Offerpad Solutions Inc

Hello and welcome to the Offerpad third quarter 2021 conference call. My name is Brika and I'll be today's call operator. Following the presentation today, we will have a Q&A session. If you would like to register a question, please press star followed by the number one on your telephone keypads. I'll now turn the call over to Stephanie Leighton, Senior Director of Investor Relations at Offerpad. Stephanie, please go ahead.

Thank you, and good afternoon, everyone. Welcome to OfferPad Solutions' third quarter 2021 earnings call. Our Chairman and Chief Executive Officer, Brian Baer, and Chief Financial Officer, Mike Burnett, are here with me today. During the call today, management will make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain, and events could differ significantly from management's expectations. Please refer to the risks, uncertainties, and other factors relating to the company's business described in our quarterly report on Form 10-Q for the three months ended September 30, 2021, to be filed with the U.S. Securities and Exchange Commission on or about November 10, 2021, and subsequent filings OfferPad makes with the Securities and Exchange Commission. Except as required by applicable law, OfferPad does not intend to update or alter forward-looking statements. whether as a result of new information, future events, or otherwise. On today's call, management will refer to certain non-GAAP financial measures, including adjusted net loss, contribution profit and margin, contribution profit and margin after interest, as well as adjusted EBITDA. These metrics exclude certain items discussed in our earnings release under the heading non-GAAP financial measures. The reconciliations of OfferPad's non-GAAP measures to the comparable GAAP measures are available in the financial tables of the third quarter 2021 quarterly report on Form 10-Q and earnings release on OfferPad's website at investor.offerpad.com. I'll now turn the call over to Brian.

Thank you, Stephanie. It's great to be speaking with you all today. I'm excited to share details about the exceptional progress we made during our first quarter as a public company. I will also share more about our strategy going forward, and I will speak to some of the market dynamics we're seeing in the industry. Mike will cover our third quarter financial results and full year 2021 expectations. Our business model, strategy, and experience set us apart from others in the industry. At Offerpad, we've created a flexible business model designed to adapt in any real estate cycle. Our business model seeks to provide a full-service solution center for homeowners. This customer-centric solution center approach extends beyond the buying and selling transaction to provide easy access to other services such as mortgage, title, and bundle rewards. It also provides options for individuals to create customizable solutions. Our express cash offer and our flex listing services are great examples where customers can choose which solution is best for their needs. The end-to-end solution center approach to address the variety of homeowner needs creates a diversified platform. This, in turn, can increase our growth, our opportunity for multiple engagements with each customer, and expand our margins. Our strategy is to grow our platform by expanding into new markets, increasing our penetration in existing markets, and building upon ancillary services we currently offer. Our focus is on growing rapidly in a responsible and disciplined manner that balance our goal of increasing market share with achieving long-term sustainable profitability. Our team's deep real estate knowledge and local real estate expertise sets us apart. We combine this expertise with data analytics and technology to better anticipate and account for changing market conditions. This approach has led to our rigorous underwriting and a strong track record for accurately estimating what our homes will ultimately sell for. I'm very proud that from the time we launched OperaPad in 2015 through the first half of this year, we've achieved less than 1% variance between our aggregate estimated prices and actual sales prices. We believe our proven ability to anticipate and adapt to changing market conditions and to account for those changes in our underwriting is supported by our vast real estate depth in each local market. We are continuously assessing data such as interest and mortgage rates and household income fluctuations in addition to sentiment to ensure our underwriting is appropriately projecting and adjusting for anticipated changes in market conditions. A great example of our proprietary insight comes from an automated weekly market report summarizing real-time information from our local teams regarding individual market dynamics. This data is then reviewed by our leadership and analytics team and is used to adjust our underwriting algorithm and process to address increasing or decreasing risk. Our differentiated approach, including our diversified solution center model, our strategy for disciplined growth, and our deep real estate expertise is transforming the residential real estate experience for customers, providing an easier, more efficient way to buy and sell a home. Our financial results this quarter speak to the success we are already seeing from our team's ability to execute. During the third quarter, we launched four new markets, Indianapolis, St. Louis, Kansas City, and Columbia, with Columbus, Ohio launched in October. As of today, we have launched seven new markets in 2021, allowing us to operate in 21 markets in nearly 1500 cities and towns across the country. Between 2021 and 2022 combined, we expect to add a total of approximately 15 new markets. We also expanded our mix of ancillary services in particular markets to include a customer rewards program. OfferPad Bundle Rewards allows customers to receive multiple discounts when both buying and selling a home with OfferPad and by obtaining a home loan through OfferPad Home Loans. Since launching this in the third quarter, customers in 10 out of our 21 markets have utilized this product offering. By bundling services, customers save money and we increase our engagement with those customers. While the first three quarters of this year have exceeded expectations, driven in part by one of the hottest real estate markets in recent history, we recognize there are lingering challenges caused by the adjustments society has made to address the pandemic. In particular, like many, we've experienced supply chain constraints. To mitigate our exposure, we have adjusted our renovation plans on a home-by-home, market-by-market basis. This can, for example, prevent a particular back-ordered appliance from impacting our ability to finish renovating and listing a home for sale. We have also adjusted our acquisition strategy to limit purchasing homes where particular supplies are key to ensure a timely sale of the home. By adjusting our acquisition strategy and the scope of our renovations, we have been able to limit the time delays from supply chain constraints to about five to 10 additional days on average, depending on the market. Even with this extension, as of September 30th, 2021, our average time from acquisition to sale remained below our 100-day target, and our inventory owned more than 180 days remained low at less than 1%. We are also aware of the labor challenges present in the broader market. At OfferPad, we have been successful in attracting new talent across nearly all of our markets and functions, with recruiting challenges largely limited to our renovation crews. Our strategy to employ our renovation team members continues to be an advantage, even at the top pool for new members' titans. Our year-to-year turnover rate within our renovation teams is less than half the 2020 average turnover rate in the construction industry, demonstrating the strength of our culture. Company-wide, our ability to attract new talent remains strong. In August alone, we hired more than 100 new team members. In the third quarter of 2021, we increased the size of our team by 25%, bringing our total team to more than 800 employees. While we're not immune to the challenges many are facing, our flexibility, adaptability, and differentiated approach have proven invaluable in mitigating the uncertainties currently present in the macro environment. Looking forward, we expect the broader real estate market, including home price appreciation, will continue to normalize through the remainder of this year and in 2022. One of the benefits of the iBuying platform is the advantages of a cash offer with no showings and a control over the timing of the transaction become more apparent in a cooler market where the traditional model can take 90 plus days to sell a home. Our team has experience navigating all types of market cycles, and we are confident in our ability to adapt going forward. In summary, our solution center model, disciplined growth strategy, and deep real estate expertise differentiated our tech-enabled platform, and we believe are key to achieving long-term, sustainable profitability and delivering shareholder value. Our distinctive qualities and exceptional team have already proven effective in meeting our goals. I'm confident we will continue to execute and grow rapidly as we bring simpler ways to buy and sell a home to more customers. I'll now turn the call over to Mike.