Opendoor (OPEN) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Head of Investor Relations - Michael Judd
• Chief Executive Officer - Kaz Nejatian
• Management - Christy Schwartz

TAKEAWAYS

• Revenue -- $1,022 million, representing 12% growth driven by increased home sales and higher acquisition volume.
• Contribution Profit -- $34 million, reflecting a 70% increase due to improved spreads and operational efficiencies compared to the prior year.
• Contribution Margin -- 3.3%, representing an improvement from 2.2% in the third quarter of 2025 but a sequential decline from 5.8% in the second quarter of 2026.
• Net Loss -- $218 million, primarily reflecting $108 million in stock-based compensation and $53 million in inventory valuation adjustments.
• Adjusted EBITDA Loss -- $31 million, an improvement from a loss of $33 million a year ago despite increased inventory holding costs.
• Homes Purchased -- 4,865, representing a 316% increase driven by the expansion of capital-light products and improved seller conversion rates.
• Homes Sold -- 2,728, compared with 2,568 in the prior-year period.
• Market Share -- 0.6% of the addressable U.S. market, a fourfold increase from 0.1% in the third quarter of 2025.
• Inventory Value -- $2,568 million at quarter end, up from $1,053 million a year ago as the company rebuilt its home stock.
• OpEx Per Acquired Home -- $4,000 on a trailing 12-month basis, down 36% due to the implementation of automated pricing and operations systems.
• Marketing Expense Per Acquired Home -- $2,800 on a trailing 12-month basis, representing a 57% improvement in customer acquisition efficiency.
• Mortgage Origination Volume -- Increased fivefold quarter over quarter, following the expansion of licensing to 25 states.
• Cash and Cash Equivalents -- $910 million, supported by the issuance of $650 million in convertible notes in August.
• Inventory Aging -- 18% of listed homes were on the market for more than 120 days, up from 9% in the second quarter.
• Q4 Revenue Guidance -- Growth of at least 40% year over year, based on current acquisition contracts and expected resale pacing.
• Q4 Adjusted EBITDA Guidance -- A loss of $70 million to $85 million, reflecting seasonal marketing increases and higher inventory holding costs.
• Consumer Reach -- 1 in 4 Americans in the company's core markets who list their home first request an offer from the platform.
• Asset-Light Volume -- Around 50% of direct-to-consumer offers accepted in the most recent week were for listing or shared-risk products.
• Share Repurchase -- 5% reduction in total shares outstanding, executed as part of a $650 million capital restructuring in August.
• Assessment Automation -- 98% of home assessments are now completed digitally, up from approximately 2% in the prior year.
• Pricing Throughput -- 2.5x increase in volume managed per person on the pricing team through the deployment of AI-based workflow tools.
• Total Asset-Backed Debt -- $2,364 million, utilized to fund the expansion of the real estate portfolio.

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RISKS

• Schwartz stated, "We are behind schedule on our goal of reaching positive Adjusted Net Income by the end of 2026," citing challenging housing market conditions.
• Nejatian warned that "in Q3, clears just started to collapse, and it has not come back," referring to the impact of mortgage rates exceeding 7% on home sales activity.
• Schwartz warned that the company expects a sequential decline in contribution margin for the fourth quarter as it continues to sell inventory into a difficult market.

SUMMARY

Opendoor Technologies Inc. (NASDAQ:OPEN) reported an increase in revenue despite significant contraction in the broader residential real estate market. Management indicated a strategic shift toward capital-light products, including listing services and shared-risk financing models, to reduce balance sheet exposure and interest costs. The company reported a substantial expansion in home acquisition volume and a reduction in operational expenses per home through the implementation of automated AI systems for pricing and renovation scoping. While inventory aging increased sequentially due to slower market clearance, management emphasized a commitment to clearing homes over maintaining near-term margins. The company also strengthened its capital position by extending debt maturities and executing its first share repurchase program.

• CEO Nejatian stated, "We've now proven that we can grow without overpaying for houses," noting that seller conversion improved at comparable spreads through better product features.
• The company launched Buy with Opendoor in beta, an initiative allowing the platform to generate mortgage revenue from buyers even when they are not purchasing an Opendoor-owned home.
• Management replaced manual renovation standards with an AI system that generates specific repair scopes for every home before acquisition to optimize resale appeal.
• The company reported that 1 in 3 Americans experience high stress during traditional home sales, which management identified as a primary driver for its automated digital offer platform.
• Fixed operating expenses rose to $37 million in the third quarter from $35 million in the second quarter, primarily due to growth investments.
• The company reported that its mortgage origination volume in October alone represented more than half of the total volume achieved in the entire third quarter.

INDUSTRY GLOSSARY

• Adjusted EBITDA: A non-GAAP measure of earnings before interest, taxes, depreciation, and amortization, adjusted for stock-based compensation and inventory valuation adjustments.
• Adjusted Net Income (ANI): A non-GAAP profitability metric that aligns inventory valuation adjustments with the period in which the related revenue is recorded.
• Cash Now, More Later: A product where sellers receive immediate cash and participate in the eventual resale upside of the property.
• Contribution Margin: A non-GAAP metric representing gross profit less direct selling costs and holding costs for homes sold during a specific period.
• iBuyer: An institutional buyer that uses automated valuation models to purchase homes directly from sellers for resale.
• True Seller Conversion: A metric measuring the percentage of homeowners who received an Opendoor offer and chose to sell to the company within 90 days.

