What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-15 · 217 added, 268 removed, 500 unchanged (49% of the section changed)

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Residential real estate is a trillion-dollar industry underpinned by a process that is complicated, time-consuming, stressful, and offline.

We believe all consumers deserve to buy, sell, and move between homes with simplicity and confidence, and we have dedicated almost a decade to delivering on this vision.

We believe all consumers deserve to buy, sell, and move between homes with simplicity and confidence, and we have dedicated over a decade to delivering on this vision.

We have built unique pricing and operations capabilities to become one of the largest buyers and sellers of homes in the United States.

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Non-GAAP Financial Highlights (1)

Contribution (Loss) Profit

Contribution Profit (Loss)

$ 242 $ (258) $ 525 $ 500 $ (783)

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Current Housing Environment

2023 was a year underpinned by macro uncertainty in the housing market, driven by interest rate volatility, which caused 30-year mortgage rates to increase by 170 basis points between February and October.

These dynamics resulted in hesitation by both buyers and sellers with overall home sales declining nearly 20% year-over-year.

In the first half of 2023, home prices

Throughout 2024, the U.S.

housing market faced persistent headwinds as elevated mortgage rates, affordability constraints, and supply-demand imbalances weighed on market activity.

Mortgage rates remained volatile, with brief periods of relief followed by rate reversions that reinforced sluggish market conditions.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

performed better than expected on the back of historically low listing volumes.

Against this backdrop of constrained supply, market clearance exceeded levels seen historically over the same time period.

In the second half of 2023, the elevated 30-year mortgage rates further depressed buyer demand, amplifying the typical seasonal decline in market clearance rates.

The slowing market clearance rates impacted our financial performance for the final quarter of 2023 in the following three ways.

First, as market clearance rates slowed, our pace of resales, and therefore revenue, was reduced quarter over quarter.

Second, although the impact was tempered by historically low listing volumes, we reduced home-level list prices in order to stay inline with our clearance targets, which flowed through to revenue, gross profit, gross margin and contribution margin.

Third, as a result of slower resale clearance rates, some sales from the old book of inventory shifted out of the third quarter of 2023 and continued to be a drag on overall margins as they sold through given their negative margin profile.

As we look ahead, the real-time metrics we track are continuing to show constrained supply and demand, which is resulting in home price stability.

Several macroeconomic indicators have been trending favorably, including a healthy U.S.

labor market and moderating inflation.

However, given continued interest rate volatility, we remain focused on preserving flexibility in setting spreads to operate against a range of macroeconomic outcomes in 2024.

Contribution Margin is a non-GAAP financial measure.

See “— Non-GAAP Financial Measures ” for further details and a reconciliation of Contribution Margin to Gross Margin.

Housing market activity remained subdued, with 2024 seasonally adjusted annual home sales coming in at just over four million units – well below the decade average of over five million.

The ongoing lock-in effect, where homeowners with low fixed-rate mortgages are reluctant to sell, continued to constrain supply, while elevated borrowing costs weighed on buyer affordability.

Against this backdrop, delistings – homes removed from the market unsold – continued to climb throughout the year, reflecting a persistent disconnect between seller expectations and buyer willingness to transact.

By mid-year, month-over-month home price appreciation (“HPA”) had turned negative earlier than in any year in the last decade outside of 2020.

A brief period of declining mortgage rates in the fall spurred a temporary uptick in demand and HPA, but as rates rebounded, demand and home price appreciation reverted back to negative territory.

We continue to operate with a flexible approach, dynamically adjusting pricing strategies to balance growth, margin, and risk.

We will continue to monitor macroeconomic signals, and we remain nimble in our decision making so that we can capitalize on shifts in interest rates and market conditions.

Factors Affecting our Business Performance

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We are steadily growing our reach via our partnership channels with homebuilders, agents, and online real estate platforms.

We have relationships with the three largest online real estate platforms, Zillow, Redfin, and Realtor.com, which collectively reach millions of unique monthly visitors.

We launched our partnership agreement with Zillow, Inc.

We have relationships with two of the largest online real estate platforms, Zillow and Redfin, which together reach millions of unique monthly visitors.

We launched our partnership with Zillow, Inc.

in early 2023, allowing home sellers on the Zillow, Inc.

platform to request an offer directly from Opendoor, and creating an additional channel for us to drive brand awareness and acquire customers.

As of December 31, 2023, our partnership was live in 45 markets.

In the fourth quarter of 2023, we also announced a new partnership agreement with eXp Realty, the largest independent real estate company in the world.

This agreement enables eXp’s agents to request a cash offer on qualifying properties on behalf of their clients directly within their eXp dashboard and present the Opendoor offer alongside the option of listing the client’s home on the market.

A continued source of growth is re-engagement with our base of registered sellers, meaning sellers that have received an offer from Opendoor but have not yet sold their home.

platform to request an offer directly from Opendoor.

In addition to driving incremental acquisitions, we expect these partnerships can build our brand awareness and serve as additional avenues for sellers to learn about the benefits of our flagship cash offer.

A continued source of opportunity is re-engagement with our base of registered sellers, meaning sellers that have received an offer from Opendoor but have not yet sold their home.

In the last ten years, we have sent millions of offers and, while not everyone is ready to act when they request an offer, we treat everyone as a potential future seller.

We perpetually iterate on our reengagement strategies and believe that our registered customer base will continue to be an important source of home acquisition volumes.

We perpetually iterate on our re-engagement strategies and believe that our registered customer base will continue to be an important source of home acquisition volumes.

Market Footprint

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Number of markets (at period end) 50 50 53

Due to the deteriorating macro environment in 2022 and 2023, we slowed down our new market expansion plans.

During the three months ended December 31, 2023, we stopped acquiring inventory in, and operationally supporting, our markets in Boise, Idaho, Reno, Nevada and Asheville, North Carolina.

These three markets are below the scale required for us to operate in

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

a cost-effective manner and are not sufficiently close to another market to leverage its operations.

In total, these three markets represented less than 1% of total homes sold in 2023.

Due to the deteriorating macro environment in 2022, 2023, and 2024, we paused our new market expansion plans and are continually assessing areas within our existing markets to expand.

Adjacent Services

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Our success with title insurance and escrow services helps validate our view that customers prefer an online, integrated experience.

We will continue to evaluate new ways to improve our end-to-end solution and expect to invest in additional adjacent products and services over time with the expectation that these adjacent services will continue to improve our unit economics.

We will continue to evaluate new ways to improve our end-to-end solution and expect to invest in additional

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

adjacent products and services over time with the expectation that these adjacent services will continue to improve our unit economics.

Unit Economics

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• Incremental attach of services, which supplement the core transaction margin profile;

• Expansion of our listing and marketplace product offerings, which will reduce our inventory exposure and capital intensity, and eliminate the holding and selling costs associated with taking ownership of the home.

