Opendoor Technologies - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue was $1.084B (+25% YoY; -21% QoQ) and Opendoor exceeded the high end of its Q4 guidance across acquisitions, revenue, contribution margin, and adjusted EBITDA; Contribution Profit was $38M (3.5% margin) and Adjusted EBITDA was $(49)M.
• Management flagged a “particularly slow start” to 2025: clearance rates pacing ~25% below last year; active listings up ~20% YoY; delistings up >30% to decade highs—prompting increased spreads in January to preserve unit economics.
• Q1 2025 guidance: revenue $1.0B–$1.075B, Contribution Profit $40M–$50M (4.0%–4.7% margin), Adjusted EBITDA $(50)M–$(40)M), and SBC $13M–$15M; strategy shifts include aligning marketing with seasonality (focus Q4/Q1, reduce Q2/Q3) and re-engaging high-intent sellers to drive conversion.
• Financing position strengthened: early 2025 renewals of multiple facilities at same/better credit spreads; $6.9B non-recourse capacity and $1.1B capital at year-end support execution despite macro pressure.

What Went Well and What Went Wrong

What Went Well

• Exceeded the high end of Q4 guidance in acquisitions, revenue, contribution margin, and adjusted EBITDA; sold 2,822 homes, revenue $1.084B, Contribution Profit $38M, Adjusted EBITDA $(49)M.
• Improved unit economics YoY: contribution margin 3.5% (3.4% in 4Q23), Adjusted Net Loss narrowed to $(77)M from $(97)M, with pricing model enhancements driving conversion at like-for-like spreads.
• Strengthened capital stack: renewed 3 revolving and 1 term facility; extended mezzanine facilities through at least 2027, signaling partner confidence and providing flexibility.

Management quotes:

• “We exceeded the high end of our outlook for acquisitions, revenue, contribution margin and adjusted EBITDA.”
• “We implemented improvements to our pricing models… to better differentiate spreads across price points… expand conversion.”
• “We successfully renewed three revolving credit facilities and one term debt facility at consistent or improved credit spreads.”

What Went Wrong

• Macro deterioration: clearance rates ~25% below last year, visits to new listings down ~20%, delistings up >30%; management increased spreads in January, dampening acquisitions.
• Older inventory mix: 46% of homes >120 days on market at year-end, pressuring contribution margins; Q1 margin guide below full-year 5%–7% target (4.0%–4.7%).
• GAAP losses remain: Q4 Net Loss $(113)M, EPS $(0.16); full-year Net Loss $(392)M amid elevated interest expense and lower starting inventory entering 2024.

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Opendoor Technologies Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one-one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one-one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kimberly Niehaus, Investor Relations. Please go ahead.

Kimberly Niehaus (Head of Investor Relations)

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 the following discussion contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are 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 can 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 factor section of Opendoor's most recent annual report on Form 10-K for the year ended December 31st, 2024, as updated by our periodic reports filed after that 10-K. 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 each 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.

Carrie Wheeler (CEO)

Good afternoon, everyone. Thanks for joining us today. With me today is Selim Freiha, our Chief Financial Officer. At Opendoor, we're on a mission to reinvent the U.S. residential real estate industry. And in 2024, we took decisive steps to simplify our business, sharpen our focus, and drive towards sustainable, profitable growth. Early in the year, we saw a strong home acquisition momentum. But as macro signals pointed to potential instability in late Q2, we acted swiftly, adjusting our pricing to manage risk and maintain healthy unit economics. At the same time, we took proactive steps to strengthen our operations. In Q3, we completed the separation of Mainstay. And in Q4, we launched a cost-efficiency program and a workforce reduction to align our structure with our profitability goals. Despite persistent macro headwinds, we executed with discipline. In 2024, we purchased 30% more homes than in 2023.

We improved contribution margin to 4.7%, up from -3.7% the year before, and we significantly reduced our adjusted net losses. As we enter 2025, we're seeing a slower start to the spring selling season, with additional macro pressures compared to last year. On the supply side, clearance rates, meaning how quickly homes go under contract, are pacing 25% lower than last year. New listings are holding steady, but active listings are up nearly 20%, signaling a slowing market. On the demand side, visits to new listings are down 20%-25%, while delistings are up over 30%, hitting decade highs as more sellers exit the market, and with little near-term rate relief in sight, the lock-in effect of low mortgage rates for sellers and affordability challenges for buyers will persist.

