Opendoor Technologies Inc

Good day, and thank you for standing by. Welcome to the Open Door Third 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, Kimberly Niehaus, investor relations officer. 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 doors financial condition, anticipated financial performance, business strategy and plans, market opportunity 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 factor 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. An open door 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 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, Interim Chief Financial Officer, and Dodd Fraser, President of Capital and Open Exchange. As a market-leading platform that is leveraging technology to transform and simplify the way people buy and sell their home, Opendoor has the opportunity to build a generational company and disrupt the massive market. Over the past year, our team has been hard at work scaling our customer acquisition channels and improving our pricing systems and cost structure. We believe we've laid the foundation to reaccelerate revenue next year as we build for a future of sustained profitable growth. In the third quarter, Opendoor purchased 3,136 homes. This was an increase of 17% quarter over quarter, despite the fact that average new listings were down 8% within our buy box in our markets, demonstrating our ability to gain share despite lower market transaction volumes. Throughout 2023, we made cost structure and pricing accuracy improvements and passed those through to spread reductions, which in turn enabled us to increase acquisitions quarter over quarter. These spreads improvements, combined with our growing partnership channels and plans to increase advertising spend in the first half of 2024, should allow us to accelerate home acquisitions next year. Our third quarter results demonstrate continued execution in what remains an uncertain US housing market. Mortgage rates hit a 22-year high of 8% in October, up over 100 basis points since reported Q2 results in August. Market clearance rates, while still at historically healthy levels, have declined more than expected with higher rates further depressing buyer demand. While these market moves do have implications for our business, we continue to operate within our risk management framework and focus on controlling what we can control. Based on current conditions and signals we're observing, our plans to increase acquisition volumes next year have not changed. We continue to closely monitor leading indicators so that we can respond to shifts in the market. Acquisitions from our partnership channels increased 33% sequentially in Q3 and are up over 76% compared to Q1. We continue to make progress on expanding our partnership channels across online real estate platforms, agents, and home builders. Our exclusive partnership with Zillow continues to scale and is live in 45 markets as of this week. With more opportunities for customer re-engagement in this channel and our previously launched markets continuing to mature, we saw meaningful transaction growth in the quarter. In early October, we announced a partnership with eXp Realty, the largest independent real estate company in the world. This agreement enables eXp's agents to request a cash offer on qualifying properties on behalf of their clients directly within their eXp dashboard. Ultimately, we believe Opendoor enables agents to better serve their clients and improve productivity. By leveraging AI and other technologies, we continue to drive operational excellence across our platform, including pricing, inventory management, and home operations. In terms of pricing, our proprietary home data asset that we've built over the last decade, coupled with deep human expertise, is enabling Opendoor to build proprietary real estate-specific AI models. For example, we use AI to extract home conditions from customer-provided inputs, such as chat conversations, images, and videos. These inputs are used by our centralized pricing team and improve our pricing accuracy with the objective of durably reducing spreads. For inventory management, we continue to develop technology and improve processes to centralize operations and conduct quality control remotely. We get real-time home-specific signals from our proprietary home security system and customer and agent feedback from each home visit, which enhances our ability to quickly and cost-effectively respond to issues. We leverage AI to automatically categorize feedback and extract data points. Maintenance quality has improved significantly with 99% of work meeting our quality standards of our statements of work. Additionally, agent feedback has indicated that listed home quality improved by over 10% throughout the year. Finally, we continue to enhance our transactions and operations platforms in Q3. We piloted automated operator work assignments successfully to more effectively load balance work across operators and are expanding it to all operator groups over the next two quarters. We also recently revised our end-to-end CRM. Changes to the platform have enabled us to respond to customers faster, capture more useful structured data, and ensure that each step of the transaction is completed on time. Switching gears for a minute, I wanted to make a comment on potential disruption in the real estate industry regarding the Buyer Broker Commission. Just this week, a jury ruled against NAR and other brokerages in one of several lawsuits that are challenging the practice of listing agents, and therefore home sellers, being required to pay the buyer broker's commission. To be very clear, Opendoor's core business does not derive revenue from the buyer broker commission. On the contrary, the buyer broker commission is a cost that we pay when we resell our homes. The BBC currently represents approximately 2.5 points of our overall cost structure, which is meaningful. If the buyer broker commission were reduced or went away, those costs to us would be reduced. At Opendoor, we built our entire platform with a focus on giving customers transparency and choice as to how they sell their home. As such, we believe we're well positioned to improve the experience of sellers and buyers as changes in the real estate ecosystem materialize. Before I turn the call to Christy, I'd like to thank the Opendoor team for their continued hard work to reshape the real estate industry and fix a broken process. We believe we've built the foundation for a future of profitable growth as we exit the year with an improved cost structure, strong balance sheet, and scaled customer acquisition channels. And we remain steadfast in our mission to power life's progress one move at a time. Christy will now review guidance in the financial results. Thank you.

