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 three 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 four-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 seeing in early 2026. Let's start with the market context. The housing market remains constrained, transaction volumes are below historic norms, and affordability continues to limit mobility. Mortgage rates, while moderating, remain elevated relative to the prior cycle. Recovery is gradual and uneven. At the same time, nearly half of the listed homes 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 lack the liquidity or time to renovate before selling. The combination of agent inventory, capital constraints, and limited mobility creates friction, and friction suppresses transactions. But friction also creates opportunity for platforms that can step into that gap. That's where Offerpad is positioned to perform. We purchased homes at an approximately $370,000 median price, which is right in the heart of affordability for first-time and middle-income buyers. In 2025, we invested an average of $25,000 per home in targeted repairs and renovations, and we delivered move-in ready, mortgage-eligible homes in established neighborhoods where supply is often limited. We're not just facilitating transactions; we're solving a fundamental market problem, expanding access to quality, move-in ready housing at price points where demand is strongest and supply remains constrained. Now let me talk about what we did in 2025 and why. Our priority in 2025 was not volume; it was readiness. We made a deliberate choice to widen underwriting spreads, operate with tighter risk hard rails, and slow acquisition velocity rather than chase transactions into an uncertain market. Let me be specific about what we saw and why we made that choice. Throughout 2025, the housing market showed intermittent signs of improvement, but the underlying transaction data remains unstable. Existing home sales were approximately 4.1 million units, essentially flat year-over-year and the lowest annual level since the mid-'90s. At the same time, we observed operational signals across our markets. Days on the market extended in multiple metros. Price dispersion widened even within the same neighborhoods and buyer cost pressures from insurance to taxes to maintenance increasingly impacted transaction velocity and completion rates. When transaction velocity slows and price dispersion increases, pricing accuracy matters more, and margin for error shrinks. That combination triggered our decision to, one, tighten our box guardrails and, two, increase required contribution margins before deploying capital. Last year, every home competed for capital. If we could not underwrite to a durable risk-adjusted return, we simply didn't transact. Importantly, what we're seeing entering 2026 is greater pricing clarity. While overall transaction volumes remain constrained, instability has moderated. Days on the market have stabilized in several of our core markets, price cuts have become more predictable, and inventory growth has normalized relative to demand. We are not calling for a housing surge; what we are seeing is a market that is more measurable, and measurability supports disciplined scaling. Over the past several years, the housing market has reinforced a clear lesson: capital deployed without discipline erodes returns quickly. We chose a different path. In the second half of 2025, we deliberately slowed acquisitions and cleared aged inventory acquired earlier in the year. That decision pressured near-term cash offer margins, but has positioned us to enter 2026 with a cleaner, faster-turning portfolio. As of today, aged inventory that is not under contract has been reduced to fewer than 60 homes, materially lowering aged inventory exposure. Importantly, as of the end of the year, all cohorts across our inventory, with the exception of two homes, are expected to be profitable. As we enter 2026, we are doing so with a streamlined portfolio, limited aged exposure, and embedded mark-to-market strength across the majority of our assets. Importantly, while we moderated capital deployment, demand did not moderate. Top-of-funnel engagement remained consistent. Just in the past few months, from November through January, signed contracts doubled up 102%, reflecting stronger downstream execution. December signed volumes increased 71% month-over-month, and that momentum carried into January. In fact, as of mid-February, we signed approximately 305 contracts, nearly matching the full Q4 total of 314 with half the quarter remaining. These are measurable leading indicators that we did not lose demand. We chose to align capital more selectively against that demand. At the same time, we learned something important about today's seller. Throughout 2025, we analyzed the outcomes of sellers who came to Offerpad, whether they accepted our cash offer, listed their home, refinanced, or ultimately stayed put. What became clear is this: sellers aren't coming to us for a cash offer alone; they're coming to us for a liquidity solution. They're seeking help understanding trade-offs, timelines and outcomes. That shift is precisely why expanding into a broader multi-solution platform was necessary. We responded by building an integrated conversion engine designed to meet sellers where they are and guide them to the best solution, whether that's an Offerpad cash offer, an external buyer cash offer through our cash offer marketplace, or a listing solution. Here's what's materially different today compared to prior years. First, we are no longer a one-solution company seeking to attach ancillary services; we are a platform where each solution is designed to generate meaningful revenue and operate at scale. Second, we have built the operational infrastructure to convert sellers across these pathways. That