Good afternoon. Thank you for attending today's Offerpad First Quarter 2022 Earnings Call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'll now turn the call over to Stefanie Layton, Senior Director of Investor Relations at Offerpad. Stefanie?

Thank you. And good afternoon, everyone. Welcome to Offerpad Solutions First Quarter 2022 Earnings Call. Our Chairman and Chief Executive Officer, Brian Bair, and Chief Financial Officer, Michael 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 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's non-GAAP measures to the comparable GAAP measures are available in the financial tables of the first-quarter earnings release on Offerpad website. I'll now turn the call over to Brian.

Thank you. I'm excited you could all join us today. This is our third earnings call since going public, and we keep building upon our track record of delivering exceptional results. Today, I will share details about our progress in 2022, future plans, and market trends. Mike will cover our first quarter 2022 financial results and second quarter 2022 expectations. I will start with a few highlights before we dive into details. I'm proud to share that Q1 was our best quarter in Offerpad's history. We set a new company record with $41 million of net income in Q1. Our top-line revenue increased by $1.1 billion year-over-year, and we reported positive adjusted EBITDA for the sixth consecutive quarter. Demand continues to grow for our products with a 115% increase in request volume year-over-year. In the first quarter this year, companies faced labor challenges, supply constraints, rising interest rates, and inflation. The housing industry saw mortgage rate increases. And with all of this, we navigated effectively and achieved exceptional results. We continue to prove we can grow at a robust pace profitably. These accomplishments are possible because we built Offerpad to address the toughest pain point in real estate, the transaction. Finding an agent isn't hard; the transaction is. At Offerpad, instead of providing customers with a list of options for different companies, they can use to complete each part of their transaction, agents, renovation companies, mortgage companies, moving companies, we take care of all these things. Providing a list of options has been the norm. Completing the transaction for the customer on their timeline is what we do best. To facilitate the transaction with the most control and certainty, allowing for the best customer experience, we own the assets at the core of the transaction. We own the home. Not only does this provide a seamless service for customers, but also limit Offerpad's exposure to underwriting risk by supporting a highly efficient logistics business. When we can control the majority of the transaction components, we can better control the timing and financial outcome. The power of owning the home also allows us to build a larger suite of high-margin, low-risk services that logically attach and simplify the homeownership experience for the consumer even more. These qualities control the transaction and building out additional services directly support our ability to meet our long-term goals. We have a clear mission, disciplined strategy, vast expertise, and an abundant drive to re-imagine the real estate landscape. We are proud to lead this transformation by offering customers a simpler solution. To drill down to details for the first quarter, in Q1 we made meaningful progress in all three of our focus areas; market penetration, market expansion, and ancillary services. We added 600 new ZIP codes, increasing our service territory by nearly 15%. This includes 75 new ZIP codes in Austin, Texas, expanding that territory by 50%. And all three of our new California markets are up and running. Importantly, with each new market, we complete a post-launch review. Our culture values a continuous improvement mentality that encourages our team to keep learning, innovating, and building upon our existing strengths. We look for ways to enhance our internal processes, reduce risks, and optimize our core business tasks. We then incorporate our learnings into future launches. For example, when we entered California, we added a stock launch two weeks prior to our official opening date as the process improvement identified from prior experience. We employ experts with decades of experience who still push to learn and improve every day. That mentality fuels our ability to succeed. Looking forward, we plan to expand our services to five additional markets this year. We expect our next market launch in Fort Myers, Florida, will be up and running during the second quarter. Our plans for the remainder of the year include expanding to Cincinnati, Ohio, Fort Wayne, Indiana, Fort Collins, Colorado, and Colorado Springs, Colorado. Our growth is also visible in the expansion of our ancillary services. We're now licensed to provide Offerpad