Q2 2026 Offerpad Solutions Inc Earnings Call

Speaker #1: This call. My name is Megan, and I will be your conference operator today. At this time, all participant lines have been placed on mute to prevent any background noise.

Speaker #1: After management's prepared remarks, we will open the call for a question-and-answer session. If you would like to ask a question, please press star followed by the number 1 on your telephone keypad.

Speaker #1: To withdraw your question, press the pound key. With that, I'll turn the call over to Cortney Reed, Offerpad's Vice President of Investor Relations and Communications.

Speaker #2: Good afternoon, and welcome to Offerpad's second quarter 2026 earnings call. Management's remarks today are pre-recorded and accompanied by a presentation. A live question-and-answer session will follow.

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.

Speaker #2: Please refer to the risks, uncertainties, and other factors related to the company's 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 otherwise.

Speaker #2: 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." The reconciliations of Offerpad non-GAAP measures to the comparable GAAP measures are available in the financial tables of the second quarter earnings release on Offerpad's website.

Speaker #2: With that, I'll turn the call over to Brian Bair, Chairman and Chief Executive Officer.

Speaker #3: Thank you, Cortney, and welcome everyone. Before we get into the quarter, I'd like to take a step back and talk about where we are as a company.

Speaker #3: Over the past 18 months, we made a series of deliberate decisions that weren't designed to maximize short-term volume. They were designed to build a stronger company for the long term.

Speaker #3: We protected capital, we sold through our aged inventory, we reset our cost structure, we put the right people in place across pricing, operations, and every product line, expanded from a single product company into a multi-solution platform.

Speaker #3: And embedded artificial intelligence across our business. None of those investments were made to improve one quarter. They were made to improve the next decade.

Speaker #3: We believe those investments are now beginning to translate into measurable operating momentum. The rebuilding phase of Offerpad is largely behind us. The buying engine is back on.

Speaker #3: I'll be walking through several visuals during the call, so I've encouraged you to follow along on your screen. First, the quarter itself. We guided to 300 to 350 transactions and 80 to 90 million in revenue.

Speaker #3: We came in at 295 transactions and approximately 78 million in revenue, while still delivering another quarter of improved adjusted EBITDA. Alongside those numbers, I'll walk you through some leading indicators.

Speaker #3: Contract signed and acquisitions. We think they're helpful for understanding where the business is headed as we scale. For the past year, you've heard us talk about discipline.

Speaker #3: You've heard Peter walk through our cost structure. You've heard us talk about contribution margins, conversion, and the investments we've made in our operating platform.

Speaker #3: Those weren't separate initiatives. They were always the same operating framework. The one that's been guiding how we run this business. By sharing that framework with you today, we want to give you a clear view into how we make decisions.

Speaker #3: Allocate capital, and measure progress. It's also the context behind everything we've reported over the past year. That framework comes down to three objectives. Let's start with the first.

Speaker #1: Adjusted EBITDA. Alongside those numbers, I'll walk you through some leading indicators: contracts signed and acquisitions. We think they're helpful for understanding where the business is headed as we scale.

Speaker #3: Scale transactions through discipline growth. That's straightforward. But here's what it actually means. We're not chasing volume for its own sake. We're using better home selection, more precise pricing, and the data we built over the past several years to grow where we believe we can generate the strongest outcomes.

Speaker #1: For the past year, you've heard us talk about discipline. You've heard Peter walk through our cost structure. You've heard us talk about contribution margins, conversion, and the investments we've made in our operating platform.

Speaker #1: Those weren't separate initiatives; they were always the same operating framework—the one that's been guiding how we run this business. By sharing that framework with you today, we want to give you a clear view into how we make decisions, allocate capital, and measure progress.

Speaker #3: Our target hasn't changed. Approximately 1,000 transactions a quarter. The level we believe our current cost structure supports at break even. But that's not where the plan stops.

Speaker #3: Beyond break even, the plan illustrates the operating leverage available as we scale towards levels we have achieved before. For example, the company averaged approximately 3,500 quarterly transactions in 2022.

Speaker #1: It's also the context behind everything we've reported over the past year. That framework comes down to three objectives. Let's start with the first: scale transactions through disciplined growth.

Speaker #3: Here's the visual that helps illustrate how we get there. Starting with the question you may have: how do we get from roughly 300 transactions today to our goal of around 1,000 a quarter?

Speaker #1: That's straightforward. But here's what it actually means: we're not chasing volume for its own sake; we're using better home selection, more precise pricing, and the data we've built over the past several years to grow where we believe we can generate the strongest outcomes.

Speaker #3: Start on the left. Every closed transaction starts as a signed contract. In April, we signed 129. That grew to 163 in May, and 256 by June.

Speaker #1: Our target hasn't changed: approximately 1,000 transactions a quarter—the level we believe our current cost structure supports at break-even. But that's not where the plan stops.

Speaker #3: Nearly double where we started. Now take a look at the middle. Roughly 30 days after signing, approximately 90% of contracts become acquisitions. We acquired 268 homes in quarter two, nearly 70% more than the quarter before.

Speaker #1: Beyond break-even, the plan illustrates the operating leverage available as we scale toward levels we have achieved before. For example, the company averaged approximately 3,500 quarterly transactions in 2022.

Speaker #3: That momentum continued into July, where we acquired roughly 200 homes in a single month. As the stronger June and July signings work their way through.

Speaker #1: Here's the visual that helps illustrate how we get there. Starting with the question you may have: How do we get from roughly 300 transactions today to our goal of around 1,000 a quarter?

Speaker #3: This growing pipeline is expected to drive higher transaction volumes in the second half of fiscal 2026, as homes typically sell within 120 to 150 days after signing.

Speaker #1: Start on the left. Every closed transaction starts as a signed contract. In April, we signed 129. That grew to 163 in May, and 256 by June—nearly double where we started.

Speaker #3: Think about it this way. We expect another meaningful step up in acquisitions in the third quarter. And we can say that with real confidence, because most of the activity is already signed.

Speaker #1: Now, take a look at the middle. Roughly 30 days after signing, approximately 90% of contracts become acquisitions. We acquired 268 homes in Q2, nearly 70% more than the quarter before.

Speaker #3: It's sitting on the left side of this chart right now, moving through the pipeline. Now let's look at the right side. Roughly 90 to 120 days after acquisition, a home sells.

Speaker #1: That momentum continued into July, where we acquired roughly 200 homes in a single month, as the stronger June and July signings worked their way through.

Speaker #3: Which means the fourth quarter is largely being built right now. Not in the fourth quarter itself. Today's signings become tomorrow's acquisitions, and those acquisitions become tomorrow's home sells.