Thank you, Carrie. Our third quarter results reflect increased acquisition volume, the growing mix of our new book of inventory, and our continued focus on cost discipline. We remain focused on delivering healthy, risk-adjusted contribution margins and preserving capital through disciplined cost management. We delivered $980 million of revenue in the third quarter, slightly exceeding the midpoint of our expected guidance range. We have continued to sell through our longest held homes with less than 150 old book homes not in resale contract at quarter end. On the acquisition front, we purchased 3,136 homes in the third quarter a 17% sequential increase, despite a decline in market new listings within our buy box. We returned a positive contribution margin in the third quarter, generating positive 4.4% versus negative 4.6% in Q2 of 2023. These results were ahead of our implied guidance range of 3.2% to 4%, The outperformance reflects both the strong performance of our new book of homes, as well as slightly higher mix of new book versus old book resales than expected. Our new book of homes generated gross margins of 12% and contribution margin of 9.2% in the third quarter. Adjusted EBITDA loss was $49 million in the third quarter, inclusive of our previously recorded inventory valuation adjustments of negative $29 million. This beat the high end of our guidance range and is an improvement from an adjusted EBITDA loss of $168 million in the second quarter of 2023. Adjusted operating expenses, which we define as the delta between contribution profit and adjusted EBITDA, were $92 million in Q3, up from $78 million in Q2 2023, and down from $189 million in Q3 2022. The sequential increase reflects the fact that we began rebuilding inventory in the third quarter, while the decline versus the prior year period reflects our improved cost structure. Adjusted operating expenses outperformed our prior guidance of $100 million due primarily to the timing of certain expenses that we now expect to incur in 4Q23. We expect adjusted operating expenses to be approximately $120 million in the fourth quarter which reflects both the shift in some expenses from 3Q to 4Q, as well as our expectation to continue rebuilding inventory while continuing to prioritize cost discipline. Turning to our balance sheet, we ended the third quarter with $1 billion in total shareholders' equity, which is a decrease of $66 million from the second quarter of 2023. We ended the third quarter with $1.5 billion in total capital, which includes $1.2 billion in unrestricted cash, cash equivalents, and marketable securities, and $182 million of equity invested in homes and related assets, net of inventory valuation adjustments. At quarter end, we had $8.4 billion in non-recourse asset-backed borrowing capacity, composed of $3.9 billion of senior revolving credit facilities, and $4.5 billion of senior and mezzanine term debt facilities, of which total committed borrowing capacity was $3 billion. As Carrie mentioned, mortgage rates reached 8% in October, their highest level in over 20 years, and up over 100 basis points since we reported second quarter results in August. This increase in rates softened buyer demand, amplifying the typical seasonal decline in market clearance rates. The impact of this is reflected in our outlook for the balance of the year. First, as market clearance rates have slowed, our pace of resales is likewise reduced, impacting projected fourth quarter revenue. Second, we reduced home-level list prices in order to meet our clearance objectives, which flows through to lower revenue and contribution margins. And third, as a result of slower resale clearance rates, some sales from the old books shifted out of the third quarter. We expect the impact of those tail homes will be a drag on the overall fourth quarter contribution margin, given their margin profile. Responding to seasonality and market changes is a normal part of our portfolio management process, including balancing the pace of inventory inflows and outflows. With that in mind, we expect fourth quarter revenue to be between $800 million and $850 million. Contribution profit between $15 million and $25 million, which implies a contribution margin of 1.9% to 2.9%. Adjusted EBITDA loss between $105 million to $95 million. And adjusted operating expenses of approximately $120 million. In line with the expectations outlined back in May, we continue to expect fourth quarter home purchases to be about $3,000 and roughly flat quarter over quarter. With less than 150 old book homes not under contract as a quarter end, we expect to return to more normalized inventory turns of three to three and a half times per year. There are other factors that may cause inventory turns to vary quarter to quarter, most notably seasonality, but we believe it's helpful to keep in mind as you model our inventory acquisition and resale pace throughout the year. We continue to manage our business to return to positive adjusted net income, our best proxy for operating cash flow, and believe we have the cost structure and balance sheet in place to do so. I'd now like to turn the call over to the operator to open up the line for Q&A.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Nick Jones with JMP Securities. Your line is now open.