home loans in South Carolina and Ohio, bringing the service to a total of nine states. This growth in the service can also be measured by the increase of our loan volume. In the first quarter of 2022, our loan volume increased 29% compared to the fourth quarter of 2021. A key driver supporting our real estate logistics and growth is the innovative proprietary technology we utilize. In fact, technology is captured as one of our three strategic priorities. These priorities include maintaining best-in-class operational execution, growing in a disciplined and responsible manner, and utilizing innovative technology to build upon our foundation of real estate expertise. Ultimately, these priorities help us create the best products to serve the most customers. On our last earnings call, we highlighted our 2022 focus on buyer engagement. As you know, we have a FLEX listing offering available to customers in addition to our Express cash offer service. Through FLEX, we have in-house real estate agents that can lift the customer's home on the open market while allowing the customer to keep our cash offer as a backup. Our FLEX agents also help customers looking to buy a home. In the first quarter of 2022, we improved our home buyer services by adding a new buyer expert role on our team. These agents focus solely on engaging with prospective home buyers. Training was revamped in Offerpad University providing our agents with enhanced knowledge around our growing suite of solutions, and the ever-changing landscape of the real estate industry. We also enhanced the home buying page on our website, adding new search capabilities in tour scheduling. We have seen a significant increase in customers using our FLEX product. Our FLEX team completed 20% more transactions in Q1 over last quarter and more than double the number of transactions year-over-year. This includes a 100% increase in home buyer closings compared to the first quarter of 2021. I believe our ability to meet the customer at the beginning of their real estate journey will help increase our total transaction volume, reduce costs to the company and the customer, and provide a better one-stop experience for customers. I'm excited about our FLEX products' growth and we're just getting started. To further support our focus on providing the best solutions for home buyers, we plan to initiate a soft launch of our buyer boost program in the second quarter of 2022. Through this program, buyers will have the advantage of making an Offerpad cashback offer, increasing their ability to compete in an intense sellers market. Turning now to the broader real estate market trends. We're still seeing significant strengths in our market. We continue to see high demand and low supply. As the real estate market changes, different opportunities will present themselves. We can adapt by leveraging the variety of services we provide and leaning into the advantage of being both the home buyer and seller. Currently, consumers have easy access to liquidity by selling their home quickly in a strong sellers market. As the market adjusts, consumers' ability to access the liquidity in their home on their timeline will become more challenging. Our ability to solve this challenge will offer even more value to our customers. Remember too that buying is less than 2% of our total market, meaning Offerpad can continue to grow even if the broader market is slowing. Offerpad saw an increase in market share from Q3 to Q4 last year following Zillow's exit from iBuying. Additionally, seven markets reached 8% or higher buying penetration in the fourth quarter last year, highlighting the increase in consumer awareness and adoption. Our top of funnel request increased as well. In the first quarter, we hit a record high request volume company-wide. According to similar web analysis of U.S. real estate websites with over 100,000 visitors, Offerpad's website ranked in the top 10 for the largest year-over-year growth in total website visitors from 2020 to 2021. This strength in website traffic mirrors the increase in request volume we saw. Importantly, even with our significant growth, we are proud that the quality of our service remains a strength with a 94% customer satisfaction rating in Q1. I don't think anyone can argue that consumers are unsatisfied with the old way of real estate, with the lack of certainty and control in selling their home. We are solving that every day at Offerpad. We had a fantastic first quarter; belief in our values proved once again to deliver results exceeding expectations. Importantly, the success of our company allows us to serve more customers and communities. To learn about ways Offerpad is engaging with the communities we serve, please visit our new republished ESG page on our Investor Relations website. There are so many great things we are already doing and so much more we aspire to do in the future. On that note, I will turn the call over to Mike.

