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Just months after a bruising earnings report and major executive shakeup, iBuying giant Opendoor on Thursday revealed that it saw its revenue drop and losses rise yet again in the final months of 2022.
In total, Opendoor brought in $2.9 billion in revenue during the fourth quarter of last year, according to a newly published earnings report. That’s down 25 percent compared to the final quarter of 2021. The company also revealed that it sold 7,512 homes during the quarter, a year-over-year dip of 23 percent.
Additionally, Opendoor suffered a net loss of $399 million between October and December of last year — more than double the $191 million loss from one year prior.
Opendoor lost an average of $28,000 per home it sold in the fourth quarter of last year. That’s a stark reversal from the $16,000 in profit it made on average from each home sale in the final three months of 2021.
The report also includes figures for all of 2022. Those numbers show that Opendoor brought in $15.6 billion in revenue over the course of the year — up 94 percent compared to 2022. The company sold a total of 39,183 homes last year which represents an 80 percent year-over-year increase.
However, Opendoor also suffered a net loss of $1.4 billion in 2022, also about double the $662 million loss the company suffered for all 2021.
Carrie Wheeler
Despite the significant losses, “2022 affirmed our conviction in what we are building,” CEO Carrie Wheeler said in the report.
“As we enter 2023, our new book of homes is outperforming our expectations, and we’re pacing ahead of selling our older book of homes,” Wheeler added in the report. “We are focused on operating with excellence and leaning into our core strengths.”
In a call with investors Thursday afternoon, Wheeler described the current market as “challenging” and characterized last year’s market as experiencing a “reset.” But she also said that Opendoor is focused on “stabilizing our core business” and expressed optimism about the company’s ability to meet its goals.
“We’re energized about our future,” Wheeler said during the call. “We believe we have the team, balance sheet and plans in place to realize these goals.”
Heading into Thursday’s earnings, shares in Opendoor were trading for just over $1.80. That was down for the day and week but up from late December when shares briefly dipped below $1 — a key threshold that companies are expected to stay above or risk getting booted from the market.
Opendoor shares bounced around in after-hours trading following the debut of Thursday’s earnings report but ultimately ended up down compared to where they finished during regular trading.
Credit: Google
Opendoor had a market cap of just over $1 billion as of the close of the markets Thursday afternoon.
The iBuyer previously reported earnings last November, and that report proved to be one of the most shocking of the season. That’s because the company reported a net loss of $928 million between July and September of 2022. The majority of that loss was due to the falling value of homes Opendoor held in inventory, rather than to pure cash burn, but the number nevertheless nabbed attention and prompted discussions in the industry about the future of iBuying.
Though the fourth quarter’s losses were significant, they were not as deep as those suffered one quarter prior.
About a month after Opendoor reported its nearly $1 billion third-quarter loss, the company also revealed that it was shaking up its executive team and appointing Wheeler, previously chief financial officer, as CEO. Eric Wu, the company’s founder and then-CEO, moved into a new role as president of Marketplace.
A smaller shakeup took place Tuesday when Chief Investment Officer Daniel Morillo resigned. A filing with the U.S. Securities and Exchange Commission indicated Morillo will continue with the company in an advisory role.
The moves have come as Opendoor grapples with last year’s shift from a buyers’ market to a sellers’ market. The shift, which was driven by soaring interest rates, has dinged most real estate companies and even behemoths, such as Anywhere suffered steep losses in the final months of last year.
But iBuying has suffered more acutely than other sectors thanks to high costs and high risks associated with buying, remodeling and selling homes at a time when prices aren’t rising rapidly.
One day before Opendoor reported its earnings, rival Offerpad revealed that it too suffered significant losses during the fourth quarter of last year. Significantly, the company also lost an average of about $24,000 on every home it sold during that period.
Opendoor has responded to this new market landscape by, among other things, pivoting to new products. Most notably, last November the company announced Opendoor Exclusives, which it billed as a marketplace that can connect buyers and sellers. Though at the time of the launch the marketplace was mostly populated with homes Opendoor itself owned, in theory, the product represents a way for Opendoor to act as a kind of middleman in transactions, thus avoiding the high costs of physically owning and remodeling homes.
During Thursday’s investor call, Wheeler said Opendoor Exclusives will allow the company to have a “mix of on- and off-balance sheet transactions.” The company is currently building the product by focusing on an improved consumer experience, building liquidity and going deep in select markets, among other things, Wheeler explained during the call.
Asked during the call about the market, Wheeler also said that “we do expect to see a pick up in volume as we move into the second quarter.” She went on to say that the company is making progress selling homes it bought before last year’s “reset,” which cost more, and that homes purchased more recently are outperforming Opendoor’s expectations.
In addition to building a marketplace, the company has also worked recently to become leaner in other ways, such as by shifting gears and slowing down its homebuying efforts.
Wheeler on Thursday additionally touted her company’s new partnership with Zillow which will allow homeowners in Atlanta and Raleigh to get instant cash offers from Opendoor and simultaneously hear from Zillow what their home might sell for on the market. Wheeler said during the call that she is “optimistic” about the relationship with the portal and believes it “allows us to put our brand and our offer in front of a lot more home sellers.”
During the investor call, Wheeler further explained that the company is looking to improve operational efficiency via a “host of initiatives designed to improve margins.” She added that the company has historically focused on growing scale, and doing it at velocity, but that Opendoor is now operating with a different orientation.
“Now,” she said, “we want to build for long-term efficiency.”
Update: This post was updated after publication with additional information from Opendoor’s earnings report, and with commentary from the company’s call with investors.
Email Jim Dalrymple II
