Gross Profit increases 205% quarter over
quarter
Offerpad Solutions Inc. (“Offerpad”) (NYSE: OPAD), a leading
tech-enabled platform for residential real estate, today released
financial results for the three months ended June 30, 2023.
“We exceeded our financial expectations across the board,” said
Brian Bair, Chairman and CEO of Offerpad. “Our outperformance in
the second quarter reflects the improvements we have made to our
business processes and our elevated focus on profitability through
margin expansion and cost discipline. Our agile business model
makes integrating improvements and adapting to changing market
conditions part of our everyday culture,” said Bair.
Second quarter highlights include:
- Reported the highest gross margin since Q3 2021 at 9.7%;
- Achieved gross margin per home sold on homes acquired after
September 1, 2022 of 13.5%;
- Achieved contribution margin after interest per home sold on
homes acquired after September 1, 2022 of 9.5%, which is above
Offerpad’s target range of 3% to 6%;
- Reduced inventory aged over 180 days to less than 2%, well
below Offerpad’s 10% target; and
- Increased home acquisition volume from 364 homes in Q1 to 840
homes in Q2.
“The combination of completing the sale of our legacy inventory
and the high-quality homes currently on our balance sheet provides
a strong foundation for performance going forward. The favorable
quarter-over-quarter trends we saw during the first half of this
year support our expectation to achieve positive Adjusted EBITDA by
year-end,” said Bair.
Second Quarter 2023 Financial Results – compared with the prior
quarter:
- Revenue was $230.1 million compared to $609.6 million
- Gross Profit increased over 200% to $22.2 million from $7.3
million
- Net Loss improved to ($22.3) million from ($59.4) million
- Adjusted EBITDA improved to ($17.3) million from ($44.8)
million
- Diluted Loss Per Share improved to ($0.82) from ($2.51)
Q2 2023 Financial Results (quarter over
quarter)
Q2 2023
Q1 2023
Percentage Change
Homes acquired
840
364
131%
Homes sold
650
1,609
(60%)
Revenue
$230.1M
$609.6M
(62%)
Gross profit1
$22.2M
$7.3M
205%
Net loss1, 2
($22.3M)
($59.4M)
62%
Adjusted EBITDA1
($17.3M)
($44.8M)
61%
Gross profit per home sold
$34,200
$4,500
655%
Contribution loss after interest per
home sold
($2,900)
($46,900)
94%
Cash and cash equivalents
$115.6M
$107.7M
7%
1 Includes $0.2 million charge in Q2 2023 and $7.3 million
charge in Q1 2023 for an inventory valuation adjustment. 2 Includes
$0.4 million non-cash credit in Q2 2023 and a $0.4 million non-cash
charge in Q1 2023 to mark to market the Warrant Liability.
Q2 2023 Financial Results (year over
year)
Q2 2023
Q2 2022
Percentage Change
Homes acquired
840
3,792
(78%)
Homes sold
650
2,888
(77%)
Revenue
$230.1M
$1.1B
(79%)
Gross profit1
$22.2M
$93.0M
(76%)
Net (loss) income1, 2
($22.3M)
$11.6M
n.a.
Adjusted net loss1
($22.8M)
($1.0M)
2,225%
Adjusted EBITDA1
($17.3M)
$13.7M
n.a.
Gross profit per home sold
$34,200
$32,200
6%
Contribution (loss) profit after
interest per home sold
($2,900)
$28,500
n.a.
Cash and cash equivalents
$115.6M
$155.5M
(26%)
1 Includes $0.2 million charge in Q2 2023 and $21.2 million
charge in Q2 2022 for an inventory valuation adjustment. 2 Includes
$0.4 million non-cash credit in Q2 2023 and a $12.5 million
non-cash credit in Q2 2022 to mark to market the Warrant
Liability.
Additional information regarding Offerpad’s second quarter 2023
financial results and management commentary can be found by
accessing the Company’s Quarterly Letter to Shareholders on the
Offerpad investor relations website.
