Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read together with the historical audited annual consolidated financial statements as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023, and 2022.
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Forward-Looking Statements,” “Risk Factors,” or in other parts of this Annual Report on Form 10-K.
Overview
Opendoor’s mission is to power life’s progress, one move at a time. 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 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. Since our founding, we have helped customers to buy or sell homes in over 274,000 transactions and have expanded our footprint to 50 markets across the country.
Financial Highlights and Operating Metrics
Year Ended December 31,
(in millions, except percentages, homes purchased, homes sold, number of markets, and homes in inventory)
2024 2023 2022 2023 to 2024 Change
2022 to 2023 Change
Revenue $ 5,153 $ 6,946 $ 15,567 $ (1,793) $ (8,621)
Gross profit $ 433 $ 487 $ 667 $ (54) $ (180)
Gross margin 8.4 % 7.0 % 4.3 %
Net loss $ (392) $ (275) $ (1,353) $ (117) $ 1,078
Number of markets (at period end) 50 50 53 — (3)
Homes sold 13,593 18,708 39,183 (5,115) (20,475)
Homes purchased
14,684 11,246 34,962 3,438 (23,716)
Homes in inventory (at period end) 6,417 5,326 12,788 1,091 (7,462)
Inventory (at period end) $ 2,159 $ 1,775 $ 4,460 $ 384 $ (2,685)
Percentage of homes “on the market” for greater than 120 days (at period end)
46 % 18 % 55 %
Non-GAAP Financial Highlights (1)
Contribution Profit (Loss)
$ 242 $ (258) $ 525 $ 500 $ (783)
Contribution Margin 4.7 % (3.7) % 3.4 %
Adjusted EBITDA $ (142) $ (627) $ (168) $ 485 $ (459)
Adjusted EBITDA Margin (2.8) % (9.0) % (1.1) %
Adjusted Net Loss $ (258) $ (778) $ (574) $ 520 $ (204)
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(1) See “— Non-GAAP Financial Measures ” for further details and a reconciliation of such non-GAAP measures to their nearest comparable GAAP measures.
Current Housing Environment
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.
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(Tabular amounts in millions, except share and per share data and ratios, or as noted)
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
Market Penetration in Existing Markets
Residential real estate is one of the largest consumer markets in the United States, of which less than 1% of the estimated $1.7 trillion of home value transacted annually is conducted online. Given the fact that we operate in a highly fragmented industry and offer a differentiated value proposition to the traditional offline selling process, we believe there is significant opportunity to expand our share in our existing markets. By providing a consistent, high-quality and differentiated experience to our customers, we hope to continue to drive positive word-of-mouth awareness and trust in our platform.
We are steadily growing our reach via our partnership channels with homebuilders, agents, and online real estate platforms. 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. 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 re-engagement strategies and believe that our registered customer base will continue to be an important source of home acquisition volumes.
Market Footprint
The following table represents the number of markets we operated in as of the periods presented:
Year Ended December 31,
(in whole numbers) 2024 2023 2022
Number of markets (at period end) 50 50 53
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
We believe home sellers and buyers value simplicity and certainty. To that end, we are building an online, integrated suite of home services, which currently includes title insurance, escrow services and real estate brokerage services.
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
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(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
We view Contribution Margin as a key measure of unit economic performance. 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. Our long-term financial performance depends, in part, on continuing to maintain and expand unit margins through the following initiatives:
• Optimization and enhancements of our pricing engine;
• Platform efficiency improvements through greater automation and self-service;
• Incremental attach of services, which supplement the core transaction margin profile; and
• 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
Effectively managing our overall inventory position and balancing growth, margin, and risk are critical to our financial performance. Since our inception, we have prioritized investment in our pricing capabilities across our home acquisition processes and our forecasting and resale systems, and will continue to do so. As part of our overall risk management framework, we consider both individual market and aggregate portfolio exposures. 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, 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
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(Tabular amounts in millions, except share and per share data and ratios, or as noted)
mezzanine term debt facilities, to finance our home acquisitions. See “— Liquidity and Capital Resources — Debt and Financing Arrangements. ”
Seasonality
The residential real estate market is seasonal, with greater demand and home price appreciation from home buyers in the spring and summer, and typically weaker demand and lower home price appreciation in late fall and winter. 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, have obscured the impact of seasonality in our historical financials and we expect may continue to do so.
