Opendoor Technologies Inc

That's what we're building Opendoor for. It's why the results we're sharing today matter. Because every number behind them represents a homeowner who got to focus on what comes next instead of what comes with selling. I'm Michael Judd, Opendoor's Head of Investor Relations. Welcome to Opendoor's fourth quarter 2025 earnings live stream. Details of our results and additional management commentary are available in our earnings release, which can be found at investor.opendoor.com. The following discussion contains forward-looking statements within the meaning of the federal securities laws. All statements other than the 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 under-reliance should not be placed on them. Such forward-looking statements involve risk 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 Open North's most recent annual report on Form 10-K for the year ended December 31, 2025, and other filings with SEC. Any forward-looking statements made on this webcast, 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 reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our website at investor.opendoor.com. With that, let's get into the open house with Kaz and Christy.

Good afternoon, everyone. Early in my career, I used to write a plan that told my team what we were going to get done during any given cycle. Then at the end of the cycle, I would go through the doc and color every sentence of the plan, green, yellow, or red, based on whether we had done what we said we would do and if we were on track to go where we wanted to go. I kind of always found it useful to write things down so you can hold yourself to account. With that in mind, I'd like to remind you of the last financial open house. In my first open house, I told you that we had a four-step plan to turn Opendoor around. We renewed energy. Let's go back in time and listen to what I said. So here's our four-step plan to channel that energy. First, by the end of next year, we will drive Opendoor to break even. We think about this in terms of adjusted net income on a 12-month go-forward basis. That means Opendoor will start generating cash and will never be forced to raise equity ever again. Second, we will drive significant positive unit economics while increasing the velocity at which we transact in homes. This includes launching financial services like mortgage. Third, as we increase our unit economics, we will change the company's focus from primarily building channels to transacting directly with buyers and sellers. We're also going to focus on reducing our days in possession rather than arbitrarily increasing spread, which has had genuine significant negative consequences for us. Fourth, once we've accomplished the first three steps, we're going to focus on allowing buyers and sellers to transact on Opendoor without having to buy or sell from Opendoor. This is going to significantly lower our capital risk, but more importantly, it's going to give folks options they want. Today, I want to grade Opendoor against these four steps, and then I'll give you some details. Here's the bottom line. We did what we said we would do. But let's go through this line by line. So we're on track for our first step. We're driving Opendoor to be adjusted to income positive by the end of 2026 on a 12-month go-forward basis. The goal is simple. Start by generating cash and never be forced to raise equity ever again. Second, since September, we've increased our acquisition velocity by 300%. We bought 537 homes last week alone. In the last week of the third quarter, we did only 128. And we grew while we drove significant positive unit economics. This improvement is a result of deliberate change to our product, our pricing strategy, and our operations. Most importantly, our October 2025 cohort, which is the first full cohort under Open Door 2.0. And it's the first one with enough sell-through data. is performing really well. I'll get back to this in a second. Third line. We grew our DTC acquisition contracts while reducing our average days in possession. Comparing this last week to the last week of the third quarter, we've grown our DTC acquisitions by almost 700% and reduced our days in possession by almost 25%. Fourth line. we've made it easier for sellers to choose the path that works best for them. And increasingly, they're choosing our capital-like product, Cash+. In the last week of Q3, Cash+, was about 19% of our total contracts. Last week, it was 35%, up a much higher volume. To give you a sense, Cash+, was over 600% bigger last week than it was in the last week of Q3. This is the first step towards our goal of allowing buyers and sellers to eventually transact directly with each other. Christy is going to go through all the details of all the financials, but before she does, I want to say this. We laid out a plan for you. We're going to turn this company around, and we laid that plan out during Open Door 2.0's first open house. That plan is working. We're green all across. We're already delivering results and are on track to deliver against our mission. In a minute, I'm going to tell you a lot about our product changes and all the things we've done since Q3. I'm really proud of how fast our team is moving and how much we're shipping. And the list I'll tell you about is a public CEO's dream. It sounds good in a script and it looks amazing in a pitch deck. But look, I know what this sounds like. New products, expanded TAM, ops improvement, pricing efficiencies, and a bunch of business school words like strategic operationalization of North Star and Paradigm ships with best-in-class synergy. Oh, flywheel. Look, I get it. Every public company does a stupid dance that pretends folks can't