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Citing an “uncertain macro backdrop,” Opendoor on Thursday revealed that its revenue fell and losses grew during the first three months of 2023.
In total, the iBuying giant brought in $3.1 billion during the first quarter of the year, according to a newly published earnings report. That represents a year-over-year dip of 39 percent. Meanwhile, the company lost $101 million, which represents a reversal from one year earlier when it made a profit of $28 million.
Opendoor’s first quarter 2023 earnings — while lackluster compared to a year ago — do represent an improvement over the fourth quarter of 2022, when the company brought in $2.9 billion.
Additionally, Opendoor suffered a net loss of $399 million in the fourth quarter of last year — nearly four times as much as it lost in this most recent quarter.
The first quarter of 2023 looks even better in comparison to the third quarter of 2022, when Opendoor lost nearly $1 billion, though not all of that loss was from cash burn.
Thursday’s report goes on to show that Opendoor sold a total of 8,274 homes between January and March, which is 35 percent fewer than it sold during the first quarter of 2022. And it bought 1,747 homes, down 81 percent year over year.
Speaking during a call with investors Thursday, Opendoor CEO Carrie Wheeler said that “the number of new listings in our buy box was down almost 25 percent in the first quarter”— a comment that suggests the company’s lower level of buying activity was at least in part due to fewer available properties.
For each home that Opendoor sold in the first quarter, it lost an average $29,000. That’s very slightly worse than it did during the fourth quarter of 2022, when it lost $28,000 on each sold home.
In a post-earnings interview with Inman, Wheeler went on to explain that Opendoor currently has two “books” of homes: Those that were purchased in June 2022 and earlier, and those that were purchased after that date, after the market started to sour. Opendoor’s Q1 losses — both per home and overall — have to do with those older homes, Wheeler said. She also noted that the homes purchased more recently are “performing extremely well.”
As Opendoor increasingly clears out those older homes and sees more recent purchases dominate its inventory, its financial results should improve as well, Wheeler said.
“I think what’s overwhelming our results right now is selling down a static pool of longer dated homes,” Wheeler also told Inman. “So just to give out the average of how you sell a book of homes over time, you sell your best homes first. The worst homes tend to be sold last. So what you’re seeing is that tail of the old book. Going forward, we have a very good new book of homes that are performing ahead of expectations by a couple hundred basis points.”
In the report, Wheeler additionally concluded that the quarter’s financial results ultimately “demonstrate our progress in navigating the housing market transition against an uncertain macro backdrop.”
“We exceeded our sell-through expectations for our longest-held homes and continued to build a new book of inventory with strong margin performance,” Wheeler continued. “We also took further actions to right-size our cost structure. As we look ahead, we are focused on attracting more sellers, including via the expansion of our partnership channels and product diversification, and driving operational excellence to improve our long-term profitability.”
Despite the losses, the company further pointed out in an email that it “exceeded the high end of our revenue guidance by 18 percent.”
The company’s results also appeared to impress investors.
Heading into Thursday’s earnings report, shares in Opendoor were trading in the mid $1.30 range. That was up for the day and the week, but down from a high point in February 2021 when shares neared $35.
However, after publishing the report, Opendoor saw its shares spike in after hours trading. Some of those gains later disappeared, but by the time the investor call wrapped up shares were still up compared to their price when regular trading ended Thursday.
Opendoor had a market cap of about $870.8 million as of Thursday afternoon.
Thursday’s earnings report comes at a critical time for the iBuying giant. Like other companies, Opendoor suffered in 2022 as high rates made borrowing, buying, and renovating all more expensive. Unlike brokerages or comparatively asset-light firms such as Zillow, however, Opendoor’s business model left it by the end of 2022 with a large inventory of physical assets, homes, that it needed to offload.
The company has been up front in recent months about the need to sell those homes, which were purchased when the market was stronger.
In its statement Thursday, Opendoor indicated it was making progress on that front more quickly than expected.
In total, Thursday’s report shows that the company had 2,118 homes in inventory as of March 31. That was down from 4,460 homes as of the end of last year. During the investor call, Wheeler said that going forward Opendoor will probably buy about 1,000 homes per month.
Opendoor has also worked in recent months to pivot into more nimble verticals. Most notably, the company launched a marketplace designed to connect buyers and sellers. Though still in its infancy, the marketplace — known as Exclusives — allows Opendoor to stay involved in transactions as a middleman without having to spend the time or money actually taking on ownership of properties.
Exclusives is currently only available in a handful of Texas communities. But Wheeler said during the call that “we’re really encouraged by the early signs we’re seeing.” She went on to say that the offering appeals to “latent sellers,” or people who want to sell their homes at some point but don’t want to go through the hassle of listing those properties immediately. Using Exclusives allows such consumers to field offers without otherwise putting their homes on the market.
Buyers are also engaging with the platform “because they’re getting these homes they can’t get anywhere else,” Wheeler said.
“What’s really encouraging is the growth we’re seeing,” Wheeler added of Exclusives.
In her interview with Inman, Wheeler also said that Exclusives “expands the pie” and gives the company access to a “different class of supply than we could otherwise get.”
Ultimately, Wheeler was resolute about Opendoor’s mission Thursday, describing the company’s offerings during the investor call as “a magic product.” She contrasted that with real estate’s status quo, which she characterized as “static and broken,” adding that the “process of buying and selling a home today remains complicated.”
In the near term, however, Wheeler said “the outlook for home prices continues to be uncertain.” She told Inman Opendoor is able to price homes regardless of whether prices are moving up or down, but noted that the company will have to navigate the future with care.
“It is imperative,” she added during the investor call, “to operate with caution and discipline.”
Update: This report was updated after publication with information from Opendoor’s earnings report, commentary from a call company leaders held with investors, and an interview Inman conducted with Wheeler Thursday.