Non-GAAP Financial Measures
In addition to our results of operations below, we report certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”).
These measures have limitations as analytical tools when assessing our operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net loss. We may calculate or present our non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures we report may not be comparable with those of companies in our industry or in other industries.
Adjusted Gross Profit and Contribution Profit (Loss)
To provide investors with additional information regarding our margins and return on inventory acquired, we have included Adjusted Gross Profit and Contribution Profit (Loss), which are non-GAAP financial measures. We believe that Adjusted Gross Profit and Contribution Profit (Loss) are useful financial measures for investors as they are supplemental measures used by management in evaluating unit level economics and our operating performance. Each of these measures is intended to present the economics related to homes sold during a given period. We do so by including revenue generated from homes sold (and adjacent services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in inventory as of the end of the period. Contribution Profit (Loss) provides investors a measure to assess Opendoor’s ability to generate returns on homes sold during a reporting period after considering home purchase costs, renovation and repair costs, holding costs and selling costs.
Adjusted Gross Profit and Contribution Profit (Loss) are supplemental measures of our operating performance and have limitations as analytical tools. For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in inventory at the end of the period, costs required to be recorded under GAAP in the same period. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is gross profit.
Adjusted Gross Profit / Margin
We calculate Adjusted Gross Profit as gross profit under GAAP adjusted for (1) inventory valuation adjustment in the current period and (2) inventory valuation adjustment in prior periods. Inventory valuation adjustment in the current period is calculated by adding back the inventory valuation adjustments recorded during the period on homes that remain in inventory at period end. 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. 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.
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(Tabular amounts in millions, except share and per share data and ratios, or as noted)
Contribution Profit / Margin
We calculate Contribution Profit (Loss) as Adjusted Gross Profit, minus certain costs incurred on homes sold during the current period including: (1) holding costs incurred in the current period, (2) holding costs incurred in prior periods, and (3) direct selling costs. Contribution Margin is Contribution Profit (Loss) as a percentage of revenue.
We view this metric as an important measure of business performance as it captures the unit level performance isolated to homes sold in a given period and provides comparability across reporting periods. Contribution Profit (Loss) helps management assess inflows and outflows directly associated with a specific resale cohort.
The following table presents a reconciliation of our Adjusted Gross Profit and Contribution Profit to our gross profit, which is the most directly comparable GAAP measure, for the periods indicated:
Year Ended December 31,
(in millions, except percentages) 2024 2023 2022
Revenue (GAAP)
$ 5,153 $ 6,946 $ 15,567
Gross profit (GAAP) $ 433 $ 487 $ 667
Gross Margin 8.4 % 7.0 % 4.3 %
Adjustments:
Inventory valuation adjustment – Current Period (1)(2)
25 23 458
Inventory valuation adjustment – Prior Periods (1)(3)
(26) (455) (39)
Adjusted Gross Profit $ 432 $ 55 $ 1,086
Adjusted Gross Margin 8.4 % 0.8 % 7.0 %
Adjustments:
Direct selling costs (4)
(132) (197) (414)
Holding costs on sales – Current Period (5)(6)
(44) (50) (109)
Holding costs on sales – Prior Periods (5)(7)
(14) (66) (38)
Contribution Profit (Loss)
$ 242 $ (258) $ 525
Contribution Margin 4.7 % (3.7) % 3.4 %
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(1) Inventory valuation adjustment includes adjustments to record real estate inventory at the lower of its carrying amount or its net realizable value. See “— Critical Accounting Policies and Estimates — Real Estate Inventory. ”
(2) Inventory valuation adjustment — Current Period is the inventory valuation adjustments recorded during the period presented associated with homes that remain in inventory at period end.
(3) Inventory valuation adjustment — Prior Periods is the inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.
(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 and are included in Sales, marketing and operations.
