Offerpad Solutions Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 5, 2025

There are 9 speakers on the call.

Operator

Good afternoon, and thank you for attending today's Offerpad First Quarter twenty twenty five Earnings Conference Call. My name is Jayla, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'd now like to turn the conference over to our host, Courtney Reed. Courtney, you may proceed.

Speaker 1

Good afternoon, and welcome to Offerpad's first quarter twenty twenty five earnings call. I'm joined today by Offerpad's Chairman and Chief Executive Officer, Brian Baer and Chief Financial Officer, Peter Kanag. 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.

Speaker 1

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.

Speaker 1

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.

Speaker 2

Thank you, Courtney. Let's start with a quick look at Q1 results, then I'll share how our continued efforts are laying the foundation. So we're built for today's environment and ready to accelerate as volume returns to more typical levels. In Q1, we met the midpoint of our revenue guidance, driven by a balanced mix of offerings. Our cash offer program performed as expected, while our asset light services including the B2B renovate business, Direct Plus Buyer program and agent partnership program contributed significantly to the top and bottom line.

Speaker 2

Highlighting the strength of our renovate business, we delivered a record quarter generating $5,300,000 in revenue, representing an annualized run rate of approximately $20,000,000 This marks the highest quarterly total since the launch of the product and further solidifies RenovATE as a key driver of growth going forward. And today, we're excited to announce a new partnership with Auction.com. Offerpad RenovATE will become a preferred provider of renovation services for buyers on their platform from local community developers to large institutions. It's a meaningful step forward as we help buyers transform properties into move in ready homes, expand our renovation business and deliver greater value to buyers, sellers and communities across the country. As we scale renovate and strengthen our core offerings, we're also prioritizing diversification through high margin revenue streams, streamlining operations and managing resources with discipline.

Speaker 2

Together, these efforts are positioning us well to reach positive adjusted EBITDA and drive sustainable long term growth. The housing market continues to be shaped by sustained macroeconomic pressures that have been building for some time. Elevated mortgage rates and persistent affordability challenges have kept transaction volumes near historic lows and new tariff developments are adding a fresh uncertainty and anxiety for consumers weighing major financial decisions. These headwinds are not new. They've been unfolding over an extended period, but their impact is becoming even more visible across the housing sector.

Speaker 2

Higher borrowing costs, limited affordable inventory and broader economic uncertainty are all contributing to greater cost among buyers and sellers. Although the environment is directly impacting overall transaction flow, we've maintained a strong focus on managing our top of funnel and demand for the cash offer continues to grow. Offer requests rose 33% quarter over quarter, and website traffic steadily increased month over month, showing that homeowners are actively seeking out the certainty and control we provide. The rise in organic consumer activity also helped lower our cost per lead, reinforcing the strength of our model and brand. Our commitment to providing the best way to buy and sell a home has never wavered regardless of market conditions.

Speaker 2

Since 2015, we've built our business around the strength of our foundational cash offer while continually introducing new solutions that give customers more control, clarity and confidence. That mission continues today, a series of purposeful updates aimed to enhancing the customer experience and expanding the value we deliver alongside our agent partners. It starts with how we send our offers. Powered by proprietary data, machine learning and real time market trends, our Citrus Value technology generates offer ranges in minutes and allows sellers to schedule inspections on their terms, reducing friction and creating a smoother experience. We've also made the inspection process faster and more efficient.

Speaker 2

And once the contract is signed, price lock kicks in, our commitment that the offer won't change giving sellers added confidence. After rolling out these improvements in Q4, we saw immediate traction. That momentum continued into Q1 with thousands of living room appointments, a strong sign our approach is working. While this process has been deployed through direct channels, it's laying the groundwork to extend the same experience to our agent partners, building a framework for better performance, stronger conversion and product expansion. This is just the beginning and we're energized by what's ahead.

Speaker 2

As we enhance our solutions, we're unlocking new ways for customers to take control of their journey and creating even more opportunities for agent partners to thrive alongside us. Before I turn the call over to Peter to cover the financials, I want to take a moment to highlight a recent announcement we're excited about. We welcome Donna Corley to Offerpad's Board of Directors. Donna brings nearly thirty years of housing finance experience, most recently serving as Executive Vice President and Head of the Single Family Business at Freddie Mac. She will serve as the Chair of the Audit Committee and as a member of the Nominating and Governance Committee.

