The company’s CEO Brian Bair was able to offer shareholders reassurance in the wake of Zillow’s iBuying flop by providing hard data to show that Offerpad’s business model is working.
IBuyer Offerpad saw surging growth during the third quarter of 2021, with revenue jumping 190 percent year over year to $540.3 million and gross profit rising 169 percent from the year before to $53.1 million, according to an earnings report released on Wednesday.
The company’s home sales also increased 123 percent from the previous year, from 749 homes sold during the third quarter of 2020, to 1,673 homes sold last quarter.
Offerpad saw its fourth consecutive quarter of positive adjusted EBITDA, which was $6.1 million.
The company’s net loss was $15.3 million, which was largely due to a $13.2 million non-cash charge during the quarter to mark to market the value of the Warrant Liability assumed with its business combination of Supernova, which was done in order to go public. On an adjusted basis, the company’s loss for the quarter was just $2.1 million, an improvement from $2.9 million the previous year.
The iBuyer added that over 99 percent of the company’s inventory were owned for less than 180 days.
The earnings report marked the first released by Offerpad as a publicly traded company.
“We are proud that our first quarter as a public company has highlighted key outcomes of our strategy: high customer satisfaction, operational efficiency and strong revenue growth, all supporting our path to sustained long-term profitability,” Brian Bair, chairman and CEO of Offerpad, said in a press statement.
In the wake of Zillow’s announcement that it would soon be shuttering its iBuying program, Zillow Offers, investors waited to see how other iBuyers have fared over the last quarter. As he did in an interview with MarketWatch last week, Bair offered encouragement to shareholders, backed by hard evidence of the company’s strong performance, which he says is built on local real estate professionals’ expertise.
“The backbone of our approach is combining our team’s deep local industry expertise with technology, working to make the customer experience simple and convenient,” Bair said in a statement. “This approach has led to rigorous underwriting and a strong track record of accurately estimating what our homes will ultimately sell for. I’m very proud that from the time we launched Offerpad in 2015 through the first half of this year, we’ve achieved a less than 1 percent variance between our aggregate estimated and actual sales prices.”
In its earnings report, the company also highlighted its expansion across four Midwestern markets over the course of the quarter, and its bolstering of services to provide customers with more customized solutions. During the company’s earnings call, Bair pointed out that Offerpad added a total of seven new markets over the course of 2021, and anticipates having added about 15 new markets in total over the course of 2021 and 2022 combined.
In terms of personnel, the company increased its team size by about 23 percent during the quarter, and now has roughly 800 employees total.
The company also noted that it launched a customer rewards program, Offerpad Bundle Rewards, in select markets over the course of the quarter, providing consumers with discounts when buying or selling with Offerpad and obtaining a home loan through the company’s loan program, Offerpad Home Loans.
In addition, Offerpad pointed to a customer satisfaction rating of 94 percent year-to-date through September 30th, according to a survey the company conducted of 2,500 customers.
Offerpad’s positive quarterly results also allowed it to raise its full-year outlook for 2021, increasing its midpoint of homes sold by about 100 to 5,800-6,000. The company raised its revenue midpoint for the year by $100 million to $1.85 billion-$1.90 billion, and raised its gross profit midpoint by $5 million to $175 million-$185 million.
“With a record number of homes sales driving record revenue of $540 million in the third quarter, Offerpad continues to demonstrate a combination of strong, sustainable growth and efficiency,” Mike Burnett, CFO of Offerpad, said in a statement.
“Bringing together our leading technology with our residential real estate and home renovation expertise has enabled us to continue to navigate through some of the most challenging and rapidly changing market conditions over the past 18 months. Our results this quarter have enabled us to once again raise our outlook for the remainder of the year, giving us positive momentum heading into 2022.”
During the questions period of the company’s earnings call, in response to one question about Bair’s thoughts on Zillow’s news and the overall state of iBuying, Bair said the company’s seen a “pendulum change” in this sector of the industry of late, with more consumers turning to iBuying as a first option when buying or selling a home than ever before.
Bair added, that like many people, he was “shocked” to hear about Zillow shuttering Zillow Offers, but noted, “it comes down to execution and operations and logistics.”
“Like any business, the execution is going to be key,” he said.
Update: This post was updated after publishing with additional information from Offerpad’s Q3 earnings call.
Email Lillian Dickerson