(5) Holding costs include mainly property taxes, insurance, utilities, homeowners association dues, cleaning and maintenance costs. Holding costs are included in Sales, marketing, and operations on the Consolidated Statements of Operations.
(6) Represents holding costs incurred in the period presented on homes sold in the period presented.
(7) Represents holding costs incurred in prior periods on homes sold in the period presented.
Adjusted Net Loss and Adjusted EBITDA
We also present Adjusted Net Loss and Adjusted EBITDA, which are non-GAAP financial measures that management uses to assess our underlying financial performance. 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
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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. For example, these measures exclude the impact of certain costs required to be recorded under GAAP. These measures also include inventory valuation adjustments that were recorded in prior periods under GAAP and exclude, in connection with homes held in inventory at the end of the period, inventory valuation adjustments required to be recorded under GAAP in the same period. These measures could differ substantially from similarly titled measures presented by other companies in our industry or companies in other industries. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is net loss.
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, 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 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 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. Our calculation of Adjusted Net Loss does not currently include the tax effects of the non-GAAP adjustments because our taxes and such tax effects have not been material to date.
Adjusted EBITDA / Margin
We calculated Adjusted EBITDA as Adjusted Net Loss adjusted for depreciation and amortization, property financing and other interest expense, interest income, and income tax expense. Adjusted EBITDA is a supplemental performance measure that our management uses to assess our operating performance and the operating leverage in our business. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue.
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(Tabular amounts in millions, except share and per share data and ratios, or as noted)
The following table presents a reconciliation of our Adjusted Net Loss and Adjusted EBITDA to our net loss, which is the most directly comparable GAAP measure, for the periods indicated:
Year Ended December 31,
(in millions, except percentages) 2024 2023 2022
Revenue (GAAP) $ 5,153 $ 6,946 $ 15,567
Net loss (GAAP) $ (392) $ (275) $ (1,353)
Adjustments:
Stock-based compensation 114 126 171
Equity securities fair value adjustment (1)
7 1 35
Intangibles amortization expense (2)
4 7 9
Inventory valuation adjustment – Current Period (3)(4)
25 23 458
Inventory valuation adjustment – Prior Periods (3)(5)
(26) (455) (39)
Restructuring (6)
17 14 17
Loss (gain) on extinguishment of debt
2 (216) 25
Goodwill impairment — — 60
Legal contingency accrual and related expenses
5 — 46
Other (7)
(14) (3) (3)
Adjusted Net Loss $ (258) $ (778) $ (574)
Adjustments:
Depreciation and amortization, excluding amortization of intangibles
35 45 41
Property financing (8)
116 174 329
Other interest expense (9)
17 37 56
Interest income (10)
(53) (106) (22)
Income tax expense 1 1 2
Adjusted EBITDA $ (142) $ (627) $ (168)
Adjusted EBITDA Margin (2.8) % (9.0) % (1.1) %
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(1) Represents the gains and losses on certain financial instruments, which are marked to fair value at the end of each period.
(2) Represents amortization of acquisition-related intangible assets. 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.
(4) Inventory valuation adjustment — Current Period is the inventory valuation adjustments recorded during the period presented associated with homes that remain in inventory at period end.
(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 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.
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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.
Components of Our Results of Operations
Revenue
We generate the majority of our revenue from the sale of homes that we previously acquired from homeowners. In addition, we generate revenue from additional services we provide to both home sellers and buyers, which consists primarily of title insurance and escrow services and brokerage services.
Home sales revenue from selling residential real estate is recognized when title to and possession of the property has transferred to the buyer and we have no continuing involvement with the property, which is generally the close of escrow. The amount of revenue recognized for each home sale is equal to the sale price of the home net of any concessions.
Cost of Revenue
Cost of revenue includes the property purchase price, acquisition costs and direct costs to renovate or repair the home. These costs are accumulated in real estate inventory during the property holding period and charged to cost of revenue under the specific identification method when the property is sold. Real estate inventory is reviewed for valuation adjustments at least quarterly. 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. Additionally, for our revenue other than home sales revenue, cost of revenue consists of any costs incurred in delivering the service, including associated headcount expenses such as salaries, benefits and stock-based compensation.