Speaker #1: This growing pipeline is expected to drive higher transaction volumes in the second half of fiscal 2026, as homes typically sell within 120 to 150 days after signing.

Speaker #3: So when you look at our third quarter transaction guidance, next to our longer-term target, remember: those quarter three closings were mostly locked in by contract signed earlier in the year.

Speaker #1: Think about it this way: We expect another meaningful step up in acquisitions in the third quarter. And we can say that with real confidence, because most of the activity is already signed.

Speaker #3: Before conversion improved. Quarter four is where you'll really start to see today's stronger performance show up. And one more thing to highlight: our platform is now broader than cash offer.

Speaker #1: It's sitting on the left side of this chart right now, moving through the pipeline. Now let's look at the right side. Roughly 90 to 120 days after acquisition, a home sells.

Speaker #3: Cash offer marketplace and brokerage services shown in light blue on the chart. Widen the pool of sellers we can serve and generate fee-based revenue with little to no balance sheet capital.

Speaker #1: Which means the fourth quarter is largely being built right now, not in the fourth quarter itself. Today's signings become tomorrow's acquisitions, and those acquisitions become tomorrow's home sales.

Speaker #3: What you're seeing here is execution, not spending. The growth in signs I just showed you happened without meaningful increase in marketing. It's conversion. We're converting demand we already had.

Speaker #1: So when you look at our third quarter transaction guidance next to our longer-term target, remember: those Q3 closings were mostly locked in by contracts signed earlier in the year.

Speaker #3: The second objective is expanding contribution margin. And this is where we made some of our most meaningful progress this quarter. This chart shows the annual picture.

Speaker #1: Before conversion improved. Q4 is where you'll really start to see today's stronger performance show up. And one more thing to highlight: our platform is now broader than Cash Offer.

Speaker #3: Margins compressed through the market slowdown. Bottomed out in loss in 2023. And have been recovering since. With 2025's numbers still weighed down by the aged inventory, we've been working through.

Speaker #1: Cash offer marketplace and brokerage services, shown in light blue on the chart, widen the pool of sellers we can serve and generate fee-based revenue with little to no balance sheet capital.

Speaker #3: But look at what's happening inside this year. Quarter to quarter. Contribution profit after interest reached 13,500 per real estate transaction in Q2. Up from 5,500 in quarter one.

Speaker #1: What you're seeing here is execution, not spending. The growth in signs I just showed you happened without a meaningful increase in marketing. It's conversion. We're converting demand we already had.

Speaker #3: Our strongest quarter since 2023. First, we cleared the age book. It peaked at more than 100 homes in 2025. We slowed acquisitions, guided under 30 by quarter one, and were at under 10 today.

Speaker #1: The second objective is expanding contribution margin, and this is where we made some of our most meaningful progress this quarter. This chart shows the annual picture.

Speaker #3: What remains consists primarily of homes acquired during the past two quarters. Second, we're moving faster. Our aged homes have taken around 339 days to sell.

Speaker #1: Margins compressed through the market slowdown, bottomed out in a loss in 2023, and have been recovering since. With 2025's numbers still weighed down by the aged inventory we've been working through.

Speaker #3: Our quarter two, non-aged homes sold in approximately 82 days. Well ahead of our 100 to 120-day target. That velocity is what's driving the stronger margins and putting us on the path toward adjusted EBITDA profitability.

Speaker #1: But look at what's happening inside this year, quarter to quarter. Contribution profit after interest reached $13,500 per real estate transaction in Q2, up from $5,500 in Q1.

Speaker #3: Our third objective is driving operating leverage. Over the past several years, we've fundamentally reset our cost structure. Removing more than 140 million of annualized operating expense.

Speaker #1: Our strongest quarter since 2023. First, we cleared the aged book. It peaked at more than 100 homes in 2025. We slowed acquisitions, guided under 30 by Q1, and were at under 10 today.

Speaker #3: These weren't cuts tied to the housing market. They were structural changes. And they've left us with a leaner, more efficient business. This chart shows what that means.

Speaker #1: What remains consists primarily of homes acquired during the past two quarters. Second, we're moving faster. Our aged homes have taken around 339 days to sell.

Speaker #3: At today's volume, around 295 transactions a quarter, we're on the steep part of the curve. Where fixed costs aren't yet fully absorbed. At 1,000 transactions, the level our cost structure is built for, cost per transaction drops sharply.

Speaker #1: Our Q2 non-aged homes sold in approximately 82 days, well ahead of our 100- to 120-day target. That velocity is what's driving the stronger margins and putting us on the path toward adjusted EBITDA profitability.

Speaker #3: Because that cost base doesn't grow in step with volume. Every transaction beyond the point should flow more directly to earnings. Those are the three objectives that guide how we run this business.

Speaker #1: Our third objective is driving operating leverage. Over the past several years, we've fundamentally reset our cost structure, removing more than $140 million of annualized operating expense.

Speaker #3: Disciplined transaction growth. Expanding contribution margin. And operating leverage. Today, they're the framework behind every decision we make, every dollar we allocate, and every result we measure ourselves against.

Speaker #1: These weren't cuts tied to the housing market. They were structural changes, and they've left us with a leaner, more efficient business. This chart shows what that means.

Speaker #3: I'd encourage you to spend a few minutes with our full operating plan on our investor relations website. It goes deeper into each of these three objectives.

Speaker #1: At today’s volume, around 295 transactions a quarter, we’re on the steep part of the curve where fixed costs aren’t yet fully absorbed. At 1,000 transactions—the level our cost structure is built for—cost per transaction drops sharply.

Speaker #3: The data behind them, and how they connect to our path to profitability. Peter will now take you through our financial results and guidance in detail.

Speaker #2: Thank you, Ryan. For the past year, we've been telling you the model was getting healthier. Better margins, tighter costs, and a cleaner portfolio. This quarter, you can see it in the numbers themselves.

Speaker #1: Because that cost base doesn't grow in step with volume, every transaction beyond that point should flow more directly to earnings. Those are the three objectives that guide how we run this business.

Speaker #1: Disciplined transaction growth, expanding contribution margin, and operating leverage: today, they're the framework behind every decision we make, every dollar we allocate, and every result we measure ourselves against.

Speaker #2: The model is straightforward. Higher transaction volume multiplied by stronger contribution profit per transaction on a largely fixed cost base, drives adjusted EBITDA. Let's start with what we produced.

Speaker #1: I'd encourage you to spend a few minutes with our full operating plan on our Investor Relations website. It goes deeper into each of these three objectives.

