Opendoor Technologies Inc

Hey everyone, welcome to Open Door's 3Q2026 Financial Open House Earnings Livestream. I'm Michael Judd, Open Door's Head of Investor Relations. A few housekeeping items before we get started. 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 Thank you for joining us. Thank you. Hey, everyone.

I've been doing this job for just over a year, and like all anniversaries, I thought it'd be a good idea to take a second and look at what we've done in the past year. A year ago, I told you we would build a different Opendoor. Faster, stronger, fully committed to our mission of tilting the world in favour of homeowners. Let's see what's changed. Today, our market share of U.S. real estate is up more than four times. We're now over half the percent of the market. We signed over 7,000 contracts in Q3. A year ago, that was just a little over 1,500. In Q3, we shipped more than 500 new features and products across our stack. We had shipped almost nothing that was useful in the weeks before I started. This time last year, we didn't have a single mortgage license. Today, we have 25 state licenses and our mortgage orientation volume is up 5x quarter over quarter and October alone was over half of Q3. Over the last 12 months, we had over a billion, $1 billion in cash now, more later volume. This is 1 billion more than we had done in the previous 12 months. And even with the listings at unprecedented highs, we're selling homes faster than the market every single week. Look, we should talk a bit about the market because if I don't talk about the market now, every follow-up question will be about the macro. It's not going to be a shock to anyone watching this that the market has turned, right? 2025 was the worst year housing had had in a long time. And 2026 was tracking right on top of it through June. And honestly, we would have been just fine with that. But then in Q3, clears just started to collapse and it hasn't come back. In September, Pending Home Sales Index fell to the lowest level it has ever seen since we started recording it. It's lower than it was in April 2020 when going out to tour homes was basically illegal. And mortgage rates are now above 7%. That's more than a full point higher than it was a year ago. and everyone, everyone in housing got hit. Our job is to build a business that can perform better in difficult conditions and we're doing this in three important ways. First, our capital light volume, right? This past week, around half of the first offers our B2C sellers accepted were listing or cashed down more later. That lets us serve more sellers with less of our capital exposed to changes in the market. Second, velocity. The less time we own a home, the less time the market has opportunity to move against us. So we price homes to sell and focus on reducing the time between acquisition and resale. Third, mortgage. When buyers are hard to find, better financing gives them a reason to choose to work with Opendoor. That's why we launched Buy with Opendoor in beta this week. We need to grow, use less capital per transaction and sell homes faster. Those are things we can control and that's what we're focused on. What matters to us is solving the core problems of our business, and those are what we need to focus on. Look, for most of its life, Opendoor has had basically three problems, right? To grow, we had to overpay sellers for their home. To grow, we had to own more homes and take on more risk on our entire inventory. And to grow, we had to hire more and more people. That is a hard business to scale. A year ago, I said we would change this, and I gave you three objectives, right? One for each of these problems. We've made real progress on these objectives, and we're in a really good place on first and third, and we're making progress on the second. Let's go through each of these objectives. Okay, objective one was scale acquisition, right? The first problem was that for Opendoor, growth always meant paying more for homes. To understand our core business opportunity, you need first to understand two numbers. Just two simple numbers. First, in our core markets, nearly one in four Americans who go to sell their home first try to sell at the open door. That's the first number. Second, one in three Americans cry when trying to sell their home the traditional way. Our problem has never been that we don't have enough demand or that people love crying. Our problem has always been that we have not been able to serve them in a good way, right? So, have we scaled acquisitions? The answer is for sure yes, right? Now, I want to be careful because the easy and lazy story here is Opendoor took on more risks and bought more homes than the market turned. That's not what happened, right? And the evidence is obvious when you look at our true seller conversion. I want you to look at this chart. It takes homeowners who got an offer from us and within 90 days either sold to us or listed on the open market and measures how many chose Opendoor at the same period over the same spread. The blue line is this year, the gray lines are 2024 and 2025. What this shows as we're winning more of these sellers at nearly every spread level and we're literally doing three times better in some of these levels. We're winning the market without having to make riskier offers. So how are we doing this? and the answer is we've just built better products. We have built more ways to meet sellers' needs and have made it easier for them to understand their options and make the choice they want for their own lives, right? Sellers can now adjust the offer's lives and make the choice that is good for their families. Look, not that long ago, Around 80% of the assessments we did on homes required an open door employee, and this could take many, many weeks. Today, that 80% is 2%. 