCIAL
HIGHLIGHTS AND OPERATING METRICS(In millions, except
percentages, homes sold, number of markets, homes purchased, and
homes in inventory)(Unaudited) |
|
|
|
Three Months Ended |
|
|
June 30,2024 |
|
March 31,2024 |
|
December 31,2023 |
|
September 30,2023 |
|
June 30,2023 |
Revenue |
|
$ |
1,511 |
|
|
$ |
1,181 |
|
|
$ |
870 |
|
|
$ |
980 |
|
|
$ |
1,976 |
|
Gross profit |
|
$ |
129 |
|
|
$ |
114 |
|
|
$ |
72 |
|
|
$ |
96 |
|
|
$ |
149 |
|
Gross Margin |
|
|
8.5 |
% |
|
|
9.7 |
% |
|
|
8.3 |
% |
|
|
9.8 |
% |
|
|
7.5 |
% |
Net (loss) income |
|
$ |
(92 |
) |
|
$ |
(109 |
) |
|
$ |
(91 |
) |
|
$ |
(106 |
) |
|
$ |
23 |
|
Number of markets (at period
end) |
|
|
50 |
|
|
|
50 |
|
|
|
50 |
|
|
|
53 |
|
|
|
53 |
|
Homes sold |
|
|
4,078 |
|
|
|
3,078 |
|
|
|
2,364 |
|
|
|
2,687 |
|
|
|
5,383 |
|
Homes purchased |
|
|
4,771 |
|
|
|
3,458 |
|
|
|
3,683 |
|
|
|
3,136 |
|
|
|
2,680 |
|
Homes in inventory (at period
end) |
|
|
6,399 |
|
|
|
5,706 |
|
|
|
5,326 |
|
|
|
4,007 |
|
|
|
3,558 |
|
Inventory (at period end) |
|
$ |
2,234 |
|
|
$ |
1,881 |
|
|
$ |
1,775 |
|
|
$ |
1,311 |
|
|
$ |
1,149 |
|
Percentage of homes “on the
market” for greater than 120 days (at period end) |
|
|
14 |
% |
|
|
15 |
% |
|
|
18 |
% |
|
|
12 |
% |
|
|
24 |
% |
Non-GAAP Financial
Highlights (1) |
|
|
|
|
|
|
|
|
|
|
Contribution Profit
(Loss) |
|
$ |
95 |
|
|
$ |
57 |
|
|
$ |
30 |
|
|
$ |
43 |
|
|
$ |
(90 |
) |
Contribution Margin |
|
|
6.3 |
% |
|
|
4.8 |
% |
|
|
3.4 |
% |
|
|
4.4 |
% |
|
(4.6 |
)% |
Adjusted EBITDA |
|
$ |
(5 |
) |
|
$ |
(50 |
) |
|
$ |
(69 |
) |
|
$ |
(49 |
) |
|
$ |
(168 |
) |
Adjusted EBITDA Margin |
|
(0.3 |
)% |
|
(4.2 |
)% |
|
(7.9 |
)% |
|
(5.0 |
)% |
|
(8.5 |
)% |
Adjusted Net Loss |
|
$ |
(31 |
) |
|
$ |
(80 |
) |
|
$ |
(97 |
) |
|
$ |
(75 |
) |
|
$ |
(197 |
) |
(1) |
|
See “—Use of Non-GAAP Financial
Measures” for further details and a reconciliation of such non-GAAP
measures to their nearest comparable GAAP measures. |
|
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 Ended |
|
Six Months
EndedJune 30, |
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
|
2024 |
|
|
|
2023 |
|
REVENUE |
$ |
1,511 |
|
|
$ |
1,181 |
|
|
$ |
1,976 |
|
|
$ |
2,692 |
|
|
$ |
5,096 |
|
COST OF REVENUE |
|
1,382 |
|
|
|
1,067 |
|
|
|
1,827 |
|
|
|
2,449 |
|
|
|
4,777 |
|
GROSS PROFIT |
|
129 |
|
|
|
114 |
|
|
|
149 |
|
|
|
243 |
|
|
|
319 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
Sales, marketing and operations |
|
116 |
|
|
|
113 |
|
|
|
124 |
|
|
|
229 |
|
|
|
312 |
|
General and administrative |
|
48 |
|
|
|
47 |
|
|
|
44 |
|
|
|
95 |
|
|
|
110 |
|
Technology and development |
|
37 |
|
|
|
41 |
|
|
|
39 |
|
|
|
78 |
|
|
|
79 |
|
Restructuring |
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
Total operating expenses |
|
201 |
|
|
|
201 |
|
