Opendoor Technologies Inc

Good day, and thank you for standing by. Welcome to the Open Door Third Quarter 2024 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. 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 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 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, 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 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. Before we get started, I'd like to take a moment to welcome two new leaders to our leadership team. Celine Freiha joined us earlier this week as our new Chief Financial Officer, And Shrisha Radhakrishna will be joining as our new chief technology and product officer this month. These leaders will bring fresh perspectives and deep expertise, and their track record of discipline, growth, and innovation will help shape our path ahead. I'd also like to thank Christy, who has served as our interim CFO since September of 2022. Christy joined Opendoor in 2016 and has helped guide the company these last eight years, including leading our finance function for the past two. I'm deeply grateful for her partnership and her many lasting contributions to Opendoor. At Opendoor, we continue to see tremendous opportunity to redefine how consumers transact within the massive residential real estate market. Millions of transactions, well over $1 trillion worth, are done offline, mired in a process that is complex, uncertain, stressful, and time-consuming. We're focused on developing innovative products that leverage our purpose-built platform to transform home selling. bringing simplicity, clarity, and ease to consumers. This is no small task, but we're making meaningful progress, having already helped hundreds of thousands of customers move with confidence. Despite a challenging housing market in the third quarter, we delivered acquisition volumes, revenue, contribution profit, and adjusted EBITDA ahead of our guidance, driven by strong execution across the business. We also continue to make progress in developing innovative seller-focused products, Opendoor is widely recognized for our all-cash offer, which provides sellers with simplicity and certainty. While many sellers come to us for our cash offer, there are others who want the opportunity to test the market for price discovery. We've developed our list at Opendoor and our exclusive products so that we can address these sellers. Our long-term vision is that every seller starts their journey with Opendoor. We believe these offerings extend our reach enabling many more sellers to come to us first when selling their home. Both lists of open-door and exclusives are products with economics, both for sellers and for open-door, that are not sensitive to our spread levels and are thus less macro-dependent and are largely capital-light. Additionally, we observe an increase in our net promoter score when these options are surfaced to sellers, an additional proof point that we're addressing a previously unmet consumer need. While all this is early, we are optimistic about the long-term potential of lists with open-door exclusives. Practice changes stemming from the recent National Association of Realtors settlement were implemented during the quarter, enhancing transparency and options for consumers when buying and selling their home. In response to the ruling, Open Door has begun transitioning from directly paying buyer broker commissions to a model that provides buyers with concessions, allowing them to choose how to use those funds, including the option to pay their buyer agent. We anticipate that the impact of this ruling on the broader market is going to evolve over time, and we will adapt our strategy accordingly to best meet the needs of our customers. We continue to contend with a challenged housing market and are making spread decisions with risk management top of mind. Although the Fed implemented a 50 basis point rate cut in September, mortgage rate relief has been short lived. The combination of elevated rates and near record high home prices is prolonging affordability concerns, keeping buyers and sellers on the sidelines. We saw further deterioration in key housing market indicators in the third quarter. Delisting rates continued to climb, and clearance rates declined more than seasonally typical. Overall, the housing market is on track to experience the lowest level of existing home sales since 1995 for a second consecutive year. In response to this step down in the housing market, which we called out last quarter, we raised spreads back in May, and we have continued to operate with elevated spread levels throughout Q3, prioritizing risk management. Higher spreads enable us to underwrite homes at healthy margins, but they do impact our overall acquisition volumes. One of our strengths is our ability to respond to market signals and balance growth versus risk by dynamically adjusting our spread levels. We remain intently focused on reducing net losses and ultimately achieving adjusted net income profitability. To this end, we are committed to taking steps to operate more efficiently. Over the course of this year, we've made significant improvements to our cost structure. In August, we announced the separation of main state, which is expected to provide approximately $35 million in annual cost savings. And today, we announced a headcount reduction of about 300 people, or roughly 17% of our workforce. In addition to reducing our costs, we are flattening our org structure to allow us to move faster and more efficiently. This was a difficult decision and not taken lightly, but it is the right choice for our business. And I'd like to thank all of our departing team members for their hard work and dedication in building Opendoor into what it is today. While the housing environment remains challenging, we are proactively strengthening our business and our offering. We are undeterred by current market conditions and believe that as the market normalizes, we are well positioned to benefit and seize the opportunity to build a generational company. With that, Christy will now review our financial results and guidance.