Opendoor Technologies Inc. (OPEN) Earnings Call Transcript

Hey, everyone. Welcome to Opendoor's Second Quarter 2026 Financial Open House Earnings Live Stream. I'm Michael Judd, Opendoor's Head of Investor Relations. Now a few housekeeping items before we get started. Like all things at Opendoor, we're ready to do this faster. Details of our results and additional management commentary are available in our earnings release, which can be found at investor.opendoor.com. The following discussion contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are statements that could be deemed forward-looking, including, but not limited to, statements regarding Opendoor's financial condition, anticipated financial performance, business strategy and plans, market opportunity and expansion and management objectives for future operations. These statements are neither promises nor guarantees, and undue reliance should not be placed on them. Such forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those discussed here. Additional information that could cause actual results to differ from forward-looking statements can be found in the Risk Factors section of Opendoor's most recent annual report on Form 10-K for the year ended December 31, 2025, as updated by our periodic reports and other filings with the SEC. Any forward-looking statements made on this webcast, including responses to your questions, are based on management's reasonable current expectations and assumptions as of today, and Opendoor assumes no obligation to update or revise them, whether as a result of new information, future events or otherwise, except as required by law. The following discussion contains references to certain non-GAAP financial measures. The company believes these non-GAAP financial measures are useful to investors as supplemental operational measurements to evaluate the company's financial performance. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our website at investor.opendoor.com. And with that, let's get into the open house with Kaz and Christy.

Good afternoon, everyone. I usually start these calls by showing you a clip of what I told you during the last call. But this time, I'm going to tell you a story about what my wife told me, and I don't have a video clip because it'd be weird if my wife and I just record each other all the time. So you're just going to have to use your imagination. When I was leaving home to fly to San Francisco before my first day at Opendoor, I told my wife that I'd be back home the following Wednesday, maybe Thursday. And she didn't miss a beat. She said, don't come back until there's a plan to break even. Look, there's a lot of ways people describe the thing I'm about to tell you. It just depends on which tribe they're part of, right? Paul Graham has a famous essay about it, finance people call it a glide path to profitability, mostly because I think finance people are legally required to say things like glide path. But basically, the question is this, if nothing changes and you keep doing what you're doing, what happens? Let's see. There is no magic here. It's just math. This next section, it's going to take me a few minutes, but it's incredibly important. I want to give you all the same framework we use internally, so you can see things the way we're seeing them right now. Opendoor's core business math is simple. It's how many homes we transact on times our contribution margin minus our OpEx and our financing costs. So let's go through each of these 4 numbers. First, volume. Right now, we're signing more than 500 contracts every single week. Last week, we signed around 700. That's our highest contract week in years. That's over 5x higher year-over-year and 5x higher since I joined the company. And just think about when we're doing this. We're doing this in the weakest housing market in a generation and in the worst season of the year for us. The spring and summer seasons are basically the only times of the year where the traditional real estate system still kind of actually works, right? But over 500 sellers are still saying yes to Opendoor every single week. If you've been following along on accountable.opendoor.com, you've seen this, right? When we put up our ranges last quarter, those numbers weren't sandbags. Those were numbers we thought we'd see to put us on the path we need to be at the end of this year. The fact that we have been above the high end of the projections every single week for the last quarter is the reason that I'm so confident about what I'm about to say. Look, our ANI breakeven framework assumes 6,000 quarterly transactions at $375,000 each for around $9 billion in revenue. We're pacing well above that on a contract basis in Q2. And look, some of these won't close. That's normal. That hasn't changed. That isn't the point. The point is we've achieved this in a market and at the time of the year that is the worst for us. I think it's super reasonable to expect