Earnings call transcript: Opendoor beats Q4 2024 EPS forecast, stock dips

Opendoor (NASDAQ:OPEN) Technologies Inc. reported its fourth-quarter 2024 earnings, beating analyst expectations with an earnings per share (EPS) of -$0.16 compared to the forecasted -$0.17. The company also surpassed revenue projections, posting $1.08 billion against a forecast of $965.32 million. Despite these positive results, the stock fell 7.14% to $1.36 in after-hours trading, reflecting broader market concerns. According to InvestingPro data, the company’s market capitalization stands at $1.1 billion, with the stock showing significant volatility with a beta of 2.82. InvestingPro analysis indicates the stock may be undervalued at current levels.

Key Takeaways

• Opendoor’s Q4 2024 EPS outperformed forecasts by a slight margin.
• Revenue growth of 25% year-over-year, reaching $1.1 billion.
• Stock price declined by 7.14% in aftermarket trading.
• Full-year 2024 revenue decreased to $5.2 billion from $6.9 billion in 2023.
• The company is focusing on cost efficiency and profitability.

Company Performance

Opendoor Technologies demonstrated a strong performance in the fourth quarter of 2024, with revenues increasing by 25% year-over-year to $1.1 billion. However, the full-year revenue saw a decline to $5.2 billion from $6.9 billion in 2023. This reflects ongoing challenges in the real estate market, including a slow start to the 2025 spring selling season and macroeconomic headwinds.

Financial Highlights

• Revenue: $1.1 billion, up 25% YoY
• Full-Year Revenue: $5.2 billion, down from $6.9 billion in 2023
• Contribution Profit: $38 million in Q4, up from $30 million in Q4 2023
• Adjusted EBITDA Loss: $49 million in Q4, improved from previous year
• Full-Year Adjusted EBITDA Loss: $142 million, significantly better than $627 million in 2023

Earnings vs. Forecast

Opendoor’s actual EPS of -$0.16 slightly beat the forecast of -$0.17, while revenue of $1.08 billion exceeded expectations of $965.32 million. The surprise in revenue highlights the company’s ability to outperform in a challenging market environment. The beat in EPS, although marginal, indicates improved operational efficiency.

Market Reaction

Despite the positive earnings surprise, Opendoor’s stock fell 7.14% in after-hours trading to $1.36. This decline may be attributed to broader market concerns and the company’s ongoing challenges in the real estate market. The stock is trading near its 52-week low of $1.28, reflecting investor caution.

Outlook & Guidance

For the first quarter of 2025, Opendoor forecasts revenue between $1.0 billion and $1.075 billion, with a contribution profit of $40-$50 million. The company plans to acquire over 3,500 homes in Q1 and aims for a 5-7% annual contribution margin. Continued focus on cost efficiency and profitability remains a priority.

Executive Commentary

CEO Carrie Wheeler emphasized the company’s mission to "reinvent the U.S. Residential real estate industry" and highlighted the focus on "profitable, sustainable growth." CFO Selene Freyja noted efforts to optimize contribution profit and reduce losses significantly.

Risks and Challenges

• Persistent macroeconomic pressures in the real estate market.
• Slow start to the 2025 spring selling season.
• Increased active listings and lower clearance rates.
• Need for continued cost efficiency and profitability improvements.
• Potential impact of workforce reduction and operational changes.

Q&A

During the earnings call, analysts inquired about Opendoor’s market challenges and strategic adaptations. Discussions included enhancements to pricing models and inventory management strategies, as well as exploring potential revenue streams from high-intent leads.

Full transcript - Opendoor Technologies Inc (OPEN) Q4 2024:

Conference Operator: Good day, and thank you for standing by. Welcome to the Opendoor Technologies Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Kimberly Meehaus, Investor Relations. Please go ahead.

