Offerpad Solutions Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 3, 2026

Key Takeaways

  • Negative Sentiment: Q2 results fell slightly below guidance: Offerpad completed 295 transactions and generated approximately $78 million in revenue, below its targets of 300–350 transactions and $80–$90 million. Adjusted EBITDA loss nevertheless narrowed to $6.2 million from $6.7 million in Q1.
  • Positive Sentiment: Unit economics improved substantially. Contribution profit after interest rose to $13,500 per transaction, while gross margin increased to 9.2% from 6.9% in Q1; newer homes sold in approximately 82 days versus roughly 339 days for aged inventory.
  • Positive Sentiment: Management expects accelerating volume in the second half of 2026. Contract signings increased from 129 in April to 256 in June, July signings were higher than June, and management expects Q3 transactions of 350–400 and a year-end exit rate of roughly 1,000 transactions per quarter.
  • Positive Sentiment: Capital-light businesses and cost discipline are supporting operating leverage. Brokerage and Cash Offer Marketplace services represented about one-third of the current mix and are expected to grow toward 50%, while quarterly operating expenses declined to $13.3 million and unrestricted cash rose 46% year over year to $33.1 million.
AI Generated. May Contain Errors.
Earnings Conference Call
Offerpad Solutions Q2 2026
00:00 / 00:00

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Operator

Good afternoon, and welcome to Offerpad's second quarter 2026 earnings conference call. My name is Megan, 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 one on your telephone keypad. To withdraw your question, press the pound key. With that, I'll turn the call over to Cortney Read, Offerpad's Vice President of Investor Relations and Communications.

Cortney Read
Cortney Read
VP of Investor Relations and Communications at Offerpad

Good afternoon, and welcome to Offerpad's second quarter 2026 earnings call. Management's remarks today are pre-recorded and accompanied by a presentation. A live question and answer session will follow. 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 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 under the heading Non-GAAP Financial Measures.

Cortney Read
Cortney Read
VP of Investor Relations and Communications at Offerpad

The reconciliations of Offerpad non-GAAP measures to the comparable GAAP measures are available in the financial tables of the second quarter earnings release on Offerpad's website. With that, I'll turn the call over to Brian Bair, Chairman and Chief Executive Officer.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Thank you, Cortney, and welcome everyone. Before we get into the quarter, I'd like to take a step back and talk about where we are as a company. Over the past 18 months, we made a series of deliberate decisions that weren't designed to maximize short-term volume. They were designed to build a stronger company for the long term. We protected capital. We sold through our aged inventory. We reset our cost structure. We put the right people in place across pricing, operations, and every product line expanded from a single product company into a multi-solution platform and embedded artificial intelligence across our business. None of those investments were made to improve one quarter. They were made to improve the next decade. We believe those investments are now beginning to translate into measurable operating momentum. The rebuilding phase of Offerpad is largely behind us. The buying engine is back on.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

I'll be walking through several visuals during the call, so I'd encourage you to follow along on your screen. First, the quarter itself. We guided to 300-350 transactions and $80 million-$90 million in revenue. We came in at 295 transactions and approximately $78 million in revenue, while still delivering another quarter of improved adjusted EBITDA. Alongside those numbers, I'll walk you through some leading indicators, contracts signed and acquisitions we think are helpful for understanding where the business is headed as we scale. For the past year, you've heard us talk about discipline. You've heard Peter walk through our cost structure. You've heard us talk about contribution margins, conversion, and the investments we've made in our operating platform. Those weren't separate initiatives. They were always the same operating framework, the one that's been guiding how we run this business.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

By sharing that framework with you today, we want to give you a clear view into how we make decisions, allocate capital, and measure progress. It's also the context behind everything we've reported over the past year. That framework comes down to three objectives. Let's start with the first. Scale transactions through disciplined growth. That's straightforward, but here's what it actually means. We're not chasing volume for its own sake. We're using better home selection, more precise pricing, and the data we've built over the past several years to grow where we believe we can generate the strongest outcomes. Our target hasn't changed. Approximately 1,000 transactions a quarter, the level we believe our current cost structure supports at breakeven. That's not where the plan stops. Beyond breakeven, the plan illustrates the operating leverage available as we scale towards levels we have achieved before.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

