Opendoor Technologies Inc Common Stock 2026 Q2 Earnings Call

Hey everyone. Welcome to Opendoor's second quarter 2026 financial open house earnings live stream. I'm Michael Judd, Opendoor's Head of Investor Relations. A few housekeeping items before we get started. Like all things Opendoor, we're going to do this faster. Details of our results and additional management commentary are available in our earnings release, which can be found at investor.opendoor.com. The following discussion contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are statements that could be deemed forward-looking, including, but not limited to, statements regarding Opendoor's financial condition, anticipated financial performance, business strategy and plans, market opportunity and expansion, and management objectives for future operations. These statements are neither promises nor guarantees, and undue reliance should not be placed on them.

Such forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in the risk factors section of Opendoor's most recent annual report on Form 10-K for the year ended December 31, 2025, as updated by our periodic reports and other filings with the SEC. Any forward-looking statements made on this webcast, including responses to your questions, are based on management's reasonable current expectations and assumptions as of today, and Opendoor assumes no obligation to update or revise them, whether as a result of new information, future events, or otherwise, except as required by law. The following discussion contains references to certain non-GAAP financial measures. The company believes these non-GAAP financial measures are useful to investors as supplemental operational measurements to evaluate the company's financial performance.

For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our website at investor.opendoor.com. With that, let's get into the open house with Kaz and Christy.

Good afternoon, everyone. I usually start these calls by showing you a clip of what I told you during the last call. This time, I'm going to tell you a story about what my wife told me, and I don't have a video clip because it'd be weird if my wife and I just recorded each other all the time. You're just going to have to use your imagination. When I was leaving home to fly to San Francisco before my first day at Opendoor, I told my wife that I'd be back home the following Wednesday, maybe Thursday, and she didn't miss a beat. She said, "Don't come back until there's a plan to break even." Look, there's a lot of ways people describe the thing I'm about to tell you. It just depends on which tribe they're a part of, right?

Paul Graham has a famous essay about it. Finance people call it a glide path to profitability, mostly because I think finance people are legally required to say things like glide path. Basically, the question is this: If nothing changes and you keep doing what you're doing, what happens? Let's see. There's no magic here. It's just math. This next section, it's going to take me a few minutes, but it's incredibly important. I want to give you all the same framework we use internally so you can see things the way we're seeing them right now. Opendoor's core business math is simple. It's how many homes we transact on times our contribution margin minus our OpEx and our financing costs. Let's go through each of these four numbers. First, volume. Right now, we're signing more than 500 contracts every single week. Last week, we signed around 700.

That's our highest contract week in years. That's over 5X higher year-over-year, and 5X higher since I joined the company. Just think about when we're doing this. We're doing this in the weakest housing market in a generation, and in the worst season of the year for us. The spring and summer seasons are basically the only times of the year where the traditional real estate system still kind of actually works, right? Over 500 sellers are still saying yes to Opendoor every single week. If you've been following along on accountable.opendoor.com, you've seen this, right? When we put up our ranges last quarter, those numbers weren't sandbags. Those were numbers we thought we'd see to put us on the path we'd need to be at the end of this year.

The fact that we have been above the high end of the projections every single week for the last quarter is the reason that I'm so confident about what I'm about to say. Look, our ANI breakeven framework assumes 6,000 quarterly transactions at $375,000 each for around $9 billion in revenue. We're pacing well above that on a contract basis in Q2. Look, some of these won't close. That's normal. That hasn't changed. That isn't the point. The point is we've achieved this in a market and at the time of the year that is the worst for us. I think it's super reasonable to expect that we're going to end up north of the 9 billion mark in revenue. It's important to take a second and describe a pattern that we're seeing as we ramp up for this revenue.

Companies have kind of two ways to artificially increase growth in absence of actual improvement in the company, right? Those two levers are marketing and pricing. I'm going to get to marketing in a second, but I want to start by talking about pricing. If you've followed Opendoor for a while, when you see high acquisition volumes, you should be skeptical. You should be asking, are we buying growth through more risk and lower spreads? Using regular language that everyday people use, are we paying more than fair prices for homes? Opendoor did this during the COVID era, right? To get volume, it took lots of risks because it believed that price was the only lever it had at its discretion to increase conversion. And if it couldn't reduce its overall cost structure, it would lose money.

What I'm about to show you is probably the slide that has made me most excited about what we've gotten done so far this year. This shows our true seller conversion at different spread levels. True sellers are the people who request an offer from Opendoor and then either sell to Opendoor or list on the open market. It's the conversion on people who actually want to sell their home. What this chart shows is that we are converting dramatically more sellers at the same spread levels than we've had in the past. We're on track to hit more than the volume we need, and we're not doing it by paying above fair prices for homes. That should mean something for our contribution margin. Let's talk about that. Our contribution margins have been improving every single quarter this year and are now in the target range that we told you we would be in.

There are about 100 or so homes left from the Opendoor 1.0 era that are going to be a drag on our contribution margin, but they're going to be sold mostly this quarter and we're going to be done with them, and I'm never going to talk about them again. On the new cohorts, our margin is performing and cohort curves are doing what we want them to do. Now, look, it's for sure true that Q3 is a seasonally worse contribution margin quarter for us than Q2. You should expect quarter-over-contribution margin to go down from Q2 to Q3.

This year we also have the impact of the Doma acquisition, which is a temporary drag on contribution margin while we integrate Doma into Opendoor. We expect to break with Opendoor's historical trend and have a Q4 that is higher in contribution margin than Q3. Every year in Opendoor's public company history, Q4 has had a worse margin than Q3 and we're about to reverse that trend. Going back to the main point, in Q2, we got to a contribution margin zone we told you we'd aim for, and we have proven that we can run the company here. Okay, acquisition volume is tracking to where we want it to be, and margin is within the range we told you we would have to be in. That leaves OpEx and financing. Let's talk about OpEx. Opendoor's OpEx includes marketing, variable operations, which we call just operations in our financials, and fixed operations.

Most of our costs happen when we buy and renovate homes. It's useful to look at these costs in relation to our acquisition numbers since that is the variable that scales them. We have this idea called acquisition GMV, which is roughly the revenue we expect to get from homes we've closed on. Our homes have been selling right around the $375,000 mark, let's use that assumption so I don't have to leak our internal model to the world. It'll also make the math easier. Acquisition GMV is acquisitions times $375,000. With that in mind, let's talk about the three parts of our OpEx. First, marketing. Marketing is our cost of customer acquisition per home we buy.

The last time we signed more than 6,000 contracts in a quarter, our marketing spend was over $80 million. This quarter it was five, not five-oh, just five. I know that sounds crazy, but yes, Morgan actually wrote the book on this. Yes, this is one part of Opendoor where I think we're executing 10 out of 10. It took us a minute, but we have found our groove. Our marketing as a percentage of our acquisition GMV has gone from 1.6% under Opendoor One to 0.3%. Let's say we'll not be that good forever. Let's assume we'll get a little worse. Let's assume we'll have 0.5% of acquisition GMV on marketing. Just remember that, okay? Next, let's talk about variable operations. Variable operations are mostly the costs we incur when we're buying and renovating our houses.

This is the human and system cost of underwriting, buying, and renovating a home. Variable ops have declined from 2.7% of acquisition GMV to 0.9% of acquisition GMV. If you look at acquisition contract GMV, this number is already at 50 basis points. Look, don't give us the benefit of this doubt. There'll be some contracts that will fall through, so let's mark this up. Let's say it'll be 70 basis points on acquisition GMV. Why has this number gone down so much? The answer is simple, Ru would tell you, we are among the best users of AI in tech. We have fundamentally re-engineered our business around AI automation across underwriting and operations. Look, in Q3 last year, the people who managed renovations of our homes, our HPMs, they carried three renovations per person per month. Right now, they're carrying around 10.