Thanks, Brian. Today I will cover our first quarter 2022 financial results, discuss the impacts from current market conditions, review some of our risk mitigation strategies, and also provide our outlook for the second quarter. As Brian mentioned, our first quarter this year was the strongest quarter in our company's history, and we again exceeded the high end of our Q1 guidance ranges. Revenue increased by over $1 billion or 384% year-over-year, and also increased 58% sequentially. Our revenue in the first quarter of 2022 at $1.37 billion, exceeded the revenue reported in the first three quarters of last year combined through the powerful combination of higher average sales prices and increases in volume from both organic growth in existing markets and new market expansions. Importantly, our robust top-line growth was not just growth for growth's sake, it was profitable growth. Q1 gross profit increased 294% from the prior year, and we reported positive adjusted EBITDA for the sixth consecutive quarter. Adjusted EBITDA was $50.4 million, the highest in company history. And after reporting positive net income for the full year 2021, we continue that trend as we set a new company record with GAAP net income of $41 million for the quarter. Excluding a $5.7 million credit to mark-to-market the value of our warrant liability, adjusted net income was $35.3 million. Gross profit this quarter was $132.1 million, at a gross margin of 9.6% compared to 8.1% in the fourth quarter of 2021. This represents the seventh consecutive quarter gross profit has increased. The first quarter has historically been a strong sales quarter with later acquisitions reflecting the seasonality of the real estate market. In four out of the last five years, sales have exceeded acquisitions in the first quarter. The outsized revenue growth this quarter was driven by a record 3,602 homes sold. While we expected to show strong volume increases in the first quarter, we exceeded the top end of our guidance range by nearly 15%. This was the result of a couple of factors. First, the previously discussed longer renovation times that we experienced in late 2021 due to supply chain issues began to improve, and by Q1 this extra inventory was ready to list. Second, market conditions for residential home sales were extremely favorable in Q1, recovering from a slowdown at the end of the year, partially due to the Omicron variant. Lastly, we also saw some favorable impact in the quarter from a full forward of sales from the second quarter of 2022 as buyers were looking to lock mortgage rates on their new home ahead of the impending rate increases. On the acquisition side, we acquired over 2,850 homes in the first quarter. Again, Q1 is traditionally the lowest quarter for acquisitions due to seasonality, and we are seeing the normal increase month-over-month within the quarters, with March of this year setting a record for the most homes we have ever bought in a single month. We are expecting our acquisition momentum for March and April to continue in Q2 and to drive sequential revenue increases in Q3 and Q4 of this year. Our results this quarter once again proved our ability to achieve both strong top-line growth and enhanced bottom-line profitability. Our operational execution focus on efficiency were key drivers in continuing to effectively leverage our cost structure as our total operating costs improved to 6.4% of revenue compared to 7.7% in the fourth quarter of 2021, and 11.3% in the fourth quarter of 2020. Our strong revenue growth is allowing us to continue to invest in the business while still reducing our overhead costs as a percentage of revenue. After completing a remarkable year in 2021, we started 2022 on an even stronger footing. As interest rates have increased and are expecting to rise further, we have made the proper adjustments to our applicable input variables in our underwriting and do not anticipate changes in our cost of capital to have a material impact on our business. While increasing mortgage rates will have an impact on the real estate market, we continue to see the limited supply and outsized demand for housing, as the primary drivers for the current market conditions. Housing supply remained at historic lows, with a national supply of housing in March at two months, and the average supply in offer house markets at 0.6 months. We saw this supply-demand imbalance once again support increasing home prices with our average sales price reaching $381,000 in Q1, compared to $357,000 in the fourth quarter last year. The majority of our growth, however, is driven by our increasing market penetration and market expansion. For perspective, in the first quarter, approximately $720 million or two-thirds of the $1.1 billion increase in revenue was driven by the increase in market penetration within our existing markets and new market expansion. The remaining $370 million increase in revenue is attributable to the increase in average sales price. Similar to our model adjustments accounting for increasing interest in mortgage rates, we regularly review and adjust our risk management strategies to account for other anticipated changes in the real estate market conditions. Forward mitigating factors reduce our exposure when market changes occur. These factors include the limited time in which we own a home, a contribution margin after interest that can comfortably allow for decreasing home prices over our average fold-in period, geographic diversification, and product diversification. We have a strong track record of owning our inventory for less than 100 days from purchase to sale. Of that time period, the home is typically under contract to sell for roughly 30 days. Thus, our average exposure to fluctuations in the real estate market is typically limited to a short window of approximately 70 days or less. Even during the most aggressive historical declines from 2008 through 2012, national U.S. home prices declined on average less than 1% per month. This is an important factor to note as we turn over our inventory every three to four months and replace it with newly underwritten homes with updated assumptions and data points reflecting current conditions. We therefore mitigate our overall exposure to the effects of a severe or prolonged downturn. Second, our contribution margin after interest over the past five quarters ranged from 5% to 10%, exceeding the exposure from decreasing home prices. Our model is built to sustain periods of market fluctuations, even in a more normalized market with contribution margins after interest of 3% to 6%. Third, it is unusual for the real estate market and all cities in states to move in tandem. This is why we have methodically expanded our geographic footprint across the U.S. to 24 markets, spanning 16 states and serving over 1,700 cities and towns. While we did experience more consistent movement of markets over the past two years, historically, markets across the country have operated at different points in the real estate cycle. This geographic diversification provides us another source of risk mitigation. Lastly, we have two different foundational offerings with our Express cash offer and our FLEX listing service. The two services each have different strengths but also work particularly well when offered together. For example, a customer can list their home with our FLEX listing service and keep their Express cash backup offer for 60 days. Because these two products appeal to different customers and have advantages in different market conditions, they offer another element of diversification to our business. We can increase or decrease our focus on each offering depending upon demand. A great example of this was the increase in demand we saw for our Express cash offering through COVID as a result of social distancing and increased use of technology during that period. From an operational perspective, our ability to complete the right renovations efficiently and our ability to minimize aged inventory also reduces our inventory holding exposure. Our renovation efficiency improved in the first quarter of 2022 compared to the fourth quarter, reflecting, in part, our ability to effectively navigate around supply chain constraints. The average duration in renovation was 23 days in the first quarter compared to 24 days in Q4. In addition, our inventory owned over 180 days as of March 31st was below 5%, which is significantly lower than our target of less than 10%. Turning to our outlook for the second quarter. Our expectations for a strong start to 2022 materialized, and we anticipate continuing that momentum into the second quarter. Specifically, in Q2, we expect to sell between 2,900 and 3,100 homes, generating revenue of $1.1 billion to $1.5 billion, or nearly a 200% increase over Q2 of 2021 at the midpoint. We also expect to extend our track record to seven consecutive quarters of positive adjusted EBITDA, estimated to be between $27 million and $37 million. In short, we expect to produce another strong quarter of profitable growth. In conclusion, we are executing our strategy and our model is driving. Our model has proven adaptable and a dynamic environment. Our strategy of balancing robust growth with sustainable profitability has proved to be a successful combination, as we once again demonstrated our ability to generate positive net income supporting the long-term health and value proposition of our company. We will continue to execute our ground game paired with our innovative technology and expect to deliver on our commitments to our customers and our shareholders. I will now turn the call over to the Operator to begin the question-and-answer session.

