Q3 2023 Offerpad Solutions Inc Earnings Call

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Speaker 1: Good afternoon. Thank you for attending today's offer pad third quarter 2023 earnings conference call. My name is Hannah, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call for the opportunity for questions and answers at the end. If you would like to ask a question.

Good afternoon. Thank you for attending today's offer pad third quarter 2023 earnings Conference call. My name is Hannah and that will be your moderator for today's call all lines will be muted during the presentation portion of the call, but an opportunity for questions and answers at the end.

I'd like to ask a question. Please press star one.

Speaker 1: I would now like to pass the conference over to our host, Taylor Giles, with faster relations.

I would now it has to pass the conference over to our host Taylor Giles with Investor Relations you May go ahead.

Speaker 2: Good afternoon and welcome to Offerpad's third quarter of 2023 earnings.

Good afternoon, and welcome to offer pads third quarter of 2023 earnings call.

Speaker 2: I'm joined today by Offerpads Chairman and Chief Executive Officer Brian Baer, Chief Financial Officer Jawad Asan, and Senior Vice President of Finance James Grout.

I'm joined today by offer pads, Chairman and Chief Executive Officer, Brian Bird, Chief Financial Officer, Joe <unk>, and senior Vice President of Finance James Graff.

Speaker 2: During the call today, management will make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain, and events could differ significantly from management's expectations.

During the call today management will make forward looking statements as defined in the private Securities Litigation Reform Act of 1095 forward looking statements are inherently uncertain and events could differ significantly from management's expectations. Please refer to the risks uncertainties and other factors relate.

Speaker 2: Please refer to the risks and certainties and other factors relating to the company's business described in our filings with the US securities and exchange committee.

Now to the Companys business described in our filings with the U S Securities and Exchange Commission.

Speaker 2: Except as required by applicable law, OfferPad does not intend to update or alter forward-looking statements, whether as a result of new information, future events, or other ones.

Except as required by applicable law offer pad does not intend to update or alter the forward looking statements, whether as a result of new information future events or otherwise.

Speaker 2: On today's call, man is minimal referred to certain non- GAAP financial measures. These metrics include certain items discussed in our earnings release under the heading non- GAAP financial

On today's call management will refer to certain non-GAAP financial measures. These metrics exclude certain items discussed in our earnings release under the heading non-GAAP financial measures a reconciliation of <unk> non-GAAP measures to the comparable GAAP measures are available in the financial tables.

Speaker 2: The reconciliation of Lafertad's non- GAAP measures to the comparable GAAP measures are available in the financial tables of the third quarter earnings release on offer PAD's website. With that, I'll turn the call over to Brian .

Third quarter earnings release on offer pads website with that I will turn the call over to Brian.

Speaker 3: Good afternoon and thank you for joining today's call. We are pleased to deliver both top and bottom line results within our expectations, despite the difficult macro environment. We are exceptionally proud of our expanding contribution margin as we expect to move towards sustainable, positive adjusted EBITDA in 2024. I am truly grateful to our employees, strategic partners, and offer pad customers who enable us to meet our guidance and nimbly respond to the historic market conditions.

Good afternoon, and thank you for joining today's call. We are pleased to deliver both top and bottom line results within our expectations. Despite the difficult macro environment. We are exceptionally proud of our expanding contribution margin as we expect to move towards sustainable positive adjusted EBITDA in 2024.

I am truly grateful to our employees strategic partners and offer pad customers, who enabled us to meet our guidance and nimbly respond to these historic market conditions.

Speaker 3: During moments like this, our vast real estate experience is more important than ever.

During moments like this our vast real estate experience is more important than ever.

Speaker 3: Before Duwad shares numbers and his insights, I will update you on our perspective on the real estate market and our strategic imperative.

Before jawad shares numbers in his insights I will update you on our perspective on the real estate market in our strategic imperatives.

Speaker 3: At a high level, buyer affordability, rising mortgage rates, and sellers with existing low mortgage rate loans continues to stress real estate markets on all fronts. However, although inventory levels are down over 20% in most markets, we are focused on the 80% of the buyers and sellers that are transacted.

At a high level buyer affordability rising mortgage rates and sellers with existing low mortgage rate loans continues to stressed real estate markets on all fronts. However, although inventory levels are down over 20% in most markets. We are focused on the 80% of the buyers and sellers that are transacting.

Hannah: Good afternoon. Thank you for attending today's Offerpad third quarter 2023 earning conference call. My name is Hannah and I will be your moderator for today's call.

Speaker 3: And today's environment, providing multiple solutions for customers is more important than ever. And as you'll hear from us today, we're leveraging our robust end-to-end platform to bring value-added services, solutions, and tools to customers.

Hannah: All lines will be needed during the presentation portion of the call, but an opportunity for questions and answers at the end. If you would like to ask a question, these press star one.

In today's environment, providing multiple solutions for customers is more important than ever and as Youll hear from US today, we're leveraging our robust end to end platform to bring value added services solutions and tools to customers.

Hannah: I would now like to pass the conference over to our host Taylor Giles with faster relations. You may go ahead.

Speaker 3: Most recently, the further support and incentivize buyers of Offerpad homes, we introduced a 4.99% mortgage rate buy-down program on eligible Offerpad owned homes. This is a powerful tool that allows us to greatly increase the affordability of our homes and motivate buyers.

Most recently the further support and incentivize buyers of offer Pat homes, we introduced a $4, 99% mortgage rate buy down program on eligible offer pad owned homes. This is a powerful tool that allows us to greatly increase the affordability of our homes and motivate buyers.

Taylor Giles: Good afternoon and welcome to Offerpad third quarter 2023 earnings call. I'm joined today by Offerpad's chairman and chief executive officer Ryan Bair, chief financial officer Jawad Ahsan and senior vice president of finance James Grout. During the call today, management will make forward looking statements as defined in the private security litigation reform act of 1995. Forward looking statements are inherently uncertain and events could differ significantly from management's expectations. Please refer to the risks and certain to you and other factors relating to the company's business described in our filings with the US Securities and Exchange Commission. Except as required by applicable law, Offerpad does not intend to update or alternate forward looking statements, whether as a result of new information, future events or otherwise.

Speaker 3: This allows more buyers to afford their dream home while saving thousands in mortgage.

This allows more buyers to afford their dream home, while saving thousands and mortgage costs initially.

Speaker 3: Initial uptake has been strong and we expect to see continue track.

Initial uptake has been strong and we expect to see continued traction.

Speaker 3: Now I'll turn to the three strategic comparatives that guide our roadmap and discuss how we're executing the GIMSTAR to inject...

Now I'll turn to the three strategic imperatives that guide our roadmap and discuss how we are executing against our objectives. Our first imperative is also our guiding mission removing the friction from the real estate process.

Speaker 3: Our first imperative is also our guiding mission, removing the friction from the real estate process.

Speaker 3: We founded Offerpad eight years ago because we first saw that visualization of real estate was inevitable.

We founded <unk> eight years ago, because we foresaw that digitalization of real estate was inevitable.

Speaker 3: We understood where the pain points and real estate transactions existed, and we built our platform to solve these problems.

We understood where the pain points and to illustrate transactions existed and we built our platform to solve these problems.

Speaker 3: With combined decades of real estate expertise, we had a unique insight.

Taylor Giles: On today's call, management will refer to certain non-gap financial measures. These metrics include certain items discussed in our earnings release under the heading non-gap financial measures. The reconciliation of Offerpad non-gap measures to the comparable gap measures are available in the financial tables. The third quarter earnings release on Offerpad's website with that.

With combined decades of real estate expertise, we have a unique insight.

Speaker 3: Consumers wanted the ease of a digital transaction, but they didn't want to forego the human touch entirely. We set out to build a robust real estate technology foundation combined with local expertise in a seamless end-to-end platform.

Consumers wanted the ease of a digital transaction, but they didn't want to forego the human touch entirely we set out to build a robust real estate technology Foundation combined with local expertise in a seamless end to end platform.

Speaker 3: We created the offerpad platform, focus on what buyers and sellers needed through each step of their unique real estate transact.

We created the <unk> platform focused on what buyers and sellers needed through each step of their unique real estate transaction.