Speaker 2

Her strategic insight and deep financial expertise will be instrumental as we continue to strengthen our foundation and execute on our long term vision. In summary, we're executing with focus and intention by strengthening our cash offer customer journey, expanding high margin services and laying a strong foundation. So we're not only operating for today's market, but positioned to accelerate as transaction volumes normalize. With a disciplined approach to operations and a growing set of flexible customer first solutions built around our cash offer, we're positioning Offerpad to capture future demand, deliver stronger performance and drive sustainable long term growth. With that, I'll turn it over to Peter.

Speaker 3

Thank you, Brian. Over the past several months, we've remained focused on strengthening the business through thoughtful cost efficiencies, operational improvements and targeted process enhancements. In April, we implemented significant changes expected to drive further operating expense reductions throughout the remainder of 2025. Our refined customer experience process is also accelerating response times, resulting in higher customer engagement and inspection volume. These initiatives support our broader strategy of growing revenue on a more efficient foundation, ensuring financial resilience across a range of market conditions.

Speaker 3

At the end of the first quarter, we held six seventy one homes in inventory with only 13% aged over one hundred and eighty days and not under contract, an improvement from 22% at year end. This progress is expected to support higher margins in Q2. In addition, we have been selectively ramping up acquisition volumes by focusing on targeted buy boxes and stronger market segments, setting us up for increased home sales and better alignment with seasonal trends and market dynamics. During the first quarter, we acquired four fifty four homes, an 18% increase from the fourth quarter consistent with our disciplined approach to inventory management. While our cash offer business remains a key driver of revenue, our asset light services including Renovate, Direct Plus and the agent partnership program have become an increasingly meaningful contributor to margin.

Speaker 3

Over the past year, more than 40% of our contribution profit after interest has come from asset light services, a trend that continued in the first quarter. First quarter revenue totaled $161,000,000 in line with guidance with four sixty homes sold. Revenue declined eight percent quarter over quarter and homes sold decreased 9%, primarily reflecting the strategic reduction in acquisition pace during the middle and latter part of last year. Net loss for the quarter was $15,100,000 a 14% improvement compared to the same period in 2024. Homes sold in the first quarter had an average time to cash of one hundred and sixty five days, consistent with our expectations following acquisition adjustments in the second half of twenty twenty four.

Speaker 3

With the trough of the inventory transition behind us, we anticipate sequential improvements in time to cash throughout the second quarter and into the back half of the year. Gross margin for the quarter was 6.5%, generating $10,500,000 in gross profit. Operating expenses, excluding property related costs, totaled $16,400,000 a $1,700,000 sequential improvement and then $11,400,000 year over year reduction, driven by improved advertising effectiveness, expansion of the agent partnership program and ongoing cost management efforts. Through a relentless focus on cost efficiency, we've taken significant steps towards profitability. Over the past twenty four months, we have reduced annual operating expenses by approximately $115,000,000 and we continue to make strong progress in 2025 by identifying and removing additional costs.

Speaker 3

You should anticipate further improvements based on the actions we executed in April and those still underway as we maintain our disciplined focus on cost and process efficiencies. We will provide additional updates on these efforts next quarter. Adjusted EBITDA loss for the first quarter was $7,800,000 a sequential improvement of 32% or $3,700,000 As of the quarter end, unrestricted cash totaled $31,000,000 with total liquidity exceeding $60,000,000 when including the net value of our carried inventory. I also want to highlight that we are making continued progress on capital market opportunities beyond our core asset backed facilities. With active discussions underway across multiple groups, we remain cautiously optimistic that these conversations will continue to advance.

Speaker 3

Additionally, to be prepared for the possibility that we do not bring in new capital, we are developing plans for restructuring alternatives and options. We expect these to include more significant cost reductions, product and operational changes focused on reductions in working capital requirements and other actions to enhance the preservation of cash. Looking ahead, we expect second quarter revenue to be in the range of $160,000,000 to 190,000,000 with 500 to five fifty homes sold. We also anticipate sequential improvements in adjusted EBITDA as we continue to drive operational leverage. As we move further into 2025, we remain focused on increasing acquisition activity, continued growth of our asset light lines of business, maintaining disciplined cost management and positioning Offerpad for long term stability and growth.

Speaker 3

Thank you. We will now open the call for questions.

