Opendoor Technologies Inc · NASDAQ:OPEN
Opendoor Technologies — SPAC Merger (September 2020)
49 slides from Opendoor Technologies's SPAC merger presentation, September 2020
Slide 1: Opendoor
Opendoor
Slide 2: Disclaimer
Disclaimer Confidentiality and Disclosures This presentation has been prepared for use by Social Capital Hedosophia Holdings Corp. II (“Social Capital”) and Opendoor Labs Inc. (“Opendoor”) in connection with their proposed business combination. This presentation is for information purposes only and
Slide 3: My journey started at 2004 Mitchell Street
“Incredible upgrade opportunity” My journey started at 2004 Mitchell Street
Slide 4: Seasoned, deep and experienced team
Seasoned, deep and experienced team Eric Wu Carrie Wheeler Julie Todaro Ian Wong Tom Willerer Founder, CEO CFO President, Homes & Services Founder, CTO Chief Product Officer Head of Product, Trulia Partner, TPG VP Operations, Amazon Head of Data Science, Square VP Product, Netflix Product Engineerin
Slide 5: Unlock homeownership for millions of Americans
Unlock homeownership for millions of Americans Buy, sell & move at the tap of a button 5
Slide 6: Charlisa's next chapter: An Opendoor story
Charlisa’s next chapter An Opendoor story Read and watch her story www.opendoor.com/w/stories/charlisa-boyd 6
Slide 7: We are the innovator and market leader
We are the innovator and market leader Key metrics Revenue ($B) Homes sold (2019) $4.7 18,799 21 Markets 4.4x 80K larger than the next closest competitor Homeowners served $1.8 $10B $0.7 Homes sold 2017 2018 2019 #2 Competitor #3 Competitor Note: Markets, Homeowners served and Homes sold metrics sin
Slide 8: Investment highlights
Investment highlights Massive, fragmented market U.S. real estate industry is ripe for disruption Superior consumer experience Digital experience transforming a highly inefficient process Market leader with low cost transaction platform Highly efficient platform to buy and sell real estate Rapid gro
Slide 9: The largest, undisrupted market in the U.S.
The largest, undisrupted market in the U.S. Massive market Fragmented incumbents 68% of Americans are homeowners 2 million realtors 5 million homes sold annually 28% of realtors have another occupation 31% 15-50 annual $1.6T/yr 66% transactions $1.0T/yr 0-15 annual $841B/yr transactions 4% 50+ annua
Slide 10: Process is complex, uncertain, time-consuming and offline
Process is complex, uncertain, time-consuming and offline Today, 89% of buyers and sellers use an agent, and this is their experience Costing as much as 12%+ of the transaction Item Cost Decides to move Find an agent Interview and find Repair and prep Repair, renovate and prep Broker commission $13,
Slide 11: Receive an offer and sell on your timeline
Receive an offer and sell on your timeline Online cash offer Flexible close date Digital closing 11
Slide 12: New experience to search, visit and buy thousands of homes
New experience to search, visit and buy thousands of homes Self-tour homes Financing in-app Digital offer process 12
Slide 13: Offering greater simplicity, certainty, speed and safety
Offering greater simplicity, certainty, speed and safety Traditional sale Opendoor Complex Simple Average of 6 counter Integrated digital experience parties to manage Uncertain Certain ~20% of transactions fall through Guaranteed close on your timeline Inflexible timelines to closing No unforeseen co
Slide 14: Home sellers are choosing Opendoor
