US iBuyer Offerpad says it achieved higher gross profits year-on-year (YoY) despite falling revenues in its Q3 results—with a slight revenue boost from Q2.
On the surface, Offerpad's numbers look good. Gross profits of $24M for the quarter represent an astonishing 1000% (one thousand per cent) increase YoY from Q3 2022.
Gross profit per home sold was even more impressive, $34,100—a 3500% (three thousand five hundred per cent) change from 2022's $900 per property.
Net losses shrunk from $80M to a more appetizing $20M—a 75% improvement from 2022.
One reason for the narrower margins may be the significant decrease in the number of properties Offerpad invested in in the past 12 months. The company bought 1,847 properties in Q3 2022, but just 930 in Q3 2023.
Brian Bair, CEO and chairman at Offerpad, said:
"We are pleased that we met both top and bottom-line expectations in the third quarter, despite a continued difficult macro environment. We are particularly proud of our expanding contribution margin.
"We have proven we can perform in a difficult market, and we have exciting opportunities ahead of us. We are well positioned for further solid performance in 2024 as we take the friction out of real estate."
Jawad Ahsan, CFO, said:
"The third quarter marked my first full quarter with Offerpad. I’m very impressed with the team and pleased with our progress.
"We have further refined our path to sustainable Adjusted EBITDA profitability in 2024 and beyond, while optimizing three key priorities. These include ensuring the business is on a path to become profitable and self-sustaining; future proofing to mitigate against macro volatility; and, better aligning our marketing strategy with our customer behavior.
"I look forward to sharing our progress over the coming quarters."
Offerpad's Q4 forecast suggests revenues of $270M, 800 homes sold, while the firm is now forecasting Adjusted EBITDA profitability in 2024.
Offerpad raised $90M in private investment in February after a disastrous $80M loss in Q3 2022. The iBuying proposition has already seen rivals Zillow and Redfin leave the space entirely, with OpenDoor the only remaining iBuying rival in the Unites States.