Operator

As a reminder, you're using a speakerphone, please remember to pick up your headset before asking a question. All questions are limited to one question and one follow-up. After which, you may reenter the queue Our first question comes from Nick Jones with the company Citizens Financial Group. Nick, your line is now open.

Speaker 3

Great. Thanks for taking the questions.

Speaker 4

I have two. I guess the first one on the acquisition pace of homes. Kinda given the seasonality of the industry, as we try to model out the rest of the year and try to kinda think how you would strategically acquire homes, is it I mean, should we be kind of assuming that, the bulk of the acquisitions are gonna kinda happen early in 2Q, slow down into 3Q, and then, like, pick back up again in 4Q given the seasonal pattern and wanting to pick things up when it kind of are typically lower? And then I have

Speaker 5

a follow-up on kind of

Speaker 3

private listings. Sure. Hey, So there's really two dynamics going on. Yes, of course, we expect that there's seasonality, and that will impact the volumes to some extent. But the second is, as we've discussed in prior calls, we are ramping up or we went down to lower intentionally down to lower acquisition volumes in third and fourth quarter.

Speaker 3

While we did a number of things, including some operational changes, And as we move out of that, we have been acquiring now in first quarter at higher volumes. You're going to you can see in the guidance that those cohorts some of the homes in those cohorts will convert into sold homes in second quarter and expect that trend to continue. So our expectation is we continue as we talked about before, we continue to see 1,000 homes per quarter as a North Star, alongside continued cost outs and alongside growth in our asset light services that, altogether will take us towards EBITDA profitability as we move through the next few quarters. But just to get back to your original question, yes, we do expect there to be increased volumes as we move through the year.

Speaker 2

And I'll just come in and say, from a market and real estate perspective, we're still selectively buying right now. We're still seeing affordability concerns, things we've talked about with premier affordability, but buyer demand just in general. And so we're looking for homes in the interior that still have pockets that we're seeing good transaction volume in those areas. And so some of the outlying areas, we're seeing very, very low transaction volume and buyer demand. And so we're selectively obviously, some markets are better than others.

Speaker 2

But in each market, we're looking for pockets where we're seeing decent activity on the market transaction activity that is.

Operator

The next question comes from Dave K. Lee with the company JPMorgan.

Speaker 5

Thanks for taking my questions. I have two as well. I guess on the first one, given your comments about selectively accelerating acquisition in certain markets and combine that with know, I feel like unpredictability of the market has been the biggest challenge so far. Does your acceleration comment basically indicate you kinda feel like this current environment is stable, and that's what you expect to play out for the remainder of 2025? And then secondly, Peter, I'm sorry if I missed this because my call dropped, but could you talk a little bit more about the changes you made in April and how we should think about the financial impact of those changes relative to the magnitude of the changes you made in the past?

Speaker 3

I'll start with the April actions. I don't have a lot more to add, Dave, to that comment in the prepared remarks. We I do expect that next quarter, we will have more information on cost outs. But what I'd say is the cost outs continued, similar to what we've done last year, just not ready to talk about the magnitude.

Speaker 2

I think from the perspective of the ramping up acquisitions as we talk through this, I think there's a combination of different things is that the the there there's still a lot of volatility in the market. There's there's no question. But we are seeing we've we've been, as as we've talked about in in previous calls, really disciplined about when and how we're going to buy homes. And, obviously, what what gets affected by that is the amount of volume that that that we buy. But, so we we we are staying disciplined, but we are seeing more and more opportunity to buy homes at at the risk metrics that we that we feel are are right for this this this market.

Speaker 2

And so not just from our direct channels, I think, you know, we're seeing a pretty good increase in in in traffic coming to us wanting to to buy their home. But also from our agent partnership channel, more and more agents are are bringing us their home before they hit the market for us to to look at acquiring. So we're seeing opportunities. We're staying disciplined. I think from a consumer standpoint, from a seller, as as homes sit on the market longer and as it's you know, they're seeing more signs come up in their neighborhood.

Speaker 2

They're they're you know, our our our option is is obviously they're gonna start, you know, start with us or come come back to us when when they see there's more adversity out there in the market. So think it's a combination of that. We're also, again, being smart about what we're buying in in the pockets. So I think the volume is from more opportunities that we're seeing. You know, it it continues to stay disciplined, but also really getting comfortable with the pockets in some of these markets that we're buying, feeling good about what we're buying in those areas.

