With the iBuyer sector still in flux under shifting market conditions, the first three months of the year weren’t easy on Offerpad. However, despite the company’s challenges, executives appear laser-focused on returning to their heyday.
The Arizona-based company reeled in $609.6 million in the year’s first quarter, marking a 10% loss compared to the final quarter of 2022. That dip grows when looking at how Offerpad performed in the first quarter of last year.
The iBuyer tallied a 56% decline in revenue this quarter compared to the same period last year when Offerpad posted earnings that reached $1.3 billion.
Offerpad reported a net loss of $59.1 million in Q1, which company officials touted as a win for the iBuyer after it lost double that amount last quarter.
“We are pleased to see the expected sequential improvement in our quarterly results materialize,” said Brian Bair, chairman and CEO of Offerpad, in a statement.
During a Wednesday call with investors, Bair acknowledged the toll that interest rate increases and shifting market conditions took on the iBuyer, which was forced to adjust its plans and near-term objectives.
For the past six months, the company has focused on adjusting to changing market conditions. That effort, according to Bair, included renovating and selling off the remainder of the homes Offerpad acquired before September 2022.
“As of last week, 99% of those homes have sold or are under contract to sell. This allows us to focus entirely on our go-forward plans,” Bair said.
He also indicated that the company would continue to “acquire new homes at a cautious pace” to test the market to see if it can get positive product returns.
Offerpad acquired 364 homes in the first quarter of 2023, marking an 87% decrease in acquisitions from the same period last year. The company also sold 1,609 homes in that period, down 55% from Q1 last year.
Bair claimed that the downshift in acquisitions and sales of its existing inventory aligns with recent efforts that Offerpad has implemented to offload properties the company purchased before September.
“We are now focused entirely on our go-forward plans to simplify residential real estate and build an extensive suite of solutions,” he said in a statement.
Offerpad has also been doing a bit of belt-tightening to adjust to market conditions, which included layoffs. The most recent firings came in February.
During the company’s Q4 earnings call, Mike Burnett, CFO of Offerpad, indicated that it had reduced its overall workforce by roughly 50% from its peak numbers in August 2022.
During Wednesday’s call, Burnett said the headcount reductions and other general cost-cutting measures are expected to save about $40 million for the company this year.
Despite market headwinds, the company is set on achieving profitability again. Bair went as far as to suggest that the ability to achieve that goal “is not dependent on home price appreciation.”
“We are prepared to perform through this period of depressed residential resale transaction volumes,” he said. “There are plenty of upsides if this broader market accelerates. However, our plan is not dependent on market acceleration.
“As we navigated through the abrupt market shift last year, we used this time and experience to build an even better, more diverse business,” Bair added. “We thrived in the hot buyer’s market during 2021. We adapted during the market shift in 2022, demonstrating our ability to perform under the current market conditions, with improving operational and financial results.”
Offerpad executives said they expect to sell 400 to 500 homes during the second quarter of 2023. Revenue is expected to come between $140 million and $200 million.
