Prepared remarks
Good afternoon and welcome to Offerpad's Second Quarter 2026 Earnings Conference Call. My name is Megan and I will be your conference operator today. Operator provided standard instructions for the conference. With that, I'll turn the call over to Cortney Read, Offerpad's Vice President of Investor Relations and Communications.
Good afternoon, and welcome to Offerpad's Second Quarter 2026 Earnings Call. Management's remarks today are prerecorded and accompanied by a presentation. A live question-and-answer session will follow. During the call today, management will make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain, and events could differ significantly from management's expectations. Please refer to the risks, uncertainties, and other factors related to the company's business described in our filings with the U.S. Securities and Exchange Commission. Except as required by applicable law, Offerpad does not intend to update or alter forward-looking statements, whether as a result of new information, future events, or otherwise. On today's call, management will refer to certain non-GAAP financial measures. These metrics exclude certain items discussed in our earnings release under the heading non-GAAP financial measures. The reconciliations of Offerpad non-GAAP measures to the comparable GAAP measures are available in the financial tables of the second quarter earnings release on Offerpad's website. With that, I'll turn the call over to Brian Bair, Chairman and Chief Executive Officer.
Thank you, Cortney, and welcome everyone. Before we get into the quarter, I'd like to take a step back and talk about where we are as a company. Over the past 18 months, we made a series of deliberate decisions that weren't designed to maximize short-term volume, they were designed to build a stronger company for the long-term. We protected capital, we sold through our aged inventory. When we set our cost structure, we put the right people in place across pricing, operations, and every product line, expanded from a single product company into a multi-solution platform and embedded artificial intelligence across our business. None of those investments were made to improve 1 quarter. They were made to improve the next decade. We believe those investments are now beginning to translate into measurable operating momentum. The rebuilding phase of Offerpad is largely behind us. The buying engine is back on. I'll be walking through several visuals during the call. So I encourage you to follow along on your screen. First, the quarter itself. We guided to 300 to 350 transactions and $80 million to $90 million in revenue. We came in at 295 transactions and approximately $78 million in revenue, while still delivering another quarter of improved adjusted EBITDA. Alongside those numbers, I'll walk you through some leading indicators, contract signs and acquisitions. We think they're helpful for understanding where the business is headed as we scale. For the past year, you've heard us talk about discipline. You've heard Peter walk through our cost structure. You've heard us talk about contribution margins, conversion, and the investments we've made in our operating platform. Those weren't separate initiatives, they were always the same operating framework. The one that's been guiding how we run this business. By sharing that framework with you today, we want to give you a clear view into how we make decisions, allocate capital, and measure progress. It's also the context behind everything we've reported over the past year. That framework comes down to 3 objectives. Let's start with the first. Scale transactions through discipline growth. That's straightforward. But here's what it actually means. We're not chasing volume for its own sake. We're using better home selection, more precise pricing, and the data we built over the past several years to grow where we believe we can generate the strongest outcomes. Our target hasn't changed, approximately 1,000 transactions a quarter, the level we believe our current cost structure supports at break-even. But that's not where the plan stops. Beyond break-even, the plan illustrates the operating leverage available as we scale towards levels we have achieved before. For example, the company averaged approximately 3,500 quarterly transactions in 2022. Here's the visual that helps illustrate how we get there. Starting with the question you may have, how do we get from roughly 300 transactions today to our goal of around 1,000 a quarter? Start on the left. Every closed transaction starts as a signed contract. In April, we signed 129. That grew to 163 in May and 256 by June, nearly double where we started. Now take a look at the middle. Roughly 30 days after signing, approximately 90% of contracts become acquisitions. We acquired 268 homes in quarter 2, nearly 70% more than the quarter before. That momentum continued into July, where we acquired roughly 200 homes in a single month as the stronger June and July signings work their way through. This growing pipeline is expected to drive higher transaction volumes in the second half of fiscal 2026, as homes typically sell within 120 to 150 days after signing. Think about it this way. We expect another meaningful step-up in acquisitions in the third quarter. And we can say that with real confidence because most of the activity is already signed. It's sitting on the left side of this chart right now moving through the pipeline. Now let's look at the right side. Roughly 90 to 120 days after acquisition, a home sells, which means the fourth quarter is largely being built right now, not in the fourth quarter itself. Today's signings become tomorrow's acquisitions, and those acquisitions become tomorrow's home sales. So when you look at our third quarter transaction guidance next to our longer-term target, remember, those quarter 3 closings were mostly locked in by contracts signed earlier in the year, before conversion improved. Quarter 4 is where you'll really start to see today's stronger performance show up. And 1 more thing to highlight, our platform is now broader than Cash Offer. Cash Offer Marketplace and Brokerage Services, shown in light blue on the chart, widen the pool of sellers we can serve and generate fee-based revenue with little to no balance sheet capital. What you're seeing here is execution, not spending. The growth in signs I just showed you happened without meaningful increase in marketing. It's