For example, the company averaged approximately 3,500 quarterly transactions in 2022. Here's the visual that helps illustrate how we get there. Starting with the question you may have, how do we get from roughly 300 transactions today to our goal of around 1,000 a quarter? Start on the left. Every closed transaction starts as a signed contract. In April, we signed 129. That grew to 163 in May and 256 by June, nearly double where we started. Take a look at the middle. Roughly 30 days after signing, approximately 90% of contracts become acquisitions. We acquired 268 homes in quarter two, nearly 70% more than the quarter before.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

That momentum continued into July, where we acquired roughly 200 homes in a single month as the stronger June and July signings worked their way through. This growing pipeline is expected to drive higher transaction volumes in the second half of fiscal 2026, as homes typically sell within 120-150 days after signing. Think about it this way. We expect another meaningful step up in acquisitions in the third quarter, and we can say that with real confidence because most of the activity is already signed. It's sitting on the left side of this chart right now, moving through the pipeline. Let's look at the right side. Roughly 90-120 days after acquisition, a home sells, which means the fourth quarter is largely being built right now, not in the fourth quarter itself.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Today's signings become tomorrow's acquisitions, those acquisitions become tomorrow's home sales. When you look at our third quarter transaction guidance next to our longer term target, remember, those quarter three closings were mostly locked in by contracts signed earlier in the year before conversion improved. Quarter four is where you'll really start to see today's stronger performance show up. One more thing to highlight. Our platform is now broader than Cash Offer. Cash Offer Marketplace and brokerage services, shown in light blue on the chart, widen the pool of sellers we can serve and generate fee-based revenue with little to no balance sheet capital. What you're seeing here is execution, not spending. The growth in signs I just showed you happened without meaningful increase in marketing. It's conversion. We're converting demand we already had.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

The second objective is expanding contribution margin, this is where we made some of our most meaningful progress this quarter. This chart shows the annual picture. Margins compressed through the market slowdown, bottomed out and lost in 2023, have been recovering since, with 2025's numbers still weighed down by the aged inventory we've been working through. Look at what's happening inside this year, quarter to quarter. Contribution profits after interest reached $13,500 per real estate transaction in Q2, up from $5,500 in quarter one, our strongest quarter since 2023. First, we cleared the aged book. It peaked at more than 100 homes in 2025. We slowed acquisitions, got it under 30 by quarter one, we're at under 10 today. What remains consists primarily of homes acquired during the past two quarters. Second, we're moving faster. Our aged homes have taken around 339 days to sell.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Our quarter two non-aged homes sold in approximately 82 days, well ahead of our 100-120 day target. That velocity is what's driving the stronger margins and putting us on the path toward adjusted EBITDA profitability. Our third objective is driving operating leverage. Over the past several years, we've fundamentally reset our cost structure, removing more than $140 million of annualized operating expense. These weren't cuts tied to the housing market. They were structural changes, they've left us with a leaner, more efficient business. This chart shows what that means. At today's volume, around 295 transactions a quarter, we're on the steep part of the curve, where fixed costs aren't yet fully absorbed. At 1,000 transactions, the level our cost structure is built for, cost per transaction drops sharply.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

That cost base doesn't grow in step with volume, every transaction beyond the point should flow more directly to earnings. Those are the three objectives that guide how we run this business. Disciplined transaction growth, expanding contribution margin, operating leverage. Today, they're the framework behind every decision we make, every dollar we allocate, every result we measure ourselves against. I'd encourage you to spend a few minutes with our full operating plan on our investor relations website. It goes deeper into each of these three objectives, the data behind them, and how they connect to our path to profitability. Peter will now take you through our financial results and guidance in detail.