Brian Bair: I'll turn the call over to Brian. Good afternoon and thank you for joining today's call. We are pleased to deliver both pop and bottom line results within our expectations despite the difficult macro environment. We are exceptionally proud of our expanding contribution margin as we expect to move towards sustainable, positive adjusted EBITDA in 2024. I am truly grateful to our employees, strategic partners, and Offerpad customers who enabled us to meet our guidance and nimbly respond to these historic market conditions.

Speaker 3: Our aim has always been to go above and beyond to deliver a superior experience.

Our aim has always been to go above and beyond to deliver a superior experience in.

Speaker 3: In 2023, our customer satisfaction score stands at 91%. And our NPS is 63.

In 2023, our customer satisfaction score stands at 91% and our NPS is 63.

Speaker 3: which is a remarkable achievement in the real estate world where the average NPS is only 30.

Which is a remarkable achievement in the real estate World, where the average NPS is only 30.

Speaker 3: We're in the early days of this massive digital transformation and have a lot of exciting work ahead of us.

We are in the early days of this massive digital transformation and have a lot of exciting work ahead of us.

Speaker 3: our pricing engine and underwriting tools such as offer cop and limelight continue to be more robust.

Our pricing engine and underwriting tools, such as offer comp and limelight continue to be more robust.

Brian Bair: During moments like this, our vast real estate experience is more important than ever. Before Jawad shares numbers and his insights, I will update you on our perspective on the real estate market and our strategic comparatives. At a high level, buyer affordability, rising mortgage rates, and sellers with existing low mortgage rate loans, continues to stress real estate markets on all fronts. However, although inventory levels are down over 20% in most markets, we are focused on the 80% of the buyers and sellers that are transacting.

Speaker 3: They sit on top of eight years of our proprietary data and machine learning insight.

They sit on top of eight years of our proprietary data and machine learning insights.

Speaker 3: Limelight in particular is propelled by data insights to dissect essential pricing elements.

I might in particular is propelled by data insights the dissect essential pricing elements such as neighborhood housing data numerous macroeconomic factors and local insights from our team of real estate experts in each of our markets.

Speaker 3: such as neighborhood housing data, numerous macroeconomic factors, and local insights from our team of real estate experts in each of our markets.

Speaker 3: The powerful analytic behind these tools are enhancing unit economics, enabling us to determine the value of each individual property.

The powerful analytics behind these tools are enhancing unit economics, enabling us to determine the value of each individual property.

Brian Bair: In today's environment, providing multiple solutions for customers is more important than ever. And as you'll hear from us today, we're leveraging our robust end-to-end platform to bring value added services, solutions, and tools to customers. Most recently, the further support and incentivized buyers of Offerpad homes, we introduced a 4.99% mortgage rate buy-down program on eligible Offerpad owned homes. This is a powerful tool that allows us to greatly increase the affordability of our homes and motivate buyers. This allows more buyers to afford their dream home while saving thousands in mortgage costs. Initial uptake has been strong, and we expect to see continued traction.

<unk> serves as an excellent illustration of how we harness our extensive data insights and analytic tools to enhance our intelligence with each home, we purchase and sell.

Speaker 3: Limelight serves as an excellent illustration of how we harness our extensive data insights and analytic tools to enhance our intelligence with each home we purchase and sell.

Speaker 3: We've also been working diligently behind the scenes to introduce innovative methods for engaging with customers in real time at the moment they meet us.

We've also been working diligently behind the scenes to introduce innovative methods for engaging with customers in real time at the moment. They need US for example, we know that 60% of our customers' favorite tech space communication and through the use of AI. We are developing a solution to facilitate 24 seven support.

Speaker 3: For example, we know that 60% of our customers favor text-based communication and through the use of AI, we are developing a solution to facilitate 24-7 support while decreasing our operating costs.

While decreasing our operating costs.

Speaker 3: This advancement will empower us to provide customers with real-time answers to their questions at nearly every stage of their transaction, from pricing to inspections and more.

This advancement will empower us to provide customers with real time answers to their questions at nearly every stage of their transaction from pricing to inspections and more.

Brian Bair: Now I'll turn to the three strategic comparatives that guide our road map and discuss how we're executing against our objectives. Our first imperative is also our guiding mission, removing the friction from the real estate process. We founded Offerpad eight years ago because we first saw that digitalization of real estate was inevitable. We understood where the pain points and real estate transactions existed, and we built our platform to solve these problems. With combined decades of real estate expertise, we had a unique insight.

Speaker 3: Our second imperative is to continue to make great progress on our asset-life product lines, offering end-to-end services that encompass the entire process of selling, buying, and homeownership.

Our second imperative is to continue to make great progress on our asset light product lines.

Offering end to end services that encompass the entire process of selling buying and homeownership.

Speaker 3: A private example of this and one of our most rapidly growing offerings is our renovations.

Private example of this and one of our most rapidly growing offerings as our renovations business.

Speaker 3: Today, we are one of the largest renovation companies in the United States, having successfully completed over 30,000 renovations in our own behalf.

Today, we are one of the largest renovation companies in the United States, having successfully completed over 30000 renovations on our own behalf.

Speaker 3: We are leveraging this expertise to extend our reach and recently expanded our offerings to enable third party businesses to leverage our renovation expertise and efficiency.

We are leveraging this expertise to extend our reach and recently expanded our offerings to enable third party businesses to leverage our renovation expertise and efficiency.

Brian Bair: Consumers wanted the ease of a digital transaction, but they didn't want to forego the human touch entirely. We set out to build a robust real estate technology foundation combined with local expertise in a seamless end to end platform. We created the offer pad platform focus on what buyers and sellers needed through each step of their unique real estate transaction. Our aim has always been to go above and beyond to deliver a superior experience.

Speaker 3: We gain momentum right out of the gate, and in just a few months, we already have nearly 50 B2B renovation clients in our active mark.

We gained momentum right out of the gate and in just a few months, we already have nearly 50 BTB renovation clients in our active markets.

Speaker 3: In fact, we saw 127% increase in close projects in Q3 compared to Q2. And October's our highest ever pipeline of projects.

In fact, we saw a 127% increase in closed projects in Q3 compared to Q2.

In October our highest ever pipeline of projects.

Speaker 3: These B2B customers are plugging into OfferPad Renovations to benefit from our competitive pricing, swift turnaround times, high-quality work, and streamlined renovation management.

These b to B customers are plugging into offer pad renovations to benefit from our competitive pricing Swift turnaround times.

Brian Bair: In 2023, our customer satisfaction score stands at 91%, and our NPS is 63, which is a remarkable achievement in the real estate world where the average NPS is only 30. We are in the early days of this massive digital transformation and have a lot of exciting work ahead of us. Our pricing engine and underwriting tools such as offer comp and limelight continue to be more robust. They sit on top of eight years of our proprietary data and machine learning insights.

High quality work and streamlined renovation management.

We renovate their homes just asked if there was an offer Pat one property, where everyday and every dollar matters.

Speaker 3: We renovate their homes just as if it was an Offerpad-owned property, where every day and every dollar matters.

Speaker 3: Against the backdrop of a strong and growing renovations enterprise, I am pleased to announce that starting next year, we will also offer renovation services directly to homeowners.

Against the backdrop of a strong and growing renovations enterprise.

I am pleased to announce that starting next year. We will also offer renovation services directly to homeowners.

Speaker 3: Customers will have the opportunity to not only utilize Offerpad's platform for buying and selling their homes, but also to leverage our renovation services for home improvement.

Customers will have the opportunity to not only utilize offer pads platform for buying and selling their homes, but also to leverage our renovation services for home improvement.

Brian Bair: Limelight in particular is propelled by data insights that dissect essential pricing elements such as neighborhood housing data, numerous macro economic factors and local insights from our team of real estate experts in each of our markets. The powerful analytics behind these tools are enhancing unit economics and able enough to determine the value of each individual property. Limelight serves as an excellent illustration of how we harness our extensive data insights and analytic tools to enhance our intelligence with each home we purchase and sell.

Speaker 3: With the prevalence of homeowners who are locked into low mortgage rates and less inclined to make a move, our ability to refresh, upgrade, or perform complete renovations on their homes becomes increasingly essential, both now and in the years ahead.

