New post available from the research blog breaking down Opendoor's Q1 2024 earnings report, including unit economics of recent purchase cohorts and outlook for the year ahead. Read it here: https://lnkd.in/gfkDK2EM
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Opendoor's Q1 results exceeded the high end of guidance across revenue, Contribution Margin, and Adjusted EBITDA. Purchase volume increased significantly year-over-year, with the company purchasing 3,458 homes in Q1, up 98% vs Q1 2023. However, this is still well below peak 2022 purchase volumes of 5,000+ homes per month.
The company has guided to purchase 4,500+ homes in Q2 2024, which would represent a substantial increase over the 2,680 purchased in Q2 2023. Opendoor also established a new $200 million ATM (at-the-market) equity program, providing financial flexibility to opportunistically fund growth over the next three years.
Opendoor has been able to sustain improved unit economics while growing purchase volume, generating $25k+ in spread profit per home across properties purchased in the second half of 2023. Detailed metro-level profit breakdowns of the most recent cohorts are available for paid subscribers at the end of this article.
A key industry development during the quarter was the proposed settlement of antitrust lawsuits against the National Association of Realtors (NAR) related to agent commissions. Under the settlement, effective August 2024, seller's agents could no longer specify buyer's agent commissions on MLS listings, and buyers would negotiate compensation directly with their agent. Opendoor's management believes the NAR settlement will provide consumers with more transparency and choice, driving a trend towards lower transaction costs. CEO Carrie Wheeler stated, "If commissions do decline, Opendoor may be able to pass these cost savings back to consumers in the form of lower spreads," potentially resulting in more direct transactions through platforms like Opendoor. The company's business model doesn't rely on buyer's agent commissions, which are currently a cost when reselling homes.
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