Home sellers are choosing Opendoor High intent customers High conversion Real seller conversion vs. fees 34% 46% 44% 40% 38% 80% 35% And at 6% fees Browsing for a 30% 31% quote 2019 real seller conversion conversion is 44%+ 25% 26% 23% 24% 90% Even at 10% fees conversion is 23% 20% Real sellers Sell
Slide 15: And are delighted by our experience
And are delighted by our experience Opendoor Category Leaders 70 Net Promoter Score Traditional Mortgage Title Cable Rental Traditional Listing Car Dealerships Note: NPS metrics based on Company data, public filings and 3rd-party research 15
Slide 16: We've rebuilt the entire real estate service stack
We’ve rebuilt the entire real estate service stack Pricing Home Ops Fulfillment Capital Markets Customer Experience Real-time models to Inspections, data Automated Efficient capital Centralized sales and support predict the current and collection, repairs closing, title and markets systems to teams
Slide 17: Pricing advantage: data, accuracy and automation
Pricing advantage: data, accuracy and automation Feature level home data Meaningful improvements in accuracy 2Q18 acquisition cohort Predicted vs. actual resale price Bedrooms 2Q19 acquisition cohort 145 +$15.0K from 2 to 3 Roofing (absolute delta) Countertops +$9.0K if < 5 yrs Unique features per +
Slide 18: Cost advantage: applying technology to reduce costs
Cost advantage: applying technology to reduce costs Centralization & automation Economies of scale 50% Transactions / person Reduction of spend/home over last 2 years 40%+ Bulk pricing discounts on home materials Traditional agent We are 12x more efficient Opendoor 10K+ Opendoor Scout Subcontractors
Slide 19: Growth
Growth 19
Slide 20: Our first markets reached $2.7B run-rate revenue in 1Q20
Our first 6 markets reached $2.7B run-rate revenue in 1Q20 6 Markets 3.2% $206M run-rate revenue $388M run-rate revenue 1.9% market share 5.5% market share 📍 Las Vegas 📍 Raleigh-Durham Market share $1.0B run-rate revenue $664M run-rate revenue 4.6% market share 4.2% market share $2.7B Phoenix 📍…
Slide 21: Today, we are in 21 markets and just scratching the surface
Today, we are in 21 markets and just scratching the surface 21 📍 Portland Minneapolis-St.Paul 📍 Markets 2.0% Sacramento 📍 📍 Salt Lake City 📍 Denver 📍 Las Vegas 📍 Raleigh-Durham Market share Los Angeles 📍 📍 Riverside Nashville 📍 📍 Charlotte $5.0B Phoenix 📍 Tucson 📍 Atlanta 📍…
Slide 22: Track record of new market launches
Track record of new market launches Infrastructure in place to launch efficiently Market share by market maturity 1.5% Centralized customer operations 1.3% Phoenix Centralized teams to service sellers and buyers end-to-end Next 5 Next 15 1.0% Market share Scalable pricing systems Mature market data
Slide 23: Our current playbook takes us to $50B in revenue
Our current playbook takes us to $50B in revenue 📍 Seattle 📍 Spokane 4% Tacoma 📍 📍 Kennewick 📍 Portland 📍 Salem Minneapolis- 📍 Boston 📍 Boise St.Paul 📍 Market share 📍 Providence Hudson Valley Milwaukee 📍 Grand Buffalo 📍 📍 📍 Long Island Rapids 📍 📍 Detroit 📍 Newark Redding 📍 📍…
Slide 24: With a U.S. market potential of $1.3T
With a U.S. market potential of $1.3T 📍 Seattle 5M 📍 Spokane Tacoma 📍 📍 Kennewick 📍 Portland 📍 Salem Minneapolis- 📍 Boston 📍 Boise St.Paul 📍 Annual homes sold Milwaukee 📍 Grand Hudson Valley Buffalo 📍 📍 Providence 📍 📍 Long Island Rapids 📍 📍 Detroit 📍 Newark Redding 📍 📍 Cleveland…
Slide 25: And this is just the beginning
And this is just the beginning 25
