OPAD Offerpad Solutions Inc

Gross Margin Improves for Third Consecutive Quarter

Offerpad Solutions Inc. (“Offerpad”) (NYSE: OPAD), a leading tech-enabled platform for residential real estate, today released financial results for the three months ended June 30, 2024.

“During the second quarter, we delivered revenue within our guidance and sequential improvement in Adjusted EBITDA. Our focus on expense management, and the continued growth in our asset light platform services, drove improvement in gross margin, contribution margin, and Adjusted EBITDA,” said Brian Bair, Offerpad’s chief executive officer. “We intend to remain flexible to adapt quickly to market shifts and have adjusted our buy box, focusing more on wider margins per home and less on volume. We are pleased that our approach to strategic operations and disciplined expense management is positioning us well on the path to sustained profitability, in any real estate market.”

Highlights include:

• Improved Net Loss and Adjusted EBITDA 38% and 74%, respectively, from the prior year
• Gross margin of 8.7%, up 80bps from 7.9% in the prior quarter
• Gross profit per home sold of $29.5k, up 10% from the prior quarter
• Contribution profit after interest per home sold of $14.5k, up 22% from the prior quarter
• Time to Cash for homes sold in the quarter of 106 days, down from 138 the prior year
• Inventory owned 180+ days ended the quarter at 5.1% down from 8.5% the prior quarter
• Strong quarter for Renovate, with closed renovation projects growing 306% versus the prior year, generating $4.9M in revenue. Began working on projects for new customers including Freddie Mac and Fannie Mae
• Requests from Offerpad’s Agent Partnership Program grew to 25% of total, driving most efficient Customer Acquisition Cost (CAC) since Q2’22

“As we look at the back-half of 2024 and beyond, we are continuing to push hard on cost management and profitability with a focus on building long-term value, regardless of the macro real estate environment,” said Peter Knag, Offerpad’s chief financial officer. “Offerpad’s business is uniquely positioned in this shifting real estate landscape with significant opportunities ahead, and I am excited to be a part of this organization.”

Q2 2024 Financial Results (quarter over quarter)

 

Q2 2024

Q1 2024

Percentage Change

Homes acquired

831

806

3%

Homes sold

742

847

(12%)

Revenue

$251.1M

$285.4M

(12%)

Gross profit

$21.9M

$22.6M

(3%)

Net loss

($13.8M)

($17.5M)

21%

Adjusted EBITDA

($4.4M)

($7.1M)

38%

Diluted Net Loss per Share

($0.50)

($0.64)

22%

Gross profit per home sold

$29,500

$26,700

10%

Contribution profit after interest per home sold

$14,500

$11,900

22%

Cash and cash equivalents

$56.9M

$68.6M

(17%)

Q2 2024 Financial Results (year over year)

 

 

 

 

 

Q2 2024

Q2 2023

Percentage Change

Homes acquired

831

840

(1%)

Homes sold

742

650

14%

Revenue

$251.1M

$230.1M

9%

Gross profit

$21.9M

$22.2M

(2%)

Net loss

($13.8M)

($22.3M)

38%

Adjusted EBITDA

($4.4M)

($17.3M)

74%

Diluted Net Loss per Share

($0.50)

($0.82)

39%

Gross profit per home sold

$29,500

$34,200

(14%)

Contribution profit (loss) after interest per home sold

$14,500

($2,900)

n.a.

Cash and cash equivalents

$56.9M

$115.6M

(51%)

Additional information regarding Offerpad’s second quarter 2024 financial results and management commentary can be found by accessing the Company’s Quarterly Letter to Shareholders on the Offerpad investor relations website.

Third Quarter 2024 Outlook

Offerpad is providing its third quarter outlook for 2024 as follows:

 

Q3 2024 Outlook

Homes Sold

550 to 650

Revenue

$185M to $225M

Adjusted EBITDA1

Sequential Improvement

1

See Non-GAAP financial measures below for an explanation of why a reconciliation of this guidance cannot be provided.

Conference Call and Webcast Details

Brian Bair, Chairman and CEO, and Peter Knag, CFO, will host a conference call and accompanying webcast on August 5, 2024, at 4:30 p.m. ET. The webcast can be accessed on Offerpad’s Investor Relations website. Those interested can register here. Access to a replay of the webcast will be available from the same website address shortly after the live webcast concludes.