Kimberly Meehaus, Investor Relations, Opendoor Technologies: Thank you and good afternoon. Details of our results and additional management commentary are available in our earnings release and shareholder letter, which can be found on the Investor Relations section of our website at investor.opendoor.com. Please note that this call will be simultaneously webcast on the Investor Relations section of the company’s corporate website. Before we start, I would like to remind you the following discussion contains forward looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are statements that could be deemed forward looking, including but not limited to, statements regarding Opendoor’s financial condition, anticipated financial performance, business strategy and plans, market opportunity and expansion and management objectives for future operations.

These statements are neither promises nor guarantees and undue reliance should not be placed on them. Such forward looking statements involve risks and uncertainties that can cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward looking statements can be found in the Risk Factors section of Opendoor’s most recent annual report on Form 10 ks for the year ended 12/31/2024, as updated by our periodic reports filed after that 10 K. Any forward looking statements made on this conference call, including responses to your questions, are based on management’s reasonable current expectations and assumptions as of today, and Opendoor assumes no obligation to update or revise them, whether as a result of new information, future events or otherwise, except as required by law. The following discussion contains our references to certain non GAAP financial measures.

The company believes these non GAAP financial measures are useful to investors as supplemental operational measurements to evaluate the company’s financial performance. For a reconciliation of each of these non GAAP financial measures to the most directly comparable GAAP metric, please see our website at investor.opendoor.com. I will now turn the call over to Carrie Wheeler, Chief Executive Officer of Opendoor.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Good afternoon, everyone. Thanks for joining us today. With me today is Selene Freyja, our Chief Financial Officer. At Opendoor, we’re on a mission to reinvent The U. S.

Residential real estate industry. And in 2024, we took decisive steps to simplify our business, sharpen our focus and drive towards sustainable profitable growth. Early in the year, we saw strong home acquisition momentum, but as macro signals pointed to potential instability in late Q2, we acted swiftly, adjusting our pricing to manage risk and maintain healthy unit economics. At the same time, we took proactive steps to strengthen our operations. In Q3, we completed the separation of Mainstay.

And in Q4, we launched a cost efficiency program and a workforce reduction to align our structure with our profitability goals. Despite persistent macro headwinds, we executed with discipline. In 2024, we purchased 30% more homes and in 2023, We improved contribution margin to 4.7%, up from negative 3.7% the year before and we significantly reduced our adjusted net losses. As we enter 2025, we’re seeing a slower start to the spring selling season with additional macro pressures compared to last year. On the supply side, clearance rates, meaning how quickly homes go under contract are pacing 25% lower than last year.

New listings are holding steady, but active listings are up nearly 20% signaling a slowing market. On the demand side, business two new listings are down 20% to 25%, while delistings are up over 30%, hitting decade highs as more sellers exit the market. And with little near term rate release in sight, the lock in effect of low mortgage rates for sellers and affordability challenges for buyers will persist. Given these dynamics, we are refining our approach further, optimizing contribution profit dollars, exploring new revenue opportunities and ensuring Open Doors position to drive long term value. Our commitment is clear, profitable, sustainable growth and there are four key areas where we’re focused on improving our cash offer business.

First, we are setting spreads to optimize our contribution margin. Given the continued depressed housing backdrop and a particularly slow start to the spring selling season, we began increasing spreads in January to manage risk. As has always been the case, we will monitor key macro indicators and make prudent adjustments to spreads with a bias towards optimizing for contribution margin. Second, we are enhancing the customer experience. A better experience drives higher conversion.

We’ve enhanced our pricing models, improving price segmentation and market level spread accuracy, so that we can better differentiate spreads across price points and expand our conversion. This has allowed us to drive improvements in conversion at like for like spreads. Additionally, we know that many sellers come to Opendoor, get an offer and then wait before making a decision. In fact, over 70% of our twenty twenty four acquisitions came from sellers who declined their first offer, but later accepted a refresh one. This year, we’re strengthening our re engagement strategy, so when sellers are ready, Opendoor is top of mind.