Speaker #2: Revenue was approximately 78 million on 295 real estate transactions. But the number I'd point you to this quarter isn't the top line. It's what each transaction earned.

Speaker #1: The data behind them, and how they connect to our path to profitability. Peter will now take you through our financial results and guidance in detail.

Speaker #2: Gross profit was 7.1 million, up from 5.6 million in the first quarter. And that gain came on slightly lower revenue. Gross margin improved to 9.2%, up from 6.9% last quarter.

Speaker #2: Thank you, Brian. For the past year, we've been telling you the model was getting healthier—better margins, tighter costs, and a cleaner portfolio. This quarter, you can see it in the numbers themselves.

Speaker #2: Our best since third quarter of 2023. As Brian stated, contribution profit after interest reached 13,500 per real estate transaction, up 36% year over year, and 145% quarter over quarter.

Speaker #2: The model is straightforward: higher transaction volume, multiplied by stronger contribution profit per transaction on a largely fixed cost base, drives adjusted EBITDA. Let's start with what we produced.

Speaker #2: Revenue was approximately $78 million on 295 real estate transactions. But the number I'd point you to this quarter isn't the top line—it's what each transaction earned.

Speaker #2: Earning more gross profit on less revenue is exactly what you'd expect when the improvement comes from unit economics and mix rather than volume. Underneath the top line are revenue bases diversifying.

Speaker #2: Gross profit was $7.1 million, up from $5.6 million in the first quarter, and that gain came on slightly lower revenue. Gross margin improved to 9.2%, up from 6.9% last quarter.

Speaker #2: Brokerage services and cash offer marketplace drove much of the higher margin mix I just mentioned, and renovate contributed 4.8 million of revenue this quarter.

Speaker #2: Together, these fee-based offerings deepened both our margins and our reach. Without adding balance sheet risk. On the cost side, quarterly operating expenses excluding property costs were 13.3 million, down from 17 million a year ago, and down from a high of over 50 million per quarter in 2022.

Speaker #2: Our best since Q3 of 2023. As Brian stated, contribution profit after interest reached $13,500 per real estate transaction, up 36% year over year and 145% quarter over quarter.

Speaker #2: Earning more gross profit on less revenue is exactly what you'd expect when the improvement comes from unit economics and mix, rather than volume. Underneath the top line, our revenue bases are diversifying.

Speaker #2: We've held that cost base largely fixed by design. That will drive incremental volume to convert into profit, rather than overhead, as we scale. Adjusted EBITDA loss for the second quarter was 6.2 million.

Speaker #2: Brokerage services and the cash offer marketplace drove much of the higher margin mix I just mentioned, and Renovate contributed $4.8 million of revenue this quarter.

Speaker #2: An improvement from a 6.7 million loss in the first quarter. Another quarter of sequential improvement towards positive adjusted EBITDA before the year end. We ended the quarter with 33.1 million in unrestricted cash, up 46% year over year, and total liquidity of more than 55 million, including the fair market value of our inventory.

Speaker #2: Together, these fee-based offerings deepened both our margins and our reach, without adding balance sheet risk. On the cost side, Qo expenses excluding property costs were $13.3 million, down from $17 million a year ago and down from a high of over $50 million per quarter in 2022.

Speaker #2: Cash offer and brokerage services are leading the acceleration. While cash offer marketplace has moved more slowly, as some institutional buyers pull back. Our 2026 framework doesn't require incremental capital.

Speaker #2: We've held that cost base largely fixed by design. That will drive incremental volume to convert into profit rather than overhead as we scale. Adjusted EBITDA loss for the second quarter was $6.2 million.

Speaker #2: Our liquidity facilities and growing fee-based revenue support the plan as it stands. If cash offer demand runs ahead of plan, we may bring in additional working capital to meet it.

Speaker #2: An improvement from a $6.7 million loss in the first quarter. Another quarter of sequential improvement towards positive adjusted EBITDA before the year-end. We ended the quarter with $33.1 million in unrestricted cash, up 46% year over year, and total liquidity of more than $55 million, including the fair market value of our inventory.

Speaker #2: We have a clear path forward either way, and we'll keep looking for opportunities that improve our flexibility or lower our cost of capital which has already come down significantly over the past two years.

Speaker #2: Now to the outlook. For the third quarter, we expect 350 to 400 real estate transactions across cash offer cash offer marketplace and brokerage services.

Speaker #2: Cash offer and brokerage services are leading the acceleration, while the cash offer marketplace has moved more slowly as some institutional buyers have pulled back. Our 2026 framework doesn't require incremental capital.

Speaker #2: Total revenue of 90 to 100 million. And a narrower adjusted EBITDA loss compared to Q2. Continuing our sequential progress towards positive adjusted EBITDA. Our full year objective is unchanged.

Speaker #2: Our liquidity facilities and growing fee-based revenue support the plan as it stands. If cash offer demand runs ahead of plan, we may bring in additional working capital to meet it.

Speaker #2: Exit 2026 at a run rate of roughly 1,000 transactions a quarter, and reach positive adjusted EBITDA before the year end. It's worth reiterating what's compounding underneath those numbers.

Speaker #2: We have a clear path forward either way, and we'll keep looking for opportunities that improve our flexibility or lower our cost of capital, which has already come down significantly over the past two years.

Speaker #2: The signings that accelerated through the second quarter become acquisitions in the third quarter, and closings in the fourth. And they'll carry the stronger unit economics of a cleaner portfolio.

Speaker #2: Now to the outlook. For the third quarter, we expect 350 to 400 real estate transactions across Cash Offer, Cash Offer Marketplace, and brokerage services.

Speaker #2: So as volume grows, the effect compounds. More transactions, each one worth more than it was a few quarters ago, landing on a cost base we've held largely fixed.

Speaker #2: Total revenue of $90 to $100 million, and a narrower adjusted EBITDA loss compared to Q2, continuing our sequential progress towards positive adjusted EBITDA. Our full-year objective is unchanged.

Speaker #2: Higher volume, higher margin per transaction, and disciplined costs are three forces building on each other. To close, margins are a multi-year highs. The cost base is disciplined.

Speaker #2: Exit 2026 at a run rate of roughly 1,000 transactions a quarter, and reach positive adjusted EBITDA before year-end. It's worth reiterating what's compounding underneath those numbers.

Speaker #2: And leading indicators are moving in the right direction. The pieces are in place. Now it is about execution, quarter after quarter. With that, we're ready to take your questions.

Speaker #2: The signings that accelerated through the second quarter become acquisitions in the third quarter, and closings in the fourth. And they'll carry the stronger unit economics of a cleaner portfolio.

Speaker #1: At this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad.