|
|
217 |
|
|
|
402 |
|
|
|
511 |
|
LOSS FROM OPERATIONS |
|
(72 |
) |
|
|
(87 |
) |
|
|
(68 |
) |
|
|
(159 |
) |
|
|
(192 |
) |
(LOSS) GAIN ON EXTINGUISHMENT
OF DEBT |
|
(1 |
) |
|
|
— |
|
|
|
104 |
|
|
|
(1 |
) |
|
|
182 |
|
INTEREST EXPENSE |
|
(30 |
) |
|
|
(37 |
) |
|
|
(53 |
) |
|
|
(67 |
) |
|
|
(127 |
) |
OTHER INCOME – Net |
|
12 |
|
|
|
15 |
|
|
|
41 |
|
|
|
27 |
|
|
|
60 |
|
(LOSS) INCOME BEFORE INCOME
TAXES |
|
(91 |
) |
|
|
(109 |
) |
|
|
24 |
|
|
|
(200 |
) |
|
|
(77 |
) |
INCOME TAX EXPENSE |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
NET (LOSS) INCOME |
$ |
(92 |
) |
|
$ |
(109 |
) |
|
$ |
23 |
|
|
$ |
(201 |
) |
|
$ |
(78 |
) |
Net (loss) income per share
attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.13 |
) |
|
$ |
(0.16 |
) |
|
$ |
0.04 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.12 |
) |
Diluted |
$ |
(0.13 |
) |
|
$ |
(0.16 |
) |
|
$ |
0.03 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.12 |
) |
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
693,445 |
|
|
|
682,457 |
|
|
|
646,062 |
|
|
|
687,951 |
|
|
|
646,750 |
|
Diluted |
|
693,445 |
|
|
|
682,457 |
|
|
|
667,159 |
|
|
|
687,951 |
|
|
|
646,750 |
|
|
OPENDOOR TECHNOLOGIES INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In millions, except share
data)(Unaudited) |
|
|
|
June 30,2024 |
|
December 31,2023 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
790 |
|
|
$ |
999 |
|
Restricted cash |
|
|
121 |
|
|
|
541 |
|
Marketable securities |
|
|
19 |
|
|
|
69 |
|
Escrow receivable |
|
|
24 |
|
|
|
9 |
|
Real estate inventory, net |
|
|
2,234 |
|
|
|
1,775 |
|
Other current assets |
|
|
61 |
|
|
|
52 |
|
Total current assets |
|
|
3,249 |
|
|
|
3,445 |
|
PROPERTY AND
EQUIPMENT – Net |
|
|
71 |
|
|
|
66 |
|
RIGHT OF USE ASSETS |
|
|
23 |
|
|
|
25 |
|
GOODWILL |
|
|
4 |
|
|
|
4 |
|
INTANGIBLES – Net |
|
|
2 |
|
|
|
5 |
|
OTHER ASSETS |
|
|
23 |
|
|
|
22 |
|
TOTAL ASSETS |
|
$ |
3,372 |
|
|
$ |
3,567 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable and other accrued liabilities |
|
$ |
73 |
|
|
$ |
64 |
|
Non-recourse asset-backed debt – current portion |
|
|
315 |
|
|
|
— |
|
Interest payable |
|
|
1 |
|
|
|
1 |
|
Lease liabilities – current portion |
|
|
4 |
|
|
|
5 |
|
Total current liabilities |
|
|
393 |
|
|
|
70 |
|
NON-RECOURSE ASSET-BACKED
DEBT – Net of current portion |
|
|
1,739 |
|
|
|
2,134 |
|
CONVERTIBLE SENIOR NOTES |
|
|
377 |
|
|
|
376 |
|
LEASE LIABILITIES – Net of
current portion |
|
|
18 |
|
|
|
19 |
|
OTHER LIABILITIES |
|
|
— |
|
|
|
1 |
|
Total liabilities |
|
|
2,527 |
|
|
|
2,600 |
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
Common stock, $0.0001 par value; 3,000,000,000 shares authorized;
698,843,166 and 677,636,163 shares issued, respectively;
