Good afternoon, and welcome to Offerpad's Fourth Quarter and Full Year 2025 earnings conference call. My name is Kara and I will be your conference operator today. [Operator Instructions] And 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 Fourth Quarter 2025 Earnings Call. 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 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 fourth 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 thank you to everyone for joining us today. On the call with me today is our Chief Financial Officer, Peter Knag, along with leaders who are central to how we execute and scale in 2026. Rich Ford, our Chief Strategy Officer and President of Cash Offer Marketplace; and Chris Carpenter, our Chief Operating Officer. Each of these leaders owns a core operating function that directly impacts how we allocate capital, drive conversion and deliver returns. Today's call is about 3 things. First, the disciplined capital allocation decisions we made in 2025, decisions that we believe position us for sustainable, profitable growth. Second, how we evolve from a single product company into a 4 solution real estate platform capable of monetizing transactions across the spectrum of capital intensity. And third, how the operational improvements we made in 2025, stronger pricing segmentation, better conversion infrastructure and deeper marketplace liquidity are translating to momentum we're already seen in early 2026. Let's start with the market context. The housing market remains constrained, transaction volumes are below historic norms, affordability continues to limit mobility. Mortgage rates, while moderating, remain elated relative to the prior cycle. Recovery is gradual and uneven. At the same time, nearly half of the listed homes are hitting the market today are over 40 years old. Many of these homes require significant updates to meet modern buyer expectations and mortgage financing standards. Yet homeowners are often locked into low mortgage rates and lacked the liquidity or time to renovate before selling. The combination of agent inventory, capital constraints and limited mobility creates friction and friction suppressive transactions. But friction also creates opportunity for platforms that can step into that gap. That's where Offerpad is deciding to perform. We purchased homes at approximately $370,000 median price, which is…

Thank you, Brian. As you've heard over the past year and especially in recent months, we've strengthened leadership across our core operating areas, refined our operating model and leaned into a broader product set focused on targeting higher conversion and profit. That clarity is translating into more disciplined capital deployment, tighter cost control and more consistent execution. In Q4, revenue was $114 million with 312 homes sold, bringing full year revenue to $568 million and 1,591 homes sold. Gross margin was 7% for the quarter and 7.4% for the full year generating gross profit of $8 million and $42 million, respectively. While volumes in 2025 were below historical norms, the operating framework and control supporting those transactions are stronger than ever before and we expect this will position us to scale back up to higher volumes driven by our broader product set. Adjusted EBITDA loss for the fourth quarter was $6.9 million. Excluding onetime restructuring and other costs, underlying performance was consistent with the prior quarter. At quarter end, total liquidity was over $55 million, reflecting unrestricted cash plus the estimated fair market value of our inventory and including $27 million of unrestricted cash. As previously announced, we completed an $18 million capital raise early in the first quarter of 2026, further strengthening our liquidity and providing additional flexibility to support increased transaction volumes. Including the $18 million capital raise, our total liquidity was over $70 million. At the same time, the cost structure of the business has fundamentally changed with over $140 million of annualized expenses removed since 2022. Importantly, our cost base can support much higher transaction volumes without proportional overhead growth. That operating leverage is a critical driver of our expected path to profitability in 2026. Turning to the near term. We expect the first quarter to…

[Operator Instructions] Your first question comes from the line of Dae Lee with JPMorgan. .

Great. I have two. So first one for Brian. So with the AI expertise you've added across the board and management, where are you most excited to see the impact of AI in your business? Which P&L line should we expect to show -- to see that show up first? And secondly, to Peter, could you walk us through the bridge from first quarter 2026 transaction volume to the year-end target? And if there's any like step-up or proof points that we should be watching through the year? And if that rise should be steady? Or do you expect more of a back half ramp as you go into 2027?

Peter, do you want to take the first one? I'll take...

Sure.

Yes, sorry, start with the second one.

Sure. So we're ramping. I mean, we've effectively given full year guidance, right, at 1,000 transactions per quarter as we exit. So that means that on a run rate basis as we exit, we'll get up to that level. We've guided towards 250 to 300 real estate transactions and just reclarifying that we're moving now to a focus of 3 product focus across the cash offer, the cash offer marketplace, which is when we're selling homes, underwriting and selling to an investor and three, traditional list product as well. So we are not giving guidance for second quarter and third quarter. But what I'd say today is we expect a fairly -- roughly linear growth trend as we move from in the neighborhood of 100 transactions per month up to just above 300 transactions a month across a broader product set of three products instead of one.

Yes. And then I'll take -- Dave, I'll take the AI. Listen, AI is such a powerful tool. I'm excited in a lot of different areas there. But specifically, the real estate operations and the power of AI, what we're working on there as far as pricing, pricing sensitivity. We have 10 years of data that we can pull from property inspections to likely sellers to it's just phenomenal what -- over the last 10 years of what AI can do with that. And so the data that we have in place but also just as we work through the process of -- from the disposition process of when to sell, how to sell, how to look at those things differently. But there is -- like I said, the real estate is really impactful. But we're also seeing immediately, we're seeing some really good impact in just something very simple is through AI voice scheduling inspections. We schedule hundreds and thousands of inspections throughout the year. We've had a lot of labor either outsourcing it or overseas or having large internal teams. And with the ability of AI voice, we can now schedule inspections to have our call center Q&A, people can call and ask questions about where they are in the process. So -- and the other thing I'll just add about AI is that it's across the company. Even just our individual employees using that in their day-to-day life on that is I think it makes them 60%, 70% more efficient. So there's a lot of opportunity we really excited about there.