Speaker #2: So as volume grows, the effect compounds—more transactions, each one worth more than it was a few quarters ago, landing on a cost base we've held largely fixed.

Speaker #1: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ryan, Tomasello, with KBW. Your line is open.

Speaker #2: Higher volume, higher margin per transaction, and disciplined costs are three forces building on each other. To close, margins are at multi-year highs, and the cost base is disciplined.

Speaker #1: Please go ahead.

Speaker #2: And leading indicators are moving in the right direction. The pieces are in place. Now it is about execution, quarter after quarter. With that, we're ready to take your questions.

Speaker #3: Hi everyone. Congrats on the nice progress in the quarter. Regarding the 1,000 transaction target by year end, understand the positive forward indicators here that you're pointing to that give you confidence in that target.

Speaker #3: At this time, I would like to remind everyone that in order to ask a question, please press star, then the number 1 on your telephone keypad.

Speaker #3: But can you just help us understand what are the main drivers of the meaningful step-up from 3Q to 4Q? And is that target of 1,000 transactions dependent on any concentrated volume from specific institutional partners or any other partnerships that might need to come online to hit that level?

Speaker #3: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ryan Tomasello with KBW. Your line is open.

Speaker #3: Please go ahead.

Speaker #3: Thanks.

Speaker #4: Hi Brian. Congrats on the nice progress in the quarter. Regarding the 1,000 transaction target by year-end, I understand the positive forward indicators you're pointing to that give you confidence in that target.

Speaker #2: Hey Ryan, it's Peter. So I'll take the last piece first so I don't forget. But it is not driven by institutional partners. The among the three products, the two that are growing the most significantly, we talked about cash offer.

Speaker #4: But can you just help us understand, what are the main drivers of the meaningful step-up from Q3 to Q4? And is that target of 1,000 transactions dependent on any concentrated volume from specific institutional partners or any other partnerships that might need to come online to hit that level?

Speaker #2: That's one. But also our brokerage services is growing fairly rapidly too. And you can begin to see some of that in the trending schedules that are on the IR site.

Speaker #2: So yeah, I'd point back to the as Brian identified in his prepared remarks, there's if you add up the three months in the quarter, there's about 550 signs just for product number one, just for the cash offer.

Speaker #4: Thanks.

Speaker #2: Hey Brian, it's Peter. So I'll take the last piece first so I don't forget. It is not driven by institutional partners. Among the three products, the two that are growing the most significantly—we talked about Cash Offer, that's one.

Speaker #2: And those signs, at a 100 to 110-day time to cash, those signs convert into a similar number of dispositions roughly 100 or 110 days later.

Speaker #2: But also, our brokerage services are growing fairly rapidly too. You can begin to see some of that in the trending schedules that are on the IR site.

Speaker #2: So that's one really important driver in the signs are up very significantly again. And then again, I'd point to the brokerage services which is also growing rapidly, both of those together, without any dependency on partners, will get us to the exit rate of 1,000 transactions.

Speaker #2: So yeah, I'd point back to, as Brian identified in his prepared remarks, if you add up the three months in the quarter, there's about $550,000 just for product number one, just for the cash offer.

Speaker #2: And those signs, at a 100- to 110-day time to cash, those signs convert into a similar number of dispositions roughly 100 to 110 days later.

Speaker #4: One thing that I'll just add, Ryan, you and I have talked about this in the past. Our demand has stayed very, very strong. We still get thousands and thousands of sellers that are very engaged coming to us every month to sell their home.

Speaker #2: So that's one really important driver, and the signs are up very significantly again. And then again, I'd point to the brokerage services, which are also growing rapidly. Both of those together, without any dependency on partners, will get us to the exit rate of 1,000 transactions.

Speaker #4: And so with less marketing spend, we're seeing more and more demand for our products. And so as we've talked about that, again, that's a lot of lever for pricing.

Speaker #4: And so right now, as we look at some of the we call it velocity areas that we're buying areas that we think are when we buy the home, it's going to turn we can buy renovate it and sell it within 100 days.

Speaker #4: So we've spent countless hours and data and trying to figure out where those markets are. We've made a lot of progress on that. But our demand is still there.

Speaker #1: One thing that I'll just add, Brian—you and I have talked about this in the past—our demand has stayed very, very strong. We still get thousands and thousands of sellers that are very engaged, coming to us every month to sell their home.

Speaker #4: Demand has always been there. It just depends on what we want to pay for homes. And so we've been disciplined in the past, making sure with the uncertainty or when we see homes moving too slow in certain markets.

Speaker #4: But in the areas that we're seeing, we're getting smarter with our marketing spend. Where those marketing dollars are spent. It's driving customers we know we're going to have a better that the homes that we want to buy have better chance of buying that home.

Speaker #1: And so, with less marketing spend, we're seeing more and more demand for our products. And so, as we've talked about, again, that's a lot of leverage for pricing.

Speaker #1: And so right now, as we look at some of the—we call it velocity areas—that we're buying, areas that we think are, when we buy the home, it's going to turn. We can buy, renovate it, and sell it within 100 days.

Speaker #4: And then we're giving them a stronger offer. Whether or not they take our offer, they'll also then use our other products. They can use our listing services and some of the other products as well.

Speaker #4: So that's where you're seeing the growth come from. And as we've been through a lot and of playing defense, now we're focused on playing offense and buying homes.

Speaker #1: So, we've spent countless hours and data trying to figure out where those markets are. We've made a lot of progress on that, but our demand is still there.

Speaker #1: Demand has always been there. It just depends on what we want to pay for homes. And so, we've been disciplined in the past, making sure—with the uncertainty, or when we see homes moving too slow in certain markets.

Speaker #4: And we definitely have the demand to do that.

Speaker #3: That's all very helpful. Thank you. And then. On the.

Speaker #1: But in the areas that we're seeing, we're getting smarter with our marketing spend—where those marketing dollars are spent. It's driving customers we know we're going to have a better— that the homes that we want to buy have a better chance of buying that home.

Speaker #1: Your next question comes from the line of Dae Lee with JP Morgan.

Speaker #1: And then we're giving them a stronger offer, whether or not they use our other products. They can use our listing services and some of the other products as well.

Speaker #5: Great. Thanks for taking my questions. I have two on the first one, maybe for Brian. When you look at your June contract signing, maybe it's a very strong reflection relative to the prior month.

Speaker #1: So that's where you're seeing the growth come from. And as we've been through a lot and have played in defense, now we're focused on playing offense.

Speaker #5: Just wondering I understand your business running on a full cylinders and having great momentum. But was there anything else like product-wise or region-wise or from underlying industrial or industry dynamic that drove that strong inflection?

