Get out the streamers and kazoos and start preparing the hors d’oeuvres – an iBuying company has reported a year’s worth of profitability.
Offerpad Solutions generated $6.5 million for the year 2021, company CEO, chairman and founder Brian Bair reported on an earnings call Thursday, a turnaround from the Chandler, Arizona-based company losing $23.1 million in 2020.
Offerpad also posted $2.1 billion in 2021 revenue, almost doubling its $1.1 billion revenue haul. This gross revenue sum includes fees Offerpad charges consumers, plus money from home sales.
The seven-year-old business went public in September, through a special purpose acquisition company helmed by former Zillow CEO Spencer Rascoff.
Unclear is whether Offerpad can remain in the black. Bair and Mike Burnett, the company’s chief financial officer, acknowledged on the call the favorable role for their bottom line played by home price appreciation. “Nobody is expecting this level of home price appreciation to continue,” Burnett said.
Also, Offerpad only issued financial guidance for the first quarter of 2022 for which the company hopes to manufacture over $1 billion in revenue.
Still, Offerpad’s financials are a far cry from its short list of iBuying competitors. Opendoor bled $421 million in the first nine months of 2021 (Opendoor’s earnings call is Thursday). Zillow lost so much they are shutting iBuying down. And Redfin’s iBuying program is the main culprit for the company’s $110 million 2021 loss.
As for what Offerpad is doing better, Bair pointed to the company’s relatively small operating expenses of $188 million. “We will continue to demonstrate strong cost discipline,” the CEO said.
Also, Offerpad is not taking the risks other instant home buyers have when it comes to price. The company sold 6,373 homes in 2021 for an average price of $324,000. That’s less than the median U.S. home price of $361,000, according to National Association of Realtors numbers. Offerpad’s business is mostly based in Sunbelt markets. The company plans to expand into 29 markets, but analysts on the call questioned if consumers have heard of Offerpad in environs like Kansas City, Missouri and San Bernardino, California.
“Our brand awareness is market specific,” Bair said. “It’s strong in Phoenix, Charlotte and Atlanta. Brand awareness in newer markets is not what it needs to be.”
Analysts also pressed whether Offerpad can expand its “buy box” – that is the price range for which they feel comfortable to buy a home, and then resell it in around 90 days. In answering these questions, Bair and Burnett focused less on price forecasting tools and more on the company’s ability to remodel homes.
Bair also was non-committal about how Zillow dipping out of iBuying may help his business.
“It’s a little bit early to tell,” the company CEO said. “We are seeing more and more people come to us. I’m sure there’s some impact of Zillow exiting the market.”