Opendoor lays off 300 workers after 3Q loss

Opendoor Technologies is laying off hundreds of workers after reporting a large third quarter loss.

The iBuyer last week said it would cut its workforce by 17%, or 300 employees, for $50 million in annualized savings. The San Francisco-based company said it would incur around $17 million in restructuring and related expenses in the fourth quarter. 

It's the firm's third major round of layoffs in as many years, with cuts in 2022 and 2023 including over 1,000 employees. 

"In addition to reducing our costs, we are flattening our (organizational) structure to allow us to move faster and more efficiently," said Opendoor CEO Carrie Wheeler in an earnings call last week. "This was a difficult decision and not taken lightly but it is the right choice for our business."

In August, the company also separated from its Mainstay business, a single-family rental technology platform. Opendoor will remain its largest shareholder but retain less than 50% ownership on a diluted basis. Wheeler said last week that separation will give the company another $35 million in annual cost savings. 

The cash-offer product giant recorded a $78 million net loss in the third quarter, an improvement over $92 million and $106 million losses in the quarter and year-ago period, respectively. Amid a prolonged housing market slump, Opendoor in May raised its spreads to underwrite homes at "healthy" margins. That however has impacted its acquisition volumes. 

Over the summer, Opendoor acquired 3,504 homes, down 27% from the prior quarter. The company said the drop was due to its elevated spreads and a pullback in marketing spend.

It sold 3,615 homes in the recent quarter, a 17% quarterly increase and 35% rise from a year ago. The company counts 6,288 homes in its inventory, 23% of which have been on the market for at least 120 days. 

Changes by the National Association of Realtors have also impacted Opendoor's business, albeit slightly. The iBuyer said it's transitioned from paying buyer-broker commissions to providing buyers with concessions, from which they can use to pay their buyer agent.

Opendoor's contribution margins, or the money generated for each unit sold after variable costs, fell to 3.8% in the third quarter. That's a sequential and annual decline, and a lower $14,000 profit per home sold.

Wheeler said the company still delivered acquisition volumes, revenue, contribution profits and adjusted EBIDTA ahead of its guidance. Opendoor shrank its adjusted net loss by $5 million annually to $70 million, although it's far greater than the $31 million loss in the second quarter. 

The company also touts $1.2 billion in total capital and $7 billion in borrowing capacity. Its stock has remained steady, opening Friday after the earnings results at $1.91 per share, and sitting at $1.82 per share as of Monday midday.