• Expansion of our List with Opendoor and Opendoor Marketplace product offerings, which will reduce our inventory exposure and capital intensity, and eliminate the holding and selling costs associated with taking ownership of the home.

Inventory Management

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As part of our overall risk management framework, we consider both individual market and aggregate portfolio exposures.

Our performance in 2023 reflects the sharp transition in the housing market from peak levels earlier in 2022 to lower transaction velocity and home price appreciation well beyond typical seasonal trends.

Given these macroeconomic pressures, we have been focused on managing overall inventory health and risk.

We have been particularly focused on homes that we acquired based on offers made in the first half of 2022 and prior (“old book”) and we have continued to adjust down listed prices on our inventory to stay in-line with market sell-through rates and drive resale clearance.

As of December 31, 2023, we had $34 million of old book homes in inventory, down 99% from $3.5 billion at December 31, 2022.

We also increased the spreads embedded in our offers and reduced our marketing investment, which slowed our acquisition pacing.

(Spreads are defined as total discount to our home valuation at time of offer less than Opendoor service fee of 5%.) We expect to achieve positive gross margins and contribution margins on acquisitions arising from offers made in the second half of 2022 onward once fully sold through, and we expect to resume a higher acquisition pace as the housing market stabilizes.

Related primarily to the sharp transition in the housing market, we recorded inventory valuation adjustments of $737 million during the year ended December 31, 2022.

In 2023, resale clearance is trending better than the back half of 2022 and a lack of supply of new listings has helped to stabilize home prices.

As such, inventory valuation adjustments of $65 million recorded during the year ended December 31, 2023 were significantly lower than 2022.

We typically seek to maximize the resale margin performance of our inventory in the context of managing overall risk and inventory health through monitoring sell-through rates, holding periods, and portfolio aging, and we will adjust down listed prices on our inventory when appropriate to stay in-line with market sell-through rates and drive resale clearance.

We also adjust the spreads embedded in our offers to respond to current market conditions, both at a macro and local level.

(Spreads are defined as total discount to our home valuation at time of offer less the Opendoor service fee of 5%.)

Real estate inventory is reviewed for valuation adjustments on a quarterly basis.

If the carrying amount for a given home is not expected to be recovered, an inventory valuation adjustment is recorded to cost of revenue and the home’s carrying value is adjusted to its net realizable value.

Inventory valuation adjustments are not offset by any expected gains and are not reversed or adjusted should the expected net realizable value subsequently increase.

We recorded inventory valuation adjustments of $57 million and $65 million during the years ended December 31, 2024 and 2023, respectively.

See “— Critical Accounting Policies and Estimates — Real Estate Inventory” for a detailed discussion of inventory valuation adjustments.

As one key measure of inventory management performance, we evaluate our portfolio metrics relative to the broader market (as observed on the multiple listing services (“MLS”)).

One such metric is our percentage of homes “on the market” for greater than 120 days as measured from initial listing date.

As of December 31, 2023, such homes represented 18% of our portfolio, compared to 21% for the broader market when filtered for the types of homes we are able to underwrite and acquire

As of December 31, 2024, such homes represented 46% of our portfolio, compared to 25% for the broader market when filtered for the types of homes we are able to underwrite and acquire based on characteristics such as market, price range, home type, home location, year built and lot size (which we refer to as our “buybox”).

This metric fluctuates based on seasonal factors, market dynamics, and our resale strategies.

In the fourth quarter, we implemented fewer home-level price reductions as the market slowed, opting not to sell inventory into a low-demand environment.

Meanwhile, delistings continued to rise, with over one in four home sellers removing their listings from the MLS rather than going into contract.

The combination of slower price reductions and rising delistings resulted in longer listing times compared to market participants who took a more aggressive pricing approach or were willing to delist their homes from the market.

Additionally, beginning in mid-May, we intentionally slowed our home acquisition pace in response to our risk management objectives and broader macroeconomic uncertainty.

When newly acquired homes represent a smaller proportion of our overall inventory, average days on market for our portfolio generally increases.

Inventory Financing

Our business model is working capital intensive and inventory financing is a key enabler of our growth.

We primarily rely on our access to non-recourse asset-backed debt, which consists of asset-backed senior debt facilities and asset-backed

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

in a given market based on characteristics such as price range, home type, home location, year built and lot size (which we refer to as our “buybox”).

Inventory Financing

Our business model is working capital intensive and inventory financing is a key enabler of our growth.

We primarily rely on our access to non-recourse asset-backed debt, which consists of asset-backed senior debt facilities and asset-backed mezzanine term debt facilities, to finance our home acquisitions.

mezzanine term debt facilities, to finance our home acquisitions.

See “— Liquidity and Capital Resources — Debt and Financing Arrangements.

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In general, we expect our financial results and working capital requirements to reflect seasonal variations over time.

However, other factors, including growth, market expansion and changes in macroeconomic conditions, such as rising inflation and interest rate increases as recently observed, have obscured the impact of seasonality in our historical financials and we expect may continue to do so.

However, other factors, including growth, market expansion and changes in macroeconomic conditions, such as rising inflation and interest rate increases, have obscured the impact of seasonality in our historical financials and we expect may continue to do so.

Non-GAAP Financial Measures

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Inventory valuation adjustment in prior periods is calculated by subtracting the inventory valuation adjustments recorded in prior periods on homes sold in the current period.

We define Adjusted Gross Margin as Adjusted Gross Profit as

Adjusted Gross Margin is Adjusted Gross Profit as a percentage of revenue.

See “— Critical Accounting Policies and Estimates — Real Estate Inventory” for a detailed discussion of inventory valuation adjustments.

We view this metric as an important measure of business performance as it captures gross margin performance isolated to homes sold in a given period and provides comparability across reporting periods.

Adjusted Gross Profit helps management assess home pricing, service fees and renovation performance for a specific resale cohort.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

a percentage of revenue.

See “— Critical Accounting Policies and Estimates — Real Estate Inventory” for detailed discussion of inventory valuation adjustment.

Adjusted Gross Profit helps management assess home pricing, service fees and renovation performance for a specific resale cohort.

Contribution Profit / Margin

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(1) holding costs incurred in the current period, (2) holding costs incurred in prior periods, and (3) direct selling costs.

The composition of our holding costs is described in the footnotes to the reconciliation table below.

Contribution Margin is Contribution Profit (Loss) as a percentage of revenue.

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Inventory valuation adjustment – Prior Periods (1)(3)

(26) (455) (39)

Adjusted Gross Profit $ 432 $ 55 $ 1,086

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(4) Represents selling costs incurred related to homes sold in the relevant period.

This primarily includes broker commissions, external title and escrow-related fees and transfer taxes.