Great. Thanks for taking the questions. I guess, you know, I saw the comments on the NAR lawsuit and kind of recent judgment on Missouri. If commissions were to come down, and I realize maybe it lowers your cost a little bit, but does that then change the value proposition and the spread dynamic? in your go-to-market and how you can expect your homes to convert, I guess if we kind of key this out longer term.

Hey, Nick, it's Carrie. I mean, short answer is no, it does. I mean, we're here to serve someone who's looking to sell their home with simplicity and certainty, and that's the fee we charge today. And as I said earlier in my comments, I mean, the buyer-broker commission for us is a cost that we pay out as we resell our homes. And if that comes down, I mean, you know, at worst it's a neutral in terms of overall margin to us over time.

Great. And then as we think about, I guess, you know, 2024, you know, how much of an overhang will affordability continue to be? I mean, do we really need to see transaction volumes kind of normalized to semi-historic levels for things to kind of improve and, you know, growth to kind of re-accelerate and margins to come through? Is it kind of a longer-term view or do you think the expansion of the buy box that you, you know, you talked to and those in the shareholder letter is enough to kind of the key to grow and navigate the current environment?

Yeah, I mean, I think we feel really comfortable with our ability to grow and navigate. I think, as we've talked about in past calls, I think it's important to distinguish between price stability and volumes. We really care most about price stability because that allows us to reduce our spreads. From a volumes perspective, as we mentioned in the letter, Our addressable market today is $600 billion, and so we just need a small fraction of that addressable market to scale back to profitable cash flow break-even.

Hey, Nick, it's Carrie. The only thing I want to add on to Doug's good answer is that, you know, we have been showing throughout the course of the year that we're gaining share, and we're gaining share against the declining market. And I think that's evidence of the value prop and what we're putting into the market for customers, and, you know, our focus is continuing to do so.

Great. Thanks, Carrie. Thanks, Doug.

Thank you. Our next question comes from the line of Yugal Aronian with Citigroup. Your line is now open.

Hey, good afternoon, guys. I just want to focus on prices and spreads for a little bit. I'm not surprised about that. So on the reference call right now, they just talked about seeing some signals of home prices softening, and in their view, that's a good thing. I know that obviously has an impact on how you think about the world. And so I may have missed some of the commentary, but just your thoughts on spreads right now as we get through the end of this year and into next year and what you're factoring in or thinking about in terms of home prices as we kind of work through what's been more of a challenging environment than last time we spoke.

Yep.

So first off, let's just sort of step back and look at what the year's been like. So 2023, we're still seeing 4 million homes being sold in the U.S. annually. To your point, we have observed low supply, but we've also paired that with resilient buyer demand. And so what we've seen is supply and demand largely staying in balance, which has resulted in home price stability. The metric we really focus a lot on is market clearance or the pace of resales. We look at that because it really helps reflect the balance of supply and demand. And if you look at the back of our shareholder letter, market clearance continues to be above historical periods. For the homes we're buying today, we'll be selling those into the spring selling season next year. 4Q acquisitions for us have historically been some of our strongest cohorts, given the month-over-month home price tailwinds that start to show up in mid-February. So we will continue to monitor our leading indicators, monitor clearance, and be disciplined about balancing growth, margin, and risk. But this has thus far been a stable house price market, and that is in part why we've been able to retake our spreads down.

