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Offerpad Solutions Inc. (OPAD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $174.3M, gross margin 6.1%, diluted EPS was ($0.63), and Adjusted EBITDA was ($11.5M); results landed in the upper half of guidance and reflected lower volumes and margins versus Q3 amid a strategically reduced acquisition pace .
  • Management highlighted diversification into asset-light services (Renovate, Direct+, Agent Partnerships) and product enhancements (Citrus Value instant offer range) as key levers; Renovate delivered ~187 projects and >$4M revenue in Q4 and ~$18M for FY24 (+49% YoY) .
  • 2025 Q1 outlook: Homes sold 450–500, revenue $150–$170M, with “slightly better” Adjusted EBITDA; focus remains on buy-box expansion, cost discipline and potential capital markets activity to enhance flexibility and scale acquisitions .
  • Near-term stock narrative catalysts: execution on buy-box expansion toward a 1,000 acquisitions/quarter “North Star,” sequential Adjusted EBITDA improvement, and clarity on any capital raise structure/cost of capital .

What Went Well and What Went Wrong

What Went Well

  • Revenue exceeded the midpoint of guidance, supported by a balanced mix including asset-light services and improved advertising efficiencies via the Agent Partnership Program (“nearly a third of acquisitions”) .
  • Citrus Value pricing technology and streamlined offer flow increased engagement; January saw nearly 1,200 “living rooms” and a 95% CSAT, with agents’ PRO tier driving a 46% YoY increase in quarterly requests and now ~45% of acquisitions .
  • Cost actions continued: FY OpEx fell to $118.2M from $174.6M (–$56.4M, –32%), helping improve FY net loss 47% ($55M) and Adjusted EBITDA 65% ($53M) YoY .

What Went Wrong

  • Sequential deterioration vs Q3: revenue –16% ($174.3M vs $208.1M), gross profit –38% ($10.6M vs $17.1M), Adjusted EBITDA loss widened to ($11.5M) vs ($6.2M); contribution profit after interest per home fell to $5.5k from $12.4k .
  • Year-over-year declines: revenue –28%, gross profit –37%, homes sold –29%, diluted EPS loss widened to ($0.63) from ($0.57) .
  • Cash and cash equivalents declined to $43.0M from $48.5M in Q3 and $76.0M in Q4’23, reflecting lower volumes and inventory dynamics; inventory included 677 homes with 22% >180 days not under resale contract .

Financial Results

Core P&L and Operating Metrics (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$251.1 $208.1 $174.3
Gross Margin (%)8.7% 8.2% 6.1%
Gross Profit ($M)$21.9 $17.1 $10.6
Homes Sold (units)742 615 503
Homes Acquired (units)831 422 384
Net Loss ($M)($13.8) ($13.5) ($17.3)
Diluted EPS ($)($0.50) ($0.49) ($0.63)
Adjusted EBITDA ($M)($4.4) ($6.2) ($11.5)
Gross Profit per Home Sold ($k)$29.5 $27.9 $21.1
Contribution Profit After Interest per Home Sold ($k)$14.5 $12.4 $5.5
Cash & Equivalents ($M)$56.9 $48.5 $43.0

Q4 2024 Year-over-Year (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($M)$240.5 $174.3
Gross Profit ($M)$16.7 $10.6
Net Loss ($M)($15.4) ($17.3)
Adjusted EBITDA ($M)($7.1) ($11.5)
Diluted EPS ($)($0.57) ($0.63)
Gross Profit per Home Sold ($k)$23.4 $21.1
Contribution Profit After Interest per Home Sold ($k)$10.2 $5.5
Homes Sold (units)712 503
Cash & Equivalents ($M)$76.0 $43.0

KPIs and Operating Efficiency (Q2 → Q3 → Q4 2024)

