Opendoor Technologies Inc. Q2 FY2025 earnings call

• Opendoor's mission is to make selling homes simple, certain, and fast. They've built infrastructure, data, and AI powering cash offers. • Shift to a distributed platform with multiple offerings through agents, piloted last quarter with strong results like 2x more customers to cash offer, 5x higher listing conversion. • Launched Key Agent iOS app and Cash Plus. Cash Plus is a hybrid product for sellers wanting cash offer with upside potential. • Ended Q2 with 4,538 homes, $1.5 billion in net inventory, $1.1 billion in total capital, and $7.8 billion in nonrecourse asset-backed borrowing capacity.

In the second quarter, Opendoor had $1.6 billion in revenue. They purchased 1,757 homes. Contribution profit was $69 million, representing a 4.4% contribution margin. Adjusted EBITDA was $23 million. For Q3 2025, guidance includes approximately 1,200 homes acquired, revenue between $800 million and $875 million, contribution margin of 2.8% to 3.3%, adjusted EBITDA between negative $28 million and negative $21 million, and stock-based compensation expense between $10 million and $12 million.

• Q3 2025 guidance: ~1,200 homes acquired, revenue $800M-$875M, contribution margin 2.8%-3.3%, adjusted EBITDA negative $28M to negative $21M, stock-based comp $10M-$12M. • Q4 revenue expected to decline sequentially similar to Q3, contribution margin pressured by older, lower-margin homes, putting year-on-year contribution margin improvement out of reach.

• Persistently high mortgage rates suppressing buyer demand, leading to lower clearance and record delistings. • Macro environment and seasonality affecting acquisition and resale volumes. • Early-stage nature of platform evolution not yet material contributor to results.

Q: With regards to your 3Q guidance, you talked about macro conditions worsening throughout 2Q. Is it kind of stable now? Or do you -- are you still seeing incremental softness heading into the back half? And I think you talked about the 3Q guidance not including meaningful impact from the newer initiatives like the agent -- working with agents. Is that -- like how long does that process take? And when do you expect that to be a more meaningful contributor? And then I have a follow-up.

A: Selim Freiha said things seem to have stabilized, well below where they were at the beginning of Q2, and outlook for Q3 and Q4 assumes staying at or around current macro environment. Carrie Wheeler said impact of new initiatives will show up in conversion and contracts before P&L, with ramping in Key Connection markets, lag between contracts/listings and revenue realization, and Cash Plus being a growth lever, expecting real impact in 2026.

Q: On the 4Q guidance commentary, when the company says that it expects a sequential decline in 4Q revenue similar to what the 3Q guidance implies, is that going to be on an absolute dollar basis or on a percent basis? And similarly, would the $50 million third quarter OpEx guidance be a good run rate for fourth quarter as well?

A: Selim Freiha said sequential guidance is on a percentage basis, not dollar basis. OpEx will ramp back up in Q4 and Q1 driven by marketing as per new marketing strategy.

Q: With the shift to more of a buyer's market across parts of the country, are you seeing any notable increases in request volumes from sellers in those markets? And generally, how are you thinking about the potential for more seller demand coming into the platform?

A: Selim Freiha said guidance doesn't imply increase in seller demand as not seeing increase in buyer demand leading to higher clearance, and marketing spend aligned to times when spreads are lower to acquire homes ahead of spring selling season.

Q: This is Wayne Trinh on for Ygal. I just wanted to ask about the distributed platform. It seems to be performing well with the twice as many customers reaching a cash offer and getting said offer faster. Can you just walk us through how it's kind of done since you got into rapid expansion? And can you talk about the share economics you'll have there with agents between conversions and lead generation?

A: Carrie Wheeler said pairing sellers with agents early drives incremental conversion, with twice as many customers getting to final underwriting, higher listing conversion, some degradation in cash conversion anticipated but temporary, and Cash Plus being incremental to cash conversion. On unit economics, Cash Plus reduces upfront cash, seller gets additional proceeds after resale, agents earn listing commission, and Opendoor takes share of commission as capital-light, high-margin revenue.

Q: Maybe just to start, you've noted that spreads have remained elevated and above historical norms, just given weaker clearance rates. And I'm just wondering if you could provide any color or translate some of that to how much cushion you're building into today's pricing environment. And what kind of home price volatility you expect in the back half of the year?

A: Selim Freiha said they strive to set price to deliver within target contribution margin range, and home price appreciation varies by season, with spring typically having positive appreciation and fall/winter negative, and this year the positive appreciation period was shortest in years.

Q: I know you've established the ATM equity offering about a year ago, and it doesn't look like you've accessed it to date even with the recent improvement in stock price and volume. So I'm just curious if you can talk about the environment or circumstances in which you would consider raising capital through the ATM.

A: Selim Freiha said generally don't comment on future capital raises, and as for the ATM, no comment on when they would consider using it beyond being opportunistic with the 1.5 years remaining to use it.