that we're going to end up north of the $9 billion mark in revenue. Now it's important to take a second and describe a pattern that we're seeing as we ramp up for this revenue. Look, companies have kind of 2 ways to artificially increase growth in the absence of actual improvement in the company, right? Those 2 levers are marketing and pricing. I'm going to get to marketing in a second, but I want to start by talking about pricing. If you've followed Opendoor for a while, when you see high acquisition volumes, you should be skeptical. You should be asking, are we buying growth through more risk and lower spreads or using regular language that everyday people use, are we paying more than fair prices for homes? Opendoor did this during the COVID era, right? To get volume, it took lots of risks because it believed that price was the only lever it had at its discretion to increase conversion. And if it couldn't reduce its overall cost structure, it would lose money. What I'm about to show you is probably the slide that has made me most excited about what we've gotten done so far this year. This shows our true seller conversion at different spread levels. So true sellers are the people who request an offer from Opendoor and then either sell to Opendoor or list on the open market. So it's the conversion on people who actually want to sell their home. What this chart shows is that we are converting dramatically more sellers at the same spread levels than we've had in the past. We're on track to hit more than the volume we need, and we're not doing it by paying above fair prices for homes. That should mean something for our contribution margin. So let's talk about that, right? Our contribution margins have been improving every single quarter this year and are now in the target range that we told you we would be in. There are about 100 or so homes left from the Opendoor 1.0 era that are going to be a drag on our contribution margin, but they're going to be sold mostly this quarter, and we're going to be done with them, and I'm never going to talk about them again. But on the new cohorts, our margin is performing and cohort curves are doing what we want them to do. Now look, it's for sure true that Q3 is a seasonally worse contribution margin quarter for us than Q2. So you should expect quarter-over contribution margin to go down from Q2 to Q3. This year, we also have the impact of the Doma acquisition, which is a temporary drag on contribution margin while we integrate Doma into Opendoor. But we expect to break with Opendoor's historical trend and have a Q4 that is higher in contribution margin than Q3. Every year in Opendoor's public company history, Q4 has had a worse margin than Q3, and we're about to reverse that trend. But going back to the main point. In Q2, we got to contribution margin zone we told you we would aim for, and we have proven that we can run the company here. Okay. So acquisition volume is tracking to where we want it to be and margin is within the range that we told you what you have to be in. That leaves OpEx and financing. Let's talk about OpEx. So Opendoor's OpEx includes marketing, variable operations, which we call just operations in our financials and fixed operations. So most of our costs happen when we buy and renovate homes. So it's useful to look at these costs in relation to our acquisition numbers since that is a variable that scales them, right? So we have this idea called acquisition GMV, which is roughly the revenue we expect to get from homes we've closed on. Our homes have been selling right around the $375,000 mark. So let's use that assumption so I don't have to leak our internal model to the world. It will also make the math easier. So acquisition GMV is acquisition times $375,000. With that in mind, let's talk about the 3 parts of our OpEx. First, marketing. Marketing is our cost of customer acquisition per home we buy. We do basically no marketing when we sell homes. And the last time we signed more than 6,000 contracts in the quarter, our marketing spend was over $80 million. This quarter, it was 5, not 5-0, just 5. I know that sounds crazy. But yes, Morgan actually wrote the book on this. And yes, this is one part of Opendoor where I think we're executing 10 out of 10. It took us a minute, but we have found our groove. Our marketing as a percentage of our acquisition GMV has gone from 1.6% under Opendoor [ One to 0.3% ]. Let's say, we'll not be that good forever. Let's assume we'll get a little worse. Let's assume we'll have 0.5% of acquisition GMV on marketing. Just remember that, okay? Next, let's talk about variable operations. Variable operations are mostly the costs we incur when we're buying and renovating our houses, right? This is the human and system cost of underwriting, buying and renovating a home. So variable ops have declined from 2.7% of acquisition GMV to 0.9% of acquisition GMV. If you look at acquisition contract GMV, this number is already