means dedicated teams, refined handoff processes, and technology that tracks the customer journey across multiple solutions. Third, we are seeing it in our data; conversion rates are improving. Customers who don’t take our cash offer are increasingly staying in our ecosystem by transacting through the marketplace or listing solutions. Now let me walk you through the four solutions that make this possible. First is the cash offer, which remains the foundation of our business. We deliver pricing certainty to sellers, purchase homes, renovate, and sell them to buyers, creating a streamlined, reliable transaction from start to finish. Our underwriting today reflects a sophisticated application of decision science, supported by generative AI and machine learning, that ensures we are buying the right homes in the right markets at the right time. We are leveraging years of operating data and experience, transaction history, and market intelligence to increase pricing precision and reduce risk. In parallel, under the leadership of Dr. Jai Singh, our Chief Pricing and Analytics Officer, we are developing and piloting an integrated portfolio management system that applies AI, machine learning, and advanced decision science to optimize the full life cycle of a home, acquisition, hold strategy, and disposition. This platform is designed to fuse qualitative property-level signals, including images, inspection notes, and customer interactions, with quantitative inputs such as local micro market dynamics, demand indicators, inventory trends, and broader macroeconomic data. By integrating qualitative and quantitative data into a unified decision framework, we are improving precision, increasing consistency, and optimizing capital allocation across our cash offer portfolio. Now let me be clear about how we think about our cash offer returns. We're not optimizing for margin per home; we're optimizing for return on deployed capital. At the property level, we target contribution margins in the mid-single digits, but what matters is capital velocity. We're targeting 90- to 120-day turn times, which means we can turn the same dollar of capital 3 to 4 times per year. When you turn capital that fast at those property-level margins, we're generating annualized returns in the 15% to 20% range on deployed capital. That's the right way to evaluate cash offer economics. The business operates with clear guardrails around pricing, risk, and capital deployment, but our focus is velocity and returns, not just margin per transaction. Second is the cash offer marketplace. This solution extends external buyer demand beyond our balance sheet by routing homes to a diversified network of professional buyers. Our Direct Plus partners include short-term value-add operators, regional professional investors, and structured capital buyers. This diversity is strategic; it deepens buyer demand, increases bid confidence, and enhances execution certainty for sellers. By matching homes with the right capital profile for each property and market, we can deliver more competitive outcomes while maintaining disciplined capital allocation. When you route a home through the marketplace, we retain a 5% average seller-paid fee, approximately $20,000 on a $400,000 home, without deploying principal capital. Last year, marketplace transactions increased approximately 60% year-over-year. To lead continued growth, Rich Ford joined Offerpad as Chief Strategy Officer and President of cash offer marketplace. Rich brings more than two decades of experience building and scaling residential real estate marketplaces. His mandate is to expand and scale this business line. Third is brokerage services. Within brokerage services is HomePro. This is not a traditional listing attachment; it's a premium differentiated listing service designed to deliver a highly curated, value-added experience for sellers who prefer to go to market. When the seller lists through HomePro, Offerpad earns a referral fee which averaged approximately $4,500 per transaction in 2025. Within brokerage services, the agent partnership program allows agents to introduce Offerpad as one of several options available to their sellers, including the cash offer. Agents remain the trusted advisors, helping sellers evaluate alternatives and determine the right path for their situation. In 2025, approximately one-third of cash offer requests originated through agents who included Offerpad as part of the conversation, reinforcing our role as a solutions platform supporting both sellers and real estate professionals. Additionally, we work with homebuilders through our homebuilder program, helping buyers remove sell contingencies on new construction by providing certainty around the sale of their existing home. Together, brokerage services position Offerpad as a first stop for both sellers and agents with the goal of ensuring each customer is directed to the right solution while improving conversion across the platform. Fourth is RENOVATE. RENOVATE plays a dual role. First, it enables the performance of our cash offer model. As stated earlier, many homes require updates before they are list-ready and mortgage eligible. By executing these improvements efficiently and with cost discipline, we return homes to the market in buyer-ready condition that meets financing standards. This expands access to quality, move-in ready housing often at price points aligned with first-time and middle-income buyers and supply-constrained neighborhoods. Second, RENOVATE is a fee-based B2B service, generating margins between 20% and 30%. It supports professional owners, operators, and Direct Plus partners with targeted repairs and full rehabs, enhancing asset readiness and execution while producing revenue without deploying balance sheet capital. Last year, RENOVATE generated $27 million in revenue, up approximately 