698,843,166 and 677,636,163 shares outstanding, respectively |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
4,379 |
|
|
|
4,301 |
|
Accumulated deficit |
|
|
(3,534 |
) |
|
|
(3,333 |
) |
Accumulated other comprehensive loss |
|
|
— |
|
|
|
(1 |
) |
Total shareholders’ equity |
|
|
845 |
|
|
|
967 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
3,372 |
|
|
$ |
3,567 |
|
|
OPENDOOR TECHNOLOGIES INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
millions)(Unaudited) |
|
|
Six Months
EndedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
Net loss |
$ |
(201 |
) |
|
$ |
(78 |
) |
Adjustments to reconcile net loss to cash, cash equivalents, and
restricted cash (used in) provided by operating activities: |
|
|
|
Depreciation and amortization |
|
26 |
|
|
|
39 |
|
Amortization of right of use asset |
|
3 |
|
|
|
4 |
|
Stock-based compensation |
|
66 |
|
|
|
63 |
|
Inventory valuation adjustment |
|
41 |
|
|
|
37 |
|
Change in fair value of equity securities |
|
4 |
|
|
|
(7 |
) |
Other |
|
3 |
|
|
|
(1 |
) |
Proceeds from sale and principal collections of mortgage loans held
for sale |
|
— |
|
|
|
1 |
|
Loss (gain) on extinguishment of debt |
|
1 |
|
|
|
(182 |
) |
Changes in operating assets and liabilities: |
|
|
|
Escrow receivable |
|
(15 |
) |
|
|
17 |
|
Real estate inventory |
|
(498 |
) |
|
|
3,259 |
|
Other assets |
|
(10 |
) |
|
|
(3 |
) |
Accounts payable and other accrued liabilities |
|
7 |
|
|
|
(31 |
) |
Interest payable |
|
— |
|
|
|
(10 |
) |
Lease liabilities |
|
(4 |
) |
|
|
(6 |
) |
Net cash (used in) provided by operating activities |
|
(577 |
) |
|
|
3,102 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
Purchase of property and equipment |
|
(16 |
) |
|
|
(17 |
) |
Proceeds from sales, maturities, redemptions and paydowns of
marketable securities |
|
47 |
|
|
|
61 |
|
Proceeds from sale of non-marketable equity securities |
|
— |
|
|
|
1 |
|
Net cash provided by investing activities |
|
31 |
|
|
|
45 |
|
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
Repurchase of convertible senior notes |
|
— |
|
|
|
(270 |
) |
Proceeds from exercise of stock options |
|
— |
|
|
|
2 |
|
Proceeds from issuance of common stock for ESPP |
|
2 |
|
|
|
1 |
|
Proceeds from non-recourse asset-backed debt |
|
217 |
|
|
|
236 |
|
Principal payments on non-recourse asset-backed debt |
|
(302 |
) |
|
|
(2,099 |
) |
Payment for early extinguishment of debt |
|
— |
|
|
|
(4 |
) |
Net cash used in financing activities |
|
(83 |
) |
|
|
(2,134 |
) |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH |
|
(629 |
) |
|
|
1,013 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning of
period |
|
1,540 |
|
|
|
1,791 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period |
$ |
911 |
|
|
$ |
2,804 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during
