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OFFON

OPENDOOR TECHNOLOGIES INC.

(OPEN)
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3Q21 Letter to Shareholders

11/10/2021 | 04:35pm EST

Letter to Shareholders

3Q21

Opendoor Southern CA Market

A NOTE FROM ERIC

Dear Shareholders,

Over the years, I am often asked whether our vision and strategy has changed. The short answer is no - we have always been focused on making it possible to buy, sell, and move at the tap of a button. In our view, the end state for the real estate marketplace will inevitably be a simple, certain, and fast transaction powered by technology. It is just a matter of when. So we have been consistently focused on investing in that future experience, piece by piece, with the consumer in mind at every step.

Our third quarter results are the byproduct of this focus on the consumer experience. We exceeded our expectations in generating $2.3 billion of revenue, acquiring 15,181 homes, and delivering $170 million of Contribution Profit and $35 million of Adjusted EBITDA.

After clarity of vision and strategy comes execution and perspiration. We take great pride in doing the hard work to execute with excellence in our consumer experience, technology, business performance, and company culture. This is what sets us apart. In less than a year, we have virtualized the entire selling experience, with a third of our interior home assessmentsconducted via digital self-service.We have invested in our internalplatform, Opendoor Scout, to efficiently manage inspections, repairs, and vendors at scale. We have evaluated over 100 new data sets as we continue to enhance our pricing accuracy. We have launched two new buyer products that our customers love. We have doubled our markets from 21 to 44. Most importantly,we have grown our customer base by an average of 90% perquarter, while delivering a delightful experience with a seller NPS of over 80.

Underlying our execution is our team, one that is obsessed with the consumer experience, moving with a startup mentality, and building as one team to deliver on our vision. And we have added substantial talent to our team, including the acquisition ofPro.com and Skylight.com, which are leaders in home renovationtechnology, and RedDoor.com, a fully digital home financingproduct. When you combine clarity of vision and strategy withexecution and talent, you have the opportunity to build agenerational company.

Our Mission

Empower everyone with the freedom to move

Eric Wu, Co-Founder & CEO

2

3Q21 Highlights

Revenue of $2.3 billion, up 91% versus 2Q21, with 5,988 total homes sold, up 72% versus 2Q21

-

GAAP gross profit of $202 million in 2Q21; GAAP versus 13.4% in 2Q21

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GAAP net income of ($57) million, versus ($144) million in 2Q21; Adjusted Net Income of ($17)million, versus $2 million in 2Q21

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Contribution Profit of $170 million, versus$128 million 2Q21; Contribution Margin of 7.5%,versus 10.8% in 2Q21

-

Adjusted EBITDA of $35 million versus $26 million in 2Q21; Adjusted EBITDA Margin of1.5%versus 2.2% in 2Q21

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Expanded to 44 markets at the end of 3Q21with 5 new market launches

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Purchased 15,181 homes, up 79% versus 2Q21

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Grew inventory balance to 17,164 homes, representing $6.3 billion in value, up 130% versus 2Q21

3

CUSTOMER STORY

Meet The Botma's

Tyler Botma, a homeowner in Phoenix, Arizona bought and sold his house through Opendoor.

Tyler and his wife had their eye on the Litchfield Park neighborhood in greater Phoenix, for some time. For Tyler, it started with a promise made to his dad to buy a home in the area, when he was playing T-ball there at just six years old. But like millions of homeowners nationwide, the Botma's felt a lot of apprehension trying to sell their home, while also searching to buy their dream home.

That was when Tyler's brother, a loan officer, recommended he use Opendoor. The relationship between Opendoor and the Botma family started when they found out they could buy and sell all in one place. In particular, the competitive edge that Opendoor's cash-backed offer provided was incredibly valuable to Tyler given the hot housing market at the time.

Throughout the process, the stress relief and value provided by Opendoor was in complete contrast to the pain they had gone through buying and selling the traditional way. Now, the Botma family is absolutely loving their dream home.

"You can literally buy and sell all in one go and have the confidence of knowing you're going to sell your home and have that buying power and confidence on both ends and in getting what you're looking for."

Tyler Botma

4

Business Highlights

Our three key areas of investment remain unchanged. First, we are driving market share growth in our existing markets-greater scale improves awareness, trust and adoption, operational cost efficiencies, and pricing accuracy from more data. Second, we are focused on expanding nationwide, which will in turn build national brand awareness, and expand our diversified inventory portfolio across a greater variety of markets. Third, we are continuing to build a digital one-stop-shop, which enables us to digitize and bundle a suite of services together to deliver the best experience at lower costs.

EXISTING MARKET GROWTH

In executing against our goal to drive existing market growth, we have seen material gains in the adoption of Opendoor. This is driven by rising consumer awareness, expanded buybox coverage, and our investments in scalable systems that meet consumer demand.

In terms of consumer awareness and buybox coverage, we grew acquisition volume 79% quarter-over-quarter to a total of 15,181 homes, with record offers and real seller conversion. Expansions in our buybox since the end of 2019 drove 45% of our acquisitions in the third quarter, powered by the strategic investments we are making in our pricing systems, and data and pricing teams.

Our investments in scalability have also been paying dividends. We made enhancements to the seller experience by further streamlining the home assessment process prior to finalizing a seller offer. Customer adoption of our self-serve virtual assessments has increased to 35%, driven by the speed and convenience of this feature. Our data and machine learning systems are improving accuracy with minimal human intervention. We have centralized the review of all our virtual home assessments, vendor sourcing, and vendor management, driving increased operational flexibility and consistency across markets.

3Q21 Homes Acquired

15,181

15,181

8,494

3,594

799 2,016

3Q20

4Q20

1Q21

2Q21

3Q21

5

Disclaimer

Opendoor Technologies Inc. published this content on 10 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2021 21:32:41 UTC.


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Financials (USD)
Sales 2021 7 353 M - -
Net income 2021 -603 M - -
Net Debt 2021 4 407 M - -
P/E ratio 2021 -8,32x
Yield 2021 -
Capitalization 5 207 M 5 207 M -
EV / Sales 2021 1,31x
EV / Sales 2022 0,77x
Nbr of Employees 1 048
Free-Float 83,9%
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Number of Analysts 8
Last Close Price 8,50 $
Average target price 23,00 $
Spread / Average Target 171%
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Managers and Directors
Eric Wu Chairman & Chief Executive Officer
Andrew Low Ah Kee President
Carrie Ann Wheeler Chief Financial Officer
Ian Wong Chief Technology Officer
Daniel Morillo Chief Investment Officer