What’s next for Opendoor after layoffs and $78 million loss?
Top iBuyer highlights new products and shifts in agent pay as it joins Offerpad, Elliman and Fathom in finding bright spots after tough third-quarter results.
The industry's leading iBuyer says it isn't done yet, despite continued losses and layoffs.
Opendoor on Nov. 7 announced that it would be cutting 300 employees — 17% of its workforce — and reported third-quarter losses of nearly $80 million. The company also laid off more than 500 employees in 2023 and 2022.
The latest cuts are part of a "reorganization aimed at prioritizing strategic growth initiatives, flattening reporting structures, and driving efficiencies," and will save the company about $50 million this year, CEO Carrie Wheeler said in the company's letter to shareholders. Spinning off its rental-focused market intelligence company, Mainstay, will save another $35 million, she said.
Though the losses are significant, Opendoor is continuing a trend of improvement. The company lost $78 million in Q3 compared to a $106 million loss in Q3 of 2023. Revenue came in at $1.4 billion, up 41% compared to the same period last year. And it bought 3,504 houses, a 12% increase vs. last year.
Experts say these moves towards greater efficiency — and partnerships with companies like Zillow — are exactly what Opendoor needs to be doing.
What Opendoor had to say
On the impact of industry rule changes related to agent compensation: "Opendoor has begun transitioning from paying buyer broker commissions to offering concessions to buyers, who, in turn, can determine how best to apply those concessions, including how to compensate their buyer agent," Wheeler said in her letter. "There is little doubt that there will continue to be changes as agents, buyers, and sellers adapt to the new rules and as new models emerge."
On expanding its offerings: Wheeler called out a newly expanded product, List with Opendoor, which allows buyers to put their home up for sale, with a backup cash offer from Opendoor good for 30 days. That, along with its Exclusives marketplace, "enable us to serve customers who would otherwise not have chosen (or been able) to work with Opendoor," Wheeler said.
On the future: "The core strengths of our business model remain unchanged: our product continues to resonate deeply with customers, we stand alone in offering a unique solution at scale for a home seller to transact directly and for a home buyer to have an e-commerce-like transaction experience," Wheeler said.
More earnings: Offerpad, Elliman, Fathom
The other notable player in the iBuying space, Offerpad, reported a Q3 loss of $13.5 million, a 32% improvement over Q3 of last year, though revenue dipped 11%. The company bought 422 homes — 55% fewer than a year ago — and sold 614, calling out a gross profit of $27,900 per home sold. In Q3 of 2023, that figure was just over $34,000. "We are proud of the cost control maintained during this period of market dislocation," said Peter Knag, Offerpad's CFO.
Douglas Elliman's third-quarter earnings update came after a wave of change in its executive ranks, following concerns over the company's handling of sexual assault claims. Elliman reported revenues of $266.3 million, up from $251.5 million in Q3 a year ago, and a net loss of $27.4 million vs. $5.1 million in Q3 of 2023. New chairman and CEO Michael S. Liebowitz called out Elliman's move to diversify by creating "a strategic M&A and business development unit to explore complementary acquisitions in ancillary businesses — such as title, escrow, staging, insurance brokerage and property management — while remaining opportunistic in our core brokerage business."
Fathom Holdings, meanwhile, acknowledged the impact of commissions lawsuits, blaming its $8.1 million loss primarily on its settlement deal and legal fees. The company highlighted its recent acquisition of My Home Group and said its agent network grew to 12,383, up 9% compared to the same time last year. "We remain committed to advancing our strategic priorities, returning our company to 25% annual agent growth, and optimizing profitability and cash flow," CEO Marcus Frenegal said in a statement. "Our recent initiatives, including targeted investments in agent recruitment and the launch of new commission plans, are already fostering growth and positioning us for sustained success."