With the prevalence of homeowners, who are locked into low mortgage rates and less inclined to make a move or ability to refresh upgrade or perform complete renovations on their homes.

Comes increasingly essential both now and in the years ahead.

Speaker 3: Enabling direct-to-consumer renovations is yet another instance of harnessing our platform to deliver asset-light services and expanding our market presence through the broader array of customer solutions.

Labeling direct to consumer renovations is yet another instance of harnessing our platform to deliver asset light services and expanding our market presence through the broader array of customer solutions.

Brian Bair: We've also been working diligently behind the scenes to introduce innovative methods for engaging with customers in real time at the moment they need us. For example, we know that 60% of our customers favorite tech space communication and through the use of AI, we are developing a solution to facilitate 24 seven support while decreasing our operating costs. This advancement will empower us to provide customers with real time answers to their questions at nearly every stage of their transaction from pricing to inspections and more.

Speaker 3: In lockstep with growth of our renovations business, we are remaining focused on expanding our supporting technology.

In lock step with growth of our renovations business. We are remaining focused on expanding our supporting technology.

Speaker 3: This will enable us to provide significant internal efficiencies and deliver insight to onsite crews, B2B customers, and in the future, homeowners who use our renovation offer.

This will enable us to provide significant internal efficiencies and deliver insight to onsite Cruz <unk> customers and in the future homeowners, who use our renovation offering.

Speaker 3: In the early part of next year, we are poised to introduce RenoCaptain, a revolutionary internal workflow designed to provide all users of OfferPad renovations, including field teams, vendors, customers, with real-time insights into the progress of the home's renovation.

In the early part of next year, we are poised to introduce Reno Captain a revolutionary internal workflow designed to provide all users of offer pad renovations, including field teams vendors customers with real time insights into the progress of the homes renovation.

Brian Bair: Our second imperative is to continue to make great progress on our asset light product lines offering end to end services that encompass the entire process of selling buying and homeownership. A prime example of this and one of our most rapidly growing offerings is our renovations business. Today, we are one of the largest renovation companies in the United States having successfully completed over 30,000 renovations on our own behalf. We are leveraging this expertise to extend our reach and recently expanded our offerings to enable third-party businesses to leverage our renovation expertise and efficiency.

Looking ahead, we anticipate that renovations will become a substantial portion of business driven by a robust client pipeline strategic growth plan and internal proprietary technology and underpinned by the strength of our end to end platform.

Speaker 3: Looking ahead, we anticipate that renovations will become a substantial portion of business, driven by our robust client pipeline, strategic growth plan, and internal proprietary technology, and underpinned by the strength of our end-to-end platform.

Speaker 3: Another important component of our AssetLite business model is DirectPlus. This product connects homes that align with the purchasing criteria of both long-term and short-term investors.

Another important component of our asset light business model is direct plus this product connects homes that align with the purchasing criteria of both long term and short term investors.

Speaker 3: We grant access to our pre-qualified and screened investor partners, providing them with the opportunity to purchase our top of funnel home.

We grant access to our prequalified and screen Investor partners, providing them with the opportunity to purchase our top of funnel homes.

Brian Bair: We gained momentum right out of the gate, and in just a few months, we already have nearly 50 B2B renovation clients in our active markets. In fact, we saw 127% increase in closed projects in Q3 compared to Q2. In October, our highest ever pipeline of projects. These B2B customers are plugging in to Offerpad renovations to benefit from our competitive pricing, swift turnaround times, high quality work, and streamlined renovation management. We renovate their homes just as if it was an Offerpad owned property, where every day and every dollar matters.

Speaker 3: Equally valued by our investor partners, OfferPad guides the customer throughout the selling process, ensuring a seamless and successful closing for everyone involved.

Equally valued by our Investor partners offer pad guide the customer throughout the selling process.

During a seamless and successful closing for everyone involved.

Speaker 3: This comes with excellent profit margins for Offerpad with no capital investment from us.

This comes with excellent profit margins for offer pad with no capital investment from us.

Speaker 3: Our teams are focused on driving continued growth across all three of our AssetLite businesses, Direct Plus, Renovate and Flex Listing Service, which have gained great momentum as they've accounted for 50% of our unit transactions in the past two quarters.

Our teams are focused on driving continued growth across all three of our asset light businesses direct plus renovate and flex listing service, which have gained great momentum as they are accounted for 50% of our unit transactions in the past two quarters.

Speaker 3: Our platform was designed to enable strategic partners to harness our capabilities, and this brings me to our third crucial imperative.

Our platform was designed to enable strategic partners to harnessed our capabilities and this brings me to our third crucial imperative.

Brian Bair: Against the backdrop of a strong and growing renovations enterprise, I am pleased to announce that starting next year, we will also offer renovation services directly to homeowners. Customers will have the opportunity to not only utilize Offerpad's platform for buying and selling their homes, but also to leverage our renovation services for home improvement. With the prevalence of homeowners who are locked into low mortgage rates and less inclined to make a move, our ability to refresh, upgrade, or perform complete renovations on their homes becomes increasingly essential, both now and in the years ahead.

Speaker 3: expanding our partner ecosystem to enhance OfferPad's reach in terms of both scope and scale.

Spanning our partner ecosystem to enhance offer pads reach in terms of both scope and scale.

We have long standing relationships with local regional and National partners, including 15 of the top 20 homebuilders in the U S.

Speaker 3: We have long-standing relationships with local, regional, and national partners, including 15 of the top 20 home builders in the U.S., national real estate companies, and third-party real estate agents through our agent partnership program.

National Real estate companies and third party real estate agents through our agent partnership program.

Speaker 3: As of the third quarter, our agent partnership program has generated over 130,000 cash offer requests.

As of the third quarter, our agent partnership program has generated over 130000 cash offer requests.

Speaker 3: We take pride in the fact that more than 65% of those agents continue to request offers on behalf of their clients.

We take pride in the fact that more than 65% of those agents continue to request the offers on behalf of their clients.

Brian Bair: Enabling direct to consumer renovations is yet another instance of harnessing our platform to deliver asset light services and expanding our market presence through the broader array of customer solutions. In locked up with growth of our renovations business, we are remaining focused on expanding our supporting technology. Visual enable us to provide significant internal efficiencies and deliver insight to on site crews, B2B customers, and in the future homeowners who use our renovation offering.

Speaker 3: On top of those existing partnerships, we recently announced a national program in collaboration with Anywhere Real Estate.

On top of those existing partnerships, we recently announced a national program in collaboration with anywhere real estate, formerly known as <unk>. The parent company of renowned real estate brokerage brands in service businesses, including century, 21, Coldwell banker and southern bees.

Speaker 3: formerly known as Realogy, the parent company of renowned real estate brokerage brands and service businesses, including Sensory 21, Coldwell Banker, and Sotheby's.

Speaker 3: This program extends OfferPad's reach, allowing seller requests from areas outside of OfferPad's coverage.

This program extends <unk> reach allowing seller requests from areas outside of offer pads coverage can be served by certified affiliated agents with the anywhere leads network. We are thrilled that we can support sellers, who were previously beyond our reach and ensure they receive excellent service.

Speaker 3: to be served by certified affiliated agents with the Anywhere Leads Network.

Brian Bair: In the early part of next year, we are poised to introduce Renault Captain, a revolutionary internal workflow designed to provide all users of Offerpad renovations, including fill teams, vendors, customers with real-time insights into the progress of the home's renovation. Looking ahead, we anticipate that renovations will become a substantial portion of business driven by our robust client pipeline, strategic growth plan, and internal proprietary technology, and underpinned by the strength of our end-to-end platform.

Speaker 3: We are thrilled that we can support sellers who were previously beyond our reach and ensure they receive excellent service.

Speaker 3: Three quarters into the year, we are pleased to be delivering against our operating and financial goals.

Three quarters into the year, we are pleased to be delivering against our operating and financial goals.

Speaker 3: We are grateful to our teams for their proactive mindset and adaptability and responding to this historic macro environment. Reinforcing our beliefs that our robust end-end platform represents the future of realists.

We are grateful to our teams for their proactive mindset and adaptability in responding to this historic macro environment reinforcing our belief that a robust and then platform represents the future of real estate, we are confident that our roadmap and strategic initiatives are positioning the company for profitable durable.