Thank you. If you would like to ask your questions, please press star one on your telephone keypad. If for any reason, you would like to remove that question, please press star two. Again, to ask a question, please press star one. As a reminder, if you're using a speakerphone please remember to pick up your handset before asking your questions. We will pause here briefly as questions are registered. Our first question comes from the line of Mike Ng with Goldman Sachs. Please go ahead.

Hey, good afternoon and thank you very much for the question. Just first on purchases, I was wondering if you could give a little bit more color about how we should think about purchases for Q2. Is that going to be similar to Q1 levels and how are you balancing increasing purchases with being price disciplined? And then on the second question, I was just wondering if you could talk a little bit more about renovations. Is that beginning to contribute to gross margins in the form of home price appreciation? Thank you very much.

Great. Thanks Mike for your question. From the first one, in terms of acquisitions for Q2, as we talked about, Q1 is traditionally a seasonally low quarter for acquisitions. Our expectations for Q2 will show that seasonal ramp up. Our acquisitions are generally strongest in Q2 and Q3, so we would expect that pattern to play out. I don't see anything different on the landscape that would drive variations since our request volumes still continue to be strong and support that view, so I think we're in good shape there. In terms of the renovations, we've made really good progress on that. We spent some time in prior calls last year and the last couple of quarters with some supply chain issues that slowed us down a little bit. That really — that bottleneck unleashed really in the first quarter here, and the team did a fantastic job of getting back on track. I would say we're in a much more normalized position on that front to the point where, yes, it does come back to be a part of the equation for the margins as we go forward. We're still seeing inflation, we're still seeing price increases, labor is tight, so it hasn't gotten easier, and we think that's going to continue for the second half, but we do have the process in pretty good shape as we're going forward.

The one thing I would add on renovation is that renovation is going to become more important. What we've seen over the last couple of years with supply and demand of the product we put on there, we still want to have a really nice Offerpad product that we're proud of that we put out there. But because of the demand, we've been able to — we don't have to put all the bells and whistles in every home that we own. As the market changes and we start seeing more supply, this is where we can really flex our renovation muscle. Competing against more homes for a buyer to buy, having nice renovation in those homes becomes more important. That's something that we are focused on as well.

Great. Thank you very much for the thoughts, Brian, and Mike.

Thank you. Our next question comes from the line of Dae Lee with JPMorgan. Please go ahead.