Analyst at Offerpad

Thank you, Brian. For the past year, we've been telling you the model was getting healthier. Better margins, tighter costs, and a cleaner portfolio. This quarter, you can see it in the numbers themselves. The model is straightforward. Higher transaction volume multiplied by stronger contribution profit per transaction on a largely fixed cost base drives adjusted EBITDA. Let's start with what we produced. Revenue was approximately $78 million on 295 real estate transactions. The number I'd point you to this quarter isn't the top line, it's what each transaction earned. Gross profit was $7.1 million, up from $5.6 million in the first quarter, and that gain came on slightly lower revenue. Gross margin improved to 9.2%, up from 6.9% last quarter, our best since third quarter of 2023.

Analyst at Offerpad

As Brian stated, contribution profit after interest reached $13,500 per real estate transaction, up 36% year-over-year and 145% quarter-over-quarter. Earning more gross profit on less revenue is exactly what you'd expect when the improvement comes from unit economics and mix rather than volume. Underneath the top line, our revenue base is diversifying. Brokerage services and Cash Offer Marketplace drove much of the higher margin mix I just mentioned, and Renovate contributed $4.8 million of revenue this quarter. Together, these fee-based offerings deepen both our margins and our reach without adding balance sheet risk. On the cost side, quarterly operating expenses, excluding property costs, were $13.3 million, down from $17 million a year ago, and down from a high of over $50 million per quarter in 2022. We've held that cost base largely fixed by design.

Analyst at Offerpad

That will drive incremental volume to convert into profit rather than overhead as we scale. Adjusted EBITDA loss for the second quarter was $6.2 million, an improvement from a $6.7 million loss in the first quarter. Another quarter of sequential improvement towards positive adjusted EBITDA before the year-end. We ended the quarter with $33.1 million in unrestricted cash, up 46% year-over-year, and total liquidity of more than $55 million, including the fair market value of our inventory. Cash Offer and brokerage services are leading the acceleration. While Cash Offer Marketplace has moved more slowly as some institutional buyers pull back. Our 2026 framework doesn't require incremental capital. Our liquidity, facilities, and growing fee-based revenue support the plan as it stands. If Cash Offer demand runs ahead of plan, we may bring in additional working capital to meet it.

Analyst at Offerpad

We have a clear path forward either way, and we'll keep looking for opportunities that improve our flexibility or lower our cost of capital, which has already come down significantly over the past two years. Now to the outlook. For the third quarter, we expect 350-400 real estate transactions across Cash Offer, Cash Offer Marketplace, and brokerage services. Total revenue of $90 million-$100 million and a narrower adjusted EBITDA loss compared to Q2, continuing our sequential progress towards positive adjusted EBITDA. Our full year objective is unchanged. Exit 2026 at a run rate of roughly 1,000 transactions a quarter and reach positive adjusted EBITDA before the year-end. It's worth reiterating what's compounding underneath those numbers. The signings that accelerated through the second quarter become acquisitions in the third quarter and closings in the fourth.

Analyst at Offerpad

They'll carry the stronger unit economics of a cleaner portfolio. As volume grows, the effect compounds. More transactions, each one worth more than it was a few quarters ago, landing on a cost base we've held largely fixed. Higher volume, higher margin per transaction, and disciplined costs are three forces building on each other. To close, margins are at multi-year highs, the cost base is disciplined, and leading indicators are moving in the right direction. The pieces are in place. Now it is about execution quarter after quarter. With that, we're ready to take your questions.

Operator

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ryan Tomasello with KBW. Your line is open. Please go ahead.

Ryan Tomasello
Ryan Tomasello
Managing Director at KBW

Hi, everyone. Congrats on the nice progress in the quarter. Regarding the 1,000 transaction target by year-end, understand the positive forward indicators here that you're pointing to that give you confidence in that target. Can you just help us understand what are the main drivers of the meaningful step up from three Q to four Q? Is that target of 1,000 transactions dependent on any concentrated volume from specific institutional partners or any other partnerships that might need to come online to hit that level? Thanks.

