Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Disclosure This section details forward-looking statements about Offerpad's future operations, financial condition, and market strategies, subject to inherent risks and uncertainties - Forward-looking statements cover future results of operations, financial condition, liquidity, real estate inventory and home acquisition strategy, mortgage rates, cash requirements, financing plans, product/service offerings, compliance, macroeconomic trends, and geopolitical concerns8 - Key risks include the ability to respond to economic conditions, health of the U.S. residential real estate industry, market share growth, effective growth management, accurate real estate inventory valuation and management, successful launch of new offerings, brand maintenance, profitability, success of strategic relationships, and compliance with NYSE listing rules13 PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Offerpad's unaudited condensed consolidated financial statements and detailed notes for Q2 and YTD June 30, 2025 Condensed Consolidated Balance Sheets The balance sheet shows decreased total assets and stockholders' equity from December 2024 to June 2025, driven by reduced cash and increased accumulated deficit Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $22,650 | $43,018 | | Restricted cash | 4,096 | 30,608 | | Real estate inventory | 212,737 | 214,174 | | Total current assets | 249,597 | 294,212 | | TOTAL ASSETS | $267,986 | $313,053 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Secured credit facilities and other debt, net | 177,322 | 195,378 | | Secured credit facilities and other debt - related party | 38,577 | 41,861 | | Total current liabilities | 229,618 | 250,965 | | Total liabilities | 243,451 | 265,400 | | Total stockholders' equity | 24,535 | 47,653 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $267,986 | $313,053 | - Total assets decreased by $45.067 million (14.4%) from December 31, 2024, to June 30, 202515 - Total stockholders' equity decreased by $23.118 million (48.5%) from December 31, 2024, to June 30, 2025, primarily due to an increased accumulated deficit15 Condensed Consolidated Statements of Operations Revenue and gross profit decreased for Q2 and YTD 2025, but net loss improved due to lower operating and interest expenses Three Months Ended June 30, (in thousands, except per share data) | (in thousands, except per share data) | 2025 | 2024 | | :------------------------------------ | :---------- | :---------- | | Revenue | $160,315 | $251,122 | | Cost of revenue | 146,126 | 229,251 | | Gross profit | 14,189 | 21,871 | | Total operating expenses | 21,970 | 31,732 | | Loss from operations | (7,781) | (9,861) | | Net loss | $(10,903) | $(13,782) | | Net loss per share, basic | $(0.39) | $(0.50) | Six Months Ended June 30, (in thousands, except per share data) | (in thousands, except per share data) | 2025 | 2024 | | :------------------------------------ | :---------- | :---------- | | Revenue | $321,013 | $536,480 | | Cost of revenue | 296,317 | 492,014 | | Gross profit | 24,696 | 44,466 | | Total operating expenses | 44,014 | 67,912 | | Loss from operations | (19,318) | (23,446) | | Net loss | $(25,960) | $(31,297) | | Net loss per share, basic | $(0.94) | $(1.14) | - Revenue decreased by 36.2% for Q2 2025 YoY and 40.2% for YTD Q2 2025 YoY20 - Net loss improved by 20.9% for Q2 2025 YoY and 17.1% for YTD Q2 2025 YoY20 Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity significantly decreased from December 2024 to June 2025, mainly due to net loss, partially offset by stock-based compensation Changes in Stockholders' Equity (Six Months Ended June 30, 2025) (in thousands) | (in thousands) | Common Stock Shares | Common Stock Amount | Additional Paid in Capital | Accumulated Deficit | Total Stockholders' Equity | | :----------------------------- | :------------------ | :------------------ | :------------------------- | :-------------------- | :------------------------- | | Balance at December 31, 2024 | 27,379 | $3 | $507,696 | $(460,046) | $47,653 | | Issuance of common stock upon vesting of restricted stock units | 331 | — | (197) | — | (197) | | Stock-based