Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Opendoor Technologies Inc (OPEN, Financial) reported $1.2 billion in revenue for the first quarter, maintaining levels similar to the previous year.
- The company achieved a 4% increase in home acquisitions compared to the same quarter last year, purchasing 3,609 homes.
- Adjusted EBITDA loss improved significantly to $30 million from $50 million in the previous year, driven by reductions in operating expenses.
- Opendoor Technologies Inc (OPEN) is piloting an expanded agent partnership program in 11 markets, which has shown early positive indicators.
- The company has successfully renewed credit facilities with consistent or improved credit spreads, reflecting confidence from capital partners.
Negative Points
- The macroeconomic environment remains challenging, with high mortgage rates and increased delistings impacting the housing market.
- Contribution profit decreased to $54 million from $57 million in the previous year, with a contribution margin of 4.7%.
- The company expects a slowdown in acquisitions, projecting only 1,700 home acquisitions in the second quarter.
- Revenue is anticipated to decline in the third and fourth quarters due to the slowdown in acquisitions and current market dynamics.
- Persistently high mortgage rates are suppressing buyer demand, leading to more sellers pulling out of contracts.
Q & A Highlights
Q: Selim, regarding the slowdown in acquisition growth to about 1,700 in Q2, is this a level to maintain in the back half of the year, or is it a rebalancing to current market levels? Are there specific markets where this is more applicable?
A: Selim Freiha, CFO: We expect a seasonal pattern with more acquisitions in Q1 and Q4 and fewer in Q2 and Q3. This pattern should continue in the second half of the year. Regarding contribution margins, we expect them to be consistent with Q1, around 4.7%, due to a mix of older inventory at lower margins.
Q: How do you view the health of your inventory, especially if home prices fall further?
A: Selim Freiha, CFO: We expect a natural degradation in margins over time. Recent acquisitions are starting at higher margins, which gives us confidence in year-over-year improvements. Our outlook and pricing strategies account for potential valuation changes.
Q: Can you elaborate on the expansion of the agent partnership and its impact on your business model?
A: Carrie Wheeler, CEO: A significant portion of our business already comes from agents. We're now providing customer referrals to agents earlier in the process, which should improve conversion and speed. This partnership is expected to drive more asset-light revenue. The mix of direct-to-consumer and agent-assisted sales will evolve over time.
Q: What further cost-saving opportunities exist, and how do you plan to manage costs if the macro environment worsens?
A: Selim Freiha, CFO: We've achieved significant cost reductions, with a 33% decrease in fixed costs year-over-year. We continue to seek efficiencies in infrastructure and operations. Our business is already rightsized for a slower market, and we will adjust based on future outlooks.
Q: Can you clarify the reduction in operating expenses and the role of marketing costs?
A: Selim Freiha, CFO: The majority of the $29 million reduction in operating expenses is due to lower marketing spend, driven by seasonal dynamics and current spread levels. We also expect a favorable adjustment due to changes in inventory levels, with resales outpacing acquisitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
