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In its earnings release Thursday, IBuyer Opendoor reported lower revenue and wider losses in the second quarter of 2024 due to the market downturn.
iBuyer sold 4,078 homes, and revenue fell 24% year-on-year to US$1.5 billion, an increase of 28% from the previous quarter.
Opendoor had a net loss of $92 million, down from positive revenue of $23 million in the second quarter of 2023.
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The company’s gross profit was $129 million, down from $149 million a year earlier and up from $114 million in the first quarter.
Opendoor’s inventory balance reached $2.2 billion, representing 6,399 homes, an increase of 94% year over year.
Despite year-over-year revenue declines and growing losses, Opendoor CEO Carrie Wheeler expressed satisfaction with the company’s overall performance, which exceeded their expectations.
Kelly Wheeler | CEO, Open Doors
“We are proud of our second quarter results and the progress we have made in building the platform on which 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 also exceeded expectations, growing nearly 80% year-over-year. We continue to achieve results in increasing brand awareness and delivering industry-leading seller NPS. progression of meaning [Net Promoter Score]expanding our product range and improving structural efficiencies across our platform, which we expect will benefit the company in the coming years.
One of the ways Opendoor is looking to increase brand awareness this season is by launching a mobile truck that drives through neighborhoods in Nashville, Tennessee, delivering instant iBuyer offers directly to consumers’ doorsteps.
Wheeler added that the company adjusted its strategy as the market began to slow further during the quarter.
“In the second half of the second quarter, we started to respond to signals that indicated a further slowdown in the housing market,” Wheeler said. “In what remains a challenging environment, we are making decisions that appropriately balance growth, margins and risk. While the real estate cycle will eventually recover, the improvements we have made in our business are durable. Compared to 2023, we It still expects to make meaningful progress this year on increasing acquisitions and reducing adjusted net losses.
In the second quarter, iBuyer purchased 4,771 homes, an increase of 78% from the same period last year and an increase of 38% from the previous quarter.
Opendoor ended the quarter with 1,793 homes under contract, up 29% year over year and down 31% from the first quarter of 2024.
“We are focused on building a durable, generational business that customers love,” Wheeler said on a call with investors Thursday afternoon, noting that the company made significant improvements during the quarter to improve its top-of-funnel , which will lead to more converted customers.
Wheeler noted that more than half of Opendoor’s marketplaces launched in the pandemic-affected years of 2021 and 2022, so awareness was less than 20%. However, these markets will have huge potential for growth in the future once market awareness increases.
Wheeler added that in the second quarter, iBuyer expanded its list to nearly all markets through the Opendoor product, which led to a nearly 10% increase in NPS, indicating increasing consumer loyalty. The program allows consumers to list their home with an Opendoor partner agent and decide whether to accept an offer or explore Opendoor’s offers within 30 days.
Wheeler also mentioned that Opendoor announced today that Mainstay, its single-family rental intelligence platform, will exit from Opendoor and 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 as well as the team hired to grow the company.
Wheeler ended the investor call by expressing optimism about future improvements in the housing market.
“We’re pleased with the results,” Wheeler said. “We know the housing market remains challenging – and we also know it won’t last forever.”
Opendoor shares were down about 16% or 17% in after-hours trading Thursday as the investor conference call took place.
Credit: Google
Looking ahead to the third quarter of 2024, Opendoor expects revenue to reach $1.2 billion to $1.3 billion.
UPDATE: This article was updated after publication and added additional details from an investor conference call held on August 1, 2024.
Email Lillian Dixon