Speaker 5

Okay. Just one follow-up on that, if I can. So when you say that, are you guys or should we assume your contribution margin targets? Like, where would you land within that contribution margin target as you accelerate your acquisition volume? Is it going to be between the 3% to 6% range?

Speaker 5

Or do you expect to be higher in that range given some of the volatility and your risk appetite right now?

Speaker 2

Yeah. So we're moving up,

Speaker 3

and we can see we have as you know, we have strong visibility in three to four months ahead just based on on how the you know, our products cycle through, in in the process. We we we've been through a trough where where in first quarter, we we took down our our tail we took down the number percentage of tail homes very significantly, and we can see the the the contribution margin will increase as we move into to second quarter, and and we have a higher percentage of more recent purchased homes in our cohorts that are driving our contribution margin. The number well, I'm not ready. We're not going to give specific guidance on contribution margin percentages, but what I can say, Jay, is we expect contribution margins to move back towards what we saw in, say, first quarter, second quarter of last year.

Operator

Our next question comes from Ryan Tumicello with the company KBW. Ryan, your line is now open.

Speaker 6

Hi, everyone. Thanks for taking the questions. First one for Brian, just high level with spring selling season full swing. I was hoping you can just provide some context on just what you're seeing generally in terms of supplydemand across your key markets, if you're noticing any imbalances beginning to materialize just from the rising inventory we're seeing in certain parts of the country. And as it relates to Offerbad, just how you're thinking about managing risk here, just given the potential for maybe a choppy selling season, and outsized seasonality into the slower part of the back half of the year?

Speaker 2

Hey, Ryan. Yes. We continue to see active inventory increase in most every market that we're in. I think the last data that I saw markets like Phoenix have over 25,000 active listings right now. There's just not, you know, from affordability, there's there's a lot of homes and not enough buyers.

Speaker 2

So, you know, come back to kind of what I said before, we are we are being very selective in areas that that that we are, that we're seeing that that that's close to either, you know, jobs and schools, those areas that you're seeing. There's still transactions happening. You just gotta know where in in in where they're happening at and where people wanna live. And there's a lot of choices for people to to look at at in in the market right now if if they wanna buy. So, the other thing that we're doing is is, you know, we're we're leveraging our our renovation, more and more is that as inventory is on there's more inventory on the market, which means we we have more competition.

Speaker 2

We're gonna make sure our house is a little more upgraded and a more desirable than the next house across the street. And that's always something to go with with with with where we're at right now, that renovation, you can always really maximize some of your results on that side of it. And so from a risk perspective overall, it's, again, being very selective, staying disciplined with ROI we need to expect the markets. But also being disciplined just overall of the comparables that are out there because in this environment and the other thing that's that's been, you know, the the tariffs have really caused uncertainty as well. And so as you go through that, if there already wasn't enough uncertainty, the tariffs over the last few weeks is causing more uncertainty just in the market.

Speaker 2

So we're definitely being cautious. That's why some of the volume and what we're seeing, we're still going to be selective of what we're buying. And I'm really, really liking what we're buying right now and what we're seeing in some of the performance. And so those move through some of our legacy inventory and on the tail as we start replacing that with the homes and be selective what we're buying, think we're going to be positioned well as far as what our portfolio looks like.

Speaker 6

Appreciate that. And then just a follow-up for Peter. I guess, as we think about the 1,000 homes a month I'm sorry, per quarter North Star that you're talking about, is that a level that you believe is enough to support cash flow breakeven? And as you think about the pace of acquisitions ramping over the course of the year, do you feel like 1,000 homes is something you could potentially hit this year? Big picture, just trying to understand what is a reasonable time line for cash flow breakeven, with your acquisition?

Speaker 6

Yes.

Speaker 3

Sure. So yes, again, flow breakeven is driven by low overhead, of course, driven by a higher mix of our higher margin asset light services. But yes, we think that directionally 1,000 homes per quarter along with those other dynamics is where EBITDA and cash flow breakeven and positive will occur. We're not guiding to the end of the year, but we do expect volumes to increase as we move across the year. Not ready yet to guide whether we hit the $1,000 by the end of year.