the period for interest |
$ |
62 |
|
|
$ |
126 |
|
DISCLOSURES OF NONCASH ACTIVITIES: |
|
|
|
Stock-based compensation expense capitalized for internally
developed software |
$ |
10 |
|
|
$ |
10 |
|
RECONCILIATION TO CONDENSED CONSOLIDATED BALANCE SHEETS: |
|
|
|
Cash and cash equivalents |
$ |
790 |
|
|
$ |
1,120 |
|
Restricted cash |
|
121 |
|
|
|
1,684 |
|
Cash, cash equivalents, and restricted cash |
$ |
911 |
|
|
$ |
2,804 |
|
|
|
|
|
|
|
|
|
Use of 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 (Loss), Contribution Profit (Loss), 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 (Loss) and Contribution Profit (Loss)
To provide investors with additional information regarding our
margins and return on inventory acquired, we have included Adjusted
Gross Profit (Loss) and Contribution Profit (Loss), which are
non-GAAP financial measures. We believe that Adjusted Gross Profit
(Loss) and Contribution Profit (Loss) are useful financial measures
for investors as they are supplemental measures used by management
in evaluating unit level economics and our operating performance.
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 (Loss) 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.
Adjusted Gross Profit (Loss) and Contribution Profit (Loss) 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 (Loss) / Margin
We calculate Adjusted Gross Profit (Loss) 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.
Adjusted Gross Margin is Adjusted Gross Profit (Loss) 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 (Loss) helps management
assess home pricing, service fees and renovation performance for a
specific resale cohort.
Contribution Profit (Loss) / Margin
We calculate Contribution Profit (Loss) as Adjusted Gross Profit
(Loss), 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 (Loss) 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 (Loss) helps management
assess inflows and outflows directly associated with a specific
resale cohort.
|
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 (Loss) and Contribution Profit (Loss) to our gross
profit, which is the most directly comparable GAAP measure, for the
periods indicated:
|
|
Three Months Ended |
|
Six Months Ended
June 30, |
(in millions,
except percentages and homes sold, or as noted) |
|
June 30, 2024 |
|
March 31, 2024 |
|
December 31, 2023 |
|
September 30,2023 |
|
June 30, 2023 |
|
|
2024 |
|
|
2023 |
Revenue (GAAP) |
|
$ |
1,511 |
|
|
$ |
1,181 |
|
|
$ |
870 |
|
|
$ |
980 |
|
|
$ |
1,976 |
|
|
$ |
2,692 |
|
|
$ |
5,096 |
|
Gross profit
(GAAP) |
|
$ |
129 |
|
|
$ |
114 |
|
|
$ |
72 |
|
|
$ |
96 |
|
|
$ |
149 |
|
|
$ |
243 |
|
|
$ |
319 |
|
Gross Margin |
|
|
8.5 |
% |
|
|
9.7 |
% |
|
|
8.3 |
% |
|
|
9.8 |
% |
|
|
7.5 |
% |
|
|
9.0 |
% |
|
|