Slide 26: Early stages of the digital transformation in real estate
Early stages of the digital transformation in real estate Category Retail Transportation Used auto sales Real estate % Online 14% 4% 1% < 1% Market leader Market capitalization ~$1.5T ~$50B ~$30B Note: Online penetration metrics are based on public filings and third party research Market capitalizat
Slide 27: COVID-19 has accelerated shifts in consumer behavior
COVID-19 has accelerated shifts in consumer behavior Customers are prioritizing Customers are demanding digital Opendoor safety first experiences provides a digital, contact-less way to buy and sell a De-urbanization Demand for home is occurring as housing in our buyers avoid markets is dense areas
Slide 28: Consumers demand digital experiences for services around the home
Consumers demand digital experiences for the services that revolve around the home Title and Escrow Financing Insurance Warranty Upgrades Home maintenance Moving services 28
Slide 29: As the market leader, we are just getting started
As the market leader, we are just getting started Today Tomorrow We’ve transformed how We will transform how people sell a home people move Sold in a few taps Digital one-stop shop to move 29
Slide 30: Financial overview
Financial overview 30
Slide 31: We have proven, positive unit economics
We have proven, positive unit economics 1Q20 Margin Performance (2.6%) (0.7%) $11K/home 7.3% $8K/home $8K/home 4.0% $5K/home 3.0% 3.1% 1.9% Adjusted Gross Margin Selling Costs Holding Costs Contribution Margin Contribution Margin After Interest Contribution Margin Contribution Margin After Interest
Slide 32: The vast majority of our markets are CM positive
The vast majority of our markets are CM positive Contribution Margin per home by market (1Q20) $11K / home $8K / home TotalCo Contribution Margin 90% 4.0% of markets are CM positive Phoenix Note: All metrics presented are non-GAAP, see reconciliation in Appendix. Based on 1Q20 performance for 19 mar
Slide 33: Demonstrated success in adding high margin services
Demonstrated success in adding high margin services First proof point with title & escrow Adjacent services roadmap Established Target CM / home 82.9% 78.4% 75.8% 75.9% Title & Escrow $1,750 74.5% 80% Title & escrow transactions (#) 8,157 7,031 Recently launched 57.8% Attach rate (%) 5,394 60% Home
Slide 34: Significant margin upside from additional services and cost optimization
Significant margin upside from additional services and cost optimization 2.4% Ancillary Vehicle Gross Margin Gross Margin 0.6% 7.0% 4.0% Ancillary Vehicle Gross Margin Gross Margin $11K/home $1.5K/home $6.6K/home $19K/home 1Q20 Contribution Margin Cost optimization Additional services Long-term targ
Slide 35: Rapid growth at scale and improving profitability
Rapid growth at scale and improving profitability Homes sold Revenue Adjusted EBITDA Margin ($B) 19,632 18,799 $5.0 $4.7 % % 45 59 +1 +1 (2.3%) R R AG AG C C 7,470 (4.6%) $1.8 3,127 $0.7 (7.1%) (8.0%) 2017 2018 2019 1Q20 2017 2018 2019 1Q20 2017 2018 2019 1Q20 Run Rate Run Rate Note: Adjusted EBITDA
Slide 36: Scalable, efficient financing in place
Scalable, efficient financing in place Attractive debt financing Pro forma equity capital ($M) Committed, non-recourse 97% 100% 95% (1) ~100% $979 $1,709 asset-backed facilities of $2.4B ~90% ~80% Proven ability to scale capacity and reduce costs • Increased advance rate from ~80% to ~100% $730 • De
Slide 37: COVID-19: Systems built to react quickly to changing market conditions