98% of the time, you can ask for an offer Monday morning, complete the assessment before noon, and sign a contract before breakfast Tuesday. We help sellers understand our options. We help them move fast. And sometimes we tell them, we're not the best option for you. And that builds trust. Look, these things don't mean that we price every home perfectly. But by building the product the right way, we have managed to do two things that usually don't go hand in hand. We've increased growth and lowered risk. Every other time this company has scaled, it has done by paying more for houses. This time, it didn't. We proved that we can grow without buying growth. That's the single most important thing that has happened over the last year. Our objective one is solid green. Okay, the second problem was that growth meant owning more homes and carrying all the risk, right? We're changing that with our capitalized products. But when we do own a home, we still have to renovate it, price it, and sell it, and we have to do it fast. On objective two, which was our union economics and research velocity, I think we're yellow. We have some work left to do, but things are much better than they were a year ago. Thank you for joining us. We choose to clear. We choose to clear every single time. The decline in late August and September knocked us off track on execution a little bit because we turned our attention to clearance rather than margin improvement. It costs... like something real in a quarter like this, but that's the right way to run this company for the long run. You don't focus on a quarter, you focus on the mission. The economics that come out of this are not great. They're not what we want, but they're better than they would be otherwise because we're currently scaling Opendoor. And we're learning about all the parts of the company that are not built for scale yet, right? We're fixing these things properly as we come across them rather than putting duct tape over cracks in the foundation because what we want to do is build a generational company and not one that just looks good in the short term. Let me give you a couple of examples, because these are things that if we had not changed, no one would have noticed. And the numbers may have looked better for a quarter, but would have been way worse for the long run, right? We fix things that cost us margin this quarter, but are incredibly important for the long run. Let's first talk about renovation. Every real estate company has a manual, usually a physical manual that they renovate or build homes to. Opendoor had one of these until recently as well. It was called the Universal Repair Standard. This manual and things like it are the reason why all homes basically end up looking the same, right? You look at home after you acquired it, and then you apply some universal set of rules to that home. So a home in Raleigh gets the same renovation as a home in Orlando. And this all requires lots of humans doing lots of human things. And if you don't have lots of human doing those things, like it all just breaks. This past quarter, we rebuilt this entire system at Opendoor. We built an AI system that determines a specific repair plan for every single home before we buy it. Machines then draft a renovation scope and hand it to people doing the renovation. This was a lot of work, and because models don't behave perfectly as you build them, the first few homes that hit the market under this model were not built the way we would like them, right? For the last few weeks, this system has been outperforming the old process just amazingly. Another example is resale, right? Every single real estate company ends up with humans managing resale of homes. If they're exceptional, one person can handle somewhere between 100 and 150 homes at a time. That means that as we rescaled our acquisition in Forex, we would have had to increase the number of people managing these acquisitions by Forex. We have done the exact opposite. Look, until August, our resale process was similar to literally everyone else in real estate. we thought we were better at it, but pricing every home we owned basically lived in like a glorified spreadsheets with 70 something columns, right? So every Tuesday a portfolio manager would scroll through like 3000 rows pulling information from different tools and deciding what price to drop and what price to keep and how much. And then somebody would type this into a spreadsheet and into a separate system and then it was all just very weird. But this was actually state of the art for the industry. up until August, but that doesn't scale. Scaling this means adding more people and adding more errors and then adding more people to catch those errors, right? We replaced this entire thing, this single system, where a model recommends an action right in a tool that looks at comps and offer history and then the people keep the judgment, but software does the work. This works amazingly well today. 12 weeks ago, it didn't exist. Mortgage, that's another example, right? Licensing here has taken us longer than we wanted. We can't rush governments but we're making really good progress. Today, when a buyer finances a home through Opendoor and closes it quickly, we can improve our contribution margin on that home significantly. and through buy with Opendoor, which we just launched in Bayer this week, we can earn mortgage revenue even on homes that we never own. Let's put this all together. Improving resale velocity isn't that complicated. You make the homes better, you get better pricing done, you renovate them quickly, and then you buy something people actually want. And then mortgage makes it something they can afford. Better pricing gets the right buyer to act faster. The proof will be in how fast these homes sell and what we make on them when they do so. Look, I don't think we're there yet. We're much better off than we were a year ago, but I think this objective is yellow and we have work to do. Okay, the third problem. The third problem was that growth meant hiring more people. and here like we're clearly green. We're doing