Third, we are better aligning our marketing strategy to seasonal buying and selling patterns. We’ll focus our marketing efforts to more closely align with when our spreads tend to be lower and when Opendoor’s value proposition for customers is even greater. This will result in increased acquisitions in Q4 and Q1 and will position us to sell those homes in the spring and summer selling seasons when buying demand typically peaks. In Q2 and Q3, we expect to scale back marketing spend and in turn acquisitions since homes acquired in those quarters will be sold into a lower demand environment and recognize lower price appreciation over the holding period. This strategy aligns our marketing spend to how our spreads change throughout the year and allows us to benefit from seasonal price swings and maximize the value of every transaction.

And fourth, we’re continuing to operate with greater discipline. We enter 2025 as a leaner, more efficient organization and will continue to drive efficiencies throughout the year. Beyond improving and expanding our cash offer business, we’re also focused on expanding our offerings to serve even more sellers and unlock new revenue opportunities. We are growing lists with Opendoor and our marketplace. In 2024, we expanded lists with Opendoor to nearly all of our markets and we launched marketplace in Charlotte and Raleigh.

These products give more sellers more choices. In 2025, we’ll continue expanding them, ensuring sellers can choose the option that best fits their needs. We’re also helping more sellers who are outside of our buy box. Many high intent sellers visit our site every day, even if their homes don’t fit within our buy box. We see a significant opportunity to connect these sellers with agents, helping them successfully transact while creating new revenue streams for Opendoor.

At Opendoor, we’re driven by our mission, transforming the real estate experience by making it seamless, convenient and certain for sellers and buyers. Our customers continue to reinforce the value of our platform every day. And as we move forward, our focus remains the same, building a profitable sustainable business that delivers innovative solutions for sellers, buyers and agents alike. And with that, I’ll turn it over to Selene for the financial overview.

Selene Freyja, Chief Financial Officer, Opendoor Technologies: Thank you, Carrie. In the fourth quarter, we exceeded the high end of our outlook for acquisitions, revenue, contribution margin and adjusted EBITDA. We delivered $1,100,000,000 of revenue in the fourth quarter, up 25% versus the same quarter in 2023, representing 2,822 homes sold. Revenue for the full year was $5,200,000,000 compared to $6,900,000,000 in 2023, due primarily to a lower starting inventory balance entering 2024. On the acquisition side, we purchased 2,951 homes in the fourth quarter compared to 3,683 in the same quarter last year as spread levels remain elevated.

However, we were able to accelerate our pace of acquisition as we move through the quarter as we saw improvements in conversion at given spread levels. These conversion gains were enabled by enhancements to our product flow and improvements to our pricing models. For the full year, we acquired 14,684 homes, up 31% versus twenty twenty three. Contribution profit was $38,000,000 in the fourth quarter versus $30,000,000 in Q4 twenty twenty three, representing a contribution margin of 3.5%. For the full year, contribution profit improved by $500,000,000 to $242,000,000 versus a loss of $258,000,000 in 2023.

And for the full year, contribution margin was 4.7% versus negative 3.7% in 2023 and just shy of our annual target margin range of 5% to 7%. Adjusted EBITDA loss was $49,000,000 in the fourth quarter, representing a $20,000,000 year over year improvement. For the full year, our adjusted EBITDA loss was $142,000,000 versus a loss of $627,000,000 in 2023. This improvement in adjusted EBITDA losses was primarily driven by improved contribution profit and better expense management. Turning to our balance sheet, we ended the year with 6,417 homes, representing $2,200,000,000 in net inventory, up 22% from the prior year.

We also had $1,100,000,000 in total capital, which includes $679,000,000 in unrestricted cash and marketable securities and $3.00 $6,000,000 of equity invested in homes and related assets, net of inventory valuation adjustments. We also had $6,900,000,000 in non recourse asset backed borrowing capacity, composed of $3,000,000,000 of senior revolving credit facilities and $3,900,000,000 of senior and mezzanine term debt facilities, of which total committed borrowing capacity was $2,200,000,000 In early twenty twenty five, we strengthened our capital position by amending and extending the term of certain debt facilities. We have successfully renewed three revolving credit facilities and one term debt facility at consistent or improved credit spreads, while both of our mezzanine facilities were extended through 2027. The successful extension of these credit facilities is a testament to the ongoing support and confidence of our capital partners and positions us well to continue executing on our business plans. As we enter 2025, we are focused on ensuring attractive unit economics in our cash offer business, operating with strong cost discipline and making progress on our path to profitability.

