Offerpad Solutions (OPAD) investor relations material

Market conditions and trends

• Affordability challenges and the lock-in effect are limiting both buyers and sellers, with high mortgage rates making it difficult for many to move, especially first-time buyers.

• Inventory is mounting in unexpected markets, leading to a selective approach in acquisitions and a focus on high-volume, interior areas close to jobs.

• Showing and contract activity is highly sensitive to mortgage rate changes, with pent-up demand responding quickly to rate drops.

• Home prices remain steady, but some areas are seeing 1-2% monthly declines; sellers are pulling homes off the market, which is keeping prices resilient but maintaining affordability issues.

• Seller expectations often lag market realities, requiring careful communication and risk management in pricing and acquisitions.

Business strategy and product evolution

• Transitioning from a sole focus on cash offers to a broader platform with four main products: cash buying, renovation, Direct Plus (marketplace for other cash buyers), and HomePro (partner agent network).

• The new approach emphasizes offering sellers multiple transaction options, aiming for the best fit and higher conversion rates.

• Renovation services are now offered to third parties, including institutional clients like Fannie and Freddie, leveraging operational scale for efficiency and margin.

• Direct Plus connects sellers with a network of 1,500 cash buyers, including SFR investors and specialized fix-and-flip buyers, to maximize seller value and conversion.

• Partner agents are trained to present all options neutrally, with compensation aligned to avoid bias toward any single product.

Financial performance and operational focus

• On track with homes sold guidance, but planning to shift reporting to total real estate transactions per quarter.

• Higher spreads are being built into cash offers, with targeted contribution margins now in the high single digits, up from mid-single digits last year.

• Asset-light services like Renovate and HomePro deliver consistent 20-30% margins, supporting more predictable profitability as the business diversifies.

• Gross profit is becoming a more important metric than gross revenue as the product mix shifts away from cash offers.

• Operating expenses have been reduced through headcount cuts and tighter third-party spend management, with technology leveraged to further improve efficiency.