This primarily includes broker commissions, external title and escrow-related fees and transfer taxes and are included in Sales, marketing and operations.

(5) Holding costs include mainly property taxes, insurance, utilities, homeowners association dues, cleaning and maintenance costs.

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(6) Represents holding costs incurred in the period presented on homes sold in the period presented.

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

(7) Represents holding costs incurred in prior periods on homes sold in the period presented.

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These measures are also commonly used by investors and analysts to compare the underlying performance of companies in our industry.

We believe these measures provide investors with meaningful period over period comparisons of our underlying performance, adjusted for certain charges that are non-recurring, non-cash, not directly related to our revenue-generating operations, not aligned to related revenue, or not reflective of ongoing operating results that vary in frequency and amount.

We believe these measures provide investors with

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

meaningful period over period comparisons of our underlying performance, adjusted for certain charges that are non-cash, not directly related to our revenue-generating operations, not aligned to related revenue, or not reflective of ongoing operating results that vary in frequency and amount.

Adjusted Net Loss and Adjusted EBITDA are supplemental measures of our operating performance and have important limitations.

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Adjusted Net Loss

We calculate Adjusted Net Loss as GAAP net loss adjusted to exclude non-cash expenses of stock-based compensation, equity securities fair value adjustment, warrant fair value adjustment, and intangibles amortization expense.

We calculate Adjusted Net Loss as GAAP net loss adjusted to exclude non-cash expenses of stock-based compensation, equity securities fair value adjustment, and intangibles amortization expense.

It excludes expenses that are not directly related to our revenue-generating operations such as restructuring and legal contingency accruals.

It excludes (gain) loss on extinguishment of debt as these expenses or gains were incurred as a result of decisions made by management to repay portions of our outstanding credit facilities and the 0.25% convertible senior notes due in 2026 (the "2026 Notes") early;

It excludes loss (gain) on extinguishment of debt as these expenses or gains were incurred as a result of decisions made by management to repay portions of our outstanding credit facilities and the 0.25% convertible senior notes due in 2026 (the "2026 Notes") early;

these expenses are not reflective of ongoing operating results and vary in frequency and amount.

It also excludes non-recurring payroll tax on initial RSU release, and goodwill impairment.

It also excludes goodwill impairment.

Adjusted Net Loss also aligns the timing of inventory valuation adjustments recorded under GAAP to the period in which the related revenue is recorded in order to improve the comparability of this measure to our non-GAAP financial measures of unit economics, as described above.

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Equity securities fair value adjustment (1)

Warrant fair value adjustment (1)

Intangibles amortization expense (2)

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Inventory valuation adjustment – Prior Periods (3)(5)

(26) (455) (39)

Restructuring (6)

(Gain) loss on extinguishment of debt

Loss (gain) on extinguishment of debt

Goodwill impairment — — 60

Payroll tax on initial RSU release — — 5

Legal contingency accrual and related expenses

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(2) Represents amortization of acquisition-related intangible assets.

The acquired intangible assets have useful lives ranging from 1 to 5 years and amortization is expected until the intangible assets are fully amortized.

The acquired intangible assets had useful lives ranging from 1 to 5 years and amortization was expected until the intangible assets were fully amortized in 2024.

(3) Inventory valuation adjustment includes adjustments to record real estate inventory at the lower of its carrying amount or its net realizable value.

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(5) Inventory valuation adjustment — Prior Periods is the inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.

(6) Restructuring costs consist primarily of severance and employee termination benefits and bonuses.

(7) Includes primarily gain or loss on the sale of available for sale securities, sublease income, income from equity method investments, and gain on lease termination.

(6) Restructuring costs consist primarily of severance and employee termination benefits and bonuses incurred in connection with the elimination of employees’ roles.

Additionally, these costs include expenses related to the termination of certain non-cancelable leases and consulting fees incurred during the restructuring process.

(7) Includes primarily gain on deconsolidation, net, sublease income, impairment of internally developed software projects related to restructuring, and income from equity method investments.

(8) Includes interest expense on our non-recourse asset-backed debt facilities.

(9) Includes amortization of debt issuance costs and loan origination fees, commitment fees, unused fees, other interest related costs on our asset-backed debt facilities, interest expense related to the 2026 Notes outstanding, and interest expense on other secured borrowings.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

(10) Consists mainly of interest earned on cash, cash equivalents, restricted cash and marketable securities.

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Technology and Development Expense

Technology and development expense consists primarily of headcount expenses, including salaries, benefits and stock-based compensation for employees in the design, development, testing, maintenance and operation of our mobile applications, websites, tools, applications, and mobile apps that support our products.

Technology and development expense consists primarily of headcount expenses, including salaries, benefits and stock-based compensation for employees in the design, development, testing, maintenance and operation of our websites, tools, applications, and mobile apps that support our products.

Technology and development expense also includes amortization of capitalized software development costs and third-party software and hosting costs.

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Goodwill impairment expense consists of impairment charges recorded as a result of goodwill impairment testing.

Restructuring Expense

Restructuring expense consists primarily of severance and other termination benefits for employees whose roles have been eliminated.

Additionally, this includes expenses related to the termination of certain non-cancelable leases and consulting fees

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

Restructuring Expense

Restructuring expense consists primarily of severance and other termination benefits for employees whose roles have been eliminated.

Warrant Fair Value Adjustment

Warrant fair value adjustment consists of unrealized and realized gains and losses as a result of marking our warrants to fair value at the end of each reporting period and subsequent settlement through exercise of warrants to equity.

Gain (Loss) on Extinguishment of Debt

Gain (loss) on extinguishment of debt is primarily related to the Company’s partial repurchase of the 2026 Notes at a discount net of unamortized deferred costs associated with the 2026 Notes.

incurred during the restructuring process.

See “ Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 20.

Restructuring” for additional information regarding restructuring expenses.

(Loss) Gain on Extinguishment of Debt

(Loss) gain on extinguishment of debt is primarily related to the Company’s partial repurchase of the 2026 Notes at a discount net of unamortized deferred costs associated with the 2026 Notes.

Gain on extinguishment of debt also includes any gains or losses recognized in conjunction with the termination of debt facilities, partial debt extinguishments, and unamortized deferred costs associated with these facilities.

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Interest expense consists primarily of interest paid or payable and the amortization of debt discounts and debt issuance costs.

Interest expense varies period over period, primarily due to fluctuations in our inventory volumes and changes in the floating benchmark interest rates (“Benchmark Rates”), based on a London Interbank Offered Rate (“LIBOR”) for certain periods prior to December 31, 2022 or the secured overnight financing rate (“SOFR”), plus an applicable margin, which impact the interest incurred on our senior revolving credit facilities (see “— Liquidity and Capital Resources — Debt and Financing Arrangements ”).