Speaker #1: And buying homes, and we definitely have the demand to do that.

Speaker #4: That's all very helpful, thank you. And then, on the...

Speaker #5: And do you have any update to share on how your July month might be trending?

Speaker #3: Your next question comes from the line of Day Lee with JP Morgan.

Speaker #4: Sure. So we continue to see strong just across the board. I'll tell you the but not really an inflection. Like I said, we've been really for the last several months, we've been working on products like Scout and Henry and some of them are farther advanced than others as far as what we're doing and to help us get smarter where and how we're buying homes.

Speaker #4: Great, thanks for taking my questions. I have two. The first one, maybe for Brian—when you look at your June contract signing, I mean, it is a very strong reflection relative to the prior month.

Speaker #4: Just wondering—I understand your business is running on all cylinders and has great momentum. But was there anything else, like product-wise or region-wise, or from underlying industry dynamics, that drove that strong inflection?

Speaker #4: And in this environment, we are hyper-focused on active inventory. And so areas that are normally interior homes, one of the things you're going to see is you're going to see our price points start to tick up a little bit because we're buying more homes in the interior.

Speaker #4: And do you have any update to share on how your July month might be trending?

Speaker #4: High velocity, strong school scores, that but also one of the other things we're doing and some of those areas, we realize we don't have to put as much renovation in some of those homes.

Speaker #1: Sure. So, we continue to see strength just across the board. I'll tell you, but not really an inflection. Like I said, for the last several months, we've been working on products like Scout and Henry, and some of them are further advanced than others as far as what we're doing.

Speaker #4: Not all of them. Obviously, it's market-specific, but because of the affordability, normally the playbook is when you see more supply, you want to put more renovations in there.

Speaker #4: Have your home sell before the others because yours is the nicest on the block. It's a little different there. Now you high velocity areas, a desirable place is that people want to live.

Speaker #1: And to help us get smarter about where and how we're buying homes. In this environment, we are hyper-focused on active inventory. So, in areas that are normally interior homes, one of the things you're going to see is our price points start to tick up a little bit, because we're buying more homes in the interior.

Speaker #4: So but in general, I would tell you, Dae, it's specifically hyper-focused on our marketing dollars. And marketing to areas that we want to buy homes that we feel strongly that they can move quickly.

Speaker #4: One of the numbers I want to highlight is we've got rid a lot of our aged inventory. And that was weighing down the entire company, the entire portfolio.

Speaker #1: High velocity, strong school scores, but also one of the other things we're doing in some of those areas—we realize we don't have to put as much renovation into some of those homes.

Speaker #4: Inventory way when even when interest rates changed and just navigating this environment. And so we're down to, I believe, less than 10 of those homes right now.

Speaker #1: Not all of them. Obviously, it's market-specific. But because of the affordability, normally the playbook is: when you see more supply, you want to put more renovations in there.

Speaker #4: And so now is so that kind of got that off of our shoulders. That was we rebuild our portfolio going forward. Some of our newer inventories performing like an 85 and 90 days on the market.

Speaker #1: Have your homes sell before the others because yours is the nicest on the block. It's a little different there. Now you have high-velocity areas, desirable places that people want to live.

Speaker #1: So, but in general, I would tell you, Day, it's specifically hyper-focused on our marketing dollars, and marketing to areas that we want to buy homes, that we feel strongly that they can move quickly.

Speaker #4: So we're moving through our newer stuff very well. So the velocity stuff is working. So a lot of it is disciplined analytics, but also just making sure that we're buying homes that we feel that can move fairly quickly.

Speaker #1: One of the numbers I want to highlight is we've gotten rid of a lot of our aged inventory, and that was weighing down the entire company, the entire portfolio.

Speaker #2: Yeah. And I just add some context on July. Our July signs was higher than June. So the trend continues to get even better. And we expect that to be the same going into September.

Speaker #1: Inventory weighed on us even when interest rates changed, and just navigating this environment. And so we're down to, I believe, less than 10 of those homes right now.

Speaker #1: And so now, that kind of got that off of our shoulders. Now, as we rebuild our portfolio going forward, some of our newer inventory is performing like an 85- and 90-day on the market.

Speaker #2: August and September.

Speaker #5: Got it. That's great to hear. And then follow-up question. To you, Peter. When you look at contribution profit after interest per transaction, it's good to see those reaching multi-year highs.

Speaker #1: So we're moving through our newer stuff very well, so the velocity stuff is working. And so a lot of it is discipline, analytics, but also just making sure that we're buying homes that we feel can move fairly quickly.

Speaker #5: How would you describe the performance of that metric relative to your expectations? And where do you expect that to trend going into the back half?

Speaker #2: Yeah. And I'll just add some context on July. Our July signs were higher than June, so the trend continues to get even better. And we expect that to be the same going into September.

Speaker #2: Yeah. It will continue to go up based on two drivers. Right now, we have as Brian just highlighted, we have a very new and healthy portfolio of inventory and our expected ROIs across the rest of the year.

Speaker #2: And August and September.

Speaker #2: Are quite high. The contribution margin after profit and also the gross margin was a little bit temporarily depressed over the last couple of quarters as we sold some aged inventory.

Speaker #4: Got it. That's great to hear. And then, a follow-up question for you, Peter: When you look at contribution profit after interest per transaction, it's good to see those reaching multi-year highs.

Speaker #2: So that's one driver. And the second driver is which is equally important is our mix. We've talked about moving right now, we're at about one-third fee-based services.

Speaker #4: How would you describe the performance of that metric relative to your expectations? And where do you expect that to trend going into the back half?

Speaker #2: Yeah, it will continue to go up based on two drivers. Right now, as Brian just highlighted, we have a very new and healthy portfolio of inventory and our expected ROIs across the rest of the year.

Speaker #2: Our brokerage service or our marketplace where we sell to other buyers. And two-thirds are cash offer. The margin dynamic on those is significantly higher.

Speaker #2: So as we move shift to a higher percentage of fee-based services, that will push the margin up even further.

Speaker #2: Are quite high. The contribution margin after profit, and also the gross margin, was a little bit temporarily depressed over the last couple of quarters as we sold some aged inventory.

Speaker #4: Dae, one thing just for the question you asked me and then you can do a follow-up to Peter, but just I want to highlight this is one thing that has changed I think a little bit and this is just me and an assumption, but I think sellers' expectations have changed as well.

Speaker #2: So that's one driver. And the second driver, which is equally important, is our mix. We've talked about moving—right now, we're at about one-third fee-based services.

Speaker #4: And if offer pad's doing their job, we're doing our right, we should be six months to nine months ahead of what the market is doing and what sellers know what the market is.

