Opendoor(US:OPEN)2023-05-04 23:06Financial Data and Key Metrics Changes - The company reported Q1 2023 revenue of $3.1 billion, exceeding guidance due to better-than-expected market sell-through rates driven by a significant decline in new listing volumes [7][57] - Adjusted EBITDA loss was $341 million, which included $295 million in previously recorded inventory valuation adjustments [49] - Contribution margin was negative 7.7% in Q1, reflecting the performance of older inventory, while new inventory generated a contribution margin of 8.5% [60] Business Line Data and Key Metrics Changes - The company purchased 1,747 homes in Q1 2023, down 81% compared to Q1 2022, indicating a significant reduction in acquisition activity [23] - The company expects to maintain double-digit spreads for the rest of 2023 while focusing on expanding low-cost partnership channels [21][24] Market Data and Key Metrics Changes - New listings within the company's buy box were down almost 25% in Q1 2023 compared to the previous year, contributing to higher market clearance rates [57] - The company observed a decline in new market listings from a 17% decline in January to a 27% decline by March [8] Company Strategy and Development Direction - The company aims to build the most trusted e-commerce platform for residential real estate, focusing on transforming the complicated home buying and selling process [53] - The company is enhancing its operating pricing platforms to deliver greater efficiencies and higher unit economics over time [74] - Partnerships with top online real estate platforms like Zillow, Redfin, and Realtor.com are expected to drive acquisition volumes [4] Management Comments on Operating Environment and Future Outlook - Management noted that home sellers remain on the sidelines, and the outlook for home prices is uncertain, but they are optimistic about the stabilization of home prices [57] - The company plans to operate cautiously regarding home pricing, expense management, and capital discipline due to the uncertain macro environment [24] Other Important Information - The company announced a workforce reduction of approximately 22% or 560 employees to align with the decline in market transaction volumes [44] - The company has partnered with over 90 homebuilders to facilitate trade-ins for customers of new build homes, enhancing its service offerings [48] Q&A Session Summary Question: Outlook on contribution profit and EBITDA - Management indicated that contribution profit is expected to improve sequentially through the remainder of the year, with positive EBITDA anticipated starting in Q3 as the new inventory comprises the majority of resales [12][50] Question: Dynamics between restricted cash and inventory - Management explained that the increase in restricted cash is primarily related to term debt facilities, which are collateralized by inventory or restricted cash [46] Question: Acquisition pace and market conditions - Management stated that the acquisition pace is expected to stabilize around 1,000 acquisitions per month, contingent on spreads and market conditions [51][62]