COVID-19: Systems built to react quickly to changing market conditions Paused offers De-risked balance sheet Maintained margins 15,192 $1,019 7.1% >6.8% Adjusted Gross Margin (%) 5.6% First offers sent (#) 7,362 Inventory ($M) $172 Feb-20 Mar-20 Apr-20 Feb-20 Jul-20 4Q19 1Q20 2Q20 Note: Adjusted Gros
Slide 38: Projecting continued strong growth and path to profitability
Projecting continued strong growth and path to profitability Revenue Contribution Margin Adjusted EBITDA Margin ($B) ($M) $9.8 $539 0.1% 8% 5% +5 +9 R R AG AG $6.2 C (2.0%) C $290 5.5% $3.5 4.7% $2.5 $142 (5.4%) $72 (5.7%) 4.1% 3.0% 2020P 2021P 2022P 2023P 2020P 2021P 2022P 2023P 2020P 2021P 2022P 2
Slide 39: Summary financials
Summary financials 2017 2018 2019 2020P 2021P 2022P 2023P Homes Sold 3,127 7,470 18,799 9,673 13,458 24,030 37,689 % YoY Growth 113% 139% 152% (49%) 39% 79% 57% Total Revenue ($B) $0.7 $1.8 $4.7 $2.5 $3.5 $6.2 $9.8 % YoY Growth 109% 159% 158% (48%) 41% 79% 58% Adjusted Gross Profit ($M) $66 $146 $29
Slide 40: Long-term margin targets
Long-term margin targets Metric 2018 2019 1Q20 Long-Term Target Key Drivers • Maturation of existing, launched markets 7 - 9% Total Contribution Margin 3.5% 1.9% 3.1% (1) • Continuing optimization of cost structure ($20K/home) • Penetration of high margin services 6 - 8% • Assumes 100bps of steady-s
Slide 41: Investment summary
Investment summary $1.6T <1% Massive, fragmented market Existing home sales Online penetration 70 34% Superior consumer experience T Customer NPS Real seller conversion 12x 40%+ Market leader with low cost platform More efficient Scale cost savings $4.7B 150%+ Rapid growth and scale 2019 revenue CAG
Slide 42: Opendoor
Opendoor
Slide 43: Transaction overview
Transaction overview 43
Slide 44: Transaction overview
Transaction overview Pro forma valuation Sources and uses ($M) ($M except per share values) Sources IPOB illustrative share price $10.00 Cash from PIPE (including co-investment) $600 Pro forma shares outstanding (M)(1) 630.7 Cash from IPOB $414 Total equity value $6,307 Total sources $1,014 Cash on
Slide 45: Transaction overview (continued)
Transaction overview (continued) (1) Pro forma enterprise value of $4.8B Pro forma ownership $600M PIPE raised at $10 / share consisting of: $200M from affiliated entities, led by $100M from Chamath 9.5% PIPE Palihapitiya, Founder and CEO of SCH, and $58M from Hedosophia, with the remainder invested
Slide 46: Appendix
Appendix 46
Slide 47: Non-GAAP reconciliations
Non-GAAP reconciliations 2017 2018 2019 1Q20 GAAP Gross Profit ($M) $66 $133 $301 $91 Adjustments: Net Impairment $0 $13 ($5) ($2) Adjusted Gross Profit $66 $146 $297 $89 Adjusted Gross Margin 9.3% 7.9% 6.3% 7.1% Direct Selling Costs ($26) ($62) ($149) ($37) Holding Costs on Sales ($9) ($19) ($55) (
Slide 48: Non-GAAP reconciliations
Non-GAAP reconciliations 2017 2018 2019 4Q19 1Q20 GAAP Gross Profit ($M) $66 $133 $301 $74 $91 Adjustments: Net Impairment $0 $13 ($5) ($3) ($2) Adjusted Gross Profit $66 $146 $297 $71 $89 Adjusted Gross Margin 9.3% 7.9% 6.3% 5.6% 7.1% Note: Financials may not sum due to rounding Net Impairment refl
Slide 49: Non-GAAP reconciliations
Non-GAAP reconciliations 2017 2018 2019 1Q20 GAAP Net Income ($M) ($85) ($240) ($339) ($62) Adjustments: Stock Based Compensation $4 $15 $13 $3 Warrant Expense $0 $18 ($6) $1 Net Impairment $0 $13 ($5) ($2) Intangibles Amortization Expense $0 $1 $3 $1 Restructuring $0 $0 $3 $1 Convertible Note Inter