Opendoor(OPEN) - 2025 Q1 - Quarterly Results

Q1 2025 Financial Performance Overview Opendoor reported Q1 2025 revenue of $1.2 billion with improved net loss and Adjusted EBITDA, while strategically expanding its selling platform and forecasting Q2 profitability Q1 2025 Financial Highlights In Q1 2025, Opendoor reported revenue of $1.2 billion, a 2% decrease year-over-year but a 6% increase quarter-over-quarter. The company demonstrated improved operational efficiency, with net loss narrowing to $(85) million from $(109) million in Q1 2024. Adjusted EBITDA also improved to $(30) million. The company increased its home purchases by 4% YoY and grew its inventory balance by 26% YoY to $2.4 billion Q1 2025 Key Financial and Operational Metrics | Metric | Q1 2025 | Change vs Q1 2024 | Change vs Q4 2024 | | :--- | :--- | :--- | :--- | | Revenue | $1.2 billion | -2% | +6% | | Homes Sold | 2,946 | -4% | +4% | | Gross Profit | $99 million | -13.2% | +16.5% | | Net Loss | $(85) million | Improved from $(109)M | Improved from $(113)M | | Homes Purchased | 3,609 | +4% | +22% | | Inventory Balance | $2.4 billion | +26% | +9% | | Adjusted EBITDA | $(30) million | Improved from $(50)M | Improved from $(49)M | | Adjusted Net Loss | $(63) million | Improved from $(80)M | Improved from $(77)M | Management Commentary CEO Carrie Wheeler highlighted the company's disciplined execution in Q1 2025, which led to improved Adjusted EBITDA and a sharp reduction in Adjusted Net Losses. The company is focused on its plan to drive toward profitability while enhancing its customer experience. Strategically, Opendoor is evolving into a broader selling platform that offers customers more choices, including a cash offer or listing with an agent - The company's Q1 results reflect disciplined execution, with a focus on driving towards profitability by improving Adjusted EBITDA and reducing Adjusted Net Losses[4] - Opendoor is strategically investing in its future by evolving into a broader selling platform, aiming to provide homeowners with multiple options, such as a direct cash offer or listing with a partner agent[5] Q2 2025 Financial Outlook For the second quarter of 2025, Opendoor projects continued sequential growth and a significant improvement in profitability. The company forecasts revenue between $1.45 billion and $1.525 billion, Contribution Profit between $65 million and $75 million, and a positive Adjusted EBITDA in the range of $10 million to $20 million Q2 2025 Financial Guidance | Metric | Q2 2025 Guidance | | :--- | :--- | | Revenue | $1.45 billion to $1.525 billion | | Contribution Profit | $65 million to $75 million | | Adjusted EBITDA | $10 million to $20 million | Consolidated Financial Statements The consolidated financial statements for Q1 2025 show revenue of $1.153 billion, improved net loss, increased real estate inventory, and a net decrease in cash due to operating activities Financial Highlights and Operating Metrics In Q1 2025, revenue increased to $1.153 billion from $1.084 billion in the prior quarter, though it was down from $1.181 billion in Q1 2024. Net loss improved sequentially to $(85) million. The company increased its home inventory to 7,080 homes, valued at $2.362 billion, up from 6,417 homes at the end of Q4 2024. However, the percentage of homes held for over 120 days decreased significantly to 27% from 46% in the previous quarter Key Financial and Operating Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue (Millions) | $1,153 | $1,084 | $1,181 | | Gross Margin | 8.6% | 7.8% | 9.7% | | Net Loss (Millions) | $(85) | $(113) | $(109) | | Homes Sold | 2,946 | 2,822 | 3,078 | | Homes Purchased | 3,609 | 2,951 | 3,458 | | Homes in Inventory | 7,080 | 6,417 | 5,706 | - The percentage of homes held in inventory for more than 120 days decreased to 27% at the end of Q1 2025, a significant improvement from 46% at the end of Q4 2024, but higher than the 15% in Q1 2024[15] Statements of Operations (Income Statement) For Q1 2025, Opendoor reported revenue of $1.153 billion and a gross profit of $99 million. Total operating expenses were reduced to $155 million, down from $201 million in the prior-year period, primarily due to lower sales, marketing, G&A, and technology costs, alongside new restructuring charges. This resulted in a loss from operations of $(56) million and a net loss of $(85) million, or $(0.12) per share, showing improvement from both the prior quarter and the same quarter last year Condensed Consolidated Statements of Operations | (In millions) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Revenue | $1,153 | $1,084 | $1,181 | | Gross Profit | $99 | $85 | $114 | | Total Operating Expenses | $155 | $179 | $201 | | Loss from Operations | $(56) | $(94) | $(87) | | Net Loss | $(85) | $(113) | $(109) | | Net Loss Per Share | $(0.12) | $(0.16) | $(0.16) | Balance Sheets As of March 31, 2025, Opendoor's total assets increased to $3.277 billion from $3.126 billion at the end of 2024, driven by a rise in real estate inventory to $2.362 