Thanks for taking the question back to — just looking at your Q1 growth. Those are strong, so curious if there's any particular market that having drilled back growth. I think you talked about prior two years, seeing a more consistent growth across all markets. So I'm wondering if you're seeing any changes to that and if markets are behaving differently going forward, and then looking at your Q2 value feels like there's a change in the top line. Just curious if you can double-click on that a little bit more and explain how much is about pull-forward into Q1. And if there's been any change to your strategy.

Thanks for the question. I'll jump in just real quick on the markets. The one thing that I'm very proud of is our consistency. We've had consistency in most of our markets, if not all of our markets, with a lot of the challenging times we've faced over the last year. But we got a really good playbook when executing new markets and rolling out new markets. There are some things we’re getting them out. Just as we open a new market, more and more people understand our model and what we're doing. It's more of a real estate-as-a-service. We're executing well, just from consumer brand awareness when we get into new markets. The team knows what we're looking for in the teams we put in there, and our ground game in those markets from a renovation director, acquisition director, and general manager just across the board. Knowing what teams drive in those markets has been really important to us. So we've been very consistent in our markets and I wouldn't say that one market is really carrying this. I think we're pretty consistent around all markets.

I totally agree with that. Some of the comments about the geographic diversification as we built out our market footprint. The other piece, the benefits as in there is that there's less concentration in the individual market. Years ago, when we were starting the company, we were much more heavily concentrated in Phoenix, and while that's still our Number 1 market, we don't have really a single market that's 20% or more of the entire business. The concentration in each of these markets is nicely dispersed as well. We've got good strong markets that we've been in for a while. The Charlotte's, the Atlanta's, the Phoenix. Even Tampa, very strong recently as well. And then as the new markets we brought on are coming, they're getting up to speed, we're getting them up and functioning and individually profitable at a faster pace than we ever have. So good results there. Your second question on the velocity, I don't see it really slowing down. The business isn't linear. If you take a look at Q4, it was a little bit slower due to some macro conditions in terms of sales. While it was strong sequentially and year-over-year, it slowed down a little bit because of the supply chain issues.

Thank you.

Thank you. Our next question comes from the line of Andrew Boone with JMP Securities. Please go ahead. Andrew, your line is open.

Apologies. Sorry, I was on mute. Thanks for taking the questions and sorry for the delay there. As we look at the Q2 EBITDA guide, there's a slight decline in margins as we go from Q1 to Q2. Can you just help parse that out? It seems like there are a lot of good things going on in terms of bundling and mortgage being more broadly available. Is that just HPA slowing down, and can you help us think about the impact of that as we get to the back half of the year? So how do we think about HPA in terms of Q3 and Q4? And then secondly, great to hear 115% increase in terms of request volume in the quarter, that's really impressive. Can you just step back and more strategically talk about bringing greater awareness to the platform, to Offerpad overall? Where do you think consumers are in just being aware of iBuying overall as an option? Thanks so much.

I'll let Mike jump into the first one. Yes. The one thing that I'm especially proud of is our brand awareness. The average home seller and buyer are very familiar with our model. You take Phoenix and Atlanta and Tampa and Orlando, the markets we've been in. Our Texas market has been very happy with our brand awareness. I think people really understand what we're going to do. What I'm very excited about. We talked about this in the last earnings call; one of the things in the education that we have to do was having people not looking at us only as an iBuyer where they can come and we will buy their home on their timeframe, but also as a solution center. They’ll start looking at us through other products and whether they want to partner with us in listing their home or having us help find their next home, whether it's on Offerpad or not. We've starting to make some headway on that with our brand. And just as a reminder to everybody where we're going into a market, you're going to see us on television, you're going to see us direct mail, all the digital media channels you would expect. We attack a market from that approach and then obviously we'll get more strategic as we move along. Our brand awareness in markets is good and we start the transition of people looking at us more as a one-stop solution center, it is a lot of work to do there. So we are starting to break that threshold a little bit, which is great too.