look at the slope of a graph. One of my favorite investors, Sir John Templeton, used to say, the four most dangerous words in investing are, this time it's different. So I'm not going to sit here and say random school words and ask you to believe that this time it's different. This time, I'm going to show you. Our October acquisition cohort. which is the first cohort of Opendoor 2.0 that has had reasonable sell-through data, is on track to be the most profitable October cohort in company history. Again, when it comes to the key metric that matters, our contribution margin, October 2025 is on track to be the most profitable October since Opendoor was incorporated. And we achieved this in the middle of the most aggressive market expansion in Opendoor's history. Given that this isn't really the strongest housing market, this performance, I think, shows a structural shift in how we operate. A shift that I genuinely think will be durable across macro cycles. We are no longer a prop desk. We're now a market maker. And I want to put a finer point on this cohort. What makes this cohort significant isn't just the margin level. It's the shape of the cohort. From 10% to 50% sold through, our margin degradation relative to home price appreciation has been the lowest of any cohort in our history. Not any October cohort, any cohort period. That the October cohort is going so well is not a plan. It's a proof point. The product launches I'm going to talk to you about aren't promises of things that might work. They're the explanation for why October happened and why it's repeatable. Now, look, because we're committed to transparency, let me get ahead of a couple of things. October was not our largest cohort by volume. But it was about double the size of what we were doing just a few months ago. We're not getting lucky on a few homes in a friendly market. And given how the past few weeks have gone, I believe we're on track to significantly increase our acquisition size as we said we would do. What October shows is that the structural changes we made under Open Door 2.0 are working. And then we're compounding those learnings into every single cohort going forward. We have a lot left to prove. I know that. But for the first time, we're not asking you to take our word for it. This is a new company. Look, the way I think about my job is that my job is to build Open Door as though it's a product. Just like Tesla builds robots that build cars, my job is to build the tools and the systems inside Opendoor that help us build a great product. In the last few months, we've made a great deal of progress on this front. I don't want to spend a lot of time talking about this, but I kind of want to take a second to talk about the most important part of it. As Vinod Khosla says, the team you build is the company you build. not the plan you make. Today, 18 people report to me at Opendoor. Of those 18, 10 didn't even work at Opendoor a year ago. Our 10K filing has a list of our executive team, and you can take a look at it. Not a single one of those people on that list was in our last filing. Since I joined Opendoor, we have a new chief operating officer, a new CFO, a new president, a new chief growth officer, a new chief people officer, and a new chief business officer. This is a world-class leadership team that I would put up against any other tech company. And on top of this, Opendoor 2.0 is the single most AI-pilled company in the public market that I know of. Let me give you an example. Not that long ago, after we bought a home, someone on our team would sit at their desk and manually pull up data from five different systems, things like property records, inspection notes, HOA docs, pricing history, contract terms, stuff like that. And they would copy these things field by field into a seller disclosure PDF. It took hours per home every single time. Last week, someone at Opendoor shipped an AI workflow that does all of this kind of automatically with no humans in the loop. It queries our data warehouse, cross-references inspection history, and generates a plain English disclosure summary, fills a compliance PDF, and then sends it out for review. But here's the best part. Other companies talk about how AI-native their engineers are. The person I just talked about, that person is not an engineer. He works at our ops team. He built this in his spare time in a week. No ticket field, no sprint planned. No one asked him to do this. He understood this simple fact. It's wartime. Our primary weapon is our ability to prompt machines to create a new world. And he's not the only person doing this. Our ops team, sales team, compliance teams, they're all building their own tools now. Now, if this is what our ops team does, I want you to imagine what our engineers are up to. So when I say we default to AI, I don't mean engineers use Copilot. That's not what I mean. Opendoor is a different type of company. It's a company where everyone, everyone is learning how to think like an engineer. Okay, with that, let's talk about what we built. We shipped a lot in Q4. I'll try to move through this fast, but I want you to see how what we shipped caused the October results. Okay, we shipped across three fronts. Better products, bigger markets, and stronger margins. And we did this, well, faster. First, we made our products better for buyers and sellers. For years, years, Opendoor's product was a one-size-fits-all product. You want to sell a home? Here's an offer. Take it or leave it. But look, all sellers are not the same. Someone with 80% equity in their home doesn't have the same needs as someone with 20%. But under the old model, both of these folks paid the same fee, which means that we were taking on risk that neither side