Interest expense varies period over period, primarily due to fluctuations in our inventory volumes and changes in the floating benchmark interest rates (“Benchmark Rates”), based on the secured overnight financing rate (“SOFR”), plus an applicable margin, which impact the interest incurred on our senior revolving credit facilities (see “— Liquidity and Capital Resources — Debt and Financing Arrangements ”).

We expect our overall interest expense to increase as inventory increases.

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Other Income (Loss) — Net

Other income (loss) – net consists primarily of interest income on our Cash and Restricted cash balances and from our investment in money market funds, time deposits, and debt securities as well as changes in fair value of, and dividend income, from our investment in equity securities.

Income Tax Expense

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Technology and development 141 167 (26) (16) %

Restructuring 17 14 3 21 %

Total operating expenses 753 873 (120) (14) %

Loss from operations

(320) (386) 66 (17) %

(Loss) gain on extinguishment of debt

(2) 216 (218) N/M

Interest expense (133) (211) 78 (37) %

Other income-net

64 107 (43) (40) %

Loss before income taxes (391) (274) (117) 43 %

Income tax expense (1) (1) — — %

Net loss $ (392) $ (275) $ (117) 43 %

N/M - Not meaningful.

Revenue decreased by $1.8 billion, or 26%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease in revenue was primarily attributable to lower sales volumes during the year ended December 31, 2024.

We sold 13,593 homes during the year ended December 31, 2024, compared to 18,708 homes during the year ended December 31, 2023, representing a decrease of 27%.

Revenue per home sold increased 2% between the same periods.

The decrease in sales volumes was primarily attributable to proactively slowing inventory acquisitions beginning in the third quarter of 2022 in reaction to volatility in the U.S.

housing market coupled with a focus on clearing existing inventory, which had reached peak levels in 2022.

The Company entered 2024 with 5,326 homes in inventory as compared to 12,788 homes in inventory at the start of 2023, representing a 58% decrease in homes available for resale.

Cost of Revenue and Gross Profit

Cost of revenue decreased by $1.7 billion, or 27%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease in cost of revenue was primarily attributable to lower sales volumes.

Gross profit decreased from $487 million to $433 million and gross margin increased from 7.0% to 8.4% for the years ended December 31, 2023 and December 31, 2024, respectively.

For the same periods, Adjusted Gross Margin increased from 0.8% to 8.4% and Contribution Margin increased from (3.7)% to 4.7%.

The decrease in gross profit was attributable to lower sales volumes as discussed above.

The increase in gross margin, Adjusted Gross Margin and Contribution Margin reflects relative home price stabilization and higher spreads embedded in our acquisition offers beginning in the third quarter of 2022.

As a reminder, Adjusted Gross Margin and Contribution Margin include inventory valuation adjustments recorded in prior periods on homes sold in the current period and exclude inventory valuation adjustments on homes remaining in inventory at the end of the period, which can create significant differences between these metrics and Gross margin.

Adjusted Gross Margin and Contribution Margin for the years ended December 31, 2023 and December 31, 2024 are inclusive of $455 million and $26 million, respectively, of inventory valuation adjustments recorded in prior periods on homes sold in the current period.

Adjusted Gross Margin and Contribution Margin are non-GAAP financial measures.

See “— Non-GAAP Financial Measures ” for further details and a reconciliation of such non-GAAP measures to their nearest comparable GAAP measures.

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

Operating Expenses

Sales, Marketing and Operations .

Sales, marketing and operations decreased by $73 million, or 15%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease was primarily attributable to a $65 million decrease in resale transaction costs and broker commissions, consistent with the 26% decrease in revenue during the same period.

In addition, during the same period, headcount expenses, including salaries, benefits and stock-based compensation, decreased $21 million, primarily due to workforce reductions and the transition of certain roles to lower-cost geographies.

Advertising expense increased by $11 million, from $75 million for the year ended December 31, 2023 to $86 million for the year ended December 31, 2024.

General and Administrative .

General and administrative decreased by $24 million, or 12%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease was primarily attributable to a $8 million decrease in depreciation expense as we slowed our pace of fixed assets additions and existing assets became fully depreciated.

In addition, headcount expenses, including salaries, benefits and stock-based compensation, decreased $8 million, primarily due to workforce reductions and the transition of certain roles to lower-cost geographies.

Rent expense decreased by $3 million, driven by partial terminations of leases and subleases.

Technology and Development .

Technology and development decreased by $26 million, or 16%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease was primarily driven by a $39 million reduction in headcount expenses, including salaries, benefits, and stock-based compensation, resulting from workforce reductions and the transition of certain roles to lower-cost geographies.

Additionally, amortization of intangibles from past acquisitions declined by $3 million.

These cost reductions were partially offset by a $17 million net increase in expenses related to internally developed software, reflecting lower capitalization of development costs and increased amortization expenses, partially offset by a decrease in impairment expense.

Restructuring.

Restructuring increased by $3 million, or 21%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was attributable to the Company’s reduction in force announced on November 7, 2024 as well as the termination of certain non-cancelable leases and consulting fees incurred during the restructuring process.

(Loss) Gain on Extinguishment of Debt

(Loss) gain on extinguishment of debt decreased by $218 million, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The gain on extinguishment of debt of $216 million in the year ended December 31, 2023 resulted from the Company’s partial repurchase of its 2026 Notes at a discount, net of unamortized deferred costs associated with the 2026 Notes.

This gain was partially offset by expenses related to partial debt extinguishments during the year ended December 31, 2023.

Interest Expense

Interest expense decreased by $78 million, or 37%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease was primarily attributable to a significant decrease in average balances in our non-recourse asset-backed debt and a decrease in loan fees as a result of committed debt reductions.

Other Income — Net

Other income – net decreased by $43 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease was primarily related to a $53 million decrease in interest income due to a reduction in the average cash, cash equivalents and restricted cash balances and a $7 million unrealized loss versus a $4 million unrealized gain on marketable equity securities during the years ended December 31, 2024 and December 31, 2023, respectively.

The decrease was partially offset by the $14 million gain from the deconsolidation of Mainstay.

See “ Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 16.

Deconsolidation” for additional information regarding the deconsolidation of Mainstay.

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

Income Tax Expense

Income tax expense changed by a nominal amount for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

The following table sets forth our results of operations for the years ended December 31, 2023 and 2022:

Year Ended December 31, Change in

(in millions, except percentages) 2023 2022 $ %

Revenue $ 6,946 $ 15,567 $ (8,621) (55) %

Cost of revenue 6,459 14,900 (8,441) (57) %

Gross profit 487 667 (180) (27) %

Operating expenses:

Sales, marketing and operations 486 1,006 (520) (52) %

General and administrative 206 346 (140) (40) %

Technology and development 167 169 (2) (1) %

Goodwill impairment — 60 (60) N/M

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Total operating expenses 873 1,598 (725) (45) %

Net operating loss (386) (931) 545 (59) %

Loss from operations

(386) (931) 545 (59) %

Gain (loss) on extinguishment of debt

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housing market at the start of the year.