Speaker 3: We are confident that our roadmap and strategic initiatives are positioning the company for profitable, durable growth and remain committed to creating value for our shareholders. With that, I'll turn it back to you.

Growth and remain committed to creating value for our shareholders.

Brian Bair: Another important component of our asset light business model is direct plus. This product connects homes that align with the purchasing criteria of both long-term and short-term investors. We grant access to our pre-qualified and screen investor partners, providing them with the opportunity to purchase our top of funnel homes. Equally valued by our investor partners, Offerpad guides the customer throughout the selling process, ensuring a seamless and successful closing for everyone involved. This comes with excellent profit margins for Offerpad with no capital investments from us.

With that I'll turn the call over to Jawad.

Speaker 4: Thanks, Brian . As mentioned, the third quarter marked my first full quarter with OfferPad. I'm very impressed with the team here and pleased with our progress.

Thanks, Brian.

As mentioned the third quarter marked my first full quarter with offer bad.

I'm very impressed with the team here and pleased with our progress.

Speaker 4: In his remarks, Brian opened with our intent to drive towards sustainable profit.

In his remarks, Bryan opened with our intent to drive towards sustainable profitability.

Speaker 4: Using that as our North Star, we established three key priorities for the business that formed the basis for our 2024 financial plan.

Using that as our North Star, we established three key priorities for the business that form the basis for our 2024 financial plan.

Speaker 4: These three priorities are one, ensure that the business is on a path to be profitable and self-sustaining.

These three priorities are one ensure that the business is on a path to be profitable and self sustaining.

Brian Bair: Our teams are focused on driving continued growth across all three of our asset light businesses, direct plus, renovate, and flex listing service, which have gained great momentum as they've accounted for 50% of our unit transactions in the past two quarters.

Speaker 4: to future proof to help mitigate against another downturn in housing or rate shock.

To future proof to help mitigate against another downturn in housing or rate shock.

Speaker 4: Three, better align our marketing strategy with our customer behavior. Let's break these

Three better align our marketing strategy with our customer behavior.

Let's break these priorities down one by one.

Brian Bair: Partners. Our platform was designed to enable strategic partners to harness our capabilities, and this brings me to our third crucial imperative, expanding our partner ecosystem to enhance Offerpad's reach in terms of both scope and scale. We have longstanding relationships with local, regional and national partners, including 15 of the top 20 home builders in the U.S., national real estate companies, and third-party real estate agents through our agent partnership program. As at the third quarter, our agent partnership program has generated over 130,000 cash offer requests.

Speaker 4: The first priority is to ensure that our business is on a path to be profitable and self-sustaining. We must and we will control our own destiny.

The first priority is to ensure that our business is on a path to be profitable and self sustaining we must and we will control our own destiny. We've.

Speaker 4: We've assumed conservatively that we will not have any access to outside capital for two years or through the end of 2025.

We've assumed conservatively that we will not have any access to outside capital for two years or through the end of 2025.

Speaker 4: We felt it prudent to plan to fund our operations, assuming a scenario where the capital market remained tight.

We felt it prudent to plan to fund our operations, assuming a scenario where the capital markets remain tight.

Speaker 4: We then set out to plan for 2024 using two guard rooms.

We then set out the plan for 2024 using two guardrails.

Speaker 4: The first chord reel was the assumed lack of access to capital over the next two years.

The first guard rail was the assumed lack of access to capital over the next two years.

Speaker 4: The second guardrail assumed that the current market conditions will persist also for the next two years and that real estate transaction volumes will not recover from 2023 levels.

The second guardrail assumed that the current market conditions will persist also for the next two years and that real estate transaction volumes will not recover from 2023 levels.

Brian Bair: We take pride in the fact that more than 65% of those agents continue to request offers on behalf of their clients. On top of those existing partnerships, we recently announced a national program in collaboration with Anywhere Real Estate, formerly known as Rilogy. The parent company of renowned real estate brokerage brands and service businesses, including Century 21, Coldlow Banker, and Sotheby's. This program extends Offerpad's reach, allowing seller requests from areas outside of Offerpad's coverage to be served by certified affiliated agents with the Anywhere Leads Network. We are thrilled that we can support sellers who are previously beyond our reach and ensure that you receive excellent service.

Speaker 4: Again, this is not our expectation, but rather a conservative assumption that we are using to ensure that we can control our own destiny against a difficult macro backdrop. With these guardrails, we determined that we needed to reduce our cash burn rate by over $20 million heading into 2024. And that's exactly what we did with our recent actions to scale back our cost structure.

Again, this is not our expectation, but rather a conservative assumption that we are using to ensure that we can control our own destiny against a difficult macro backdrop.

With these guardrails, we determined that we needed to reduce our cash burn rate by over $20 million heading into 2024.

And Thats exactly what we did with our recent actions to scale back our cost structure.

Speaker 4: Our guiding principle was reorganize to optimize.

Our guiding principle was reorganized to optimize.

This optimization reduced our workforce by 18%.

Speaker 4: This optimization reduced our workforce by 18%.

Speaker 4: Our goal was to reduce our employee-based team members who can not only execute in this challenging environment.

Our goal was to reduce our employee based team members, who can not only execute in this challenging environment.

Brian Bair: Three-quarters into the year, we are pleased to be delivering against our operating and financial goals. We are grateful to our teams for their proactive mindset and adaptability in responding to this historic macro environment, reinforcing our belief that our robust end-end platform represents the future of real estate. We are confident that our roadmap and strategic initiatives are positioning the company for profitable, durable growth and remain committed to creating value for our shareholders.

Speaker 4: but also set the stage for growth when transaction volumes rebound.

But also set the stage for growth when transaction volumes rebound.

As you might imagine this was incredibly difficult to do as we've been operating in a challenging environment for some time now.

Speaker 4: As you might imagine, this was incredibly difficult to do as we've been operating in a challenging environment for some time now.

Speaker 4: We know how hard this action was on our colleagues who were impacted, some of whom have been with Offerpad for many years, and we are doing what we can to help with their transition.

We know how hard this action was on our colleagues who are impacted some of whom have been with offer pad for many years and we are doing what we tend to help with their transition.

Speaker 4: Ultimately, we did what needed to be done to ensure that offer pad will successfully navigate this downturn and will thrive in a recovery.

Ultimately, we did what it needed to be done to ensure that offer pad will successfully navigate this downturn and will thrive in a recovery.

Jawad Ahsan: With that, I'll turn the call over to Jawad. Thanks, Brian. As mentioned, the third quarter marked my first full quarter with Offerpad. I'm very impressed with the team here and pleased with our progress. In his remarks, Brian opened with our intent to drive towards sustainable profitability.

Speaker 4: We've been working hard throughout 2023 to narrow our operating loss, and we are still pacing to exit this year profitable from an adjusted EBITDA system.

We've been working hard throughout 2023 to narrow our operating loss and we are still pacing to exit this year profitable from an adjusted EBITDA standpoint.

Our cost optimization is intended to allow us to continue to operate at or slightly above adjusted EBITDA breakeven for the full year of 2024.

Speaker 4: Our cost optimization is intended to allow us to continue to operate at or slightly above adjusted EBITDA break even for the four year of 2020

Jawad Ahsan: Using that as our North Star, we established three key priorities for the business that formed the basis for our 2024 financial plans. These three priorities are one, ensure that the business is on a path to be profitable and self-sustaining. Two, future proof to help mitigate against another downturn in housing or rate shock. Three, better align our marketing strategy with our customer behavior.

Jawad Ahsan: Let's break these priorities down one by one. The first priority is to ensure that our business is on a path to be profitable and self-sustaining We must and we will control our own destiny. We've assumed conservatively that we will not have any access to outside capital for two years or through the end of 2025. We felt it prudent to plan to fund our operations, assuming a scenario where the capital markets remain tight.

Speaker 4: Our second priority is to feature proof to help mitigate the business against another downturn in housing or rate shock. You heard Brian talk about the progress we're making towards becoming more asset light.

Our second priority is to future proof to help mitigate the business against another downturn in housing or rate shock you heard Brian talk about the progress, we're making towards becoming more asset light.

