Offerpad revenue down more than 60% but profits are up 

While high demand and rising home prices may seem like the salvation Offerpad needed after its stock sank so low in November that the company was nearly delisted from the New York Stock Exchange, the Chandler, Arizona-based iBuyer is still struggling to regain its footing.

Today, company CEO Brian Bair and James Grout, VP of Finance & Corporate Development, announced mixed results to investors. The company witnessed a bump in gross profit and acquired more homes in the most recent quarter over Q1, but revenue fell significantly. 

Offerpad is scaling its inventory back up, having acquired 840 homes in Q2 compared to just 364 houses the previous quarter. But the company is still operating at a much lower scale than it was a year ago when it scooped up nearly 3,800 homes in just one quarter. 

The earnings release highlighted Offerpad's gross margin of 9.7%, noting that it was the highest it's been in nearly two years, and said the company has reduced stale inventory to below-target levels. 

Key numbers

Revenue: $230.1 million, which represented a 62% decrease compared to Q1's $609.6 million and a 79% decline year-over-year.

Cash and cash equivalents: $115.6 million, or roughly a 7% gain from Q1 but a 26% drop from the same period a year ago.

Gross profit: $22.2 million, a healthy 205% bump from Q1's $7.3 million, but a 76% decline from Q2 2022. 

Net income/loss: A loss of $22.3 million in Q2, which was an improvement over the $59.4 million net loss the previous quarter.

EBITDA (earnings before interest, taxes, depreciation and amortization): Negative $17.3 million, up from negative $44.8 million the prior quarter.

Homes acquired: 840 in Q2, compared to 364 the prior quarter and 3,792 homes in Q2 2022.

Homes sold: 650 this past quarter, compared to 1,609 in the previous quarter and 2,888 homes sold in Q2 2022.

What Offerpad had to say

"We have proven our ability to scale before and we have the opportunity to do it again, but with the added benefit of additional experience," Bair wrote to investors in the earnings report. "We set out to change the way real estate transacts forever and that is exactly what we are doing."

During the Q&A, Bair reiterated the company's value is in providing homeowners with the option of selling quickly.

"As people see limited inventory and they want to explore the open market and see what they can get on the retail side, we can help them with that," he said during the call with investors. 

Bair also remained confident the company would have a stronger year and noted that the market may not experience the same seasonal drop-off during winter since demand for homes remains so high.

"The lack of supply is definitely throwing a little bit of a wrench in the seasonality [of real estate], and it's something that we're watching closely," he said.

Notable moves

Blair said that Offerpad is remaining disciplined in their buying decisions but said that there could be opportunities to get into different types of inventory later this year or next year, but the company is "laser-focused on being profitable" at this moment. 

"As we get more comfortable in certain markets, we can move to higher value homes and then also take on certain kinds of renovation homes to help us with the growth stage," he said. 

In July, the company hired a new chief financial officer, Jawad Ahsan, to replace former CFO Michael Burnett, who led Offerpad through its IPO in 2021.