The increase in gross margin for the year ended December 31, 2023 compared to the year ended December 31, 2022 is attributable to $737 million in inventory valuation adjustments recorded during the year ended December 31, 2022 to reduce homes in inventory to their net realizable value

The increase in gross margin for the year

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

following the rapid downturn in the U.S.

ended December 31, 2023 compared to the year ended December 31, 2022 is attributable to $737 million in inventory valuation adjustments recorded during the year ended December 31, 2022 to reduce homes in inventory to their net realizable value following the rapid downturn in the U.S.

housing market, beginning primarily in the second half of 2022.

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housing market in the second half of 2022, resulting in market conditions at the time of resale to be weaker than we believed they would be at the time of pricing our inventory acquisitions.

Contribution Margin decreased from 3.4% to (3.7)% for the years ended December 31, 2022 and December 31, 2023, respectively, due to the reasons noted above as well as increased holding costs due to longer average inventory holding periods.

Contribution Margin and Adjusted Gross Margin are non-GAAP financial measures.

In addition, we prioritized risk management and resale clearance at the expense of resale margin performance in order to clear the old book inventory, which composed a majority of the resale cohort for the year ended December 31, 2023.Contribution Margin decreased from 3.4% to (3.7)% for the years ended December 31, 2022 and December 31, 2023, respectively, due to the reasons noted above as well as increased holding costs due to longer average inventory holding periods.

Adjusted Gross Margin and Contribution Margin are non-GAAP financial measures.

See “— Non-GAAP Financial Measures ” for further details and a reconciliation of such non-GAAP measures to their nearest comparable GAAP measures.

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Other income (loss) – net increased by $117 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.

The increase is primarily related to an $84 million increase in interest income due to an increase in interest rates and a $4 million unrealized gain versus a $35 million unrealized loss on marketable equity securities during the year ended December 31, 2023 and December 31, 2022, respectively.

The increase was primarily related to an $84 million increase in interest income due to an increase in interest rates and a $4 million unrealized gain versus a $35 million unrealized loss on marketable equity securities during the years ended December 31, 2023 and December 31, 2022, respectively.

Income Tax Expense

Income tax expense decreased by a nominal amount for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

The following table sets forth our results of operations for the years ended December 31, 2022 and 2021:

Year Ended December 31, Change in

(in millions, except percentages) 2022 2021 $ %

Revenue $ 15,567 $ 8,021 $ 7,546 94 %

Cost of revenue 14,900 7,291 7,609 104 %

Gross profit 667 730 (63) (9) %

Operating expenses:

Sales, marketing and operations 1,006 544 462 85 %

General and administrative 346 620 (274) (44) %

Technology and development 169 134 35 26 %

Goodwill impairment 60 — 60 N/M

Restructuring 17 — 17 N/M

Total operating expenses 1,598 1,298 300 23 %

Net operating loss (931) (568) (363) 64 %

Warrant fair value adjustment

— 12 (12) (100) %

Loss on extinguishment of debt (25) — (25) N/M

Interest expense (385) (143) (242) 169 %

Other (loss) income-net

(10) 38 (48) (126) %

Loss before income taxes (1,351) (661) (690) 104 %

Income tax expense (2) (1) (1) 100 %

Net loss $ (1,353) $ (662) $ (691) 104 %

N/M - Not meaningful.

Revenue increased by $7.5 billion, or 94%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase in revenue was primarily attributable to higher sales volumes as well as higher revenue per home.

We sold 39,183 homes during the year ended December 31, 2022, compared to 21,725 homes during the year ended December 31, 2021, representing an increase of 80%.

Revenue per home sold increased 8% between periods due to inventory mix, buybox expansion and home price appreciation.

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

Cost of Revenue and Gross Profit

Cost of revenue increased by $7.6 billion, or 104%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase in cost of revenue was primarily attributable to higher sales volumes and a 13% increase in cost of revenue per home, excluding inventory valuation adjustments, as a result of inventory mix, buybox expansion, and home price appreciation at the time of inventory acquisition.

In addition, we recorded $458 million of inventory valuation adjustments during the year ended December 31, 2022 to adjust the cost basis of homes remaining in inventory at December 31, 2022 to their net realizable value as compared to $39 million of inventory valuation adjustments during the year ended December 31, 2021.

Gross profit decreased from $730 million to $667 million and gross margin decreased from 9.1% to 4.3% for the year ended December 31, 2021 and December 31, 2022, respectively.

For the same periods, Adjusted Gross Margin decreased from 9.6% to 7.0%.

The decrease in gross margin and Adjusted Gross Margin reflects our decision to prioritize risk management and resale clearance in the second half of 2022 at the expense of resale margin performance.

As a result of the fast downturn in the housing market due to macroeconomic conditions, market conditions at the time of sale were weaker than we believed they would be at the time of pricing our inventory acquisitions.

In addition, gross margin and Adjusted Gross Margin for the year ended December 31, 2021 benefited from a fresh book of inventory after we sold down our inventory in response to the COVID-19 pandemic and more favorable macroeconomic conditions as compared to the year ended December 31, 2022.

Contribution Margin decreased from 6.5% to 3.4% for the same periods, due to the reasons noted above as well as due to increased direct selling and holding costs.

Contribution Margin and Adjusted Gross Margin are non-GAAP financial measures.

See “— Non-GAAP Financial Measures ” for further details and a reconciliation of such non-GAAP measures to their nearest comparable GAAP measure.

Operating Expenses

Sales, Marketing and Operations .

Sales, marketing and operations increased by $462 million, or 85%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase was primarily attributable to a $219 million increase in resale transaction costs and broker commissions, consistent with the 94% increase in revenue.

Property holding costs increased by $91 million, consistent with increased inventory levels and longer inventory holding periods compared to the year ended December 31, 2021 when we held a fresh book of inventory.

Advertising expense increased by $77 million, from $123 million for the year ended December 31, 2021 to $200 million for the year ended December 31, 2022 as we increased marketing to drive acquisition volumes in both existing and new markets.

Headcount expenses, including salaries and benefits, increased $50 million consistent with the increase in headcount.

General and Administrative .

General and administrative decreased by $274 million, or 44%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The decrease was primarily attributable to $354 million reduction in stock-based compensation due to the expense recognition of certain performance awards during the year ended December 31, 2021 following the consummation of the Business Combination in December 2020, the expense recognition of certain RSUs upon the fulfillment of the liquidity event vesting condition satisfied by the February 2021 Offering and the reversal of expense in December 2022 related to the forfeiture of certain executive performance awards.