compensation expense | — | — | 3,039 | — | 3,039 | | Net loss | — | — | — | (25,960) | (25,960) | | Balance at June 30, 2025 | 27,710 | $3 | $510,538 | $(486,006) | $24,535 | Condensed Consolidated Statements of Cash Flows Significant net cash outflows from operating and financing activities in H1 2025 led to a substantial decrease in total cash and equivalents Six Months Ended June 30, ($ in thousands) | ($ in thousands) | 2025 | 2024 | | :------------------------------------------------ | :---------- | :---------- | | Net cash used in operating activities | $(23,646) | $(51,999) | | Net cash used in investing activities | (1,079) | (318) | | Net cash (used in) provided by financing activities | (22,155) | 45,381 | | Net change in cash, cash equivalents and restricted cash | $(46,880) | $(6,936) | | Cash, cash equivalents and restricted cash, end of period | $26,746 | $72,998 | - Net cash used in operating activities decreased by $28.353 million (54.5%) YoY for the six months ended June 30, 202529 - Net cash from financing activities shifted from a $45.381 million inflow in 2024 to a $22.155 million outflow in 2025, primarily due to reduced credit facility borrowings29261 Notes to Condensed Consolidated Financial Statements These notes detail Offerpad's business, accounting policies, and financial statement line items, providing context for reported figures Note 1. Nature of Operations and Significant Accounting Policies Offerpad operates a real estate platform in 27 markets, prepares GAAP financial statements with key inventory valuation estimates, and consolidates subsidiaries and VIEs - Offerpad operates in over 1,900 cities and towns in 27 metropolitan markets across 18 states as of June 30, 202533 - Real estate inventory is valued at the lower of cost or net realizable value, with valuation adjustments recorded in cost of revenue3839 Real Estate Inventory Valuation Adjustments ($ in millions) | Period | 2025 ($ in millions) | 2024 ($ in millions) | | :------------------------- | :------------------- | :------------------- | | Three months ended June 30 | $1.1 | $0.6 | | Six months ended June 30 | $2.8 | $1.2 | - New accounting standards for income tax disclosures are effective for annual periods beginning after December 15, 2024, and for disaggregation of income statement expenses after December 15, 20264344 Note 2. Real Estate Inventory Real estate inventory slightly decreased from December 2024 to June 2025, with shifts in homes under renovation, listed for sale, and under contract Real Estate Inventory Components (in thousands) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Homes preparing for and under renovation | $42,510 | $38,479 | | Homes listed for sale | 127,501 | 135,937 | | Homes under contract to sell | 42,726 | 39,758 | | Real estate inventory | $212,737 | $214,174 | Note 3. Property and Equipment Net property and equipment slightly increased from December 2024 to June 2025, due to leasehold improvements and office equipment, despite decreased construction in progress Property and Equipment, Net (in thousands) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Leasehold improvements | $6,060 | $1,055 | | Rooftop solar panel systems | 4,958 | 4,958 | | Office equipment and furniture | 1,284 | 687 | | Construction in progress | 92 | 5,440 | | Property and equipment, gross | 13,022 | 12,768 | | Less: accumulated depreciation | (3,350) | (3,641) | | Property and equipment, net | $9,672 | $9,127 | - Depreciation expense for the three months ended June 30, 2025, was $0.3 million, up from $0.1 million in 202448 Note 4. Leases Operating lease costs decreased for Q2 and YTD 2025, with a weighted-average remaining lease term of 9.6 years and a discount rate of 7.5% as of June 30, 2025 Operating Lease Costs (in millions) | Period | 2025 ($ in millions) | 2024 ($ in millions) | | :------------------------- | :------------------- | :------------------- | | Three months ended June 30 | $0.7 | $0.9 | | Six months ended June 30 | $1.4 | $1.8 | - Weighted-average remaining lease term was 9.6 years as of June 30, 2025 (9.7 years as of December 31, 2024)52 - Weighted-average discount rate was 7.5% as of June 