Full Conference Call Transcript

Michael Judd: Hey, everyone. Welcome to Opendoor's Q3 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. 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 obligations 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 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.

Kaz Nejatian: Hey, everyone. I've been doing this job for just over a year, and like all anniversaries, I thought it'd be a good idea to take a second and look at what we've done in the past year. A year ago, I told you we would build a different Opendoor, faster, stronger, fully committed to our mission of tilting the world in favor of homeowners. Let's see what's changed. Today, our market share of U.S. real estate is up more than four times. We're now over half the percent of the market. We signed over 7,000 contracts in Q3. A year ago, that was just a little over 1,500.

In Q3, we shipped more than 500 new features and products across our stack. We had shipped almost nothing that was useful in the weeks before I started. This time last year, we didn't have a single mortgage license. Today, we have 25 state licenses, and our mortgage origination volume is up 5x quarter-over-quarter, and October alone was over half of Q3. Over the last 12 months, we had over $1 billion in Cash Now, More Later volume. This is $1 billion more than we had done in the previous 12 months. Even with delistings at unprecedented highs, we are selling homes faster than the market every single week.

Look, we should talk a bit about the market, because if I do not talk about the market now, every follow-up question will be about the macro. It is not going to be a shock to anyone watching this that the market has turned. 2025 was the worst year housing had in a long time, and 2026 was tracking right on top of it through June. Honestly, we would have been just fine with that. But then in Q3, clears just started to collapse, and it has not come back. in September, Pending Home Sales Index fell to the lowest level it has ever seen since we started recording it.

It is lower than it was in April 2020, when going out to tour homes was basically illegal. Mortgage rates are now above 7%, and that is more than a full point higher than it was a year ago. Everyone in housing got hit. Our job is to build a business that can perform better in difficult conditions, and we are doing this in three important ways. First, our capital-light volume. This past week, around half of the first offers our D2C sellers accepted were listing or Cash Now, More Later. That lets us serve more sellers with less of our capital exposed to changes in the market. Second, velocity.

The less time we own a home, the less time the market has opportunity to move against us. So we price homes to sell and focus on reducing the time between acquisition and resale. Third, mortgage. When buyers are hard to find, better financing gives them a reason to choose to work with Opendoor. That is why we launched Buy with Opendoor in beta this week. We need to grow, use less capital per transaction, and sell homes faster. Those are things we can control, and that is what we are focused on. What matters to us is solving the core problems of our business, and those are what we need to focus on.

Look, for most of its life, Opendoor has had basically three problems. To grow, we had to overpay sellers for their home. To grow, we had to own more homes and take on more risk on our entire inventory. To grow, we had to hire more and more people. That is a hard business to scale. A year ago, I said we would change this, and I gave you three objectives. One for each of these problems. We have made real progress on these objectives, and we are in a really good place on first and third, and we are making progress on the second. Let us go through each of these objectives. Objective one was scale acquisition.

The first problem was that for Opendoor, growth always meant paying more for homes. To understand our core business opportunity, you need first to understand two numbers, just two simple numbers. First, in our core markets, nearly one in four Americans who go to sell their home first try to sell it to Opendoor. That's the first number. Second, one in three Americans cry when trying to sell their home the traditional way. Our problem has never been that we don't have enough demand or that people love crying. Our problem has always been that we have not been able to serve them in a good way, right? Have we scaled acquisitions? The answer is for sure yes, right?

Now, I want to be careful because the easy and lazy story here is Opendoor took on more risks and bought more homes, then the market turned. That's not what happened, right? The evidence is obvious when you look at our true seller conversion. I want you to look at this chart. It takes homeowners who got an offer from us and within 90 days either sold to us or listed on the open market, and measures how many chose Opendoor at the same period over the same spread. The blue line is this year, the gray lines are 2024 and 2025.

What this shows is we're winning more of these sellers at nearly every spread level, and we're literally doing three times better in some of these levels. We're winning the market without having to make riskier offers. How are we doing this? The answer is, we've just built better products. We have built more ways to meet sellers' needs and have made it easier for them to understand their options and make the choice they want for their own lives, right? Sellers can now adjust the offer slides and make the choice that is good for their families.

Look, not that long ago, around 80% of the assessments we did on homes required an Opendoor employee, and this could take many, many weeks. Today, that 80% is 2%. 98% of the time, you can ask for an offer Monday morning, complete the assessment before noon, and sign a contract before breakfast Tuesday. We help sellers understand their options, we help them move fast, and sometimes we tell them, "We're not the best option for you," and that builds trust. Look, these things don't mean that we price every home perfectly, but by building the product the right way, we have managed to do two things that usually don't go hand in hand. We've increased growth and lowered risk.

Every other time this company has scaled, it has done by paying more for houses. This time, it didn't. We proved that we can grow without buying growth. That's the single most important thing that has happened over the last year. Our objective one is solid green. Okay, the second problem was that growth meant owning more homes and carrying all the risk, right? We're changing that with our capital-light products. But when we do own a home, we still have to renovate it, price it, and sell it, and we have to do it fast. On objective two, which was our unit economics and resale velocity, I think we're yellow.

