The more things change in iBuying, the more they stay the same. Opendoor again announced major revenue growth in the third quarter as the iBuyer hit the gas on cash purchases and subsequent resale of homes.
Company revenue soared 91% from the second quarter to $2.3 billion, and Opendoor sold 5,988 homes, a 72% leap from the prior quarter.
However, the San Francisco-headquartered outfit could not leverage a historically fantastic housing market to turn a profit, posting a $57 million net income loss.
Opendoor has lost money every quarter since becoming a publicly traded company in late 2020. The business’s losses total $421 million in the first nine months of 2021. That compares to a $199 million in the first nine months of 2020, a period when operations were partially paused amid the coronavirus pandemic.
There was, ahem, a bit of a backdrop to Opendoor’s earnings call on Wednesday. The company’s main rival Zillow shockingly announced a wind-down of its iBuying arm one week earlier, deeming its home price forecaster “too volatile.”
In the flurry of examinations and postmortems on Zillow, Opendoor has, by comparison, come off as a fiscally responsible company. For example, an analysis from Mike DelPrete indicated that while Zillow wildly overpaid for homes in Phoenix and Atlanta, Opendoor forked over market value.
The earning’s report, meanwhile, revealed that Opendoor ramped up its purchases almost as quickly as Zillow. The company bought 15,181 homes in quarter three. That’s a 79% hike from the second quarter.
Opendoor now has 17,164 homes on its books. The iBuyer lists these homes on its balance sheet as a $6.4 billion asset.
On the company’s earnings call, Opendoor CEO Eric Wu said nothing at all about the company’s net loss and gave limited remarks about the downfall of Opendoor’s chief rival.
The CEO spoke very broadly to investors and the public:
“We’re in a generational shift in housing from offline to online.”
“Our value proposition is resonating.”
“We need to meet customer’s expectations of a sale that is simple, certain and fast.”
Details were mostly left for Carrie Wheeler, the company’s Chief Financial Officer.
Wheeler said that responsible risk management is “embedded in the company’s DNA,” and that the company has conservative home price appreciation estimates, in order to perhaps avoid what befell Zillow.
Wheeler discussed several times Opendoor’s “buy box,” which is the company’s ability to confidently price a greater range of homes. This evolution of the company’s pricing model, Wheeler said, has helped enable Opendoor to expand into more than 40 markets and purchase somewhat more expensive homes.
Wheeler forecasted Opendoor expanding its revenue again in the fourth quarter despite a seasonal housing market cooling, anticipating 39% revenue growth from quarter three. She did not discuss net income, but noted that an adjusted measurement of pre-tax, interest and depreciation income could be break even.
Perhaps the closest to addressing Opendoor’s profitability path was a question from Ygal Arounian of Wedbush Securities about ancillary services. Analysts have cited in-house mortgage lending and title insurance as a possible iBuyer move toward making money.
Wheeler did not break out any numbers on mortgage and title revenue. But she did discuss Opendoor’s recently announced acquisition of mortgage broker RedDoor, and the company’s Opendoor Complete, a new consumer platform.
Added Wu: “The end-to-end digital experience is what our customers will crave.”