The macro real estate environment has been marked by higher interest rates for buyers and entrenched homeowners with existing low rate mortgages who remain on the sidelines. While many of the changes and programs we are putting in place are helping to counter some of these pressures, we anticipate that these headwinds will continue to impact our performance in the near term. Our outlook expectations for the first quarter of twenty twenty five include the following: revenue is expected to be between $1,000,000,000 and $1,075,000,000 contribution profit between $40,000,000 and $50,000,000 which implies a contribution margin of 4% to 4.7% adjusted EBITDA loss between $40,000,000 and $50,000,000 adjusted operating expenses of approximately $90,000,000 and non cash stock based compensation expense between $13,000,000 and $15,000,000 which represents a decline of over 50% year over year. We expect home acquisitions of over 3,500 in the first quarter, up slightly year over year. Normalizing for bulk purchases we made in the first quarter of last year that are not expected to repeat this year, acquisition growth would be up over 10% year over year.

As Carey mentioned, we are evolving our home acquisition strategy to enable us to concentrate our selling activity in the spring and summer selling season when buyer demand and home price appreciation are higher. This will also result in fewer homes acquired in the middle of the year relative to Q1 and Q4. Additionally, while we continue to believe that 5% to 7% is an appropriate annual contribution margin for our business, our margin will fluctuate from quarter to quarter driven by seasonality and other factors. Our strategy for this year is to continue to enhance our pricing effectiveness, improve our customer experience and offerings and drive efficiencies that we expect will meaningfully improve our adjusted net losses on a year over year basis. Longer term, we are focused on implementing the strategy that Cary discussed, building on our platform to position Opendoor to achieve profitable growth amidst varying real estate backdrops.

With that, I will ask the operator to open the line for questions.

Conference Operator: Thank Our first question comes from the line of Day Li with JPMorgan. Your line is now open.

Dave Li, Analyst, JPMorgan: Great. Thanks for taking my questions. I have two. First one for you, Selim. Could you elaborate a bit more on your cost savings and cost efficiency opportunities?

And I guess with the housing market being depressed for more than two years now, could you talk about how you’re thinking about balancing the need to achieve profitability at current housing levels versus maintaining operational scale? And then secondly, could you give us an update on what you’re seeing from marketplace in Charlotte and Railways that gives you confidence to expand the offering more broadly? Thank you.

Selene Freyja, Chief Financial Officer, Opendoor Technologies: Yes. Dave, I’ll take your question on operating costs. Look, we’ve taken significant action in the latter half of the year to reduce our overall fixed cost base. We’ve talked about before, we executed the disposition of Mainstay as well as did a RIF and implemented other cost savings initiatives. And what we said at the time that we did that, that we expected that to deliver $85,000,000 worth of cost savings.

And as we look towards 2025, we’ll continue to look for areas of efficiency within the business and how to operate more effectively and drive further cost savings as we progress throughout the year. Looking at it from a longer term perspective, I would say that in this environment, we are optimizing for contribution profit and working to significantly reduce our losses, which we have done in 2024, down $500,000,000 year over year and we expect again to materially reduce our losses in 2025. That will be driven in part by improved contribution profit or contribution margin as well as the full year impact of the cost efficiency programs that we put into place. And in terms of how we think about scale over time, we believe we have rightsized and will continue to rightsize the business for the scale we’re operating at today from a fixed cost perspective, but also feel like we can at our current fixed cost levels, we think we can support a higher level of growth in the medium term should that come to pass. Don’t feel like we need to scale those costs back up within reason, but it’s all dependent on the growth outlook for the business over the long term.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Hey, Dave, it’s Carey. I’ll take the marketplace question. For your comments, so we have been in Texas, mostly Dallas for quite some time and we recently expanded in the last year to Raleigh and Charlotte. And reason being, twofold. One, customer saying yes to trial marketplace, high take rate on that to people opting into the product and then a pretty good clearance rate into marketplace, notwithstanding the fact that just we have a lot less visibility than you would have for that home on MLS.