Analyst at Offerpad

Hey, Ryan, it's Peter. I'll take the last piece first so I don't forget. It is not driven by institutional partners. Among the three products, the two that are growing the most significantly, we talked about Cash Offer, that's one. Also our brokerage services is growing fairly rapidly too. You can begin to see some of that in the trending schedules that are on the IR site. Yeah, I'd point back to the As Brian identified in his prepared remarks, if you add up the three months in the quarter, there's about 550 signs just for product number one, just for the Cash Offer. Those signs at a 100- to 110-day time to cash, those signs convert into a similar number of dispositions roughly 100 or 110 days later.

Analyst at Offerpad

That's one really important driver, the signs are up very significantly again. Again, I'd point to the brokerage services, which is also growing rapidly. Both of those together without any dependency on partners will get us to the exit rate of 1,000 transactions.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

One thing that I'll just add, Ryan, I've talked about this in the past. Our demand has stayed very, very strong. We still get thousands and thousands of sellers that are very engaged coming to us every month to sell their home. With less marketing spend, we're seeing more and more demand for our products. As we've talked about, again, that's a lot of lever for pricing. Right now, as we look at some of the, we call it velocity areas that we're buying, areas that we think are when we buy the home, it's going to turn, we can buy, renovate it, and sell it within 100 days. We've spent countless hours and data in trying to figure out where those markets are. We've made a lot of progress on that, our demand is still there. Demand's always been there.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

It's just kind of what we want to pay for homes. We've been disciplined in the past, making sure with the uncertainty or when we see homes moving too slow in certain markets. In the areas that we're seeing, we're getting smarter with our marketing spend, where those marketing dollars are spent, that it's driving customers we know we're going to have a better chance at buying that home. We're giving them a stronger offer. Whether or not they take our offer, they'll also then use our other products. They can use our listing services and some of the other products as well. That's where you're seeing the growth come from. As you know, we've been through a lot of playing defense.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Now we're focused on playing offense and buying homes, and we definitely have the demand to do that.

Ryan Tomasello
Ryan Tomasello
Managing Director at KBW

That's all very helpful. Thank you. Then on the-

Operator

Your next question comes from the line of Dae Lee with JPMorgan.

Dae Lee
Dae Lee
Equity Research VP at JPMorgan

Great. Thanks for taking my question.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Yeah.

Dae Lee
Dae Lee
Equity Research VP at JPMorgan

Thanks, Dae, too. First one maybe for Brian. When you look at your June contract signings, it is a very strong inflection relative to the prior month. Just wondering, I understand your business running on all cylinders and having great momentum, but was there anything else like product-wise or region-wise or from an underlying industrial or industry dynamic that drove that strong inflection? Do you have any updates to share on how your July month might be trending?

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Sure. We continue to see strong just across the board. I will tell you Dae. Not really an inflection. Like I said, we have been really for the last several months, we have been working on products like SCOUT and HENRY, and some of them are farther advanced than others as far as what we are doing and to help us get smarter where and how we are buying homes. In this environment, we are hyper-focused on active inventory. Areas that are normally interior homes, like one of the things you are going to see is you are going to see our price points start to tick up a little bit because we are buying more homes in the interior, high velocity, strong school scores.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Also one of the other things we are doing in some of those areas, we realized we do not have to put as much renovation in some of those homes. Not all of them. Obviously, it is market specific. Because of the affordability, normally the playbook is when you see more supply, you want to put more renovations in there, have your home sell before the others because yours is the nicest on the block. It is a little different there. Now you have high velocity areas of desirable places that people want to live. In general, I would tell you, Dae, it is specifically hyper-focused on our marketing dollars, and marketing to areas that we want to buy homes that we feel strongly that they can move quickly.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

One of the numbers I want to highlight is we got rid of a lot of our aged inventory. That was weighing down the entire company, the entire portfolio. Inventory way when even when interest rates changed and just navigating this environment. We are down to, I believe, less than 10 of those homes right now. That kind of got that off of our shoulders. Now as we rebuild our portfolio going forward, some of our newer inventory is performing like in 85 and 90 days on the market. We are moving through our newer stuff very well. The velocity stuff is working. A lot of it is discipline, analytics, but also just making sure that we are buying homes that we feel that can move fairly quickly.