On the EBITDA question on the outlook, it's about 50 basis points to the top end of the guidance below where we were this quarter. I really wouldn’t read a whole lot into that. There's nothing structurally that really changes quarter-to-quarter. The business is solid and there weren't really any one-timers that moved that one way or the other. So I think we still expect to continue that. It's also very sensitive. I mean, if you move $5 million on the EBITDA line, you're back up to the same percentage. So there is some sensitivity involved there. Nothing that we're necessarily signaling one way or the other on that HPA as far as that's concerned. We have said now for the past three-plus quarters that these were extremely strong times, and we would expect a pattern to normalize through that time. We've had good success through the fourth quarter in the first part of this year, and we're pleased with our track record and the market conditions underlying that. I do expect that to rein in a little bit in the second half of the year. I can't really put a number specifically to it, but I think directionally, our expectations that we do see HPA being less of a contributory factor in the second half.

Thanks. Apologies for the delay.

Thank you. Our next question comes from the line of Ryan Tomasello with KBW. Please go ahead.

Good evening, everyone. Thanks for taking the question. I think in this space of housing market innovators like Offerpad and peers, it seems like investors are really at this point trying to understand the durability of these business models through a very volatile period of potentially decelerating or declining housing market. I realize you touched on this in your prepared remarks, but I think it would be helpful to give you the opportunity to put a finer point around the checks and balances you have in place to identify and respond to changing market conditions. Maybe even past examples that you could point to in your operating history, if any, that might help explain the business's ability to navigate by favorable market conditions.

Sure. It's a great question. Thanks for the question. I would tell you that Offerpad is built for this. I mean, this is what we have with our real estate DNA. The market conditions are always doing something, and obviously what we're seeing out there right now is highlighted and under the spotlight right now. But down to a normal market, down to a subdivision level, street-by-street level of how we're expecting our risk of every product and every home that we buy, and how we're assessing that risk. Everything we do is about the risk assessment of buying, renovating, and selling the home within 100 days. We assess that risk, and as we build into that risk, obviously, protect ourselves. The best thing about our model is we own that home for a very short period of time. So we have to be right during that period of time. It normally comes down to logistics and execution, and that's really important. But as we underwrite homes, one of the biggest monitors that we look for is active supply. It's just one-on-one supply and demand and there are still fluctuations in housing. You'll assess a home much differently if there are 12 with the same model in the same subdivision than you would if that’s the only home that's there in a one-mile radius. We're watching that closely. We meet on that weekly, with checks and balances and re-study down to there's a two-story house in Charlotte over $500,000 price point, is this something in the market that we're seeing? We'll dive down into data and analytics through technology, through our ground game, which is helpful with market dynamics, with our ears to the ground on what the market conditions are. All of that is the staff working with our acquisition teams, our renovation teams, our disposition teams, and that's where logistics come into play. The one point that I will say is as we look at declining markets, remember, in real estate there’s opportunity on both ends of markets. Right now, you could argue this is the worst time to be an iBuyer because some of them in the open market can sell their home easier than they have been able to in the last 20 years. Acquiring the number of homes really plays into the volume of homes we handle to buy. Once we own it, we can sell it on the other end. During downturns when there’s more supply, we can really flex our capabilities, as homeowners may have more trouble selling their homes. It goes back to a normalized selling period. Using Offerpad will become that much more valuable. These are all things that we've been through and that we're prepared for. Right now, with the market dynamics, we're watching it closely and no one has a crystal ball, but in each market we'll be doing something a little bit differently over time.

Appreciate all that color, Brian. A follow-up on the same topic of general investor concerns that we're hearing regarding your contribution margin targets of 3% to 6%. I think absent the potential impact on mortgage grades regarding the fundamentals and how the market seems like. There are concerns around how Offerpad's financing structure is built to stomach the rate outlook that we're staring at over the next few months with aggressive rate hikes. Maybe you can just discuss what levers you pull to date around mitigating that impact when you could still do. Really, what kind of max level can you stomach before you might need to evaluate changes to your funding sources? As a quick follow-on to that, if I could squeeze one in, how do you feel about the current cash position and overall liquidity position? Thanks.