30, 2025 (7.4% as of December 31, 2024)52 Note 5. Accrued and Other Liabilities Accrued and other current liabilities slightly increased from December 2024 to June 2025, driven by home renovation and legal obligations, offset by reduced payroll and marketing Accrued and Other Current Liabilities (in thousands) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Home renovation | $4,195 | $3,684 | | Interest | 1,512 | 1,293 | | Legal and professional obligations | 1,396 | 344 | | Payroll and other employee related expenses | 1,281 | 1,895 | | Operating lease liabilities | 1,060 | 963 | | Marketing | 575 | 757 | | Other | 2,403 | 2,868 | | Accrued and other current liabilities | $12,422 | $11,804 | - Advertising expenses decreased by $1.4 million (40%) for Q2 2025 YoY and $3.5 million (44.3%) for YTD Q2 2025 YoY54 Note 6. Credit Facilities and Other Debt Total credit facilities and debt decreased from December 2024 to June 2025, with $772.0 million borrowing capacity, and a temporary covenant waiver obtained in July 2025 Credit Facilities and Other Debt, Net (in thousands) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Senior secured credit facilities with financial institutions | $165,511 | $166,914 | | Senior secured credit facility with a related party | 11,860 | 18,329 | | Senior secured debt - other | 11,869 | 21,433 | | Mezzanine secured credit facilities with financial institutions | — | 7,707 | | Mezzanine secured credit facilities with a related party | 26,717 | 23,532 | | Debt issuance costs | (58) | (676) | | Total credit facilities and other debt, net | $215,899 | $237,239 | - Total borrowing capacity under senior and mezzanine secured credit facilities was $772.0 million as of June 30, 2025, with $70.5 million committed57 - In July 2025, Offerpad obtained a temporary waiver of minimum liquidity and tangible net worth covenants under related party facilities, leading to the expiration of associated revolving/withdrawal periods7072 - On July 31, 2025, the Company entered into a new $15.0 million revolving credit facility with a three-year term, accruing interest at 8.50% per annum74 Note 7. Warrant Liabilities As of June 30, 2025, 16.1 million public and 5.7 million private placement warrants were outstanding; new 2025 Warrants were issued post-period at $2.30 per share - As of June 30, 2025, 16.1 million public warrants and 5.7 million private placement warrants were outstanding, exercisable at $172.50 per share (15 warrants per share)75 - On July 25, 2025, Offerpad issued 1,428,571 new 2025 Warrants with an exercise price of $2.30 per share, exercisable from January 26, 2026, to January 26, 203078 Note 8. Fair Value Measurements Fair value of public and private placement warrant liabilities decreased from December 2024 to June 2025, classified as Level 1 and Level 3 measurements, respectively Fair Value of Warrant Liabilities (in thousands) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Public warrant liabilities (Level 1) | $75 | $128 | | Private placement warrant liabilities (Level 3) | $84 | $103 | - The change in fair value of warrant liabilities resulted in a $0.3 million gain for Q2 2025 and a $0.1 million gain for YTD Q2 20258384 Note 9. Stockholders' Equity As of June 30, 2025, 27.7 million Class A common shares were outstanding; a July 2025 Offering generated $6.0 million gross proceeds, with no preferred stock or cash dividends - 27,710,358 shares of Class A common stock were issued and outstanding as of June 30, 202589 - On July 25, 2025, Offerpad issued 2,857,143 shares of Class A common stock and warrants for $6.0 million gross proceeds90 - The company has not paid any cash dividends on common stock and has no current plans to do so93 Note 10. Stock-Based Awards The 2021 Incentive Award Plan's share limit increased by 2,721,500 shares in July 2025; unrecognized stock-based compensation is $4.8 million for RSUs and $0.1 million for stock options - The 2021 Incentive Award Plan's share limit was increased by 2,721,500 shares, approved by stockholders on July 30, 202595 - As of June 30, 2025, 1,945 thousand RSUs were outstanding, with $3.0 million of unrecognized stock-based compensation expense100101 - 777 thousand stock options were outstanding as of June 30, 2025, with $0.1 million of unrecognized stock-based compensation expense103104 Stock-Based Compensation Expense (in thousands) | ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales, marketing and operating | $211 | $1,129 | $690 | $2,305 | | General and administrative | 860 | 1,995 | 2,005 | 4,395 | | Technology and development | 186 | 125 | 344 | 416 | | Total | $1,257 | $3,249 | $3,039 | $7,116 | Note 11. Variable Interest Entities Offerpad consolidates SPEs as VIEs where it is the primary beneficiary, with VIE assets and liabilities primarily comprising restricted cash, real estate inventory, and secured credit facilities VIE Assets and Liabilities (in thousands) | ($ in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Assets | | | | Restricted cash | $3,771 | $30,608 | | Accounts receivable | 1,951 | — | | Real estate inventory | 212,737 | 214,174 | | Total assets | $218,717 | $245,127 | | Liabilities | | | | Secured credit facilities and other debt, net | 215,899 | 237,273 | | Total liabilities | $217,563 | $239,190 | Note 12. Earnings Per Share Basic and diluted net loss per share was $(0.39) for Q2 2025 and $(0.94) for YTD Q2 2025; anti-dilutive securities were excluded due to net losses Net Loss Per Share (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(10,903) | $(13,782) | $(25,960) | $(31,297) | | Weighted average common shares outstanding, basic | 27,770 | 27,385 | 27,667 | 27,362 | | Net loss per share, basic | $(0.39) | $(0.50) | $(0.94) | $(1.14) | | Net loss per share, diluted | $(0.39) | $(0.50) | $(0.94) | $(1.14) | - Anti-dilutive securities excluded from diluted EPS calculation include stock options (780k for Q2 2025), restricted stock units (640k for Q2 2025), and warrants (1,452k for Q2 2025)112 Note 13. Income Taxes Minimal income tax expense for Q2 and YTD 2025, with a lower effective tax rate due to NOLs and state taxes; a $125.9 million valuation allowance is maintained against net deferred tax assets - Income tax expense was less than $0.1 million for Q2 2025 and $0.1 million for YTD Q2 2025114 - Effective tax rate was an expense of 0.3% for Q2 2025 and YTD Q2 2025, differing from the 21% federal statutory rate due to net operating loss carryforwards and state taxes114 - A full valuation allowance of $125.9 million was recorded against net deferred tax assets as of June 30, 2025114 Note 14. Related-Party Transactions Offerpad has credit facilities with LL Capital Partners, uses services from First American Financial, and granted compensation and RSUs to CEO Brian Bair's family Related-Party Credit Facilities (in thousands) | ($ in thousands) | June 30, 2025 Borrowing Capacity | June 30, 2025 Outstanding Amount | December 31, 2024 Borrowing Capacity | December 31, 2024 Outstanding Amount | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------------- | :----------------------------------- | | Senior secured credit facility with a related party | $50,000 | $11,860 | $50,000 | $18,329 | | Mezzanine secured credit facilities with a related party | $57,000 | $26,717 | $92,000 | $23,532 | - Interest paid for borrowings under LL credit facilities was $1.6 million for Q2 2025 and $2.8 million for YTD Q2 2025122 - Payments to First American Financial Corporation for services were $0.9 million for Q2 2025 and $1.8 million for YTD Q2 2025123 Compensation to Immediate Family Members of Brian Bair (in thousands) | ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Mr. Vaughn Bair | $112 | $99 | $321 | $262 | | Mr. Casey Bair | 92 | 92 | 200 | 245 | | Ms. Katie Bullard | 37 | 31 | 87 | 67 | | Total | $241 | $222 | $608 | $574 | Note 15. Commitments and Contingencies As of June 30, 2025, Offerpad committed to purchase 110 homes for $30.3 million and faces legal proceedings, including a class action lawsuit dismissed in February 2025 - As of June 30, 2025, Offerpad was under contract to purchase 110 homes for an aggregate price of $30.3 million130 - A class action lawsuit alleging breach of fiduciary duties against certain defendants, including Offerpad Defendants, was dismissed without prejudice for Offerpad Defendants on February 24, 