Opendoor Technologies - Earnings Call - Q2 2025

Executive Summary

• Q2 delivered $1.57B revenue and the first positive Adjusted EBITDA ($23M, 1.5% margin) in three years as management prioritized underwriting discipline and marketing efficiency; Contribution Margin was 4.4% and slightly below prior guide due to an older inventory mix.
• Management moved rapidly from pilot to broad rollout of an agent-led platform: partner agents live in every market; early data show 2x more customers reach a final underwritten cash offer and 5x higher listing conversions; “Cash Plus” launched as a hybrid, capital-light product to improve risk-adjusted returns.
• Macro deteriorated through Q2 (slowing clearance, rising delistings); spreads were raised and acquisitions slowed, exiting Q2 on a lower pace. Q3 guide embeds continued softness: revenue $800–$875M, Contribution Profit $22–$29M (2.8–3.3%), Adjusted EBITDA $(28)–$(21)M; Q4 revenue expected to decline sequentially similar to Q3, and marketing spend to be materially lower YoY.
• Balance sheet/liquidity improved: $789M cash, $7.8B non-recourse borrowing capacity (of which $1.8B drawn), and a $325M 7.0% 2030 convertible issuance that extended maturities and added ~$75M cash.

What Went Well and What Went Wrong

• What Went Well

  • First positive Adjusted EBITDA since 2022: “we achieved our first quarter of Adjusted EBITDA profitability… even as housing market conditions continued to deteriorate” (CEO).
  • Platform pivot traction: “partner agents are live in every market,” with “twice as many customers… to a final underwritten cash offer” and “5x” listing conversion; Cash Plus expands capital-light earnings potential.
  • Liquidity and terming out converts: $325M 7.0% 2030 Notes exchanged/issued, extending $246M 2026 converts and adding ~$75M cash.

• What Went Wrong

  • Contribution mix headwind: Contribution Margin 4.4%, “just below” prior 4.5–4.9% guide due to older, lower-margin homes; Contribution Profit $69M vs $95M in 2Q24.
  • Macro weakening through quarter: slowing clearance, decade‑high delistings; spreads raised further; acquisitions fell 63% YoY to 1,757 and exited Q2 on a lower trajectory.
  • H2 outlook resets: Q3 guided to lower revenue and negative Adjusted EBITDA; Q4 revenue to decline sequentially similar to Q3; marketing down materially YoY given spreads and seasonality.

Transcript

Speaker 7

day and thank you for standing by. Welcome to the Opendoor Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Michael Judd, Capital Markets and Investor Relations.

Speaker 4

Thank you, and good afternoon. Details of our results and additional management commentary are available in our earnings release and shareholder letter, which can be found on the Investor Relations section of our website at investor.opendoor.com. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of the Federal Securities Laws. All statements other than statements of historical fact or statements that could be deemed forward-looking, including, but not limited to, statements regarding Opendoor's financial condition, anticipated financial performance, business strategy and plans, market opportunity and expansion, and management objectives for future operations. These statements are neither promises nor guarantees, and undue reliance should not be placed on them.

Such forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in the Risk Factors section of Opendoor's most recent annual report on Form 10-K for the year ended December 31, 2024, as updated by our quarterly report on Form 10-Q for the quarter ended June 30, 2025, and other filings with the SEC. Any forward-looking statements made on this conference call, including responses to your questions, are based on management's reasonable current expectations and assumptions as of today, and Opendoor assumes no obligation to update or revise them, whether as a result of new information, future events, or otherwise, except as required by law. The following discussion contains references to certain non-GAAP financial measures.

The company believes these non-GAAP financial measures are useful to investors as supplemental operational measurements to evaluate the company's financial performance. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our website at investor.opendoor.com. I will now turn the call over to Carrie Wheeler, Chief Executive Officer of Opendoor.

