Offerpad Solutions Inc

Good afternoon, thank you for attending today's OfferPad Third Quarter 2023 Earnings Conference 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. I would now like to pass the conference over to our host, Taylor Giles with Fester Relations. You may go ahead.

Good afternoon and welcome to OfferPad's third quarter 2023 earnings call. I'm joined today by OfferPad's Chairman and Chief Executive Officer, Brian Baer, Chief Financial Officer, Jawad Ahsan, and Senior Vice President of Finance, James Grout. 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 US 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 non-GAAP measures to the comparable GAAP measures are available in the financial tables of the third quarter earnings release on OfferPad's website. With that, I'll turn the call over to Brian.

Good afternoon, and thank you for joining today's call. We are pleased to deliver both top and bottom line results within our expectations, despite the difficult macro environment. We are exceptionally proud of our expanding contribution margin as we expect to move towards sustainable, positive, adjusted EBITDA in 2024. I am truly grateful to our employees, strategic partners, and Offerpad customers who enabled us to meet our guidance and nimbly respond to these historic market conditions. During moments like this, Our vast real estate experience is more important than ever. Before Jawad shares numbers and his insights, I will update you on our perspective on the real estate market and our strategic imperatives. At a high level, buyer affordability, rising mortgage rates, and sellers with existing low mortgage rate loans continues to stress real estate markets on all fronts. However, although inventory levels are down over 20% in most markets, we are focused on the 80% of the buyers and sellers that are transacting. In today's environment, providing multiple solutions for customers is more important than ever. And as you'll hear from us today, we're leveraging our robust end-to-end platform to bring value-added services, solutions, and tools to customers. Most recently, to further support and incentivize buyers of Offerpad homes, we introduced a 4.99% mortgage rate buy-down program on eligible Offerpad-owned homes. This is a powerful tool that allows us to greatly increase the affordability of our homes and motivate buyers. This allows more buyers to afford their dream home while saving thousands in mortgage costs. Initial uptake has been strong, and we expect to see continued traction. Now I'll turn to the three strategic imperatives that guide our roadmap and discuss how we're executing against our objectives. Our first imperative is also our guiding mission, removing the friction from the real estate process. We founded Offerpad eight years ago because we foresaw that digitalization of real estate was inevitable. We understood where the pain points in real estate transactions existed, and we built our platform to solve these problems. With combined decades of real estate expertise, we had a unique insight. Consumers wanted the ease of a digital transaction, but they didn't want to forego the human touch entirely. We set out to build a robust real estate technology foundation combined with local expertise in a seamless end-to-end platform. We created the Offerpad platform focused on what buyers and sellers needed through each step of their unique real estate transaction. Our aim has always been to go above and beyond to deliver a superior experience. In 2023, our customer satisfaction score stands at 91%, and our NPS is 63, which is a remarkable achievement in the real estate world where the average NPS is only 30. We are in the early days of this massive digital transformation and have a lot of exciting work ahead of us. Our pricing engine and underwriting tools, such as OfferComp and Limelight, continue to be more robust. They sit on top of eight years of our proprietary data and machine learning insights. Limelight in particular is propelled by data insights that dissect essential pricing elements, such as neighborhood housing data, numerous macroeconomic factors, and local insights from our team of real estate experts in each of our markets. The powerful analytics behind these tools are enhancing unit economics, enabling us to determine the value of each individual property. LimeLite serves as an excellent illustration of how we harness our extensive data insights and analytic tools to enhance our intelligence with each home we purchase and sell. We've also been working diligently behind the scenes to introduce innovative methods for engaging with customers in real time at the moment they need us. For example, We know that 60% of our customers favor text-based communication, and through the use of AI, we are developing a solution to facilitate 24-7 support while decreasing our operating costs. This advancement will empower us to provide customers with real-time answers to their questions at nearly every stage of their transaction, from pricing to inspections and more. Our second imperative is to continue to make great progress on our asset-light product lines. offering end-to-end services that encompass the entire process of selling, buying, and home ownership. A prime