Opendoor (OPEN) Q3 2024 Earnings Call Transcript | The Motley Fool

Image source: The Motley Fool. Date Thursday, Nov. 7, 2024, at 5 p.m. ET Call participants Chief Executive Officer - Carrie Wheeler Chief Financial Officer - Selim Freiha Interim Chief Financial Officer - Christy Schwartz Takeaways Revenue -- $1.4 billion, exceeding the high end of the company's guidance range. Home acquisitions -- 3,504 homes purchased, which is down 27% sequentially due to elevated spread levels and reduced marketing spend. Contribution margin -- 3.8%, above the high end of guidance, supported by higher resale clearance and lower concessions and buyer broker commissions. Adjusted operating expenses -- $90 million, below the $105 million guidance and down from $100 million in the prior quarter, driven by a reduction in advertising spend and continued cost discipline. Adjusted EBITDA loss -- $38 million, better than the high end of the company's guidance due to contribution margin outperformance and ongoing expense control. Capital position -- $1.2 billion in total capital, composed mainly of $837 million in unrestricted cash and marketable securities, and $218 million of equity invested in homes and related assets. Asset-backed borrowing capacity -- $7 billion total, with $2.3 billion in committed borrowing; comprised of $3 billion in senior revolving credit and $4 billion in term facilities. Spread levels -- Raised in May and kept elevated through the quarter to manage risk, impacting acquisition volumes. Cost structure initiatives -- Announced August separation of Mainstay for $35 million in annual savings and a headcount reduction of approximately 300 positions (about 17% of the workforce) for $50 million in annualized savings. Fourth quarter guidance -- Revenue expected between $925 million and $975 million; contribution profit of $15 million to $25 million (implying 1.6%-2.6% margin); adjusted EBITDA loss forecast at $60 million to $70 million; and adjusted operating expenses around $85 million. Restructuring costs -- $17 million in restructuring expenses to be recognized related to reduction in force and other actions. All-cash offer, List with Opendoor, and Exclusives -- Management highlighted product suite expansion and noted that List with Opendoor is now nationwide and performing at or above expectations. Buyer broker commissions -- Transitioned from blanket payments to buyer concessions in response to the National Association of Realtors settlement, reducing direct selling costs from 2.8% to 2.4% of revenue quarter-over-quarter. Need a quote from a Motley Fool analyst? Email [email protected] Risks Housing market conditions -- Management described further "deterioration in key housing market indicators," including continued decline in listing and clearance rates and projected the lowest level of existing home sales since 1995 for a second consecutive year. Acquisition volume impact -- Elevated spread levels while enabling healthy margins have reduced overall acquisition volumes. Contribution margin pressure -- Fourth quarter contribution margin is expected to decrease due to lower home price appreciation during hold periods and a higher mix of older, lower-margin homes in resale inventory. Restructuring costs -- The company expects to incur about $17 million in restructuring expenses in the fourth quarter as a result of cost-reduction actions. Summary Opendoor Technologies ( OPEN 2.88%)...

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