Opendoor(US:OPEN)2025-11-06 21:34Financial Performance - Revenue for Q3 2025 was $915 million, a decrease of 33.5% from $1,377 million in Q3 2024[154] - Gross profit for Q3 2025 was $66 million, down 37.1% from $105 million in Q3 2024, resulting in a gross margin of 7.2%[154] - Net loss for Q3 2025 was $90 million, compared to a net loss of $78 million in Q3 2024, reflecting a 15.4% increase in losses[154] - Contribution profit for Q3 2025 was $20 million, down 61.5% from $52 million in Q3 2024[154] - Adjusted Gross Profit for Q3 2025 was $64 million, down from $99 million in Q3 2024, resulting in an Adjusted Gross Margin of 7.0% compared to 7.2% in the prior year[184] - Contribution Profit for Q3 2025 was $20 million, a decrease from $52 million in Q3 2024, with a Contribution Margin of 2.2% compared to 3.8% in the previous year[184] - Adjusted Net Loss for Q3 2025 was $(61) million, an improvement from $(70) million in Q3 2024[191] - Adjusted EBITDA for Q3 2025 was $(33) million, compared to $(38) million in Q3 2024, resulting in an Adjusted EBITDA Margin of (3.6)%[191] - Revenue decreased by $462 million, or 34%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to lower sales volumes[212] - Gross profit decreased from $105 million to $66 million for the three months ended September 30, 2025, with gross margin decreasing from 7.6% to 7.2%[218] - Total operating expenses decreased by $38 million, or 22%, for the three months ended September 30, 2025, compared to the same period in 2024[210] - Net loss for the three months ended September 30, 2025, was $90 million, compared to a net loss of $78 million in the same period in 2024, representing an increase of 15%[210] - Revenue decreased by $434 million, or 11%, for the nine months ended September 30, 2025, compared to the same period in 2024[215] - The company reported net cash provided by operating activities of $979 million for the nine months ended September 30, 2025, compared to a cash used of $(515) million for the same period in 2024[268] - The company reported a net loss, net of non-cash items, of $66 million for the nine months ended September 30, 2025[268] Sales and Inventory - Homes sold decreased to 2,568 in Q3 2025, down 29% from 3,615 in Q3 2024[154] - Homes purchased dropped significantly to 1,169 in Q3 2025, a decline of 33.4% from 3,504 in Q3 2024[154] - The percentage of homes "on the market" for more than 120 days was 51% as of September 30, 2025, compared to 23% for the broader market[168] - The company sold 2,568 homes during the three months ended September 30, 2025, a decrease of 29% from 3,615 homes sold in the same period in 2024[213] - The company sold 9,813 homes during the nine months ended September 30, 2025, a decrease of 9% from 10,771 homes sold in the same period in 2024[215] Costs and Expenses - The company incurred $28 million in direct selling costs in Q3 2025, compared to $32 million in Q3 2024[184] - Total holding costs on sales for Q3 2025 were $16 million, including $4 million in current period costs and $12 million in prior period costs[191] - General and administrative expenses decreased by $32 million, or 23%, for the nine months ended September 30, 2025, compared to the same period in 2024[224] - Restructuring expenses increased by $1 million for the three months ended September 30, 2025, compared to the same period in 2024[227] - Interest expense increased by $2 million, or 2%, for the nine months ended September 30, 2025, compared to the same period in 2024[231] - Other income decreased by $22 million, or 44%, for the nine months ended September 30, 2025, compared to the same period in 2024[233] Market Expansion and Strategy - The company expanded its market footprint to 50 markets at the start of 2025, serving customers nationwide by Q3 2025[163] - Opendoor is focusing on enhancing its pricing engine and leveraging generative AI to improve platform efficiency and service offerings[171] - The company continues to assess home pricing, service fees, and renovation performance to improve overall business performance[180] Financial Position and Debt - As of September 30, 2025, the company had cash and cash equivalents of $962 million and restricted cash of $490 million, with an increase of $283 million compared to December 31, 2024[237] - The total outstanding balances on asset-backed debt were $1.3 billion, with an additional $460 million from convertible senior notes as of September 30, 2025[238] - The company issued $325 million aggregate principal amount of 7.00% senior convertible notes due 2030, resulting in gross cash proceeds of $75 million during the third quarter of 2025[240] - The company had undrawn borrowing capacity of $6.3 billion under non-recourse asset-backed debt facilities, of which $494 million was committed[238] - As of September 30, 2025, the company had total non-recourse asset-backed debt of $7.618 billion, with $374 million classified as current liabilities[254] - The company issued and sold 21,587,667 shares at a weighted average price of $9.26 per share under the ATM Agreement, resulting in total cash proceeds of approximately $198 million[242] - The company expects its cash and cash equivalents, along with future operational cash generation, to be sufficient for working capital and capital expenditure requirements for at least 12 months[246] - The company was in compliance with all financial covenants as of September 30, 2025[249] - As of September 30, 2025, the total outstanding balance of Convertible Senior Notes is $460 million, with $135 million for the 2026 Notes and $325 million for the 2030 Notes[261] - The company has contractual obligations totaling $2,185 million as of September 30, 2025, with $1,100 million due within one year[273] Economic Environment - The Federal Reserve increased the federal funds rate multiple times in 2022 and 2023 due to persistent inflationary pressures[284] - Despite rate reductions expected in 2024 and 2025, the federal funds rate remains elevated compared to historical levels[284] - Higher interest rates have led to increased mortgage rates, reducing home affordability[284] - Reduced home affordability may result in lower transaction volumes and extended holding periods for owned inventory[284] - Increased holding and financing costs for owned inventory are a consequence of elevated federal funds rates[284]