Speaker 0

Thank you for joining us. At Opendoor, our mission is straightforward but bold: to make selling your home simple, certain, and fast. For most people, selling a home is one of the biggest financial transactions of their lives, and too often it's also one of the most stressful. We believe it doesn't have to be that way. Over the past 10 years, we've built deep infrastructure in real estate, pricing intelligence, operational capabilities, and a marketing engine that reaches high-intent sellers. In doing so, we've amassed an unparalleled dataset: photos, videos, agent notes, and customer interactions from millions of home visits. This proprietary data fuels our AI, and that AI powers our flagship product, the Cash Offer, which delivers what traditional sales cannot: speed, certainty, and control. Our customers understand this. Over the past four years, our Net Promoter Score has been near 80, exceptional in any industry.

Increasingly, agents understand it too. In fact, one in four of our acquisitions already come from an agent bringing us their client for a cash offer. We are now making the most important strategic shift in our history, moving from a single product to a distributed platform with multiple offerings delivered through agents. Agents already come to us every single day for a cash offer. We're simply changing the direction of traffic, putting the power of Opendoor into their hands so they can bring our product straight to the seller. We have two things no one else can give an agent: one, unparalleled lead quality. We are not giving agents cold names from a spreadsheet. We're putting them in the home with a motivated seller. Two, a differentiated product suite, more selling options powered by a trusted local advisor.

Sellers can choose the certainty of a cash offer, the upside potential of a market listing, or a hybrid of both. This means sellers get more choice, more speed, and more certainty. Sellers win, agents win, and Opendoor wins because we can serve far more sellers, monetize more leads, and expand high-margin, capital-light revenue streams. We began piloting this new approach in select markets last quarter. The early proof points were compelling. Two times more customers are reaching a final underwritten cash offer relative to our traditional flow. We're delivering offers faster, with streamlined in-home agent assessments. Listing conversion rates are five times higher, and we're unlocking more capital-light earnings through our share of listing commissions. On the strength of these results, we've gone from pilot to full rollout in record time. Today, partner agents are live in every market we operate.

Our next phase is optimization: more agents, better tools, better training, and more products. We've launched our Key Agent iOS app so agents can do high-fidelity home assessments right from their phone, enriching our AI and deepening the customer connection. Being in the home gives agents the chance to guide the seller through every option, and we believe that face-to-face trust will be a powerful driver of conversion. We've also launched Cash Plus, a hybrid product designed for sellers who want the convenience of a cash offer but hope to maximize upside by going to market. Opendoor provides immediate cash to the seller, gets the home list ready, and works with a partner agent to list the home. Upon resale, the seller can receive additional proceeds after expenses. For sellers, it's the best of both worlds.

For agents, it's another competitive tool and keeps them engaged with the customer throughout the sales process. For Opendoor, it's a better risk-adjusted product that uses less capital, protects our downside, and aligns our incentives even more closely with the customers. We are building a vibrant distributed ecosystem. Agents coming to us for cash offers. We're bringing sellers to partner agents. Sellers gain more choice, more speed, more certainty, and Opendoor gains more opportunities to monetize leads, serve customers, and expand high-margin revenue streams. This is a flywheel. The more agents we enable, the more sellers we serve, the more transactions we handle, the stronger our platform gets. Our marketing dollars become more efficient as we monetize more of the sellers who come to us. As we grow transactions, we further leverage our cost structure. Value compounds for customers, agents, and shareholders alike.

We are making these changes amidst a very challenging housing market. The second half of 2025 will reflect lower acquisition and resale volumes due to the macro environment and continued high spreads, seasonality, and the fact that we are early in our transition. Our near two-month look, however, does not reflect what we're building towards: durability, relevance, and scale for the next decade. We know exactly where we're going, and we're taking decisive steps to get there. With that, I'll hand it over to Selim for the financials.