at 50 basis points. But look, don't give us the benefit of this doubt. There'll be some contracts that will fall through. So let's mark this up. Let's say it will be 70 basis points on acquisition GMV. Why has this number gone down so much? The answer is simple, and we would tell you, we are among the best users of AI in tech. We have fundamentally reengineered our business around AI automation across underwriting and operations. Look, in Q3 last year, the people who managed the renovations of our homes, our HPMs, they carried 3 renovations per person per month. Right now, they're carrying around 10. By the end of this year, they will carry around 20. In Q3 last year, our pricing underwriting team could handle around 20 underwrites per person per day. They can now do over 50. They'll be able to handle around 100 by the end of the year. A couple of years ago, more than 80% of homes that we bought required an Opendoor employee to visit them before we even made an offer. Today, that percentage is below 20%, and it will go down to below 10% by the end of this year. So 70 basis points, just remember that. The last component is our fixed operations. These are the people that build the machine that runs Opendoor. Last year, there were a lot of consultants in G&A. Now it's a lot of engineers and data scientists writing code. One of the beautiful things about code is that scales really well. Spinning up the server is easier than hiring a new consulting firm. And you can see this in our numbers. In Q3 last year, this number was over 8% of our acquisition GMV and over 6% of our acquisition contract, right? In Q2, this was 2.1% of acquisition GMV and 1.4% of acquisition contract GMV. Let's say it will be somewhere between those 2 numbers. Let's pick -- I don't know, 1.7%. So 50 basis points on marketing, 70 basis points on variable operations and 1.7% on fixed OpEx. Add all those up, and it's 2.9% on our acquisition GMV, which doesn't give us the benefit of our increased acquisitions that we're making right now. If you take the dollars spent and compare them to our $9 billion run rate, that's 2.4%. That's less than the low end of 3% to 4% range I told you we would need to get to become ANI profitable. Okay. The last component here is interest. Look, we finance the homes we buy. So this scales with how many homes we buy and how long we own them. At the speed that we turn inventory right now, that's about 3x a year. So net interest runs a little above 2% on our revenue. We're working on lots of things that will lower this, and I think there's a lot of upside here, but don't give us the benefit of the doubt. Let's assume they just stay where they are. So what would happen if we just froze the company? Like, if we pretend that we don't improve anything, no new products, no funnel improvements, no pricing model updates, no rate cuts, no macro rescue, no one has to be a hero. We just keep doing exactly what we did last week. In fact, the math I just showed you assumes that we get worse at marketing and operations, which we for sure won't. But what happens if that happens? Current volumes, current margins, worse cost structures, current financing costs, run those numbers forward, and this is the back of napkin math, right? At roughly 6,000 transactions per quarter, Opendoor reaches adjusted net income profitability on a run rate basis heading into next year. No new assumptions, just today's company carried forward. Look, I told you this on our very first call. I've said it on every call since then, adjusted net income breakeven on a 12-month go-forward basis by the end of 2026. When I said this, there were more than a few things that needed to go right. But we moved fast, we shipped. We took charge of our own company every single week. And every quarter, the math became more and more obvious. Yang, our Chief Investment Officer, he runs our pricing and meeting teams at Opendoor. He has a simple way of putting these things. He likes it so much that he actually bought a T-shirt at a nerd convention and he wears it to the office. The T-shirt says, it's just math. For years, one question has followed this company everywhere it went. Will Opendoor become profitable? As of today, that question is boring. As things stand right now, Opendoor will become ANI profitable. It's just math, sweetheart, after this call, I am coming home. So the last few minutes have sounded like a confident CEO, 10 months into a turnaround, holding a napkin that says, everything is working. But let me tell you what's not a napkin. Here's the uncomfortable truth. Nothing about this has been easy. Turnarounds are really, really hard. And there's obviously a bit of a survivor bias here, right? Everyone knows about the ones that work in retrospect. But why will this one work? We're 10 months now into this process, I'm really proud of what we've done. If we freeze the company I just told you, we would become AI profitable even if the macro keeps punching