Opendoor Technologies Inc

Thank you for standing by and welcome to Open Doors, fourth quarter, 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. I would now like to hand the call over to Kimberly Niehaus, 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 websites. 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 conditions, 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 factor section of Opendoor's most recent annual report on Form 10-K for the year ended December 31, 2023, 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 metrics, 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 Frazier, President of Capital and Open Exchange. For Open Door 2023 was a year of focus, execution, and results. Despite a dynamic macro environment marked by the lowest level of home sales since 1995, the team focused on controlling what would get control, and we made meaningful progress. We grew our acquisition volume sequentially every quarter and tripled our market share from Q1 to Q4. Our new book of inventory generated contribution margin of 8.3% in the year, demonstrating the health of our more recent acquisitions. We also made improvements to our tooling, technology, and processes to make our platform more efficient, which resulted in a year-over-year reduction of nearly 30% in adjusted operating expenses in Q4, excluding the reduction in our advertising expense. With these improvements, we now enter 2024 with the foundation in place to rescale the business and build a future of sustained profitable growth. Last month marked Opendoor's 10-year anniversary. Since our founding, we've made it possible to sell your house with the tap of a button, something unthinkable a decade ago. We've built the largest e-commerce platform for residential real estate and have served over 250,000 customers across 50 markets. And we're committed to building a product suite to become the place where every seller can start their home selling journey in a way that the traditional process cannot provide with simplicity and certainty. Looking to 2024, we're excited about our ability to reach and attract more sellers to our platform, namely through increased advertising spend, continued growth of our partnership channels, and more attractive spread levels. Last year, we reduced our marketing spend by over 60% versus the prior year as elevated spreads made our marketing investments less efficient. Despite these reductions, we've maintained our aided awareness, a testament to the effectiveness and efficiency of our creative advertising efforts. In 2024, we plan to ramp our total marketing spend to widen the top of our funnel and reach more sellers. And we're spending more creatively. Last Sunday during the Super Bowl, we live streamed the Couch family getting an open-door cash offer on their home in Atlanta during halftime, proving just how easy and quick it is to sell to us. Acquisition from our partnership channels, which includes online real estate platforms, home builders, and agents, continue to increase in the fourth quarter, up 35% versus Q3 and up over 140% since Q1. These partnerships have effectively positioned us as the branded cash offer for residential real estate and are a true win-win. Our offering enhances the selling experience of our partners' platforms to their customers and also provides us with a source of acquisitions and customers and an attractive fixed spend. We expect volumes from this channel to continue to grow on an absolute basis in 2024. Finally, as a reminder, our spreads are an important lever in managing seller conversion and mitigating risk on our platform. We meaningfully reduced spreads during 2023, which resulted in improved conversion and acquisition volumes throughout the year. Looking ahead, based on where we are at today, we expect to see an increase in contract volume late in Q1, which would translate to sequential acquisition volume growth in Q2. Christy will speak to our outlook next, but I want to quickly address our goal of returning to positive adjusted net income. We have strong tailwinds at our back, but we're still facing ongoing macro uncertainty. Mortgage rates remain volatile. We're acting on lessons we've learned in recent years and taking a prudent approach to balancing growth and profitability while also operating within our risk management framework. We expect to make significant progress in both scaling acquisition and resale volumes and meaningfully reducing our losses this year. However, we don't anticipate reaching positive adjusted net income for a full quarter in 2024. We are focused on driving sustainable growth, and our entire business is organized around durably getting back to positive ANI. I am proud of what our team's accomplished in the last year. We've emerged smarter, leaner, and energized, and we are building a platform that over the long term has the potential to transform the way millions sell and buy real estate. Today, we stand alone in not only what we offer, but also the scale at which we are able to do so, and we're just getting started. Christy will now review our financial results and guidance.