The reduction in stock-based compensation was partially offset by a $46 million legal contingency accrual and related expenses recorded during the year ended December 31, 2022 in connection with the FTC consent order finalized in October 2022.

Headcount expenses, including salaries and benefits increased $21 million consistent with the increase in headcount.

Technology and Development .

Technology and development increased by $35 million, or 26%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase was primarily attributable to a $26 million increase in headcount expenses, including salaries and benefits, consistent with the increase in headcount.

Goodwill Impairment .

Goodwill impairment increased by $60 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.

During the fourth quarter of 2022, the market price of our common stock declined significantly causing the Company to perform an interim quantitative test for goodwill impairment.

Based on the quantitative analysis, the Company recorded a goodwill impairment charge of $60 million for the year ended December 31, 2022.

There was no impairment of goodwill identified for the year ended December 31, 2021.

Restructuring.

Restructuring increased by $17 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The restructuring expenses recorded in the year ended December 31, 2022, represented severance, and

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

other termination benefits for employees whose roles were eliminated, and other restructuring costs related to winding down the Company’s mortgage lending and brokerage services.

Warrant Fair Value Adjustment

Warrant fair value adjustment decreased by $12 million, or 100%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The gain recorded in the year ended December 31, 2021, was attributable to a decrease in the fair value of the Sponsor Warrants between the time of the Business Combination and the completion of their redemption in July 2021.

Loss on Extinguishment of Debt

Loss on extinguishment of debt increased by $25 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The loss on extinguishment of debt of $25 million in December 31, 2022 resulted from the Company’s voluntary partial early repayment of an asset-backed mezzanine term debt facility.

Interest Expense

Interest expense increased by $242 million, or 169%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase was primarily attributable to increases in the average outstanding balances of our asset-backed senior debt facilities and mezzanine term debt facilities, which is consistent with our increase in inventory over the same periods.

In addition, interest expense from our asset-backed senior revolving credit facilities, which bear interest at a floating reference rate based on LIBOR or SOFR, has increased due to higher reference rates during the year ended December 31, 2022 compared to the year ended December 31, 2021.

Other (Loss) Income — Net

Other (loss) income – net decreased by $48 million, or 126%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The decrease was primarily related to the fair value adjustments recorded on marketable equity securities.

The Company recorded a $35 million gain in 2021 when a company in which we invested went public and then recorded a $35 million loss in 2022 when the company’s stock price declined.

The fair value loss recorded in 2022 is offset by a $20 million increase in interest income due to higher interest rates during the year ended December 31, 2022 compared to the year ended December 31, 2021.

During 2022, the terms of certain of our asset-backed senior revolving credit facilities were modified to replace LIBOR-based floating reference rates with SOFR-based floating reference rates.

As of December 31, 2022, all such floating reference rates in our asset-backed senior revolving credit facilities were based on SOFR.

Income Tax Expense

Income tax expense increased by a nominal amount for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Liquidity and Capital Resources

Our principal sources of liquidity have historically consisted of cash generated from our operations and from financing activities.

As of December 31, 2023, we had cash and cash equivalents of $1.0 billion, restricted cash of $541 million, and marketable securities of $69 million.

The decline in our cash, cash equivalents and marketable securities balance of $213 million as compared to December 31, 2022 resulted from a combination of operating losses and the partial repurchase of our 2026 Notes, offset by capital released as a result of reduced inventory levels.

The decrease in our restricted cash balance of $113 million as compared to December 31, 2022 was largely a result of lower resale activity and lower outstanding balances in our term debt facilities in December 2023 as compared to December 2022.

As of December 31, 2024, we had cash and cash equivalents of $671 million, restricted cash of $92 million, and marketable securities of $8 million.

The decrease in our cash, cash equivalents and marketable securities balance of $389 million as compared to December 31, 2023 resulted primarily from operating losses and an increase in real estate inventory.

The decrease in our restricted cash balance of $449 million as compared to December 31, 2023 was primarily a result of the increase in real estate inventory and $217 million net principal payments on non-recourse asset-backed debt.

As of December 31, 2024, the Company had total outstanding balances on our asset-backed debt of $1.9 billion and aggregate principal outstanding from convertible senior notes of $381 million.

In addition, we had undrawn borrowing capacity

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios,or as noted)

of $6.0 billion under our non-recourse asset-backed debt facilities (as described further below), of which $650 million was committed.

In addition, we had undrawn borrowing capacity of $5 billion under our non-recourse asset-backed debt facilities (as described further below), of which $218 million was committed.

During the year ended December 31, 2023, the Company entered into separate, privately negotiated transactions to repurchase a portion of the outstanding 2026 Notes (“Repurchased 2026 Notes”).

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The amounts involved and total consideration paid may be material.

In May 2024, the Company entered into an at-the-market equity offering sales agreement (the “ATM Agreement”) with Barclays Capital Inc.

and Virtu Americas LLC, as sales agents (the "Agents"), pursuant to which the Company may offer and sell, from time to time, through the Agents, shares of the Company’s common stock having an aggregate offering price of up to $200 million.

Under the ATM Agreement, the Agents may sell shares by any method deemed to be an “at-the-market offering.” During the year ended December 31, 2024, there was no activity pursuant to the ATM Agreement.

We have incurred losses from inception through December 31, 2024 and expect to incur additional losses in the future.

Our ability to service our debt and fund working capital, business operations and capital expenditures will depend on our ability to generate cash from operating activities, which is subject to our future operating success, and ability to obtain inventory acquisition financing on reasonable terms, which is subject to factors beyond our control, including potential economic recession, rising interest rates, inflation and general economic, political and financial market conditions.

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios, or as noted)

Our working capital requirements may increase should our inventory balance increase.

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The maximum initial advance rates vary by facility and generally decrease on a fixed timeline that varies by facility based on the length of time a given property has been financed and other facility-specific adjustments, including adjustments based on collateral performance.

At times, we may be required to keep amounts in restricted cash accounts to collateralize our asset-backed term debt facilities if the property borrowing base is insufficient to satisfy the borrowing base requirements.

These amounts may fluctuate due to seasonality, timing of property acquisitions and resales, and the outstanding loan balances under our asset-backed term debt facilities.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

These amounts may fluctuate due to seasonality, timing of property acquisitions and resales, and the outstanding loan balances under our asset-backed term debt facilities.

The following table summarizes certain details related to our non-recourse asset-backed debt and other secured borrowings as of December 31, 2024 (in millions, except interest rates):

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Asset-backed Senior Term Debt Facilities

Term Debt Facility 2021-S1 100 — 100 3.48 % January 2, 2025 April 1, 2025

Term Debt Facility 2021-S1 100 — 100 3.48 % February 24, 2026 August 24, 2026

Term Debt Facility 2021-S2 400 — 300 3.31 % September 10, 2025 March 10, 2026

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Asset-backed Senior Term Debt Facilities

We classify our senior term debt facilities as non-current liabilities in our consolidated balance sheets.