us in the face. Look, we're going to become ANI profitable on the path to fulfilling our mission and becoming a meaningful company in this country. But there's something else that I can tell you, right? The math works, and we're going to become ANI profitable. We can very clearly see that right now. But what that does not mean that everything between here and there will be just perfectly smooth. Turnarounds are hard and they surprise you sometimes. Sometimes these surprises are good. And I want to talk about 2 of them. First is seasonality. Opendoor's business has had a real seasonality to it. We've traditionally been a company that's had a feast in Q2 and famine the rest of the year. In fact, every year since we've been public, other than 2023, our margin degradation between Q2 and Q3 has averaged almost 500 basis points. Look, this year, we haven't killed off seasonality entirely. So it won't be 0, but it will be way, way, way less. Folks won't appreciate why this is a big deal, and they won't appreciate it for a while. But I think of everything we have done this quarter, this compression may be the most important thing for the long-term health of the company. That's the first thing. The second one is the embedded impact of things that have already happened, but don't look like they have. When a seller signs a contract with us, that home becomes revenue a few months later, right? We buy, we fix, we renovate, we list, we sell. And we can't really skip a step in the theme, right? It just takes time. This means I always live a few months in the future, right? Every week, contracts turn into homes, which turn to listings, which turn to closings. What I see today in our acquisition contracts turns into GAAP revenue a few months from now based on our conversion rates. It's why we put our weekly contracts on accountable.opendoor.com, so you can see what we see in real time a few months sooner. C.S. Lewis has a famous metaphor about watching a horse grow wings. As a father of daughters, I'm a bit of an expert on this topic. This is technically a pegasus, not a unicorn. The horse in transition for the first little while would look a little odd, right? This is a horse that was running fast, and it's going to run a little awkwardly right now because he's growing these bumps on his back that are going to become wings but aren't quite yet. He doesn't take off until the wings grow. Silicon Valley has spent the last 20 years chasing the unicorns, and we're coining a new category, the pegasus, not a company that was magical from the beginning, but a company that had to grow its wings in public. This is what transformations look like midstream. The changes are real before the financial statements catch up. That awkwardness is part of process. Opendoor is really starting to feel that way to me, awkward, awkward, awkward flight. We still have some awkward growing pains, but the wings are growing, and it really, really feels like this thing is taking off. Speaking of things that still look a little awkward but are starting to grow wings. Let's talk about mortgages. Look, when you buy a home, you're actually buying 2 separate things, the house and the money, 2 different work streams, 2 different sets of people, 2 time lines that need to kind of automatically merge and 100 different ways that can kill the deal. We're classing these 2 things into one integrated transaction. But why does this matter? It matters because friction. Friction destroys the process and getting rid of it expands our margin, reduces risk and builds a real flywheel between our buying engine and our selling engine. The best place to sell a home becomes the best place to buy one. At our core, our job is simple, remove friction from a homeownership process. And there are 2 kinds of friction in residential real estate. There's a friction that holds people in place, right? Sellers are stuck. They're stuck because of price uncertainty, repair headaches and all the traditional pain that goes along with the time line of selling a home. We solved that first with our offer product. Our core offer product gives you near instant certainty. But unsticking the sellers is only half the trade. Once the buyer enter the friction, there's a whole new type of friction. This is like the rate shock that acts as a drag that's already in motion, right? A 7% mortgage rate slows the deal down or it kills it entirely. That's exactly the friction that our mortgage product eliminates. Look, our core product allows sellers to move on. Our mortgage products allow buyers to move in. And this isn't theoretical. Look at the early numbers. In Colorado, our first launch market, more than half of our scheduled closes are going to be financed through Opendoor home loans. In Texas, just 6 weeks after launch, we're already at nearly 1 in 5. And that's before rolling out FHA, VA or adjustable rate products. Look, to be clear, each state we launch will have its own dynamics, right? But