About Offerpad

Offerpad, dedicated to simplifying the process of buying and selling homes, is a publicly traded company committed to providing comprehensive solutions that removes the friction from real estate. Our advanced real estate platform offers a range of services, from consumer cash offers to B2B renovation solutions and industry partnership programs, all tailored to meet the unique needs of our clients. Since 2015, we've leveraged local expertise in residential real estate alongside proprietary technology to guide homeowners at every step. Learn more at www.offerpad.com.

#OPAD_IR

Forward-Looking Statements

Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Offerpad’s future financial or operating performance. For example, statements regarding Offerpad’s financial outlook, including homes sold, revenue and Adjusted EBITDA, for the second quarter 2024, and expectations regarding market conditions, strategic imperatives and profitability, including the timing of reaching sustainable positive Adjusted EBITDA and cash flow, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “pro forma,” “may,” “should,” “could,” “might,” “plan,” “possible,” “project,” “strive,” “budget,” “forecast,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that may impact such forward-looking statements include, but are not limited to, Offerpad’s ability to respond to general economic conditions; the health of the U.S. residential real estate industry; Offerpad’s ability to grow market share in its existing markets or any new markets it may enter; Offerpad’s ability to manage its growth and its costs structure effectively; Offerpad’s ability to accurately value and manage real estate inventory, maintain an adequate and desirable supply of real estate inventory, and manage renovations; Offerpad’s ability to successfully launch new product and service offerings, and to manage, develop and refine its technology platform; Offerpad’s ability to maintain and enhance its products and brand, and to attract customers; Offerpad’s ability to achieve and maintain profitability in the future; and the success of strategic relationships with third parties. These and other important factors discussed under the caption "Risk Factors" in Offerpad’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 27, 2024, and Offerpad’s other reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Offerpad and its management, are inherently uncertain. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Offerpad undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Operations

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(in thousands, except per share data) (Unaudited)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue

 

$

251,122

 

 

$

230,147

 

 

$

536,480

 

 

$

839,726

 

Cost of revenue

 

 

229,251

 

 

 

207,916

 

 

 

492,014

 

 

 

810,210

 

Gross profit

 

 

21,871

 

 

 

22,231

 

 

 

44,466

 

 

 

29,516

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales, marketing and operating

 

 

20,230

 

 

 

29,040

 

 

 

42,682

 

 

 

71,391

 

General and administrative

 

 

10,538

 

 

 

12,713

 

 

 

22,493

 

 

 

27,192

 

Technology and development

 

 

964

 

 

 

2,312

 

 

 

2,737

 

 

 

4,553

 

Total operating expenses

 

 

31,732

 

 

 

44,065

 

 

 

67,912

 

 

 

103,136

 

Loss from operations

 

 

(9,861

)

 

 

(21,834

)

 

 

(23,446

)

 

 

(73,620

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liabilities

 

 

(9

)

 

 

435

 

 

 

335

 

 

 

46

 

Interest expense

 

 

(4,581

)

 

 

(1,867

)

 

 

(9,486

)

 

 

(9,299

)

Other income, net

 

 

615

 

 

 

965

 

 

 

1,369

 

 

 

1,247

 

Total other expense

 

 

(3,975

)

 

 

(467

)

 

 

(7,782

)

 

 

(8,006

)

Loss before income taxes

 

 

(13,836

)

 

 

(22,301

)

 

 

(31,228

)

 

 

(81,626

)

Income tax benefit (expense)

 

 

54

 

 

 

(43

)

 

 

(69

)

 

 

(165

)

Net loss

 

$

(13,782

)

 

$

(22,344

)

 

$

(31,297

)

 

$

(81,791

)

Net loss per share, basic

 

$

(0.50

)

 

$

(0.82

)

 

$

(1.14

)

 

$

(3.21

)

Net loss per share, diluted

 

$

(0.50

)

 

$

(0.82

)

 

$

(1.14

)

 

$

(3.21

)

Weighted average common shares outstanding, basic

 

 

27,385

 

 

 

27,258

 

 

 

27,362

 

 

 

25,470

 

Weighted average common shares outstanding, diluted

 

 

27,385

 

 

 

27,258

 

 

 

27,362

 

 

 

25,470

 

 

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Balance Sheets

 

 

 

 

June 30,

 

 

December 31,

 

(in thousands, except par value per share) (Unaudited)

 

 

2024

 

 

2023

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

56,906

 

 

$

75,967

 

Restricted cash

 

 

 

16,092

 

 

 

3,967

 

Accounts receivable

 

 

 

6,745

 

 

 

9,935

 

Real estate inventory

 

 

 

307,750

 