wanted. The seller didn't need it, and we didn't want it, but the product forced it. That's not a pricing problem. It's not an underwriting problem. It's a product problem. So we fixed it. We now put the ability to change the offer that fits your needs into your hands. You choose how much cash you want up front, and the fee adjusts. Take less up front, pay less in fees, often a lot less. Every dollar that a seller does not need up front is a dollar that we don't need to put at risk, and a dollar that they don't need to pay for. So they pay less and we make more. It's a win-win. And it also allows us to serve customers that we could have never served before. This risk reduction, it allows us to do something else too. It allows us to tighten spreads on our core cash product. It's early, but from best I can tell, this is working. We're seeing demand that we would have never seen before. And because we're seeing a lot of extra demand, we also launched our self-assessment app. With our self-assessment app, the seller takes pictures of their home and AI does the assessment work. No humans needed. And because there are no humans in the loop, in January, we nearly doubled the number of homes that we assessed compared to September. And so far this month, about half the homes we've assessed have needed zero people to show up at your doorstep. On top of this, we expanded our buyer products, Open Door Checkout. As of this morning, it is now live in 40 states. Open Door Checkout embeds mortgage pre-approval directly. It also supports Open Door's Euro's Home Credit, where we give the brave men and women of America's Armed Forces $4,000 towards closing costs of a home. Open Door Checkout also includes the Open Door Guarantee, It allows for free cancellation, warranty, and early move-in. We also launched our seller guarantee. When a seller sells us a house using Cash Plus, they now get a chance to make sure they like how we are selling the home. If they don't, they can just undo the transaction and take the home back by paying us a low restock guarantee. Okay, that was the core product. Outside the core product, we also expanded our growth levers. To start, we dramatically expanded how many people we could serve by expanding our geo coverage and our buy box. It took Opendoor from 2015 to 2025 to become available as an option for about one third of the homes in the US, 10 years. Opendoor 2.0 almost tripled that in about 10 weeks. Thanks to AI, our product went from being available to about one to every three homeowners to being available to nearly every homeowner in the lower 48. Now, you would expect that that kind of rapid expansion would reduce risk. Sloppy underwriting, margin compression, operational blowups. We saw the opposite. You'll hear Christy talk about our margin guide points in a bit. But the new system is working, and it's already generating thousands of incremental qualified leads per week with zero incremental marketing spend. Making this work well required us to build across almost 200 MLS data sets, coordinate over 100 brokerage regions, and expose 150 standardized attributes. This was hard work. But we believe software should not be limited by zip codes. And as we expanded our product, we also significantly improved our data ingestion. We now have a nearly real-time data ingestion with over 1,000 pipelines. They serve our new market-agnostic pricing tools, and we also have a new ML model that predicts customer conversion propensity at the time of underwriting. It uses like a dozen different data points, so we can best target our sales and marketing efforts. And because we have all these new potential customers, we also focus on making sure we can grow profitably. I want to tell you something a little counterintuitive. Usually CEOs get in front of investors and say, we're focused on cutting costs. And usually that doesn't work. And actually it increases costs. So we didn't do that. We didn't focus on cutting costs to improve margins. We focused on improving the product and taking pride in our code. And the costs started disappearing, kind of under-owned. Look, Products frequently get better by removing things, not adding them, by deleting code, not writing it. So we deleted a lot of things. They just weren't needed. Last quarter, I talked to you about the actual debt that was weighing down the company. We're now focused on a different kind of debt, but one that is just genuinely equally pernicious. There's a concept in engineering called tech debt. It's the accumulated cost of every shortcut, every extra layer, every microservice that was added for no goddamn reason. This tech debt across the entire stack is the reason that it's 2026 and connecting an office printer still feels a little like defusing a bomb. And honestly, before the recent changes, Opendoor wasn't that much better than your printer. We weren't just carrying tech debt. We were also carrying organizational debt. And the interest payments on these bad decisions were just killing us. So we started paying this down, and the results are just wonderful. When Opendoor entered 2025, Our annual runway costs on hosting was $12 million a year. Exiting 2025, Opendoor 2.0's cost on hosting infrastructure is less than $5 million a year. We haven't just significantly cut the cost of providing our products to our customers, we've also made the product better. We also significantly increased the sample set used in our valuation model while decreasing the cost This means that the runtime in our model was reduced by about 50%, from 12 hours to five and a half hours. The entire pipeline can now run in a script that's about 50 lines of code, and the feature building DAGs are now 90% cheaper. This saves us at least one