What we think we’re creating in marketplace is a different kind of seller who has some aspirations to sell certainly, but is shy of wanting to put their home on the MLS. Oftentimes because of home condition is not list ready, but they want to trial something and they can always fall back to the cash offer, but they don’t want to expose themselves to the taint of days on market and all that. And they’re just not in a position to do that. In this market, having those kinds of homes available to buyers given affordability pressures is something we’re still focused on pursuing. And so we’ll continue to iterate and test in a very measured investment way in the three markets we’ve got.

Conference Operator: Thank you. Got

Dave Li, Analyst, JPMorgan: it. Thank you.

Conference Operator: Our next question comes from the line of Yigal Arunyan with Citigroup (NYSE:C). Your line is now open.

Yigal Arunyan, Analyst, Citigroup: Hi guys. Good afternoon. I’ll ask about other third party products or what’s the list with Opendoor and what you’re seeing since you’ve expanded that into all of your markets and what the opportunity you think might be on these products moving them outside of your buy box? And there is, I guess, a good amount of debt that’s coming to in 2025 and 2026. And just as that starts to play out, how you think about current interest rate environment, capital needs, liquidity and what your approach is going to be there?

Thank you.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Sure. Hugo, it’s Carey. I’ll just touch base really quickly on list with Opendoor, handed over to Selene to talk about balance sheet. So list with Opendoor, just as a reminder, that’s letting someone access the market, test it, but with the certainty of like Opendoor cash offer for a finite period of time, in all markets towards the end of last year. So still relatively small for us in terms of overall percentage of revenue.

In this environment, given where we are with spreads and just what we feel as it continues to be soft macro, it will be something we will lean more into in 2025. Selim?

Selene Freyja, Chief Financial Officer, Opendoor Technologies: Yes. On the balance sheet side, look, we’ve planned to significantly reduce losses year over year as we’ve indicated and we feel good about our overall liquidity position. In regards to our facilities entering this year, we have recently amended or extended more than half of our facilities increasing our borrowing capacity at similar or better credit spreads and over 90 of our $8,000,000,000 of available borrowing capacity is now extended through at least 2026. We’ve done this in and amongst a difficult market environment, which demonstrates solid credit performance, financeability of our assets and the steady commitment of our long term lending partners. We currently have $1,100,000,000 in capital.

And while we don’t comment on future capital transactions with regards to our converts, they don’t mature until August of twenty twenty six. That’s a year and a half out from now. And we’re constantly evaluating our capital structure and opportunistically assessing the market for ways to support our balance sheet. But overall, we feel good about where we are right now.

Yigal Arunyan, Analyst, Citigroup: Okay. And maybe if I could ask one more follow-up, just bigger picture is we all know the market continues to be challenging and you’re rightsizing for the current market environment, but with hopes that one day it starts to improve. How are you balancing the maybe the way you thought about the previous 05:00 in the markets you were operating in and how you approach expansion and then opportunity meaning? Would the target be to kind of go after the same addressable market? Does it do you narrow it down to regions and areas where you can get better contribution margins?

Does that approach change at all? Have you thought about that or you’re just kind of busy working through what’s been this real challenging market right now? Thank you.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Yes. Let me take that, Yigal. I would say, we haven’t pulled back on all the buy box expansion we’ve made with those geographically or price point. What we have done is gotten a lot better at price segmentation and how we adjust for the right spread for the right home at the right time. So one of the things we talked about in the shareholder letter is we’ve had meaningful gains on a spread adjusted basis of conversion.

And so we’ll continue to challenge our team to make improvements is like, let’s get better at pricing that home. And if certain segments are challenging, Florida condos, for example, we’re going to be really wide and discriminating on our pricing in certain, but we have not we’re not retrenching from our buy box today. Does that answer your question?

