Opendoor is trying to close the door on its cash flow issues.
The iBuyer did well enough on that front to post a modest $23 million profit last quarter, it announced Thursday, after having lost $101 million in the previous quarter and $54 million in the year-ago period.
Still, its stock fell in after-hours trading as investors were not impressed with the outlook it released along with its earnings.
Opendoor also reported “adjusted” EBITDA — earnings before interest, taxes, depreciation and amortization — of negative $168 million and a quarterly cash-burn rate of $68 million, roughly half of the $125 million it burned in quarter one. Its adjusted EBITDA had been negative $341 million that quarter.
Some accounting magic helped: It bought back some of its debt for $104 million less than it owed on the notes. The “debt extinguishment” technically put it into the black for the period.
Opendoor’s losses are at least happening at a slower rate, an important step in the right direction for the firm, which has had a rough time with the market downturn.
The San Francisco-based firm lost over $1 billion in the last two quarters of 2022 as the homes it bought decreased in value. Its co-founder and CEO Eric Wu stepped down late last year. It conducted a second round of mass layoffs earlier this year.
“We’re leveraging the lessons we’ve learned and focusing on what we can control,” said CEO Carrie Wheeler, who took over in December, on the second-quarter earnings call.
Revenue for the quarter was nearly $2 billion, exceeding the company’s guidance by 7 percent.
Wheeler said that 99 percent of homes Opendoor bought in the second quarter of last year — when home prices were higher than they are today — are now under contract or sold, and that homes bought more recently are generating profits. Wheeler expects the company to have positive contribution margins — revenue after variable costs — next quarter.
“We also plan to increase our paid marketing to drive additional direct to consumer volume as we see more market stabilization and reduced spreads,” she said.
Opendoor is trying to be more judicious and measured with its iBuying. It bought 2,680 homes last quarter, down 81 percent year-over-year but up 53 percent over the first quarter. Its inventory of 3,558 homes is worth $1.1 billion, down 83 percent from last year and 46 percent from the first quarter.
The company is also launching AI programs to manage homes and utilities and process documents and transactions, which it anticipates will allow it to reduce headcount and create efficiencies, according to a spokesperson.
“We believe the actions we are taking will allow us to emerge from this cycle more resilient and positioned for market leadership and long-term profitability,” said Wheeler.