We have some work left to do, but things are much better than they were a year ago. We're not as good as we want to be, but we're in a much better place. Look, when the market moves against you and you own homes, there's two things you can do, right? You can sell fast, or you can hold and wait and pray for the market to recover. We choose to clear. We choose to clear every single time. The decline in late August and September knocked us off track on execution a little bit because we turned our attention to clearance rather than margin improvement.

It costs something real in a quarter like this, but that's the right way to run this company for the long run. You don't focus on the quarter, you focus on the mission. The economics that come out of this are not great. They're not what we want, but they're better than they would be otherwise because we're currently scaling Opendoor, and we're learning about all the parts of the company that are not built for scale yet. We're fixing these things properly as we come across them, rather than putting duct tape over cracks in the foundation, because what we want to do is build a generational company and not one that just looks good in the short term.

Let me give you a couple examples, because these are things that if we had not changed, no one would have noticed, and the numbers may have looked better for the quarter, but would have been way worse for the long run. We fixed things that cost us margin this quarter, but are incredibly important for the long run. Let's first talk about renovation. Every real estate company has a manual, usually a physical manual that they renovate or build homes to. Opendoor had one of these until recently as well. It was called the Universal Repair Standard. This manual and things like it are the reason why all homes basically end up looking the same.

You look at a home after you acquired it, and then you apply some universal set of rules to that home. So a home in Raleigh gets the same renovation as a home in Orlando. This all requires lots of humans doing lots of human things, and if you don't have lots of human doing those things, it all just breaks. This past quarter, we rebuilt this entire system at Opendoor. We built an AI system that determines a specific repair plan for every single home before we buy it. Machines then draft a renovation scope and hand it to people doing the renovation.

This was a lot of work, and because models don't behave perfectly as you build them, the first few homes that hit the market under this model were not built the way we would like them. But for the last few weeks, this system has been outperforming the old process just amazingly. Another example is resale. Every single real estate company ends up with humans managing resale of homes. If they're exceptional, one person can handle somewhere between 100 and 150 homes at a time. That means that as we rescaled our acquisition 4x, we would have had to increase the number of people managing these acquisitions by 4x. We have done the exact opposite.

Look, until August, our resale process was similar to literally everyone else in real estate. We thought we were better at it, but pricing every home we owned basically lived in glorified spreadsheets with 70-something columns, right? Every Tuesday, a portfolio manager would scroll through 3,000 rows, pulling information from different tools and deciding what price to drop and what price to keep and how much. Then somebody would type this into a spreadsheet and into a separate system, and then it was all just very weird. This was actually state-of-the-art for the industry up until August. That doesn't scale. Scaling this means adding more people and adding more errors and then adding more people to catch those errors, right?

We replaced this entire thing with a single system where a model recommends an action right in a tool that looks at comps and offer history, and then the people keep the judgment, but software does the work. This works amazingly well today. Twelve weeks ago, it didn't exist. Mortgage, that's another example, right? Licensing here has taken us longer than we wanted. We can't rush governments, but we're making really good progress. Today, when a buyer finances a home through Opendoor and closes it quickly, we can improve our Contribution Margin on that home significantly.

Through Buy with Opendoor, which we just launched in Bay Area this week, we can earn mortgage revenue even on homes that we never own. Now, let's put this all together. Improving resale velocity isn't that complicated. You make the homes better, you get better at pricing them, you renovate them quickly, and then you buy something people actually want. Then mortgage makes it something they can afford. Better pricing gets the right buyer to act faster. The proof will be in how fast these homes sell and what we make on them when they do sell. Look, I don't think we're there yet.

We're much better off than we were a year ago, but I think this objective is yellow, and we have work to do. Okay, the third problem. The third problem was that growth meant hiring more people. Here, we're clearly green. We're doing exceptionally well, and I think we're doing better than any public company I know of. Here's what this looks like. On a trailing 12-month basis, our OpEx per acquired home is down 36%, and fixed OpEx per acquired home is down 34%. Opendoor was founded on this idea that you could take a real estate transaction apart, put it together again in a much better way, right? That thesis still holds, but AI fundamentally changes the math.

I want to talk about three things here. First, automated intelligence. Look at this chart. Over the past year, our pricing team's throughput per person is up about 2.5x. Rather than having people spending their days looking at pictures and doing mundane tasks, our people now each manage an army of agents. In July, we had 5,400 homes, that's 5,400 sellers sitting in a queue waiting for days for a human to confirm the price on their home. Two weeks ago, that queue was zero. Zero, and it will remain zero. As far as I can tell, that's the first time in Opendoor's history where we can say that the queue is zero, and we expect it to remain zero.

Look, this is not unique to pricing. Last year, the most efficient Opendoor employee could turn on a few dozen utilities in a week on homes we had bought. Last week, that number was 400. Last year, the most efficient closer at Opendoor could close around 135 escrow files. Today, that number is 431. Second, I want to talk about how workflows connect to each other. Opendoor used to have all of the entire industry's fragmentation inside one company. Our title and escrow team had to open a legacy software system just to look up which Opendoor entity was buying a home. Now that entire information is in one system they already use.

That's not just in title and escrow, that's across the entire stack. We're doing the same thing across the entire transaction where our people can benefit from having one tool to manage their day. The last part is our shared platform. In a fragmented industry, when you improve something, that makes that something better, but doesn't benefit anything else. So if you improve acquisition gets better, but resale doesn't improve. At Opendoor, when we improve something, it compounds across the transaction. The data we use to buy a home, renovate a home, list a home, give a mortgage on a home, close a transaction, it all works together rather than hopping across multiple parts of the business.

Look, there is a test being run right now for all companies. When a new model comes out, does it make you better or does it make you more vulnerable? For a lot of companies, the honest answer is more vulnerable, because the thing they sell is a thin layer on top of someone else's model, and the next release just eats that layer away. For us, we get better. Everyone has access to the same model, but what they do not have is what we feed them.

Every home we have bought, every repair we have scoped, hundreds of millions of listing photos and trillions of other photos, over a decade of what our homes have actually sold for, and not the misleading data that's publicly available. No one else has our data advantage. And because we're the largest buyer of homes in America, our data advantage is growing. We see inside of homes and we see foundation of homes for hundreds and hundreds and hundreds of homes, and no one else gets that data. A better model makes Opendoor's core economics better. It doesn't just increase our operational leverage. This week, I sent a note to our entire team, basically wholesale copying Jeff Bezos.

There's a famous shareholder letter that he wrote in 2000 where he referenced the Benjamin Graham line that in the short run, the market is a voting machine, but in the long run, it's a weighing machine. Bezos said that he rather be weighed. And I also want to put Opendoor on a scale. If there were a machine to weigh Opendoor, I think it would give you five data points about our business. One, very few people inside or outside Opendoor believed that this would be true a year ago. But we've now proven that we can grow without overpaying for houses. Spreads went up this past year and conversion went up even more.

We improved the product and the funnel, and more sellers chose us. Two, we're generating volume that needs less of our balance sheet. Around half of what sellers are accepting through our D2C funnel right now is listing and Cash Now, More Later. We can serve these sellers while carrying much less risk and paying much less in interest. Three, we are supporting more acquisitions at a lower cost per home, down more than a third on both the measures we talked about earlier. Four, we get paid more than once per home. Mortgage, title and escrow. This is an entirely different business model, and we have added it while we are still fixing the old one, right?

Now, every home we touch gives us multiple revenue opportunities. This wasn't true before. Five, every new AI model, every single new model that comes up makes us better because we are sitting on data no one else has. Put these things together. Demand that does not require us to pay higher prices, volume that doesn't require a heavy balance sheet, growth that does not cause our OpEx to go up linearly, a new tech stack that improves itself every single week, a data advantage that is just growing. Look, we are taking market share and making a stronger company while everyone else is backing down.

We have spent the past year building a machine, and that machine is getting better every single day. We are not done yet. It is not perfect, but it is getting better every single day. The question is this, is Opendoor in a better economic condition than it was a year ago? The answer is obviously yes. We told you we would build a faster, stronger, better Opendoor, and what I have just shared with you shows that we have. With that, I will turn to Christy to tell you about the numbers.

Christy Schwartz: Thank you, Kaz. Financial highlights. Third quarter revenue was over $1 billion, up 12% year-over-year, and in line with the revised expectations we provided in September, despite a weaker housing market. Contribution Profit was $34 million, up 70%. We sold 2,728 homes in the quarter, up from 2,568 a year ago, and purchased 4,865 homes, more than four times the 1,169 we purchased in Q3 last year. We ended the quarter with 1,780 homes under contract to purchase, compared with 526 a year ago. Contribution Margin was 3.3%, down from 5.8% in Q2, but up from 2.2% a year ago, and in line with the revised expectations we provided in September.

Our Adjusted EBITDA loss was $31 million, an improvement from a $33 million loss a year ago, but wider than the $4 million loss in Q2 2026. Most of the sequential decline came from the homes we bought in the spring selling into a much weaker market, along with deeper price cuts as we chose to clear rather than hold. We expect margin to decline again in Q4, and we will continue selling through the remaining spring acquisitions into Q1. Slower market clearance also showed up in our inventory aging.

At quarter end, 18% of listed homes had been on the market for more than 120 days, up from 9% last quarter, as clearance slowed, but still well below the market at 30% and the 51% we carried a year ago. We are continuing to move homes through a difficult market, releasing capital and limiting how long we remain exposed to further changes in prices. While homes we purchased before the market slowed continued to weigh on margins, the business we are building is becoming more efficient. On a trailing 12-month basis through September, operations expense per acquired home was $4,000, down 36% from $6,300 a year ago.

Fixed operating expense was $37 million in Q3, slightly up from $35 million in Q2. We have also become more efficient at acquiring customers. On a trailing 12-month basis through September, marketing expense per acquired home was $2,800, down 57% from $6,500 a year ago. That efficiency, together with our operational improvements, gives us confidence to invest more. Earlier this year, we held marketing spend back while strengthening our products and our ability to deliver them at scale. We are now increasing Q4 marketing to around $20 million, up from $5 million in Q3, and above what we planned last quarter.

We have improved seller conversion, expanded our capital-light offerings, and addressed key bottlenecks using AI to scale underwriting, tailor renovations to buyer demand, and better inform resale pricing. We still need to prove those improvements show up in realized margins, but we are no longer relying on the same manual processes to support higher volume, and we are not loosening offers to buy volume. While others are retreating, we are advancing. We intend to win more sellers, take share, and build a stronger business. We will not let near-term pressure distract us from our long-term opportunity. Turning to the balance sheet, we strengthened our capital position while keeping existing shareholders at the center of those decisions.

We ended the third quarter with $910 million in cash and cash equivalents. The August financing was an important part of that, and I want to spend a moment on what we accomplished. In August, we raised $650 million through 0% coupon convertible notes due in 2030. After funding a concurrent share repurchase and capped calls, the transaction added approximately $440 million of capital before transaction expenses. We used $135 million to repay our expiring notes at maturity. The transaction reduced shares outstanding by approximately 5% through our first share repurchase as a public company. The capped calls were designed to limit potential future dilution.

Together, these actions extended our debt maturity profile, added capital to support growth, and protected more of the upside for our existing shareholders. Our responsibility is to now put that capital to work productively. For example, Cash Now, More Later requires less capital upfront per acquisition, while List with Opendoor lets us serve sellers without buying their homes. As those products grow, we can serve more customers without a proportional increase in inventory. Faster resale complements that shift by releasing capital sooner and reducing the time we're exposed to changes in the market. Together, these give us more capacity to grow with the capital we have.

Before turning to guidance, I want to put the opportunity ahead of us into perspective. In the third quarter, we signed more than 7,000 acquisition contracts, representing just over half a percent of home selling activity in our addressable market. That's more than four times our share a year ago, but we're still serving fewer than one in 100 sellers. Even in this slow market, we're seeing roughly 5 million annualized true sellers. Each incremental 10 basis points of market share is roughly 5,000 homes a year, or roughly $1.9 billion of annual transaction value at today's average price. We've added 40 basis points of share in the past year alone.

Our own funnel shows how much room we have to serve more of those sellers. Each week, around 9,000 true sellers come to opendoor.com, and we go into contract with around 500. Most of the rest go on to list their homes. By offering more ways to sell, we can help more of the people already coming to us. List with Opendoor, which we launched two weeks ago, lifted first offer conversion by 28% in our tests. We can build a much larger business by meeting the needs of more sellers who are already coming to us. We can also earn more from each customer relationship.

Historically, most of our economics have come from buying and reselling homes, complemented by title and escrow. Our emerging mortgage offering allows us to earn more from each relationship while meeting a critical customer need and making the transaction easier. Those services also open up a broader market. Our emerging Buy with Opendoor offering can help buyers whether or not they are buying a home from Opendoor, and we see an opportunity to extend title and escrow to customers who aren't buying or selling through Opendoor. Similar to listings, the offerings extend our reach beyond our home acquisition business and create opportunities to earn without taking ownership of a home.

Addressing more of the sellers who come into our funnel, financing more buyers, and expanding title and escrow to a broader market gives us multiple ways to grow earnings and build towards profitability. That is why we're investing through this market. The opportunity ahead of us is significant, and we're building the products and capabilities to capture it. Now let me turn to the outlook. We're rebuilding Opendoor while the housing market is shifting every week, and that means our near-term results can move significantly. These guideposts reflect what we see today. We'll keep making the right decisions we believe are right for the business, even when they weigh on near-term results.

Our focus remains on our long-term mission, tilting the world in favor of homeowners. With that in mind, here's what we expect. We are behind schedule on our goal of reaching positive Adjusted Net Income by the end of 2026, measured on a 12-month go-forward basis. The same also applies to our prior expectation for Adjusted EBITDA profitability on a 12-month go-forward basis. We continue to drive toward profitability, and we remain focused on closing the gap, but our fourth quarter guideposts reflect the challenging market conditions we see today. On revenue, we expect growth of at least 40% year-over-year. You can continue to follow acquisition contracts and resale closings on accountable.opendoor.com.

On Contribution Margin, we expect a sequential decline as we continue selling into a difficult market. Our focus remains on moving homes and managing the capital and market exposure associated with holding them. We expect an increase in Adjusted Operating Expenses from Q3, which will be almost entirely driven by investment in growth, including the higher marketing spend I described earlier and increased holding costs as we rebuild inventory. The higher marketing spend also reflects seasonality. Marketing in the fall and winter helps us acquire homes ahead of the spring and summer selling seasons when buyer demand is typically stronger. We incur that marketing expense now while the revenue and margin from those homes come later.

This is why we look at marketing efficiency on a trailing 12-month basis and why you should expect our quarterly marketing to move with seasonality. Together, sequentially lower Contribution Margin and higher Adjusted Operating Expenses lead to an expected fourth quarter Adjusted EBITDA loss of $70 million-$85 million. Comparing year-over-year, roughly a third of the increase in our expected loss is the additional marketing, and the remaining two-thirds is primarily higher holding costs as we have been rebuilding our inventory. We have more work to do. We will continue to report against the objectives we set and be clear about where we are delivering and where we are behind.

With that, Michael, I will turn it over to you for questions.

Michael Judd: Thanks, Christy. Our first question comes to us from Will down in Phoenix.

Will Bieger: Hey, Kaz. Will Bieger here. Super excited to be in the Opendoor office and installed this painting here today. Got a question for you. Thanks for answering my DM, by the way, and getting me involved. Really appreciate that. I know you studied Opendoor a lot even before coming the CEO. Wanted to ask the question, what is something or an opportunity that you understand now that Opendoor 2.0 is here that you did not kind of think of before joining the company? Really appreciate you answering my question and looking forward to watching this earnings call.

Kaz Nejatian: Thanks, man. Before I answer your question, let me take a second to say this. One of the reasons I love working at Opendoor is because our shareholders believe in the company and our product, that we are on a mission together to tilt the world in favor of homeowners because we believe owning a home is like owning a share in your country. It is like owning a share in your community, and that homeownership just makes the world a better place. To answer your questions, look, I think there are lots of ways to answer this, but the one that has honestly surprised me the most is title and escrow.

Title and escrow is like the infra that lets a real estate transaction happen, right? It is a lot like payments in e-commerce, and I have spent basically my entire life being a payments nerd. I took apart my first credit card terminal when I was a teenager. When I joined, I thought most of my payment experience would go to building a mortgage product. To be clear, I am really bullish on our mortgage product, and I am much more bullish on it today than when I joined. But title and escrow feels like such an amazing opportunity because with mortgage, what we are doing is we are pulling a system that was built in the 2000s into 2026.

With title and escrow, we are building a system that operates not pre-internet, but pre-computers into the modern AI world. We are doing two things. First, we are making our title and escrow operators just way more effective, right? In some cases, they are handling three times more volume than they were a year ago, right? This is in a business where the biggest cost is people's times, right? That goes straight to the cost of a transaction, right? So every operator that can handle more transactions gives us capacity to grow. I am really excited about this because when we have this capacity, we can build products that we cannot build today and no one can build today.

This is why we are doing the second thing. We are connecting the workflows in title and escrow and mortgage to the actual buying and selling activities, right? When these systems work together, there is a lot less chasing of information around. It is almost like you are going from faxing your order with a credit card number into it, into Sears with a catalog. You are going from that to Shop Pay today, right? This is what the big jump will be. I genuinely underestimated how big a business title and escrow could become just in its own right.

So the capabilities we are building for Opendoor transactions today are going to be used for non-Opendoor transactions, and they can help us deliver title and closing services to people who never buy a home from us or sell a home to us. That is why I am just so excited about this, because it is making the core business better, but also allows us to extend the reach of the software we have built outside Opendoor, so we do not have to buy your home to make homeownership better for everyone.

Michael Judd: Our next question comes to us from Nia N., who asks, "When is Opendoor going to be profitable?

Kaz Nejatian: Yeah, this is simple. Our goal is to be ANI positive on a 12-month go-forward basis at the end of this year. We are a bit behind on this today, but we are going to go through some walls and catch up. This isn't going to be easy. Nothing is for certain, but that's what we are going to do.

Michael Judd: Our next question comes to us, Angelo E. asks, "You said we don't need rates to fall. If Dalio is right that the bond bear market has a long way to go and mortgages hit 8% through 2027, do we stay solvent without raising money? And how are we hedging our inventory risk so Opendoor is a bet on our technology, not home prices?

Kaz Nejatian: Yeah. Hey, thanks, Angelo, for the question. Let me start with the easy answer, which is we ended the third quarter with over $900 million in cash, and I am very happy about our balance sheet position. So, we have all the money we need to deliver on the mission. But the bigger question is how we are changing this business. Our job is to provide the right solution for the user who comes to us. And different customers want different things. They want different amounts of certainty. They are willing to take different amounts of risk.

And basically, all of our products are going to end up being the same underlying infrastructure and models that we have built basically from scratch for Cash Now, More Later, but used with different risk levels. We are rebasing the entire company back on top of Cash Now, More Later with basically kind of like a risk toggle. Let us just think about the products for a second. With Cash, you get this maximum certainty, right? We take on the resale risk, and economically, that is a lot like insurance, right? It has value, it has a cost, and some people want insurance on some things, and some people don't.

This is becoming a smaller and smaller part of our portfolio. Look, I think Cash is going to be a massive business for us, but it will be a smaller and smaller part of our portfolio overall. Cash Now, More Later is where you receive the cash you need upfront to do the thing you need to do, but then you participate in the outcome of the home when it sells, right? That changes how risk is shared. Listing is We are early here, but listing is basically Cash Now, More Later, except with zero risk upfront, right?

We use exactly the same tools we use for Cash Now, More Later, and we help you sell your home without having to buy it from you, right? The seller will retain the risk and the exposure to the eventual sale price, but they will use all of our tools, workflows, title and escrow technology, and mortgage technology to make the transaction work, right? We don't need to buy every home to help every customer. To be clear, even today, when we are super early on this, there are folks who don't buy or sell a home to Opendoor who use our mortgage product, who use our title and escrow products, right?

This gives us more flexibility as the market changes, and it gives us more ways to grow without taking risk. For homes that we do own, underwriting and selling efficiently still matter a lot, right? Our direction is very clear. Serve more customers, build one infra and one set of models, and use it for everything, and be very deliberate about the risk we take and how we price it.

Michael Judd: Our next question comes to us from Calvin R., who asks, "As a long-term shareholder, I've watched age inventory drop from 36% to 9% and Opendoor Home Loans and Opendoor Own go live. What's the one metric you want shareholders like me to judge you on over the next 12 months, and what's the target?

Kaz Nejatian: Yeah. Thanks, Calvin. We don't really have just one hero metric, and that's very deliberate because Goodhart's Law is real, right? When a measure becomes a target, people start optimizing for the measure rather than the outcome it is designed to produce. This is why lots of tech companies just go right over their skis while improving their KPIs. That's why we talk about the three objectives, because they're kind of like three legs of the stool, and they all work together, right? Scale acquisitions, improve unit economics and resale velocity, and build operating leverage. I'm not going to repeat everything we said on the call, but I think we're very green on one and three.

