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For iBuyer Opendoor, 2023 was all about moderation.
“We are excited about how we are set up for 2024 and beyond,” CEO Carrie Wheeler told investors and analysts listening to the firm’s Q4 2023 earnings call on Thursday evening.
“We’ve done the hard work in 2023 to be leaner, to be more agile, to be able to rescale the business in a sustainable fashion.”
After posting a $1.4 billion net loss in 2022 due to the drastic housing market slowdown in the second half of the year, Opendoor greatly curtailed its spending and home acquisition speed in 2023. This strategy paid off for the firm, as its net loss of $275 million for 2023 is markedly smaller. Additionally, the smaller loss came as the firm posted a 55% annual decline in revenue to $6.9 billion for full year 2023.
Indicative of Opendoor’s scaled-back approach to business was the fact that it bought just 11,246 homes in 2023, compared to 34,962 homes in 2022. At the end of 2023, Opendoor had only 5,326 homes on its balance sheet, representing nearly $1.8 billion in inventory. In comparison, at the end of 2022, the iBuyer had 12,788 homes on its balance sheet, representing $4.5 billion in inventory.
“We intentionally slowed our home acquisitions beginning in the second half of 2022, prioritizing risk management and inventory health,” said Christy Schwartz, Opendoor’s interim chief financial officer. “This resulted in lower sales volumes in 2023 versus the prior year.”
While the 18,708 homes Opendoor sold in 2023 is significantly smaller than the 39,183 homes it sold in 2022, properties spent less time on the market with only 18% of inventory at the end of 2023 being listed for more than 120 days, compared to 55% at the end of 2022.
As Opendoor looks to 2024, executives said the firm is aiming to increase its home acquisition volume throughout the year, as it did in 2023, building from 1,747 homes purchased in Q1 2023 to 3,683 homes purchased in Q4 2023.
“Looking where we stand today, we are expecting an increase in contract volume late in Q1, which will translate into sequential acquisition growth in Q2,” Wheeler said.
Opendoor executives also noted the firm’s goal to return to adjusted net income. While the iBuyer has turned a profit as recently as Q2 2023, the market shift in 2022 and the volatile mortgage rate environment in 2023 have made things challenging for the iBuyer.
“We are highly focused on rescaling the business, but we are intent on doing it in a sustainable way,” Wheeler said.
As Opendoor looks to regain ground in 2024, Wheeler said the firm is planning to increase its advertising spread and is working to widen its customer acquisition funnel.
“Last year, we reduced our marketing spend by over 60% versus the prior year, as elevated spreads made our marketing spend less efficient,” Wheeler said. “Despite these reductions, we’ve maintained our agent awareness, which is a testament to the effectiveness and efficiency of our creative advertising efforts.”
Additionally, Wheeler noted that the firm tripled its market share from Q1 to Q4 2023, growth that Wheeler and Opendoor plan to expand upon in 2024.
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