Sure. Thanks, Ryan. On the contribution margin, we have ranged anywhere, as I said, from 5% to 10% over the last four quarters. We were at a 6.4% contribution margin after interest here. Interest is a component of that, but it's not the primary component. As Brian talked about some of the different levers that we can use in the underwriting, one of the factors that goes into that is our cost of capital. We're certainly cognizant of that. It’s part of the equation that we use to give a good offer in the process. To date, it has not impeded us and it isn't really seen as a gating item. We've got a debt capital structure about 20%, and it's fixed. It's something that we keep an eye on. Obviously, with the news today, the expectation of rate increases through the year, we're incorporating that into every home that we put an offer on. So I don't see that as an issue from a capacity standpoint. We've had great success in utilizing some very effective credit facilities. We've got great lenders that have been very supportive to the company and we've only continued to expand those and add that to the portfolio. I like where we're at from a debt capital structure standpoint. Lastly on the cash position, we ended the quarter in the first quarter at nearly $200 million in cash. We've been cash-flow positive. I'm comfortable with where we're at and our ability to execute against our business plan. As always, we will be opportunistic. We watch the capital markets. There are opportunities to access markets in a reasonable value accretive manner, and we'll certainly do that because this is a capital-intensive business, and we recognize that. We've got very good growth aspirations. All those pieces go together, and we're constantly monitoring that situation, but I'm quite comfortable with where we're at today.

Let me just throw one other point in here. It's really nice having two main products that we have. We have our Express, which is our cash offer, and then we have our FLEX. You never want to do is buy homes when you are uncertain about market conditions. Obviously, we pride ourselves in knowing what those conditions are. But also having those other products. So when there's uncertainty or where we have to build more risk into the cash offers side of it, we can help back in — we can help that customer by putting them into a FLEX product that's a very high-margin low-risk business for us as well. Having those different solutions and products really helps us navigate any uncertainty in the markets. Then, of course, once we get comfortable with market conditions, then opportunities present themselves as I mentioned before. I just wanted to point out that having those two products is really helpful.

Thank you. The last question comes from the line of Ben Sherlund with Cantor. Please go ahead.

Hi, guys. Thanks for taking my question. I'm looking at the guidance for the home price in the quarter and I'm seeing at the midpoint, $375,000. I want to do on the website and look at the inventory on average, home is what's the— for about $409,000. Is there anything to read into that or about your expectations for the rest of the quarter or could this just be a function of the mix of lower-priced homes selling quicker versus the higher-priced ones? Any color there would be appreciated.

Yes, I don't think there's really anything to read into that. We have seen a lot of price appreciation quarter-to-quarter year. There is an expectation that that slows down a little bit. There's some mix that goes into that as well. A fair amount of the more recent new markets that we've opened have been Midwest markets. Those have been lower price point communities that we're operating in to. We do get a little bit of a mix involved with that. A lot of those, since we are new to the markets, we've just had gone through an acquisition cycle and more of those are coming on the market for us too. I think it's really just a matter of; we don't expect the ASP to continue to rise at the same rate that it has. But I think we're in a good position with a $307,000 ASP.

Great. And then maybe a follow-up on the new markets. In an old presentation, I believe it was from Q1 '21, you showed us the spread of the contribution margin after interest on older cohorts or older markets versus newer markets. In a competitive environment like today, do those newer market openings ramp up profitability quicker than they might have in 2020?

They do. That's actually more of a function of the refinement model and how we're going with it. One of the benefits that we've seen organizationally as we've grown is our ability to retain really good regional general managers. We've got a good pipeline in building our structure. So we've been able to take our model and, as we've gone into a new market, learn from things that have not gone right, capitalize on what we know works in each market, and really get better each time we go in there. I would tell you we are seeing the ramp of profitability quicker in newer markets than we did years ago and it's been quite successful.

I agree with that. Again, this all comes down to—and I know there's a lot of noise out there, but this all comes down to execution. This comes down to paying the right price on the front end for the home to renovating it in the timeframe and putting it on the market, and selling it within 100 days. If you can get that execution logistics down, it's a very, very good model and customers and consumers love it. Our execution is getting better and better in the markets that we're in overall. We're getting just more consistent across the board.

Okay. Great. Thanks, guys. Congrats on a great quarter.

Thank you very much.

Thank you. The question-and-answer session has concluded. I will now turn the call over to Brian Bair, Chairman and CEO, for closing remarks.

Thanks, everyone. I'm very proud that revenue this quarter was over $1 billion higher than quarter one last year. The phenomenal growth and execution resulted in another profitable quarter with a record $41 million of net income. I want to give a massive shout-out to our amazing employees. They live by our main core value: Results rule. I would also like to thank each one of our investors for believing in our vision to make real estate better. Thanks a lot, everyone. Enjoy your day.

That concludes the Offerpad First Quarter 2022 Earnings Call. Enjoy the rest of your day. You may now disconnect your lines.