Opendoor Technologies Inc

Good day, and thank you for standing by. Welcome to the Open Door Second Quarter 2023 Earnings Conference Call. At this time, all participants are in 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 turn the conference over to your speaker today, Whitney Kukoka, Investor Relations with Blue Shirt Group. 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.opendoors.com. Please note that this call will simultaneously be 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 law. All statements other than statements of historical fact are statements that could be deemed forward-looking, including but not limited to statements regarding Opendoor'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 31, 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 reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our website at investor.opendoor.com. I will now turn the call over to Carrie 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 and Open Exchange. Open Door's vision is to build the most trusted e-commerce platform for residential real estate where home buyers and sellers can transact with simplicity and certainty. Regardless of the macro environment, life and home transactions continue, and we're committed to being the first and most trusted place that people look to when considering their move. In navigating the current environment, we're leveraging the lessons we've learned and focusing on what we can control. We've made significant progress in strengthening our offerings, driving cost efficiencies, and managing risk. We're building a healthy new book of inventory that demonstrates our ability to generate positive unit economics in what continues to be an uncertain time in the U.S. housing market. We remain focused on making investments in durable growth levers and our pricing and operations platforms that will benefit us for years to come. We're doing what we've always done. We're leading with the consumer experience as we innovate, build, and adapt Open Door to be an all-weather product and the best option for millions of people who want to buy or sell a home. We have intentionally moderated our acquisition pace this year to manage risk. We've maintained above-average spreads, resulting in lower conversion and higher customer acquisition costs and our direct-to-consumer paid marketing channels. We've leaned into our partnerships with home builders, agents, and online real estate platforms. These channels have fixed customer acquisition costs and thus are highly efficient and represent durable long-term partnerships for us. In Q2, acquisition contracts and partnerships grew 78% sequentially and represented 40% of total acquisition contracts. We expect these partnerships to continue to grow. However, we also plan to increase our paid marketing to drive additional direct-to-consumer volume as we see more market stabilization and reduced spreads. Partnerships and paid marketing drive our top of funnel growth, bringing true sellers and registered sellers, defined as those who have received an offer but have not yet sold their home to Opendoor. Not everyone is a true seller at the time they request an offer, but we treat everyone as a possible future seller. Re-engaging our base of registered sellers until they decide to sell their home requires de minimis incremental cost. Three-quarters of acquisition contracts in Q2 were from sellers who didn't accept their initial offer but accepted a subsequent one. We believe that growing our registered customer base, which gives us access to true sellers whenever they do choose to sell, will continue to be an important source of growth. Direct-to-consumer paid marketing remains an important channel for us, delivering 60% of our contracts in Q2. However, given the higher spread environment, we have prioritized limited but highly effective marketing investments, such as creative ad campaigns, brand media, and consumer and agent influencer programs. Despite reducing marketing spend nearly 80% year over year in Q2, our aided brand awareness remained flat in the quarter. As we think about durably reducing spreads and re-accelerating growth, much is within our control, but we need to be nimble and reactive to what we're seeing in the broader housing market. The housing macro has improved since the beginning of the year. But sitting here today, we're looking for signals of further market stabilization, including a more certain outlook for HPA. We've taken prescriptive action on the things we can control as we navigate ongoing uncertainty. We are focused on investments to improve our pricing accuracy, inventory management, and overall cost structure. These actions are intended to durably reduce spreads charged to customers while still achieving our target contribution margin. An example is our continued investment into home condition which relies on computer vision, AI-based condition modeling, and interior assessments, all of which give us more structured data to improve our overall data insights, which in turn informs home-level pricing and pricing model accuracy. We remain steadfast in our mission to power life's progress one move at a time. The actions we are taking today reflect our commitment to returning the business to adjusted net income positive, and will allow us to emerge from this cycle more resilient and positioned for market leadership. There's still much to do, and we're heads down as we continue to build a generational company that will transform home transactions for many years to come. With that, I'm going to turn the call over to Christy to review guidance and financial results.