Yigal Arunyan, Analyst, Citigroup: It does. Thank you.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: You’re welcome.

Conference Operator: Our next question comes from the line of Nick Jones of Citizens. Your line is now open.

Nick Jones, Analyst, Citizens: Great. Hi. Thanks for taking the questions. I guess, first, can you talk about exclusive listings? So this is increasingly a topic of conversation in the industry.

I think folks have tried in the past to maybe bypass the MLS or really kind of own unique content or inventory. Can you just talk about how you said maybe fitting into your playbook or if that’s kind of a good or bad for the business?

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Yes. I mean, we obviously, we just talked about marketplace exclusives for us. I mean, at the highest level, we’re on the right side of consumers. Consumer first business, I think CCP is about giving consumers full access and transparency and availability. All those things are critical.

But I also think at the same time, there’s room for evolution. It doesn’t always work for everyone to expose their home to the MLS and we think people should have choice. So the extent that there’s innovation in the traditional system, we’re all for it. So long as it’s in favor of consumer choice, which again marketplace for us is in that strike zone. It’s about giving customers an option to do something around their home and explore liquidity, shy of having to expose it to the full MLS.

Nick Jones, Analyst, Citizens: Makes sense. And then I guess I want to go back and double click deeper on costs. If you think towards the path of profitability, this model, I guess, should work in like a single market. You have a certain amount of infrastructure, so you can scale. To what end do you try to get more aggressive, really bringing cost out and focusing on less markets just to kind of maintain the business or grow within a smaller geography versus kind of maintaining maybe a larger infrastructure, larger cost basis to kind of wait for the tides to change in the industry?

Thanks.

Selene Freyja, Chief Financial Officer, Opendoor Technologies: Yes. I think we do look at that trade off when we discuss that trade off internally quite a bit. We are comfortable with the geographic spread that we have today, the resources that we have in place in the various markets relative to the level of inventory and buying and selling that we’re doing there. So no plans to retrench or pull back in any markets just for the purpose of cost savings. We do look at it at the contribution margin level for each market for the homes we’re buying in those markets.

And as long as we’re getting the contribution margins that we want to see, then there’s no real reason to think about shrinking our addressable market.

Yigal Arunyan, Analyst, Citigroup: Thank you.

Conference Operator: Thank you. Our next question comes from the line of Ben Black with Deutsche Bank (ETR:DBKGn). Your line is now open.

Jeff Steiner, Analyst, Deutsche Bank: Hi, this is Jeff Steiner on for Ben. Thanks for taking my questions. Just quickly, I mean, given that you ended the year with just under 50% of your inventory, kind of having been on market over one hundred and twenty days and you talked about how clearance rates are down 25% to start the year. Is that going to be sort of an overhang on the contribution margins you’re able to attain like moving I know in 1Q you’re guiding to 4% to 4.7%. But as you move into 2Q and maybe the full year, is that something to think about when thinking about the full year 25 contribution margins?

And then just as kind of a follow-up, earlier you talked about adjusting your pricing model to kind of take into account different price points. Is there any and I know you brought up the segmentate the regional segmentation. Is there anything in price points that you might be seeing as far as more success in one price point versus the other, whether it be on the spread or clearance rates or is one of it maybe a drag that’s really kind of what’s keeping some of the lower clearance rates? Thank you.

Selene Freyja, Chief Financial Officer, Opendoor Technologies: Thanks, Ben. Let me take the question on Dom and contribution margin to start and then I’ll hand it over to Carey. So yes, we ended the year with 46% of our homes and inventory at greater than one hundred and twenty day dom, which was up year over year. As you probably know, this metric does tend to fluctuate based on seasonal factors, market dynamics and our resale strategies. A little bit of context on that.

First and foremost, our acquisitions in the quarter in Q4 were down 20% year over year. And so as a result, you would expect the share of one hundred and twenty day plus Dom homes to be higher on a year over year basis because we have slightly less fresh inventory this year versus last year. Secondarily, I would say we slowed home level price drops in Q4 as the market started to slow. We did not want to sell those homes into a lower demand environment. And so as we slowed that, that obviously that extends the dom of the overall share of the dom over one hundred and twenty days.

