Mortgage News March 13, 2023
Opendoor, one of the leading proptech firms, faced a market slowdown in the second half of 2022 due to rapidly increasing mortgage rates. Despite selling 39,962 homes, an 80% increase in the number of homes sold, and a 94% YoY revenue growth of $15.6 billion, the iBuyer recorded a net loss of $1.4 billion for the year, compared to a net loss of $664 million in the previous year.
After achieving profitability in Q1 2022, Opendoor faced challenges in the second half of the year, culminating in a difficult fourth quarter, with a 25% YoY drop in revenue to $2.9 billion and a 23% yearly decrease in the number of homes sold. This resulted in a net loss of $339 million. The company’s executives expect Opendoor to return to adjusted net income in 2024.
Opendoor’s CEO, Carrie Wheeler, stated that navigating a major housing cycle has not been easy, and the company is highly focused on stabilizing its core business and returning to positive free cash flow. Despite market headwinds in 2023, executives are optimistic and expect the firm to return to positive unit margins once it sells its remaining inventory, which is expected to happen in Q2.
Opendoor has reduced costs by scaling back its operational capacity, including reducing its marketing spend by 65% compared to its Q2 2022 peak and cutting 18% of staff in November. These cuts resulted in approximately $110 million in cost savings.
Moreover, the company is optimistic about its opportunities, including its partnership with Zillow and its Opendoor Exclusives platform, which aims to diversify its demand funnel. Additionally, Christy Schwartz, Opendoor’s interim CFO, noted that the firm’s purchases had performed well since the beginning of the housing market shift.
Despite the challenges faced by Opendoor, executives believe the company is still on its way to becoming a “profitable market leader and generational firm.”
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