 

 

276,500

 

Prepaid expenses and other current assets

 

 

 

3,545

 

 

 

5,236

 

Total current assets

 

 

 

391,038

 

 

 

371,605

 

Property and equipment, net

 

 

 

4,492

 

 

 

4,517

 

Other non-current assets

 

 

 

11,095

 

 

 

3,572

 

TOTAL ASSETS

 

 

$

406,625

 

 

$

379,694

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

 

$

2,838

 

 

$

4,946

 

Accrued and other current liabilities

 

 

 

13,095

 

 

 

13,859

 

Secured credit facilities and other debt, net

 

 

 

271,887

 

 

 

227,132

 

Secured credit facilities and other debt - related party

 

 

 

31,899

 

 

 

30,092

 

Total current liabilities

 

 

 

319,719

 

 

 

276,029

 

Warrant liabilities

 

 

 

136

 

 

 

471

 

Other long-term liabilities

 

 

 

9,203

 

 

 

1,418

 

Total liabilities

 

 

 

329,058

 

 

 

277,918

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Class A common stock, $0.0001 par value; 2,000,000 shares authorized; 27,329 and 27,233 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

 

 

 

3

 

 

 

3

 

Additional paid in capital

 

 

 

506,748

 

 

 

499,660

 

Accumulated deficit

 

 

 

(429,184

)

 

 

(397,887

)

Total stockholders’ equity

 

 

 

77,567

 

 

 

101,776

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

$

406,625

 

 

$

379,694

 

 

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Cash Flows

   

 

 

 

Six Months Ended

 

 

 

 

June 30,

 

($ in thousands) (Unaudited)

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

 

$

(31,297

)

 

$

(81,791

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

Depreciation

 

 

 

314

 

 

 

380

 

Amortization of debt financing costs

 

 

 

1,153

 

 

 

1,980

 

Real estate inventory valuation adjustment

 

 

 

1,168

 

 

 

7,454

 

Stock-based compensation

 

 

 

7,116

 

 

 

3,898

 

Change in fair value of warrant liabilities

 

 

 

(335

)

 

 

(46

)

Change in fair value of derivative instruments

 

 

 

—

 

 

 

715

 

Loss on disposal of property and equipment

 

 

 

29

 

 

 

30

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

 

3,190

 

 

 

871

 

Real estate inventory

 

 

 

(32,418

)

 

 

446,124

 

Prepaid expenses and other assets

 

 

 

2,091

 

 

 

313

 

Accounts payable

 

 

 

(2,108

)

 

 

1,693

 

Accrued and other liabilities

 

 

 

(902

)

 

 

(10,126

)

Net cash (used in) provided by operating activities

 

 

 

(51,999

)

 

 

371,495

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 

(362

)

 

 

(90

)

Proceeds from sale of property and equipment

 

 

 

44

 

 

 

—

 

Purchases of derivative instruments

 

 

 

—

 

 

 

(1,872

)

Net cash used in investing activities

 

 

 

(318

)

 

 

(1,962

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings from credit facilities and other debt

 

 

 

495,955

 

 

 

411,990

 

Repayments of credit facilities and other debt

 

 

 

(450,546

)

 

 

(889,773

)

Payment of debt financing costs

 

 

 

—

 

 

 

(172

)

Proceeds from exercise of stock options

 

 

 

16

 

 

 

53

 

Payments for taxes related to stock-based awards

 

 

 

(44

)

 

 

(52

)

Borrowings from warehouse lending facility

 

 

 

—

 

 

 

18,488

 

Repayments of warehouse lending facility

 

 

 

—

 

 

 

(17,336

)

Proceeds from issuance of pre-funded warrants

 

 

 

—

 

 

 

90,000

 

Proceeds from exercise of pre-funded warrants

 

 

 

—

 

 

 

11

 

Issuance cost of pre-funded warrants

 

 

 

—

 

 

 

(784

)

Net cash provided by (used in) financing activities

 

 

 

45,381

 

 

 

(387,575

)

Net change in cash, cash equivalents and restricted cash

 

 

 

(6,936

)

 

 

(18,042

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

 

79,934

 

 

 

140,299

 

Cash, cash equivalents and restricted cash, end of period

 

 

$

72,998

 

 

$

122,257

 

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

56,906

 

 

$

115,599

 

Restricted cash

 

 

 

16,092

 

 

 

6,658

 

Total cash, cash equivalents and restricted cash

 

 

$

72,998

 

 

$

122,257

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash payments for interest

 

 

$

12,624

 

 

$

13,932

 

Non-GAAP Financial Measures

In addition to Offerpad’s results of operations above, Offerpad reports certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). These measures have limitations as analytical tools when assessing Offerpad’s operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net income.