Speaker #2: Our brokerage service, or our marketplace where we sell to other buyers, and two-thirds are cash offers. The margin dynamic on those is significantly higher.

Speaker #4: And when we for the last couple of years, we've seen sellers' expectations that continue to think we were in a post-COVID housing market that wasn't there.

Speaker #2: So, as we shift to a higher percentage of fee-based services, that will push the margin up even further.

Speaker #4: So staying disciplined and some of our offers with the lower conversion of what the market value of those homes are. But I think sellers' expectations have changed a little bit as well as they're seeing more inventory on the market.

Speaker #1: Day, one thing—just for the question you asked me, and then you can do a follow-up to Peter. But I just want to highlight this. This is one thing that has changed, I think, a little bit, and this is just me—an assumption.

Speaker #4: Month supply going up as well. And so being a buyer and a buyer's market is a good place to be. And there's an opportunity there that I think we're seeing right now as well.

Speaker #1: But I think sellers' expectations have changed as well. And if Offerpad's doing their job and we're doing ours right, we should be six to nine months ahead of what the market is doing and what sellers know about the market.

Speaker #5: Okay. Great. Thank you both.

Speaker #3: Your next question comes from the line of Ryan Tomasello, with KBW. Your line is open. Please go ahead.

Speaker #1: And for the last couple of years, we've seen sellers' expectations continue, as they thought we were in a post-COVID housing market that just wasn't there.

Speaker #5: Thanks for taking the follow-up. Just in the operating framework here in the deck, you give an example of the transaction mix moving towards, I think, two-thirds capitalized transactions from the marketplace and brokerage services versus the one-third today.

Speaker #1: So staying disciplined in some of our offers, with the lower conversion, given what the market value of those homes are. But I think sellers' expectations have changed a little bit as well, as they're seeing more inventory on the market.

Speaker #1: Month supply is going up as well. And so, being a buyer in a buyer's market is a good place to be. There's an opportunity there that I think we're seeing right now as well.

Speaker #5: I realize it's illustrative, but is that generally how you're thinking about the evolution of the mix from here? And then a separate question on conversion.

Speaker #4: Okay. Great. Thank you both.

Speaker #5: I guess maybe dovetailing on what Dae was asking, but what exactly in your mind has been the primary driver of the conversion improvement? Has it simply been feeling more comfortable leaning into price and expanding I'm sorry, narrowing your margins or is there something else that you feel like has been a primary driver of the conversion improvement?

Speaker #3: Your next question comes from the line of Ryan Thomasello with KBW. Your line is open. Please go ahead.

Speaker #4: Thanks for taking the follow-up. Just in the operating framework here in the deck, you give an example of the transaction: two-thirds Capital Light transactions from the marketplace and brokerage services versus the one-third today.

Speaker #4: Yeah. No, we're staying pretty disciplined with our margins as well. I think it's again, it's locations of areas that we have a high confidence score in our propensity models.

Speaker #4: I realize it's illustrative, but is that generally how you're thinking about the evolution of the mix from here? And then a separate question on conversion.

Speaker #4: That's very important. The high likelihood that a home we can buy renovate it and sell it and what the percentage of that likelihood is that we can do that within 60 days on the market.

Speaker #4: I guess, maybe dovetailing on what Day was asking, but what exactly, in your mind, has been the primary driver of the conversion improvement? Has it simply been feeling more comfortable leaning into price and expanding—or, I’m sorry, narrowing—your margins?

Speaker #4: We are doing a little bit less renovations in some of those high-velocity areas. We're getting the home on the market quicker. And because we're not doing as much renovation, so we're getting some time on that side of it.

Speaker #4: There are countless process changes that internally that we have been doing. As you guys know, I brought in a new management team as we've been focused on different things.

Speaker #4: Or is there something else that you feel has been a primary driver of the conversion improvement?

Speaker #1: Yeah, no, we're staying pretty disciplined with our margins as well. I think, again, it's locations or areas that we have a high confidence score in with our propensity models.

Speaker #4: We've been really hyper-focused on conversion. It all parts of it from what from the marketing dollars that we spend and where we're spending those marketing dollars but also the customer journey to the inspection process.

Speaker #1: That's very important—the high likelihood that a home we can buy, renovate, and sell it, and what the percentage of that likelihood is that we can do that within 60 days on the market.

Speaker #4: So a lot of those processes, operationally, I wouldn't say there was one major thing I could say, "Hey, that's changing. That's why this." But all of those things as we get more efficient every day, I said something.

Speaker #1: We are doing a little bit less renovations in some of those high-velocity areas, so we're getting the homes on the market quicker.

Speaker #4: We want to get better every day. It sounds cheesy, but we're trying to figure this out. And our conversion I would also tell you that you guys know this isn't new, but I'm just mentioning it.

Speaker #1: And because we're not doing as much renovation, we're getting some time back on that side of it. There are countless process changes internally that we have been making.

Speaker #4: But we have something internally we call the power squad, but there are customer or call center customer communication team that's been extremely helpful. And so we are continuing to have more conversation because we have two types of customers at offer pad.

Speaker #1: As you guys know, I brought in a new management team, as we've been focused on different things. We've been really hyper-focused on conversion—all parts of it, from the marketing dollars that we spend, and where we're spending those marketing dollars, but also the customer journey to the inspection process.

Speaker #4: The ones that come and they want more of a tech experience like, "Hey, hands off. Just tell me what the price of my home is.

Speaker #1: So, a lot of those processes, operationally, I wouldn't say there was one major thing I could say, "Hey, that's changing, that's why this," but all of those things— as we get more efficient every day.

Speaker #4: Come inspect it and then close." And then we have another seller it's a little bit different. They maybe want to get 80% there through technology, but they need a little bit more hand-holding or answers or those.

Speaker #1: I said something: we want to get better every day. It sounds cheesy, but we're trying to figure this out. And our conversion— I would also tell you that, you guys know this isn't new, but I'm just mentioning it.

Speaker #4: They want to talk about other products and some of those things. And so we've invested in the power squad a few months back. That's been extremely helpful.

Speaker #1: But we have something internally we call the Power Squad, but they are the customer or call center customer communication team that's been extremely helpful. And so we are continuing to have more conversations because we have two types of customers at Offerpad.

Speaker #4: We've always been really good at customer interaction and customer experience. But we've really taken it to a new level of seven days a week trying to be there for customer support.

Speaker #4: And that is definitely helping as well. So overall, it's a lot of things you guys that we put in place over the last year or two.

Speaker #1: The ones that come and they want more of a tech experience, like, "Hey, hands off. Just tell me what the price of my home is."