Speaker 4

Thank you, Carrie. We delivered a strong second quarter. At $1.6 billion in revenue, we achieved our first quarter of adjusted EBITDA profitability in three years. This outcome is an indicator of the meaningful operating leverage we have driven and provides a roadmap for what A&I breakeven could look like in the future. Our Q2 performance reflects deliberate choices we've made, including increased marketing spend in Q4 2024 and Q1 2025 to acquire more homes ahead of the spring selling season, and widening offer spreads in Q2 2025 to manage risk as we prioritize marketing spend efficiency and disciplined underwriting. On the acquisition side, we purchased 1,757 homes in the second quarter, slightly ahead of our expectations, but down year over year, driven by meaningfully wider spreads and accompanying reduced marketing spend. Contribution profit was $69 million in the second quarter, representing a contribution margin of 4.4%.

This was down from $95 million and 6.3% in Q2 2024, driven by a higher mix of older inventory in our Q2 resale cohorts. Adjusted EBITDA was $23 million in the second quarter, compared to a loss of $5 million in Q2 2024. Turning to our balance sheet, we ended the quarter with 4,538 homes, representing $1.5 billion in net inventory. We also had $1.1 billion in total capital, primarily comprised of $789 million in unrestricted cash and $167 million of equity invested in homes, net of inventory valuation adjustments. At quarter end, we had $7.8 billion in non-recourse asset-backed borrowing capacity, of which total committed borrowing capacity was $2 billion. In May, we issued $325 million of convertible senior notes due in 2030.

This transaction allowed us to extend the maturities on $246 million of our existing converts by four years and add $75 million in cash to our balance sheet. Turning to our outlook, the housing market has further deteriorated over the course of the last quarter. Persistently high mortgage rates continue to suppress buyer demand, leading to lower clearance and record new listings. Our second half expectations take into account current macro dynamics, typical seasonal patterns in our cash offer business, and the early-stage nature of our platform evolution, which is not yet a material contributor to our results. Our guidance for the third quarter of 2025 includes the following: approximately 1,200 homes acquired, revenue between $800 million and $875 million, contribution margin of 2.8% to 3.3%, adjusted EBITDA between negative $28 million and negative $21 million, and stock-based compensation expense between $10 million and $12 million.

While we're not providing full year guidance at this time, I would like to add some additional color for the balance of the year. We expect Q4 revenue to decline sequentially at a similar level to the Q3 sequential decline based on the dynamics I just mentioned. Contribution margin will also be pressured in the second half by an unfavorable mix of older, lower margin homes given lower acquisition volumes, likely putting our goal of year-on-year contribution margin improvement out of reach.

Speaker 0

Thanks, Selim. I want to acknowledge the great deal of interest in Opendoor lately, and that we're grateful for it. We welcome engagement from all of our investors, including the many shareholders who are new to the company. We appreciate your enthusiasm for what we're building, and we're listening intently to your feedback. This increased visibility is an opportunity to tell our story to a broader audience. We intend to make the most of it. We've been laying the groundwork to execute on the strategy we have laid out to serve every seller possible, to build a profitable business, and in doing so, to create long-term shareholder value. We look forward to updating you on our progress in the coming quarters. I will ask the operator to open the line for questions.

Speaker 7

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and one follow-up. Our first question comes from Dae Lee with J.P. Morgan. You may proceed.

Speaker 5

Great. Thanks for taking my question. First one for Selim. In regards to your Q3 guidance, you talked about macro conditions worsening throughout Q2. Is it kind of stable now, or are you still seeing incremental softness heading into the back half? I think you talked about the Q3 guidance not including meaningful impact from the newer initiatives like the agent partnership. Is that, how long does that process take, and when do you expect that to be a more meaningful contributor in the line of follow-up?

Speaker 1

Hey, Danny. Thanks for the questions. I'll take the first one, and I'll have Carrie talk a little bit about our new initiatives. In terms of the macro and what we see, I would say yes. I think at the current moment, things seem to have stabilized, definitely well below where things were at the beginning of Q2. We did see ongoing deterioration throughout the quarter, and now things seem to be in a bit of a stable pattern. Our outlook for both Q3 and Q4 assumes that we stay at or around this sort of overall macro environment, subject to seasonality adjustments that are normal for this time of year.