Given these dynamics, we are refining our approach further, optimizing contribution profit dollars, exploring new revenue opportunities, and ensuring Opendoor's position to drive long-term value. Our commitment is clear: profitable, sustainable growth. And there are four key areas where we're focused on improving our cash offer business. First, we are setting spreads to optimize our contribution margin. Given the continued depressed housing backdrop and a particularly slow start to the spring selling season, we began increasing spreads in January to manage risk. As has always been the case, we will monitor key macro indicators and make prudent adjustments to spreads with a bias towards optimizing for contribution margin. Second, we are enhancing the customer experience. A better experience drives higher conversion. We've enhanced our pricing models, improving price segmentation and market-level spread accuracy so that we can better differentiate spreads across price points and expand our conversion.

This has allowed us to drive improvements in conversion at like-for-like spreads. Additionally, we know that many sellers come to Opendoor, get an offer, and then wait before making a decision. In fact, over 70% of our 2024 acquisitions came from sellers who declined their first offer but later accepted a refresh one. This year, we're strengthening our re-engagement strategies so when sellers are ready, Opendoor is top of mind. Third, we are better aligning our marketing strategy to seasonal buying and selling patterns. We'll focus our marketing efforts to more closely align with when our spreads tend to be lower and when Opendoor's value proposition for customers is even greater. This will result in increased acquisitions in Q4 and Q1 and will position us to sell those homes in the spring and summer selling seasons when buying demand typically peaks.

In Q2 and Q3, we expect to scale back marketing spend and, in turn, acquisitions since homes acquired in those quarters will be sold into a lower-demand environment and recognize lower price appreciation over the holding period. This strategy aligns our marketing spend to how our spreads change throughout the year and allows us to benefit from seasonal price swings and maximize the value of every transaction. And fourth, we're continuing to operate with greater discipline. We enter 2025 as a leaner, more efficient organization, and we'll continue to drive efficiencies throughout the year. Beyond improving and expanding our cash offer business, we're also focused on expanding our offerings to serve even more sellers and unlock new revenue opportunities. We are growing List with Opendoor and our Marketplace. In 2024, we expanded List with Opendoor to nearly all of our markets, and we launched Marketplace in Charlotte and Raleigh.

These products give more sellers more choices. In 2025, we'll continue expanding them, ensuring sellers can choose the option that best fits their needs. We're also helping more sellers who are outside of our Buy Box. Many high-intent sellers visit our site every day, even if their homes don't fit within our Buy Box. We see a significant opportunity to connect these sellers with agents, helping them successfully transact while creating new revenue streams for Opendoor. At Opendoor, we're driven by our mission: transforming the real estate experience by making it seamless, convenient, and certain for sellers and buyers. Our customers continue to reinforce the value of our platform every day. And as we move forward, our focus remains the same: building a profitable, sustainable business that delivers innovative solutions for sellers, buyers, and agents alike. And with that, I'll turn it over to Selim for the financial overview.

Selim Freiha (CFO)

Thank you, Carrie. In the fourth quarter, we exceeded the high end of our outlook for acquisitions, revenue, contribution margin, and adjusted EBITDA. We delivered $1.1 billion of revenue in the fourth quarter, up 25% versus the same quarter in 2023, representing 2,822 homes sold. Revenue for the full year was $5.2 billion, compared to $6.9 billion in 2023, due primarily to a lower starting inventory balance entering 2024. On the acquisition side, we purchased 2,951 homes in the fourth quarter, compared to 3,683 in the same quarter last year, as spread levels remain elevated. However, we were able to accelerate our pace of acquisition as we moved through the quarter, as we saw improvements in conversion at given spread levels. These conversion gains were enabled by enhancements to our product flow and improvements to our pricing models. For the full year, we acquired 14,684 homes, up 31% versus 2023.

Contribution profit was $38 million in the fourth quarter versus $30 million in Q4 2023, representing a contribution margin of 3.5%. For the full year, contribution profit improved by $500 million to $242 million versus a loss of $258 million in 2023. And for the full year, contribution margin was 4.7% versus -3.7% in 2023, and just shy of our annual target margin range of 5%-7%. Adjusted EBITDA loss was $49 million in the fourth quarter, representing a $20 million year-over-year improvement. For the full year, our adjusted EBITDA loss was $142 million versus a loss of $627 million in 2023. This improvement in adjusted EBITDA losses was primarily driven by improved contribution profit and better expense management. Turning to our balance sheet, we ended the year with 6,417 homes representing $2.2 billion in net inventory, up 22% from the prior year.

We also had $1.1 billion in total capital, which includes $679 million in unrestricted cash and marketable securities, and $306 million of equity invested in homes and related assets, net of inventory valuation adjustments. We also had $6.9 billion in non-recourse asset-backed borrowing capacity, composed of $3 billion of senior revolving credit facilities and $3.9 billion of senior and mezzanine term debt facilities, of which total committed borrowing capacity was $2.2 billion. In early 2025, we strengthened our capital position by amending and extending the term of certain debt facilities. We have successfully renewed three revolving credit facilities and one term debt facility at consistent or improved credit spreads, while both of our mezzanine facilities were extended through 2027. The successful extension of these credit facilities is a testament to the ongoing support and confidence of our capital partners and positions us well to continue executing on our business plans.

As we enter 2025, we are focused on ensuring attractive unit economics in our cash offer business, operating with strong cost discipline, and making progress on our path to profitability. The macro real estate environment has been marked by higher interest rates for buyers and entrenched homeowners with existing low-rate mortgages who remain on the sidelines. While many of the changes and programs we are putting in place are helping to counter some of these pressures, we anticipate that these headwinds will continue to impact our performance in the near term.

Our outlook expectations for the first quarter of 2025 include the following: revenue is expected to be between $1 billion and $1.075 billion, contribution profit between $40 million and $50 million, which implies a contribution margin of 4% to 4.7%, adjusted EBITDA loss between $40 million and $50 million, adjusted operating expenses of approximately $90 million, and non-cash stock-based compensation expense between $13 million and $15 million, which represents a decline of over 50% year-over-year. We expect home acquisitions of over 3,500 in the first quarter, up slightly year-over-year. Normalizing for bulk purchases we made in the first quarter of last year that are not expected to repeat this year, acquisition growth would be up over 10% year-over-year.

As Carrie mentioned, we are evolving our home acquisition strategy to enable us to concentrate our selling activity in the spring and summer selling season when buyer demand and home price appreciation are higher. This will also result in fewer homes acquired in the middle of the year relative to Q1 and Q4. Additionally, while we continue to believe that 5%-7% is an appropriate annual contribution margin for our business, our margin will fluctuate from quarter to quarter, driven by seasonality and other factors. Our strategy for this year is to continue to enhance our pricing effectiveness, improve our customer experience and offerings, and drive efficiencies that we expect will meaningfully improve our adjusted net losses on a year-over-year basis. Longer term, we are focused on implementing the strategy that Carrie discussed, building on our platform to position Opendoor to achieve profitable growth amidst varying real estate backdrops.

With that, I will ask the operator to open the line for questions.

Operator (participant)

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 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Dae Lee with JPMorgan. Your line is now open.

Dae Lee (Equity Research)

Great. Thanks for taking my questions as well. First one, for you, Selim. Could you elaborate a bit more on your cost savings and cost efficiency opportunities? And I guess with the housing market being depressed for more than two years now, could you talk about how you're thinking about balancing the need to achieve profitability at current housing levels versus maintaining operational scale? And then secondly, could you give us an update on what you're seeing from Marketplace in Charlotte and Raleigh that gives you confidence to expand the offering more broadly? Thank you.

Selim Freiha (CFO)

Yeah. I'll take your question on operating costs. Look, we've taken significant action in the latter half of the year to reduce our overall fixed cost base. We've talked about before. We executed the disposition of Mainstay as well as did a RIF and implemented other cost savings initiatives, and what we said at the time that we did that, that we expected that to deliver $85 million worth of cost savings, and as we look towards 2025, we'll continue to look for areas of efficiency within the business and how to operate more effectively and drive further cost savings as we progress throughout the year. Looking at it from a longer-term perspective, I would say that in this environment, we are optimizing for contribution profit and working to significantly reduce our losses, which we have done in 2024, down $500 million year-over-year.

We expect, again, to materially reduce our losses in 2025. That'll be driven in part by improved contribution profit or contribution margin, as well as the full-year impact of the cost efficiency programs that we've put into place. In terms of how we think about scale over time, we believe we have right-sized and will continue to right-size the business for the scale we're operating at today from a fixed cost perspective, but also feel like we can, at our current fixed cost levels, we think we can support a higher level of growth in the medium term. Should that come to pass, don't feel like we need to scale those costs back up within reason, but it's all dependent on the growth outlook for the business over the long term.

Carrie Wheeler (CEO)

Hey, Dae. Carrie, I'll take the Marketplace question for your comment. So we have been in Texas, mostly Dallas, for quite some time, and we recently expanded in the last year to Raleigh and Charlotte. And reason being twofold. One, customers saying yes to trial Marketplace, high take rate on that, to people opting into the product, and then a pretty good clearance rate into Marketplace, notwithstanding the fact that just we have a lot less visibility than you would have for that home on MLS. What we think we're creating in Marketplace is a different kind of seller who has some aspirations to sell, certainly, but is shy of wanting to put their home on the MLS, oftentimes because of home conditions.

It's not list ready, but they want to trial something, and they can always fall back to the cash offer, but they don't want to expose themselves to the taint of days on market and all that, and they're just not in a position to do that. In this market, having those kinds of homes available to buyers, given affordability pressures, is something we're still focused on pursuing, and so we'll continue to iterate and test in a very measured investment way in the three markets we've got.

Operator (participant)

Thank you.

Dae Lee (Equity Research)

Got it. Thank you.

Operator (participant)

Our next question comes from the line of Ygal Arounian with Citigroup. Your line is now open.

Ygal Arounian (Director of Internet Equity Research)

Hey, guys. Good afternoon. I'll ask about the other third-party products with the List with Opendoor and what you're seeing since you've expanded that into all of your markets and what the opportunity you think might be on these products, moving them outside of your Buy Box. And there's, I guess, a good amount of debt that's coming due in 2025 and 2026. And just as that starts to play out, how you think about, I don't know, current interest rate environment, capital needs, liquidity, and what your approach is going to be there. Thank you.

Carrie Wheeler (CEO)

Sure. Hey, Ygal, with Carrie. I just need to touch base really quickly on List with Opendoor. I'll hand it over to Selim to talk about balance sheet. So List with Opendoor, just as a reminder, that's letting someone access the market, test it, but with the certainty of an Opendoor Cash Offer for a finite period of time in all markets towards the end of last year. So still relatively small for us in terms of overall percentage of revenue. In this environment, given where we are with spreads and just what we feel is it continues to be a soft macro, it will be something we will lean more into in 2025. Selim?

Selim Freiha (CFO)

Yeah. On the balance sheet side, look, we've planned to significantly reduce losses year-over-year, as we've indicated, and we feel good about our overall liquidity position. In regards to our facilities, entering this year, we have recently amended or extended more than half of our facilities, increasing our borrowing capacity at similar or better credit spreads. And over 90% of our $8 billion of available borrowing capacity is now extended through at least 2026. We've done this in and amongst a difficult market environment, which demonstrates solid credit performance, financeability of our assets, and the steady commitment of our long-term lending partners. We currently have $1.1 billion in capital. And while we don't comment on future capital transactions with regards to our converts, they don't mature until August of 2026. That's a year and a half out from now.

We’re constantly evaluating our capital structure and opportunistically assessing the market for ways to support our balance sheet. Overall, we feel good about where we are right now.

Ygal Arounian (Director of Internet Equity Research)

Okay. And maybe if I could ask one more follow-up. Just bigger picture, is we all know the market continues to be challenging and you're right-sizing for the current market environment, but with hopes that one day this starts to improve. How are you balancing maybe the way you thought about the previous Buy Box and the markets you were operating in and how you approach expansion and then opportunity? Meaning, would the target be to kind of go after the same addressable market? Do you narrow it down to regions and areas where you can get better contribution margins? Does that approach change at all if you thought about that, or are you just kind of busy working through what's been this real challenging market right now? Thank you.

Carrie Wheeler (CEO)

Yeah. Let me take that, Ygal. I would say we haven't pulled back on all the Buy Box expansion we've made for those geographies or price points. What we have done is gotten a lot better at price segmentation and how we adjust for the right spread for the right home at the right time. So one of the things we talked about in the shareholder letter is we've had meaningful gains on a spread-adjusted basis in conversion. And so what we'll continue to challenge our team to and make improvements is like, let's get better at pricing that home. And if certain segments are challenging, Florida condos, for example, we're going to be really wide and discriminating on our pricing in certain—but we're not retrenching from our Buy Box today. Does that answer your question?

Ygal Arounian (Director of Internet Equity Research)

Yes.

Carrie Wheeler (CEO)

Okay.

Ygal Arounian (Director of Internet Equity Research)

It does. Yes. Thank you.

Carrie Wheeler (CEO)

You're welcome.

Operator (participant)

Our next question comes from the line of Nick Jones of Citizens. Your line is now open.

Nick Jones (Managing Director)

Great. Hi. Thanks for taking the questions. I guess first, can you talk about exclusive listing? This is increasingly a topic of conversation in the industry. To the extent I think folks have tried in the past to maybe bypass the MLS or really kind of own their kind of own unique content or inventory, can you kind of talk about how you see that maybe fitting into your playbook or if that's kind of good or bad for the business?

Carrie Wheeler (CEO)

Yeah. I mean, obviously, we just talked about marketplace exclusives for us. I mean, at the highest level, we're on the right side of consumers. Consumer-first business. I think CCP is about giving consumers full access and transparency and availability. All those things are critical. But I also think at the same time, there's room for evolution. It doesn't always work for everyone to expose their home to the MLS. And we think people should have choice. So to the extent that there's innovation in the traditional system, we're all for it, so long as it's in favor of consumer choice, which, again, marketplace for us is in that strike zone. It's about giving customers an option to do something around their home and explore liquidity, shy of having to expose it to the full MLS.

Nick Jones (Managing Director)

Yeah. Makes sense. And then I guess I want to go back and double-click deeper on costs. As we think towards the path of profitability, this model, I guess, should work in a single market. You have a certain amount of infrastructure so you can scale. To what end do you try to get more aggressive, really bringing costs down and focusing on less markets just to kind of maintain the business or grow within a smaller geography versus kind of maintaining maybe a larger infrastructure, larger cost basis to kind of wait for the tides to change in the industry? Thanks.

Selim Freiha (CFO)

Yeah. I think we do look at that trade-off, and we discuss that trade-off internally quite a bit. We are comfortable with the geographic spread that we have today, the resources that we have in place in the various markets relative to the level of inventory and buying and selling that we're doing there. So no plans to retrench or pull back in any markets just for the purpose of cost savings. We do look at it at the contribution margin level for each market for the homes we're buying in those markets. And as long as we're getting the contribution margins that we want to see, then there's no real reason to think about shrinking our addressable market.

Nick Jones (Managing Director)

Got it. Thank you.

Operator (participant)

Thank you. Our next question comes from the line of Ben Black with Deutsche Bank. Your line is now open.

Jay Steiner (Managing Director)

Hi. This is Jay Steiner. I'm for Ben. Thanks for taking my questions. Just quickly, I mean, given that you ended the year with just under 50% of your inventory, kind of having been on market over 120 days, and you talked about how clearance rates are down 25% to start the year. Is that going to be sort of an overhang on the contribution margins you're able to attain? I know in 1Q, you're guiding to 4.7%. But as we move into 2Q and maybe the full year, is that something to think about when thinking about the full-year 2025 contribution margins? And then just as kind of a follow-up, earlier, you talked about adjusting your pricing model to kind of take into account different price points.

Is there any, and I know you brought up the regional segmentation, is there anything in price points that you might be seeing as far as more success in one price point versus the other, whether it be on the spread or clearance rates or maybe a drag that's really kind of what's keeping some of the lower clearance rates? Thank you.

Selim Freiha (CFO)

Thanks, Ben. Let me take the question on DOM and contribution margin to start, and then I'll hand it over to Carrie. So yeah, we ended the year with 46% of our homes and inventory at greater than 120-day DOM, which was up year over year. As you probably know, this metric does tend to fluctuate based on seasonal factors, market dynamics, and our resale strategies. A little bit of context on that. First and foremost, our acquisitions in the quarter in Q4 were down 20% year over year. And so as a result, you would expect the share of 120-day plus DOM homes to be higher on a year-over-year basis because we have slightly less fresh inventory this year versus last year. Secondarily, I would say we slowed home-level price drops in Q4 as the market started to slow.

We did not want to sell those homes into a lower demand environment, and so as we slowed that, that obviously extends the DOM of the overall share of the DOM over 120 days. Taking a step back from that, what I would say is for Q1, we are below the 5%-7% contribution margin range, which is implied in our guidance, but we are confident in our ability to deliver 5%-7%, even with the inventory being a little bit older. We are seeing the tail of inventory that we bought in the spring at lower spreads come through in our results. That puts about a point of pressure on our contribution margin for Q1 that we don't think will repeat or be a factor in Q2 and beyond.

But cohorts we've acquired more recently are starting to sell through at higher contribution margin levels, which does give us the confidence to be able to operate within 5%-7%. And so overall, as we're managing the portfolio, we don't view those longer DOM homes to be a significant overhang.

Carrie Wheeler (CEO)

Great, and I'll just maybe make a couple of comments on some of the conversion gains we're seeing. We implemented a new pricing model in Q4, and what has resulted is benefits to conversion, like-for-like spreads seeing higher conversion, really because of better price segmentation, so not changing what price points we're willing to acquire, willing to make an offer on. It's really about, do we understand market-level dynamics better, better home-level accuracy for things like unit-level condition or the expected liquidity for an individual home in a given market? When we are able to do that, we found that we can lower spreads for what we believe to be easier to sell homes. That increases conversion in that segment because our offers are relatively more attractive. Alternatively, we'll increase spreads for harder-to-sell homes, and we don't see an equivalent reduction in conversion for those harder-to-sell homes.

And the net of those two things expands our conversion frontier. So those are the gains we've been seeing so far, which has been a real benefit to volumes, which has been great.

Jay Steiner (Managing Director)

Great. Thank you.

Operator (participant)

Thank you. [audio distortion].

I jumped on late, so if you already hit on this, my apologies. But just broadly speaking on operating expenses, if you can provide any color on how you're thinking about managing that level through the year relative to the levels you're guiding to for the first quarter, any color on just additional efficiencies that we might expect to come to for the balance of the year? Thanks.

Selim Freiha (CFO)

Yeah. Yep. Yeah. So our operating expenses in Q4 were $87 million, and our guidance for this quarter is $90 million, which implies a slight uptick in OpEx from Q4-Q1. That increase is really driven by variable OpEx and is a result of the fact that we have higher inventory or we expect to have higher inventory in Q1.

As you've seen, our acquisition guidance implies sequential growth in acquisitions, which is going to lend itself to running with a higher inventory balance through the course of the quarter, and that will drive related costs higher on a quarter-on-quarter basis. Beyond that, what I would say is we would expect costs to come down over the balance of the year as we get the full impact of the cost savings initiatives that we've implemented thus far and look to further drive cost optimization and efficiency within the business, as well as adjusting our marketing strategy and aligning our marketing spend more closely to periods of time in the year when our spreads are lower and that marketing can be more effective, which is generally speaking in Q1 and Q4 relative to Q2 and Q3.

Great. Appreciate all that color. And then, again, apologies if you already touched on this, but just relative to the break-even targets you've previously set for run rate, acquisition volume, and revenue, I think $10 billion of revenue, obviously a lot has changed over the last year in terms of your approach to the business and the efficiencies you're driving on the expense base. So any update on what type of framework we should be thinking about for acquisition pace and top-line revenue that could drive break-even?

Yeah. Yeah. Just again, sort of a reminder that we are focused on significantly reducing our ANI losses again in 2025 relative to 2024 in service of being in a position to be able to get to break-even sooner. We have not updated the framework specifically, but you can expect that the amount of volume and revenue that we would need to deliver on at ANI break-even is significantly lower versus the prior framework. We do that by focusing on delivering contribution margin in the target range of 5%-7%, by operating with spread levels that enable us to achieve positive unit economics, and realizing margins within this target upon resale. On the cost side, as we've discussed, we made significant progress on optimizing our cost structure. The actions that we took in the second half of the year are all in service of reaching ANI break-even sooner.

We entered this year leaner, more efficient, and will continue to drive further cost efficiencies. If I take a step back, given all the work that we've done and will continue to do, we believe we're extremely well-positioned to leverage any favorable shifts in the housing markets. We have made meaningful progress towards EBITDA positive, but the macro environment continues to be a headwind. So we are maintaining elevated spread levels, optimizing for contribution profit dollars rather than volume while managing our risk and exploring other ways to monetize our funnel. We think as macro conditions stabilize, we can reduce spreads, drive higher conversions and volumes, and take advantage of a much lower cost structure, which all should serve us well in our path to profitability.

Thanks for taking the questions.

Operator (participant)

Thank you. As a reminder to ask a question at this time, please press star one-one on your touch-tone telephone. Our next question comes from the line of Nick McAndrew with Zelman & Associates. Your line is now open.

Nick McAndrew (Equity Research Associate)

Hey, guys. Thanks for taking my questions. Maybe just to start, I think Carrie, you mentioned this a little earlier, but launching Marketplace in two new markets as well as List with Opendoor in nearly all markets. I'm just curious on how often you see any cross-product migration from sellers. And I think what I mean is, are there ever times where a seller might want to pivot from one solution to another? And because you offer these additional products, you're able to keep them in the ecosystem, or is it a different type of seller that's attracted to kind of each product? Thanks.

Carrie Wheeler (CEO)

Yeah. I mean, what I'd say is what we have built and what we're known for is the greatest call to action for home sellers in real estate, which is get an offer online and sell your home in minutes. And that's what people come to us for. And we use it. It works really, really well. We know that because lots of people in the industry are using it, including agents. So people who come to us are looking for a selling solution. And then we are able to say to them, "If that cash offer doesn't meet your needs, oh, by the way, you can explore. If you've got some market FOMO, you want to test the market, you can do that with the assurance of a backstop. And potentially in those select markets, you can explore an off-MLS listing in a less exposing way.

You don't have to get your home ready for resale. You don't have to do all the open houses," and again, with some assurance, you can default back to the cash offer. So we do exactly what you suggested is we're leveraging the strength of this incredible funnel we have of high-intent sellers, and then our job is to be the best place to sell and give people all these solutions if the cash offer doesn't fit them perfectly.

Nick McAndrew (Equity Research Associate)

Got it. That's helpful. Thank you. And then maybe just to follow-up too, in the shareholder letter, you mentioned expanding your approach to capitalizing on a lot of the high-intent leads that Opendoor, the website, generates. And I'm just wondering if there's any color you can add on maybe how you think about potentially monetizing that portion of leads that falls outside of your Buy Box. Thanks.

Carrie Wheeler (CEO)

Yeah. I mean, similar theme, right? We've got this incredible funnel. We don't convert all of it. We think there's a great potential to convert many more people to an outcome. We want to help people get to their selling outcome. And we had 1.5 million people show up and enter their address on our website last year. We did not convert 1.5 million people, certainly. But there are lots of people who come to us who are looking for a solution, and we can't offer to them because they're out of our Buy Box, right? We're not servicing that market per se. But what we can do is attach them to or introduce them to an agent in their market that can go on to help them figure out that solution.

And so, again, it's another way for us to monetize all the traffic and leads that we have and get customers to an answer to help them sell and generate some revenue, by the way, which is not capital intensive, more capital-led. So we're focused on doing more of that in 2025 and beyond.

Nick McAndrew (Equity Research Associate)

Great. That's helpful. Thank you.

Operator (participant)

Thank you. I'm sure no further questions at this time. I'd like to hand the call back over to Carrie Wheeler, CEO, for closing remarks.

Carrie Wheeler (CEO)

Just wanted to say thank you to everyone for joining us today, and we look forward to reporting on progress next quarter. Take care.

Operator (participant)

This concludes today's conference call. Thank you for your participation. You may now disconnect.