Offerpad, one of the nation’s largest iBuyers, was in the black for its third consecutive quarter. The industry disruptor, currently valued at half a billion dollars, logged year-over-year revenue growth of 185%, totaling $1.1 billion.
The Arizona-based company reported a net income increase of $11.6 million, or $0.04 per share, up 26% from the previous year.
“We sold more homes in the first half of 2022 than we did in all of 2021,” said CEO and Chairman Brian Bair on an investor earnings call. “We completed more than 6,500 renovation projects with an average timeline of 21 days. We maintained an average timeline of home acquisition to sale below 100 days, and we opened three new markets.”
The company reported an adjusted net loss of $1 million, or zero dollars per share, compared to $9.2 million in the second quarter of 2021, as well as an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increase of 5% to $13.7 million. Additionally, the firm posted a gross profit of $93 million, an increase of 83% from the prior year.
“Turning to the broader real estate market,” said Bair on the earnings call, “the softening we have been expecting is here.” But, he added, “We are entering this temporary transition period from a position of strength.”
Bair, who founded Offerpad in 2015, set out a slew of changes the company made to adjust for the market downturn. Among them were placing a cap on their purchase price in several markets, prioritizing acquisitions closer to each markets’ medium price point, reducing the length of time available to customers to select a closing date and updating their underwriting assumptions to adjust for additional risk by incorporating wider spread. On the latter point, Bair was confident that Offerpad’s geographic diversity would mitigate risk between market cycles, noting that certain regions were insulated from the brunt of the cooldown.
“We expect price adjustments to impact our earnings in the near-term,” concluded Bair, “but as the market shifts from a seller’s to buyer’s market, we expect our margins will improve.”
Shares of Offerpad were down 17% this week as of Friday morning (press time) and down 74.6% year-to-date. The firm began trading as a public company in September 2021 after merging with a special purpose acquisition company (SPAC), a strategy that’s considered increasingly dubious by industry insiders.
Brendan Rascius is RISMedia’s associate editor. Email him your story ideas at brascius@rismedia.com.
