Opendoor Technologies Inc

Good day, and thank you for standing by. Welcome to the Open Door Technologies first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Elise Wang, Vice President, Investor Relations. Please go ahead.

Thank you, and good afternoon. Details of our results and additional management commentary are available in our earnings release and shareholder letter, which can be found on the Investor Relations section of our website at investor.opendoor.com. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical fact, are statements that could be deemed forward-looking, including, but not limited to, statements regarding Open Door's financial condition, anticipated financial performance, business strategy and plans, market opportunity and expansion, and management objectives for future operations. These statements are neither promises nor guarantees and undue reliance should not be placed on them. Such forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in the risk factors section of OpenDoor's most recent annual report on Form 10-K for the year ended December 31st, 2022, as updated by our periodic reports filed after that 10-K. Any forward-looking statements made on this conference call, including responses to your questions, are based on management's reasonable current expectations and assumptions as of today, and OpenDoor assumes no obligation to update or revise them. whether as a result of new information, future events, or otherwise, except as required by law. The following discussion contains references to certain non-GAAP financial measures. The company believes these non-GAAP financial measures are useful to investors as supplemental operational measurements to evaluate the company's financial performance. For a reconciliation of each of these non-GAAP financial measures, to the most directly comparable gap metric, please see our website at investor.opendoor.com. I will now turn the call over to Kerry Wheeler, Chief Executive Officer of Opendoor.

Good afternoon. Also on the call with me today is Christy Schwartz, our Interim Chief Financial Officer, and Dodd Frazier, President of Capital Markets and our Enterprise Business. At Open Door, our vision is to build the most trusted e-commerce platform for residential real estate, a trillion-dollar industry that remains static and broken. The process of buying and selling a home today remains complicated, time-consuming, stressful, and offline. We are at the forefront of transforming this status quo so consumers can buy, sell, and move between homes with simplicity and confidence. Over the last nine years, we've developed a magical product that home sellers want and need. Our conversion rates continue to exceed our expectations and past performance on a spread-adjusted basis. And we've built unique pricing and operations capabilities to become one of the largest buyers and sellers of homes in the country. These are the things that differentiate us, particularly in times of macro uncertainty. While we are seeing some stabilization following what has been the steepest transition in housing in 40 years, home sellers continue to be on the sidelines. The number of new listings within our buy box were down almost 25% in the first quarter versus prior year. Market clearance is trending higher than expected as a result of this lack of supply, but the outlook for home prices continues to be uncertain. In light of this macro backdrop, it's imperative that we continue to operate with caution and discipline. Specifically, we expect to maintain double-digit spreads for the rest of 2023 as we grow a new book of inventory that comfortably meets our margin targets. Given the impact this will continue to have on conversion, we are focused on expanding our low-cost partnership channels, including home builders, agents, and online real estate platforms to attract more sellers. We expect these channels to be highly scalable and allow us to reach more customers in a cost-effective way. We've partnered with over 90 home builders across the country, where we facilitate a trade-in for customers of new-built homes, enabling a simple and seamless move from their existing home. We've also partnered with thousands of agents to give them another option in their toolkit to sell their clients' homes with speed and ease. We are seeing a growing number of agents make Opendoor a regular part of their service offering. Over 50% of contracts sourced via an agent relationship in the past 12 months came from agents who had previously done business with us. We are continuing to deepen these partnerships through our improved agent access rewards program that incentivizes repeat transactions and a referral offering that agents utilize to introduce sellers directly to us. And finally, we now have partnerships with the top three online real estate platforms by visitor traffic in the country. Zillow, Redfin, and Realtor.com. We expect to grow acquisition volumes via these platforms as we get to market parity over time, enabling us to reach the hundreds of millions of homeowners that visit these portals every month. Furthermore, we are continuing to iterate on our marketplace offering exclusives. In our pilot market of Plano, almost 60% of sellers we pitched in Q1 agreed to enroll into open door exclusives. Amongst these sellers, We're tapping into a category of customers we're calling semi-serious. They are those who are interested in selling at some point, depending on price, but are not yet ready to commit to listing their home on the MLS. We believe these are largely incremental to the customers we serve with our current cash offering. We are encouraged by these early signals and will continue to iterate on this product offering this year to hone the customer experience and drive liquidity in that market. Another focus area for us in 2023 is the strengthening of our operating and pricing platforms so that we can deliver greater efficiencies and higher unit economics over time. In Q1, we evolved our in-person home assessment process to gather additional home condition and home feature data. We also implemented technology to better capture an action on the home condition feedback that we collect per home across multiple sources throughout our ownership cycles. Together, these improvements enable us to better understand home condition, both pre-acquisition and for owned homes, and optimize acquisition and resale pricing at a per-home level. We've also expanded our repair and renovation capabilities through platform and process investments, enabling us to perform targeted renovations. Beginning in the fourth quarter of last year, we applied selective home condition improvements on almost 2,500 of our longest-held homes. which has in turn allowed us to drive faster sell-through rates on these homes than planned. These are just some examples of platform improvements we are executing against, with the goal of delivering at least 100 basis points of contribution margin improvements next year, incremental to our current annual target range of 4% to 6%. And finally, we have further right-sized our operating capacity to reflect the overall decline in market transaction volumes and our reduced pace of acquisitions. In April, we announced a workforce reduction of approximately 22% or 560 employees, primarily focused on volume-based roles across operations, transactions, and G&A groups. We expect this to deliver savings of approximately $50 million in annualized expenses. While this was a difficult decision, it was necessary to ensure that we can continue to deliver on our long-term vision and serve customers for years to come. As we look forward to next quarter and beyond, we remain as focused as ever on improving the lives of customers and building a durable generational company. We know we have the right products, unique capabilities, the capital, and the best team to not only weather this cycle, but emerge stronger and more resilient than we've ever been. With that, I'll pass the call over to Christy to discuss our financial highlights.