Speaker 2

And I think, Ryan, there's been a lot of challenges this last few years in real estate with affordability and what we've seen with mortgage rates and just all just across the board. But I'll tell you the thing that I have been with all negative, there's some positive. And the time and effort that we have really had to focus on our other asset light channels And where I think the as we're pivoting where the world, which has always been our goal, is the people don't that the world doesn't look at us only as an iBuyer that's going to pay cash for their home, but really as a solution center that the cash offer is the foundation of everything that we do, but allowing others to plug into that foundation. You know, obviously, sellers come to us every every day wanting us to buy their home. But some of those sellers, it doesn't it it you know, our cash offer, especially in this environment, might not fit for what they need, but then giving them that listing opportunity with some of our agent partners and or, you know, with with our our direct plus people.

Speaker 2

If if the home that we don't wanna buy, potentially, there's one of our other investor partners that wants to buy, you know, wants to buy off our platform. And so, you know, as of right now, you know, right now, everyone is everyone right now, because of transaction volume and the uncertainty of the market, obviously, everyone is is is is probably at their lowest levels ever. But as things start to normalize with all the work that we have done and all the people that are using our our our platform right now, and I should say using that that are that are familiar have signed up with that, I think we're gonna be more and more of our of our business is gonna be coming from our asset light channels, which is really exciting. And, so I think that will be a and and and what I'm hoping is that we can, in a very short period of time, it'll talk about not, you know, buying a thousand homes at at this ROI is going to turn into how many customers that we convert to one of our products and we're making really, really good progress on making that happen.

Operator

Our next question comes from Michael Ng with the company Goldman Sachs. Michael, your line is now open.

Speaker 7

Great. Good afternoon. Thanks for the question. Just as a follow-up to that, Brian, the company had mentioned that 40% of contribution margin after interest this quarter came from mass light services. I was just wondering if you could talk about the the biggest contributors there.

Speaker 7

Is that 40%, you know, more of a function of, you know, the fact that those dollars were just small in the quarter? Or is is 40%, like, a good framework to think about where you wanna be, long term as it relates to those Aflac services? And then, as as a follow-up, about the, product changes that may potentially occur to reduce working capital requirements in the instance that there isn't more capital brought in, could you just give us a sense of which areas of the portfolio that you would deemphasize? Thank you.

Speaker 2

Sure. Do you want to take that? Yeah.

Speaker 3

I'll start with the

Speaker 2

look, our what we said

Speaker 3

in the prepared remarks is that we're developing a plan, And that's going to involve greater cost cuts. And yes, it will also involve a shift in how we operate, including from a product perspective, so with the goal of taking down working capital and ultimately the goal of preserving cash. We're in the process of developing that plan, so we're prepared to give more specifics, but, we are focused on being prepared to execute that way.

Speaker 2

Yeah. And I think from the other thing, like, the there's no question with the market right now, the amount of homes that we're buying, you

Speaker 3

know, our asset light services is a

Speaker 2

good chunk of that. I will tell you, like, the the really what we are pushing for is that we want more and more of of what we're gonna do is on the asset light stuff. Like, I'd love to get to a point that's fifty fifty from the asset light services, and I'm talking at at at large scale. Because what we wanna do is we wanna be focused on what is the right whether our customer is b to b or it's a it's a b to c customer, what is the right product that that customer needs that we can provide them that service to do, and we can make fees from that service. And so I do think in just that we are getting really, really good momentum with with our renovate side.

Speaker 2

And I and I always will promise that even in in this environment, we're we're continuing to see really rapid growth. We and and, you know, excited about our partnership that we just formed with with auction.com. I mean, they're they're a powerful website that has thousands and thousands of users that that that buy off their their platform that potentially will use our renovation services. And so this is kind of what I was talking about before, that positioning our company for long term growth. And and, you know, there's nothing we can do about the macro world now.

Speaker 2

You know, we're gonna control everything that we can control and and and then position it position it it well. And I and and that is even to follow-up to what Peter said. For us to be able to leverage or to leverage or or to, or or to maximize more of our asset light services in in in times like this is is fantastic. And that's one of the reasons we built Offerpad was if there's ever a time that cash offers, we we don't wanna buy cash home cash, we could list it. If the listing is not right, then we could one of our investors could buy it.

Speaker 2

And just really just a flywheel of different opportunities that we think we could do. And so, we you know, obviously, we're still gonna be selective of what we're buying on the cash offer side. But if it doesn't work, we're gonna provide listing opportunities to that customer. And and if it doesn't work or our cash offer doesn't work, we're gonna get get them connected with another investor potentially, would would want to buy to buy that homes off home off our platform. So excited about what we're we're building out there for sure.