6.3 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory valuation adjustment – Current Period(1)(2) |
|
|
34 |
|
|
|
7 |
|
|
|
11 |
|
|
|
17 |
|
|
|
14 |
|
|
|
38 |
|
|
|
18 |
|
Inventory valuation adjustment – Prior Periods(1)(3) |
|
|
(9 |
) |
|
|
(17 |
) |
|
|
(17 |
) |
|
|
(29 |
) |
|
|
(156 |
) |
|
|
(23 |
) |
|
|
(432 |
) |
Adjusted Gross Profit
(Loss) |
|
$ |
154 |
|
|
$ |
104 |
|
|
$ |
66 |
|
|
$ |
84 |
|
|
$ |
7 |
|
|
$ |
258 |
|
|
$ |
(95 |
) |
Adjusted Gross Margin |
|
|
10.2 |
% |
|
|
8.8 |
% |
|
|
7.6 |
% |
|
|
8.6 |
% |
|
|
0.4 |
% |
|
|
9.6 |
% |
|
(1.9 |
)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct selling costs(4) |
|
|
(43 |
) |
|
|
(34 |
) |
|
|
(26 |
) |
|
|
(28 |
) |
|
|
(58 |
) |
|
|
(77 |
) |
|
|
(143 |
) |
Holding costs on sales – Current Period(5)(6) |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
|
|
(6 |
) |
|
|
(16 |
) |
|
|
(31 |
) |
Holding costs on sales – Prior Periods(5)(7) |
|
|
(11 |
) |
|
|
(8 |
) |
|
|
(7 |
) |
|
|
(9 |
) |
|
|
(33 |
) |
|
|
(13 |
) |
|
|
(62 |
) |
Contribution Profit
(Loss) |
|
$ |
95 |
|
|
$ |
57 |
|
|
$ |
30 |
|
|
$ |
43 |
|
|
$ |
(90 |
) |
|
$ |
152 |
|
|
$ |
(331 |
) |
Homes sold in period |
|
|
4,078 |
|
|
|
3,078 |
|
|
|
2,364 |
|
|
|
2,687 |
|
|
|
5,383 |
|
|
|
7,156 |
|
|
|
13,657 |
|
Contribution Profit
(Loss) per Home Sold (in thousands) |
|
$ |
23 |
|
|
$ |
19 |
|
|
$ |
13 |
|
|
$ |
16 |
|
|
$ |
(17 |
) |
|
$ |
21 |
|
|
$ |
(24 |
) |
Contribution Margin |
|
|
6.3 |
% |
|
|
4.8 |
% |
|
|
3.4 |
% |
|
|
4.4 |
% |
|
(4.6 |
)% |
|
|
5.6 |
% |
|
(6.5 |
)% |
_____________________
(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. |
|
|
|
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-cash, not directly related to our revenue-generating
operations, not aligned to related revenue, or not reflective of
ongoing operating results that vary in frequency and amount.
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)
income.
Adjusted Net Loss
We calculate Adjusted Net Loss as GAAP net (loss) income
adjusted to exclude non-cash expenses of stock-based compensation,
equity securities fair value adjustment, and intangibles
amortization expense. It excludes expenses that are not directly
related to our revenue-generating operations such as restructuring.
It excludes loss (gain) on extinguishment of debt as these expenses
or gains were incurred as a result of decisions made by management
to repay portions of our outstanding credit facilities and the
0.25% convertible senior notes due in 2026 (the "2026 Notes")
early; these expenses are not reflective of ongoing operating
results and vary in frequency and amount. 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 / Margin
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. Adjusted EBITDA Margin is Adjusted EBITDA as a
percentage of revenue.
