Another $91M flies out of Opendoor

Opendoor reported its second consecutive quarterly loss, though it narrowed its year-ago deficit.

The iBuyer lost $91 million after shedding $106 million in the third quarter, according to its earnings report. That was significantly less than the $399 million it frittered away in the same period of 2022.

Opendoor’s revenue was $870 million last quarter, down 70 percent year-over-year. It reported an adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — of negative $69 million, compared to $351 million in the fourth quarter of 2022.

With the exception of one quarter last year, Opendoor’s financials have taken a hit since rising mortgage rates stalled home sales. The downturn wreaked havoc on the firm, which laid off 40 percent of its staff in November 2022 and April 2023 bloodlettings.

The company cut other costs as well. It had reduced its expenses by about $400 million by the third quarter of last year.

Despite the challenging market, Opendoor has managed to stay afloat as other companies struggled to keep their iBuying operations afloat. Zillow and Redfin bowed out of the game after nine-figure losses, as rising interest rates and stock market hits — not to mention problems with their models — rendered their iBuying unfeasible. The New York Stock Exchange threatened to delist Offerpad in 2022 after its share prices plunged.

During its earnings call, Opendoor CEO Carrie Wheeler touted the firm’s potential cost savings in the wake of the Sitzer/Burnett verdict, which could upend the way brokers earn commissions. Executive Dod Fraser also noted on the call that any upsets to Multiple Listings Services could open opportunities for the company to leverage its data.

Opendoor purchased more than 3,600 homes last quarter, up 7 percent from the same period in 2022 and 17 percent from the previous quarter. At the end of the quarter, the iBuyer had more than 2,100 homes in contract, about double the number reported a year ago.

The company’s revenue last year was $6.9 billion, down 55 percent from the year prior. It lost $275 million, compared with $1.4 billion in 2022.

Looking ahead to 2024, Wheeler said the company plans to ramp up its marketing, which it kicked off with an ad during halftime of the Super Bowl. The live spot featured an Atlanta-area family giving a video tour of their home to Opendoor, which promised to respond with an offer.

Chief financial officer Christy Schwartz said the firm is committed to “rescaling our business in a sustainable way” this year, including focusing on increasing its acquisitions.

The iBuyer is also aiming for a return to positive adjusted net income, Wheeler said, though she added that the firm does not expect that to happen over a full quarter this year, given the “macro uncertainty.”

“We’re excited about how we’re set up for 2024 and beyond,” Wheeler said.

Correction: An earlier version of this article said Offerpad was among the firms that shuttered iBuying operations.

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