Speaker 7

Great. Thanks, Brian. Thanks, Peter.

Speaker 2

Yeah. Thanks.

Operator

Our next question comes from John Colantwani with the company Jefferies. John, your line is now open.

Speaker 8

Hey, guys. Thanks for taking the question. This is Vincent Cardos on for John at Jefferies. Two for us, please. You mentioned making the inspection process faster and more efficient.

Speaker 8

Curious to hear a little bit more about how you're doing that and the steps you're taking, and how the steps you're taking should be, you know, expected to hit the P and L. And then following up a bit on some of your earlier comments about renovate, maybe just talk a bit about the margin progression for that business as it grows. Any impact you're seeing on margins there from tariffs so far? And, whether growing that business at the same pace going forward would be realistic if we were to see, a major uptick in in the cost of of building materials from from these tariffs? Thanks.

Speaker 2

Yeah. And I'll I'll take the second one. As far as the we're not seeing anything as far as margins on on the renovate side as far as tariffs. You know, it's obviously very, very early on on that end. The idea of our all of our renovate business is that our partners could plug into our renovation operations that we use when we buy homes on our own behalf.

Speaker 2

We're not seeing a lot of tariff impact with that yet, and that's that we won't see it. But as of right now, we're not seeing a lot of impact. So I think that's that's pretty similar to what we're seeing on the renovate side. But the idea is that they can plug into to our renovations and get the cost and time and efficiency. And, you know, with with the idea of, well, we're gonna treat that renovation just like we own that house ourselves with the same renovation teams.

Speaker 2

And so that's been really, really good from cost perspective to keep their costs low, our costs low and keep our efficiency to where it's at. And anything you want on the margin side, Peter, you want to comment on it?

Speaker 3

No. No. I mean, I think it's 25%. We've said before, it's 20% to 30% margins. And as and importantly, as we're as the business is growing, we're maintaining those margins to really good, support business for our cash offer and also standalone business.

Speaker 2

Yeah. And and to to your first question, this has been really interesting because, you know, I I where when people are coming to us, where it used to be, you know, what where's the best option I could make the most money for my home in in in normal times or sell my house fast or something like, we we are right now, we are seeing, when people are coming to us, timing is everything for them. And so, like, you know, I keep saying the seller that comes to Offerpad today is a much, much different seller than than just at this moment in time that that are that came a couple years ago. And so we have to meet them where they want us to meet. So one of the things that we're doing with, like, for example, for our our inspection process is they're now able to they they'll instantly get their range offer over the minutes, get their range offer of what that house with the medium price.

Speaker 2

And then if if if it fits into what, you know, what what works for them in that price, they can schedule an inspection on on their timing. But what we're also doing is that we are giving them multiple times, like so it's not the old way, we would have one inspection. If that if that block was booked, they'd have to choose another inspection. But what we're doing is we're we're leveraging internal and external talent to make sure that we're working on their schedule so we get it back. If they want it tomorrow at 02:00, we're gonna figure out how to get into that house tomorrow at 02:00.

Speaker 2

And we are seeing a very, very high high engaged customer and and meeting them where they want, and we're seeing our conversion go up from that that side as well.

Operator

You. That will conclude today's conference call.

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Key Takeaways

  • Offerpad’s RenovATE business hit a record Q1 with $5.3 M revenue (≈$20 M annual run rate) and formed a preferred renovation partnership with Auction.com to expand services nationwide.
  • Demand for the core cash offer program rose 33% quarter-over-quarter, driven by marketing and tech enhancements—Citrus Value pricing, faster inspections and price locks—which also lowered cost per lead.
  • Focused cost discipline delivered an $11.4 M year-over-year reduction in operating expenses and a 32% sequential improvement in adjusted EBITDA loss, moving the company closer to positive adjusted EBITDA.
  • Inventory health improved as homes held over 180 days fell to 13% from 22%, while Q1 acquisitions rose 18% to 454 homes under a selective, high-margin buy-box strategy targeting ~1,000 homes per quarter.
  • Asset-light services (RenovATE, Direct Plus, agent partnerships) contributed over 40% of contribution profit after interest, reinforcing diversification into higher-margin revenue streams.
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Earnings Conference Call
Offerpad Solutions Q1 2025
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