2025135 Note 16. Segment Reporting Offerpad operates five segments, with 'Cash Offer' as the reportable segment; 'Other' includes B2B Renovate, Direct+, HomePro, and Agent Partnership programs, with performance evaluated by gross profit - Offerpad has five operating segments: Cash Offer, B2B Renovate, Direct+ institutional buyer, HomePro, and Agent Partnership Program139 - HomePro, a new asset-light platform offering, was launched during Q2 2025137 Segment Financial Information (in thousands) | ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue: | | | | | | Cash Offer | $152,071 | $244,880 | $305,904 | $522,725 | | Other | 8,244 | 6,242 | 15,109 | 13,755 | | Gross profit: | | | | | | Cash Offer | $11,157 | $19,878 | $19,255 | $40,073 | | Other | 3,032 | 1,993 | 5,441 | 4,393 | Note 17. Subsequent Events No material subsequent events requiring recognition or additional disclosure have occurred beyond those already described in other financial statement notes Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Offerpad's financial condition and operational results for Q2 and YTD June 30, 2025, covering business overview, economic impacts, performance factors, non-GAAP measures, and liquidity Overview Offerpad faced uncertain H1 2025 market conditions with elevated mortgage rates, but improved net loss and gross profit margin QoQ through strategic offers and cost reduction, while addressing NYSE compliance and securing new financing - Offerpad has transacted on homes representing approximately $12.0 billion of aggregate revenue through June 30, 2025147 - The average thirty-year fixed mortgage rate remained between 6.5% and 7% during H1 2025, negatively impacting housing affordability and velocity150 Key Operational Metrics (Q2 2025) | Metric | Q2 2025 | Q1 2025 | | :----------------- | :---------- | :---------- | | Homes sold | 452 | 460 | | Revenue | ~$160M | ~$160M | | Gross profit margin | 8.9% | (improved QoQ) | - Offerpad received a NYSE non-compliance notice on April 10, 2025, due to market capitalization and stockholders' equity below $50 million, but its business plan to cure the deficiency was accepted on July 16, 2025154156 - On July 31, 2025, Offerpad entered into a new $15.0 million revolving credit facility157 - On July 25, 2025, Offerpad issued and sold 2,857,143 shares of Class A common stock and warrants for $6.0 million gross proceeds158 Factors Affecting Our Performance Performance is driven by market penetration, asset-light offerings, ancillary products, unit economics, inventory financing, seasonality, and risk management - Offerpad captured roughly 0.4% market share of real estate transactions across its 26 active markets in 2024161 - Expanded into three new markets recently, but decelerated overall market expansion due to uncertain economic conditions162163 - B2B Renovate business services are growing, with Offerpad becoming a preferred provider on Auction.com's marketplace in Q2 2025164165 - Launched HomePro in Q2 2025, expanding to all markets, to increase in-home seller engagement and provide comprehensive solutions167 - Agent Partnership Program provides referral fees to agents and integrates with Realtor.com to expand reach168169 - Ancillary products and services, like title and escrow, aim to strengthen unit economics with higher margins despite smaller average revenue per transaction171172 - Average real estate inventory holding period decreased to 133 days in Q2 2025, down from 165 days in Q1 2025, and is expected to remain around 140 days in Q3 2025180181 Non-GAAP Financial Measures Offerpad uses non-GAAP measures like Adjusted Gross Profit, Contribution Profit, and Adjusted EBITDA to evaluate unit economics and financial performance, adjusting for non-recurring items Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (in thousands, except percentages) | (in thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit (GAAP) | $14,189 | $21,871 | $24,696 | $44,466 | | Adjusted gross profit | $14,925 | $23,295 | $26,386 | $47,537 | | Adjusted gross margin | 9.3% | 9.3% | 8.2% | 8.9% | | Contribution profit | $10,071 | $16,384 | $16,215 | $33,041 | | Contribution margin | 6.3% | 6.5% | 5.1% | 