The first three months of 2022 proved fortuitous for two of iBuying’s most prominent players, Opendoor and Offerpad, as both companies capped the first quarter with milestone performances.
The most noteworthy news came out of Opendoor’s camp as the California-based company achieved profitability after earning $5.2 billion during the quarter—a 590% increase from the same period last year. According to co-founder and CEO Eric Wu, the iBuying giant exceeded expectations across its key metrics.
“This quarter marked another step along our journey to transform the real estate industry,” Wu said during Opendoor’s latest earnings call. “While I am encouraged by our financial performance, I’m most proud of how we delivered these results. We focused on delivering system-level changes that enable us to drive sustainable margin improvements.”
Opendoor tallied a gross profit of $535 million in Q1 compared to its $97 million from the year before. The California company also reported a $176 million surge in adjusted EBITDA, marking Opendoor’s first profitable quarter and a significant YoY recovery from its $2 million loss in Q1 2021.
Wu attributed the earnings boost—at least partially—to “consumer adoption” of their product offerings.
“As we reshape the consumer experience, we are also building a durable generational company,” he said. “This means not only driving rapid growth but also sustainable margin improvements and a reduction in our cost structure that enables us to grow and be profitable across economic cycles.”
Opendoor sold 12,669 homes in Q1—up 415% from the same period last year—while also purchasing 9,020 homes. The iBuyer currently has 13,360 homes of inventory, representing $4.7 billion in value, up 455% versus in Q1 last year.
During Opendoor’s final earnings call of 2021, Wu confidently indicated that the company would enter the new year with tailwinds carrying them forward in the market. He maintained that same upbeat outlook during the call while noting recent housing market shifts that could pose challenges for the industry.
“While rising interest rates and waiting affordability are factors we monitor very closely, we’re confident in our ability to hit our financial targets across cycles,” Wu said. “Setting aside the fact that our forecasts incorporate risk and volatility, the combination of very healthy margins driven by structural price and cost improvements, and our short duration sale-ready inventory makes navigating market turbulence very manageable.”
After reaching profitability in the final three months of 2021, Offerpad managed to keep the needle moving in the right direction in the first three months of the year. The company’s chief executive reported that they delivered the “best quarter in Offerpad’s history.”
“Not only did we achieve exponential growth, but we continued to grow profitably,” said Offerpad CEO Brian Bair in a prepared statement. “Our real estate expertise continues to be an X-factor for Offerpad’s success.”
Offerpad earned $1.37 billion in Q1, marking a 384% increase from the same quarter in 2021.
The Arizona-based company reported a year-over-year surge in adjusted EBITDA of $50.4 million—up more than 1,500% from Q1 2021. The company also turned a profit of about $41 million.
“In the first quarter of this year, companies faced labor challenges, supply constraints, rising interest rates and inflation. The housing industry saw mortgage rates increase,” Bair said during Offerpad’s Q1 earnings call. “With all of this, we navigated effectively and achieved exceptional results. We continue to prove we can grow at a robust pace profitably.”
Offerpad acquired 2,856 homes in the first quarter of 2022, marking a 139% increase in acquisitions from the same quarter last year. The company also sold 3,602 homes in that period.
It also continued to expand its footprint since the start of 2022, increasing its service territory by nearly 15% in the first quarter by adding 600 new zip codes to its business model. The company also extended Offerpad Home Loans mortgage service to nine states.
“These accomplishments are possible because we built Offerpad to address the toughest pain point in real estate, the transaction,” Bair said.