Third Quarter 2023 Outlook
“Our results in the first half of this year indicate that the
business has stabilized and positive momentum is building,” said
Jawad Ahsan, CFO of Offerpad. “In the third quarter, we expect that
momentum to continue with sequential improvement in our key
performance metrics, including Gross Margin, Net Loss and Adjusted
EBITDA. We also expect Q3 to reflect quarter-over-quarter
improvement in time to cash, as well as increases in Acquisitions,
Inventory and Contribution Margin after Interest,” said Ahsan.
Offerpad is providing its third quarter outlook for 2023 as
follows:
Q3 2023 Outlook
Homes Sold
600 – 700
Revenue
$200M – $240M
Adjusted EBITDA3
($17M) – ($9M)
3 See Non-GAAP financial measures below for an explanation of
why a reconciliation of this guidance cannot be provided.
Conference Call and Webcast Details
Offerpad Chairman and CEO Brian Bair and CFO Jawad Ahsan will
host a conference call and accompanying webcast on August 2, 2023,
at 12:30 p.m. ET. The webcast can be accessed on Offerpad’s
Investor Relations website. Participants can register here to
receive a personalized dial in number and PIN. Access to a replay
of the webcast will be available from the same website address
shortly after the live webcast concludes.
About Offerpad
Offerpad’s mission is to deliver the best home buying and
selling experience. From cash offers and flexible listing options
to mortgages and buyer services, Offerpad has been helping
homeowners since 2015. We pair our local expertise in residential
real estate with proprietary technology to put you in control of
the process and help find the right solution that fits your needs.
Visit Offerpad.com for more information.
#OPAD_IR
Forward-Looking Statements
Certain statements in this press release may be considered
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally relate to future events or Offerpad’s future
financial or operating performance. For example, statements
regarding the anticipated quarter-over-quarter improvement in
Offerpad’s time from acquisition to sale and increase in Offerpad’s
acquisition volume, inventory and contribution margin for the third
quarter 2023, Offerpad’s financial outlook, including increases in
Offerpad’s key performance metrics, including Gross Margin, Net
Loss and Adjusted EBITDA, for the third quarter 2023, and
expectations regarding profitability, including the timing of
reaching positive Adjusted EBITDA, are forward-looking statements.
In some cases, you can identify forward-looking statements by
terminology such as “pro forma,” “may,” “should,” “could,” “might,”
“plan,” “possible,” “project,” “strive,” “budget,” “forecast,”
“expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,”
“predict,” “potential” or “continue,” or the negatives of these
terms or variations of them or similar terminology. Such
forward-looking statements are subject to risks, uncertainties, and
other important factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking
statements. Factors that may impact such forward-looking statements
include, but are not limited to, Offerpad’s ability to respond to
general economic conditions; the health of the U.S. residential
real estate industry; Offerpad’s ability to grow market share in
its existing markets or any new markets it may enter; Offerpad’s
ability to manage its growth effectively; Offerpad’s ability to
accurately value and manage inventory, and to maintain an adequate
and desirable supply of inventory; Offerpad’s ability to
successfully launch new product and service offerings, and to
manage, develop and refine its technology platform; Offerpad’s
ability to maintain and enhance its products and brand, and to
attract customers; Offerpad’s ability to achieve and maintain
profitability in the future; the success of strategic relationships
with third parties; and Offerpad’s failure to meet the New York
Stock Exchange’s continued listing standards. These and other
important factors discussed under the caption "Risk Factors" in
Offerpad’s Annual Report on Form 10-K for the year ended December
31, 2022 filed with the Securities and Exchange Commission on
February 28, 2023, and Offerpad’s other reports filed with the
Securities and Exchange Commission could cause actual results to
differ materially from those indicated by the forward-looking
statements made in this press release. These forward-looking
statements are based upon estimates and assumptions that, while
considered reasonable by Offerpad and its management, are
inherently uncertain. Nothing in this press release should be
regarded as a representation by any person that the forward-looking
statements set forth herein will be achieved or that any of the
contemplated results of such forward-looking statements will be
achieved. You should not place undue reliance on forward-looking
statements, which speak only as of the date they are made. Offerpad
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
OFFERPAD SOLUTIONS
INC.
