Offerpad Solutions Inc

Good afternoon and welcome to OfferPad's first quarter 2026 earnings conference call. My name is Christine Nguyen and I will be your conference operator today. At this time, all participant lines have been placed on mute to prevent any background noise. After management's prepared remarks, we will open the call for a question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, Press star one again. With that, I'll turn the call over to Courtney Reed, OfferPad's Vice President of Investor Relations and Communications. Courtney, please go ahead.

Good afternoon and welcome to OfferPad's first quarter 2026 earnings call. 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 and events could differ significantly from management's expectations. Please refer to the risks, uncertainties, and other factors related 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 and under the heading non-GAAP financial measures. The reconciliations of OfferPad non-GAAP measures to the comparable GAAP measures are available in the financial tables of the first quarter earnings release on OfferPad's website. With that, I'll turn the call over to Brian Baer, Chairman and Chief Executive Officer.

Thank you, Courtney, and thank you to everyone for joining us. On the call with me today is our Chief Financial Officer, Peter Knagg. Offerpad is executing. Over the past two years, we have evolved from a single product company into a multi-solution real estate platform, and that platform is now producing measurable results. Today, that platform includes Cash Offer, Cash Offer Marketplace, Brokerage Services, and Renovate. The macro environment has shifted since our last call. Geopolitical uncertainty has increased, including ongoing conflict in the Middle East, and interest rates have moved higher in response. Transaction volumes remain below historical norms and affordability continues to limit mobility. For some sellers, this brings uncertainty around timing and proceeds, keeping many on the sidelines. We continue to refine and enhance our model through diversified revenue streams, multiple solutions, disciplined capital allocation, and AI-driven precision, positioning us to operate effectively in environments like this. While some sellers are still cautious, we are seeing greater stabilization with increased engagement and clear alignment on pricing and expectations. That shift is supporting improved conversion and we expect it to remain a tailwind through the remainder of 2026. With all that said, our cash offer strategy is not dependent on the macro backdrop changing. We run this business as a capital allocator first and an operator second. Every transaction competes for capital. If it does not meet our return thresholds, we do not transact. Our philosophy is simple. Volume follows return, not the other way around. Throughout 2025, that meant deliberately widening spreads, tightening our buy box, and slowing acquisitions rather than chasing volume into an unstable market. That approach pressured short-term volume, but it strengthened the portfolio and preserved optionality. As we move through 2026, We are deploying capital with the same discipline. The result is a portfolio that is cleaner, faster turning, and better positioned for returns than at any other point in recent history. Our aged inventory, homes beyond their target period of hold time, stands today at less than 30 homes, down from fewer than 60 at the end of quarter four. For remaining homes, we deployed buy-down mortgage rate incentives along with pulling other levers to accelerate movement. In addition, we made an important shift in how we operate. By moving to a post-inspection offer model, we are entering commitments with greater certainty, which means stronger transaction quality, more efficient capital deployment, and a better experience for sellers. But the bigger narrative is what is happening at the top of our funnel. Seller engagement with OfferPath is growing, and more importantly, sellers are finding solutions. Our multi-solution platform means that when a cash offer is not the right fit, We have options ready, the cash offer marketplace or through our brokerage services with an agent-led listing path. More sellers are staying in our ecosystem, converting across more pathways and leaving with a solution that works for their situation. Conversion is what we are focused on, the quality and completeness of every seller engagement. That should position us to scale transaction volume with confidence through the remainder of 2026. A key part of the execution and central to how we move forward is AI. Real estate is a data-intensive, decision-dense industry, and we have spent the last decade building the foundation to do this right. Thousands of transactions, deep market coverage, rich data across pricing, renovations, and homeowner behavior. We believe this is a real operating advantage. With Scout and Henry, we are turning it into a faster, smarter, and more consistent operating model across stages of the transaction. From the moment a seller first engages with OfferPad to the final disposition of properties in our portfolio, AI will be embedded in that decision. That is a fundamentally different way to operate and should be a durable advantage that compounds with every home we touch. Let me start with what it's producing. From January through March, following the deployment of Scout across all operating markets, we saw over a 200 basis point improvement in home contracting rates. Let me explain how. Scout is an internally developed AI-powered homeowner intake and routing platform that is being rolled out to better understand our seller intent by cross-referencing seller provided data with third-party sources, public records, and importantly, our own proprietary transaction history to improve acquisition accuracy and routing decisions before every single offer is made. Looking ahead, we are building Scout to make our homeowner intake experience fully dynamic and adaptive in