Hello, and welcome to the Offerpad Third Quarter 2021 Conference Call. My name is Brica, and I'll be today's call operator. Following the presentation today, we will have a Q&A session. [Operator Instructions] I'll now turn the call over to Stefanie Layton, Senior Director of Investor Relations at Offerpad. Stephanie, please go ahead.

Thank you, and good afternoon, everyone. Welcome to Offerpad Solutions third quarter 2021 earnings call. Our Chairman and Chief Executive Officer, Brian Bair; and Chief Financial Officer, Mike Burnett are here with me today. 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 relating to the company's business described in our quarterly report on Form 10-Q for the three months ended September 30, 2021 to be filed with the US Securities and Exchange Commission on/or about November 10, 2021 and subsequent filings Offerpad makes with the 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, including adjusted net loss, contribution profit and margin, contribution profit and margin after interest, as well as adjusted EBITDA. These metrics exclude certain items discussed in our earnings release under the heading non-GAAP financial measures. The reconciliations of Offerpad’s non-GAAP measures to the comparable GAAP measures are available in the financial staples of the third quarter 2021 quarterly report on Form 10-Q and earnings release on Offerpad’s website at investor.offerpad.com. I'll now turn the call over to Brian.

Thank you, Stefanie. It's great to be speaking with you all today. I'm excited to share details about the exceptional progress we made during our first quarter as a public company. I will also share more about our strategy going forward, and I will speak to some of the market dynamics we're seeing in the industry. Michael will cover our third quarter financial results and full year 2021 expectations. Our business model strategy and experience set us apart from others in the industry. In Offerpad, we've created a flexible business model designed to adapt in any real estate cycle. Our business model seeks to provide a full service solution centered for homeowners. This customer centric solution center approach extends beyond the buying and selling transaction to provide easy access to other services such as mortgage, title and bundle rewards. It also provides options for individuals to create customizable solutions. Our EXPRESS cash offer and our FLEX listing services are great examples where customers can choose, which solution is best for their needs. The end-to-end solution center approach to address the variety of homeowner needs creates a diversified platform. This in turn can increase our growth, our opportunity for multiple engagements with each customer and expand our margins. Our strategy is to grow our platform by expanding into new markets, increasing our penetration in existing markets and building the ancillary services we currently offer. Our focus is on growing rapidly in a responsible and disciplined manner that balances our goal of increasing market share with achieving long-term sustainable profitability. Our team's deep real estate knowledge and local real estate expertise sets us apart. We combine this expertise with data analytics and technology to better anticipate an account for changing market conditions. This approach has led to our rigorous underwriting and a…

Thanks, Brian. Today, I will cover our third quarter 2021 financial and operating results, provide additional information regarding our unit economics and underwriting process, share details regarding our approach to renovations and also provide an update to our full year 2021 financial guidance. During our exceptionally strong third quarter, we produce record revenue on a record number of homes sold, record gross profit and a record number of acquisitions. We exceeded the high-end of our third quarter revenue guidance by $20 million, as we generated $540 million of revenue and our $6.1 million of adjusted EBITDA exceeded the high-end of our third quarter guidance range by $14.6 million. This marks our fourth consecutive quarter of positive adjusted EBITDA and year-to-date we've generated adjusted EBITDA of $22.2 million. The reported net loss this quarter of $15.3 million includes a $13.2 million non-cash charge to mark-to-market the value of the warrant liability assumed in the business combination with supernova. We will continue to record this non-cash valuation adjustment each quarter that the warrants are outstanding. Excluding those non-cash charge, our adjusted net loss was $2.1 million, an improvement of nearly $1 million compared to the third quarter of 2020. Our strong results for the third quarter were supported by our continued growth in homes acquired and home sold, as well as continued strength in our unit economics, as evidenced by a 48% year-over-year increase in contribution profit after interest per home sold. This quarter we acquired 2,753 homes, a 36% sequential increase from Q2 and a 258% increase over Q3 of 2020, which was negatively impacted by the acquisition slowdown caused by the pandemic conditions. Request volume and demand for our offers is increasing, in part due to the seven new geographic markets we opened this year. In addition to expanding market…

Thank you. The question-and-answer session is now open. [Operator Instructions] The first question on the phone line from Brent Thill of Jefferies. So. Brent, please go ahead.

Thank you. Brian, maybe for you just to talk a little bit about the overall dynamics in your market and in obviously those decision to leave. Can you just walk us through kind of your view -- the overall industry dynamics? And as a follow-up from Mike, really good profitability And maybe if you can kind of walk through the levers there of why you're continuing to see such good upside on the bottom-line?

Yes, hey Brian, I'll jump in first. But, I think up for -- up until about a week ago, I'll want to tell you there was the pendulum change in what we've seen in the iBuying, more and more people starting their journey coming to an iBuyer. And so, I think the news that came out was shocking to a lot of people, but what I keep saying and I've tried to chat this from the rooftops for years is, it comes down to execution and operations and logistics is. This is as much as a logistics business as it is a real estate technology company. And so like any business, the execution is going to be key. Overall from a market side, what we've seen nationally is the last six to eight months was massive home price appreciation, which we've talked about. We're starting to see that normalize in most markets; you're still seeing a lack of supply in most of our markets less than two months supply. So if you price a home right on the market and it's good quality home, it's going to sell, it's going to sell fairly quickly, and so instead of getting 10 offers, you might get one or two offers on that home. So overall the strength of the market is been strong. I think as far as this model, we're seeing more and more customers reach out to us everyday, every month wanting this and I don't think anyone can argue this is the best option for the consumer you that control certainty. So very bullish on the industry and where we're going.