Condensed Consolidated
Statements of Operations
Three Months Ended
Six Months Ended
June 30,
June 30,
(in thousands, except per share data)
(Unaudited)
2023
2022
2023
2022
Revenue
$
230,147
$
1,079,531
$
839,726
$
2,453,368
Cost of revenue
207,916
986,550
810,210
2,228,245
Gross profit
22,231
92,981
29,516
225,123
Operating expenses:
Sales, marketing and operating
29,040
65,239
71,391
135,127
General and administrative
12,713
16,121
27,192
30,778
Technology and development
2,312
3,243
4,553
6,425
Total operating expenses
44,065
84,603
103,136
172,330
(Loss) income from operations
(21,834
)
8,378
(73,620
)
52,793
Other income (expense):
Change in fair value of warrant
liabilities
435
12,537
46
18,201
Interest expense
(1,867
)
(7,771
)
(9,299
)
(14,967
)
Other income, net
965
24
1,247
28
Total other (expense) income
(467
)
4,790
(8,006
)
3,262
(Loss) income before income
taxes
(22,301
)
13,168
(81,626
)
56,055
Income tax expense
(43
)
(1,610
)
(165
)
(3,509
)
Net (loss) income
$
(22,344
)
$
11,558
$
(81,791
)
$
52,546
Net (loss) income per share, basic
$
(0.82
)
$
0.71
$
(3.21
)
$
3.24
Net (loss) income per share, diluted
$
(0.82
)
$
0.66
$
(3.21
)
$
3.03
Weighted average common shares
outstanding, basic
27,258
16,390
25,470
16,200
Weighted average common shares
outstanding, diluted
27,258
17,383
25,470
17,346
OFFERPAD SOLUTIONS
INC.
Condensed Consolidated Balance
Sheets
June 30,
December 31,
(in thousands, except par value per share)
(Unaudited)
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
115,599
$
97,241
Restricted cash
6,658
43,058
Accounts receivable
1,479
2,350
Real estate inventory
211,119
664,697
Prepaid expenses and other current
assets
8,731
6,833
Total current assets
343,586
814,179
Property and equipment, net
4,874
5,194
Other non-current assets
4,641
5,696
TOTAL ASSETS
$
353,101
$
825,069
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
6,340
$
4,647
Accrued and other current liabilities
19,272
28,252
Secured credit facilities and other debt,
net
161,316
605,889
Secured credit facilities and other debt -
related party
29,926
60,176
Total current liabilities
216,854
698,964
Warrant liabilities
493
539
Other long-term liabilities
2,543
3,689
Total liabilities
219,890
703,192
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.0001 par value;
2,000,000 shares authorized; 27,225 and 15,491 shares issued and
outstanding as of June 30, 2023 and December 31, 2022,
respectively
3
2
Class B common stock, zero shares
authorized, issued and outstanding as of June 30, 2023; and $0.0001
par value, 20,000 shares authorized; 988 shares issued and
outstanding as of December 31, 2022
—
—
Additional paid in capital
495,668
402,544
Accumulated deficit
(362,460
)
(280,669
)
Total stockholders’ equity
133,211
121,877
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
353,101
$
825,069
OFFERPAD SOLUTIONS
INC.