6.2% | | Contribution profit after interest | $5,623 | $10,728 | $5,844 | $20,769 | | Contribution margin after interest | 3.5% | 4.3% | 1.8% | 3.9% | Adjusted Net Income (Loss) and Adjusted EBITDA (in thousands, except percentages) | (in thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss (GAAP) | $(10,903) | $(13,782) | $(25,960) | $(31,297) | | Adjusted net loss | $(11,232) | $(13,773) | $(26,032) | $(31,632) | | Adjusted net loss margin | (7.0)% | (5.5)% | (8.1)% | (5.9)% | | Adjusted EBITDA | $(4,787) | $(4,429) | $(12,618) | $(11,558) | | Adjusted EBITDA margin | (3.0)% | (1.8)% | (3.9)% | (2.2)% | Results of Operations Consolidated revenue significantly decreased for Q2 and YTD 2025 due to lower Cash Offer sales, but net loss improved from reduced operating and interest expenses, while Other segment revenue and gross profit margins increased Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Q2 2025 consolidated revenue decreased by 36.2% YoY due to lower Cash Offer sales, but Other revenue increased; net loss improved by 20.9% from reduced operating and interest expenses Consolidated Results (Three Months Ended June 30, in thousands) | (in thousands) | 2025 | 2024 | $ Change | % Change | | :------------------------------ | :---------- | :---------- | :---------- | :------- | | Total revenue | $160,315 | $251,122 | $(90,807) | (36.2)% | | Total cost of revenue | 146,126 | 229,251 | (83,125) | (36.3)% | | Gross profit | 14,189 | 21,871 | (7,682) | (35.1)% | | Total operating expenses | 21,970 | 31,732 | (9,762) | (30.8)% | | Loss from operations | (7,781) | (9,861) | 2,080 | (21.1)% | | Net loss | $(10,903) | $(13,782) | $2,879 | (20.9)% | - Cash Offer revenue decreased by $92.8 million (37.9%) due to a 39.1% decrease in homes sold (452 homes in Q2 2025 vs. 742 in Q2 2024)204 - Other revenue increased by $2.0 million (32.1%), primarily from B2B Renovate business due to higher renovation volumes and average transaction value207 - Cash Offer gross profit margin decreased to 7.3% (from 8.1%) due to increased real estate inventory valuation adjustments and higher holding periods212 - Other gross profit margin increased to 36.8% (from 31.9%) due to a shift in product mix towards higher-margin Agent Partnership Program213 - Sales, marketing and operating expenses decreased by $7.0 million (34.8%) due to lower headcount, variable costs, and advertising spend214 - Interest expense decreased by $0.9 million (20.0%) due to a $66.8 million decrease in average outstanding debt and a 0.9% decrease in weighted average variable interest rates218 Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 YTD Q2 2025 consolidated revenue decreased by 40.2% YoY due to lower Cash Offer sales, but Other revenue increased; net loss improved by 17.1% from significant reductions in operating and interest expenses Consolidated Results (Six Months Ended June 30, in thousands) | (in thousands) | 2025 | 2024 | $ Change | % Change | | :------------------------------ | :---------- | :---------- | :---------- | :------- | | Total revenue | $321,013 | $536,480 | $(215,467) | (40.2)% | | Total cost of revenue | 296,317 | 492,014 | (195,697) | (39.8)% | | Gross profit | 24,696 | 44,466 | (19,770) | (44.5)% | | Total operating expenses | 44,014 | 67,912 | (23,898) | (35.2)% | | Loss from operations | (19,318) | (23,446) | 4,128 | (17.6)% | | Net loss | $(25,960) | $(31,297) | $5,337 | (17.1)% | - Cash Offer revenue decreased by $216.8 million (41.5%) due to a 42.6% decrease in homes sold (912 homes in YTD Q2 2025 vs. 1,589 in YTD Q2 2024)223 - Other revenue increased by $1.4 million (9.8%), primarily from B2B Renovate revenue, partially offset by a transition from historical listing services225 - Cash Offer gross profit margin decreased to 6.3% (from 7.7%) due to increased real estate inventory valuation adjustments and higher average holding periods230 - Sales, marketing and operating expenses decreased by $15.7 million (36.7%) due to lower headcount, variable costs, and advertising spend232233 - Interest expense decreased by $2.3 million (24.2%) due to a $55.2 million decrease in average outstanding debt and a 0.8% decrease in weighted average variable