Speaker #4: I would tell you right now, as we're starting to see this starting to finally see this maximize and capitalize on what we're doing, probably the single biggest lever is our marketing spend and where and how we're spending those marketing dollars capped with the operations.

Speaker #1: "Come inspect it." And then close. And then we have another seller. It's a little bit different—they maybe want to get 80% there through technology, but they need a little bit more hand-holding, or answers, or those.

Speaker #2: Yeah. If I could jump in and I'd highlight the marketing that's a big tighter operations and everything Brian talked about, but one of the focus areas of our new chief operating officer has been marketing attribution.

Speaker #1: They want to talk about other products and some of those things. And so, we've invested in the Power Squad a few months back. That's been extremely helpful.

Speaker #1: We've always been really good at customer interaction and customer experience, but we've really taken it to a new level—seven days a week, trying to be there for customer support.

Speaker #2: And that's also a big driver as well. We're just getting we're getting our top of funnel is stronger and healthier in addition to all the operational changes.

Speaker #1: And that is definitely helping as well. So overall, it's a lot of things, you guys, that we put in place over the last year or two.

Speaker #4: And having we highlighted in the prepare to march at our peak, we were doing 3,500 plus transactions a quarter. And just kind of what we've done in the past.

Speaker #1: I would tell you right now, as we're starting to see this—starting to finally see this—maximize and capitalize on what we're doing, probably the single biggest lever is our marketing spend and where and how we're spending those marketing dollars, capped with the operations.

Speaker #4: And that was only with one product. What's exciting is when it comes from a conversion perspective is when customers we're just making a huge stride to when customers come to us.

Speaker #2: Yeah, if I could jump in. And I'd highlight that marketing is a big part, tied to operations and everything Brian talked about. But one of the focus areas of our new Chief Operating Officer has been marketing attribution.

Speaker #4: It's not just it's a cash offer or no. It's a cash offer but then what's the it's a cash offer doesn't work or they want to explore the market.

Speaker #4: What can I get on the market? We have some pretty cool listing products out there well that are different and not as traditional as what you could see.

Speaker #2: And that's also a big driver as well. We're just getting—we're getting our top of funnel is stronger and healthier, in addition to all the operational changes.

Speaker #4: That we help the seller on that side as well, which and so we're seeing a really good increase in conversion, a good customer experience on that side as well.

Speaker #1: And having we highlighted in the prepared to march, their peak, we were doing 3,500 plus transactions a quarter. And just kind of what we've done in the past.

Speaker #4: And with the whole time without putting the company more at risk as far as what we do on our pricing side, we focus very heavily on making the best pricing, the best real estate decision.

Speaker #1: And that was only with one product. What's exciting is when it comes from a conversion perspective, is when customers we're just making a huge stride to when customers come to us.

Speaker #4: And where you don't want to do is try to get volume by paying more than you want to in homes, especially in environments like this.

Speaker #1: It's not just, "Is it a cash offer or not?" It's a cash offer, but then what's the—if a cash offer doesn't work, or they want to explore the market?

Speaker #4: There's still 4 million transactions. We want to buy our share of those 4 million transactions. And in the right areas, the one that worked for our pricing team.

Speaker #1: What can I get on the market? We have some pretty cool listing products out there as well that are different and not as traditional as what you could see.

Speaker #4: And if they don't, then we'll move into one of our other products.

Speaker #1: That we help the seller on that side as well, so we're seeing a really good increase in conversion and a good customer experience on that side as well.

Speaker #5: Great. Thank you.

Speaker #2: I didn't hit the second question, the conversion question. So I'll just hit that quickly. Brian, you're right. That's illustrative. The product mix is super important because it helps us convert at a much higher level and we are currently at one-third, as I mentioned, one-third the fee-based services and two-thirds cash offer.

Speaker #1: And the whole time, without putting the company more at risk as far as what we do on our pricing side, we focus very heavily on making the best pricing, the best real estate decision.

Speaker #1: And where you don't want to do is try to get volume by paying more than you want to in homes, especially in environments like this.

Speaker #1: There's still 4 million transactions. We want to buy our share of those 4 million transactions, and in the right areas—the ones that work for our pricing team.

Speaker #2: We expect that to move up to around 50%. And then the chart in the operating plan is down the road. Ultimately, we do expect to flip at some point.

Speaker #1: And if they don't, then we'll move into one of our other products.

Speaker #4: Great. Thank you guys.

Speaker #2: We're not we don't ready to talk about or forecast when, but we do expect to flip to a situation where we have higher fee-based services than cash offer along longer term.

Speaker #2: I didn't hit the second question, the conversion question, so I'll just hit that quickly. Brian, you're right—that's illustrative. The product mix is super important because it helps us convert at a much higher level, and we are currently at one-third, as I mentioned, one-third fee-based services and two-thirds cash offer.

Speaker #5: Thanks, Peter.

Speaker #4: Thanks, Ray.

Speaker #1: Your next question comes from the line of Gaurav Mehta with Alliance Global Partners. Your line is open. Please go ahead.

Speaker #2: We expect that to move up to around 50%. And then the chart in the operating plan is down the road. Ultimately, we do expect to flip at some point.

Speaker #6: Thank you. I wanted to ask you on your renovation business. Can you maybe talk about what's embedded in your 26 guidance for renovation revenues?

Speaker #2: We're not we're not ready to talk about or forecast when, but we do expect to flip to a situation where we have higher fee-based services than cash offer longer term.

Speaker #2: Yeah. Hi, Gaurav. We don't guide separately for renovate, but what I would say about that business is it's a really it used to be a cost center and so it's been a big win for us.

Speaker #4: Thanks, Peter.

Speaker #2: It's a cost center that we've converted starting about two years ago into a profit center. The financials for the renovate business are really about double what we report because the work we do on our internal inventory is not part of the external reporting.

Speaker #1: Thanks, Ray.

Speaker #3: Your next question comes from the line of Gaura's Meta, with Alliance Global Partners. Your line is open. Please go ahead.

Speaker #5: Thank you. I wanted to ask you on your renovation business. Can you maybe talk about what's embedded in your 26 guidance for renovation revenues?

Speaker #2: But just the third-party business that you see that you see information around in the segment reporting in the SEC filings, that is that is a profitable business at about 20, 25 percent margin.

Speaker #2: Yeah. Hi, Gaura. We don't guide separately for Renovate, but what I would say about that business is it's a really—it used to be a cost center, and so it's been a big win for us.

Speaker #2: And you can also see some of the trends on the not forward-looking, but historical trends on the trending schedules and the IR website.

