The Q3 2022 earnings report chart arrows were all over the place for Offerpad, the high-tech iBuyer and seller headquartered in Arizona. On Wednesday, Nov. 2, the company reported the following 2022 Q3 results compared with the prior-year third quarter:
- Revenue was $821.7 million compared to $540.3 million.
- Gross profit was $2.2 million* compared to $53.1 million.
- Net loss was $80.0 million* compared to $15.3 million.
- Adjusted EBITDA was negative $64.3 million* compared to positive $6.1 million.
*Reported amounts include an inventory impairment charge of $27.5 million.
While the iBuyer managed to reel in more cash during the quarter than the year before, its balance sheet took a significant hit last quarter.
Most notably, Offerpad slipped out of the black and into the red, as its net losses for the quarter bumped the company out of profitability, a setback that company executives attributed to shifting market and economic conditions.
“Since the second quarter, the economy, consumer sentiment and the real estate market have changed significantly,” said Brian Bair, chairman and CEO of Offerpad. “An increasingly hawkish Fed, persistent inflation, substantial increases in mortgage rates and further escalation of global conflict have put the financial and credit markets on edge, leaving consumers in a temporary state of shock.”
While Offerpad’s Q3 report tells the tale of how the company has weathered the recent storm that the iBuyers—and the housing market overall—has experienced, it also underscores another challenge that may lie in the background for the Arizona-based iBuyer.
Offerpad’s stock price dropped to $0.85 per share at the closing bell on Wednesday, staying the course on a downward trend that has been permeating over the past six months.
The company’s stock price hasn’t been over $1 since late October, which is the threshold for companies listed on the New York Stock Exchange—where Offerpad is listed.
If a company’s stock price dips below $1 and stays that way for a month it could be delisted, which would deal a significant blow to Offerpad in the eyes of investors.
“Offerpad’s core strategy of providing a comprehensive suite of real estate solutions is more important than ever given the recent market volatility,” Bair said. “Because of our diverse product offerings, including our asset-light listing service, Offerpad has continued to offer customers more certainty and control throughout this market transition.”
Created in 2015, Offerpad pairs real estate technology with fundamental industry experience, creating a platform where sellers could receive a purchase offer for their home, quickly contract and close, and avoid the details associated with traditional real estate selling.
The company acquired 1,847 homes in the third quarter, marking a 33% decline in purchases from the same period last year. On the other hand, Offerpad sold 2,280
Homes in Q3—up 36% YoY.purchased a total of 9,023 homes last year, a 156% increase from 2020.
Bair said in a statement that the company will be focusing on selling the remaining homes acquired over the next two quarters “before market conditions deteriorate,” which he thinks will “drive improving margins and profitability in 2023.”
“We continue to navigate through this period of market dislocation by appropriately managing down our inventory levels and strategically acquiring homes that reflect current conditions,” said Mike Burnett, CFO of Offerpad. “We are already seeing homes acquired later in the year performing better than those acquired prior to the market dislocation.”
Bair noted, “Despite the current market volatility, I firmly believe technology-enabled solutions that simplify the home ownership experience will define the future of real estate.”