We classify our senior term debt facilities as current or non-current liabilities in our consolidated balance sheets based on the applicable final maturity date.

The carrying value of the non-current liabilities is reduced by issuance costs of $7 million.

In some cases, the borrowing capacity amounts under the asset-backed senior term debt facilities as reflected in the table are not fully committed and any borrowings above the

In some cases, the borrowing capacity amounts under the asset-backed senior term debt facilities as reflected in the table are not fully committed and any borrowings above the committed amounts are subject to the applicable lender’s discretion.

As of December 31, 2024, we had committed borrowing capacity with respect to asset-backed senior term debt facilities of $1.4 billion.

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

committed amounts are subject to the applicable lender’s discretion.

As of December 31, 2023, we had committed borrowing capacity with respect to asset-backed senior term debt facilities of $1.4 billion.

The withdrawal period end dates and final maturity dates reflected in the table above are inclusive of any extensions that are at the sole discretion of the Company.

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CURRENT LIABILITIES:

Other current liabilities (2)

Current asset-backed senior revolving credit

$ 182 $ — $ 182

Current asset-backed senior term debt

Other current liabilities (2)

Total current liabilities 456 73 529

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Goodwill, $3 million;

Intangibles - Net, $5 million;

and Other Assets, $60 million.

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(in millions) 2024 2023 2022

Net cash provided by (used in) operating activities $ 2,344 $ 730 $ (5,794)

Net cash provided by (used in) investing activities $ 44 $ 234 $ (476)

Net cash (used in) provided by financing activities $ (2,639) $ (1,751) $ 7,342

Net (decrease) increase in cash, cash equivalents, and restricted cash $ (251) $ (787) $ 1,072

Net Cash Provided by (Used in) Operating Activities

Net cash provided by (used in) operating activities was $2.3 billion, $730 million and $(5.8) billion for the years ended December 31, 2023, 2022 and 2021, respectively.

Net cash (used in) provided by operating activities $ (595) $ 2,344 $ 730

Net cash provided by investing activities $ 28 $ 44 $ 234

Net cash used in financing activities $ (210) $ (2,639) $ (1,751)

Net decrease in cash, cash equivalents, and restricted cash $ (777) $ (251) $ (787)

Net Cash (Used in) Provided by Operating Activities

Net cash (used in) provided by operating activities was $(595) million, $2.3 billion and $730 million for the years ended December 31, 2024, 2023 and 2022, respectively.

For the year ended December 31, 2024, cash used in operating activities was primarily driven by a $449 million increase in real estate inventory and our net loss, net of non-cash items, of $168 million.

For the year ended December 31, 2023, cash provided by operating activities was primarily driven by a $2.6 billion decrease in real estate inventory, partially offset by our net loss, net of non-cash items, of $214 million.

For the year ended December 31, 2022, cash provided by operating activities was primarily driven by a $896 million decrease in real estate inventory.

For the year ended December 31, 2021, cash used in operating activities was primarily driven by an $5.7 billion increase in real estate inventory and an $83 million increase in escrow receivables correlated to the increase in revenue during the year.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by (used in) investing activities was $44 million, $234 million and $(476) million for the years ended December 31, 2023, 2022 and 2021, respectively.

For the year ended December 31, 2022, cash provided by operating activities was primarily driven by an $896 million decrease in real estate inventory.

Net Cash Provided by Investing Activities

Net cash provided by investing activities was $28 million, $44 million and $234 million for the years ended December 31, 2024, 2023 and 2022, respectively.

For the year ended December 31, 2024, cash provided by investing activities primarily consisted of a $55 million decrease in marketable securities, partially offset by a $25 million increase in property and equipment principally related to the capitalization of internally developed software.

For the year ended December 31, 2023, cash provided by investing activities primarily consisted of a $80 million net decrease in marketable securities, partially offset by a $37 million increase in property and equipment principally related to the capitalization of internally developed software.

For the year ended December 31, 2022, cash provided by investing activities primarily consisted of a $300 million net decrease in marketable securities, partially offset by a $37 million increase in property and equipment, and $19 million for strategic investments in certain privately held companies.

For the year ended December 31, 2021, cash used in investing activities primarily consisted of $394 million in investments in marketable securities, $33 million for the acquisitions of Pro.com and RedDoor, net of cash acquired, the $15 million purchase of strategic investments in certain privately held companies, and $33 million in capital expenditures, including internally developed software.

Net Cash (Used in) Provided by Financing Activities

Net cash (used in) provided by financing activities was $(2.6) billion, $(1.8) billion and $7.3 billion for the years ended December 31, 2023, 2022 and 2021, respectively.

Net Cash Used in Financing Activities

Net cash used in financing activities was $(210) million, $(2.6) billion and $(1.8) billion for the years ended December 31, 2024, 2023 and 2022, respectively.

For the year ended December 31, 2024, cash used in financing activities was primarily attributable to $217 million net principal payments on non-recourse asset-backed debt.

For the year ended December 31, 2023, cash used in financing activities was primarily attributable to $2.3 billion net principal payments on non-recourse asset-backed debt, as well as $362 million related to the partial repurchase of the 2026 Notes.

For the year ended December 31, 2022, cash used in financing activities was primarily attributable to $1.7 billion net principal payments on non-recourse asset-backed debt.

For the year ended December 31, 2021, cash provided by financing activities was primarily attributable to $5.7 billion net proceeds from non-recourse asset-backed debt and $886 million in proceeds from the February 2021 Offering, net of $29 million of issuance costs.

In addition, we received $978 million in proceeds from the issuance of the 2026 Notes, net of $25 million of issuance costs and offset by $119 million purchase of the Capped Calls related to the 2026 Notes.

OPENDOOR TECHNOLOGIES INC.

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Contractual obligations are cash amounts that we are obligated to pay as part of certain contracts that we have entered into during the normal course of business.

Below is a table that shows our contractual obligations as of December 31, 2023:

Below is a table that shows our material contractual obligations as of December 31, 2024:

Payment Due by Year

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1 – 3 years 4 – 5 years

Senior revolving credit facilities (1)

$ 186 $ 186 $ — $ — $ —

Senior and mezzanine term debt facilities (2)

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________________

(1) Represents the principal amounts outstanding as of December 31, 2024.

Includes estimated interest payments, calculated using the variable rate in existence at period end over an assumed holding period of 90 days.

Borrowing under the senior revolving credit facilities are payable as the related inventory is sold.

The payment is expected to be within one year of December 31, 2024.