Taking a step back from that, what I would say is for Q1, we are below the 5% to 7% contribution margin range, which is implied in our guidance, but we are confident in our ability to deliver 5% to 7% even with the inventory that being a little bit older. We are seeing the tail of inventory that we bought in the spring at lower spreads come through in our results that puts about a point of pressure on our contribution margin for Q1 that we don’t think will repeat or be a factor in Q2 and beyond. But cohorts we’ve acquired more recently are starting to sell through at higher contribution margin levels, which does give us the confidence to be able to operate within 5% to 7%. And so we don’t like overall as we’re managing the portfolio, we don’t view those longer dom homes to be a significant overhang.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Great. And just maybe make a couple of comments on some of the conversion gains we’re seeing. We implemented a new pricing model in Q4 and what has resulted is benefits to conversion, like for like spread seeing higher conversion really because of better price segmentation. So not changing like what price points we’re willing to acquire, willing to make an offer on. It’s really about do we understand market level dynamics better, better home level accuracy for things like unit level condition or the expected liquidity for an individual home in a given market.

When we are able to do that, we found that we can lower spreads for what we believe to be easier to sell homes that increases conversion in that segment because our offers are relatively more attractive. Alternatively, we’ll increase spreads for harder to sell homes and we don’t see an equivalent reduction in conversion for those harder to sell homes. And the net of those two things expands our conversion frontier. So that’s those are the gains we’ve been seeing so far, which has been a real benefit to volumes, which has been great.

Jeff Steiner, Analyst, Deutsche Bank: Great. Thank you.

Conference Operator: Thank you. Our next question comes from the line of Tom with Page Yu.

Yigal Arunyan, Analyst, Citigroup: Your line

Conference Operator: is now open.

Tom, Analyst, Page Yu: I jumped on late, so if you already hit on this, my apologies. But just broadly speaking on operating expenses, if you can provide any color on how you’re thinking about managing that level through the year relative to the levels you’re guiding to for the first quarter, any color on just additional efficiencies that we might expect to come through to the balance of the year? Thanks.

Selene Freyja, Chief Financial Officer, Opendoor Technologies: Yes. We yes. So our operating expenses in Q4 were $87,000,000 and our guidance for this quarter is $90,000,000 which implies a slight uptick in OpEx from Q4 to Q1. That increase is really driven by variable OpEx and as a result of the fact that we have higher inventory or or we expect to have higher inventory in Q1. As you’ve seen our acquisition guidance implies sequential growth in acquisitions, which is going to lend itself to running with a higher inventory balance through the course of the quarter and that will drive related costs higher on a quarter over quarter basis.

Beyond that, what I would say is we would expect costs to come down over the balance of the year as we get the full impact of the cost savings initiatives that we’ve implemented thus far and look to further drive cost optimization and efficiency within the business as well as the marketing adjusting our marketing strategy and aligning our marketing spend more closely to periods of time in the year when our spreads are lower and that marketing can be more effective, which is generally speaking in Q1 and Q4 relative to Q2 and Q3.

Tom, Analyst, Page Yu: Great. Appreciate all that color. And then again, apologies if you already touched on this, but just relative to the breakeven targets you’ve previously set for run rate acquisition volume and revenue, I think $10,000,000,000 of revenue. Obviously, a lot has changed over the last year in terms of your approach to the business and the efficiencies you’re driving on the expense base. So any update on what type of framework we should be thinking about for acquisition pace and top line revenue that could drive breakeven?

Selene Freyja, Chief Financial Officer, Opendoor Technologies: Yes. Just again, sort of a reminder that we are focused on significantly reducing our NII losses again in 2025 relative to 2024 in service of being in a position to be able to get to breakeven sooner. We have not updated the framework specifically, but you can expect that the amount of volume and revenue that we would need to deliver on at ANI breakeven is significantly lower versus the prior framework. We do that by focusing on delivering contribution margin in the target range of five percent to 7% by operating with spread levels that enable us to achieve positive unit economics and realizing margins within this target upon resale. On the cost side, as we’ve discussed, we made significant progress on optimizing our cost structure.