Texas shows where a market can be in just 6 weeks and Colorado is where a market can be with some seasoning. Neither of these are ceilings, right? And these numbers are going to bounce around as we scale, and that's normal. What matters is the direction and the underlying physics. There's something big that I think people are missing here. The frame of this has always kind of been wrong, right? This is not an adjacent service. This is not an attached play. If you're evaluating the mortgage as an extra fee on the side, sure, it adds margin, but you're missing the bigger picture. Mortgage is the other half of the coin. Our market maker needs both sides to clear, right? Our offers create sellers, our mortgage create buyers. And you can look, ask a fair question, right? We tried mortgages before and it didn't work. Why will this time be different? I like this question that I just asked because it gives me a chance to be nerdy. You see, I love studying the history of companies. And I want to tell you a story that I tell our product managers. I call it good Sears and bad Sears. For years, I've carried this metal card in my wallet, like actually in my wallet. I love the history of money. I wrote a book about this. So it's less odd for me to carry an old unusable charge card than almost anyone else. But this is the Sears revolving charge card. This one was issued in 1951 to help fund customers buy stuff from Sears. Sears eventually allowed other merchants to accept this card, and that business inside Sears went to become one of the most successful financial services products ever launched. And eventually, it became worth more than all of Sears itself. That business was eventually spun out, and we now call it Discover. That was good Sears. Financial infrastructure born inside a transaction. A few decades later, Sears bought Dean Witter, it's a brokerage firm, and they put it inside their department stores so that a mother of 3 who came in for a new fridge could also leave with a mutual fund. The idea was just absurd. It was 2 parts sharing a roof, but not a purpose. Sears had no competitive advantage, nothing that would make this product special. A bunch of number crunchers tried to create ROI through attach. The whole thing failed. That was bad Sears. Look, the main question is this. There is a difference between bolting something on and building something in. During my time at Shopify, we built Shopify Capital, the good Sears way. It didn't work because we cross-sold merchants. It worked because the platform already saw every merchant in real time. We didn't need a loan application. We already had the underlying data, right? Financial product wasn't bolted on. It was born inside the transaction. Opendoor 1.0 was mortgage and honestly, every mortgage product on the market is bad Sears. You buy a house and then someone awkwardly tries to sell your loan. It just adds friction and it fails because it deserves to fail. These products that fail aren't about the customer. They're about companies wanting margin. The product we're building today, it sits inside the process from day 1, built in, not bolted on. That changes both the customer experience and our unit economics. And here's why. People think mortgages are special. They're really, really not, right? The legacy mortgage industry carries 65 to 85 basis points of yield in every single loan just to feed the pork barrel buffet of people taking margin. The legacy mortgage industry pays thousands of dollars to acquire each buyer. And this chain exists only because it has always existed. Look, we didn't ask how we could make money on mortgage. We asked the following question. If our goal was to offer the lowest rate possible, what would be built? So we built our own point of sale and our own loan origination system. And we offer only the most common loans, no bells, no whistles. You can have any flavor of ice cream you want so long as it's vanilla. If you want a fancy mortgage with lots of features, please use a bank. Do not use Opendoor home loans. But if you want a regular mortgage or a regular home, we are going to be your best bet. We have automated so much the process that our loan officers can handle 50 mortgages a month against about 10 in the industry. And we've spent $0 on marketing. We took all the money we saved and passed them to homebuyers. We're not new at this, right? Homebuilders have figured this out decades ago. A great mortgage is a more powerful force than a price cut. And we have figured out the same thing. But because we turn inventory a few times a year, the math is even better for us. For a market maker, a lower mortgage rate is the thing that speeds everything else up. It removes friction and need to get more turns a year. It frees up capital so we can buy the next house and the next and the next. We haven't invented new math here. We have just bent it in a way that a stand-alone lender structurally can't. Look, I've spent most of