Condensed Consolidated
Statements of Cash Flows
Six Months Ended
June 30,
($ in thousands) (Unaudited)
2023
2022
Cash flows from operating
activities:
Net (loss) income
$
(81,791
)
$
52,546
Adjustments to reconcile net (loss) income
to net cash provided by (used in) operating activities:
Depreciation
380
249
Amortization of debt financing costs
1,980
1,546
Real estate inventory valuation
adjustment
7,454
22,205
Stock-based compensation
3,898
4,028
Change in fair value of warrant
liabilities
(46
)
(18,201
)
Change in fair value of derivative
instrument
715
—
Loss on disposal of property and
equipment
30
—
Changes in operating assets and
liabilities:
Accounts receivable
871
(6,764
)
Real estate inventory
446,124
(179,060
)
Prepaid expenses and other assets
313
(5,847
)
Accounts payable
1,693
4,306
Accrued and other liabilities
(10,126
)
12,513
Net cash provided by (used in)
operating activities
371,495
(112,479
)
Cash flows from investing
activities:
Purchases of property and equipment
(90
)
(725
)
Purchases of derivative instruments
(1,872
)
—
Net cash used in investing
activities
(1,962
)
(725
)
Cash flows from financing
activities:
Borrowings from credit facilities and
other debt
411,990
2,132,189
Repayments of credit facilities and other
debt
(889,773
)
(2,017,985
)
Payment of debt financing costs
(172
)
(35
)
Borrowings from warehouse lending
facility
18,488
—
Repayments of warehouse lending
facility
(17,336
)
—
Proceeds from issuance of pre-funded
warrants
90,000
—
Proceeds from exercise of pre-funded
warrants
11
—
Issuance cost of pre-funded warrants
(784
)
—
Proceeds from exercise of stock
options
53
4,775
Payments for taxes related to stock-based
awards
(52
)
(235
)
Net cash (used in) provided by
financing activities
(387,575
)
118,709
Net change in cash, cash equivalents
and restricted cash
(18,042
)
5,505
Cash, cash equivalents and restricted
cash, beginning of period
140,299
194,433
Cash, cash equivalents and restricted
cash, end of period
$
122,257
$
199,938
Reconciliation of cash, cash
equivalents and restricted cash to the condensed consolidated
balance sheet:
Cash and cash equivalents
$
115,599
$
155,464
Restricted cash
6,658
44,474
Total cash, cash equivalents and
restricted cash
$
122,257
$
199,938
Supplemental disclosure of cash flow
information:
Cash payments for interest
$
13,932
$
19,941
Non-GAAP Financial Measures
In addition to Offerpad’s results of operations above, Offerpad
reports certain financial measures that are not required by, or
presented in accordance with, U.S. generally accepted accounting
principles (“GAAP”). These measures have limitations as analytical
tools when assessing Offerpad’s operating performance and should
not be considered in isolation or as a substitute for GAAP
measures, including gross profit and net income.
Offerpad may calculate or present its non-GAAP financial
measures differently than other companies who report measures with
similar titles and, as a result, the non-GAAP financial measures
Offerpad reports may not be comparable with those of companies in
Offerpad’s industry or in other industries. Offerpad has not
provided a quantitative reconciliation of forecasted Adjusted
EBITDA to forecasted net income (loss) within this press release
because Offerpad is unable to calculate certain reconciling items
without making unreasonable efforts. These items, which include,
but are not limited to, stock-based compensation with respect to
future grants and forfeitures, could materially affect the
computation of forward-looking net income (loss), are inherently
uncertain and depend on various factors, some of which are outside
of Offerpad’s control.
Adjusted Gross Profit, Contribution Profit, and Contribution
Profit After Interest (and related margins)
To provide investors with additional information regarding
Offerpad’s margins, Offerpad has included Adjusted Gross Profit,
Contribution Profit, and Contribution Profit After Interest (and
related margins), which are non-GAAP financial measures. Offerpad
believes that Adjusted Gross Profit, Contribution Profit, and
Contribution Profit After Interest are useful financial measures
for investors as they are used by management in evaluating unit
level economics and operating performance across Offerpad’s
markets. Each of these measures is intended to present the
economics related to homes sold during a given period. Offerpad
does so by including revenue generated from homes sold (and
ancillary services) in the period and only the expenses that are
directly attributable to such home sales, even if such expenses
were recognized in prior periods, and excluding expenses related to
homes that remain in real estate inventory as of the end of the
period presented. Contribution Profit provides investors a measure
to assess Offerpad’s ability to generate returns on homes sold
during a reporting period after considering home acquisition costs,
renovation and repair costs, and adjusting for holding costs and
selling costs. Contribution Profit After Interest further impacts
gross profit by including interest costs (including senior and
mezzanine secured credit facilities) attributable to homes sold
during a reporting period. Offerpad believes these measures
facilitate meaningful period over period comparisons and illustrate
Offerpad’s ability to generate returns on assets sold after
considering the costs directly related to the assets sold in a
presented period.