million a year. We also replaced third-party tools with in-house vision models for thinking through home conditions. Not only did this save us a few million dollars in backfill costs for large-scale experiments, it also brought a core AI capability fully in-house and cut the processing time for 100,000 listings from 34 hours to just four. Cheaper, better, faster. On top of this, we also cut over a million dollars in costs by replacing SaaS tools with more cost-effective and genuinely better AI alternative. And we stopped paying for tools we barely used. Land and expand SaaS no longer works inside Opendoor. And we didn't just cut costs and focus on better infrastructure. We also invested in advanced ML models and data-driven pricing strategies. They're improving our margins per home while maintaining or actually improving our conversion rate. Our home sale pricing is now powered by our new ML model that avoids Opendoor's previous policy of just blanketed price drops. The model now helps us make targeted pricing decisions for every single home. We also built a new home-level days in possession model using real demand signals. I think this is going to increase our dispersion by about 2x. Okay, that's a lot. Let's take a step back. Look, I opened this call by grading Opendoor against the plan that we laid out last quarter. Green, yellow, red. We're not cowering. We're going to keep doing this every single quarter. You can track our acquisition contracts and our progress in real time at accountable.opendoor.com. We're going to revisit this every single quarter just like we did right now. And we're going to make it reflect our path to profitability. As we learn more, we'll tell you more. You can see the results of our work, what we ship, and whether it moves the needle. Please hold us to it. We're asking you to hold us accountable because this matters. There are millions of families in this country where the experience of buying or selling a home is so bad, so slow, so uncertain. that people who want to do it just don't. This is a hard problem, but we're going to fix it. And for the first time, we have the team, technology, and the proof points to actually do it. If you have questions about anything, DM me on X. Seriously, DM me on X. I'll try to answer your questions. We're not hiding behind consultants or scripted callbacks. That's not how we operate. Christy's going to walk you through the numbers. But to steal a bit of her thunder, the numbers are good. Christy?

Thank you, Kaz. Bottom line, we're executing. Last quarter, we laid out three goals. Scale acquisitions, improve unit economics and resale velocity, and build operating leverage, and we delivered on all three. We increased acquisitions 46% from the third quarter. Our October 2025 acquisition contract cohort is over 50% sold through or in resale contract. This represents over a 2X improvement in resale velocity compared to October 2024, and a roughly 50% improvement from October 2023. At 50% sold through, this cohort is yielding the highest contribution margins for an October acquisition cohort in company history. And we delivered all of this while reducing fixed operating expenses and holding trailing 12-month variable operations expense flat as a percentage of revenue. Our fourth quarter results reflect the early days of Open Door 2.0. While we implemented the operational changes CAS described, it's important to note that 94% of the homes we sold in Q4 were acquired before October. We were clearing the old book while building the new one with higher quality homes. In the fourth quarter, we purchased 1,706 homes, an increase of 46% from Q3. This marked an important inflection point as we shifted from the high spread posture of the first three quarters to a more tailored approach. We provided stronger offers for higher quality homes with greater expected resale velocity and maintained higher spread for lower quality homes with elevated risk and slower resale clearance expectations. We delivered revenue of $736 million, representing a 20% quarter-over-quarter decline, meaningfully better than our guidepost of a 35% quarter-over-quarter decline. We sold through more aged inventory than initially forecasted, a direct result of the resale velocity improvements we've made. As anticipated, our margins face near-term pressure as we work through legacy inventory. Gap gross profit was $57 million in Q4 compared to $66 million in Q3. Gap gross margin was 7.7% of 50 basis points sequentially. Contribution profit was $7 million and contribution margin was 1% compared to contribution profit of $20 million and contribution margin of 2.2% in Q3. This sequential decline reflects the continued clearing of older, lower-quality inventory acquired during the prior high-sped strategy and Q3's historically low acquisition volumes, leaving us with minimal new inventory to improve the mix. Adjusted EBITDA loss was $43 million compared to $33 million in Q3 and exceeded the favorable end of our guidance range of a high $40s to mid-$50 million loss. Net loss for the fourth quarter was $1.1 billion compared to $90 million in Q3. This included a $933 million non-cash loss from last quarter's convertible note refinancing. Adjusted net loss, which excludes that item, totaled $62 million compared to $61 million in Q3. Turning to our balance sheet and capital structure, we ended the quarter with $962 million in unrestricted cash and $133 million of equity invested in homes. We held 2,867 homes at quarter end, representing $925 million in net inventory. Our non-recourse asset-backed borrowing capacity remains robust at $7.2 billion, with total committed borrowing capacity of $1.6 billion. These facilities, built over years of partnership with our