Real estate technology firm and iBuyer Offerpad hosted its Q4 earnings call on Monday, Feb. 24– and CEO Brian Bair had to answer some difficult questions from investors about the company’s performance and long-term plans.
Bair offered some insight into the company’s home buying targeting, saying that they sought to expand their buy box from the $200,000 to $500,000 range towards the $250,000 to $700,000 price point. Bair noted that this would unlock buyers who were exiting a sale and looking to reinvest their equity, as opposed to getting caught in the net of first time buyers, who have run up against affordability issues.
“What’s interesting is it’s really difficult for first time homebuyers right now to get into a home because of the affordability. And so what we’ve done is we moved the buy box up and really expanded it…basically, that allows us to find buyers that are coming out of another sale and (are) moving their equity from one house to another,” he said.
The company purchased 384 homes in Q4 2024, down sharply from 678 for the same quarter in 2023. Offerpad sold 503 homes last quarter, compared to 712 a year ago.
The sharp lines of questioning from investors came against a backdrop of a difficult financial environment for Offerpad, Chief Financial Officer Peter Knaagas said the company has “begun to engage in capital market discussions beyond our core asset backed facilities partnerships.”
Knaag also fielded a question regarding the raw number of homes Offerpad seeks to acquire for its portfolio. He said that 1,000 homes continues to be the company’s “north star,” but that they likely won’t reach that point in the first two quarters of 2025.
“We’re going to be moving sequentially towards that level as we get into the year,” he said.
Offerpad’s Q4 Results
The company experienced a challenging year when set against a 2023 benchmark, experiencing a 30% decline in revenue year-over-year to $919 million. In spite of this, the company was within its internal parameters, as Q4 revenue was at the upper end of guidance at $174 million.
The company operated at a net loss again for the quarter, down $17.3 million (from $15.4 million last year) and aims to quickly scale its business after a difficult 2024 in the real estate space and for the company. Bair detailed the efforts in his introductory comments:
“Our efforts remain centered on expanding high margin revenue streams, optimizing operations and managing resources effectively to support growth. Meanwhile, enhancements in our product and processes have increased efficiency and have us poised to quickly scale the business as the market recovers. Over the past two years, and specifically in recent quarters, returning to positive earnings and cash flow has been our key objective.”
Bair went on to detail the strategies by which Offerpad intends to scale its profitability, which were to diversify sources of income beyond its core model, expanding its buy box to include a more realistic segment of the market and refining acquisition strategies such that there will be “disciplined inventory management with strong return objectives.”
Offerpad’s stock price was up and down following the earnings report, trading roughly flat at press time.