conversion. We're converting demand we already had. The second objective is expanding contribution margin. And this is where we made some of our most meaningful progress this quarter. This chart shows the annual picture. Margins compressed through the market slowdown, bottomed out in loss in 2023, and have been recovering since, with 2025's numbers still weighed down by the aged inventory we've been working through. But look at what's happening inside this year, quarter to quarter. Contribution profit after interest reached $13,500 per real estate transaction in Q2, up from $5,500 in quarter 1, our strongest quarter since 2023. First we cleared the aged book. It peaked at more than 100 homes in 2025. We slowed acquisitions, got it under 30 by quarter 1, and we're at under 10 today. What remains consists primarily of homes acquired during the past 2 quarters. Second, we're moving faster. Our aged homes have taken around 339 days to sell. Our quarter 2 non-aged homes sold in approximately 82 days, well ahead of our 100 to 120-day target. That velocity is what's driving the stronger margins and putting us on the path toward adjusted EBITDA profitability. Our third objective is driving operating leverage. Over the past several years, we've fundamentally reset our cost structure, removing more than $140 million of annualized operating expense. These weren't cuts tied to the housing market. They were structural changes, and they've left us with a leaner, more efficient business. This chart shows what that means. At today's volume, around 295 transactions a quarter, we're on the steep part of the curve, where fixed costs aren't yet fully absorbed. At a 1,000 transactions, the level our cost structure is built for, cost per transaction drops sharply because that cost base doesn't grow in step with volume. Every transaction beyond the point should flow more directly to earnings. Those are the 3 objectives that guide how we run this business: disciplined transaction growth, expanding contribution margin, and operating leverage. Today, they're the framework behind every decision we make, every dollar we allocate, and every result we measure ourselves against. I'd encourage you to spend a few minutes with our full operating plan on our Investor Relations website. It goes deeper into each of these 3 objectives, the data behind them, and how they connect to our path to profitability. Peter will now take you through our financial results and guidance in detail.
Thank you, Brian. For the past year, we've been telling you the model is getting healthier, better margins, tighter costs and a cleaner portfolio. This quarter, you can see it in the numbers themselves. The model is straightforward. Higher transaction volume multiplied by stronger contribution profit per transaction on a largely fixed cost base drives adjusted EBITDA. Let's start with what we produced. Revenue was approximately $78 million on 295 real estate transactions. But the number I point you to this quarter isn't the top line, it's what each transaction earned. Gross profit was $7.1 million, up from $5.6 million in the first quarter and that gain came on slightly lower revenue. Gross margin improved to 9.2% up from 6.9% last quarter, our best since third quarter of 2023. As Brian stated, contribution profit after interest reached $13,500 per real estate transaction, up 36% year-over-year and 145% quarter-over-quarter. Earning more gross profit on less revenue is exactly what you'd expect when the improvement comes from unit economics and mix rather than volume. Underneath the top line, our revenue base is diversifying. Brokerage Services and Cash Offer Marketplace drove much of the higher margin mix I just mentioned, and Renovate contributed $4.8 million of revenue this quarter. Together, these fee-based offerings deepen both our margins and our reach without adding balance sheet risk. On the cost side, quarterly operating expenses, excluding property costs, were $13.3 million, down from $17 million a year ago, and down from a high of over $50 million per quarter in 2022. We've held that cost base largely fixed by design. That will drive incremental volume to convert into profit rather than overhead as we scale. Adjusted EBITDA loss for the second quarter was $6.2 million, an improvement from a $6.7 million loss in the first quarter. Another quarter of sequential improvement towards positive adjusted EBITDA before the year-end. We ended the quarter with $33.1 million in unrestricted cash, up 46% year-over-year and total liquidity of more than $55 million, including the fair market value of our inventory. Cash Offer and Brokerage Services are leading the acceleration, while Cash Offer Marketplace has moved more slowly as some institutional buyers pull back. Our 2026 framework doesn't require incremental capital. Our liquidity, facilities and growing fee-based revenue support the plan as it stands. If Cash Offer demand runs ahead of plan, we may bring in additional working capital to meet it. We have a clear path forward either way, and we'll keep looking for opportunities that improve our flexibility or lower our cost of capital, which has already come down significantly over the past 2 years. Now to the outlook. For the third quarter, we expect 350 to 400 real estate transactions across Cash Offer, Cash Offer Marketplace, and Brokerage Services. Total revenue of $90 million to $100 million and a narrower adjusted EBITDA loss compared to Q2, continuing our sequential progress towards positive adjusted EBITDA. Our full year objective is unchanged. Exit 2026 at a run rate of roughly 1,000 transactions a quarter and reach positive adjusted EBITDA before the year-end. It's worth reiterating what's compounding underneath those numbers. The signings that accelerated through the second quarter become acquisitions in the third quarter and closings in the fourth. And they'll carry the stronger unit economics of a cleaner portfolio. So as volume grows, the effect compounds. More transactions, each 1 worth more than it was a few quarters ago, landing on a cost base we've held largely fixed. Higher volume, higher margin per transaction, and disciplined costs are 3 forces building on each other. To close, margins are at multi-year highs, the cost base is disciplined, and leading indicators are moving in the right direction. The pieces are in place. Now it is about execution quarter after quarter. With that, we're ready to take your questions.