Adjusted Gross Profit, Contribution Profit and Contribution
Profit After Interest (and related margins) are supplemental
measures of Offerpad’s operating performance and have limitations
as analytical tools. For example, these measures include costs that
were recorded in prior periods under GAAP and exclude, in
connection with homes held in real estate inventory at the end of
the period, costs required to be recorded under GAAP in the same
period.
Accordingly, these measures should not be considered in
isolation or as a substitute for analysis of Offerpad’s results as
reported under GAAP. Offerpad includes a reconciliation of these
measures to the most directly comparable GAAP financial measure,
which is gross profit.
Adjusted Gross Profit / Margin
Offerpad calculates Adjusted Gross Profit as gross profit under
GAAP adjusted for (1) net real estate inventory valuation
adjustment plus (2) interest expense associated with homes sold in
the presented period and recorded in cost of revenue. Net real
estate inventory valuation adjustment is calculated by adding back
the real estate inventory valuation adjustment charges recorded
during the period on homes that remain in real estate inventory at
period end and subtracting the real estate inventory valuation
adjustment charges recorded in prior periods on homes sold in the
current period. Offerpad defines Adjusted Gross Margin as Adjusted
Gross Profit as a percentage of revenue.
Offerpad views this metric as an important measure of business
performance, as it captures gross margin performance isolated to
homes sold in a given period and provides comparability across
reporting periods. Adjusted Gross Profit helps management assess
performance across the key phases of processing a home
(acquisitions, renovations, and resale) for a specific resale
cohort.
Contribution Profit / Margin
Offerpad calculates Contribution Profit as Adjusted Gross
Profit, minus (1) direct selling costs incurred on homes sold
during the presented period, minus (2) holding costs incurred in
the current period on homes sold during the period recorded in
sales, marketing, and operating, minus (3) holding costs incurred
in prior periods on homes sold in the current period recorded in
sales, marketing, and operating, plus (4) other income, net which
is primarily comprised of interest income earned on our cash and
cash equivalents and fair value adjustments of derivative financial
instruments. The composition of Offerpad’s holding costs is
described in the footnotes to the reconciliation table below.
Offerpad defines Contribution Margin as Contribution Profit as a
percentage of revenue.
Offerpad views this metric as an important measure of business
performance as it captures the unit level performance isolated to
homes sold in a given period and provides comparability across
reporting periods. Contribution Profit helps management assess
inflows and outflow directly associated with a specific resale
cohort.
Contribution Profit / Margin After Interest
Offerpad defines Contribution Profit After Interest as
Contribution Profit, minus (1) interest expense associated with
homes sold in the presented period and recorded in cost of revenue,
minus (2) interest expense associated with homes sold in the
presented period, recorded in costs of sales, and previously
excluded from Adjusted Gross Profit, and minus (3) interest expense
under Offerpad’s senior and mezzanine secured credit facilities
incurred on homes sold during the period. This includes interest
expense recorded in prior periods in which the sale occurred.
Offerpad’s senior and mezzanine secured credit facilities are
secured by their homes in real estate inventory and drawdowns are
made on a per-home basis at the time of purchase and are required
to be repaid at the time the homes are sold. Offerpad defines
Contribution Margin After Interest as Contribution Profit After
Interest as a percentage of revenue.
Offerpad views this metric as an important measure of business
performance. Contribution Profit After Interest helps management
assess Contribution Margin performance, per above, when fully
burdened with costs of financing.