Got it. Maybe just to follow up on that, so how does what you're talking about here align with the lower clearance rates you're seeing and lowering the prices right now? Is it more of a seasonal factor? I just want to make sure I understand and make that bridge. Thanks.

Yep. Very much a seasonal factor and part of our risk management framework. So, we saw that softening and wanted to stay in line with our clearance targets. And so, to your point, that is a short-term effect. And if you sort of roll forward the clock another month or two, November and December, you'll see market new listings go down 50% between October and December. And so both supply and demand shift in a significant way for November and December. People don't want to move during the holidays. So it's very much a short-term, near-term phenomenon. And I think if you look again at those charts in the back, from a price perspective, a nominal home price perspective, that continues to show

stability really in line with what we've seen in prior years.

Okay. Thank you very much.

Thank you. Our next question comes from the line of Curtis Nagel with Bank of America. Your line is now open.

Great. Thanks very much. Yeah, maybe just kind of tacking on, you know, and mixed points just in terms of thinking about, I guess, the setup for 24. So, you know, rates high, clearance rates lower, I guess, some of that seasonal. But why not kick back the buying just a little bit? So, I mean, look, things are obviously super volatile. So, you know, maybe lower some of the inventory risk and, again, just such a soft market. And then just as a follow-up, could you give a little more color on the marketing spend? Sounds like that's to gear up, I think, spring selling season next year. But, yeah, more detail on that. Is that what drove the shift, I guess, into 4Q?

Well, just on the 4Q acquisitions, what we said was they would be sort of approximately 3,000, which is flat quarter over quarter. I also mentioned a moment ago, 4Q acquisitions historically are some of our strongest cohorts. I think it's really important to remember that the homes that we're buying right now will be selling early next year into that very positive spring selling season. So I think starting with that, I think the, I mean, I couldn't quite tell if you're asking if we should be decreasing or increasing. From an increasing perspective, Given those lifting volumes in the market, increasing volumes is hard, given what I've mentioned about just new listings being down significantly in months like November and December.

It was decreasing just, again, on a potential inventory risk question on a volatile market, right? Three months is a long time. That's sort of the point.

I think that's where if you sort of track through to the price changes you see in February and March, those are 100, 200 basis point positives. And so I think that's where we are setting our spread so that we feel comfortable we will hit that annual contribution margin target that we've guided to, that 5% to 7%, so that those new acquisitions will perform in line with our targets.

Okay. Hey, Curtis, do you have a follow-on question related to marketing?

Yeah, yeah, I did. So it sounds like marketing spend was either increasing or shifting from 3Q to 4Q. I couldn't quite tell, right, because the fixed costs are going up a bit quarter to quarter. So just hoping to square that and, you know, what type of marketing we're putting in the market.

Hi, Curtis. It's Christy. So On marketing, you know, basically our adjusted OpEx, there's three main components, marketing, fixed cost, variable SG&A. Those are all relatively flat between Q3 and what we're guiding to for Q4. In the letter, and I think in the prepared remarks as well, I mentioned that there was some shift between 3Q and 4Q, and that's just some expenses that we had expected in 3Q that are going to actually come through in 4Q. It's not specific to marketing. The other thing about the guide to the $120 million in fixed, or sorry, adjusted OpEx, total adjusted OpEx, that's the dynamic that we've seen in the past, which is when we rebuild inventory, especially at a high rate compared to resales, holding costs that will eventually move to contribution profit when that inventory is sold through burden adjusted OpEx as the inventory is growing. And so that's some of the uptick you're seeing in Q4. We plan to lean into paid marketing a bit starting in Q1.

Yeah, I mean, just to add on to that, I mean, the consistent motion for us throughout the course of the year, given what God said earlier about listing volumes in Q4, is it's a relatively quiet marketing quarter for us, and we lean into more marketing spend in Q1. We expect to do so next year, along with the fact that our spreads are at a level right now where we can make those investments in a cost-effective way. So that's a pretty natural motion for us.

