Two of iBuying’s most prominent players, Opendoor and Offerpad, exceeded expectations by reporting impressive revenue growth in their respective earnings reports. However, while the companies were able to capitalize on the demise of Zillow Offers, an uptick in net losses proved to be problematic.
That was at least the case for iBuying giant Opendoor, which saw its stock value drop by more than 20% less than 24 hours after the company announced strong earnings increases in the fourth quarter of 2021.
The company more than doubled that amount for the entire year, earning $8 billion in 2021—up 211% from 2020.
“In 2021, we saw a significant and durable shift in demand for our digital product, demonstrated our market leadership and delivered exceptional results,” said Eric Wu, co-founder and CEO of Opendoor, in a Feb. 24 statement.
Wu also said that the company’s performance at the end of 2021 outpaced expectations.
The surge in earnings was primarily due to an increase in quarterly and annual sales of homes that Opendoor acquired. The company sold 9,639 houses in the fourth quarter of 2021—up 378% versus the same period in 2020.
Opendoor sold 21,725 homes in 2021 and purchased a total of 36,908 homes last year, marking a 498% increase.
While the report showed multiple gains on Opendoor’s balance sheet, it also noted that the company tallied a significant increase in its net losses. Opendoor lost $191 million in the fourth quarter of 2021—up from $54 million from the same period the year before. It also lost $662 million for the entire year, a significant increase from its $253 million losses in 2020.
The report detailed that the primary driver for its increased losses was non-cash stock-based compensation of $536 million versus $38 million in 2020.
Opendoor’s gross profit for the fourth quarter came in at $272 million last year, up from $39 million in the same period in 2020. The company marked a full-year profit of $730 million as well.
Looking ahead, Wu appeared confident that Opendoor would carry its momentum into 2022 as the company plans to add more markets and services to its repertoire to become a “digital one-stop-shop that homeowners love and choose.”
“It is our fundamental belief that in a matter of years, millions of homebuyers and home sellers will pick a simple, certain and fast experience and transact themselves completely online,” he said.
In its first year as a publicly traded company, Offerpad, on the other hand, tallied a fourth quarter and annual performance that its chief executive described as “remarkable.”
“We exceeded our growth targets and financial expectations as demand for our services continues to grow,” said CEO and Chairman Brian Bair in his company’s latest earnings report, which showed that it earned $867.5 million in the final three months of 2021—up 287% from the same period in 2020.
“Our team successfully delivered a personal and customized experience to thousands of customers in 2021, earning us a 93% customer-satisfaction rating,” Bair continued. “Customers recognize the benefits Offerpad brings to their real estate experience, and our exceptional results highlight the value of our customer-centric approach.”
The Arizona-based company’s stock took a slight dip on Friday morning as well, sliding by less than 6%.
Offerpad’s performance in Q4 2021 also yielded the noteworthy milestone of reaching profitability since rolling out its IPO in 2021. Offerpad reported a net income of $12.8 million in Q4 2021, up from the same period in 2020 when it tallied a loss of $1.3 million.
Bair applauded his operations team during a Feb. 23 earnings call where he highlighted company growth on several fronts, including doubling the iBuyers employee base to over 1,000 people nationwide.
“The key to our continued success over the past year was growing in a responsible manner while maintaining high-quality and customizable service offerings for our customers,” Bair said during the earnings call.
Despite a skepticism surrounding algorithmic house flipping that followed the demise of Zillow Offers, Offerpad has maintained its confidence in its business model.
The company acquired 3,049 homes in the final quarter of 2021, which matched the number of homes it bought for all of 2020. Offerpad purchased a total of 9,023 homes last year, a 156% increase from 2020.
The company reported that it completed more than 8,000 home renovations last year.
Looking ahead, Bair indicated that Offerpad will continue executing its “three-pronged growth strategy focused on market expansion, increased market penetration and additional ancillary services.”
“Our third growth driver in the expansion of our ancillary service offerings includes the launch of Offerpad home loans into all markets and new partnerships,” Bair said.
“As you can see, we have innovative plans for our future and a foundation and team well-positioned to meet our goals,” Bair added. “We’ve succeeded through the historic uncertainty and economic shutdown of 2020. Then we navigated one of the most aggressive growth markets in 2021. These achievements give me confidence that the agility and flexibility of our strategy will allow us to successfully navigate future market changes.”
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to jgrice@rismedia.com.