Your next question comes from the line of Ryan Tomasello with KBW.

Starting with the real estate transaction targets for the year. Can you give us a sense of what mix you expect for traditional cash offer products to comprised as you kind of march towards that 1,000 target per quarter. And more near term here, what's being baked into the 1Q guide for real estate transactions in terms of that cash offer mix?

Sure. Yes. So we -- Ryan, so we have been, as we've talked about before, it depends on the month and the quarter but somewhere in the neighborhood of 1/3 of the transactions are -- have been across Direct Plus. And 2/3 through cash offer. Now we have three products, not primarily one or two. As we roll out, as we focus really equally across three products. We expect that mix to move up towards eventually to 50-50 range. Again, it will change month-over-month. But that's the effectively where we expect to go.

Yes. So I think -- Ryan, I think you're going to see 2/3, 1/3 as we begin here. But like Peter said, we're focused and the -- our focus really is what's going to provide seller with the best solution, whether that's a cash offer from Offerpad or one of our partners or the listing side. So we're going to work towards 50-50 and figuring out what the best solution for them is. And so as we focus on every day, everyone that comes to Offerpad, we want to provide -- we want to have a solution for them and be able to convert them into one of our solutions. .

I'd just add one more thing, Brian. Just to that, we are in our trending schedules on the IR side, going to begin breaking out volumes -- we already have cash offer and RENOVATE, we're going to have third KPI with volumes for the other 2 products. And then just finally, as you think about the quarters, we're not guiding specifically to the mix for first quarter, but you can look at the percentages. And then I'd add for fourth quarter, we -- in addition to the homes sold number that we disclosed, there were over -- were between 50 and above 50 transactions across the other services.

Okay. I appreciate all that color. And then you guys have obviously done a really nice job executing on the expense efficiency side. I guess as you think through your 2026 operating framework here, how much more wood is there still left to chop on the expense side? And how dependent is the breakeven EBITDA target on continuing to drive down on the OpEx side of the P&L?

Yes, for sure. I mean, first, I'd point out, we've done a lot there. If you just look at -- and so part of expenses is we will continue to march forward and take out additional expenses . If you look at Q4 '25 versus Q4 '24, operating expenses came down from $24 million to $15 million, so $9 million there. Again, we will continue there was an additional risk and some actions in fourth quarter. There's some third-party spend that we can need to look at, one that's a fairly large item that we're hoping to execute across. So there will be more there. I just want to highlight that we've already come a long way. So as we look at the -- taking the operating contribution from a cash flow perspective down to 0. We've done a lot of it already. The biggest piece that's left is to take up the transactions up towards 1,000 transactions per quarter. .

And Ryan, one thing that I'll add to that is with what we're looking at as we build and scale the company again, scale it differently and smarter and obviously, with the power of AI and technology, the ability of what we can do as we continue to grow. The 1,000 transactions is our first short-term goal and then after that, but to scale it through AI and technology is something we're going to be focused on.

[Operator Instructions] Our next question comes from Gaurav Mehta with Alliance Global Partners. .

Yes. I wanted to ask you on your comments around 4 solutions platform. And maybe get some color on how you view revenue allocation from each of those solutions, maybe near term and short -- long term? .

Sure. Yes. So this business is all about conversion. And by -- there's 3 solutions that are solutions for our home sellers. And again, we're really pivoting from mostly focusing on one solution to three. And by doing that, we expect that conversion will climb materially. One of the big focus areas of our Chief Operating Officer, has joined is conversion across our portfolio. We have, in any given month, somewhere between at 10,000 and 20,000 home sellers top of funnel and to get to the 1,000 transaction mark per quarter, we need to increase conversion by just around 1%. So it's not a huge amount when you look at it from that perspective. And then just to round out your question, it's really 3 products that are focused on the home seller and conversion that are that homeowner B2C transaction and our fourth product is really a separate product line, it's related. It's our renovation business where we renovate real estate assets, single-family homes that are owned by other third parties. .

All right. The second question I want to ask, you made big picture, there have been some talks about government restricting institutional investors from purchasing single-family homes. And just wanted to get some color if that impacts your business at all directly or indirectly. .

Yes. So as far as from the Offerpad perspective, we own home short term. So we're aligned with how they're thinking is the home ownership side. That's what our -- that's the mission of our company from day 1. So definitely aligned on that. From an Offerpad perspective, we buy, renovate and sell homes and put a better home on the market within a very short period of time. As far as our cash offer marketplace, there's 2 ways to look at our Direct Plus partners in there. We have long-term investors, which think of the rental funds that we have short terms. And on the short-term side, you'll see everything -- think of more fixed and flip to partners in there that will have a different kind of cash buyers or a cash offer for the seller. So they'll get 80% of the money upfront. And then be able to have some of the -- to share some of the upside. So from the long-term investment side, obviously, we're watching that closely. But what we have focused on in the last year is adding a different array of cash buyers in there. And so have hundreds of different kinds of cash buyers in there. That's so for example, if one segment slows down for any reason, we're going to have another segment that can pick up that volume. And so obviously, we're wanting it closely. But I do like just overall, I think the focus on affordability and the home ownership is, I think it's key for operate, it's something we believe in.

There are no further questions at this time. This concludes today's conference call. You may now disconnect.