Open door he wants to make residential real estate brokers run for his money, but his first-quarter earnings suggest the company isn’t there yet.
The San Francisco-based instant home buyer announced a loss of net income of $ 270 million on Tuesday, an increase of 421 percent compared to the first quarter of the 2020 deficit of $ 62 million. 2021 approached Opendoor’s $ 280 million net revenue loss for all of 2020.
A jump in losses can be a danger for a growing company, even those with abundant capital backing. And by some secondary measurements, Opendoor is growing.
Clients can now sell and buy houses with Opendoor in 27 different markets compared to 21 a year ago. In addition, Opendoor bought 3,594 homes in the first quarter, a significant increase from the previous three-month periods, and a sign that the company has stepped up its operations after a pandemic hiatus.
But Opendoor’s first-quarter revenue was $ 747 million, a 40% drop from the first quarter of 2020. Opendoor generates the majority of its revenue from reselling the homes it buys, and the company sold 2,462 homes in the first quarter, a decrease from before. periods.
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How Opendoor could sell comparatively fewer homes in the first quarter amid historically high demand and low inventory was not addressed in an earnings call Tuesday.
Instead, CEO Eric Wu and CFO Carrie Wheeler painted a picture seemingly at odds with the figures on the balance sheet.
“We are getting better and more efficient at this,” Wu said, providing as evidence that Opendoor sold more houses during the first weekend on the market and for higher prices per sale, phenomena that touched every corner of the real estate market in early 2021.
Wheeler described Opendoor as, “Having an exceptional first quarter.”
Market analysts on the call did not question Wu and Wheeler, instead discussing issues such as Opendoor’s entry into the title and mortgage, and whether the company is disproportionately affected by the well-documented timber shortage ( answer: not really).
Opendoor, founded in 2014, is a pioneer in cash home buying that moves online and is an alternative to home sellers who have to work with real estate agents. The company grew in part thanks to venture capital money, including from Tokyo. SoftBank Group.
But Opendoor’s revenue, which consists primarily of selling the houses it buys and charging a 5% fee on home purchases, has not kept up with expenses.
In the first quarter of 2021, for example, Opendoor’s $ 747 million in revenue was offset by $ 650 million in “cost of income,” a figure tied to the cash Opendoor offered for households.
That generated a gross profit of $ 97 million for the company. But the firm also had $ 342 million in operating expenses. This included $ 224 million in general administrative expenses, $ 51 million in technology and development, and $ 69 million in sales and marketing.