KPIQ2 2024Q3 2024Q4 2024
Time to Cash (days)106 110 142
Inventory >180 days (% of homes)5.1% —22%
Agent Partnership share of acquisitions (%)Requests 25% Acquisitions 33% ~45%
Renovate revenue ($M)$4.9 $4.0 >$4.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Homes Sold (units)Q4 2024480–540 Actual: 503 Achieved within range
Revenue ($M)Q4 2024$160–$185 Actual: $174.3 Achieved within range
Adjusted EBITDAQ4 2024“Slightly lower” Actual: ($11.5M) Lower (as guided)
Homes Sold (units)Q1 2025—450–500 New
Revenue ($M)Q1 2025—$150–$170 New
Adjusted EBITDAQ1 2025—“Slightly Better” New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/technology initiatives (Citrus Value)Q3: Improved initial estimated offers from 24 hours to minutes ; Q2: Technology/process improvements supporting margin gains Citrus Value drives instant offer ranges; higher engagement, conversion; 95% CSAT; nearly 1,200 “living rooms” in Jan Strengthening product-led efficiency
Asset-light services (Renovate, Direct+, Agent Partnerships)Q2: Renovate revenue $4.9M; scaled to new customers; Agent Program requests 25% ; Q3: Renovate revenue ~$4.0M; acquisitions 33% via Agent Program Q4: 187 Renovate projects, >$4M revenue; FY24 ~$18M (+49%); PRO tier +46% YoY requests; ~45% of acquisitions via Agent Program Expanding and stabilizing contribution margins
Macro/market volumes & affordabilityQ3: Delivered revenue at high end despite dislocation; TTC up slightly ; Q2: TTC down YoY, margin improvement Residential resale volumes remain historically low; affordability constraints; buyer demand weaker than normal; selective inventory (avoid high HOA/townhomes) End-market remains soft; selective buying
Commission structures/regulatory—Commission environment “settling”; co-broker commissions ~2–3%; Agent Program benefits from changes Evolving; supportive of Agent Program
Capital structure/liquidityQ3: Liquidity $58.4M (cash+restricted); cash $48.5M Considering capital markets options; liquidity ~$85M (cash + inventory net value), unrestricted cash $43M; maintain strong asset-backed partner ties Exploring capital raise; focus on cost of capital
Buy box expansionQ2/Q3: Focus on wider margins, fewer homes Expanding price points (e.g., ~$250k–$600–$700k) to target move-up buyers; ramp toward 1,000 acquisitions/quarter Shifting to higher-priced, higher-return homes

Management Commentary

  • “In the fourth quarter, revenue exceeded the midpoint of our guidance, supported by a balanced mix of offerings… And our improved advertising efficiencies driven by our Agent Partnership Program growing to nearly a third of our acquisitions.” — Brian Bair, CEO .
  • “Through our relentless focus on cost efficiency, we’ve taken big steps towards profitability… removing $44 million of additional cost [in 2024].” — Peter Knag, CFO .
  • “We are ramping towards 1,000 acquisitions per quarter… exploring options to raise additional capital… to enhance our financial flexibility.” — Brian Bair .
  • “Fourth quarter revenue totaled $174 million… Net loss for the quarter was $17.3 million… unrestricted cash totaled $43 million, with total liquidity exceeding $85 million when incorporating the net value of our carried inventory.” — Peter Knag .

Q&A Highlights

  • Buy-box expansion: Moving up in price points (approx. $250k–$600–$700k) enables targeting move-up buyers; streamlined cash offer process delivers instant ranges and quick inspections, improving visibility and conversion .
  • Acquisition ramp and EBITDA path: 1,000 acquisitions/quarter is a “North Star”; not expected in Q1/Q2 but sequential progress through 2025 with run-rate Adjusted EBITDA breakeven targeted exiting year, driven by process improvements and asset-light mix .
  • Capital raise considerations: Evaluating capital markets options to enhance liquidity and lower cost of capital; maintain strong asset-backed partner relationships; year-end liquidity ~ $85M (incl. inventory net value) and $43M cash .
  • Commission landscape: Environment “settling”; co-broker commissions ~2–3%; Agent Partnership Program benefits as agents begin with Offerpad to obtain offers pre-listing .
  • Selective inventory approach: Avoiding high HOA/townhomes/large homes on small lots; emphasis on inventory that turns quickly amid weak buyer demand .

Estimates Context

  • Wall Street consensus (S&P Global) was unavailable at the time of analysis due to request limits; therefore, estimate comparisons cannot be provided. Results were compared to company guidance and prior periods instead .
MetricQ4 2024 Consensus (S&P Global)ActualSurprise
Revenue ($M)Unavailable$174.3 —
Diluted EPS ($)Unavailable($0.63) —
Adjusted EBITDA ($M)Unavailable($11.5) —

Key Takeaways for Investors

  • Mix shift is working: Asset-light services and product enhancements are improving unit economics and engagement, providing margin stability beyond the core cash offer amidst low transaction volumes .
  • Sequential pressure in Q4 vs Q3 was driven by strategic acquisition moderation and seasonal dynamics; watch for acquisition ramp and “slightly better” Adjusted EBITDA in Q1 2025 .
  • Cost discipline remains the backbone: FY OpEx down ~32%; management plans further efficiencies in 2025, supporting the path to Adjusted EBITDA breakeven exiting the year .
  • Liquidity and capital structure are active levers: Potential capital raise could accelerate acquisition scale and improve cost of capital; asset-backed facilities remain core .
  • Buy-box expansion into higher price points targets move-up buyers, potentially improving velocity and margins as market activity recovers .
  • Near-term trade: Stock is likely sensitive to sequential acquisition metrics, Adjusted EBITDA trajectory, and any capital markets update; medium-term thesis hinges on durable margin improvements from asset-light services and product-led efficiency .
  • Guidance credibility: Q4 actuals fell within Q3-issued ranges; Q1 2025 ranges look conservative given operational initiatives—monitor conversion metrics and TTC normalization into Q2 .