real time by personalizing the seller journey based on the solutions available to them. A seller whose home falls outside of acquisition criteria will not be shown a cash offer path. Instead, they will be routed to the solution that works for them. guided by our customer solutions advisors every step of the way. That capability is an active development and is a core part of how Scout scales in 2026. Scout also enhances our call center operations with AI-driven conversation analysis, evaluating homeowner interactions in near real time, giving our advisors live coaching and provides leadership visibility into performance trends and customer intent across thousands of conversations each month. Additionally, that intelligence has been extended upstream into our marketing demand generation, improving how we manage spend, optimize performance, and drive efficiency across channels. As a result, cost per qualified lead is down 37% year over year. We're reaching more sellers more efficiently in the markets where we can win. Where Scout powers the seller journey, Henry will help govern the asset. We are expanding Henry's capabilities throughout 2026. deliberately and in stages. AI-driven property inspection and renovation estimation tools are now live, powered by computer vision models that analyze property images and inspection data to generate renovation cost estimates based on our historical outcomes. Looking ahead, Henry will guide decisions across renovation scope, listing price, holding time, and overall disposition strategy for every home in the portfolio. A core part of what Henry will enable is a new segmentation framework that combines macro market dynamics with property level signals, allowing us to move beyond traditional static pricing approaches. This data-driven model will enhance how we assess demand and liquidity, giving us more consistent and scalable ways to make pricing and acquisition decisions across markets. As we scale this across the platform, it's being designed to improve turn times, strengthen risk management, and drive more disciplined, consistent returns over time. Together, Scout and Henry are the operating architecture of OfferPad's future that will compound with every transaction we complete. On our last call, I shared more details on our focus with our four solution platform. Next, I'll go into updates and progress on each. Cash Offer remains our core differentiator. It gives sellers speed, certainty, and flexibility. and it continues to be the foundation of everything we build on top of. In Q1, cash offer continued to perform within our underwriting guardrails. And with Henry coming online, we expect our acquisition precision is only going to improve. The cash offer marketplace grew over 60% year-over-year in 2025 and remains one of the most capital-efficient revenue streams we operate, generating fee income without balance sheet deployment. The residential investment landscape may be shifting, with regulatory and capital market dynamics continuing to influence how institutional buyers participate in residential real estate. That environment remains fluid, and we are well positioned by expanding our network designed for depth and durability, diversified across buyer segments so no single regulatory or market shift could disrupt the channel. Led by Rich Ford, we are executing against that strategy with discipline. As the network matures, we expect the cash offer marketplace to become a meaningful contributor to gross profit in the second half of 2026. Offerpad's brokerage services is a core driver of our platform. In quarter one, we referred more qualified sellers to HomePro agents than in all of 2025, and one-third of cash offer requests now come through our agent partnership program. This capital-light model expands our reach, lowers acquisition costs, and drives profitability. Offerpad Renovate broke records nearly every quarter in 2025, and we are raising the bar in 2026. In quarter one, Renovate generated $5.7 million in revenue compared to $5.3 million in quarter one of 2025, continuing to deliver margins of 20% to 30% with no balance sheet capital required. Each solution serves a distinct need, generates its own revenue, and strengthens the whole. ensuring more sellers find a path with us. That breadth improves conversion, reduces risk, and keeps more customers in our ecosystem from first touch to close. Our focus remains on building a profitable, scalable business with superior returns on capital and a platform that performs across market cycles. In closing, I want to speak plainly about where we stand and what I believe. I believe we have built a strong home selling platform. I believe our four solutions give sellers and partners more control, more certainty, and more options than traditional alternatives. I believe the technology we are building in Scout and Henry will make us smarter, faster, and more precise with every single transaction we complete. And I believe the people at Offerpad, the team that has worked tirelessly to build this platform, enhance our model, and serve our customers are among the best in the industry. Our near-term objective remains approximately 1,000 transactions per quarter, the level of which the business reaches adjusted EBITDA break even, and the foundation from which we scale. We are building towards that milestone, and the progress we are making every quarter gives us confidence in that direction. But let me state again, 1,000 transactions per quarter is not the finish line. It's the foundation. The platform we have built is designed to scale And as it does, every incremental transaction carries more operating leverage, more data, and more intelligence back into the system. What we have built over the last two years is not a set of improvements. It is fundamentally different operating model. The window to understand what OfferPad is becoming before the market fully reflects it is right now. And I intend to use every day to close that gap. I'll now turn the call over to Peter.