Opendoor Earnings Miss Amid Heavy Dilution
Opendoor earnings showed a wider loss, lower revenue, and a large share issuance that raised dilution concerns and pressured near-term trader positioning.
KEY TAKEAWAYS
- Q3 revenue fell 33.6% year over year to $915 million, widening margin pressure.
- Company issued over 180 million shares, raising nearly $200 million and declaring warrant dividend.
- Management pivots to a software and AI model while targeting adjusted net income breakeven by end 2026.
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Opendoor Technologies (OPEN) reported third-quarter 2025 results on Nov. 6, showing a wider-than-expected loss and a revenue decline. The company also disclosed a large share issuance as CEO Kaz Nejatian outlined a strategic pivot toward an AI-driven model.
Q3 Results, Dilution, and Strategic Shift
Opendoor’s third-quarter revenue fell 33.6% year over year to $915 million from $1.38 billion, while its net loss widened to $90 million from $78 million a year earlier. Earnings per share came in at –$0.12, missing consensus by $0.05. Gross margin narrowed to 7.2% from 11.5%, reflecting ongoing margin pressure.
Operational volumes declined sharply. The company sold 2,568 homes, down from 3,615, and purchased 1,169 homes, down from 3,504. Management described the pullback in acquisitions as deliberate inventory management ahead of the slower selling season.
Adjusted operating expenses improved 41% year over year to $53 million, supported by cost reductions and tighter expense discipline. Cash on hand rose 16% to $962 million.
Capital actions intensified dilution concerns. Opendoor issued over 180 million new shares in the quarter, raising nearly $200 million and converting part of its 2030 convertible debt into equity. It also declared a Series K/A/Z warrant dividend, further increasing the share count. These moves heightened scrutiny of the company’s margin compression and execution risks in market and media commentary.
Management is repositioning Opendoor toward a software-and-AI business model. It has launched more than a dozen AI-driven products and shifted workforce policy to increase in-office presence while reducing consultant use to accelerate development and cut costs. CEO Nejatian described the company as a “software and AI company,” emphasizing technology that simplifies home buying, selling, and ownership.
Near-term guidance reflects these challenges. The company expects fourth-quarter revenue to decline about 35% sequentially due to low inventory following slow third-quarter acquisitions. Contribution margin is projected below the third-quarter level before improving as inventory resets.
Management targets breakeven adjusted net income by the end of 2026 on a forward 12-month basis. It plans a roughly 35% increase in home acquisitions in the fourth quarter and aims to purchase about 6,000 homes by year-end 2026. The company also set a contribution-margin goal of 5–7% and expects adjusted operating expenses to run about 3–4% of revenue. These targets assume successful execution of the AI strategy, continued cost discipline, and faster resale pricing and velocity.
No new regulatory actions, approvals, or investigations were disclosed in the quarter. Still, the combination of margin pressure, reduced acquisitions, low inventory, cost restructuring, equity raises, and warrant dilution leaves the turnaround plan unproven and the stock’s outlook volatile and high risk.