Speaker 0

On the topic of, like, when can we see the impact of all the changes we're talking about, our new go-to-market, our expanded product suite, I'd say a couple of things. One is we're going to see the impact of that show up in conversion and in contracts long before we see it hit the P&L for a couple of reasons. One is we have been ramping into key connection markets throughout the last quarter or so, now live in every single market, but certainly ramping. Our job right now is to optimize, get more agents enrolled, more training, and get them live. Two, there's just a natural lag between when we enter into a contract or a listing agreement, and then when that home actually gets sold and when we record it with revenue.

If you think about ramping activity, a lag between contract or listing to when we actually realize it on the P&L, we're going to see the real impact of this is going to show up in 2026. The last point would be Cash Plus. That's a meaningful growth lever for us, we believe, based on what we're seeing so far in our pilot markets, incremental to conversion. That's in a handful of markets ramping very quickly. Next quarter, when we have this call, it'll be in all markets. Again, that's going to take some time to kind of get in the hands of all of our key connection agents.

Speaker 5

Got it. As a quick follow-up, do these newer initiatives like Key Connections or Cash Plus change your contribution margin profile of the business?

Speaker 1

I think with respect to the various outcomes or the product suite that we have, I think Cash Plus enables us to have more confidence in being able to deliver within our target contribution margin range. It's a better risk-adjusted process or a risk-adjusted product for us, in addition to the fact that the initial cash outlay is lower than it would be otherwise for a normal cash offer. With respect to listing outcomes, that is high margin revenue for us, but obviously will not show up as much on the revenue line, but should help contribution margin over time.

Speaker 5

Understood. Thank you.

Speaker 1

Thank you.

Speaker 7

Thank you. Our next question comes from Ryan Tomasello with KBW. You may proceed.

Hi, everyone. This is Juan on for Ryan, and thank you for taking questions. On the fourth quarter guidance commentary, when the company says that it expects a sequential decline in fourth quarter revenue, similar to what the third quarter guidance implies, is that going to be on an absolute dollar basis or on a % basis? Similarly, would the $50 million third quarter OpEx guidance be a good run rate for fourth quarter as well?

Speaker 1

Thanks for the questions. Sorry that the sequential guidance comment was not clear, but just to clarify, that's sequential on a % basis, not on a dollar basis. In terms of the $50 million OpEx run rate, I would say no, that it's going to move from quarter to quarter. We've talked about in the past our new marketing strategy, which is heavier in Q1 and Q4 to align with the time of year when spreads are lower and we're acquiring homes in advance of the spring selling season. We would expect a heavier marketing load in Q4 and Q1, and a lighter marketing load in Q2 and Q3. What you have in Q3 is a lighter marketing load all else equal. We would expect OpEx to ramp back up in Q4 and Q1, driven by marketing.

Okay, that's clear. I have just a quick follow-up.

Sure.

With the shift to more of a buyer's market across parts of the country, are you seeing any notable increases in request volumes from sellers in those markets? Generally, how are you thinking about the potential for more seller demand coming into the platform?

I would say no. Our guidance and our outlook doesn't imply that there is any increase in seller demand coming because we haven't yet seen an increase in buyer demand leading to higher clearance. If and when that does happen, we would expect more sellers to be comfortable taking offers and wanting to sell their homes. We're not currently seeing that, and our guidance doesn't imply that that's going to happen. How do we think about demand, generally speaking? Like I mentioned before, we're aligning our marketing spend to points in time in the year when we can be acquisitive and acquire homes ahead of the spring selling season when you tend to have higher buyer demand and can realize better prices. We are going heavier in marketing, as I mentioned, in Q4 and Q1 to drive more acquisitions at a time when spreads historically have been lower.

We lean back out in the summer months when the focus is more on resale than it is on us being buyers in the market at that time.

Got it. Thanks.

Speaker 7

Thank you. Our next question comes from Ygal Arounian with Citigroup. You may proceed.