Operating Expenses
Sales, Marketing and Operations Expense
Sales, marketing and operations expense consists primarily of broker commissions (paid to the home buyers’ real estate agents and third-party listing agents, if applicable), resale closing costs, holding costs related to real estate inventory including utilities, property taxes and maintenance, and expenses associated with product marketing, promotions and brand-building. Sales, marketing and operations expense also includes any headcount expenses in support of sales, marketing, and real estate operations such as salaries, benefits and stock-based compensation.
General and Administrative Expense
General and administrative expense consists primarily of headcount expenses, including salaries, benefits and stock-based compensation for our executive, finance, human resources, legal and administrative personnel, third-party professional services fees and rent expense.
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 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.
Goodwill Impairment Expense
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
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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. See “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 5. Credit Facilities and Long-Term Debt—Convertible Senior Notes” for additional information regarding the 2026 Notes.
Interest Expense
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 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. Subject to market conditions and cost of capital trade-offs, we will evaluate opportunities to expand our sources of financing over time, which may allow us to diversify our mix of financing sources to include more cost-effective financing relative to our higher cost mezzanine term debt facilities.
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, and gains from deconsolidation.
Income Tax Expense
We record income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. We recognize the effect on deferred income taxes of a change in tax rates in income in the period that includes the enactment date.
We record a valuation allowance to reduce our deferred tax assets and liabilities to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance.
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(Tabular amounts in millions, except share and per share data and ratios, or as noted)
Results of Operations
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
The following table sets forth our results of operations for the years ended December 31, 2024 and 2023:
Year Ended December 31, Change in
(in millions, except percentages) 2024 2023 $ %
Revenue $ 5,153 $ 6,946 $ (1,793) (26) %
Cost of revenue 4,720 6,459 (1,739) (27) %
Gross profit 433 487 (54) (11) %
Operating expenses:
Sales, marketing and operations 413 486 (73) (15) %
General and administrative 182 206 (24) (12) %
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
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.
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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.
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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
Restructuring 14 17 (3) (18) %
Total operating expenses 873 1,598 (725) (45) %
Loss from operations
(386) (931) 545 (59) %
Gain (loss) on extinguishment of debt
216 (25) 241 N/M
Interest expense (211) (385) 174 (45) %
Other income (loss)-net
107 (10) 117 N/M
Loss before income taxes (274) (1,351) 1,077 (80) %
Income tax expense (1) (2) 1 (50) %
Net loss $ (275) $ (1,353) $ 1,078 (80) %
N/M - Not meaningful.
Revenue
Revenue decreased by $8.6 billion, or 55%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in revenue was primarily attributable to lower sales volumes as well as lower revenue per home. We sold 18,708 homes during the year ended December 31, 2023, compared to 39,183 homes during the year ended December 31, 2022, representing a decrease of 52%. Revenue per home sold decreased 7% between the same periods. The decrease in sales volumes was a result of the proactive reduction of our inventory acquisition pace beginning in the third quarter of 2022 via higher spreads embedded in our offers and lower marketing investment in reaction to volatility in the U.S. housing market. The decrease in revenue per home sold was primarily attributed to a slowdown in home price appreciation (“HPA”).
Cost of Revenue and Gross Profit
Cost of revenue decreased by $8.4 billion, or 57%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in cost of revenue was primarily attributable to lower sales volumes and a 9% decrease in cost of revenue per home, excluding inventory valuation adjustments on homes in inventory at period end, due to the slowdown in inventory acquisition pacing and HPA discussed above. In addition, the decrease in cost of revenue is attributable to a decrease in inventory valuation adjustments on homes in inventory at period end, which were $23 million for the year ended December 31, 2023 compared to $458 million for the year ended December 31, 2022. The decrease in inventory valuation adjustments reflects the relative home price stabilization experienced in 2023 as well as higher spreads embedded in our home acquisition offers.