Speaker 4: We have exciting momentum building in our standalone renovations business, our platform for institutional investors in our listing services.

We have exciting momentum building in our Standalone renovations business, our platform for institutional investors and our listing services.

Speaker 4: I want to reiterate a point Brian made earlier, which is that these three offerings together have accounted for half of our unit transactions so far this year.

I want to reiterate a point, Brian made earlier, which is that these three offerings together accounted for half of our unit transactions. So far this year.

Speaker 4: As these business lines continue to grow, we will become less reliant on the cash offer product as a source of revenue and get closer to the vision Brian had when founding the company of a true real estate solutions platform.

As these business lines continue to grow we will become less reliant on the cash offer product as a source of revenue and get closer to the vision, Brian had when founding the company of a true real estate solutions platform.

Our third priority is to better align our marketing strategy with our customer behavior.

Jawad Ahsan: We then set out to plan for 2024 using two guardrails. The first guardrail will be assumed lack of access to capital over the next two years. The second guardrail assumed that the current market conditions will persist also for the next two years and that real estate transaction volumes will not recover from 2023 levels. Again, this is not our expectation, but rather a conservative assumption that we are using to ensure that we can control our own destiny against a difficult macro backdrop.

It won't spend much time talking about this today, but we're excited to build the offer pad brand in a more meaningful and thoughtful way in 2024.

Speaker 4: The essence of our strategy here is to shift from an almost exclusively promotion to focus marketing strategy to a mix of brand building and promotion.

The essence of our strategy here is to shift from an almost exclusively promotions focused marketing strategy to a mix of brand building and promotions.

Speaker 4: The key thing for you to note at this time is that this shift is expected to be completely P&L neutral.

A key thing for you to note at this time is that this shift is expected to be completely P&L neutral.

Speaker 4: We intend to reallocate our marketing spend from promotions to brand building as opposed to spending new money on brand building. We feel that this is the right strategic shift in our marketing spend as brand awareness is the more important factor in a homeowner's decision to sell their home.

We intend to reallocate our marketing spend from promotions to brand building as opposed to spending new money on brand building we.

Jawad Ahsan: With these guardrails, we determined that we needed to reduce our cash burn rate by over $20 million heading into 2024. And that's exactly what we did with our recent actions to scale back our cost structure. Our guiding principle was reorganize to optimize. This optimization reduced our workforce by 18%. Our goal was to reduce our employee-based team members who can not only execute in this challenging environment, but also set the stage for growth when transaction volumes rebound.

Speaker 4: To recap, we're executing against these priorities to control our own destiny.

Speaker 4: Our long-term vision is to build a true software-enabled platform that will fulfill any real estate need that a customer may have. We're motivated to deliver value through this vision to our customers and excited about the value we'll deliver to Cheryl.

Jawad Ahsan: As you might imagine, this was incredibly difficult to do as we've been operating in a challenging environment for some time now. We know how hard this action was on our colleagues who were impacted, some of whom have been with Offerpad for many years, and we are doing what we can to help with their transition.

Speaker 4: The actions we outlined today continue our path to being a sustainably profitable cash generating business with a diversified product portfolio.

Speaker 4: Looking back on the third quarter, we delivered strong execution amidst a tough macro environment, enabling us to deliver on both our top and bottom line guidance.

Jawad Ahsan: Ultimately, we did what needed to be done to ensure that Offerpad will successfully navigate this downturn and will thrive in a recovery. We've been working hard throughout 2023 to narrow our operating loss, and we are still pacing to exit this year profitable from an adjusted EBITDA standpoint. Our cost optimization is intended to allow us to continue to operate at or slightly above adjusted EBITDA break even for the full year of 2024.

Speaker 4: I'm particularly excited by the continued progress we've made towards profitability.

Speaker 4: Net loss in the quarter was $20 million in 11% improvement from Q2.

Speaker 4: Third quarter, adjusted EBITDA improved to negative $13.3 million.

Speaker 4: This reflects a 23% improvement from Q2 and a 79% improvement as compared to Q3 of last

From Q2, and a 79 per cent improvement as compared to Q3 of last year.

Adjusted EBITDA was driven by improved gross profit and contribution margin as well as reduced operating expenses.

Speaker 4: Adjusted EBITDA was driven by improved gross profit and contribution margin as well as reduced operating expense

Jawad Ahsan: Our second priority is to future proof to help mitigate the business against another downturn in housing or rate shock. You heard Brian talk about the progress we're making towards becoming more asset light. We have exciting momentum building in our standalone renovations business, our platform for institutional investors in our listing services. I want to reiterate a point Brian made earlier, which is that these three offerings together have accounted for half of our unit transactions so far this year.

Speaker 4: Gross margin improved for the third consecutive quarter to 10.2% compared to 9.7% in the second quarter and was up nearly a thousand basis points year over year.

Gross margin improved for the third consecutive quarter to 10.2% compared to 9.7% in the second quarter and was up nearly a thousand basis points year over year.

This improvement was due to the quality of our inventory and a greater percentage of revenue from higher margin asset light services such as renovation.

Speaker 4: This improvement was due to the quality of our inventory in a greater percent of revenue from higher margin asset-like services such as renovations.

Speaker 4: In fact, a third of our contribution margin after interest in the quarter was from product offering other than the cash offer, the highest in the company's history.

In fact, a third of our contribution margin after interest in the quarter was from product offerings other than the cash offer the highest in the company's history.

Jawad Ahsan: As these business lines continue to grow, we will become less reliant on the cash offer product as a source of revenue and get closer to the vision Brian had when founding the company of a true real estate solutions platform.

Looking forward to the fourth quarter, we expect to continue to show improving profitability, while seasonal trends will normalize the portfolio.

Speaker 4: Looking forward to the fourth quarter, we expect to continue to show improving profitability while seasonal trends will normalize support boys.

Jawad Ahsan: Our third priority is to better align our marketing strategy with our customer behavior. I won't spend much time talking about this today, but we're excited to build the Offerpad brand in a more meaningful and thoughtful way in 2024. The essence of our strategy here is to shift from an almost exclusively promotion to focus marketing strategy to a mix of brand building and promotions. The key thing for you to note at this time is that this shift is expected to be completely P&L neutral.

Q for will reflect a severance charge of roughly $1 million associated with the cost reduction actions we discussed.

Speaker 4: Q4 will reflect a severance charge of roughly $1 million associated with the cost reduction actions we discussed.

Speaker 4: We expect to see continued sequential improvement in the fourth quarter in revenue and that loss. And to reiterate, we will exit the year adjusted EBITDA profit.

We expect to see continued sequential improvement in the fourth quarter and revenue and net loss and to reiterate we will exit the year adjusted EBITDA profitable.

Speaker 4: Specifically, in the fourth quarter of 2023, we expect to sell between 700 and 800 homes, generating revenue of between $230 million and $270 million. We also expect Adjustity Bidad to be between negative $10 million and break even in the quarter, which represents another significant sequential improvement on our path to returning to sustainable profit.

Specifically in the fourth quarter of 2023, we expect to sell between 708 hundred homes generating revenue of between $230 million and $270 million. We also expect adjusted EBITDA to be between negative $10 million and breakeven in the quarter, which represents another <unk>.

Jawad Ahsan: We intend to reallocate our marketing spend from promotions to brand building as opposed to spending new money on brand building. We feel that this is the right strategic shift in our marketing spend as brand awareness is the more important factor in a homeowner's decision to sell their home.

And if he can't sequential improvement on our path to returning to sustainable profitability.

Speaker 4: As we wrap up 2023, the entire offer pad team is laser focused on our strategic comparative and the enormous opportunity before us.

As we wrap up 20 twenty-three the entire offer pad team is laser focused on our strategic imperatives and the enormous opportunity before us.

Jawad Ahsan: To recap, we're executing against these priorities to control our own destiny. Our long-term vision is to build a true software enabled platform that will fulfill any real estate need that a customer may have. We're motivated to deliver value through this vision to our customers and excited about the value we'll deliver to Cheryl. The actions we outlined today continue our path to being a sustainably profitable, cash-generating business with a diversified product portfolio.

Speaker 4: We have the right structure and road map in place to return the company to growth.

We have the right structure and roadmap in place to return the company to growth.