lenders, provided us the flexibility to scale as we execute our growth plan. Last earnings call, we announced the refinancing of the majority of our convertible notes with equity, eliminating a near-term repayment trigger. We reduced our cash interest burden, and we issued the warrants dividend to align our shareholders directly with the upside we're working to create. The foundation is set for Open Door 2.0 operating model, and now we're focused on delivery. As we introduced last quarter, we are executing against three management objectives we believe are key to reaching profitability. The table in our earnings release shows our progress against each objective. Let me walk you through the highlights. First, scale acquisitions. We increased homes purchased by 46% quarter over quarter, from 1,169 homes in Q3 to 1,706 homes in Q4. Last week, we signed 537 acquisition contracts from 236 contracts at the time of our last earnings call. You can continue to track our weekly progress on our dashboard at accountable.opendoor.com. Second, improve unit economics and resale velocity. We made significant progress on resale velocity this quarter. The percentage of open-door homes on the market for greater than 120 days decreased from 51% at the end of Q3 to 33% at the end of Q4, an 18 percentage point improvement in a single quarter. This reflects the operational changes we've made to move homes faster. better pricing, more robust monitoring system, and an improved buyer experience through products like Open Door Checkout. In addition, the margin performance and resale velocity of the October acquisition cohort demonstrates the improvements we've made in pricing and selection. I also want to be clear about what this means for our go-forward strategy. October's margins thus far have come in above our long-term target range. That's a good problem to have, but you should not expect every quarter to look like October on a margin basis. You should expect us to reinvest that spread advantage into growth. faster terms, broader coverage, and more competitive offers, while we aim to maintain contribution margins within our target range. You can track our product, feature, and partnership launches on accountable.opendoor.com to see how we're continuing to build velocity into the business. Third, build operating leverage. On our last earnings call, we committed to holding fixed operating expenses flat and trailing 12-month operations expense, the variable component of our operating expenses, flat or down as a percentage of revenue. We achieved both goals. Fixed operating expenses were 35 million in Q4 2025 compared to 37 million in Q3 2025 and 43 million in Q4 2024. down $2 million quarter over quarter, and $8 million year over year. Our trailing 12-month operations expense as a percentage of trailing 12-month revenue held steady at 1.3% in Q4. As we scale acquisitions from this lower cost base, we expect meaningful operating leverage to emerge in 2026. These three objectives remain the foundation of our path to profitability, and we're executing against them with discipline, transparency, As I said last quarter, you can't build a great business in a spreadsheet. You build it by shipping product, operating with discipline, and learning from the market. Now let me give you some guideposts for Q1 and the year ahead. Acquisitions. Our profitability framework remains unchanged. We're targeting approximately 6,000 quarterly home acquisitions as we exit Q4 2026. As we've learned more in production, we're refining our acquisition trajectory to be more weighted to the back half of the year. We're investing Q1 and Q2 in improving how the funnel operates to scale more efficiently. This means refining conversion, sharpening pricing, and developing adjacent services to bolster unit economics. You'll also notice we've updated how we present accountable.opendoor.com. We replaced the cumulative projections chart with a single view that shows weekly actuals, a fitted trend line with its slope, and a projected range for where we plan to be. Cumulative charts can mask what actually matters, whether we're accelerating and whether we're progressing towards our year-end targets. This view shows you both. We'll update the projected range each quarter as we learn more. On revenue, we expect a decrease of approximately 10% quarter over quarter. This is a direct function of entering Q4 with low inventory levels due to the prior high-spread acquisition strategy and the successful clearing of aged inventory in Q4. We're focused on scaling acquisitions throughout Q1 to rebuild inventory with higher-quality homes that underpin our improved unit economics. Contribution margin. The mix of old inventory versus fresh inventory drives margins, and Q1 2026 will reflect this shift. We made a concerted push in Q4 to clear legacy inventory. The homes we're selling in Q1 2026 are more representative of our new model. Higher quality and faster turns. Our contribution margin bottomed out in September and has been improving every month since. We expect to exit Q1 with the highest contribution margin we've posted since Q2 2024. Finally, on adjusted EBITDA, we expect Q1 2026 adjusted EBITDA loss in the low to mid 30 millions. This represents continued sequential improvement as we maintain cost discipline while simultaneously investing in automation and product velocity. Last quarter, we showed you the blueprint. This quarter, the house is going up. Our goal remains adjusted net income profitability by the end of this year on a 12-month go-forward basis. We have a lot of work ahead of us, but the proof points are building, and we intend to keep earning your confidence every quarter. With that, Michael, I'll turn it over to you for questions.