Gross profit decreased from $667 million to $487 million and gross margin increased from 4.3% to 7.0% for the years ended December 31, 2022 and December 31, 2023, respectively. The decrease in gross profit is attributable to lower sales volumes as discussed above as well as the strong margins realized during the first half of the year ended December 31, 2022, which were fueled by a historically strong U.S. housing market at the start of the year. The increase in gross margin for the year
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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)
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. This included $458 million of inventory valuation adjustments on homes remaining in inventory at December 31, 2022.
For the same periods, Adjusted Gross Margin, which aligns the timing of inventory valuation adjustments to the period in which the home is sold, decreased from 7.0% to 0.8%. The decrease in Adjusted Gross Margin reflects the downturn in the U.S. 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. 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.
Operating Expenses
Sales, Marketing and Operations . Sales, marketing and operations decreased by $520 million, or 52%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily attributable to a $217 million decrease in resale transaction costs and broker commissions, consistent with the 55% decrease in revenue during the same period. Property holding costs decreased by $116 million, consistent with decreased inventory levels. Advertising expense decreased by $125 million, from $200 million for the year ended December 31, 2022 to $75 million for the year ended December 31, 2023 as we decreased marketing in both existing and new markets. In addition, headcount expenses, including salaries and benefits, decreased $58 million, which was largely attributable to workforce reductions and a reduction in contingent labor in 2023.
General and Administrative . General and administrative decreased by $140 million, or 40%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily attributable to $46 million reduction in stock-based compensation, which was primarily related to the forfeiture of certain executive RSUs, including performance-based awards. In addition, the Company recorded 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 decreased $19 million, which was primarily attributable to workforce reductions in 2023.
Technology and Development . Technology and development decreased by a nominal amount for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Goodwill Impairment . Goodwill impairment decreased by $60 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. 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, 2023.
Restructuring. Restructuring decreased by a nominal amount for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Gain (Loss) on Extinguishment of Debt
Gain (loss) on extinguishment of debt increased by $241 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The gain on extinguishment of debt of $216 million in December 31, 2023 resulted from the Company’s partial repurchase of its 2026 Notes in 2023 at a discount net of unamortized deferred costs associated with the 2026 Notes, partially offset by expenses related to partial debt extinguishments during the year ended December 31, 2023.
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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)
Interest Expense
Interest expense decreased by $174 million, or 45%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily attributable to a significant decrease in the average outstanding balances of our non-recourse asset-backed debt.
Other Income (Loss) — Net
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 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.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity have historically consisted of cash generated from our operations and from financing activities. 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 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”). We repurchased approximately $597 million in aggregate principal amount of our 2026 Notes as further described in “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 5. Credit Facilities and Long-Term Debt – Convertible Senior Notes ” in this Annual Report on Form 10-K. As market conditions warrant, we may, from time to time, repurchase additional outstanding debt securities in the open market, in privately negotiated transactions, by tender offer, by exchange transaction or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity and other factors and may be commenced or suspended at any time. 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.
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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. We believe our cash, cash equivalents, and marketable securities, together with cash we expect to generate from future operations and borrowings, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least 12 months from the date of this Annual Report on Form 10-K.
Debt and Financing Arrangements
Our financing activities include: short-term borrowings under our asset-backed senior revolving credit facilities; the issuance of long-term asset-backed senior term debt, asset-backed mezzanine term debt, and convertible debt; and new issuances of equity. Historically, we have required access to external financing resources in order to fund growth, expansion into new markets and strategic initiatives and we expect this to continue in the future. Our access to capital markets can be impacted by factors outside our control, including economic conditions.
We primarily use non-recourse asset-backed debt, consisting of asset-backed senior debt facilities and asset-backed mezzanine term debt facilities, to provide financing for our real estate inventory purchases and renovations. Our business is capital intensive and maintaining adequate liquidity and capital resources is needed as we continue to scale and accumulate additional inventory. We intend to actively manage our relationships with multiple financial institutions and seek to optimize duration, flexibility, efficiency and cost of funds, but there can be no assurance that we will be able to obtain sufficient capital for our business or to do so on acceptable financial and other terms.