Speaker 4: Our team is incredibly talented, the best in the world at what they do, and is executing crisply and with precision.

Our team is incredibly talented the best in the world, what they do and is executing crisply and with precision.

Speaker 4: I'm excited to share our journey during this watershed time as we disrupt the way real estate works. And with that, I'll open the call.

Sighted to share our journey during this watershed time as we disrupt the way real estate works and.

And with that I'll open the call for questions.

Pardon me.

Jawad Ahsan: Looking back on the third quarter, we delivered strong execution amidst a tough macro environment, enabling us to deliver on both our top and bottom line guidance. I'm particularly excited by the continued progress we made towards profitability. Net loss in the quarter was $20 million in 11% improvement from Q2. Third quarter, adjusted EBITDA, improved to negative $13.3 million. This reflects a 23% improvement from Q2 and a 79% improvement as compared to Q3 of last year.

Speaker 1: If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one.

I think I would like to ask a question. Please press star followed by one on your telephone keypad.

Any reason you would like to admit that question. Please press star followed by two again to ask a question press star wine.

We kindly ask that participant limit themselves to one question with one follow up.

Speaker 1: We kindly ask that participant, limit themselves to one question with one follow-up.

<unk>.

As a reminder, if you're using a speaker phone. Please remember to pick up your handset before asking a question. We will pause here briefly as questions are registered.

Speaker 1: As a reminder, if you're using a speaker phone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered.

Speaker 1: Our first question from the line of Nick Jones with JMP. Please proceed.

Our first question from the line of <unk> with J M. P. Please Christine.

Jawad Ahsan: Adjusted EBITDA was driven by improved gross profit and contribution margin as well as reduced operating expenses. Gross margin improved for the third consecutive quarter to 10.2% compared to 9.7% in the second quarter and was up nearly a thousand basis points year over year. This improvement was due to the quality of our inventory in a greater percent of revenue from higher margin asset-light services such as renovation. In fact, a third of our contribution margin after interest in the quarter was from product offerings other than the cash offer, the highest in the company's history.

Speaker 5: Hi, this is Luke on the next. Thanks for taking the question. Could you just ask us what if any are the implications of Bernat first NAR on the IBIN business? If commissions do come down broadly, does that change the value proposition at all? Thank you.

Hi, This is look on her neck. Thanks for taking the question could you just got to what if any are the implications of Burnett first and they are on the I buying business. If commissions do come down broadly does that change the value proposition. It all thank you.

Yeah. Thanks for the question.

Speaker 3: Yeah, and thanks for the question. No, you know, the, so a couple of things that obviously caused, obviously a lot of shock waves yesterday for the traditional brokerages. You know, we've been following it.

The so a couple of things that obviously cause obviously a lot of shockwaves yesterday for the traditional brokerages we've been following.

Speaker 3: closely from like everybody has, but obviously that's early in what's happening there. The short answer from an offer pad perspective.

Closely from from like like everybody has but you know obviously, that's early and what's happening there. The short answer from an offer pad perspective, you know that we underwrite that a Cobra commission in and so it's really a pass through fee for everything that we do so we don't see a lot of it has implications for that but.

Speaker 3: You know, that we underwrite that a co-broad commission in. And so it's really a pass through fee for everything that we do. So we don't see a lot of implications for that.

Jawad Ahsan: Looking forward to the fourth quarter, we expect to continue to show improving profitability while seasonal trends will normalize support bullio. Q4 will reflect a severance charge of roughly $1 million associated with the cost reduction actions we discussed. We expect to see continued sequential improvement in the fourth quarter in revenue, in net loss, and to reiterate, we will exit the year adjusted EBITDA profitable. Specifically, in the fourth quarter of 2023, we expect to sell between 700 and 800 homes generating revenue of between $230 million and $270 million. We also expect adjusted EBITDA to be between negative $10 million in break even in the quarter, which represents another significant sequential improvement on our path to returning to sustainable profitability.

Speaker 3: And saying that I think this is just maybe one of the first steps of what's going to happen on the traditional side of it, which is one of the reasons I started off for PAD, originally it was trying to remove the friction and create more transparency for sellers and buyers. And so...

Saying that I think this is just maybe one of the first steps of what's going to happen to you on the traditional side of it which is one of the reasons I started offer pad. Originally it was trying to remove the friction and create more transparency for sellers and buyers and so.

Speaker 3: I think you're going to see a lot more changes on the traditional side. And overall, we're going to still be very focused, you know, customer-centred, get everything that we do. But overall, from a commission standpoint, in early, and that's a pass-through fee for us. So whether it's zero or 3%, it's a pass-through.

I think you're gonna see a lot more changes on the traditional side and you know overall, we're gonna still be very focused customer centric and everything that we do but but overall that from a commission standpoint early and do you like to pass through a fee for us so whether it's zero or 3% it to pass through.

Alright I appreciate it thank you.

Thank you. Thank you Mister Jones.

Speaker 1: Our next question is from the line of Ryan Thomas-Sello, his cycle you may proceed.

Alright next question is for nine of Orion Thomas Hello. This cycle you May proceed.

Jawad Ahsan: As we wrap up 2023, the entire offer pad team is laser focused on our strategic comparatives and the enormous opportunity before us. We have the right structure and road map in place to return the company to growth. Our team is incredibly talented and best in the world at what they do and is executing crisply and with precision.

Hi, Thanks for taking the questions I guess just.

Speaker 5: digging it deeper into the change in the marketing strategy, shifting to a brand-of-focus versus a promotional.

Digging a bit deeper into the change in the marketing strategy.

Shifting to a promotional I'm sorry.

A branding focus versus a promotional focus.

Jawad Ahsan: I'm excited to share our journey during this watershed time as we disrupt the way real estate works.

Given that you are going to be investing reallocating those dollars.

Speaker 5: Given that you're gonna be investing reallocating those dollars.

Hannah: And with that, I'll open the call for questions. Certainly. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason, you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. We kindly ask that participant to submit themselves to one question with one follow-up. As a reminder, if you're using a speaker phone, please remember to pick up your handset before asking your question.

Speaker 5: from once the other. Do you anticipate that to have any impact on purchase volumes? You know, as you take time to invest and build that brand and the promotional spend is declined.

From one to the other do you anticipate that to have any impact on purchase volumes.

You know as you.

It takes time to invest and build that brand in the promotional spend is declining.

Speaker 4: Yeah, this is your IOT because Ryan, great question. So we look very deeply into this and throughout the year, we're monitoring our effectiveness on our marketing spend through various metrics, CAQ, cost for lead. And what we saw is that we're not getting necessarily the efficacy we thought we'd be getting focused. Thank you.

Yes. This is Ronald <unk> right Great question. So we look very deeply into this and throughout the year, we're monitoring our <unk>.

Effectiveness on our our marketing spend through various metrics CAC cost per lead and what we saw is that we're not getting necessarily the efficacy we thought we'd be getting focused.

Ryan Bair: We will pause here briefly Our first question from the line of Nick Jones with JMP. Please proceed. Hi, this is Luke on for Nick. Thanks for taking the question. Could you just ask, what if any are the implications of Bernat first NAR on the IBIN business? It's commissions do come down broadly. Does that change the value proposition at all? Thank you. Yeah, thanks for the question. No, you know, the so a couple of things that obviously caused obviously a lot of shock waves yesterday for the traditional brokerages.

Speaker 4: purely on promotional so today our marketing spend is 100% geared towards promotional and if you think about the buying decision or sorry the decision

Early on promotional so today are marketing spend is 100 per cent geared towards promotional and if you think about the buying decision or sorry that the decision.

Speaker 4: A seller makes, you know, when they're selling their home, that's something that they come to over a period of time. It's not like a point in time transaction. But in many cases, we were trying to almost perfectly time that transaction. When in reality, what you really want is more general brand awareness. And so.

Seller makes when they're selling their home that's something that they come new over a period of time, it's not like a point in time transaction, but in many cases, we were trying to almost perfectly time that transaction.

When in reality, what you really want is more general brand awareness. So.

Speaker 4: We think that we're going to be able to shift from purely promotional to a mix of promotional and brand. It's not going to be a hard shift. We're thinking from 100% where it is today in 24, we're anticipating it to be roughly 70, 30 promotional versus brand. And we do think that it is important to look. We want both meta brand awareness.

