Offerpad Solutions Inc

good afternoon thank you for attending today's offer pad fourth quarter 2022 earnings call my name is hannah 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'll now turn the call over to stephanie layton vice president of investor relations and esg at offerpad stephanie

Thank you, and good afternoon, everyone. Welcome to OfferPad Solutions' fourth quarter and full year 2022 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. These metrics exclude certain items discussed in our earnings release under the heading Non-GAAP Financial Measures. The reconciliation of OfferPad's non-gap measures to the comparable gap measures are available on the financial tables of the fourth quarter and full year 2022 earnings release on OfferPad's website. I'll now turn the call over to Brian.

Thanks, Stephanie. Hey, everyone. Appreciate you joining us today. I'll cover some company highlights, operational updates, market trends, and our 2023 strategy. Mike will share our fourth quarter 2022 financial results and our first quarter expectations. Last year was truly a tale of two halves, with the striking difference in market conditions from the first to the second half of the year. Still, we had some remarkable accomplishments in 2022. Last year, we sold over 10,000 homes in a year for the first time in OfferPat's history, completed 9,985 renovation projects, increased our cash offer requests from the agent partnership program by 90% year over year, and increased our asset-light flex transactions, including listing, buying, and mortgages by 90% year-over-year. However, the historic interest rate increases and decline in affordability left us with two significant challenges in the fourth quarter. First was selling inventory acquired prior to the market shift. Second was securing additional capital to strengthen our balance sheet. I'm happy to report we made significant progress on both. We have reduced our inventory of homes acquired prior to September 1st from a peak of nearly 4,000 to less than 225 legacy homes active on the market. This brings us near the end of our legacy inventory disposition process and puts us in a strong position to sell through the vast majority of the remaining inventory acquired during the first half of the year by our target completion date of March 31st, 2023. In addition, Homes acquired after September 1st, 2022 that have sold are recording positive returns. Early results from these homes are consistent with our expectation for returns in more of a normalized market. I don't believe any amount of experience, technology or data could have predicted the rapid rise in mortgage rates, but navigating the climate provided valuable learnings we can use going forward. For example, With homes purchased in the fourth quarter, we adjusted the risk premium for factors like proximity to new builds and outlying areas, where price reductions have been more significant. The return to positive performance on homes purchased late last year reflects our underwriting adjustments, updated assumptions, and increased spreads as we continuously adapt. Second, on February 1st, we announced receipt of an additional $90 million through a private placement. We received participation from early investors, including Roberto Stella, an OfferPad board member, and First American Financial, more recent existing investors and new investors. I increased my personal investment in the company by participating as well. The mere ability to raise capital in today's challenging macro environment is notable. In addition, participation by current shareholders demonstrates continued confidence in our strategy and our ability to drive long-term value for our customers and shareholders. With these two challenges largely behind us, we are ready to move forward and capitalize on future opportunities. The good news is the opportunities are near. We are starting to see signs of improving and stabilizing real estate market conditions. In addition to a significant amount of publicly available data, we review our internal data including sentiment on a weekly basis. For the past four weeks, Our internal data has improved in all major categories. For example, the number of homes with no offers has been steadily decreasing, and showing activity has been increasing. Many of our market experts are now labeling their market condition as improving or stable instead of slowing. Most of our market experts are citing positive shift in the active to pending ratio, as well as a decrease in depreciation in accurately priced homes that are not directly competing with new builds. While markets are seeing price drops slowly, concessions are rising. There are a few markets still indicating declining prices, including Atlanta, Charlotte, and Phoenix. Notably, townhomes and condos are currently attracting more interest than single-family homes in Columbia, Columbus, Dallas, Orlando, and Raleigh, likely due to affordability. Also, a number of markets indicated that homes priced below $350,000 have the best overall velocity. Denver and Dallas have shown considerable improvement in sentiment. Overall, we are hearing more optimism from our market experts, although it is still early and durability of this trend is unclear. Before I talk about what's new with our 2023 plan, I want to review what's not. Our vision to provide a comprehensive platform for all things home has not changed. We have said from the beginning, we are more than just an iBuyer. Our mission is to be a one-stop solution center where people can address all of their real estate needs. We continue to believe that owning the entirety of the transaction is the best way to achieve our goal of simplifying the homeownership experience for customers. By providing one customer-centric source to buy, sell, finance, and renovate a home, we can continue to grow our company and our ability to increase the value of our platform. Our ultimate goal and long-term vision remain unchanged. but we are constantly evolving our strategy to keep pace with changing conditions and shifting customer needs. In 2023, this means we plan to retain and build our foundational cash offer, listing service, and mortgage business. We strongly grow our footprint with an increased focus on market penetration and expand our business-to-business partnerships and services, allowing OfferPat to grow our asset-light offerings. Seamlessly assisting customers from start to finish, finding a new home, selling their current home, financing the purchase, and providing a free local move removes friction from a home ownership experience. It also improves our financial health by increasing the number of transactions per customer and reducing our customer acquisition costs. While cash offers are a cornerstone of our foundation, it is truly the combination of our cash offers, listing service, and mortgage business that provide the simplicity and control customers want. Our access to top of funnel, Sophisticated renovation department, real estate expertise, and customer solution center approach differentiate our model. In 2023, we will focus on increasing our engagement with each customer to enhance our value proposition and support our financial goals. Turning to our growth strategy, in 2023, we expect to accelerate our acquisition volume with a focus on increasing penetration in more affordable markets. In response to the broader real estate market slowdown, we reduced the pace of our acquisition and the size of our team. Mike will provide more details regarding our cost reduction efforts and right sizing. As part of the reset, we will not be acquiring homes in California at this time. Our engagement in California will be limited to renovation projects, allowing us to focus our resources on more affordable and established markets. We will look to build our acquisition volume on a market-by-market basis, targeting homes with price points near the median. Finally, a key pillar of our 2023 strategy will be developing our business-to-business partnerships and services. In December 2022, we extended our renovation services to other businesses. Now, more homeowners and companies can utilize OperaPath's renovation department to update their portfolio of homes for rent or to sell. We have already completed over 200 projects under our renovations as a service business model. This asset-like service leverages our existing logistics, operation, and skill sets. We are also expanding our relationship with other home buyers. Our new Direct Plus program allows other cash buyers and single-family rental companies to purchase homes directly from a homeowner, seamlessly matching cash buyers with sellers. We've said this program will allow OfferPad to help more homeowners sell, even if the home is outside our existing markets. The service fee for this program presents another asset-light revenue stream, while the program itself can expand our ability to reach more customers. I expect 2023 will be an exciting year as we dive into the next evolution of our business. While change and innovation are a given, we commit to moving forward in a manner that stays true to our guiding principles. That means balancing our goals to attain growth and sustainable profitability, striving for the best-in-class operational execution, and building upon our foundation of real estate expertise with innovative technology fueling scale. No matter what market cycle we are in or how fast we transition, we will look to the heart of who we are, our mission, our vision, and our strengths to propel us forward. I'll now turn the call over to Mike.