Offerpad may calculate or present its non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures Offerpad reports may not be comparable with those of companies in Offerpad’s industry or in other industries. Offerpad has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted net income (loss) within this press release because Offerpad is unable to calculate certain reconciling items without making unreasonable efforts. These items, which include, but are not limited to, stock-based compensation with respect to future grants and forfeitures, could materially affect the computation of forward-looking net income (loss), are inherently uncertain and depend on various factors, some of which are outside of Offerpad’s control.

Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins)

To provide investors with additional information regarding Offerpad’s margins, Offerpad has included Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins), which are non-GAAP financial measures. Offerpad believes that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across Offerpad’s markets. Each of these measures is intended to present the economics related to homes sold during a given period. Offerpad does so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in real estate inventory as of the end of the period presented. Contribution Profit provides investors a measure to assess Offerpad’s ability to generate returns on homes sold during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs (including senior and mezzanine secured credit facilities) attributable to homes sold during a reporting period. Offerpad believes these measures facilitate meaningful period over period comparisons and illustrate Offerpad’s ability to generate returns on assets sold after considering the costs directly related to the assets sold in a presented period.

Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest (and related margins) are supplemental measures of Offerpad’s operating performance and have limitations as analytical tools. For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in real estate inventory at the end of the period, costs required to be recorded under GAAP in the same period.

Accordingly, these measures should not be considered in isolation or as a substitute for analysis of Offerpad’s results as reported under GAAP. Offerpad includes a reconciliation of these measures to the most directly comparable GAAP financial measure, which is gross profit.

Adjusted Gross Profit / Margin

Offerpad calculates Adjusted Gross Profit as gross profit under GAAP adjusted for (1) net real estate inventory valuation adjustment plus (2) interest expense associated with homes sold in the presented period and recorded in cost of revenue. Net real estate inventory valuation adjustment is calculated by adding back the real estate inventory valuation adjustment charges recorded during the period on homes that remain in real estate inventory at period end and subtracting the real estate inventory valuation adjustment charges recorded in prior periods on homes sold in the current period. Offerpad defines Adjusted Gross Margin as Adjusted Gross Profit as a percentage of revenue.

Offerpad views this metric as an important measure of business performance, as it captures gross margin performance isolated to homes sold in a given period and provides comparability across reporting periods. Adjusted Gross Profit helps management assess performance across the key phases of processing a home (acquisitions, renovations, and resale) for a specific resale cohort.

Contribution Profit / Margin

Offerpad calculates Contribution Profit as Adjusted Gross Profit, minus (1) direct selling costs incurred on homes sold during the presented period, minus (2) holding costs incurred in the current period on homes sold during the period recorded in sales, marketing, and operating, minus (3) holding costs incurred in prior periods on homes sold in the current period recorded in sales, marketing, and operating, plus (4) other income, net which is primarily comprised of interest income earned on our cash and cash equivalents and fair value adjustments of derivative financial instruments. The composition of Offerpad’s holding costs is described in the footnotes to the reconciliation table below. Offerpad defines Contribution Margin as Contribution Profit as a percentage of revenue.

Offerpad views this metric as an important measure of business performance as it captures the unit level performance isolated to homes sold in a given period and provides comparability across reporting periods. Contribution Profit helps management assess inflows and outflow directly associated with a specific resale cohort.

Contribution Profit / Margin After Interest

Offerpad defines Contribution Profit After Interest as Contribution Profit, minus (1) interest expense associated with homes sold in the presented period and recorded in cost of revenue, minus (2) interest expense associated with homes sold in the presented period, recorded in costs of sales, and previously excluded from Adjusted Gross Profit, and minus (3) interest expense under Offerpad’s senior and mezzanine secured credit facilities incurred on homes sold during the period. This includes interest expense recorded in prior periods in which the sale occurred. Offerpad’s senior and mezzanine secured credit facilities are secured by their homes in real estate inventory and drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold. Offerpad defines Contribution Margin After Interest as Contribution Profit After Interest as a percentage of revenue.

Offerpad views this metric as an important measure of business performance. Contribution Profit After Interest helps management assess Contribution Margin performance, per above, when fully burdened with costs of financing.