Our asset-backed facilities are each collateralized by a specified pool of assets, consisting of real estate inventory, restricted cash and equity interests in certain consolidated subsidiaries of Opendoor that directly or indirectly own our real estate inventory. The terms of our inventory financing facilities require an Opendoor subsidiary to comply with customary financial covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to tangible net worth). As of December 31, 2024, the Company was in compliance with all financial covenants.
Our property financing subsidiaries’ assets and credit generally are not available to satisfy the debts and other obligations of any other Opendoor entities. Our asset-backed debt is non-recourse to Opendoor and our subsidiaries that are not party to the relevant financing arrangements, except for limited guarantees provided by an Opendoor subsidiary for certain obligations in situations involving “bad acts” by an Opendoor entity and certain other limited circumstances.
Our asset-backed senior debt facilities generally provide for advance rates of 75% to 90% against our cost basis in the underlying properties upon acquisition. Our mezzanine term facilities may finance up to 95% to 100% of our cost basis in the underlying properties upon acquisition. 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.
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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)
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):
Outstanding Amount
December 31, 2024 Borrowing
Capacity
Current Non-Current Weighted
Average
Interest Rate
End of Revolving / Withdrawal Period
Final Maturity
Date
Non-Recourse Asset-backed Debt:
Asset-backed Senior Revolving Credit Facilities
Revolving Facility 2018-2 $ 1,000 $ — $ — — % June 24, 2026 June 24, 2026
Revolving Facility 2018-3 1,000 182 — 8.00 % September 29, 2026 September 29, 2026
Revolving Facility 2019-1 300 — — — % August 15, 2025 August 15, 2025
Revolving Facility 2019-2 550 — — — % October 3, 2025 October 2, 2026
Revolving Facility 2019-3 100 — — 8.13 % April 4, 2025 April 3, 2026
Asset-backed Senior Term Debt Facilities
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
Term Debt Facility 2021-S3 1,000 — 750 3.75 % January 31, 2027 July 31, 2027
Term Debt Facility 2022-S1 250 250 — 4.07 % March 1, 2025 September 1, 2025
Total $ 4,700 $ 432 $ 1,150
Issuance Costs — (7)
Carrying Value $ 432 $ 1,143
Asset-backed Mezzanine Term Debt Facilities
Term Debt Facility 2020-M1 $ 1,700 $ — $ 200 10.00 % April 1, 2025 April 1, 2026
Term Debt Facility 2022-M1 $ 500 $ — $ 150 10.00 % September 15, 2025 September 15, 2026
Total $ 2,200 $ — $ 350
Issuance Costs (1)
Carrying Value $ 349
Total Non-Recourse Asset-backed Debt $ 6,900 $ 432 $ 1,492
Asset-backed Senior Revolving Credit Facilities
We classify the senior revolving credit facilities as current liabilities on our consolidated balance sheets. In some cases, the borrowing capacity amounts under the asset-backed senior revolving credit 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 revolving credit facilities of $400 million.
The revolving 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. Certain of our asset-backed senior revolving credit facilities also have additional extension options that are subject to lender approval that are not reflected in the table above.
Asset-backed Senior Term Debt Facilities
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 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.
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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)
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. Certain of our asset-backed senior term debt facilities also have additional extension options that are subject to lender approval that are not reflected in the table above.
Asset-backed Mezzanine Term Debt Facilities
In addition to the asset-backed senior revolving credit facilities and asset-backed senior term debt facilities, we have issued asset-backed mezzanine term debt facilities which are subordinated to the related senior facilities. The borrowing capacity amounts under the asset-backed mezzanine term debt facilities as reflected in the table are not fully committed and any borrowing 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 mezzanine term debt facilities of $350 million.
Convertible Senior Notes
In August 2021, we issued the 2026 Notes with an aggregate principal amount of $978 million. The table below summarizes certain details related to our 2026 Notes (in millions), as of December 31, 2024, which includes certain repurchases:
December 31, 2024 Remaining Aggregate Principal Amount
Unamortized Debt Issuance Costs Net Carrying Amount
2026 Notes $ 381 $ (3) $ 378
See “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 5. Credit Facilities and Long-Term Debt ” for additional information regarding our debt and financing arrangements.
