TLDR
- Opendoor reported Q3 revenue of $915 million, exceeding analyst forecasts by 7.8% but down 33.6% from last year.
- The company’s loss per share of $0.12 significantly missed the $0.07 estimate analysts expected.
- New CEO Kaz Nejatian outlined plans to transform Opendoor into a software and AI-driven platform.
- Fourth quarter EBITDA guidance came in at $45 million, well above the negative $41.15 million analysts predicted.
- The stock declined 8.5% to $5.99 after the earnings release despite the revenue beat.
Opendoor turned in a mixed third quarter performance that failed to impress Wall Street. The real estate technology platform generated $915 million in revenue during the quarter.
That figure topped analyst expectations of $848.7 million by 7.8%. However, revenue dropped 33.6% when compared to the same period last year.
The earnings picture looked worse. The company posted a loss of $0.12 per share. Analysts had forecast a loss of $0.07 per share. The actual result missed expectations by 68.5%.
Opendoor Technologies Inc., OPEN
Adjusted EBITDA came in at negative $33 million. The Street was looking for negative $19.39 million. That represents a 70.2% miss on the profitability metric.
Shares tumbled 8.5% to $5.99 in immediate after-hours trading following the announcement.
Leadership Change Brings Strategy Shift
Kaz Nejatian used his first earnings call as CEO to announce sweeping changes. He’s repositioning Opendoor as a software and AI company rather than a traditional real estate business.
During his first month leading the company, Nejatian implemented several changes. Employees returned to office work. The company eliminated its use of outside consultants. Opendoor rolled out more than a dozen AI-powered products and features.
“Our business will succeed by building technology that makes selling, buying, and owning a home easier and more joyful,” Nejatian explained. He emphasized the company won’t rely on “charging high spreads and hoping the macro saves us.”
The CEO laid out a clear roadmap to profitability. Opendoor plans to increase transactions with sellers, improve unit economics through better pricing and faster resales, and maintain strict expense control.
Nejatian set a deadline of late 2026 for reaching breakeven on adjusted net income using a 12-month forward basis.
Transaction Volume Continues Sliding
Opendoor sold 2,568 homes in the third quarter. That marks a decrease of 1,047 units compared to the prior year period.
Home sales have declined an average of 16.2% annually over the past two years. Revenue fell even steeper at 27.3% annually during the same timeframe. The difference suggests weaker monetization per home sold.
The operating margin reached negative 7.4% in Q3. Last year’s third quarter operating margin was negative 4.9%. The company’s two-year average operating margin stands at negative 5.9%.
Free cash flow margin reached 47.2%. That’s a substantial improvement from the 4.1% recorded in the year-ago quarter.
Outlook Provides Bright Spot
Opendoor’s fourth quarter guidance offered the most encouraging element of the report. The company projects EBITDA of $45 million at the midpoint for Q4.
Analysts had been expecting negative $41.15 million. The guidance represents a massive beat and suggests the turnaround efforts are gaining momentum.
Wall Street forecasts show revenue declining another 23% over the coming 12 months. The company sold 2,568 homes in the most recent quarter as it continues managing through lower transaction volumes.
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