Opendoor Technologies (NasdaqGS:OPEN) Q4 2025 Earnings call February 19, 2026 05:00 PM ET Company ParticipantsAnthony Pompliano - Founder and CEOBrad Bonney - Chief Business OfficerCatherine Morgans - ShareholderChristy Schwartz - CFOKaz Nejatian - CEOKupa'a Mekalanakila - ShareholderMichael Judd - Head of Investor RelationsKaz NejatianGood afternoon, everyone. Early in my career, I used to write a plan that told my team what we were going to get done during any given cycle. Then at the end of the cycle, I ...

Financial Data and Key Metrics Changes - The company reported a revenue of $736 million in Q4, representing a 20% quarter-over-quarter decline, which was better than the anticipated 35% decline [29] - GAAP gross profit was $57 million in Q4, compared to $66 million in Q3, with a GAAP gross margin of 7.7%, up 50 basis points sequentially [30] - Adjusted EBITDA loss was $43 million, compared to $33 million in Q3, exceeding the favorable end of the guidance range [31] - The net loss for Q4 was $1.1 billion, including a $933 million non-cash loss from convertible note refinancing [31] Business Line Data and Key Metrics Changes - The company increased home acquisitions by 46% quarter-over-quarter, purchasing 1,706 homes in Q4 [29][33] - The October 2025 acquisition contract cohort achieved over 50% sold through or in resale contract, marking a 2x improvement in resale velocity compared to October 2024 [28] - The percentage of homes on the market for over 120 days decreased from 51% at the end of Q3 to 33% at the end of Q4, reflecting operational improvements [34] Market Data and Key Metrics Changes - The company expanded its geographic coverage significantly, making its product available to nearly every homeowner in the lower 48 states [20] - The operational changes under Opendoor 2.0 have resulted in a more tailored approach to pricing and selection, improving the overall market strategy [34] Company Strategy and Development Direction - The company aims to achieve adjusted net income profitability by the end of 2026 on a 12-month go-forward basis, focusing on improving unit economics and transaction velocity [2][39] - The strategy includes a shift from primarily building channels to transacting directly with buyers and sellers, reducing capital risk [3] - The company is investing in product development, particularly in AI and mortgage products, to enhance operational efficiency and customer experience [47][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory, stating that the operational changes are yielding positive results and that they are on track to meet their goals [41] - The CEO emphasized that the company is not relying on favorable macro conditions but is actively improving its operations to achieve profitability [41] - Management acknowledged the importance of building trust with customers to become the default option for home selling [59] Other Important Information - The company has made significant advancements in AI integration, improving underwriting processes and operational efficiency [50][51] - The leadership team has undergone substantial changes, with new executives in key positions, enhancing the company's capabilities [12] Q&A Session Summary Question: Where is Opendoor at currently compared to expectations and profitability? - Management stated they are on track and performing well against their four-step plan, with improvements in contribution margins since September [41] Question: What are the primary macro or pricing drivers preventing a faster ramp in acquisition contract volumes? - Management indicated that they are focused on product investment rather than immediate growth, which may affect acquisition volumes in the short term [44][46] Question: How should investors assess progress given the stock's decline? - Management advised that investors should focus on the underlying business improvements rather than the stock price, emphasizing the importance of building a product that people want [62][64] Question: If home prices drop another 5%-10% nationally, what happens to margins and inventory risk? - Management highlighted that Opendoor 2.0 is designed to move homes quickly rather than hold them, utilizing a broader toolkit for pricing and selection to mitigate risks [66]

Opendoor Technologies (NasdaqGS:OPEN) Q4 2025 Earnings call February 19, 2026 05:00 PM ET Speaker4Good afternoon, everyone. Early in my career, I used to write a plan that told my team what we were going to get done during any given cycle. Then at the end of the cycle, I would go through the doc and color every sentence of the plan green, yellow, or red, based on whether we had done what we said we would do and if we were on track to go where we wanted to go. I kind of always found it useful to write things ...