Questions and answers
Your first question comes from the line of Ryan Tomasello with KBW.
Brian, congrats on the nice progress in the quarter. Regarding the 1,000 transaction target by year-end, understand the positive forward indicators here that you're pointing to that give you confidence in that target, but can you just help us understand what are the main drivers of the meaningful step-up from 3Q to 4Q? And is that target of 1,000 transactions dependent on any concentrated volume from specific institutional partners or any other partnerships that might need to come online to hit that level?
Hey, Ryan, it's Peter. I'll take the last piece first so I don't forget, but it is not driven by institutional partners. Among the three products, the two that are growing the most significantly are Cash Offer, which is one, and our Brokerage Services, which is also growing fairly rapidly. You can begin to see some of that in the trending schedules on the IR site. I'd point back to what Brian identified in his prepared remarks: if you add up the three months in the quarter, there's about 550 signs just for product number one, the Cash Offer. Those signs, with a 100 to 110-day time to cash, convert into a similar number of dispositions roughly 100 or 110 days later. So that's one really important driver, and the signs are up very significantly again. And I would again point to Brokerage Services, which is also growing rapidly. Both of those together, without any dependency on partners, will get us to the exit rate of 1,000 transactions.
One thing I'll add, Ryan, you and I have talked about this in the past. Our demand has stayed very, very strong. We still get thousands of sellers who are very engaged and come to us every month to sell their home. With less marketing spend, we're seeing more and more demand for our products, which gives us a lot of leverage on pricing. Right now, as we look at some of the areas we call velocity areas that we're buying, these are markets where when we buy a home it will turn—we can buy, renovate, and sell it within 100 days. We've spent countless hours and analyzed a lot of data to figure out where those markets are, and we've made a lot of progress, but our demand is still there. Demand has always been there; it's just dependent on what we want to pay for homes. We've been disciplined in the past when there's uncertainty or when homes are moving too slowly in certain markets. In the areas we're focused on now, we're getting smarter with our marketing spend and where those dollars are used so they drive customers and give us a better chance of buying the homes we want. We then give sellers a stronger offer, and whether or not they accept it, many use our other products like our listing services. That's where the growth is coming from. We've spent a lot of time playing defense; now we're focused on playing offense and buying homes, and we definitely have the demand to do that.
That's all very helpful. And then on...
Your next question comes from the line of Dae Lee with JPMorgan.
I have 2. First one, maybe for Brian. When you look at your June contract signing, I mean it is a very strong inflection relative to the prior month. Just wondering, I understand your business is running on all 4 cylinders and having great momentum. But was there anything else like product-wise or region-wise or from an underlying industrial or industry dynamic that drove that strong inflection? And do you have any update to share on how your July month might be trending?
