Slow and steady might win the iBuying race.
Offerpad may lack the brand recognition and investor money possessed by home-flipping incumbent Opendoor, failed iBuyer Zillow, or of ramping-up iBuyer Redfin. Still, it is the only one of these outfits to ever turn a quarterly profit from its iBuying division.
The Chandler, Arizona-based business reported $41 million in net income for the first three months of 2022 on $1.4 billion in revenue. Those numbers compare favorably to a net loss of $233,000 on revenue of $284 million for in the first quarter 2021.
Offerpad was started by its current CEO Brian Bair in 2015, and it went public through a special-purpose acquisition company, or SPAC, in September, with a valuation of $2.7 billion. The company’s market cap has since sunk to $1.4 billion.
Lukewarm investors aside, the company has consistently expanded its flipping business.
Offerpad bought 2,856 homes in the first quarter of 2022, up 139% compared with the 1,196 homes acquired during the first quarter last year. And the company sold 3,602 abodes in the first quarter of this year, ended March 31 — up 254% from the 1,018 sold in the year-prior period.
Not only did the number of homes sold increase, but so did the average resale price, which climbed to $381,000 in the first three months of 2022, compared to $278,000 in the first quarter of last year.
“We continue to prove we can grow at a robust pace profitably,” Bair declared on an earnings call Wednesday, trumpeting it as the strongest quarter in the company’s history as measured by profitability, Offerpad’s expansion into markets, growth in the markets it has entered, plus services like title.
In terms of market expansion, Chief Financial Officer Mike Burnett discussed how Offerpad used to be predominantly concentrated in Phoenix, and, to a lesser extent, Charlotte and Atlanta. The company has now diversified to 24 metropolitan markets. Burnett said that not one market is responsible for at least 20% of revenue.
For ancillary services, Bair acknowledged to investors that the company still has a “long ways to go” but is hoping to “cross a threshold” where customers see Offerpad as more than a flipper but also as a title insurer, mortgage broker and concierge service. The company did not break out its revenue sources on the call, or in its quarterly report filed with the U.S. Securities and Exchange Commission.
Offerpad forecasted during the earnings call revenue of up to $1.5 billion for the second quarter, and $27 million in earnings before interest, taxes, depreciation, and amortization (EBITDA). The company reported $44 million in EBITDA (or income from operations) for the first quarter of this year, up from $1.4 million in Q1 2021.
With Zillow winding down its iBuying operations, Offerpad and Opendoor are the only U.S. publicly traded companies whose majority revenue and expenses come from home flipping. Redfin’s iBuying division, however, is growing significantly.
Opendoor does a lot more business than Offerpad, reselling over 21,000 homes total in 2021, although the company also recorded a net loss of $662 million over the year. Opendoor’s quarter-one earnings are scheduled for release tomorrow.