Opendoor shares surge 21% on Q3 revenue, EPS beat, higher forecast | ZDNet

Opendoor, which uses artificial intelligence approaches to make offers to people selling their homes, this afternoon reported Q3 revenue and profit that both topped Wall Street’s expectations, and an outlook for this quarter that was higher as well. 

The report sent Opendoor shares surging by 21% in late trading. 

The report comes a week after competitor Zillow said it would close down its own operation of buying homes after failing to close sales with 90% of home buyers to whom it made offers. 

CEO and co-founder Eric Wu said in prepared remarks that the results were “the byproduct of our focus on the consumer experience and strong, consistent execution.”

Added Wu, “We exceeded our expectations in generating $2.3 billion of revenue, acquiring 15,181 homes, and delivering over $170 million of Contribution Profit and $35 million of Adjusted EBITDA.””

Revenue in the three months ended in September rose 72%, year over year, to $2.3 billion, yielding a net loss of 9 cents a share.

Analysts had been modeling $2 billion and negative 17 cents per share.

Also: Zillow says difficulty of forecasting, huge capital need felled home buying business

Opendoor’s gross profit margin declined from 13.4% in the prior quarter to 8.9%. The company’s operating profit on a non-GAAP basis, reported as “contribution margin,” declined to 7.5% of sales from 10.8% in the prior quarter.

The company bought 79% more homes in the quarter than in the prior quarter, a total of 15,181 homes. That was down from a pace of 136% growth in the prior quarter.

Opendoor’s inventory of homes rose by 130% from the prior quarter, to 17,164 homes, totaling $6.3 billion. That was, again, slower than the 224% increase in Q2.

Also: Opendoor discusses the secret sauce: ‘A deeper mechanism to the world’

For the current quarter, the company sees revenue of $3.1 billion to $3.2 billion, higher than consensus for $2.92 billion and a 19-cent loss per share.

More information is available in the company’s shareholder letter, and an earnings data supplement.

Added CEO Wu, 

Over the years, I am often asked whether our vision and strategy has changed. The short answer is no – we have always been focused on making it possible to buy, sell, and move at the tap of a button. In our view, the end state for the real estate marketplace will inevitably be a simple, certain, and fast transaction powered by technology. It is just a matter of when. So we have been consistently focused on investing in that future experience, piece by piece, with the consumer in mind at every step. We take great pride in doing the hard work to execute with excellence in our consumer experience, technology, business performance, and company culture. This is what sets us apart.

Opendoor management will host a conference call with analysts at 5 pm, Eastern time, and you can catch a Webcast of it on the company’s investor relations home page.