Opendoor trims losses, looks to buy more houses in 2024
The leading iBuyer lost $275 million in 2023, but that was less than a fifth of 2022 losses. Now the focus is “sustainable” growth of the business.
Opendoor followed up its Super Bowl-adjacent marketing splash with earnings that weren't necessarily a touchdown, but still exceeded expectations and showed the company's resilience in a challenging market.
The leading iBuyer had $6.9 billion in revenue for 2023, a 55% decrease compared to the prior year. However, fourth quarter revenue hit $870 million, beating the $850 million high point of their guidance.
And despite the overall drop in revenue, the company reduced its losses significantly, cutting expenses by nearly a third in Q4 vs. Q3. Opendoor still reported a net loss of $275 million in 2023 — but that was a dramatic improvement over 2022, when the company lost a staggering $1.4 billion.
Opendoor sold nearly 20,000 homes in 2023 and is down to just 75 homes from the less profitable inventory it had accumulated before the housing market cooled off in 2022. The company bought 11,246 homes in 2023, nearly a third of what it bought in 2022 (34,962 homes).
What Opendoor had to say
CEO Carrie Wheeler said last year was "about focus, execution, and progress" and laying the groundwork for 2024. "We're highly focused on rescaling the business, but we're intent on doing it in a sustainable way."
The company expects to "meaningfully" increase acquisitions in 2024, Wheeler said, doubling down on the promise of Opendoor's November earnings call.
"Last year we reduced our marketing spend by over 60% versus the prior year. We plan to ramp our total marketing spend to widen the top of our funnel and reach more sellers. And we're spending more creatively," Wheeler said. Like by advertising ahead of the Super Bowl instead of actually during the game. "We definitely saw a big pickup in traffic and awareness," she said.
Key numbers
Revenue: $870 million in Q4, down 70% versus Q4 2022 and down 11% versus the previous quarter. Full-year revenue was $6.9 billion, down 55% compared to 2022.
Gross profits: $72 million in Q4, compared to $71 million in Q4 2022.
Cash and cash equivalents: $999 million as of Dec. 31, 2023, down slightly from the $1.1 billion it reported at the end of 2022.
Net income/loss: A loss of $91 million in Q4 versus a loss of $399 million in Q4 2022. For the full year, Opendoor had a net loss of $275 million, a significant improvement compared to its $1.4 billion net loss in 2022.
EBITDA (earnings before interest, taxes, depreciation and amortization): Adjusted EBITDA for the full year was a loss of $627 million, compared to a loss of $168 million in 2022. For Q4, the adjusted EBITDA was a loss of $69 million versus a loss of $351 million in Q4 2022.
Homes sold: 2,364 in Q4, down 69% year-over-year and down 12% versus the previous quarter. Opendoor sold a total of 18,708 homes in 2023, down 52% from 2022.
Total home inventory: 5,326 homes at the end of Q4, with a value of $1.8 billion. This is down 60% compared to the same quarter a year ago.
Notable moves
Eric Wu, Opendoor's co-founder and former CEO, left the company at the end of 2023 to "create and build again" in the startup world. Wu had stepped down from the CEO role in late 2022 to focus on Opendoor Exclusives, a marketplace that sells homes directly and exclusively to consumers.
That marketplace initiative remains important to the company, Wheeler said. But "our plan to get back to positive cash flow is all about the current core business today."
"This has been a tough year for experimentation against a record low market supply. That's challenging, but that's short term. Long term, we remain committed to continue to evolve the marketplace products."