my career building financial services products. I've seen this work. Shopping installments went from nonexisting to being the largest installment product on the Internet in a year. Standalone lenders are constantly fighting gravity on customer acquisition. For us, the mortgage is just a second wing. Once both wings are locked in place, the physics switch from drag to lift. And mortgage wasn't the only product that had lots of launches. We also deprecated 5 bespoke tools and multiple micro services and unified them all into Opendoor's internal God view, Ops Hub, a single piece of software that's our command and control center gives us an end-to-end view of every home. We opened Opendoor up to agents. We launched Opendoor 2.0 for agents with a new structure that puts our offers directly inside the tools agents already use, tools like RealScout, SOLD.com and Movoto. And our new partner API launched, which means integrations into Opendoor now take days, not months. We rebuilt Opendoor iOS app, right, from the ground up. We held it to one bar, excellence against apps people use every day, not good enough for a real estate app. We launched a unified dashboard that serves as a user's home within Opendoor, whether you're selling to us, buying from us or both. There's now one place for your entire relationship with Opendoor. We put machine learning to work on underwriting. Our auto underwriter handles roughly 1 in 5 valuations, and we're testing models that value entire segments of homes with almost no manual review at all. We turned Chloe, our AI assistant, into a real part of our sales teams. She converts 3x what she did in January at 1/3 of the cost. She works 168 hours a week, takes no vacations or bathroom breaks and is completely transparent about being a bot, but people love using her because she is good. We became faster under the hood. Seller dashboards now load 3x faster as contract changes went from 4 hours to 10 minutes. And we retired legacy systems that have been slowing us down for a better part of a decade. We launched a new set of alerts for our buyers, including nearby listing matches, price drop notifications and recommended homes. And that's just a small sample of what we've shipped in the past quarters. Look, in my first call, I told you we would drive Opendoor to ANI profitability. I said drive because we didn't know exactly how we would do it. And we didn't really have any proof points. Today, we do. We've shown that if you ship great products every week and if you keep tilting the world toward homeowners, the score just kind of takes care of itself. With that, I'll hand it over to Christy to tell you about the numbers. Christy?

Thank you, Kaz. Three things to know about Q2 before we get into the details. We grew homes acquired by 77% quarter-over-quarter and 149% year-over-year. We also closed the quarter with another 2,310 homes under contract. A year ago, that number was 393. Contribution profit was $51 million, up 59% quarter-over-quarter and 22% more homes sold. Contribution margin was the highest we've reported in 2 years. A year ago, we purchased 1,757 homes and spent $15 million on operations expense. This quarter, we purchased 4,378 homes and spent $14 million, 2.5x the volume on less variable cost. Volume, margin, operating leverage. These are the 3 management objectives on our path to profitability. The table in our earnings release shows where each one stands. Let's walk through them now. First, scale acquisitions. We purchased 4,378 homes in the quarter and saw revenue growth of 23% quarter-over-quarter to $883 million. Acquisition contracts reached 6,908, up from 5,136 in Q1. Marketing spend moved in the opposite direction from $19 million to $5 million quarter-over-quarter. Second, improve unit economics and resale velocity. Contribution margin has climbed from a low of 1%, 3 years ago to 5.8% in Q2, landing in the middle of our 5% to 7% range we guided to. Aged inventory, which we define as homes listed for greater than 120 days, has fallen from 51% over that same span to 9% now. Third, build operating leverage. Trailing 12-month operations expense was 1.6% of revenue, up from 1.3% in Q1. That said, operations expense actually declined from $52 million to $51 million. The increase in the ratio reflects last year's higher revenue quarters rolling out of the trailing window, not any change in our cost discipline. On a per acquisition basis, operations expense was $3,000 this quarter, down from $5,000 in Q1 and $8,400 a year ago. Fixed operating expenses were $35 million, up $2 million from Q1, funding our investments in AI and engineering. Turning to the balance sheet. We ended the quarter with $896 million in cash and cash equivalents. We deliberately put capital to work, rebuilding the larger, higher-quality book, growing our inventory by more than $700 million during the second quarter, funded largely by our nonrecourse asset-backed facilities. We held 5,459 homes