The following tables present a reconciliation of Offerpad’s
Adjusted Gross (Loss) Profit, Contribution (Loss) Profit and
Contribution (Loss) Profit After Interest to Offerpad’s Gross
(Loss) Profit, which is the most directly comparable GAAP measure,
and Contribution (Loss) Profit Per Home Sold and Contribution
(Loss) Profit After Interest Per Home Sold to Offerpad’s Gross
(Loss) Profit Per Home Sold, which is the most directly comparable
GAAP measure, for the periods indicated:
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages and homes sold, unaudited)
2023
2022
2023
2022
Gross profit (GAAP)
$
22,231
$
92,981
$
29,516
$
225,123
Gross margin
9.7
%
8.6
%
3.5
%
9.2
%
Homes sold
650
2,888
2,259
6,490
Gross profit per home sold
$
34.2
$
32.2
$
13.1
$
34.7
Adjustments: Real estate inventory valuation adjustment - current
period (1)
169
20,995
290
21,233
Real estate inventory valuation adjustment - prior period (2)
(13,679
)
(287
)
(58,030
)
(1,205
)
Interest expense capitalized (3)
1,358
2,793
6,035
7,071
Adjusted gross profit (loss)
$
10,079
$
116,482
$
(22,189
)
$
252,222
Adjusted gross margin
4.4
%
10.8
%
-2.6
%
10.3
%
Adjustments: Direct selling costs (4)
(5,743
)
(23,524
)
(23,804
)
(55,378
)
Holding costs on sales - current period (5)(6)
(269
)
(1,293
)
(1,811
)
(3,723
)
Holding costs on sales - prior period (5)(7)
(567
)
(526
)
(2,158
)
(907
)
Other income, net (8)
965
24
1,247
28
Contribution profit (loss)
$
4,465
$
91,163
$
(48,715
)
$
192,242
Contribution margin
1.9
%
8.4
%
-5.8
%
7.8
%
Homes sold
650
2,888
2,259
6,490
Contribution profit (loss) per home sold
$
6.9
$
31.6
$
(21.6
)
$
29.6
Adjustments: Interest expense capitalized (3)
(1,358
)
(2,793
)
(6,035
)
(7,071
)
Interest expense on homes sold - current period (9)
(1,292
)
(4,115
)
(8,631
)
(11,149
)
Interest expense on homes sold - prior period (10)
(3,708
)
(1,999
)
(13,899
)
(3,721
)
Contribution (loss) profit after interest
$
(1,893
)
$
82,256
$
(77,280
)
$
170,301
Contribution margin after interest
-0.8
%
7.6
%
-9.2
%
6.9
%
Homes sold
650
2,888
2,259
6,490
Contribution (loss) profit after interest per home sold
$
(2.9
)
$
28.5
$
(34.2
)
$
26.2
(1) Real estate inventory valuation adjustment – current period
is the real estate inventory valuation adjustments recorded during
the period presented associated with homes that remain in real
estate inventory at period end. (2) Real estate inventory valuation
adjustment – prior period is the Real estate inventory valuation
adjustments recorded in prior periods associated with homes that
sold in the period presented. (3) Interest expense capitalized
represents all interest related costs, including senior and
mezzanine secured credit facilities, incurred on homes sold in the
period presented that were capitalized and expensed in cost of
sales at the time of sale. (4) Direct selling costs represents
selling costs incurred related to homes sold in the period
presented. This primarily includes broker commissions and title and
escrow closing fees. (5) Holding costs primarily include insurance,
utilities, homeowners association dues, property taxes, cleaning,
and maintenance costs. (6) Represents holding costs incurred on
homes sold in the period presented and expensed to Sales,
marketing, and operating on the Condensed Consolidated Statements
of Operations. (7) Represents holding costs incurred in prior
periods on homes sold in the period presented and expensed to
Sales, marketing, and operating on the Condensed Consolidated
Statements of Operations. (8) Other income, net principally
represents interest income earned on our cash and cash equivalents
and fair value adjustments of derivative financial instruments. (9)
Represents both senior and mezzanine interest expense incurred on
homes sold in the period presented and expensed to interest expense
on the Condensed Consolidated Statements of Operations. (10)
Represents both senior and mezzanine secured credit facilities
interest expense incurred in prior periods on homes sold in the
period presented and expensed to Interest expense on the Condensed
Consolidated Statements of Operations.