Special Purpose Entities
The Company has established certain special purpose entities (“SPEs”) for the purpose of financing the Company’s purchase and renovation of real estate inventory through the issuance of asset-backed debt. The Company is the primary beneficiary of the various variable interest entities (“VIE”) within these financing structures and consolidates these VIEs. See “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Variable Interest Entities ” for additional information regarding our VIEs.
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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)
The following table summarizes the assets and liabilities related to the VIEs consolidated by the Company as well as the assets, liabilities and equity related to Opendoor Technologies Inc (Parent Company Only) (“Parent Company”) and subsidiaries that are not VIEs, as of December 31, 2024 (in millions):
VIE Non-VIE Total
CURRENT ASSETS:
Cash and cash equivalents $ — $ 671 $ 671
Restricted cash 81 11 92
Marketable securities — 8 8
Escrow receivable 6 — 6
Real estate inventory 2,166 19 2,185
Inventory valuation adjustment (25) (1) (26)
Real estate inventory, net 2,141 18 2,159
Other current assets 8 53 61
Total current assets 2,236 761 2,997
OTHER ASSETS (1)
— 129 129
TOTAL ASSETS $ 2,236 $ 890 $ 3,126
CURRENT LIABILITIES:
Current asset-backed senior revolving credit
$ 182 $ — $ 182
Current asset-backed senior term debt
250 — 250
Other current liabilities (2)
24 73 97
Total current liabilities 456 73 529
Non-current asset-backed mezzanine term debt
349 — 349
Non-current asset-backed senior term debt
1,143 — 1,143
CONVERTIBLE SENIOR NOTES — 378 378
LEASE LIABILITIES – Net of current portion — 13 13
OTHER LIABILITIES
— 1 1
TOTAL LIABILITIES $ 1,948 $ 465 $ 2,413
SHAREHOLDERS’ EQUITY: $ 288 $ 425 $ 713
________________
(1) The Company’s consolidated Other Assets include the following assets as shown in the Consolidated Balance Sheets: Property and Equipment – Net, $48 million; Right of Use Assets, $18 million; Goodwill, $3 million; and Other Assets, $60 million.
(2) The Company’s consolidated Other Current Liabilities include the following liabilities as shown in the Consolidated Balance Sheets: Accounts Payable and Other Accrued Liabilities, $92 million; Interest Payable, $3 million; and Lease Liabilities – Current, $2 million.
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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)
Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2024, 2023 and 2022:
Year Ended December 31,
(in millions) 2024 2023 2022
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 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.
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.
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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)
Contractual Obligations and Commitments
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 material contractual obligations as of December 31, 2024:
Payment Due by Year
(in millions) Total Less than
1 year
1 – 3 years 4 – 5 years
More than
5 years
Senior revolving credit facilities (1)
$ 186 $ 186 $ — $ — $ —
Senior and mezzanine term debt facilities (2)
1,903 337 1,566 —
Convertible senior notes (3)
383 1 382 — —
Operating leases (4)
21 4 7 7 3
Purchase commitments (5)
589 589 — — —
Total $ 3,082 $ 1,117 $ 1,955 $ 7 $ 3
________________
(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. The final maturity dates of the senior and mezzanine term debt facilities vary, as discussed above.
(3) Represents the principal amounts outstanding as of December 31, 2024 and interest payments assuming the principal balances remain outstanding until maturity.
(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.
Critical Accounting Policies and Estimates
Discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue, and expenses at the date of the financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
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 policy and estimate addressed below. In addition, we have other key accounting policies and estimates that are described in “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Description of Business and Accounting Policies” .
Real Estate Inventory
Real estate inventory carrying value is equal to the lower of cost or net realizable value and each home constitutes the unit of account. Real estate inventory cost includes but is not limited to the property purchase price, acquisition costs and direct costs to renovate or repair the home, less inventory valuation adjustments, if any. 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
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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)
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. 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.
Recent Accounting Pronouncements
For information on recent accounting standards, see “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Description of Business and Accounting Policies” .
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