Hi, this is Wayne Chinn on for Ygal. I just wanted to ask about the distributed platform. It seems to be performing well with twice as many customers reaching a cash offer and getting that offer faster. Can you just walk us through how it's kind of done since you've gone into rapid expansion? Can you talk about the share economics you'll have there with agents between conversions and lead generation?

Speaker 0

I'm happy to do that. Let's talk a little bit about why we're doing this. First of all, to make it clear, I'll talk about what we're seeing on the conversion side, which is exciting, and then we'll talk about unit economics. On the why, based on what we've been trialing over the last quarter or so, is that pairing our sellers with an agent early in the selling journey drives incremental conversion. Full stop. An agent's able to get to a customer early. They can contextualize a suite of options, not just one option, but a whole range of alternatives for how they sell, and they guide that seller to the best outcome, and that converts better. So far, what we're seeing is twice as many customers getting through our funnel all the way to a final underwriting than we have seen historically on our traditional direct-to-consumer flow.

That means we have more customers that we have a chance to convert on. We're seeing total conversion to selling outcomes be higher. We're seeing five times more people convert to a listing than otherwise we would have been able to monetize a lead into. Those are all great proof points. We're seeing some small amount of degradation of cash conversion so far, but that was anticipated, and we believe it's temporary. Two reasons for that: one, our spreads are wide right now, given macro and seasonality; and two, our agents are still early on in getting trained and using the cash offer as part of their everyday motion. Probably most importantly, though, is that we don't have Cash Plus in any of those numbers yet. Where we have got Cash Plus in our pilot markets, it's incremental to cash conversion.

In other words, more people are choosing the Cash Plus option than they are choosing cash, and we think that should be a durable conversion lever to serve more sellers than we're seeing today on the cash side. That's the conversion story. With respect to the unit economics, I think, in terms of how this all rolls through for agents or for us or for both, I assume. I'll keep going.

That's good.

Yeah. On the Cash Plus versus cash economics, the way to think about it at a high level is we're valuing the home in the exact same way we do today for our traditional cash offer product. We're just providing less cash upfront. The seller is still able to unlock a ton of their equity. They can pack up, move out, and do what they need to do next. We'll take on the burdens of repairs, and we'll take on the burden of getting it listed with that partner agent. That seller gets additional proceeds after the resale net of expenses. Selim said this earlier, but just to be very clear, it reduces our upfront capital needs. It gives us better downside protection. It still targets a similar contribution margin to our historical cash offer product, but we think the likelihood of hitting that target is higher in this model.

In terms of the economics to the agents, they get their listing commission on the back end when that home resells. On the listing, to the extent that we have taken one of our customers, paired them with an agent, that agent eventually goes on to list the home for that customer. There's a listing commission involved. The agent earns that, and we take a share of that commission. Our share is at the high end of industry standard because our lead quality, frankly, is so strong and high converting. What that gives us is capital-light, high margin revenue.

Very helpful. Thank you. My second question would be on the pace of acquisitions. Last quarter, you talked about barbell kind of shaped. I guess, are you still thinking about it the same way, and is there any sense you can give us of the magnitude of a potential increase from Q3 to Q4?

Speaker 1

Yeah, we are still thinking about it in the same way. Obviously, all else equal for the macro environment. As you know, we've been responsive to that, and we've adjusted our pace according to what we see in the macro. As we currently sit here today, we would expect acquisitions to sequentially scale back up in Q4 relative to Q3, but we're not in a position to guide or give color on how much that could be or what that could look like. It is really dependent on what happens with the macro environment, where we set spreads, and the progress that we make on this platform pivot. We will update you on that in 90 days.

Got it. Thank you.

Speaker 7

Thank you. Our next question comes from Andrew Low with Citizens. You may proceed.

