Opendoor’s strong growth has pulled forward its 2023 revenue forecast, the company’s CFO said.
Courtesy Opendoor
Opendoor stock was trading sharply higher late Wednesday after the online residential real-estate firm posted better-than-expected results for the June quarter.
In late trading, shares of Opendoor (ticker: OPEN) spiked 19.5%, to $17.35.
Opendoor is in the so-called iBuyer business, buying and selling homes directly in transactions with consumers. The company reported revenue of $1.2 billion, up 60% from the year-ago quarter, and 59% above the first-quarter level. Guidance had called for revenue of $1.025 billion to $1.075 billion.
Opendoor sold 3,481 homes, up 41% from the first quarter. Adjusted Ebitda, or earnings before interest, taxes, depreciation and amortization, was $26 million, well above the company’s projection of a break-even quarter, give or take $5 million, and above both the March quarter loss of $2.1 million and the year-ago quarter loss of $21.7 million.
The company purchased 8,494 homes, up 136% from the March quarter, while ending the quarter with contracts to acquire another 8,158 homes, with a value of $3 billion. The company said it finished the quarter with an inventory balance of $2.7 billion, up 224% sequentially.
For the third quarter, Opendoor is projecting revenue of $1.8 billion to $1.9 billion, well ahead of consensus at $1.5 billion, with adjusted Ebitda ranging from $15 million to $25 million.
“We are transforming what has historically been a complex, uncertain, time-consuming and mostly offline process into a simple, online experience,” CEO Eric Wu told shareholders in a letter.
CFO Carrie Wheeler told Barron’s that the company’s strong growth has pulled forward the 2023 revenue forecast it provided when the company went public via a SPAC merger in December. She said the company made a record number of offers on new homes in the quarter, and saw a record number of customer acceptances.
Wheeler said three factors are driving the strong growth: One, the company has expanded the number of markets in which it operates to 41, from 21 at year-end. Two, the company is seeing increased consumer awareness of the business, thanks in part to increased marketing. And three, the company has increased the “buy box,” the number of homes in any given market that it is willing to consider for purchase, by adjusting the size of potential transactions, the kinds of properties targeted and the ZIP Codes in which it operates.
Wheeler said that despite the fact that the U.S. is in “the hottest seller market of all time” for residential homes, the company is seeing huge interest from sellers, part of a “massive secular shift in real estate from offline to online.” Asked whether some sellers might not want to sell to Opendoor given a frenzied market, she says the situation has created “even greater uncertainty,” and that people are drawn to a “simpler and certain experience” of selling to Opendoor.
Write to Eric J. Savitz at [email protected]