Analyst at Offerpad

Yeah. I just add some context on July. Our July signs was higher than June. The trend continues to get even better. We expect that to be the same going into September. Into August and September.

Dae Lee
Dae Lee
Equity Research VP at JPMorgan

Got it. That's great to hear. Follow-up question to you, Peter. When you look at contribution profit after interest per transaction, it's good to see those reaching multi-year highs. How would you describe the performance of that metric relative to your expectations? Where do you expect that to trend going into the back half?

Analyst at Offerpad

Yeah. It will continue to go up based on two drivers. Right now we have, as Brian just highlighted, we have a very new and healthy portfolio of inventory, our expected ROIs across the rest of the year are quite high. The contribution margin after profit and also the gross margin was a little bit temporarily depressed over the last two quarters as we sold some aged inventory. That's one driver. The second driver which is equally important, is our mix. We've talked about moving from right now we're at about one-third fee-based services, our brokerage service or our marketplace where we sell to other buyers, and two-thirds are Cash Offer. The margin dynamic on those is significantly higher. As we shift to a higher percentage of fee-based services, that will push the margin up even further.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Dae, one thing, just for the question you asked me, you can do a follow-up to Peter, I want to highlight this. One thing that has changed, I think a little bit, and this is just me and an assumption, I think sellers' expectations have changed as well. If Offerpad's doing their job, we're doing it right, we should be six months to nine months ahead of what the market is doing and what sellers know what the market is. Over the last two years, we've seen sellers' expectations that continued to think we were in a post-COVID housing market that wasn't there. Staying disciplined in some of our offers with the lower conversion of what the market value of those homes are.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

I think sellers' expectations have changed a little bit as well as they're seeing more inventory on the market, month supply going up as well. Being a buyer in a buyer's market is a good place to be, there's an opportunity there that I think we're seeing right now as well.

Dae Lee
Dae Lee
Equity Research VP at JPMorgan

Okay, great. Thank you both.

Operator

Your next question comes from the line of Ryan Tomasello with KBW. Your line is open. Please go ahead.

Ryan Tomasello
Ryan Tomasello
Managing Director at KBW

Thanks for taking the follow-up. Just in the operating framework here in the deck, you give an example of the transaction mix moving towards, I think, two-thirds capital-light transactions from the marketplace and brokerage services versus the one-third today. I realize it's illustrative, but is that generally how you're thinking about the evolution of the mix from here? A separate question on conversion, I guess, maybe dovetailing on what Dae was asking, but what exactly, in your mind, has been the primary driver of the conversion improvement? Has it simply been feeling more comfortable leaning into price and narrowing your margins? Or is there something else that you feel like has been a primary driver of the conversion improvement?

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Yeah. We're staying pretty disciplined with our margins as well. I think, again, it's locations of areas that we have a high confidence score in our propensity models. That's very important. The high likelihood that a home we can buy, renovate it, and sell it, and what the percentage of that likelihood is that we can do that within 60 days on the market. We are doing a little bit less renovations in some of those high velocity areas. We're getting the homes on the market quicker. Because we're not doing as much renovation, so we're getting some time on that side of it. There are countless process changes internally that we have been doing.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

