Offerpad Solutions Inc

Thank you for attending today's OfferPad fourth quarter and full year 2021 earnings conference call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host. Stephanie Layton, Senior Director of Investor Relations at Offerpad. Stephanie, please go ahead.

Thank you, and good afternoon, everyone. Welcome to Offerpad Solutions' fourth quarter and full year 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 filings with the U.S. 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 contribution profit and margin, contribution profit and margin after interest, adjusted net income, 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 OfferCAD's non-GAAP measures to the comparable GAAP measures are available in the financial tables of the fourth quarter and full year 2021 earnings release on OfferCAD's website. I'll now turn the call over to Brian.

Thank you, Stephanie. It's great speaking with you all today. 2021 was our most successful year yet. I'm excited to provide details about our growth and accomplishments last year. I will also share more about our focus in 2022 and speak to some of the market dynamics we are seeing in the industry. Mike will cover our fourth quarter and full year 2021 financial results and first quarter 2022 expectations. In 2021, we delivered on our financial and operational goals and exceeded expectations. We nearly doubled our reach by expanding services to include a total of approximately 1,500 cities and towns, and we introduced OfferPad to customers across the Midwest. Our operations team led the way, acquiring 156% more homes in 2021 compared to the prior year. And our renovations team set a new record, completing over 8,000 improvement projects, 137% increase over 2020. Since OfferPad was founded, we have completed home renovations totaling nearly $300 million. This means new homeowners benefit from things like upgraded finishes, energy efficient appliances, and other improvements that extend the life of the home. Neighborhoods benefit from repairs and upgrades in their community. We are doing more than just buying and selling homes. We are revitalizing homes, increasing their longevity, and creating welcoming environments for homeowners. The key to our continued success over the past year was growing in a responsible manner while maintaining high quality, customizable, and viable service offerings for our customers. In 2021, we earned an outstanding customer satisfaction rating of 93%. OperaPad has seen market demand increase as more customers seek the convenience, certainty, and control our offerings provide. We repeatedly hear from customers how our services and team members have improved their home ownership experience. With so many aspects of our daily lives simplified, from purchasing everyday products on our phone to groceries arriving at our front door, there is no question consumers want a more convenient homeownership experience. The increase in overall iBuying penetration is clear evidence. Transactional data show that in the third quarter of 2021, iBuying market share reached 1.9% of all U.S. home sales, nearly doubling the previous high of 1% set in the second quarter of 2021. In three markets, Greensboro, Phoenix, and Tucson, iBuying reached 10% market share, highlighting the potential growth of this industry. As a lean iBuyer in the country, OperaPad is exceptionally well positioned to capitalize on this potential. While our strategy and discipline are key elements to our success, I can't underestimate the importance of our incredible team. Despite the tight labor market in 2021, Our culture and commitment to our people allowed us to double our team from 499 employees to more than 1,000 by year end. Being part of the transformation that provides tangible value to customers and allows team members to implement innovative ideas is a rewarding experience and quality we celebrate. Our ability to attract and retain top talent will be important straight through 2022 as we expect the labor market will remain tight. In 2022, we plan to continue executing on our three-pronged growth strategy focused on market expansion, increased market penetration, and additional ancillary services. In terms of market expansion, we plan to add eight new markets this year for a total of 29 markets by year end. As previously announced, we are entering three new markets in California this year with San Bernardino and Riverside opening this month. Sacramento is on target to open later in the first quarter of 2022. In our existing markets, we plan to increase penetration by serving new zip codes in and around our existing service areas and to incorporate higher price point homes into our buy box. For example, in the fourth quarter of 2021, we added 66 zip codes to our service area in and around Nashville, resulting in a 48% increase to our Nashville service territory. Similar expansion plans are slated for 2022 and other existing markets. We're also expanding our Platinum Home offering. This program allows higher price point purchases with controls around the number of purchases during each market's initial launch. Homes in this program will require additional review and approval during the underwriting process and receive upgraded renovations. Our ability to expand our buy box into higher price point homes with the potential for extensive remodeling is possible because of our highly skilled and efficient renovation teams. Expansion of our service territory and buy box in existing markets are both examples of our market evolution from new to mature. When we enter a new market, we start by hiring our local leadership team and establishing relationships with local vendors. As we build, we add our internal renovation department and we gradually expand our geographic scope. As a company, we embrace learning and believe that we are smarter with every customer we serve. The first three to four months of the market are truly about establishing a presence and building a foundation, with the next nine months focused on optimizing our execution. After the first year, we transition from learning and building to pushing for increased scale and profitability. We then use our fully mature markets with an established presence to test new products and services. Our third growth driver in the expansion of our ancillary service offerings include the launch of OfferPad home loans into all markets and new partnerships. In January, we announced an expansion of our partnership with Taylor Morrison to all of our mutual markets nationwide. This partnership offers buyers of a new Taylor Morrison home additional flexibility with their closing date and extended stay options past closing when selling their existing home to Offerpad. We greatly value our relationship with the more than 50 home builders we currently partner with to improve the experience for our mutual customers. Part of our 2022 goals is to enhance our buyer engagement. We frequently talk about our express and flex offerings in simplifying the sales side of the transaction, but we also serve customers looking to buy a home. Often, customers start their real estate journey by looking for a new home they would like to buy before beginning the process of selling their current home. By enhancing our ability to meet customers at the beginning of their journey, we can offer better support with multiple products, including Offerpad home loans, and truly provide a one-stop shop experience. In 2022, we will introduce our enhanced instant access program, making it easier for potential homeowners to directly access Offerpad properties. With thousands of homes available, our properties provide another venue to engage with our new customers. In addition to our current flex team members, we are hiring buyer experts to provide specialized support to customers. We currently pay a co-broke commission on approximately 86% of the Offerpad homes we sell. By enhancing customers' ability to reach us directly when buying a home, We can reduce our costs, expand our margins, and provide customers more opportunities to save through our bundle rewards program. Turning to the broader real estate industry, we expect the market to remain strong in 2022. With the current supply and demand imbalance expected to remain, buyers will likely continue to experience an ongoing seller's market. Our expectations in 2022 assume that many of the fundamentals driving the 2021 market will remain. This includes tight supply levels, increasing yet historically low mortgage rates, and wage growth acceleration. Importantly, our growth and expectations for achieving sustainable profitability are a result of multidimensional strategy that's not reliant on any singular market condition. While wage growth acceleration and low unemployment are positive tailwinds, The unprecedented home price appreciation in 2021 further restricted first-time homebuyers' ability to access affordable housing. At Offerpad, we believe in doing the right thing for our people, our customers, our shareholders, and our communities. This means using our tools and talents to push for change to create opportunities for more and more people. Through our membership on the Freddie Mac Affordable Housing Advisory Council and with the National Fair Housing Alliance, our goal is to promote access to affordable housing and to ensure equal housing opportunity for all people. As you can see, we have innovative plans for our future and a foundation and team well positioned to meet our goals. We succeeded through the historic uncertainty and economic shutdown of 2020, then we navigated one of the most aggressive growth markets in 2021. These achievements give me confidence that our agility and flexibility of our strategy will allow us to successfully navigate future market changes. I'll now turn the call over to Mike.