CEO Eric Wu says Opendoor is ‘operating with urgency’ after Q3 losses
Opendoor Technologies reported $211 million in third-quarter adjusted losses before EBITDA. Its net loss for the quarter was $928 million.
- Opendoor Technologies reported $211 million in third-quarter adjusted losses after reducing prices to move homes. Net losses reached $928 million.
- Opendoor had more than $3.4 billion in revenues for the quarter, a significant rise from the same period last year.
- “Navigating a once-in-forty-years market transition has required us to operate with urgency and discipline,” Wu tells shareholders.
Opendoor Technologies delivered a mixed third-quarter report to shareholders Thursday, reporting steep losses from falling home prices but a significant increase in revenues.
The company reported $211 million in third-quarter adjusted losses from cutting prices to increase home sales as the real estate market slowed, company leaders told investors.
The company had $928 million in net losses, compared to $57 million in losses from the previous quarter, the company shared in a letter to investors prior to the third-quarter earnings call. The net loss included a $573 million one-time, 10% write-down on the book value of its inventory, as a result of overall declining home values.
But Opendoor had $3.4 billion in revenues for the quarter that ended Sept. 30, up nearly 50% over the same period last year. The company sold more than 8,400 homes, which was 42% higher than 2021, Wu told investors.
"Navigating a once-in-forty-years market transition has required us to operate with urgency and discipline to manage risk and overall inventory health," CEO and founder Eric Wu told investors. "In the third quarter, we accelerated the resale velocity of our existing inventory and have significantly increased spreads on new acquisitions."
Andrew Low Ah Kee, Opendoor president, said during the earnings call that employees have focused on moving homes to market more quickly after making improvements and repairs, which resulted in higher revenues for the third quarter ending Sept. 30 over the same period in 2021. He noted that the company was "a net seller" of homes through its iBuying model, with institutional buyers making up 10%-20% of business this year.
"We continue to have a product that people love. We're still selling homes and people are buying homes from us. We expect to increase volumes [but] there is a temporary dislocation in the market," chief financial officer Carrie Wheeler said during the Q3 earnings conference.
The company also announced plans for a new service called Opendoor Exclusives, which will function as an online marketplace where sellers and buyers connect directly via the Opendoor platform, which will debut in Texas.
The company also will prioritize growing a "lower-risk" and "fresh" portfolio of higher quality homes in its iBuyer program, Wu said.
Opendoor has pulled back on new acquisitions. In light of "risk management priorities," Wheeler said that contracts for home purchases under its iBuying model declined by about 73% in the third quarter compared to last year. It has contracts on about 2,260 homes.
Ahead of the third quarter earnings call CEO and founder Eric Wu announced that Opendoor was reducing its workforce by 550 employees, which is 18% of its workforce. "While challenging, we will navigate this moment with discipline and focus over uncertainty," Wu said at the conclusion of the Q3 earnings call.