billion. Total liabilities also grew to $2.632 billion from $2.413 billion, largely due to an increase in the current portion of non-recourse asset-backed debt. Consequently, total shareholders' equity decreased to $645 million from $713 million Condensed Consolidated Balance Sheets | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $559 | $671 | | Real estate inventory, net | $2,362 | $2,159 | | Total Assets | $3,277 | $3,126 | | Non-recourse asset-backed debt (Total) | $2,133 | $1,924 | | Total Liabilities | $2,632 | $2,413 | | Total Shareholders' Equity | $645 | $713 | Statements of Cash Flows In Q1 2025, Opendoor used $(279) million in cash from operating activities, a higher usage compared to $(178) million in Q1 2024, primarily due to an increase in real estate inventory. Investing activities provided a net cash of $2 million. Financing activities provided $207 million in cash, a significant shift from a use of $(98) million in the prior-year period, driven by net proceeds from non-recourse debt. Overall, cash, cash equivalents, and restricted cash decreased by $70 million during the quarter Condensed Consolidated Statements of Cash Flows | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(279) | $(178) | | Net cash provided by investing activities | $2 | $22 | | Net cash provided by (used in) financing activities | $207 | $(98) | | Net Decrease in Cash | $(70) | $(254) | | Cash, cash equivalents, and restricted cash – End of period | $693 | $1,286 | Non-GAAP Financial Measures and Reconciliations Opendoor utilizes non-GAAP measures like Contribution Profit and Adjusted EBITDA to provide supplemental insights into its financial performance and unit-level economics, with detailed reconciliations from GAAP figures Explanation of Non-GAAP Measures Opendoor uses non-GAAP financial measures such as Contribution Profit and Adjusted EBITDA to provide supplemental information on its financial performance. Management believes these metrics are useful for evaluating unit-level economics and period-to-period comparisons by excluding certain items that may not be indicative of recurring operating results. Contribution Profit assesses the returns on homes sold, while Adjusted EBITDA is used to evaluate underlying financial performance and operational leverage - The company uses non-GAAP measures like Adjusted Gross Profit, Contribution Profit, Adjusted Net Loss, and Adjusted EBITDA as supplemental tools to evaluate financial performance, unit-level economics, and period-to-period comparisons[22] - Contribution Profit is designed to measure the ability to generate returns on homes sold in a period, after accounting for direct costs like home purchase, renovation, holding, and selling costs[24] - Adjusted EBITDA helps management and investors assess underlying performance by excluding non-cash charges, items not directly related to operations, and items not reflective of ongoing results[31] Reconciliation of Gross Profit to Contribution Profit For Q1 2025, Opendoor reconciled a GAAP Gross Profit of $99 million to a Contribution Profit of $54 million. The key adjustments included adding back a $13 million inventory valuation adjustment for homes still in inventory and subtracting a $12 million adjustment for homes sold in the period. After further deducting $29 million in direct selling costs and $17 million in total holding costs for sold homes, the resulting Contribution Profit was $54 million, with a Contribution Margin of 4.7% Reconciliation of Gross Profit to Contribution Profit | (In millions) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Gross profit (GAAP) | $99 | $85 | $114 | | Inventory valuation adjustment (net) | $1 | $(10) | $(10) | | Adjusted Gross Profit | $100 | $75 | $104 | | Direct selling costs | $(29) | $(23) | $(34) | | Holding costs on sales (total) | $(17) | $(14) | $(13) | | Contribution Profit | $54 | $38 | $57 | | Contribution Margin | 4.7% | 3.5% | 4.8% | Reconciliation of Net Loss to Adjusted EBITDA In Q1 2025, the company reconciled a GAAP Net Loss of $(85) million to an Adjusted EBITDA of $(30) million. Key adjustments to arrive at an Adjusted Net Loss of $(63) million included adding back $14 million in stock-based compensation and $3 million in restructuring costs. To reach Adjusted EBITDA, further adjustments were made, primarily adding back $29 million in property financing interest and $5 million in depreciation and amortization Reconciliation of Net Loss to Adjusted EBITDA | (In millions) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net loss (GAAP) | $(85) | $(113) | $(109) | | Stock-based compensation | $14 | $23 | $33 | | Inventory valuation adjustment (net) | $1 | $(10) | $(10) | | Restructuring | $3 | $17 | $— | | Adjusted Net Loss | $(63) | $(77) | $(80) | | Depreciation and amortization | $5 | $7 | $11 | | Property financing & other interest | $33 | $32 | $37 | | Interest income | $(5) | $(11) | $(18) | | Adjusted EBITDA | $(30) | $(49) | $(50) | | Adjusted EBITDA Margin | (2.6)% | (4.5)% | (4.2)% |