50% year-over-year. Led by veteran renovation leader, Bobby Triplett, who has overseen more than 40,000 renovations, the business delivers consistent execution and cost control at scale. In 2026, we're focused on expanding business-to-business partners while maintaining margin consistency and repeat volume. Together, these four solutions provide flexibility to support the right path for each seller while operating within our defined capital structure. Importantly, our 2026 framework does not currently assume additional capital. We believe that the capital base we have today positions us well to scale transaction volumes, drive conversion improvements, and return to profitability within that structure. To execute this at scale, we strengthened operating leadership. Chris Carpenter joined as Chief Operating Officer with responsibility to optimize the operating system that drives execution across the platform, end-to-end performance, cross-functional coordination, and scalable systems that deliver consistent outcomes within our guardrails. Scaling with defined risk requires more than oversight; it requires repeatable processes, disciplined feedback loops, and systems designed to produce optimal outcomes at scale. That is where AI-led decision science becomes foundational. Across acquisition, underwriting, renovation, and disposition, we are embedding institutional-grade analytics into the core operating model. Powered by more than a decade of transaction and customer data, our system increasingly integrates both structured and unstructured inputs from market dynamics and inventory trends to property-level signals to support more consistent, analytically-driven decisions. This is not automation for automation's sake; it's about improving return stability. Better precision at entry reduces volatility. Portfolio-level optimization improves capital rotation, more disciplined disposition decisions protect margin, and enhance balance sheet efficiency. At the Board level, we expanded the breadth of expertise to support the continued scaling of our multi-solution real estate operating model with the addition of Tela Gallagher Mathias, who brings more than 25 years of enterprise technology and generative AI leadership across the housing, finance and regulated environments. The work we did in 2025 was about readiness. We didn't chase volume; we built infrastructure. We didn't deploy capital indiscriminately; we engineered optionality. The result is that Offerpad today is a different company than it was 12 months ago. Stepping back, what we're building here is a fundamentally different category leader. Not just an iBuyer and more than a brokerage; a housing transaction platform that meets sellers across multiple pathways, deploys capital selectively, and generates returns through a mix of principal and fee-based businesses. Our near-term objective is approximately 1,000 transactions per quarter as we exit 2026. It gets us to profitability, improves the operating model at scale. So let me be clear, 1,000 transactions per quarter is not the finish line. It's just the beginning.
Speaker 2
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 one-time 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 reflect normal seasonality and a measured start for the year. For Q1, we are guiding to 250 to 300 real estate transactions across cash offer, cash offer marketplace, and brokerage listings with revenue of $70 million to $95 million in sequential improvement in adjusted EBITDA. Importantly, we believe current transaction volume represents a trough for the business. The low volume experienced over 2025 is expected to be temporary and reflects our strategic expansion into a broader set of solutions. By offering more paths for sellers, we increase the likelihood of engagement and selection which we expect to drive aggregate transaction growth, improved overall conversion, and a reduction in customer acquisition costs over time. We've already begun to see increased activity early in the year with transaction pipeline rising meaningfully in the first several weeks of the quarter. Given the natural timing of the acquisition to sales cycle, that pipeline momentum is expected to translate into higher closed transaction volumes over subsequent quarters, supporting growth in volume as we move through the year. In 2026, our expectation is to return to approximately 1,000 home transactions per quarter across cash offer, cash offer marketplace, and brokerage services. We expect to reach this goal as we exit 2026. Separately, RENOVATE remains an important revenue engine incremental to the rest of the business. RENOVATE delivered $27.1 million in revenue in 2025. While these projects are service-based B2B transactions and not included in the 1,000 transaction per quarter target, they contribute meaningfully to margin and overall profitability. At these levels of activity and with the cost structure and product mix in place today, we believe the business is positioned to support a return to profitability. Based on our current outlook, we continue to expect to achieve positive adjusted EBITDA within the year. We entered 2026 with a stronger balance sheet, a structurally lower cost base, healthy inventory levels, and a broader set of monetization pathways than at any point in recent years. That foundation supports more consistent performance as we scale responsibly across a diversified platform. Importantly, our 2026 operating framework currently does not require incremental capital to execute. We believe our current liquidity position, asset-backed facilities, and operating structure fully support our plan to scale within defined guardrails. We remain open to potential capital opportunities if they enhance flexibility, lower our cost of capital, or accelerate growth initiatives. With that, we are now ready to take your questions.