(2) Represents the principal amounts outstanding as of December 31, 2024 and estimated interest payments assuming the principal balances remain outstanding until maturity.

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(3) Represents the principal amounts outstanding as of December 31, 2024 and interest payments assuming the principal balances remain outstanding until maturity.

(3) Represents future payments for long-term operating leases that have commenced as of December 31, 2023.

In May 2023, the Company amended its Tempe, Arizona office lease to partially terminate the Company’s obligation with respect to a portion of the leased premises, which resulted in a decrease of undiscounted, future lease payments of $19 million.

(4) Represents future payments for long-term operating leases that have commenced, or have been executed but not yet commenced, as of December 31, 2024.

In December 2024, certain operating leases were terminated early by the Company, which resulted in a decrease of undiscounted, future lease payments of $8 million.

(5) As of December 31, 2024, we were under contract to purchase 1,705 homes for an aggregate purchase price of $589 million.

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We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on the consolidated financial statements.

Based on this definition, we have identified the critical accounting policies and estimates addressed below.

Based on this definition, we have identified the critical accounting policy and estimate addressed below.

In addition, we have other key accounting policies and estimates that are described in “ Part II – Item 8.

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The property purchase price is net of our service fee and represents the cash proceeds paid to the home seller.

Real estate inventory is reviewed for valuation adjustments on a quarterly basis.

Inventory valuation adjustments are not offset by any expected gains and are not reversed or adjusted should the expected net realizable value subsequently increase.

For homes under resale contract, the net realizable value is the contract price less expected selling costs and any expected concessions.

For all other homes, the net realizable value is our internal projection price less expected selling

Real estate inventory is reviewed for valuation adjustments

OPENDOOR TECHNOLOGIES INC.

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(Tabular amounts in millions, except share and per share data and ratios, or as noted)

on a quarterly basis.

Inventory valuation adjustments are not offset by any expected gains and are not reversed or adjusted should the expected net realizable value subsequently increase.

For homes under resale contract, the net realizable value is the contract price less expected selling costs and any expected concessions.

For all other homes, the net realizable value is our internal projection price less expected selling costs.

Changes in our pricing assumptions may lead to a change in the outcome of our inventory valuation adjustment, and actual results may also differ from our assumptions.

Stock-Based Compensation

Our stock-based awards include stock options, restricted stock units (“RSUs”), shares of restricted stock (“Restricted Shares”), and shares granted under our Employee Stock Purchase Plan (“ESPP”).

We recognize the cost of stock option awards granted to employees and directors based on the estimated grant-date fair value of the awards.

Cost is recognized on a straight-line basis over the service period, which is generally the vesting period of the award.

We elected to recognize the effect of forfeitures in the period that they occur.

We determine the fair value of stock options using the Black-Scholes-Merton option pricing model, which is impacted by the following assumptions:

• Expected Term.

We use the simplified method when calculating the expected term due to insufficient historical exercise data.

Management elected to use the simplified method instead of historical experience due to a lack of relevant historical data resulting from changes in option vesting schedules and changes in the pool of employees receiving option grants.

• Expected Volatility.

As our shares were not actively traded on Nasdaq until December 2020, the volatility used for stock options granted prior to the Company becoming listed is based on a benchmark of comparable companies within the automotive sales industry and certain real estate technology companies.

For stock options granted after the Company became listed, we use the implied volatility from traded Opendoor call options.

• Expected Dividend Yield.

The dividend rate used is zero as we have never paid any cash dividends on our common stock and do not anticipate doing so in the foreseeable future.

• Risk-Free Interest Rate.

The interest rates used are based on the implied yield available on U.S.

Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

We evaluate the assumptions used to value our share-based awards on each grant date.

Following the Company’s common stock being listed on Nasdaq, the fair value of our stock has been determined based on the quoted market price.

Prior to our common stock being listed on Nasdaq, the grant date fair value of our common stock was determined with the assistance of an independent third-party valuation specialist.

The grant date fair value of our common stock was determined using valuation methodologies which utilize certain assumptions, including probability weighting of events, volatility, time to liquidation, a risk-free interest rate, and an assumption for a discount for lack of marketability.

Prior to our common stock being listed on Nasdaq, we determined that an Option Pricing Model (“OPM”) was the most appropriate method for allocating our enterprise value to determine the estimated fair value of our common stock.

Application of the OPM involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses and cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of future events.

Specifically, we have historically used the OPM back solve analysis in combination with the market comparables approach to estimate the fair value of our common stock.

OPM back solve analysis derives the implied equity value for one type of equity security from a contemporaneous transaction involving another type of security;

we utilized the OPM back solve analysis with respect to our convertible preferred stock to derive a value of our common stock.

In certain periods where there is not a contemporaneous transaction, we utilized the market comparables approach to estimate an enterprise equity valuation which is then allocated using OPM to determine the common stock value.

The grant date fair value calculated using the methodology discussed above is also utilized with respect to RSUs with performance and service conditions to vest and restricted shares.

For RSUs with a performance condition based on a liquidity event, as well as a service condition to vest, no compensation expense is recognized until the performance condition has been satisfied.

Subsequent to the liquidity event, compensation expense is recognized to the extent the requisite service period has been completed and compensation expense thereafter is recognized on an accelerated attribution method.

Under the accelerated attribution method, compensation expense is recognized over the remaining requisite service period for each service condition tranche as though each tranche is, in substance, a separate award.

In February 2021, the Company completed an underwritten public offering, which met the liquidity event vesting condition and triggered the recognition of compensation expense for RSUs for which the time-based vesting condition had been satisfied or partially satisfied.

For further information on the February 2021 underwritten public offering, see “ Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 11.

Shareholders’ Equity” .

OPENDOOR TECHNOLOGIES INC.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular amounts in millions, except share and per share data and ratios,or as noted)

We determined the grant date fair value of RSUs with market-based vesting conditions by using Monte Carlo simulations.

The assumptions for stock price volatility, contractual term, dividend yield, and stock price used in the Monte Carlo simulations are determined using the same methodology as described above.

The exception is that with respect to the stock price volatility used for the Monte Carlo simulations, the Company took into consideration the capital structure of each comparable company comprising the benchmark to isolate each comparable company’s equity volatility without the effect of leverage and then re-levered using our capital structure.

If we consider the performance conditions probable to be satisfied, we recognize the cost of these RSUs by treating each market-based condition as an unit of account and recognizing the cost over the requisite service period with respect to each unit.

We determine the requisite service period by comparing the derived service period to achieve the market-based condition and the explicit service-based period, if any, using the longer of the two service periods as the requisite service period.

The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management judgment.

As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our share-based compensation expense could be materially different.

For more detailed information about our historical and outstanding grants and our valuation of our share-based compensation and awards, see “ Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 12.

Share-Based Awards” .

Recent Accounting Pronouncements

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis