Offerpad Narrows Q4 Loss, Expects To Be Back In Black In 2024

Key Takeaways:

– iBuyer Offerpad expects to sell between 750 and 850 homes in Q1 2024
– They anticipate generating $245 million to $285 million in revenue during that time
– The company aims to achieve positive adjusted earnings later in the year
– Offerpad’s Q4 2023 home sales outpaced acquisitions
– The company’s revenue was up 3% in Q4 from the previous quarter
– Offerpad sold more homes than it acquired in Q4, flipping the script from the previous quarter
– The average time to convert homes in Offerpad’s inventory into cash decreased to 97 days
– Offerpad’s “asset-light” extended services accounted for 43% of transactions in 2023
– The company’s CEO, Brian Bair, emphasized the focus on scaling asset-light businesses and expanding partnership programs in 2024
– Shares in Offerpad rose in after-hours trading following the positive news and outlook

inman:

The iBuyer expects to sell between 750 and 850 homes during Q1 2024, generate $245 million to $285 million in revenue and achieve positive adjusted earnings later this year.

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Shares in iBuyer Offerpad rose in after-hours trading Monday after the company said it expects to return to profitability this year as homes turn over faster from inventory and its agent partnership program grows.

Although Offerpad posted a $15.4 million fourth-quarter loss, that’s down 23 percent from Q3 and 87 percent from a year ago, when Offerpad lost $121.1 million. For the year, Offerpad’s 2023 net loss totaled $117.2 million, down from $148.6 million in 2022.

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“We successfully navigated 2023 from a position of operational excellence,” Offerpad Chairman and CEO Brian Bair said in a statement. “During the year, we acted decisively to streamline the business and reduce costs, setting us up to drive improved top-line growth and profitability in 2024 and beyond.”

Offerpad said it expects to achieve positive adjusted earnings before interest, tax, depreciation and amortization (EBITDA) this year, but projected a Q1 adjusted EBITDA loss of $2.5 million to $10 million.

Offerpad Q4 2023 home sales outpace acquisitions

Source: Offerpad investor disclosures.

While Q4 revenue was up only marginally, rising 3 percent from the third quarter to $240.5 million, Offerpad sold more homes (712) than it acquired (678) — flipping the script from Q3 when the iBuyer bought 227 more homes (930) than it sold (703).

Offerpad said it expects to sell between 750 and 850 homes during the first quarter of this year and generate $245 million to $285 million in revenue.

During the final three months of 2023, it took an average of 97 days to convert homes in Offerpad’s inventory into cash, down from 142 days a year ago. Of the 940 homes in Offerpad owned at the end of the year, only 4.4 percent had been in its inventory for more than 180 days, down from 35 percent at the end of 2022, and nearly half were under contract.

Offerpad’s “asset-light” extended services, including its renovation service and real estate agent partnerships, accounted for 43 percent of transactions in 2023, up from 24 percent the year before. Last month, Offerpad announced it was expanding its agent partnership program with the addition of two new tiers, Offerpad PRO and Offerpad MAX.

“In 2024, our teams will focus on scaling our asset-light businesses, including the expansion of our partnership programs, and evolving our marketing strategies to potentially maximize returns and capitalize on market opportunities,” Bair said in a shareholder letter. “All of this is built upon our foundational product, our cash offer, which continues to enable our growth and expansion.”

Shares in Offerpad, which have traded for as little as $6 and as much as $15.19 in the past 12 months, closed at $9.10 before earnings were announced and gained 3 percent in after-hours trading.

Email Matt Carter


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