in inventory at quarter end with another 2,310 homes already under contract to purchase. One point on capital. As our cash now more later product scales, it provides a more efficient way to grow. It commits less capital per home than our core product, giving us a way to add acquisitions without growing our balance sheet at the same pace. Now the guidepost for Q3. Acquisitions, you can continue to track our contracts on accountable.opendoor.com. Revenue, we expect revenue to increase at least 20% year-over-year. Contribution profit, we expect contribution profit dollars to more than double year-over-year and contribution margin to be around 4% to 4.5%, reflecting typical seasonal trends. Contribution margin has fallen from Q2 to Q3 in every year we have been public by an average of 470 basis points, excluding 2023 when 2Q CM was negative. We expect to decline well below that average and the best Q2 to Q3 relative performance we have delivered outside of 2023. Adjusted EBITDA, we expect to be adjusted EBITDA profitable on a 12-month go-forward basis as of the second quarter of 2026 (sic) [ 2027 ]. In Q3, we expect a modest increase in adjusted operating expense, driven mostly by the holding costs that come with growing our inventory and a small increase in marketing. Our commitment has not changed. We expect to be adjusted net income positive by the end of this year, measured on a 12-month go-forward basis. A quarter ago, we told you exactly what this quarter would look like. And despite a real estate market that remains challenged, we did what we said we would do. With that, Michael, I'll turn it over to you for questions.

Thanks, Christy. Our first question comes to us via video submission from Lorraine Wang.

Hi, my name is Lorraine Wang, a long-term Opendoor shareholder. When long-term shareholders look back 2 years from now, what will be the 1 or 2 changes inside the business you hope they will point to and say that's when Opendoor truly became a different company?

All right. Thanks, Lorraine. Look, thanks for being a long-term shareholder. People like you are the reason this company survived so that we could get a chance to turn it around. I genuinely think of our everyday shareholders as my boss. So I'm going to give you the same answer I would give if you're my boss. I won't give you a number because it won't be a number or a future launch. It just won't. It will be this. We stopped being a real estate company with a website and became a product company that happens to be in real estate. Let me tell you what I mean. Look, for most of this company's life, it seems like every decision we made got filtered through a spreadsheet, mortgage rates, HPA, spreads, conversion, unit economics. And look, I look at these things every single day. They are very real, but that's the business. It's not the company. The company is actually the product and the customers. When you run a company like a financial portfolio, every individual trade, like it makes sense on paper, but the end-to-end user experience it just becomes completely broken. You end up with something that is barely functional, but a pain to use. You end up with a bank. Look, you don't build for a future that doesn't yet exist in spreadsheets. So the shift is this. Our primary goal, the reason we come to work every day is to build something people want. Our unit economics are downstream from that, right? When people use our product, when we eliminate friction, when we help our users, conversion goes up, margin goes up and everything follows. Our product is better today, but it's still not where it should be, right? This is the largest transaction of most folks' life. And for most of them, it's also the worst. There's like no reason why both of those facts have to be true. 2 years from now, I hope to point back to this. We decided to build an excellent product. We took the parts of product that were bad every single day, and we fixed them. And then you'll wake up one day, and you'll see that all the work we have done to fix our infrastructure, to build a better product, to build a mortgage system that is just awesome, will merge together and they'll make the process of buying and selling a home as easy as using Shop Pay. But it will all -- all of it will have started on this. We build products, not spreadsheets.

Our next question comes to us from Say Q&A. Matthew S. asks, are we still on track for profitability by the end of this year?

Yes. Yes, yes, yes. Look, every single quarter, we've done what we said we would do. We have come here. We said what we're going to do and then we've done it. We're going to become ANI profitable on a 12-month go-forward basis at the end of this year. I told you we're going to do it on our first earnings call. I sat here and I said we're going to become ANI profitable on a 12-month go-forward basis at the end of this year. And we're now giving you the math to back this up. The answer is yes. Is that clear?