The following table presents a reconciliation of our Adjusted
Net Loss and Adjusted EBITDA to our net (loss) income, which is the
most directly comparable GAAP measure, for the periods
indicated:
|
|
Three Months Ended |
|
Six Months
EndedJune 30, |
(in millions,
except percentages) |
|
June 30, 2024 |
|
March 31, 2024 |
|
December 31, 2023 |
|
September 30, 2023 |
|
June 30, 2023 |
|
|
2024 |
|
|
2023 |
Revenue (GAAP) |
|
$ |
1,511 |
|
|
$ |
1,181 |
|
|
$ |
870 |
|
|
$ |
980 |
|
|
$ |
1,976 |
|
|
$ |
2,692 |
|
|
$ |
5,096 |
|
Net (loss) income
(GAAP) |
|
$ |
(92 |
) |
|
$ |
(109 |
) |
|
$ |
(91 |
) |
|
$ |
(106 |
) |
|
$ |
23 |
|
|
$ |
(201 |
) |
|
$ |
(78 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
33 |
|
|
|
33 |
|
|
|
32 |
|
|
|
31 |
|
|
|
21 |
|
|
|
66 |
|
|
|
63 |
|
Equity securities fair value adjustment(1) |
|
|
2 |
|
|
|
2 |
|
|
|
(3 |
) |
|
|
11 |
|
|
|
(6 |
) |
|
|
4 |
|
|
|
(7 |
) |
Intangibles amortization expense(2) |
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
|
1 |
|
|
|
3 |
|
|
|
3 |
|
Inventory valuation adjustment – Current Period(3)(4) |
|
|
34 |
|
|
|
7 |
|
|
|
11 |
|
|
|
17 |
|
|
|
14 |
|
|
|
38 |
|
|
|
18 |
|
Inventory valuation adjustment — Prior Periods(3)(5) |
|
|
(9 |
) |
|
|
(17 |
) |
|
|
(17 |
) |
|
|
(29 |
) |
|
|
(156 |
) |
|
|
(23 |
) |
|
|
(432 |
) |
Restructuring(6) |
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
Loss (gain) on extinguishment of debt |
|
|
1 |
|
|
|
— |
|
|
|
(34 |
) |
|
|
— |
|
|
|
(104 |
) |
|
|
1 |
|
|
|
(182 |
) |
Other(7) |
|
|
(1 |
) |
|
|
2 |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
Adjusted Net
Loss |
|
$ |
(31 |
) |
|
$ |
(80 |
) |
|
$ |
(97 |
) |
|
$ |
(75 |
) |
|
$ |
(197 |
) |
|
$ |
(111 |
) |
|
$ |
(606 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization, excluding amortization of
intangibles |
|
|
7 |
|
|
|
11 |
|
|
|
15 |
|
|
|
9 |
|
|
|
9 |
|
|
|
18 |
|
|
|
21 |
|
Property financing(8) |
|
|
26 |
|
|
|
32 |
|
|
|
32 |
|
|
|
38 |
|
|
|
44 |
|
|
|
58 |
|
|
|
104 |
|
Other interest expense(9) |
|
|
4 |
|
|
|
5 |
|
|
|
5 |
|
|
|
9 |
|
|
|
9 |
|
|
|
9 |
|
|
|
23 |
|
Interest income(10) |
|
|
(12 |
) |
|
|
(18 |
) |
|
|
(24 |
) |
|
|
(30 |
) |
|
|
(34 |
) |
|
|
(30 |
) |
|
|
(52 |
) |
Income tax expense |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Adjusted
EBITDA |
|
$ |
(5 |
) |
|
$ |
(50 |
) |
|
$ |
(69 |
) |
|
$ |
(49 |
) |
|
$ |
(168 |
) |
|
$ |
(55 |
) |
|
$ |
(509 |
) |
Adjusted EBITDA Margin |
|
(0.3 |
)% |
|
(4.2 |
)% |
|
(7.9 |
)% |
|
(5.0 |
)% |
|
(8.5 |
)% |
|
(2.0 |
)% |
|
(10.0 |
)% |
_____________________
(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) |
|
Restructuring costs consist
primarily of severance and employee termination benefits and
bonuses incurred in connection with employees’ roles being
eliminated. |
(7) |
|
Includes primarily gain or loss
on the sale of available for sale securities, sublease income, gain
or loss on the disposal of property and equipment, income from
equity method investments, and gain on lease termination. |
(8) |
|
Includes interest expense on our
non-recourse asset-backed debt facilities. |
(9) |
|
Includes amortization of debt
issuance costs and loan origination fees, commitment fees, unused
fees, other interest related costs on our asset-backed debt
facilities, and interest expense related to the 2026 Notes
outstanding. |
(10) |
|
Consists mainly of interest
earned on cash, cash equivalents, restricted cash and marketable
securities. |
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