interest rates237 Liquidity and Capital Resources As of June 30, 2025, Offerpad had $22.7 million cash and $567.9 million undrawn capacity; post-period, a new $15.0 million credit facility was secured and $6.0 million raised, with future capital needs dependent on market conditions - As of June 30, 2025, cash and cash equivalents were $22.7 million, with $567.9 million in total undrawn borrowing capacity under secured credit facilities240 - On July 31, 2025, Offerpad entered into a $15.0 million Revolving Credit Facility241255 - On July 25, 2025, Offerpad generated $6.0 million gross proceeds from the July 2025 Offering of Class A common stock and warrants241 - Net cash used in operating activities was $23.6 million for YTD Q2 2025, a decrease from $52.0 million in YTD Q2 2024257258 - Net cash used in financing activities was $22.2 million for YTD Q2 2025, compared to $45.4 million provided in YTD Q2 2024, primarily due to reduced credit facility borrowings257261 Critical Accounting Estimates No material changes to critical accounting estimates have occurred since the December 31, 2024 Annual Report on Form 10-K - No material changes to critical accounting estimates since the December 31, 2024 Annual Report on Form 10-K265 Recent Accounting Pronouncements Recent accounting pronouncements are detailed in Note 1. Nature of Operations and Significant Accounting Policies - Refer to Note 1 for discussion of recent accounting pronouncements267 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to Offerpad's market risk exposure have occurred since December 31, 2024 - No material changes to market risk exposure since December 31, 2024268 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025270 - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025271 PART II. OTHER INFORMATION Item 1. Legal Proceedings Offerpad faces ordinary legal proceedings not expected to have a material adverse effect; specific pending litigation is detailed in Note 15 - No ordinary course legal proceedings are expected to have a material adverse effect on the company's financial statements273 - Refer to Note 15 for details on pending litigation outside the scope of ordinary and routine business275 Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the December 31, 2024 Annual Report on Form 10-K - No material changes to risk factors since the December 31, 2024 Annual Report on Form 10-K276 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or repurchases of Class A common stock occurred during the three months ended June 30, 2025 - No unregistered sales of equity securities during the period277 - No repurchases of Class A common stock during the three months ended June 30, 2025278 Item 3. Defaults Upon Senior Securities This item is not applicable to Offerpad for the current reporting period - Not applicable279 Item 4. Mine Safety Disclosures This item is not applicable to Offerpad for the current reporting period - Not applicable280 Item 5. Other Information Stockholders approved an amendment to the 2021 Incentive Award Plan on July 30, 2025, increasing shares available for issuance by 2,721,500; voting results are provided - Stockholders approved an amendment to the 2021 Incentive Award Plan on July 30, 2025, increasing shares reserved for issuance by 2,721,500281 Voting Results for Proposal 1 (2021 Incentive Award Plan Amendment) | Votes FOR | Votes AGAINST | Votes ABSTAINED | Broker Non-Votes | | :---------- | :------------ | :-------------- | :--------------- | | 13,453,287 | 1,407,169 | 117 | 0 | Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, credit agreements, securities purchase agreements, and certifications - Exhibits include the Fourth Restated Certificate of Incorporation, Amended and Restated Bylaws, Form of Common Stock Purchase Warrant, various Loan and Security Agreements, Amendment to the 2021 Incentive Award Plan, and CEO/CFO certifications290 SIGNATURES Report Signatures The Quarterly Report on Form 10-Q was signed on August 4, 2025, by Brian Bair (CEO and Chairman) and Peter Knag (CFO) - Report signed by Brian Bair (CEO and Chairman) and Peter Knag (CFO) on August 4, 2025295
Offerpad Solutions (OPAD) - 2025 Q2 - Quarterly Report