The actions that we took in the second half of the year are all in service of reaching ANI breakeven sooner. We entered this year leaner, more efficient and will continue to drive further cost efficiencies. If I take a step back, given all the work that we’ve done and will continue to do, we believe we’re extremely well positioned to leverage any favorable shifts in the housing markets. We have made meaningful progress towards ANI positive, but the macro environment continues to be a headwind. So we are maintaining elevated spread levels optimizing for contribution profit dollars rather than volume while managing our risk and exploring other ways to monetize our funnel.

We think as macro conditions stabilize, we can reduce spreads, drive higher conversions and volumes and take advantage of a much lower cost structure, which all should serve us well in our path to profitability.

Jeff Steiner, Analyst, Deutsche Bank: Thanks for taking the questions. Thank

Conference Operator: you. Our next question comes from the line of Nick McAndrew with Zelman and Associates. Your line is now open.

Nick McAndrew, Analyst, Zelman and Associates: Hey guys, thanks for taking my questions. Maybe just to start, I think Carrie you mentioned this a little earlier, but launching marketplace in two new markets as well as list with Opendoor in nearly all markets. I’m just curious on how often you see any cross product migration from sellers? And I think what I mean is, are there ever times where a seller might want to pivot from one solution to another and because you offer these additional products, you’re able to keep them in the ecosystem? Or is it a different type of seller that’s attracted to kind of each product?

Thanks.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Yes. I mean, what I’d say is, what we have built and what we’re known for is the greatest call to action for home sellers and real estate, which is like get an offer online and sell your home in minutes. And now that’s what people come to us for. And we use it. It works really, really well.

We know that because lots of people in the industry are using including agents. So people who come to us are looking for a selling solution and then we are able to say to them, if that cash offer doesn’t meet your needs, oh, by the way, you can explore, you’ve got some market FOMO, you want to test the market, you can do that with the assurance of a backstop and potentially in both select markets, you can explore an off MLS listing in a less exposing way. You don’t have to get your home ready for resale. You don’t have to do all the open houses. And again, with some assurance, you can default back to the cash offer.

So we do exactly what you suggested is we’re leveraging the strength of this incredible funnel we have of high-tech sellers and then our job is to be the best place to sell and get people all these solutions if the cash offer doesn’t fit them perfectly.

Nick McAndrew, Analyst, Zelman and Associates: Got it. That’s helpful. Thank you. And then maybe just a follow-up too. In the shareholder letter, you mentioned expanding your approach to capitalizing on a lot of the high intent leads that Opendoor, the website generates.

And I’m just wondering if there’s any color you can add on maybe how you think about potentially monetizing that portion of leads that falls outside of your buy box? Thanks.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Yes. I mean, similar theme, right? We’ve got this incredible funnel. We don’t convert all of it. We think there’s a great potential to convert many more people to an outcome.

We want to help people get to their selling outcome. And we had 1,500,000 people show up and enter their address in our website last year. We did not convert 1,500,000 people certainly. But there are lots of people come to us who are looking for a solution and we can’t offer to them because they’re out of our buy box, right? We’re not servicing that market per se.

But what we can do is attach them to or introduce them to an agent in their market that can go on to help them figure out that solution. And so again, it’s another way for us to monetize all the traffic and leads that we have and get customers to an answer to help themselves and generate some revenue, by the way, which is not capital tens of more capital. So we’re focused on doing more of that in 2025 and beyond.

Nick McAndrew, Analyst, Zelman and Associates: Great. That’s helpful. Thank you.

Conference Operator: Thank you. And I’m showing no further questions at this time. I’d like to hand the call back over to Carrie Wheeler, CEO, for closing remarks.

Carrie Wheeler, Chief Executive Officer, Opendoor Technologies: Just wanted to say thank you to everyone for joining us today, and we look forward to reporting on progress next quarter. Take care.

Conference Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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