We think that we're gonna be able to shift from purely promotional to a mix of promotional and brand and it's not going to be a hard shift we're thinking from 100 per cent, where it is today and 24 were anticipating it to be roughly 70 30.

Ryan Bair: You know, we've been following it closely from like everybody has, but you know, obviously that's early in what's happening there. The short answer from an offer pad perspective, you know, that we underwrite that a co-broke commission in. And so it's really a pass through fee for everything that we do. So we don't see a lot of implications for that.

Promotional versus brand.

And we do think that it is important look we want both met a brand awareness as well as elevating our brain within a market ultimately real estate is local.

Speaker 4: as well as elevating our brain within a market, ultimately real estate is local.

Ryan Bair: But in saying that, I think this is just maybe one of the first steps of what's going to happen that, you know, on the traditional side of it, which is one of the reasons I started off for pad originally it was trying to remove the friction and create more transparency for sellers and buyers. And so I think you're going to see a lot more changes on the traditional side. And, you know, overall, we're going to still be very focused, you know, customer centric and everything that we do.

Speaker 4: So we want to get more granular in the markets and we're still going to spend money on that. But as our brand expands, it's really important that not only the local market knows who we are, but we're in really the national dialogue and national awareness when you want to, when it comes time to telling your home, we want people to think about Off-Pad first.

So we wanted to get more granular in the markets and we're still going to spend money on that.

But as our brand expands it's really important that not only the local market knows who you are but we're in really the national dialogue and national awareness.

When you know when you want it when it comes time to selling your home we want people to think about off that burst.

Speaker 3: Yeah, I think you sounded up well. The thing I was just gonna add, but you hit on is, real estate is definitely local in brand awareness. And you have a transaction once every seven to 10 years. And so we want to be top of mind when people make a lot of those micro decisions and that they're ready to make that decision. I mean, the great thing that we have discovered because of our strong product with the cash offer.

Yeah, I think I think he just ended up well the thing I was just gonna just add but but but you hit on his real estate is definitely local and brand awareness and you have a transaction. Once every seven to 10 years and so we wanted to be top of mind when people, you'll make a lot of those micro decisions. So that they're ready to to make that decision I mean, the the great thing that we have discovered.

Ryan Bair: But overall that from a commission standpoint in early and you know, that's a pass through fee for us. So whether it's zero or three percent, it's a pass through. Great. Appreciate it. Thank you. Thank you, Mr. Jones.

Because of our strong product with the cash offer.

Ryan Bair: Our next question is from the line of Ryan Tomasello, this type of you may proceed. I'll go and make sure to take the questions. I guess just digging a bit deeper into the change in the marketing strategy, shifting to a promotional, I'm sorry, a branding focus versus the promotional focus. Given that you're going to be investing, reallocating those dollars, you know, from once the other. Do you anticipate that to have any impact on purchase volumes?

Speaker 3: That's the foundation of what we do is that in a lot of markets, 70% of the time people start to trend, start the process with us.

That's the foundation of what we do is that in a lot of markets 70 per cent of the time people start their trend you know start the process with us.

Speaker 3: But they come to us first, but then they make a lot of micro decisions. And when they are ready, and we want to be there for them. And so that's where she sees some of the shift on the brand side as well, which we're excited about.

But they come to US first but then they make a lot of micro decisions and when they are ready and we wanted to be there for them and so you have to <unk> see some of the shift on the branch side as well, which we're excited about.

And then as a follow up.

Speaker 5: the focus on shifting away from more of the capital intensive gas offer.

The focus on on shifting away from more of the capital intensive cash offer business is something you've discussed in the past it sounds like that's going to be even more at the forefront next year.

Speaker 5: something you've discussed in the past, it sounds like that's going to be even more at the forefront. Next year, as you're, you know, prudent and like

Ryan Bair: You know, as you take time to invest and build that brand and the promotional spend is declining? Yeah. This is why I'll think is Ryan. Great question. So we look very deeply into this. And throughout the year, we're monitoring our effectiveness on our our marketing spend through various metrics, CAC, cost for lead. And what we saw is that we're not getting necessarily the efficacy. We thought we'd be getting focused purely on promotional.

Prudently planning around a.

Speaker 5: perhaps a tough environment to navigate in terms of that backdrop. I guess Brian , it just be helpful to...

Perhaps a tough environments and obligated you know in terms of that backdrop, I guess, Brian it'd just be helpful.

To unpack the different.

Speaker 5: non-capital intensive businesses, the asset-like businesses, if you can remind us the value proposition of those, how much runway there is for growth, and importantly, the economics that show up in those products and how that might impact.

Non capital intensive businesses the acid like businesses, if you can remark remind us.

The value proposition of those how much one way there is for growth and importantly, the economics that.

That show up in those products and how that might impact the piano P&L next year as we just think about modeling out.

Ryan Bair: So today, our marketing spend is 100% geared towards promotional. And if you think about the buying decision or sorry, the decision a seller makes, you know, when they're selling their home, that's something that they come to over a period of time. It's not like a point in time transaction. But in many cases, we were trying to almost perfectly time that transaction. When in reality, what you really want is more general brand awareness.

Performing yeah, great. So yeah, Oh, yeah, great question. So I'll I'll go through the Fort product lines. So we call Express which is our cash offer. That's that's that's the foundation and then we have the direct plus which is where we allow other.

Speaker 3: Yeah, great question, Ryan. So I'll go through the fourth product line. So we call it Spurrest, which is our cash offer. That's the foundation. And then we have the Direct Plus, which is where we allow other investors, both short-term and long-term investors, to offer on-home top of funnel with us.

Other investors, both both short term and long term investors too.

To offer on homes top of final with us.

Speaker 3: And then also they get the efficiency of our straight to consumer call center and closing teams and transaction teams through that.

And and then also they get the efficiency of arched straight to consumer call Center and closing teams and transaction teams through through that we had the renovation side you know obviously like I mentioned in the remarks is that we have a lot of efficiency and and we definitely flashed with our renovations skill set so allowing people to <unk>.

Ryan Bair: And so we think that we're going to be able to shift from purely promotional to a mix of promotional and brand. It's not going to be a hard shift. We're thinking from 100% where it is today in 24. We're anticipating it to be roughly 70, 30 promotional versus brand. And we do think that it is important. Look, we want both meta brand awareness as well as elevating our brand within the market ultimately real estate is local.

Speaker 3: We at the renovation side, obviously, like I mentioned in the remarks, is that we have a lot of efficiency and that we definitely flex with our renovations skill set.

Speaker 3: So allowing people to plug into our renovations, they get our cost or timing, the efficiency or quality by plugging in, we already have teams there on the ground that they can plug into. So using that as a service is something we've been focused on. And right now there's a great opportunity to do that.

Log into our renovations they get they get our cost or timing the efficiency our quality uhm by plugging in we already have teams there on the ground that they can plug into so using that as a as a service is something we've been focused on.

Ryan Bair: So we want to get more granular in the markets. And we're still going to spend money on that. But as our brand expands, it's really important that not only the local market knows who we are, but we're in really the national dialogue and national awareness. When you know, when you want to when it comes time to selling your home, we want people to think about Africa at first. Yeah, I think you summed it up well.

Right now there's a great opportunity to do that just just as a side note. Those two as we allow select investors to head to bed at top of final with us and give.

Speaker 3: just as a side note, those two as we allow select investors to bid a top of final with us and give the seller wins because they're going to get the top offer they can for the home.

The seller wins, because they're gonna get the the top offer they can for the home, but no matter who gets the home, let's say that Ah direct plus partner gets that gets the house, there's a high likelihood they're gonna have us renovate that home as well. So we provide that the the top of final we provide the efficiency of the close to home, but then we also provide the renovations for them.

Speaker 3: But no matter who gets to home, let's say that direct plus.

Ryan Bair: The thing I was just going to add, but you hit on is real estate is definitely local in brand awareness and you have a transaction once every seven to 10 years and so we want to be top of mind when people make a lot of those micro decisions and if they're ready to make that decision. I mean, the great thing that we have discovered because of our strong product with the cash offer.