For two, what you're seeing is that we're scaling our asset light products, we're growing our mortgage product, and we're improving the core pricing and home management systems, right? We have work to do, but we're making great progress here. That's kind of the beauty of these three objectives. They kind of keep each other honest, right? You can't take an easy shortcut. We have to do the hard work required to make all of them green.

Michael Judd: Great. David C. asks, "What milestones would tell investors that Opendoor is successfully shifting from a capital-heavy 1P model toward a more capital-light 2P or 3P structure?

Kaz Nejatian: That's a good question. Thanks, David. I think it's kind of useful. Let me just tell you how I think you should think about it, right? Kristy said that we see around 9,000 true sellers every week. To be clear, this is not like all the sellers we see. We see a lot more. But these are 9,000 people that we know are going to sell or list their home, right? We can't serve all of them if the only product we offer requires to buy every home in America, right? We just can't do that, right?

When we were a single product company, we were effectively saying to every customer, "Take this certainty at this price, and take it or leave it," right? For some customers, that was exactly what they wanted. But for others, we were solving a problem they did not have. They did not want to pay us to take a risk they didn't want to give away, right? That's why we're building List with Opendoor and Cash Now, More Later alongside Cash. So, if you want certainty at an agreed price, and you want to be done with the sale, we have Cash.

If you want something now to move, to put a down payment in your next place, but want to participate with us in the upside, we have Cash Now, More Later. And if you just want to use all the tools we have built to get great listing product, we have List with Opendoor, right? You shouldn't have to pay us to take a risk that you are comfortable keeping, and we shouldn't have to use our balance sheet to provide you certainty that you don't want. That's better for customer, and it's more efficient for Opendoor. I think it's relatively well understood that Opendoor's capital costs are not linear, right?

The first 80% of the home that we financed costs a lot less in interest than the last 20%, right? So, when a product requires us to take less risk, over time, our cost of capital should reflect that. So, I think if I were outside the company, the best way I would track this is, how much interest is Opendoor paying as a percentage of our volume? If we're successful in this shift from 3P to 2P to 1P, that number should go down over time. Okay, I think that's a lot.

Michael Judd: Our next question comes to us from Elmer C., who's curious, "With a little over 1 million homes listed on Zillow and Redfin, can Opendoor realistically capture 10% of that market within the next five years? What would it take to achieve this scale, and is its current business model capable of supporting it?

Kaz Nejatian: Thanks, man. This is a hard question for me to answer because I mostly think about the customer who's in front of us right now rather than metrics many years out. Let me just answer it. Look, we grew our market share 4x over the past year, right, to about 0.5% of the U.S. real estate market. Another 4x gets us to 2%, and then another 4x gets us to 8%, right? That's the math. Today, one in four people in our core markets who go on to list their home already come to opendoor.com.

That isn't a forecast, but I don't think anyone should tell us job well done if we end up being 10% of the market in five years, right? Because we have lots of room to grow. The question is, how do we build a business that can support that scale, right? First of all, you clearly can't do it all with Cash alone. We've already talked about this, how listing and Cash Now, More Later help us serve more customers, right? But the second thing that's important is that you cannot do it if you're a traditional real estate company, right? It's not possible. Real estate companies have had this bad habit.

When a market gets hot and revenue grows, these companies hire a crap ton of people to keep up with this, right? All the money that they thought they were going to get when volume comes gets lost either because of bad operations or expensive operations, right? Then when the market slows down, these companies are left with a cost structure and a system built for a different business, right? That's the disease that Opendoor 2.0 is designed to cure, right? That's why I spend so much of my time on these calls talking about operator efficiency, right?

When we say we're investing in growth a lot, what I mean is we are building the capacity to handle the growth that will arrive. We could have postponed building these systems, right? We could have kept the old processes, put duct tape over everything, and hired more people as volume grew, right? But that would have meant that we would have carried a broken Opendoor into growth when growth arrives. Instead, what we're doing is we're changing the work. Software moves information between systems, and AI does the risk scoring and handling the straightforward cases, right? People focus only on decisions that require human judgment. You can see that in our progress.

In Q3, we purchased more than four times as many homes as a year ago, right? Our OpEx was basically the same. The point of investing now is to make the next stage of growth profitable. Every time we grow fourfold, we are not going to increase the size of our OpEx. We are going to put that volume through a better system, and we're going to be able to do the thing real estate companies have not traditionally been able to do in good times.

Look, I'm not setting a five-year market share target today, but I genuinely think that if we end up having 10% of the market five years from now, we should all be kind of disappointed, right? The products we have built give customers a reason to choose us, and the software and the AI that we are building allows us to serve them and serve them really well.

Michael Judd: Moving over, our next question comes to us from Dae Lee from JPMorgan, who's curious, "Kaz, with the macro shifting against Opendoor, has that reinforced your approach of underwriting new homes for clearing speed? Does anything need to change, or are you more confident?

Kaz Nejatian: Thanks, Dae. I think you asked one question, but let me answer two things. Let me talk about dispersion and underwriting. First, dispersion. I basically went around for my first three weeks at Opendoor and said, "Dispersion, dispersion," because we are focused on diversifying the homes we are buying across multiple different vectors, right? Geography, home type, price point, dip. There's a reason why people call diversification the only free lunch in finance, right? To diversify well, you have to understand how the assets are actually different, right? And those differences go much deeper than geography or price, right? People talk about the housing market as though every home is going through the same thing. That's not true.