example of this and one of our most rapidly growing offerings is our renovations business. Today, we are one of the largest renovation companies in the United States, having successfully completed over 30,000 renovations on our own behalf. We are leveraging this expertise to extend our reach and recently expanded our offerings to enable third-party businesses to leverage our renovation expertise and efficiency. We gained momentum right out of the gate, and in just a few months, we already have nearly 50 B2B renovation clients in our active markets. In fact, we saw a 127% increase in closed projects in Q3 compared to Q2, and October saw our highest ever pipeline of projects. These B2B customers are plugging into Offerpad renovations to benefit from our competitive pricing, swift turnaround times, high quality work, and streamlined renovation management. We renovate their homes just as if it was an Offerpad-owned property, where every day and every dollar matters. Against the backdrop of a strong and growing renovations enterprise, I am pleased to announce that starting next year, we will also offer renovation services directly to homeowners. Customers will have the opportunity to not only utilize OfferPad's platform for buying and selling their homes, but also to leverage our renovation services for home improvement. With the prevalence of homeowners who are locked into low mortgage rates and less inclined to make a move, our ability to refresh, upgrade, or perform complete renovations on their homes becomes increasingly essential both now and in the years ahead. Enabling direct-to-consumer renovations is yet another instance of harnessing our platform to deliver asset-light services and expanding our market presence through the broader array of customer solutions. In lockstep with growth of our renovations business, we are remaining focused on expanding our supporting technology. This will enable us to provide significant internal efficiencies and deliver insight to onsite crews, B2B customers, and, in the future, homeowners who use our renovation offering. In the early part of next year, we are poised to introduce RenoCaptain, a revolutionary internal workflow designed to provide all users of OfferPad renovations, including field teams, vendors, customers, with real-time insights into the progress of the home's renovation. Looking ahead, We anticipate that renovations will become a substantial portion of business driven by our robust client pipeline, strategic growth plan, and internal proprietary technology, and underpinned by the strength of our end-to-end platform. Another important component of our asset light business model is Direct Plus. This product connects homes that align with the purchasing criteria of both long-term and short-term investors. We grant access to our pre-qualified and screened investor partners, providing them with the opportunity to purchase our top of funnel homes. Equally valued by our investor partners, OfferPad guides the customer throughout the selling process, ensuring a seamless and successful closing for everyone involved. This comes with excellent profit margins for OfferPad with no capital investment from us. Our teams are focused on driving continued growth across all three of our asset light businesses. Direct Plus, Renovate, and Flex Listing Service, which have gained great momentum as they've accounted for 50% of our unit transactions in the past two quarters. Our platform was designed to enable strategic partners to harness our capabilities. And this brings me to our third crucial imperative, expanding our partner ecosystem to enhance OfferPad's reach in terms of both scope and scale. We have longstanding relationships with local, regional, and national partners, including 15 of the top 20 home builders in the U.S., national real estate companies, and third-party real estate agents through our Agent Partnership Program. As of the third quarter, our Agent Partnership Program has generated over 130,000 cash offer requests. We take pride in the fact that more than 65% of those agents continue to request offers on behalf of their clients. On top of those existing partnerships, we recently announced a national program in collaboration with Anywhere Real Estate, formerly known as Realogy, the parent company of renowned real estate brokerage brands and service businesses, including Sensory 21, Coldwell Banker, and Sotheby's. This program extends OfferPad's reach, allowing seller requests from areas outside of OfferPad's coverage to be served by certified affiliated agents with the Anywhere Leads network. We are thrilled that we can support sellers who were previously beyond our reach and ensure they receive excellent service. Three quarters into the year, we are pleased to be delivering against our operating and financial goals. We are grateful to our teams for their proactive mindset and adaptability in responding to this historic macro environment, reinforcing our belief that our robust end-to-end platform represents the future of real estate. We are confident that our roadmap and strategic initiatives are positioning the company for profitable, durable growth and remain committed to creating value for our shareholders. With that, I'll turn the call over to Jawad.