As you guys know, I brought in a new management team as we've been focused on different things. We're really hyper-focused on conversion in all parts of it, from the marketing dollars that we spend and where we're spending those marketing dollars. Also the customer journey to the inspection process. A lot of those processes operationally, I wouldn't say there was one major thing I could say, "Hey, this is changing. That's why this." All of those things as we get more efficient every day. I said something, we want to get better every day. It sounds cheesy, but we're trying to figure this out. Our conversion, I would also tell you that, as you guys know, this isn't new, but I'm just mentioning it. We have something internally we call the Power Squad, but they're our call center customer communication team.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

That's been extremely helpful. We are continuing to have more conversation because we have two types of customers at Offerpad. The ones that come, and they want more of a tech experience like, "Hey, hands off. Just tell me what the price of my home is, come inspect it, and then close." We have another seller that's a little bit different. They maybe want to get 80% there through technology, but they need a little bit more hand-holding or answers or those. They want to talk about other products and some of those things. We've invested in the Power Squad a few months back. That's been extremely helpful. We've always been really good at customer interaction and customer experience, but we've really taken it to a new level of seven days a week trying to be there for customer support.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

That's definitely helping as well. Overall, it's a lot of things, you guys, that we put in place over the last year or two. I would tell you right now, as we're starting to finally see this maximize and capitalize on what we're doing, probably the single biggest lever is our marketing spend and where and how we're spending those marketing dollars capped with the operations.

Analyst at Offerpad

Yeah. I like the marketing. That's a big part of operations and everything Brian talked about. One of the focus areas of our new Chief Operating Officer has been marketing attribution. That's also a big driver as well. Our top of funnel is stronger and healthier, in addition to all the operational changes.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

We highlight in the prepared remarks, at our peak, we were doing 3,500+ transactions a quarter and just kind of what we've done in the past, and that was only with one product. What's exciting is when it comes from a conversion perspective is when customers. We're just making huge strides to when customers come to us. It's not just if it's a Cash Offer or no, it's a Cash Offer. If the Cash Offer doesn't work or they want to explore the market, what can I get on the market? We have some pretty cool listing products out there well that are different and not as traditional as what you could see, that we help the seller on that side as well, which. We're seeing a really good increase in conversion, a good customer experience on that side as well.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

The whole time, without putting the company more at risk, as far as what we do on our pricing side. We focus very heavily on making the best pricing, the best real estate decision. What you don't want to do is try to get volume by paying more than you want to in homes, especially in environments like this. There's still four million transactions. We want to buy our share of those four million transactions in the right areas, the one that work for our pricing team. If they don't, we'll move into one of our other products.

Ryan Tomasello
Ryan Tomasello
Managing Director at KBW

Great. Thank you.

Analyst at Offerpad

Great. I didn't hit the second question, the conversion question. I'll just hit that quickly, Ryan. You're right, that's illustrative. The product mix is super important because it helps us convert at a much higher level. We are currently at one-third, as I've mentioned, one-third the fee-based services and two-thirds Cash Offer. We expect that to move up to around 50%. The chart in the operating plan is down the road. Ultimately, we do expect to flip at some point. We're not ready to talk about or forecast when, but we do expect to flip to a situation where we have higher fee-based services and Cash Offer longer term.

Ryan Tomasello
Ryan Tomasello
Managing Director at KBW

Thanks, Peter.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

Thanks, Ryan.

Operator

Your next question comes from the line of Gaurav Mehta with Alliance Global Partners. Your line is open. Please go ahead.

Gaurav Mehta
Gaurav Mehta
Managing Director and Senior Equity Research Analyst at Alliance Global Partners

Thank you. I wanted to ask you on your renovation business, can you maybe talk about what's embedded in your 2026 guidance for renovation revenues?