Speaker 3: partner gets that gets the house. There's a high likelihood they're going to have us renovate that home as well. So we provide the the top of final. We provide the efficiency of the clothes at home, but then we also provide the renovations for them.

Speaker 3: So, you know, the two issues that they normally struggle with are sourcing and renovation, and those are two things that we can sell for.

So the two issues that they normally struggle with our sourcing and renovation and those are two things that we can sell for.

Ryan Bair: That's the foundation of what we do is that in a lot of markets, 70% of the time people start their trans, you know, start the process with us, but they come to us first, but then they make a lot of micro decisions and when they are ready and we want to be there for them. And so that's really she see some of the shift on the brand side as well, which we're excited about.

Speaker 3: And then the other product line is our flex. So it's really important to us that we give people an option or a choice. We'll give them a cash offer, if the cash offer, whatever reason doesn't work for them. They have the ability to list their home with us as well. And if they want to list their home with us, they can also use our renovation teams.

And then the other product line is our flex so it's really important to us that we give people an option or a choice will give them a cash offer if the cash offer for whatever reason doesn't work for them. They have the ability to list your home with us as well and if they wanted to list their home with us they.

They can also use our renovation teams.

Speaker 3: to help get their house in a list ready condition. We can advance renovation costs on that as well. And so we're very, you know, on those four product lines and we're, you know, we mentioned we're continuing to see.

To help get their house illustrated condition, we can we can advance renovation costs on that as well and so we're we're very low on those for a product lines and working with <unk>.

Ryan Bair: And then as a follow up, you know, the focus on shifting away from more of the capital intensive cash offer business is something you've discussed in the past. It sounds like that's going to be even more at the forefront. Next year, as you're, you know, prudently planning around a, you know, perhaps a tough environment to navigate in terms of that backdrop. I guess, Brian, you know, it just be helpful to unpack the different non capital intensive businesses, the asset like businesses, if you can remind us, you know, the value proposition of those, how much runway there is for growth and importantly, you know, the economics that that show up in those products and how that might impact the PNL next year, as we just think about modeling out performance. Yeah, great. So yeah, oh, yeah, great question. Right.

We mentioned were continue to see.

Speaker 3: really good growth, especially on the renovation side in this environment. And the one thing that I'll point out is on the cash offer, the cash offer, the one thing that we know and can't be disputed is...

Really good growth, especially on the renovation side in this environment.

And the one thing that I'll point out is on the cash offer the cash offer the one thing that we know and can't be disputed is customers love the cash offer and the cash off when they say is the foundation that doesn't necessarily mean, what I mean by that is the cash offer is always going to be there, but that doesn't necessarily that we have to take the balance sheet on that.

Speaker 3: customers love the cash offer. And the cash offer, when they say is the foundation, that doesn't necessarily mean, and what I mean by that is, the cash offer is always gonna be there, but that doesn't necessarily mean that we have to take the balance sheet on that, that with direct plus, the customer will get the same experience.

Direct plus the customer will get the same experience.

Speaker 3: But one of our partners will close that house as well, so on the asset light. So it'll always be the foundation of

But one of our partners will close that house as well so on the asset light. So it'll always be the foundation of of what we do.

Speaker 4: to water. Yeah, and then just to add on to that, Ryan. So as

Yeah, and then just to add onto that right. So.

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Speaker 4: Brian mentioned those are the four pillars and you heard us talk about in our prepared remarks.

Brian mentioned those are the four pillars and you heard us talk about and are prepared remarks, how half of our transaction volume came from non for for year to date twenty-three half of our transaction volumes come from non cash offer non ibuying and so we think we've got the right foundation heading into next year to have those be legitimate business lines are still fairly small portions of <unk>.

Ryan Bair: So I'll go through the for product line. So, you know, we call it for us, which is our cash offer that's that's that's the foundation. And then we have the direct plus, which is where we allow other investors, both both short-term and long-term investors to offer on home top of funnel with us. And, and then also they get the efficiency of our straight to consumer call center and closing teams and transaction teams through that, we had the renovation side, you know, obviously, like I mentioned in the remarks is that, you know, we have a lot of efficiency and that we definitely flex with our renovations skill set.

Speaker 4: How half of our transaction volume came from non, for a year to date, 23 half of our transaction volume has come from non-casual for non-ibying.

Speaker 4: And so we think we've got the right foundation heading in the next year to have those be legitimate business lines. They're still fairly small portions of our revenue, but the baseline is there. The foundation is there for us to build on the momentum that we've got and specifically renovate and flex as Brian mentioned are really coming on strong.

Revenue, but the baseline is there the foundation is there for us to build on the momentum that we've got and specifically renovate and flexes Prime mentioned are really coming on strong and so what we're really excited about how we are going to be diversifying the business because we've never seen ourselves as and I buy her we've seen ourselves as really a real estate solutions platform and the trains.

Speaker 4: And so, look, we're really excited about how we are going to be diversifying the business because we've never seen ourselves as an I-Bire. We've seen ourselves as really a real estate solutions platform. And the transaction volume is bearing that out and you're going to see that translate into revenue in the next one to two years.

Ryan Bair: So allowing people to plug into our renovations, they get, they get our cost or timing, the efficiency or quality by plugging in, we already have teams there on the ground that they can plug into. So using that as a service is something we've been focused on. And right now there's a great opportunity to do that just as a side note, those two as we allow select investors to bid a top of funnel with us and give, you know, the seller wins because they're going to get the top offer they can for the home.

Section volume is doing that out and you're gonna see that translate into revenue in the next one to two years.

Great. Thanks for the call back and then.

Yeah.

Speaker 4: Yeah, that's great questions. You've asked us two of the questions we were looking forward to the most today.

Questions you've asked this to the questions. We were looking forward to the most today.

Thank you.

Speaker 1: That concludes the question and answer session as well as today's call. Thank you for your participation. You may now disconnect your align.

That concludes the question and answer session as well as today's call. Thank you for your participation you may now disconnect your lines.

Ryan Bair: But no matter who gets the home, let's say the direct plus partner gets that gets the house, there's a high likelihood they're going to have us renovate that home as well. So we provide the top of funnel, we provide the efficiency, the clothes, the home, but then we also provide the renovations for them. So, you know, the two issues that they normally struggle with are sourcing and renovation, and those are two things that we can sell for.

Ryan Bair: And then the other product line is our flex, so, you know, it's really important to us that we give people an option or a choice, we'll give them a cash offer, the cash offer, whatever reason doesn't work for them. They have the ability to list their home with us as well. And if they want to list their home with us, they can also use our renovation teams to help get their house and list ready condition.

Ryan Bair: We can advance renovation costs on that as well. And so, we're very on those four product lines and we're, you know, as we mentioned, we're continue to see really good growth, especially on the renovation side in this environment. And the one thing that I'll point out is on the cash offer, the cash offer, the one thing that we know and can't be disputed is customers love the cash offer. And the cash offer when they say is the foundation that doesn't necessarily mean and what I mean by that is the cash offer is always going to be there, but that doesn't necessarily that we have to take the balance sheet on that that with direct plus the customer will get the same experience.

Ryan Bair: But one of our partners will close that house as well, so on the asset light. So it'll always be the foundation of what we do. Yeah. And then just to add on to that, Ryan. So as Brian mentioned, those are the four pillars and you heard us talk about in our prepared remarks, how half of our transaction volume came from non for a year to date, 23 half of our transaction volume has come from non cash offer non eye buying.

Ryan Bair: And so we think we've got the right foundation heading into next year to have those be legitimate business lines. They're still fairly small portions of our revenue, but the baseline is there. The foundation is there for us to build on the momentum that we've got and specifically renovate and flex as Brian mentioned or really coming on strong. And so look, we're really excited about how we are going to be diversifying the business because we've never seen ourselves as an ibuyer.

Ryan Bair: We've seen ourselves as really a real estate solutions platform and the transaction volume is bearing that out and you're going to see that translate into revenue in the next one to two years. Great. Thanks for something called actually. And then. Yeah, that's great questions. You've asked this two of the questions we were looking forward to the most today. Thank you.

Unknown Executive: That concludes the question and answer session as well as today's call. Thank you for your participation. You may now disconnect your line.