Core Insights - Opendoor Technologies Inc. (OPEN) is set to release its fourth-quarter 2025 results on February 19, with an expected earnings per share (EPS) loss of 8 cents, reflecting a 27.3% improvement from a loss of 11 cents in the same quarter last year [1][8] - The consensus estimate for fourth-quarter revenues is $596.4 million, indicating a 45% decline from the previous year's figure [2] Earnings Estimate Trend - The current EPS estimate for the fourth quarter remains unchanged at -0.08, with similar estimates for the next quarter and the current year [2] - The earnings surprise history shows that Opendoor has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 6.3% [3][4] Revenue Drivers - The fourth-quarter performance is expected to reflect early traction from the strategic reset towards a software-driven operating model, termed "Opendoor 2.0," which focuses on scaling acquisitions and embedding AI across workflows [9] - The renewed focus on high-quality home acquisitions is anticipated to drive contract activity, supported by AI-powered inspection and underwriting processes [10] - The reactivation of direct-to-consumer (D2C) channels is expected to enhance performance, with early tests showing stronger conversion rates compared to traditional methods [11] - Product innovations, such as Opendoor Checkout and expanded warranty offerings, are likely to strengthen the value proposition for buyers and sellers [12] Margins - Fourth-quarter margins are expected to balance acquisition rescaling with operational discipline, as the company works to clear legacy inventory [13] - Financing costs and holding expenses remain critical, but improved underwriting cycles and AI-driven processes are expected to support resale velocity [14] - Cost rationalization initiatives, including reducing external consultants and consolidating software vendors, are likely to enhance operating leverage [15] Stock Price Performance & Valuation - Opendoor's shares have increased by 17.6% over the past six months, contrasting with a 22.4% decline in the industry [16] - The stock is currently trading at a forward price-to-sales (P/S) multiple of 0.69, significantly below the industry average of 3.9 [19] Investment Considerations - The company is executing a strategic reset focused on acquisition velocity and AI-driven operational discipline, aiming for a defined path toward adjusted net income breakeven by the end of 2026 [22][23] - Despite the positive outlook, risks remain elevated due to the early stages of rebuilding acquisition volumes and pressures on near-term margins [24][27]

Core Insights - Opendoor Technologies Inc. is implementing a broader product expansion strategy aimed at simplifying the home buying and selling process, focusing on convenience and a smoother user experience [1][8] Product Expansion - The company has launched Opendoor Checkout, enabling customers to tour homes and make offers online without needing an agent [2] - New AI-supported tools, automated title and escrow processes, and a builder trade-in tool are introduced to facilitate smoother transitions between homes [2] - The Opendoor Key app and Buyer Peace of Mind tools are designed to enhance user confidence and clarity during transactions [2] - Direct purchase flows have resumed, SEO capabilities have been improved, and USDC payment acceptance has been added for faster digital transactions [2] Financial Performance - In Q3 2025, Opendoor reported softer unit metrics as it worked through older inventory, marking the start of a product reset and platform rebuilding effort [3] - The company is focusing on accountability tools to track progress openly, indicating a reliance on product reach and user experience upgrades rather than solely on macroeconomic improvements [3] Competitive Landscape - Opendoor faces increasing competition from Zillow Group and Offerpad Solutions, both enhancing their platforms with AI to streamline residential transactions [4][5] - Zillow is utilizing advanced AI-driven valuation models and integrated mortgage tools, while Offerpad is refining its operational model with predictive analytics and automation [4][5] Stock Performance and Valuation - Opendoor's shares have surged 926.5% over the past six months, contrasting with a 4.6% decline in the industry [6] - The company trades at a forward price-to-sales (P/S) multiple of 0.91, significantly lower than the industry average of 4.81 [10] - The Zacks Consensus Estimate for Opendoor's 2026 loss per share has narrowed to 13 cents, improving from an estimated loss of 23 cents per share a year ago [12]

Core Insights - The U.S. residential real estate market is experiencing a shift characterized by low inventory, high mortgage rates, and a growing demand for digital transaction platforms [1] - Opendoor Technologies and Compass are two prominent companies in the real estate technology sector, each undergoing significant transformations with different business models [1][2] Opendoor Overview - Opendoor is undergoing a "refounding" under new leadership, focusing on a software-first model and introducing over a dozen AI-driven products [4] - The company has increased its home acquisition rate from 120 to 230 homes per week due to product and pricing changes [4] - Opendoor aims to achieve adjusted net income breakeven by the end of next year through improved transaction scale and tighter unit economics [5] - Despite these efforts, Opendoor reported a revenue decline from $1.37 billion to $915 million year-over-year and continues to face operational challenges [6] Compass Overview - Compass reported a record third-quarter revenue of $1.85 billion, a 23.6% increase, and has maintained positive free cash flow for seven consecutive quarters [7][8] - The company has expanded its agent base to 21,550 with a 97.3% retention rate, demonstrating resilience in a challenging housing market [7][9] - Compass is diversifying into platform services to enhance transaction monetization and is preparing for a merger with Anywhere Real Estate, expected to yield over $300 million in cost synergies [10] Comparative Analysis - Opendoor shares have increased by 228.6% over the past year, while Compass shares rose by 47%, indicating higher volatility and execution expectations for Opendoor [12] - In terms of valuation, Compass has a lower price-to-sales ratio of 0.75X compared to Opendoor's 1.23X, making it more attractive relative to its revenue and cash flow profile [13] - Earnings estimates show Opendoor's losses are expected to narrow, while Compass is projected to turn profitable by 2026 with a revenue growth rate of 22.7% in 2025 [16][19] Investment Outlook - Opendoor presents a long-term investment opportunity with potential for scalable technology if it successfully executes its AI-driven vision [20] - Compass offers a clearer near-term investment profile with strong revenue growth, consistent free cash flow, and favorable valuation metrics [20][21]

