Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue, contribution margin, and adjusted EBITDA all outperformed guidance.
- Acquisitions grew nearly 80% year over year.
- Seller NPS reached the highest level in two years.
- Expanded product offering with 'List with Opendoor' to nearly all markets.
- Maintained a strong balance sheet with $1.2 billion in total capital.
Negative Points
- Observed additional slowing in the housing market, impacting acquisition volumes.
- Increased spreads and larger home level price drops to maintain clearance levels.
- Adjusted EBITDA loss of $5 million, though improved from the previous quarter.
- Potential risk of full-year contribution margin falling below the 5% to 7% target.
- High delistings and slowing clearance rates led to a decline in home price appreciation.
Q & A Highlights
Q: What do you attribute to the recent softness in the housing market? Is it getting worse, stabilizing, or improving?
A: Carrie Wheeler, CEO: We saw worsening signals in late May, including slower home sales, increased delistings, and declining home price appreciation (HPA). These factors have weighed on home prices, leading us to increase spreads and pull back on acquisition pacing and marketing spend.
Q: Given the macro outlook, do you feel the need to tap into the ATM program announced last earnings call?
A: Christy Schwartz, Interim CFO: We ended the quarter with $1.1 billion in capital. We did not utilize the ATM in the previous quarter but will remain opportunistic and flexible in managing our capital base.
Q: How do you manage the balance between maintaining home clearance rates and reducing spreads during periods of home price volatility?
A: Carrie Wheeler, CEO: We manage for growth, margin, and risk by adhering to well-defined resale targets. This ensures we clear inventory efficiently, even if it means adjusting prices to maintain balance sheet health.
Q: Can you elaborate on the 28% of consumers within your buy-box who asked for a quote but went on to list their homes? How has this rate fluctuated?
A: Carrie Wheeler, CEO: This rate is higher in mature markets and lower in less mature ones. Our goal is to increase awareness and conversion rates in newer markets to match those of our mature markets.
Q: How do you view the impact of the upcoming buyer agent contracts on your business?
A: Carrie Wheeler, CEO: We expect some pressure on commission rates, but we believe this change will ultimately lower transaction costs and friction, benefiting consumers and driving more transactions.
Q: How are you thinking about the '26 convertible notes given the recent dip in cash?
A: Dod Fraser, President, Open Exchange and Capital: We don't comment on future capital transactions but will continue to optimize our capital structure.
Q: What is driving the shift in your marketing strategy towards brand spend?
A: Carrie Wheeler, CEO: We've shifted from local to national marketing and from paid to brand and creative spend. This has driven higher awareness and conversion rates, even with lower overall marketing dollars.
Q: How do you feel about your financing capacity and terms as you look to scale the business?
A: Dod Fraser, President, Open Exchange and Capital: We have staggered-rolling maturities and strong relationships with our lenders, giving us confidence in our financing capacity and terms.
Q: Can you provide more color on which partnership channels have been most significant in terms of volume contribution?
A: Carrie Wheeler, CEO: We don't break down contributions by channel, but partnerships with homebuilders, agents, and online real estate players collectively account for over 40% of our volume.
Q: How is the growth in inventory affecting your acquisitions and resale margins across different markets?
A: Carrie Wheeler, CEO: Growing inventory is leading to slower clearance rates and increased delistings, which we manage by adhering to our resale guardrails and adjusting prices as needed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