Thanks so much for taking the questions. I wanted to ask about the new platform and just kind of where is agent and consumer awareness within some of kind of your oldest markets? How are you guys thinking about driving the awareness of kind of newer offerings and changing the consumer perception of what Opendoor is? I'd love just something a little bit more tactical as we think about the back half of 2025. Can you just talk about the trend in spreads and how we should think about spreads in terms of offers for the back half of the year? Thanks so much.

Speaker 0

I'll go first. This is Carrie. Thanks for the question. A couple of things. First of all, how are we going to get the word out about key connections to agents? One of the things I think is important to understand is we already have 25% of our business coming to us today from agent partners. Those are agents who fully understand the power and importance of having a cash offer in hand when they're going to a listing appointment, and they're coming to us with their customer asking for a cash offer today. We already have tons of agent relationships. They understand the power of it. They know they can rely on it. We don't retrade. We close on time. We make it very easy and seamless for them to extend that offer to their client. This is just us changing the flow of traffic.

This is us taking our high-intent seller leads and putting them in the hands of agent partners. Our sense of what we're going to see is that this is going to become very symbiotic, right? Agents coming to us, us going to agents. On the news of some of the marketing we've done recently around our Key Agent iOS app, our push on key connections, we've had a ton of inbound from agents who understand what this could mean for their business. They understand what it means for their next lead. We're solving a problem for them. They're not having to go find their next customer. They understand they get a differentiated suite of products to sell to their clients that they can't get anywhere else. They understand the quality of our leads. We are putting them in the home. That's not a lead you get somewhere else.

It's totally differentiated. I don't really foresee a lot of problems getting this into the hands of agents and having it kind of stem from there. Consumers, listen, we've been marketing for a long time to consumers. We get lots of sellers that come to us. Our brand awareness has continued to creep over time. We'll continue to market to consumers. Our number one job right now is to take more of those many, many sellers who come to us and convert them, monetize those leads through the agent channel. That's what we're excited to do.

Speaker 1

With respect to spreads in a normal seasonal environment, I would say that spreads tend to peak in late spring, early summer, and then they will trend down from there throughout the course of the second half before they will start to come back up in late winter and early spring. That is how we normally manage the business. All else equal, that is what we would expect to see between now and the end of the year.

Thank you.

Speaker 7

Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Nick McAndrew with Zelman & Associates. You may proceed.

Speaker 3

Hey, guys. Thanks for taking my questions. Maybe just to start, you've noted that spreads have remained elevated and above historical norms just given weaker clearance rates. I'm just wondering if you could provide any color or translate some of that to how much cushion you're building into today's pricing environment and what kind of home price volatility you expect in the back half of the year.

Speaker 1

Yeah. Generally, we strive to set price to enable us to deliver within our target contribution margin range, and that's how we set our spreads or approach setting our spreads. The challenge that I sort of referenced in the comments is when we assume a certain macro and then the macro further deteriorates, it starts to eat into any cushion that we have and therefore makes it more difficult for us to hit the target contribution margin range. That is generally the approach that we take. With respect to home prices, home price appreciation tends to vary sort of depending on the time of year. The spring is when you tend to see the highest or positive home price appreciation, and as you get into the fall and winter, home price appreciation tends to go negative. That's no different to what we're planning today.

The only difference that we saw, I would say, in Q2 is the positive home price appreciation period of time this year was actually the shortest that it has been in quite a number of years. We provide some charts on that in the back of our shareholder letter that I would refer you to. I think that can be a helpful guide to understand that.

Speaker 3

That's helpful. Thank you. Selim, maybe just a follow-up for you. I know you've established the ATM equity offering about a year ago, and it doesn't look like you've accessed it to date, even with the recent improvement in stock price and volume. I'm just curious if you can talk about the environment or circumstances in which you would consider raising capital through the ATM. Thank you.

Speaker 1

Generally speaking, we don't comment on future capital raises. As for the ATM, no, we have not used it yet. We have a year and a half remaining to use it, and we'll be opportunistic in how we leverage it. Beyond that, I would say there's not much more I can say.

Speaker 3

Great, thank you.

Speaker 7

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.