That's not even true in the same neighborhood. Two homes can look identical on an MLS, but be very different properties and have very different margin profiles, right? The condition of the home relative to what the buyer expects, the slope of the driveway, the noise from the train, and the feedback of the people who are actually touring the home. Those tell very different stories, right? In a market like this, those differences matter a lot, and averages can hide exactly the things that will make you money, right? That's also an advantage that we have with scale.

The more homes we work on, the more homes we see, the more we learn, and we see what attracts buyers and what objections come up and how we can prepare the homes in order to get an offer, right? That was actually one of the bad things about Opendoor shrinking, is that our dataset shrank when we stopped buying homes, right? And that's just a thing you don't want to do. You don't want to lose volume because it costs you your data advantage that makes everything else better. Okay, so that was on dispersion. I also want to talk about our underwriting, right? That's an incredibly important thing.

For every home that you underwrite, you need to answer three questions, right? How much will the home sell for? How long will it take to sell? And three, and most importantly, what are the odds that you're wrong about either of these two things, right? Opendoor's old valuation model was built in the pre-AI era, right? It was incredibly compute-constrained. We also had just generally underinvested in it, especially when it came to predicting days in possession. So we've invested a lot here, right? And these models are genuinely very good now. And now we're investing even more in the third question, like, how wrong could we be, right?

The confidence around the estimate matters just as much as the estimate itself, right? Two homes can have the same expected sale price or holding period, but have very different uncertainty bands around them. And obviously, we shouldn't underwrite those things the same way. Okay, that was a lot. Sorry.

Michael Judd: No. Our next question comes to us from Andrew from Citizens. I think this might be a better one for Kristy. "Explain to us the cadence of repricing homes in the quarter. Has this now been fully recognized, or should we expect this to flow through contribution margins over the next one to two quarters as inventory is sold?

Christy Schwartz: Great. Thank you for the question, Andrew, and I'm going to take it in two parts. One, how we're driving demand for our homes, including pricing, and two, how the current inventory will flow through to contribution margin, or how we expect it to do so. On demand, we're improving both price and product. Historically, our primary lever was reducing price. We've become more sophisticated about how we do that, moving from largely linear reductions to models that leverage multiple data points, such as buyer activity, agent feedback, and comparable homes to inform the timing and size of adjustments for each home. That means better initial listing strategies, learning from buyer and agent response, and adjusting faster as conditions change.

But lowering the price is only one way to attract a buyer. We're focused on making our homes easier to shop, more appealing compared to other homes in the same neighborhood, and more affordable by connecting financing to the purchase. The goal is to generate stronger buyer demand at the same asking price. We still obviously need to price competitively, but a more appealing home, more attractive financing, and an easier buyer experience gives us more ways to win buyers. On contribution margin, the impact of the current inventory is flowing through.

Most of the sequential decline came from homes we bought in the spring selling into a weaker market, along with deeper price cuts as we chose to clear rather than hold. We expect margin decline again in Q4, and we'll continue selling through the remaining spring acquisitions into Q1.

Michael Judd: Great. I think we have time for one more. This one's also from Andrew from Citizens. This will be for you, Kaz. With mortgage out of beta, what are the keys looking ahead to driving better attach? What is the opportunity for driving demand for mortgage with non-Opendoor home buyers?

Kaz Nejatian: Thanks, Andrew. I want you to know that I noticed that you hacked our system and got two questions in, but let me answer it. I think it helps to start with who the customer is. Most people who ask us about our mortgage attach rate underestimate what we're building, right? Look, we expect to finance plenty of buyers who buy Opendoor homes, but we also have sellers who don't sell to us and buyers who don't buy one of our homes, right? Those people can still take a mortgage from us because they have a transaction to complete, right? We have around 9,000 true sellers come to us every week and thousands of buyers, right?

Someone might decide to list their home instead of taking Cash offers, but that doesn't mean they don't need a mortgage, right? If your denominator is just the homes that Opendoor sells, you're just underestimating the product. I think we can generate way more mortgages than homes we sell. We will be over 100% on that metric, right? That's why listing and Buy with Opendoor matter. The customer relationship does not end because we didn't buy their home. Look, I think I'll end this section by borrowing from Keith, who's the chair of our board. I think this is actually literally his pinned tweet. There's a secret startup success formula.

Find a large, highly fragmented industry with low NPS, vertically integrate it, build a solution that adds value by building a great product, right? Then you end up having a very large business, and buying a home fits that description perfectly. Look, we can connect brokerage and title and escrow and mortgage and buying and selling and simplify the entire process and use the combined economics to not just give the customer a better deal, but a better product. When it comes to mortgage, I think we basically have just two jobs. One is discovery, make sure folks know that Opendoor does mortgages, and the second is make the value obvious, right?

The mortgage industry has spent a lot of time making the cost of mortgage very confusing. So our job is to simplify away the BS that harms customers, and I think we are going to do a really good job here. I think what's going to happen in a little while is that the number of mortgages we issue will be higher than the number of homes that we sell. Okay, I think we have run out of time. With that, let me say thank you.

Thank you for joining us, and as always, we'll continue to update you on accountable.opendoor.com because we want to be held accountable as we build this company to tilt the world in favor of homeowners. Thanks, folks.

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