Clear to me. Next question, Angelo E. asks, you have described letting buyers and sellers transact directly on Opendoor without Opendoor owning the home. When could this launch and what revenue and contribution profit per transaction are achievable?

Angelo, thanks for the question, man. Look, let me address the economics of this upfront by saying, I'm not going to talk about revenue or contribution profit on a product that we haven't launched yet. This is the same answer I gave to Lorraine. Great products don't start with a margin target. We build for the mission and we build for the user and economics follow, right? Our mission is to tilt the world in favor of homeowners. Today, Americans pay 10% to 12% transacting on the biggest assets they own and the process sucks. That's the problem that we need to fix. And we'll look at it in 3 steps, right? I come from the e-commerce world, so I like using that language. I say 1P, 2P, 3P. Step 1, 1P. We buy the homes ourselves and we sell them. This is our regular core cash offer product. Step 2, 2P. This is cash down more later. We still buy your home, but it's a different way of owning it. It's capital light for us with less risk with alignment with the seller, right? Step 3 is 3P. That's what you're describing, buyers and sellers transacting directly with each other using all of our services and tools without using any of our balance sheet. Your home, your transaction, our platform. We're on step 2 right now, and we're not going to move to step 3 until we are really good at step 2. Now look, for what it's worth, I think people overestimate how hard step 3 is and underestimate how important step 1 and 2 are on the way to step 3. Just look at Amazon. What did Amazon do? First, they sold their own stuff in their own warehouses, 1P, right? Then they sold the things that they sold, but are shipped from other people's warehouses, 2P. Then other people's stuff out of other people's warehouses, 3P, then Amazon launched other people's stuff from Amazon's warehouses using Amazon Pay. 3P was attached services offered by Amazon. Those last 2 steps like launched the fastest because when you were excellent with the first 2, the other 2, I think that much work. And I have some conviction here because I came from a place where the entire business was 3P, letting people transact without owning the stuff. It works really, really, really well, but only once you've done the work required to earn it.

Great. Our next question comes to us from Felix B., Kaz, could you update on mortgage product and how many states are using Opendoor mortgage?

Yes. Thanks, Felix. I spoke about this a bit already, and I want to be a little careful because our lawyers are going to give me notes after this. But look, the mortgage licensing process seems to have been designed by the same people who designed the DMV. It's not built for speed and it's infuriatingly slow on purpose. It's state-by-state slog, and we're working our way through it. And we're doing it faster than I think anyone expected, but generally faster than people thought we could do it, but slower than I want. So we expect to be licensed in around 35 to 40 states by the end of this year. But also like we'll get there on this front. It's like we know we will. So the real question is, how are we doing in states where we are now live? And the answer is we're doing just excellent. The buyers are getting amazing mortgage rates very fast, very little pain, end-to-end. And if they want it, they don't have to talk to a single human being. Look, I shared numbers earlier. It's over half of our scheduled closes in Colorado are going to be on Opendoor home loans, nearly 1 in 5 in Texas, that's only 6 weeks after launch, and it's a completely unoptimized product right now. We don't offer FHA, which we will. We don't offer VA, which we will. We don't offer ARM, which we will, right? But the reason this is working is simple. There's a structural unfairness in the American homebuying process. There's a pork barrel buffet of margin that takes money out of the hand of homebuyers. It's 65 to 85 basis points baked into every single loan. We built a mortgage product without any of these costs, and our job is to pass the savings on. When the default option is the cheapest and the easiest option, like it just works. Now like, look, in the spirit of being very fully transparent, if you're buying a $10 million [indiscernible] in Manhattan, I would like you to use someone else. Do not use us. We will do just vanilla. But I'm very confident we're going to do vanilla better than anyone else. It's going to be just excellent.

Our next question comes from Angelo E. He's curious, what could keep Opendoor below 2% of U.S. home sales? Is it seller adoption, home eligibility, offer competitiveness or buyers' willingness to transact through Opendoor? And what must change to exceed 6% -- is that good?