Okay. Thanks very much. I appreciate it.

Thank you. Our next question comes from the line of Dave Lee with J.P. Morgan. Your line is now open.

Great. Thanks for taking the questions. And sorry if this has already been asked. But on Pfister and Burnett, is it right to think that if buyer agent commission changes, it'll be contribution profit dollar neutral for you guys? And then secondly, I know you guys see some color on your plans for early 2024. I'm just curious what kind of macro environment you guys are embedding in your plans, and if current rate environment kind of holds into 2024, do you still target achieving the $50 to $10 billion revenue and net income positive sometime in 2024?

Hey, Dave. Let me take the first part on the Norris, Duff, and Elhanover talk about the macro and Maybe Christy will public break even. We'll do a free-for-here. On the first part, which is the NAR part, your question was, would it be margin neutral to us if the buyer broker commission were to come down? And that's our view. Again, that's a cost item for us. It's not a revenue item. And so we think, you know, worst case, it's neutral to us from a margin perspective. That was easier. Todd, do you want to take the macro question?

Yeah, I think on your macro question, I think there's a couple points, some that I mentioned a moment ago, which are from a market clearance perspective or the pace of resales. That is still above historical norms, excluding 21 and 22, which were outlier years. We are still seeing very healthy pace of resales and a balance of supply and demand. I think the place that we are focused is really monitoring for supplier demand shocks that would then translate through to home price changes. We have not seen this, but one of the advantages of our business model and the ability to adjust spreads rapidly is exactly that, which is if we see a change, we can adapt quickly.

And then just to close things off with ANI breakeven, our framework hasn't changed. The whole organization is focused on returning to cash flow breakeven. The timeline depends on what we're seeing in the housing market, which continues to be dynamic. and we will continue to respond to market signals, and therefore we aren't going to commit to a specific month. As a business, we're always balancing growth, margin, and risk. In 2023, we were focused on risk, which led to reduced growth but outperformance on new book margins. In 2024, we'll continue to balance growth, margin, and risk, and we will track leading real-time metrics. That said, sitting here today, We do believe that doubling volumes from here is achievable, given current spreads, our growing partnership channels, and plans for cost-effective marketing investment in the first half of 2024. Great.

That all makes sense. Thank you.

Thank you. Our next question comes from the line of Ryan Tomasello with KBW. Your line is now open.

Hi, everyone. Thanks for taking the questions. Just to drill down again on OpEx, Any chance you can just provide some absolute guardrails for the level of OPEX needed to support, you know, perhaps a wide range of purchase volume assumptions next year? I guess the $120 million in the fourth quarter, is that something, you know, that obviously doesn't include the marketing spend, but as you mentioned, is certainly being burdened by higher holding costs. So Any just general guardrails relative to the $120 million in 4Q for what is a reasonable expectation for next year?

Hi, Ryan. It's Christy. Thanks for the question. You know, for A&I breakeven, we expect that to happen at $10 billion steady state revenue, meaning acquisitions are roughly equal to resales. And so at $10 billion with 4% to 5% adjusted OpEx, that's what we're marching towards. As I discussed earlier, as we're building revenue, you can have, or sorry, building inventory, you can have buildup in operating expense for the holding costs that you're incurring as your inventory is kind of outpacing your revenue.

I think the one other point to add on to that is if you think about our operating costs in sort of 4Q versus 3Q, taking aside those time adjustments, those are basically flat quarter. So we are, I think, trying to continue to be disciplined about cost management. And to your point, the real change will be in marketing spend.

Got it. And then a follow-up, just to not belabor the point on the commission lawsuits, but in addition to the one question that Nick posed earlier about Another question that we're getting is around the potential disruption to the MLS system and the impact that that could have to open. On the one hand, you could argue that a weaker value proposition to use the MLS could provide more flexibility for sellers to consider an alternative innovative model like Opendoor. And on the other, is it possible that a disruption to the MLS could pose a risk to any data that you rely on? from those databases to power your pricing models? Obviously a dense topic, but just trying to unpack all the different moving pieces here and the puts and takes.