Speaker #2: It's a cost center that we've converted, starting about two years ago, into a profit center. The financials for the renovate business are really about double what we report because the work we do on our internal inventory is not part of the external reporting.

Speaker #4: One thing I'll add just to the renovate business that I'm pretty proud of right now is you'll be sides obviously doing offer pads business.

Speaker #4: A lot of when we started renovation a couple of years ago or sorry, our renovate business doing it for third parties, we had a lot of large players in there a lot of the SFRs, a lot of groups in there we were doing single we were doing renovation for.

Speaker #2: But just the third-party business that you see that you see information around in the segment reporting and the SEC filings, that is that is a profitable business at about 20, 25 percent margin.

Speaker #4: Obviously, with some of the new things that are happening with the regulatory side of it, some of those large funds have slowed down their acquisitions.

Speaker #2: And you can also see some of the trends—not forward-looking, but historical trends—on the trending schedules on the IR website.

Speaker #4: But we at the same time in parallel, we have been focused on small to midsize renovation players. And we're doing renovations for very small fix and flippers who maybe do one to five homes a year, to midsize family offices that own a few hundred homes.

Speaker #1: One thing I'll add just to the Renovate business that I'm pretty proud of right now is, besides obviously doing Offerpad's business,

Speaker #4: To across the board, there's some other large players with different models. And so our renovation continues to grow. We still doing it for some of even the larger brands that we've mentioned before in the past.

Speaker #1: A lot of when we started renovation a couple of years ago or sorry, our renovate business doing it for third parties, we had a lot of large players in there a lot of the SFRs, a lot of groups in there we were doing single we were doing renovation for.

Speaker #4: And so anyway, there's a very happy what we're seeing there. And I always remind everyone, everyone that we're doing renovation for is normally at their lowest volume.

Speaker #1: Obviously, with some of the new things that are happening with the regulatory side of it, some of those large funds have slowed down their acquisitions.

Speaker #4: We can as renovate picks up, we expect when the market picks up, you see more transaction volume that will definitely grow with that as well.

Speaker #1: But we at the same time in parallel, we have been focused on small to midsize renovation players. And we're doing renovations for very small fix and flippers who maybe do one to five homes a year, few hundred homes.

Speaker #4: So I think there is a lot of opportunity in front of renovate.

Speaker #6: Okay. That's helpful. I also wanted to ask you on the operating leverage. With the current platform and the current cost structure, how much can you grow your portfolio and the volumes before you have to increase the cost?

Speaker #1: So, across the board, there are some other large players with different models, and so our renovation continues to grow. We're still doing it for some of the larger brands that we've mentioned before in the past.

Speaker #4: I'll let Peter give you the smart answer. I'll give you my answer. One of the things that I'm probably the most excited about, about what we've done is that we have we've been through a lot over the last couple of years and since the affordability crisis market, it hit.

Speaker #1: And so anyway, there's a very happy—what we're seeing there. And I always remind everyone, everyone that we're doing renovation for is normally at their lowest volume.

Speaker #1: As renovation picks up, we expect that when the market picks up, you'll see more transaction volume, and we will definitely grow with that as well.

Speaker #4: But I'll tell you, growing this company the first time, how we grow it again to do that will be much, much different. We're going to be a lot smarter obviously, the implementation of a lot of the AI and initiatives we have internally.

Speaker #1: So I think there is a lot of opportunity in front of Renovate.

Speaker #5: Okay, that's helpful. I also wanted to ask you about the operating leverage. With the current platform and the current cost structure, how much can you grow your portfolio and volumes before you have to increase costs?

Speaker #4: So we're not going to need the nearly amount of resources to buy a similar amount of homes that we were doing in before. We've centralized more things and our logistics and operations is humming.

Speaker #1: I'll let Peter give you the smart answer. I'll give you my answer. One of the things that I'm probably the most excited about—about what we've done—is that we've been through a lot over the last couple of years, and since the affordability crisis market hit.

Speaker #4: And so from a platform perspective and this is just from my perspective is that with the team that we have right now, we have a lot we can put a lot more volume on that same current team.

Speaker #4: Because we're leveraging other factors of technology and AI and those other different things, it's just as we get smarter. But yeah, yeah.

Speaker #1: But I'll tell you, growing this company the first time, and how we grow it again, will be much, much different. We're going to be a lot smarter, obviously, with the implementation of a lot of the AI and initiatives we have internally.

Speaker #2: Yeah. On the operating expense, it's largely fixed. There are a few areas for instance, third-party software platforms where there's some components that will where cost will grow a little bit with revenue.

Speaker #1: So we're not going to need the nearly amount of resources to buy a similar amount of homes that we were doing in before. We've centralized more things and our logistics and operations is humming.

Speaker #2: But 90, 95 percent of our opex are truly fixed costs. So we're very excited about the leverage that we'll see when we get up to 1,000 and beyond.

Speaker #1: And so from a platform perspective and this is just from my perspective is that with the team that we have right now, we have a lot we can put a lot more volume on that same current team because we're leveraging other factors of technology and AI and those other different things.

Speaker #6: All right. That's helpful. And then lastly, just to clarify. OQ number to be positive or you expect to exit the year on a run rate basis to be positive?

Speaker #1: It's just as we get smarter. But yeah, yeah.

Speaker #2: Yeah. On the operating expense, it's largely fixed. There are a few areas for instance. Third-party software platforms where there's some components that will cost will grow a little bit with revenue.

Speaker #2: You cut out. Do you mind repeating the question?

Speaker #6: Yeah. I wanted to ask you on the adjusted EBITDA. Guidance for 26, positive adjusted EBITDA. So are we expecting fortune number to turn positive or do you expect the number to be positive on a run rate basis?

Speaker #2: But 90 to 95 percent of our OpEx are truly fixed costs, so we're very excited about the leverage that we'll see when we get up to 1,000 and beyond.

Speaker #2: Right. It's all run rate, both the 1,000 and the EBITDA are run rate on exiting the year.

Speaker #5: All right, that's helpful. And then lastly, just to clarify, OQ number to be positive—are you expecting to exit the year on a run-rate basis to be positive?

Speaker #6: Okay. Thank you. That's all I had.

Speaker #2: Thank you.

Speaker #2: You cut out. Do you mind repeating the question?

Speaker #5: Yeah. I wanted to ask you on the adjusted EBITDA. Guidance for 26, positive adjusted EBITDA. So are we expecting 4Q number to turn positive or do you expect the number to be positive on a run rate basis?

Speaker #2: Right. It's all run rate; both the 1,000 and the EBITDA are run rate on exiting the year.

Speaker #5: Okay, thank you. That's all I had.

Speaker #2: Thank you.