exceptionally well and I think we're doing better than any public company I know of. Here's what this looks like. On a trailing 12 month basis, our operating expense per acquired home is down 36% and fixed operating expense per acquired home is down 34%. Opendoor was founded on this idea that you could take a real estate transaction apart, put it together again in a much better way, right? That thesis still holds, but AI fundamentally changes the math. I wanna talk about three things here. First, automated intelligence. Look at this chart. Over the past year, our pricing team's throughput per person is up about two and a half times. Rather than having people spending their days looking at pictures and doing mundane tasks, our people now each manage an army of agents. In July, in July, we had 5,400 homes. That's 5,400 sellers. sitting in a queue waiting for days for a human to confirm the price on their home. Two weeks ago, that queue was zero. Zero and it will remain zero. As far as I can tell, that's the first time in Opendoor's history where we can say that the queue is zero and we expect it to remain zero. Look, this is not unique to pricing. Last year, the most efficient Open Door employee could turn on a few dozen utilities in a week on homes we had bought. Last week, that number was 400. Last year, the most efficient closer to Open Door could close around 135 escrow files. Today, that number is 431. Second, I want to talk about how workflows connect to each other. Opendoor used to have all of the entire industry's fragmentation inside one company. Our title and escrow team had to open a legacy software system just to look up which Opendoor entity was buying a home. Now that entire information is in one system they already use. That's not just in title and escrow, that's across the entire stack. We're doing the same thing across the entire transaction where our people can benefit from having one tool to manage their day. The last part is our shared platform, right? In a fragmented industry, when you improve something, that makes that something better, but doesn't benefit anything else, right? So if you improve acquisition, acquisition gets better, but resale doesn't improve. At Opendoor, when we improve something, it compounds across the transaction, right? The data we use to buy a home, renovate a home, list a home, give a mortgage on a home, close a transaction, it all works together rather than hopping across multiple parts of the business. Look, there is a test being run right now for all companies. When a new model comes out, Does it make you better, or does it make you more vulnerable? For a lot of companies, the honest answer is more vulnerable, right? Because the thing they sell is a thin layer on top of someone else's model, and the next release just eats that layer away. For us, we get better. Everyone has access to the same model, but what they do not have is what we feed them. Every home we have bought, every repair we have scoped, hundreds of millions of listing photos and trillions of other photos over a decade of what our homes have actually sold for and not the misleading data that's publicly available. No one else has our data advantage. And because we're the largest buyer of homes in America, our data advantage is growing. We see inside of homes and we see foundation of homes for hundreds and hundreds and hundreds of homes. and no one else gets that data. A better model makes Opendoor's core economics better. It doesn't just increase our operational leverage, right? This week I sent a note to our entire team, basically wholesale copying Jeff Bezos. There's a famous shareholder letter that he wrote in 2000 where he referenced the Benjamin Graham line that in the short run, the market is a voting machine, but in the long run, it's a weighing machine. Bezos said that he'd rather be weighed. And I also want to put Opendoor on a scale. If there were a machine to weigh Opendoor, I think it would give you five data points about our business. One. Very few people inside or outside Opendoor believed that this would be true a year ago, right? But we've now proven that we can grow without overpaying for houses. Spreads went up this past year and conversion went up even more. We improved the product and the funnel and more sellers chose us. Two. We're generating volume that needs less of our balance sheet. Around half of what sellers are accepting through our D2C funnel right now is listing and cash down more later. We can serve these sellers while carrying much less risk and paying much less in interest. Three, we're supporting more acquisitions at a lower cost per home, down more than a third on both the measures we talked about earlier. Four, we get paid more than once per home, mortgage, tile and escrow. This is an entirely different business model, and we've added it while we're still fixing the old one, right? Now, every home we touch gives us multiple revenue opportunities. This wasn't true before. Five, every new AI model, every single new model that comes up makes us better because we are sitting on data no one else has. So put these things together. Demand that does not require us to pay higher prices, Volume that doesn't require a heavy balance sheet. Growth that does not cause our pecs to go up linearly. A new tech stack that improves itself every single week. A data advantage that is just growing. Look, we are taking market share and making a stronger company while everyone else is backing down. We have spent the past year building a machine and that machine is getting better every single day. We're not done yet. It's not perfect, but it's getting better every single day. So the question is this. Is Opendoor in a better economic condition than it was a year ago? The answer is obviously yes. We told you we would build a faster, stronger, better Opendoor. And what I just shared with you shows that we have. And with that, I will turn to Christy to tell you about the numbers.