Analyst at Offerpad

Yeah. Hi, Gaurav. We don't guide separately for Renovate. What I would say about that business is it used to be a cost center, and so it's been a big win for us. It's a cost center that we've converted starting about two years ago into a profit center. The financials for the Renovate business are really about double what we report because the work we do on our internal inventory is not part of it, is external reporting. Just the third-party business that you see information around in the segment reporting and the SEC filings, that is a profitable business at about 20-25% margin. You can also see some of the trends on the, not forward-looking, but historical trends on the trending schedules on the IR website.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

One thing I'll add just to the Renovate business that I'm pretty proud of right now is, besides obviously doing Offerpad's business, a lot of when we started renovation a couple years ago or started our Renovate business, doing it for third parties, we had a lot of large players in there. A lot of the SFRs, a lot of groups in there we were doing renovation for. Obviously, with some of the new things that are happening with the regulatory side of it. Some of those large funds have slowed down their acquisitions. We, at the same time, in parallel, we have been focused on small to mid-size renovation players.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

We're doing renovations for very small fix and flippers who maybe do 1-5 homes a year to mid-size family offices that own a few hundred homes, to across the board, there's some other large players with different models. Our renovation continues to grow. We're still doing it for some of even the larger brands that we've mentioned before in the past. We're very happy what we're seeing there. I always remind everyone that we're doing renovation for is normally at their lowest volume. As Renovate picks up, we expect when the market picks up, you see more transaction volume, that will definitely grow with that as well. I think there is a lot of opportunity in front of Renovate.

Gaurav Mehta
Gaurav Mehta
Managing Director and Senior Equity Research Analyst at Alliance Global Partners

Okay, that's helpful. I also wanted to ask you on the operating leverage. With the current platform and the current cost structure, how much can you grow your portfolio and the volumes before you have to increase the cost?

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

I'll let Peter give you the smart answer. I'll give you my answer. One of the things that I'm probably the most excited about what we've done is that we've been through a lot over the last couple years and since the affordability crisis market hit. I'll tell you, growing this company the first time, how we grow it again to do that will be much, much different. We're going to be a lot smarter. Obviously, the implementation of a lot of the AI and initiatives we have internally. We're not going to need nearly the amount of resources to buy similar amount of homes that we were doing in before. We've centralized more things, and our logistics and operations is humming.

Brian Bair
Brian Bair
Chairman and CEO at Offerpad

From a platform perspective, and this is just from my perspective, is that with the team that we have right now, we could put a lot more volume on that same current team because we're leveraging other factors of technology and AI and those other different things just as we get smarter.

Analyst at Offerpad

Yeah. On the operating expense, it's largely fixed. There are a few areas, for instance, third-party software platforms where there's some components that costs will grow a little bit with revenue, but 90, 95% of our OpEx are truly fixed costs. We're very excited about the leverage that we'll see when we get up to 1,000 and beyond.

Gaurav Mehta
Gaurav Mehta
Managing Director and Senior Equity Research Analyst at Alliance Global Partners

All right. That's helpful. Lastly, just to clarify. 4Q number to be positive, or you expect to exit the year on a run rate basis to be positive?

Analyst at Offerpad

You cut out. Do you mind repeating the question?

Gaurav Mehta
Gaurav Mehta
Managing Director and Senior Equity Research Analyst at Alliance Global Partners

Yeah. I wanted to ask you on the adjusted EBITDA guidance for 2026, positive adjusted EBITDA. Are we expecting 4Q number to turn positive, or do you expect the number to be positive on a run rate basis?

Analyst at Offerpad

Right. It's all run rate, both the 1,000 and the EBITDA are run rate on exiting the year.

Gaurav Mehta
Gaurav Mehta
Managing Director and Senior Equity Research Analyst at Alliance Global Partners

Okay. Thank you. That's all I have.

Analyst at Offerpad

Thank you.

Operator

There are no further questions at this time. This concludes today's conference call. You may now disconnect.

Analysts
    • Cortney Read
      VP of Investor Relations and Communications at Offerpad
    • Brian Bair
      Chairman and CEO at Offerpad
    • Analyst at Offerpad
    • Ryan Tomasello
      Managing Director at KBW
    • Dae Lee
      Equity Research VP at JPMorgan
    • Gaurav Mehta
      Managing Director and Senior Equity Research Analyst at Alliance Global Partners
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