The following tables present a reconciliation of Offerpad’s Adjusted Gross (Loss) Profit, Contribution (Loss) Profit and Contribution (Loss) Profit After Interest to Offerpad’s Gross (Loss) Profit, which is the most directly comparable GAAP measure, and Contribution (Loss) Profit Per Home Sold and Contribution (Loss) Profit After Interest Per Home Sold to Offerpad’s Gross (Loss) Profit Per Home Sold, which is the most directly comparable GAAP measure, for the periods indicated:

 

Three Months Ended

 

Six Months Ended

(in thousands, except percentages and homes sold, unaudited)

June 30, 2024

March 31, 2024

June 30, 2023

June 30, 2024

June 30, 2023

 

Gross profit (GAAP)

$

21,871

 

 

$

22,595

 

 

$

22,231

 

 

$

44,466

 

 

$

29,516

 

 

Gross margin

 

8.7

%

 

7.9

%

 

9.7

%

 

8.3

%

 

3.5

%

 

Homes sold

 

742

 

 

 

847

 

 

 

650

 

 

 

1,589

 

 

 

2,259

 

 

Gross profit per home sold

$

29.5

 

$

26.7

 

$

34.2

 

$

28.0

 

$

13.1

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Real estate inventory valuation adjustment - current period (1)

 

544

 

 

623

 

 

169

 

 

683

 

 

290

 

 

Real estate inventory valuation adjustment - prior period (2)

 

(540

)

 

 

(645

)

 

 

(13,679

)

 

 

(701

)

 

 

(58,030

)

 

Interest expense capitalized (3)

 

1,420

 

 

1,669

 

 

1,358

 

 

3,089

 

 

6,035

 

 

Adjusted gross profit (loss)

$

23,295

 

 

$

24,242

 

 

$

10,079

 

 

$

47,537

 

 

$

(22,189

)

 

Adjusted gross margin

 

9.3

%

 

8.5

%

 

4.4

%

 

8.9

%

 

-2.6

%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Direct selling costs (4)

 

(6,461

)

 

(6,969

)

 

(5,743

)

 

(13,430

)

 

(23,804

)

 

Holding costs on sales - current period (5)(6)

 

(622

)

 

 

(887

)

 

 

(269

)

 

 

(1,869

)

 

 

(1,811

)

 

Holding costs on sales - prior period (5)(7)

 

(443

)

 

(483

)

 

(567

)

 

(566

)

 

(2,158

)

 

Other income, net (8)

 

615

 

 

 

754

 

 

 

965

 

 

 

1,369

 

 

 

1,247

 

 

Contribution profit (loss)

$

16,384

 

$

16,657

 

$

4,465

 

$

33,041

 

$

(48,715

)

 

Contribution margin

 

6.5

%

 

 

5.8

%

 

 

1.9

%

 

 

6.2

%

 

 

-5.8

%

 

Homes sold

 

742

 

 

847

 

 

650

 

 

1,589

 

 

2,259

 

 

Contribution profit (loss) per home sold

$

22.1

 

 

$

19.7

 

 

$

6.9

 

 

$

20.8

 

 

$

(21.6

)

 

Adjustments:

 

Interest expense capitalized (3)

 

(1,420

)

 

 

(1,669

)

 

 

(1,358

)

 

 

(3,089

)

 

 

(6,035

)

 

Interest expense on homes sold - current period (9)

 

(2,103

)

 

(2,521

)

 

(1,292

)

 

(6,313

)

 

(8,631

)

 

Interest expense on homes sold - prior period (10)

 

(2,133

)

 

 

(2,426

)

 

 

(3,708

)

 

 

(2,870

)

 

 

(13,899

)

 

Contribution profit (loss) after interest

$

10,728

 

$

10,041

 

$

(1,893

)

$

20,769

 

$

(77,280

)

 

Contribution margin after interest

 

4.3

%

 

 

3.5

%

 

 

-0.8

%

 

 

3.9

%

 

 

-9.2

%

 

Homes sold

 

742

 

 

847

 

 

650

 

 

1,589

 

 

2,259

 

 

Contribution profit (loss) after interest per home sold

$

14.5

 

 

$

11.9

 

 

$

(2.9

)

 

$

13.1

 

 

$

(34.2

)

 

 

(1)

Real estate inventory valuation adjustment – current period is the real estate inventory valuation adjustments recorded during the period presented associated with homes that remain in real estate inventory at period end.

(2)

Real estate inventory valuation adjustment – prior period is the real estate inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.