Thank you, Kaz. Financial highlights. Third quarter revenue was over $1 billion, up 12% year over year, and in line with the revised expectations we provided in September, despite a weaker housing market. Contribution profit was $34 million, up 70%. We sold 2,728 homes in the quarter up from 2,568 a year ago and purchased 4,865 homes more than four times the 1,169 we purchased in Q3 last year. We ended the quarter with 1,780 homes under contract to purchase, compared with 526 a year ago. Contribution margin was 3.3%, down from 5.8% in Q2, but up from 2.2% a year ago, and in line with the revised expectations we provided in September. Our adjusted EBITDA loss was 31 million, an improvement from a $33 million loss a year ago, but wider than the $4 million loss in Q2, 2026. Most of the sequential decline came from the homes we bought in the spring selling into a much weaker market along with deeper price cuts as we chose to clear rather than hold. We expect margin to decline again in Q4 and will continue selling through the remaining spring acquisitions into Q1. Slower market clearance also showed up in our inventory aging. At quarter end, 18% of listed homes had been on the market for more than 120 days, up from 9% last quarter as clearance slowed, but still well below the market at 30% and the 51% we carried a year ago. We're continuing to move homes through a difficult market, releasing capital and limiting how long we remain exposed to further changes in prices. While homes we purchased before the market slowed continued to weigh on margins, the business we're building is becoming more efficient. On a trailing 12-month basis through September, operations expense per acquired home was $4,000, down 36% from $6,300 a year ago. Fixed operating expense was $37 million in Q3, slightly up from $35 million in Q2. We've also become more efficient at acquiring customers. On a trailing 12-month basis through September, marketing expense per acquired home was $2,800, down 57% from $6,500 a year ago. That efficiency together with our operational improvements gives us confidence to invest more. Earlier this year, we held marketing spend back while strengthening our products and our ability to deliver them at scale. We're now increasing Q4 marketing to around $20 million, up from $5 million in Q3 and above what we planned last quarter. We've improved seller conversion, expanded our capital light offerings, and addressed key bottlenecks using AI to scale underwriting, tailor renovations to buyer demand, and better inform resale pricing. We still need to prove those improvements show up in realized margins, but we're no longer relying on the same manual processes to support higher volume, and we're not loosening offers to buy volume. While others are retreating, we're advancing. We intend to win more sellers, take share, and build a stronger business. We won't let near-term pressure distract us from our long-term opportunity. Turning to the balance sheet, we strengthened our capital position while keeping existing shareholders at the center of those decisions. We ended the third quarter with $910 million in cash and cash equivalents. The August financing was an important part of that and I want to spend a moment on what we accomplished. In August, we raised $650 million through 0% coupon convertible notes due in 2030. After funding a concurrent share repurchase and capped calls, the transaction added approximately $440 million of capital before transaction expenses. We used $135 million to repay our expiring notes of maturity. The transaction reduced shares outstanding by approximately 5% through our first share repurchase as a public company. The capped calls were designed to limit potential future dilution. Together these actions extended our debt maturity profile, added capital to support growth and protected more of the upside for our existing shareholders. Our responsibility is to now put that capital to work productively. For example, cash now more later requires less capital upfront per acquisition, while list with Opendoor lets us serve sellers without buying their homes. As those products grow, we can serve more customers without a proportional increase in inventory. Faster resale complements that shift by releasing capital sooner and reducing the time we're exposed to changes in the market. Together, these give us more capacity to grow with the capital we have. Before turning to guidance, I want to put the opportunity ahead of