Yep.

So I think If you think about our business model, we're trying to give customers choice. And we're focused on giving transparency to the process and letting them pick the best solution for them. And I think if you look at our MPS scores and sort of how customers have reacted to the product, they love our product. So I think we're very well positioned to continue to offer these products to customers. I think on the data side, obviously we have been building our own data store now for 10 years, and so we feel I think we are almost one of the best positions to capitalize on any data components, especially – so I think we are well positioned on all fronts and whatever unfolds. I do think, as Kerry mentioned, these things likely unfold slowly, but in either a slow unfolding or a fast unfolding, I think we're well positioned for it.

Great, thanks, John.

Thank you. As a reminder, to ask a question at this time, please press star 11 on your touchstone telephone. Our next question comes from the line of Jason Helstein with Oppenheimer and Company. Your line is now open.

Hey, thanks. This is Chad on for Jason. Can you maybe help us quantify the slowdown from rates coming out of the quarter as it relates to the fourth quarter guidance? It kind of sounds like in the letter you're still confident in hitting the 10 billion run rate target at some time in 24. So just kind of trying to understand how you ramp to kind of three times what the fourth quarter revenue is going to be. Thank you.

Yeah, I mean, there are a series of charts in the back of the shareholder letter, actually, if you want. You can take a look at sort of like the pace of market clearance. I think John made this comment earlier. It remains healthy by any historical measure. And we always know it closes seasonally in the back half of the year, but there was a little extra slowdown starting in October on the back of seeing mortgage rates spike up to 8%, maybe 10%, 15% worse than we anticipated. So we reacted to that. We took some moves as we outlined in the shoulder letter, and you're seeing that show up in our guide for Q4. I think the more important point is like where do we go from here and what does that look like for us for 2024? And are we on pace to like hit the volume targets we've been talking about, which is how do we double? How do we go from 1,000 to kind of 2,000 plus per month? And sitting here today, there's really nothing I'm seeing that would suggest we should change course. As I mentioned earlier, we're looking for price stability. We've actually seen that this year. We've seen, you know, very constrained supply, people reluctant to list their homes, pretty resilient buyer demand relative to that constrained supply. And that dynamic has persisted. And we, you know, frankly, are forecasting for length. It will continue to persist for 2024. And that's a good setup for us to value homes, be able to acquire them, and then sell them against that backdrop. Second, we've got seasonality. Coming up here, we're at the sort of seasonal doldrums of residential real estate right now. Those headwinds turn into tailwinds starting in the first part of next year. So those home purchases we make today, as Todd said, we tend to like those a lot, and we'll be listing those in the stronger spring selling season. That's a good thing for volumes. And then on top of that, just a lot of work done this year to take spreads down. A lot of cost work, a lot of work done to improve price accuracy. We've invested a lot of those gains back into spreads to take them down to a level we feel is appropriate for where the market is today. And at that level, we're able to invest more into marketing on a cost-effective basis. Again, that will help amplify volumes in Q1. And we've got partnership channels that are growing that will also be enabled by that. So all those things, frankly, make us feel good about the volume assumptions we're making for 2024. We're always going to operate within a risk framework. We're always going to be responsive to what It's going out of housing. It's very dynamic. The risk management framework is imperative to us. We're always going to be balancing inflows and outflows like we did in fourth quarter in reaction to the mortgage rate spike. But at a high level, we're still on track to continue to increase our volumes.

Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Carrie Wheeler for closing remarks.

Great. Thank you. First of all, thank you for joining us today. As we exit 2023, I just want to say I'm proud of the work that the Open Door team has been doing to be just a stronger, more resilient company. The housing market, for sure, continues to be challenging, but I am confident the changes we've been working on this year we've implemented will benefit for years to come. No doubt about it. We are very focused on getting back to positive cash flow, and we're committed that we're going to manage our cost structure and our balance sheet to ensure that we get there because the opportunity we have in front of us is massive, and we're committed to delivering against it. So thank you for listening to us today, and we look forward to speaking with you all next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.