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IBuyer Opendoor saw declining revenue and growing losses during the second quarter of 2024 amid a slow market, the company reported in earnings posted on Thursday.
Revenue was down 24 percent year over year to $1.5 billion, which was an improvement of 28 percent from the previous quarter, as the iBuyer sold 4,078 homes.
Opendoor saw a net loss of $92 million, down from a positive income of $23 million during the second quarter of 2023. Still, the loss was an improvement from its $109 million loss the previous quarter.
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The company earned a gross profit of $129 million, down from $149 million the previous year and up from $114 million during the first quarter.
Opendoor’s inventory balance hit $2.2 billion, representing 6,399 homes — up 94 percent year over year.
Despite declining revenue and growing losses on an annual basis, Opendoor CEO Carrie Wheeler expressed satisfaction with the company’s performance overall, which exceeded their expectations.
Carrie Wheeler | Opendoor CEO
“We are proud of our second quarter performance and the progress we’ve made in building a platform where all customers can begin their home selling journey,” Wheeler said in a statement.
“Revenue, Contribution Margin, and Adjusted EBITDA exceeded the high end of our guidance, and our acquisitions outperformed expectations, growing nearly 80 percent year-over-year. We continue to make meaningful progress increasing brand awareness, delivering industry-leading seller NPS [Net Promoter Score], expanding our product offerings, and driving structural efficiencies across our platform that we expect will benefit the Company for years to come.”
One of the ways Opendoor sought to increase brand awareness this quarter was through launching a mobile truck that drove around neighborhoods in Nashville, Tennessee, to bring the iBuyer’s instant offers straight to consumers’ front doors.
As the market began to slow further over the course of the quarter, Wheeler added, the company shifted its strategy to adjust.
“During the back half of the second quarter, we began responding to signals that indicated additional slowing in the housing market,” Wheeler said. “We are making decisions that appropriately balance growth, margin, and risk in what continues to be a challenging environment. While the housing cycle will eventually recover, the improvements we are making in the business are enduring. We continue to expect to make meaningful progress in both increasing acquisitions and reducing Adjusted Net Losses this year, as compared to 2023.”
During the second quarter, the iBuyer purchased 4,771 homes, 78 percent more than it did during the same period one year before, and 38 percent more than the previous quarter.
Opendoor closed the quarter with 1,793 homes under contract, up 29 percent year over year and down 31 percent from the first quarter of 2024.
“We’re focused on building a durable, generational business that customers love,” Wheeler said during a call with investors on Thursday afternoon, noting that the company had made significant improvements during the quarter to improve its top-of-funnel, which will lead to more converted customers.
Wheeler noted that over half of Opendoor’s markets were launched during the pandemic-impacted years of 2021 and 2022, and therefore, have an awareness of less than 20 percent. Those markets, however, have great potential for future growth once market awareness grows.
The iBuyer expanded its List with Opendoor product to nearly all its markets during the second quarter, Wheeler added, which has yielded a nearly 10 percent increase in its NPS, showing growing consumer loyalty. The program allows consumers to list their home with an Opendoor partner agent and determine whether or not they want to accept the offer or explore an offer from Opendoor during a 30-day period.
Wheeler also mentioned that Opendoor today announced its single-family rental intelligence platform Mainstay was pulling away from Opendoor to launch as an independent company, which will allow each company “to focus on their respective businesses.” Dod Fraser and Nate Harbacek will continue to lead Mainstay alongside a team hired for the purpose of growing the company.
In closing the investor call, Wheeler expressed optimism for an improved housing market looking forward.
“We’re pleased with how our results came out,” Wheeler said. “We know the housing market continues to be challenging — we also know it will not last forever.”
Opendoor’s stock was down in after-hours trading on Thursday as the investor call took place, dropping by around 16 percent or 17 percent.
Credit: Google
Looking ahead to the third quarter of 2024, Opendoor expects to see revenue of $1.2 billion to $1.3 billion.
Update: This story was updated after publishing with additional details from an investor call that took place on Aug. 1, 2024.