us into perspective. In the third quarter, we signed more than 7,000 acquisition contracts, representing just over half a percent of home selling activity in our addressable market. That's more than four times our share a year ago, but we're still serving fewer than one in 100 sellers. Even in this slow market, we're seeing roughly 5 million annualized true sellers. Each incremental 10 basis points of market share is roughly 5,000 homes a year, or roughly 1.9 billion of annual transaction value at today's average price. We've added 40 basis points of share in the past year alone. Our own funnel shows how much room we have to serve more of those sellers. Each week, around 9,000 true sellers come to opendoor.com, and we go into contract with around 500. Most of the rest go on to list their homes. By offering more ways to sell, we can help more of the people already coming to us. List with Opendoor, which we launched two weeks ago, lifted first offer conversion by 28% in our tests. We can build a much larger business by meeting the needs of more sellers who are already coming to us. We can also earn more from each customer relationship. Historically, most of our economics have come from buying and reselling homes, complemented by title and escrow. Our emerging mortgage offering allows us to earn more from each relationship while meeting a critical customer need and making the transaction easier. Those services also open up a broader market. Our emerging buy with Opendoor offering can help buyers whether or not they are buying a home from Opendoor. And we see an opportunity to extend title and escrow to customers who aren't buying or selling through Opendoor. Similar to listings, the offerings extend our reach beyond our home acquisition business and create opportunities to earn without taking ownership of a home. addressing more of the sellers who come into our funnel, financing more buyers, and expanding title and escrow to a broader market gives us multiple ways to grow earnings and build towards profitability. That is why we're investing through this market. The opportunity ahead of us is significant, and we're building the products and capabilities to capture it. Now let me turn to the outlook. We're rebuilding Opendoor while the housing market is shifting every week, and that means our near-term results can move significantly. These guideposts reflect what we see today. We'll keep making the right decisions we believe are right for the business, even when they weigh on near-term results. Our focus remains on our long-term mission, tilting the world in favor of homeowners. With that in mind, here's what we expect. We are behind schedule on our goal of reaching positive adjusted net income by the end of 2026, measured on a 12-month go-forward basis. The same also applies to our prior expectation for adjusted EBITDA profitability on a 12-month go-forward basis. We continue to drive toward profitability and we remain focused on closing the gap. But our fourth quarter guideposts reflect the challenging market conditions we see today. On revenue, we expect growth of at least 40% year over year. You can continue to follow acquisition contracts and resale closings on accountable.opendoor.com. On contribution margin, we expect a sequential decline as we continue selling into a difficult market. Our focus remains on moving homes and managing the capital and market exposure associated with holding them. We expect an increase in adjusted operating expenses from Q3, which will be almost entirely driven by investment in growth, including the higher marketing spend I described earlier and increased holding costs as we rebuild inventory. The higher marketing spend also reflects seasonality. Marketing in the fall and winter helps us acquire homes ahead of the spring and summer selling seasons, when buyer demand is typically stronger. Thank you for watching. Together, sequentially lower contribution margin and higher adjusted operating expenses lead to an expected fourth quarter adjusted EBITDA loss of $70 million to $85 million. Comparing year over year, roughly a third of the increase in our expected loss is the additional marketing, and the remaining two thirds is primarily higher holding costs as we've been rebuilding our inventory. We have more work to do. We'll continue to report against the objectives we set and be clear about where we're delivering and where we're behind. With that, Michael, I'll turn it over to you for questions.