Yeah, this is Mike. In terms of the levers on profitability, I would say that we've done a nice job of creating and managing a solid portfolio of inventory as we’ve acquired over the last three months. We spent a lot of time on the underwrite side. We knew going into the latter part of this year that we were going to see some cooling conditions. At least, we suspected that and underwrote accordingly. And we also spent a lot of time managing what we call our retail properties, and keeping an eye on the aged inventory and doing a good job of keeping that in line as well. In terms of the OpEx side of the business, the one thing that I'm pleased with as well as we've been able to contain costs from an operating expense standpoint very well as we've gone through the quarter. So the top-line revenue increases that we're gathering, we're showing better metrics as percent of revenue on each of those operating lines except for sales and marketing where we continue to invest and definitely on a year-over-year basis, we’ve increased the investment in marketing and I think it's really paid off for us.

Great. Thank you.

Thank you, Brent. We now have the next question on the line from Andrew Boone from JMP Securities. So Andrew, please go ahead when you're ready.

Hi, guys, thanks for taking my questions. Two please. The first, I'd love to hear any response that you're seeing from consumers as I think you guys move to a 5% feed this summer. And so just what are you guys seeing on consumer adoption? And then just number two, if you think about the labor market, and just the challenge that's been in terms of hiring and everything else, can you just talk about your plans in terms of combating that and whether you're seeing any headwinds there? Thanks so much.

Yeah. And I'll take the second one first. Yeah, as far as what we're seeing in the markets, supply, labor, those kind of things. This is -- it's been very, very helpful that we internalize a lot of those operations. Our renovation teams from a renovation director, project managers, foreman, they are employees of Offerpads, so that that's very much, very helpful and a lot of the markets people down swinging the hammers are employees of Offerpads, so that that's been helpful. And we're also getting smart with what we're buying. For example, there's a window shortage in a certain market, they're having trouble with Windows. We're getting smart and through data and technology and get ourselves smart. Again, let's not buy that, if we'd like it's going to be a longer hold time, or it's going to slow down our process, because obviously what we're highly focused on is buying, renovating and selling in 100 days. We want to make sure that we're execute on every one of those metrics. So that's that. On the fee, we have seen good adaption to the fee. And obviously, we're testing, testing different things variation to that fee a lot. It's right now it's a – it's still little too early to tell because we're trying to balance that with home price appreciation and the low risk of offers that we had during the – during the home price appreciation, tailwind that we got compared to what the fees are now. So I think overall adoptions been good. Like I said, we're seeing more and more people that are coming and we're seeing a lot of, a lot of sign contracts and people executing as well, which is great.

Great. Thank you, guys.

Thank you, Andrew. We now have a question from Ben Sherlund of Cantor Fitzgerald. Sir, please go ahead, I’ve opened your line.

Hey, guys. This is Killian Clarke [ph] from Cantor on Ben Sherlund. Congrats on the great return. You're impressed that at the speed of turnaround that 99% of homes around less than 180 days. Can you speak to from your perspective, what's really driving the speed in that turnaround? And as a follow-up, how do you think that timeline might change as the housing market stabilizes? Thank you.

Yeah. So that –that something that we've had our eye on since the very beginning that Offerpad, I mean, that's really the secret sauce of this entire model is making sure that – I've said this 1,000 times, but the easiest thing you do is buy homes, if you buy and you overpay, you'll own that home for a long time, and it's not going to be a profitable home for you. So it really comes out we have dedicated through our data and analytics, but also with our ground game with our teams. And then we have directors of asset management and every one of our markets, that they're highly focused on making sure that those markets are hitting – that those houses are hitting our turn times that we want and we're anticipating. And so we – also the way we underwrite homes with different segmentations wanting to write is some that we expect to hold a little longer and some a little bit shorter. So really the – the core of everything we do is based upon what we call TTC, time to cash from the minute we own that home, to the minute we sell that home, making sure that home performs and we're executing in the right time. And so, the challenges that we've seen recently with – with some of the supply issues out there, even with that, I give a lot of credit to our team. I think on average for portfolio standpoint, we're only up five days from – from where we have been, and now each market, well, I mean, that's across our entire portfolio. Each market will have its own – maybe challenges of certain supplies, or of the renovation times. But in general, we're still hitting that 100 days with a very, very low supply of homes over 180 days and again, that's what we were focused on. We meet on that weekly, as we know that, that's where the success and the core of this business is going to come from.

Okay. Great. That's really helpful. Thanks for taking our questions.

Sure. Awesome, well, thank you everyone for joining the call today. It's great sharing with the positive results with everyone. And we look forward to seeing you all soon. Thank you very much.

Thank you. This does conclude today’s call. Thank you all, again for joining. You may now disconnect your lines.