(3)

Interest expense capitalized represents all interest related costs, including senior and mezzanine secured credit facilities, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

(4)

Direct selling costs represents selling costs incurred related to homes sold in the period presented. This primarily includes broker commissions and title and escrow closing fees.

(5)

Holding costs primarily include insurance, utilities, homeowners association dues, property taxes, cleaning, and maintenance costs.

(6)

Represents holding costs incurred on homes sold in the period presented and expensed to Sales, marketing, and operating on the Condensed Consolidated Statements of Operations.

(7)

Represents holding costs incurred in prior periods on homes sold in the period presented and expensed to Sales, marketing, and operating on the Condensed Consolidated Statements of Operations.

(8)

Other income, net principally represents interest income earned on our cash and cash equivalents and fair value adjustments of derivative financial instruments.

(9)

Represents both senior and mezzanine interest expense incurred on homes sold in the period presented and expensed to interest expense on the Condensed Consolidated Statements of Operations.

(10)

Represents both senior and mezzanine secured credit facilities interest expense incurred in prior periods on homes sold in the period presented and expensed to interest expense on the Condensed Consolidated Statements of Operations.

Adjusted Net Income (Loss) and Adjusted EBITDA

Offerpad also presents Adjusted Net Income (Loss) and Adjusted EBITDA, which are non-GAAP financial measures, which the management team uses to assess Offerpad’s underlying financial performance. Offerpad believes these measures provide insight into period over period performance, adjusted for non-recurring or non-cash items.

Offerpad calculates Adjusted Net Income (Loss) as GAAP Net Income (Loss) adjusted for the change in fair value of warrant liabilities. Offerpad defines Adjusted Net Income (Loss) Margin as Adjusted Net Income (Loss) as a percentage of revenue.

Offerpad calculates Adjusted EBITDA as Adjusted Net Income (Loss) adjusted for interest expense, amortization of capitalized interest, taxes, depreciation and amortization and stock-based compensation expense. Offerpad defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue.

Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental to Offerpad’s operating performance measures calculated in accordance with GAAP and have important limitations. For example, Adjusted Net Income (Loss) and Adjusted EBITDA exclude the impact of certain costs required to be recorded under GAAP and could differ substantially from similarly titled measures presented by other companies in Offerpad’s industry or companies in other industries. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of Offerpad’s results as reported under GAAP.

The following table presents a reconciliation of Offerpad’s Adjusted Net Income (Loss) and Adjusted EBITDA to their GAAP Net Income (Loss), which is the most directly comparable GAAP measure, for the periods indicated:

Three Months Ended

 

Six Months Ended

(in thousands, except percentages, unaudited)

June 30, 2024

March 31, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Net loss (GAAP)

$

(13,782

)

 

$

(17,515

)

 

$

(22,344

)

 

$

(31,297

)

 

$

(81,791

)

Net loss margin

 

-5.5

%

 

-6.1

%

 

-9.7

%

 

-5.8

%

 

-9.7

%

Change in fair value of warrant liabilities

 

9

 

 

 

(344

)

 

 

(435

)

 

 

(335

)

 

 

(46

)

Adjusted net loss

$

(13,773

)

$

(17,859

)

$

(22,779

)

$

(31,632

)

$

(81,837

)

Adjusted net loss margin

 

(5.5

%)

 

 

(6.3

%)

 

 

(9.9

%)

 

 

(5.9

%)

 

 

(9.7

%)

Adjustments:

Interest expense

 

4,581

 

 

 

4,905

 

 

 

1,867

 

 

 

9,486

 

 

 

9,299

 

Amortization of capitalized interest (1)

 

1,420

 

 

1,669

 

 

1,358

 

 

3,089

 

 

6,035

 

Income tax (benefit) expense

 

(54

)

 

 

123

 

 

 

43

 

 

 

69

 

 

 

165

 

Depreciation and amortization

 

148

 

 

166

 

 

178

 

 

314

 

 

380

 

Amortization of stock-based compensation

 

3,249

 

 

 

3,867

 

 

 

2,055

 

 

 

7,116

 

 

 

3,898

 

Adjusted EBITDA

$

(4,429

)

$

(7,129

)

$

(17,278

)

$

(11,558

)

$

(62,060

)

Adjusted EBITDA margin

 

(1.8

%)

 

 

(2.5

%)

 

 

(7.5

%)

 

 

(2.2

%)

 

 

(7.4

%)

(1)

Amortization of capitalized interest represents all interest related costs, including senior and mezzanine secured interest related costs, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

 

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