Sure. We continue to see strength across the board. I wouldn't call it an inflection; as I mentioned, for the last several months we've been working on products like SCOUT and HENRY. Some are more advanced than others in helping us get smarter about where and how we're buying homes. In this environment we are hyper-focused on active inventory. In areas that are typically interior neighborhoods, you'll see our price points tick up a bit because we're buying more homes in interior, high-velocity areas with strong school scores. We're also finding in some of those areas we don't have to put as much renovation into certain homes. Not all, obviously—it's market specific—but because of affordability, the usual playbook when supply increases is to do more renovations so your home sells before the others. It's a little different there: you have velocity areas and desirable places people want to live. Today we're specifically hyper-focused on marketing dollars and marketing to areas where we want to buy homes we believe can move quickly. One number I want to highlight is we've gotten rid of a lot of our aged inventory, which was weighing down the entire portfolio as we navigated changing interest rates and this environment. We're down to, I believe, less than 10 of those homes right now, so that burden is off our shoulders as we rebuild the portfolio. Some of our newer inventory is performing in 85 to 90 days on the market, so we're moving through newer homes very well and the velocity strategy is working. A lot of it is discipline and analytics, but also making sure we're buying homes we believe can sell fairly quickly.
Yes, I just want to add some context on July. Our July signings were higher than in June, so the trend continued to improve. We expect that to remain the same in August and September.
Got it. That's great to hear. And then follow-up question to you, Peter. When you look at contribution profit after interest per transaction, it's good to see those reaching multi-year highs. Like how would you describe the performance of that metric relative to your expectations and where do you expect that to trend going into the back half?
Yes, it will continue to go up based on two drivers. Right now, as Brian just highlighted, we have a very new and healthy portfolio of inventory and our expected ROIs across the rest of the year are quite high. The contribution margin after profit and the gross margin were a little bit temporarily depressed over the last couple of quarters as we sold some aged inventory, so that's one driver. The second driver, which is equally important, is our mix. Currently about one-third of volume is fee-based services—Brokerage Services or our Marketplace where we sell to other buyers—and about two-thirds are Cash Offer. The margin dynamic on fee-based services is significantly higher, so shifting to a greater percentage of those will push margin up even further.
Dae, one thing about the question you asked me, and you can follow up with Peter: I want to highlight that one change I think we're seeing is that sellers' expectations have shifted. If Offerpad is doing its job, we should be six to nine months ahead of the market and ahead of what sellers believe the market is. Over the last couple of years we saw sellers continue to assume we were in a post-COVID housing market, which wasn't the case. By staying disciplined and making some offers with lower conversion relative to true market values, we managed risk. I think sellers' expectations are changing as they see more inventory and months' supply increasing. Being a buyer in a buyer's market is a good position, and there's an opportunity there that we are seeing right now.
Your next question comes from the line of Ryan Tomasello with KBW.
Just in the operating framework here in the deck, you give an example of the transaction mix moving towards, I think, two-thirds capital-light transactions from the Marketplace and Brokerage Services versus the one-third today. I realize it's illustrative, but is that generally how you're thinking about the evolution of the mix from here? And then a separate question on conversion, I guess, maybe dovetailing on what Dae was asking, but what exactly in your mind has been the primary driver of the conversion improvement? Has it simply been feeling more comfortable leaning into pricing and expanding, I'm sorry, narrowing your margins, or is there something else that you feel has been a primary driver of the conversion improvement?
No, we're staying pretty disciplined with our margins as well. I think it's locations where we have a high confidence score in our propensity models, and that's very important. The high likelihood that we can buy, renovate, and sell a home and the percentage chance we can do that within 60 days on the market matters. We're doing a little less renovation in some of those high-velocity areas, so we're getting the homes on the market quicker because we're not doing as much renovation. There are countless internal process changes that we have been making. As you know, I brought in a new management team and we've been focused on different things. We've been really hyper-focused on conversion across the board, from the marketing dollars we spend and where we're spending them to the customer journey and the inspection process. I wouldn't point to one major thing and say that's why this is changing; it's all of those improvements together as we get more efficient every day. We want to get better every day. We also have something internally we call the Power Squad, our customer communication and call center team, and that's been extremely helpful. We are continuing to have more conversations because we have two types of customers at Offerpad. Some want a more tech-driven, hands-off experience: tell me the price, inspect it, and close. Others want technology to get them about 80 percent of the way there but need more hand-holding, answers, or discussion of other products. We invested in the Power Squad a few months back and that's been very helpful. We've always been strong at customer interaction and experience, and we've taken it to a new level with seven-day-a-week customer support. That is definitely helping. Overall, it's a lot of things we've put in place over the last year or two, and as we start to see this pay off, probably the single biggest lever is our marketing spend — where and how we're spending those marketing dollars — coupled with operations.
Yes, if I could jump in, I'd highlight marketing. It's closely tied to operations and everything Brian discussed, and one of the focus areas of our new Chief Operating Officer has been marketing attribution, which is also a major driver. We're just beginning to see our top of funnel become stronger and healthier in addition to all the operational changes.