Three Months EndedJune 30, 2023 (in thousands, except
percentages and homes sold, unaudited)
Acquired Aug'22 &
Prior Acquired Sep'22 & Later Cohort Total
Gross profit (GAAP)
$
329.00
$
21,902.00
$
22,231.00
Gross margin
0.5
%
13.5
%
9.7
%
Homes sold
159
491
650
Gross profit per home sold
$
2.1
$
44.6
$
34.2
Adjustments: Inventory valuation adjustment - current period (1)
105
64
169
Inventory valuation adjustment - prior period (2)
(11,990
)
(1,689
)
(13,679
)
Interest expense capitalized (3)
669
689
1,358
Adjusted (loss) gross profit
$
(10,887
)
$
20,966
$
10,079
Adjusted gross margin
-16.0
%
12.9
%
4.4
%
Adjustments: Direct selling costs (4)
(1,790
)
(3,953
)
(5,743
)
Holding costs on sales - current period (5)(6)
(93
)
(176
)
(269
)
Holding costs on sales - prior period (5)(7)
(467
)
(100
)
(567
)
Other income, net (8)
-
965
965
Contribution (loss) profit
$
(13,237
)
$
17,702
$
4,465
Contribution margin
-19.5
%
10.9
%
1.9
%
Homes sold
159
491
650
Contribution (loss) profit per home sold
$
(83.3
)
$
36.1
$
6.9
Adjustments: Interest expense capitalized (3)
(669
)
(689
)
(1,358
)
Interest expense on homes sold - current period (9)
(397
)
(895
)
(1,292
)
Interest expense on homes sold - prior period (10)
(2,962
)
(746
)
(3,708
)
Contribution (loss) profit after interest
$
(17,265
)
$
15,372
$
(1,893
)
Contribution margin after interest
-25.4
%
9.5
%
-0.8
%
Homes sold
159
491
650
Contribution (loss) profit after interest per home sold
$
(108.6
)
$
31.3
$
(2.9
)
Adjusted Net Income (Loss) and Adjusted EBITDA
Offerpad also presents Adjusted Net Income (Loss) and Adjusted
EBITDA, which are non-GAAP financial measures, which the management
team uses to assess Offerpad’s underlying financial performance.
Offerpad believes these measures provide insight into period over
period performance, adjusted for non-recurring or non-cash
items.
Offerpad calculates Adjusted Net Income (Loss) as GAAP Net
Income (Loss) adjusted for the change in fair value of warrant
liabilities. Offerpad defines Adjusted Net Income (Loss) Margin as
Adjusted Net Income (Loss) as a percentage of revenue.
Offerpad calculates Adjusted EBITDA as Adjusted Net Income
(Loss) adjusted for interest expense, amortization of capitalized
interest, taxes, depreciation and amortization and stock-based
compensation expense. Offerpad defines Adjusted EBITDA Margin as
Adjusted EBITDA as a percentage of revenue.
Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental
to Offerpad’s operating performance measures calculated in
accordance with GAAP and have important limitations. For example,
Adjusted Net Income (Loss) and Adjusted EBITDA exclude the impact
of certain costs required to be recorded under GAAP and could
differ substantially from similarly titled measures presented by
other companies in Offerpad’s industry or companies in other
industries. Accordingly, these measures should not be considered in
isolation or as a substitute for analysis of Offerpad’s results as
reported under GAAP.
The following table presents a reconciliation of Offerpad’s
Adjusted Net Income (Loss) and Adjusted EBITDA to their GAAP Net
Income (Loss), which is the most directly comparable GAAP measure,
for the periods indicated:
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages, unaudited)
2023
2022
2023
2022
Net (loss) income (GAAP)
$
(22,344
)
$
11,558
$
(81,791
)
$
52,546
Change in fair value of warrant liabilities
(435
)
(12,537
)
(46
)
(18,201
)
Adjusted net (loss) income
$
(22,779
)
$
(979
)
$
(81,837
)
$
34,345
Adjusted net (loss) income margin
(9.9
%)
(0.1
%)
(9.7
%)
1.4
%
Adjustments: Interest expense
1,867
7,771
9,299
14,967
Amortization of capitalized interest (1)
1,358
2,793
6,035
7,071
Income tax expense
43
1,610
165
3,509
Depreciation and amortization
178
130
380
249
Amortization of stock-based compensation
2,055
2,400
3,898
4,028
Adjusted EBITDA
(17,278
)
13,725
(62,060
)
64,169
Adjusted EBITDA margin
(7.5
%)
1.3
%
(7.4
%)
2.6
%
(1) Amortization of capitalized interest represents all interest
related costs, including senior and mezzanine interest related
costs, incurred on homes sold in the period presented that were
capitalized and expensed in cost of sales at the time of sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802655167/en/
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