Offerpad Solutions Inc. Q4 FY2024 earnings call

• Fourth quarter revenue exceeded the midpoint of guidance, driven by a balanced mix of offerings including the cash offer program and asset-light services. • Asset-light services continued to grow, becoming an increasingly important revenue stream. • The agent partnership program expanded, driving agent engagement, increasing transaction volume, and improving CAC by over 45% year over year. • Operating efficiency improved, leading to cost savings and supporting contribution margins. • The company adjusted its strategy by diversifying revenue, refining acquisition strategies, and optimizing the cost structure. • Product and process enhancements increased efficiency, positioning the company to scale as the market recovers. • Over the past two years, the focus has been on returning to positive earnings and cash flow.

In the fourth quarter, Offerpad Solutions Inc. exceeded the midpoint of its revenue guidance. Revenue for the fourth quarter totaled $174 million, landing in the upper half of the guidance range. Asset-light services, including the B2B renovate business, direct plus buyer program, and agent partnership program, contributed over 33% of total contribution profit after interest in 2024. Fourth quarter acquisitions were 384 homes, a 9% decline from Q3. Full-year revenue was $919 million, with 919 homes acquired. The cash offer program performed well alongside asset-light services, and asset-light services are becoming an increasingly important revenue stream. The agent partnership program drove agent engagement and increased transaction volume while helping improve CAC by over 45% year over year.

• First-quarter revenue is expected to be in the range of $150 million to $170 million with 450 to 500 homes sold. • Anticipate slightly better adjusted EBITDA as the company continues to focus on operating leverage. • The company aims to ramp towards 1,000 acquisitions per quarter. • Expect to increase leverage using asset-backed facilities as acquisition volumes rise.

• Broader market challenges such as historically low residential resale volumes, down almost 40% from pandemic highs. • Affordability constraints. • Shifting industry commission structures.

Q: Expand on expanding the buy box and details on offer process simplification.

A: Brian Bair explained that the company is moving up in price point to expand the buy box, market specific. The cash offer process has been enhanced, with customers getting a price range within minutes and able to schedule inspections instantly.

Q: On 1,000 per month acquisition target ramp.

A: Brian Bair stated that 1,000 homes per month is the North Star, and the mix of products is important, with the company expecting to move sequentially towards this target.

Q: Capital raise discussion.

A: Peter Knag discussed the company looking at capital markets options for flexibility, to enhance financial position, and to consider cost of capital.

Q: Impact of commission structure changes.

A: Brian Bair noted that the agent partnership program is growing due to commission structure changes, with agents using the program to submit offers before listing homes.

Q: Home acquisition factors and adjusted EBITDA guidance.

A: Brian Bair discussed home acquisition driven by market volume expectations, and Peter Knag explained that adjusted EBITDA improvement comes from cost outs and process improvements.

Q: Perspective on ClearCorporation changes.

A: Brian Bair talked about leveraging the agent community and how the company responds to changes in commission structures