We highlighted in the prepared remarks that at our peak we were doing more than 3,500 transactions a quarter, and that was with just one product. What's exciting from a conversion perspective is that customers are making huge strides. When customers come to us it isn't just a Cash Offer or nothing; it's a Cash Offer, but if the Cash Offer doesn't work or they want to explore the market, they can see what they'd get on the market. We have some compelling listing products that are different and less traditional, which help the seller as well. So we're seeing a real increase in conversion and a better customer experience. At the same time, without putting the company at greater risk, our pricing team focuses on making the best pricing and real estate decisions. You don't want to chase volume by paying more than you should for homes, especially in a market like this. There are still four million transactions; we want to buy our share of those transactions in the right areas—the ones that work for our pricing team. If they don't, we'll shift to one of our other products.
Okay. I didn't hit the second question, the conversion question. So I'll just hit that quickly, Ryan. You're right, that's illustrative. The product mix is super important because it helps us convert at a much higher level. And we are currently at 1/3, as I've mentioned, 1/3 the fee-based services and 2/3 Cash Offer. We expect that to move up to around 50%. And then the chart and the operating plan is down the road. Ultimately, we do expect to flip at some point. We're not ready to talk about or forecast when, but we do expect a flip to a situation where we have higher fee-based services than Cash Offer longer term.
Your next question comes from the line of Gaurav Mehta with Alliance Global Partners.
I wanted to ask you on your renovation business. Can you maybe talk about what's embedded in your '26 guidance for renovation revenues?
Hi, Gaurav. We don't guide separately for Renovate, but what I would say about that business is it's really something. It used to be a cost center, and it's been a big win for us since we started converting it about two years ago into a profit center. The financials for the Renovate business are really about double what we report because the work we do on our internal inventory is not part of the external reporting. The third-party business you see in the segment reporting and the SEC filings is a profitable business at about 20% to 25% margin. You can also see the historical trends on the trending schedules on the IR website.
One thing I'll add about the Renovate business that I'm pretty proud of right now is that, besides obviously doing Offerpad's business, when we started renovation a couple years ago doing it for third parties, we had a lot of large players in there. Many of the single-family rental groups and other large groups were ones we were doing renovation for. With some of the new regulatory changes, some of those large funds have slowed down acquisitions, but at the same time we've been focused on small to midsize renovation players. We're doing renovations for very small fix-and-flippers who maybe do one to five homes a year, for midsize family offices that own a few hundred homes, and for other larger players with different models. Our renovation business continues to grow. We're still doing it for some of the larger brands we've mentioned before, and I'm very happy with what we're seeing. I always remind everyone that the partners we're doing renovation for are normally at their lowest volume. As Renovate picks up, when the market picks up and you see more transaction volume, that will definitely grow with it. I think there is a lot of opportunity in front of Renovate.
Okay, that's helpful. I also wanted to ask you on the operating leverage. With the current platform and the current cost structure, how much can you grow your portfolio and the volumes before you have to increase the cost?
I'll let Peter give you the smarter answer, but I'll share my view. One of the things I'm most excited about is what we've done: we've been through a lot over the last couple of years since the affordability crisis hit. Growing this company now will be much different than the first time—we'll be a lot smarter, especially with the implementation of AI and other internal initiatives. We won't need nearly the same level of resources to buy a similar number of homes as before. We've centralized more functions, our logistics and operations are humming, and from a platform perspective, with the team we have today we could handle a lot more volume on the same team because we're leveraging technology, AI, and other improvements as we get smarter.
On the operating expense, it's largely fixed. There are a few areas, for instance, third-party software platforms where there's some components that cost will grow a little bit with revenue, but 90%, 95% of our OpEx are truly fixed costs. We're very excited about the leverage that we'll see when we get up to 1,000 and beyond.
All right, that's helpful. And then lastly, just to clarify... experienced technical difficulty ... 4Q number to be positive or you expect to exit the year on a run-rate basis to be faster?
You cut out. Do you mind repeating the question?
Yes, I wanted to ask you on the adjusted EBITDA guidance for '26, positive adjusted EBITDA. So are we expecting 4Q number to turn positive or do you expect the number to be positive on a run-rate basis?
Right. It's all run rate: both the 1,000 and the EBITDA are run rate as we exit the year.
There are no further questions at this time. This concludes today's conference call. You may now disconnect.