Core Insights - Opendoor Technologies Inc. is undergoing a significant transformation under new CEO Kaz Nejatian, with the stock rising 22.9% over the past three months, outperforming its industry and sector benchmarks [1][12] - Despite this positive momentum, Opendoor's stock still trades at a considerable valuation discount compared to peers, raising questions about whether this represents an investment opportunity or a potential value trap [1][8] Valuation Analysis - Opendoor's shares currently trade at approximately 1.12X forward 12-month price-to-sales (P/S), significantly lower than the Zacks Internet - Software industry average of 4.61X [5][8] - The company's historical P/S range has been between 0.05X and 1.78X, with the current level above the median but still near the low end of its historical range [5][8] - In comparison, Zillow Group trades at about 5.51X P/S, indicating that the market assigns a higher valuation to its marketplace business [7][8] Recent Financial Performance - Opendoor's third-quarter 2025 results showed a 33.5% year-over-year revenue decline and a net loss of $90 million, highlighting the challenges faced during the operational reset [9][24] - The company aims to achieve adjusted net-income breakeven by the end of 2026 through scaling acquisitions and improving margins [9][10] Operational Improvements - The company has launched over a dozen AI products that significantly enhance operational efficiency, reducing assessment times from nearly a day to about 10 minutes [20] - Acquisition volume has nearly doubled, indicating that revised pricing and selection strategies are effective, with management expecting a 35% growth in acquisitions for the fourth quarter [21] Challenges Ahead - Despite operational improvements, Opendoor faces significant risks, including a sharp revenue decline and challenges related to older, lower-quality inventory that affects resale velocity [23][24] - The company remains unprofitable, with expectations of continued adjusted EBITDA losses in the near term due to pressures from old inventory [24][25] Market Sentiment - Recent estimate revisions indicate improving expectations, with projected losses for 2025 narrowing from 25 cents to 23 cents per share [15] - The stock's performance has been strong relative to peers, but concerns about potential dilution from a recent special warrant issuance have created investor uncertainty [14][27]

Financial Data and Key Metrics Changes - In Q3 2025, the company purchased 1,169 homes, which is below historical acquisition volumes, but revenue reached $915 million, exceeding guidance [27] - GAAP gross profit was $66 million, down from $105 million in Q3 2024, with a gross margin of 7.2%, a decrease of 40 basis points year-over-year [27] - The net loss for Q3 was $90 million, compared to a loss of $78 million in Q3 2024, while adjusted net loss improved to $61 million from $70 million in the prior year [28] Business Line Data and Key Metrics Changes - The company has shifted its strategy to focus on operational excellence and increased acquisition speed, with contracts to buy homes rising from 128 in late September to 230 by late October [19] - The operational changes have led to a reduction in the number of employees involved in the sales contract process, decreasing from 11 to 1 in many flows [19] Market Data and Key Metrics Changes - The company ended Q3 with $962 million in unrestricted cash and $1.1 billion in net inventory, holding 3,139 homes [30] - The company has a non-recourse asset-backed borrowing capacity of $7.6 billion, with total committed borrowing capacity at $1.8 billion [30] Company Strategy and Development Direction - The company is transitioning to "Opendoor 2.0," focusing on using technology and AI to enhance home buying and selling processes, aiming to become a market maker rather than a prop desk [9][10] - The strategy includes reducing spreads, increasing acquisition speed, and launching additional services like mortgages and warranties to enhance value for homeowners [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted net income profitability by the end of 2026, emphasizing the importance of scaling high-quality acquisitions and improving unit economics [32][38] - The company is committed to transparency and accountability, with a focus on executing long-term strategies rather than short-term guidance [37][40] Other Important Information - The company has initiated a pro rata warrant dividend for shareholders, with three series of warrants being issued [24][31] - Significant cost reductions have been made, including terminating over 20 software vendors and reducing external consulting expenses [18] Q&A Session Summary Question: What's going on with tokenization? - Management believes tokenization will revolutionize homeownership by increasing transaction speed and reducing costs, with ongoing discussions about partnerships in this area [41][42] Question: What is the current headcount? - The current headcount is approximately 1,100, down from 1,407, with a focus on increasing efficiency and aggression among employees [43] Question: When will we see a dramatic change in profitability? - A dramatic change in profitability is expected next year, with a target of adjusted net income profitability by the end of 2026 [46] Question: How does management plan to combat short selling pressures? - Management focuses on long-term execution and improving financial metrics to prove short sellers wrong through performance [51] Question: How does management define Opendoor's identity? - Opendoor is defined as a software company focused on helping users buy and sell homes, leveraging technology to enhance the user experience [52]