SEC Filing | Opendoor Technologies Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________.

Commission file number 001-39253

Opendoor Technologies Inc.

(Exact name of registrant as specified in its charter)

Delaware

98-1515020

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

410 N. Scottsdale Road,

Suite 1600

Tempe,

85281

(Address of Principal Executive Offices)

(Zip Code)

(415) 896-6737

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	OPEN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of November 3, 2021 was approximately 612,612,711.

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OPENDOOR TECHNOLOGIES INC.

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		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Changes in Temporary Equity and Shareholders’ Equity (Deficit)	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 4.	Controls and Procedures	57

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	63
	Signatures	64

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OPENDOOR TECHNOLOGIES INC.

As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Opendoor,” the “Company,” “we,” “us,” and “our,” and similar references refer to Opendoor Technologies Inc. and its wholly owned subsidiaries following the Business Combination (as defined herein) and to Opendoor Labs Inc. prior to the Business Combination.

As a result of the Business Combination completed on December 18, 2020, Opendoor Labs Inc. share and per share amounts presented in this Quarterly Report on Form 10-Q, for periods prior to the Business Combination, have been retroactively converted by application of the exchange ratio of 1.618. For more information regarding the business combination, please see “Part I – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 2. Business Combination”.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition; business strategy and plans; expectations regarding the impact of COVID-19; market opportunity and expansion and objectives of management for future operations, including our statements regarding the benefits and timing of the roll out of new markets, products, or technology; expected diversification of funding sources; and efforts to remediate our material weaknesses in internal control over financial reporting, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast”, “future”, “intend,” “may,” “might”, “opportunity”, “plan,” “possible”, “potential,” “predict,” “project,” “should,” “strategy”, “strive”, “target,” “will,” or “would”, including their antonyms or other similar terms or expressions may identify forward-looking statements. The absence of these words does not mean that a statement is not forward-looking.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, which involve a number of judgments, risks and uncertainties, including without limitation, risks related to:

•our public securities’ potential liquidity and trading;

•our ability to raise financing in the future;

•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•the impact of the regulatory environment and complexities with compliance related to such environment;

•our ability to remediate our material weaknesses;

•factors relating to our business, operations and financial performance, including:

▪the impact of the COVID-19 pandemic;

▪our ability to maintain an effective system of internal controls over financial reporting;

▪our ability to grow market share in our existing markets or any new markets we may enter;

▪our ability to respond to general economic conditions;

▪the health of the U.S. residential real estate industry;

▪risks associated with our real estate assets and increased competition in the U.S. residential real estate industry;

▪our ability to manage our growth effectively;

▪our ability to achieve and maintain profitability in the future;

▪our ability to access sources of capital, including debt financing and securitization funding to finance our real estate inventories and other sources of capital to finance operations and growth;

▪our ability to maintain and enhance our products and brand, and to attract customers;

▪our ability to manage, develop and refine our technology platform, including our automated pricing and valuation technology;

▪the success of our strategic relationships with third parties; and

▪other factors detailed under the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q.

Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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OPENDOOR TECHNOLOGIES INC.

As a result of a number of known and unknown risks and uncertainties, including without limitation the important factors described in the “Risk Factors” section of this Quarterly Report on Form 10-Q and on Part I. Item 1A “ Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”), our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


		September 30, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	1,358,775	$	1,412,665
Restricted cash		484,476		92,863
Marketable securities		481,051		47,637
Mortgage loans held for sale pledged under agreements to repurchase		22,858		7,529
Escrow receivable		121,394		1,494
Real estate inventory, net		6,268,081		465,936
Other current assets ($616 and $373 carried at fair value)		84,365		24,987
Total current assets		8,821,000		2,053,111
PROPERTY AND EQUIPMENT – Net		38,321		29,228
RIGHT OF USE ASSETS		43,800		49,517
GOODWILL		47,158		30,945
INTANGIBLES – Net		11,494		8,684
OTHER ASSETS ($5,100 and $0 carried at fair value)		6,842		4,097
TOTAL ASSETS	(1)	$	8,968,615	$	2,175,582
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities		$	156,030	$	25,270
Non-recourse asset-backed debt - current portion		4,049,812		339,173
Other secured borrowings		19,728		7,149


Interest payable		9,746		1,081
Lease liabilities - current portion		4,637		20,716
Total current liabilities		4,239,953		393,389
NON-RECOURSE ASSET-BACKED DEBT – Net of current portion		1,367,989		135,467
CONVERTIBLE SENIOR NOTES		952,415		—
WARRANT LIABILITIES		—		47,349
LEASE LIABILITIES – Net of current portion		43,073		46,625
OTHER LIABILITIES		2,324		94
Total liabilities	(2)	6,605,754		622,924
COMMITMENTS AND CONTINGENCIES (See Note 17)







SHAREHOLDERS’ EQUITY:
Common stock, $0.0001 par value; 3,000,000,000 shares authorized; 607,215,233 and 540,714,692 shares issued and outstanding, respectively		60		54
Additional paid-in capital		3,877,418		2,596,012
Accumulated deficit		(1,514,509)		(1,043,449)
Accumulated other comprehensive (loss) income		(108)		41
Total shareholders’ equity		2,362,861		1,552,658
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	8,968,615	$	2,175,582

________________

(1)The Company’s consolidated assets at September 30, 2021 and December 31, 2020 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs: Cash and cash equivalents, $11,567 and $15,849; Restricted cash, $475,305 and $81,408; Real estate inventory, net, $6,131,362 and $460,680; Escrow receivable, $102,685 and $1,364; Other current assets, $39,253 and $5,365; and Total assets of $6,760,172 and $564,666, respectively.

(2)The Company’s consolidated liabilities at September 30, 2021 and December 31, 2020 include the following liabilities for which the VIE creditors do not have recourse to Opendoor: Accounts payable and other accrued liabilities, $66,134 and $2,335; Interest payable, $9,413 and $1,059; Current portion of non-recourse asset-backed debt, $4,049,812 and $339,173; Non-recourse asset-backed debt, net of current portion, $1,367,989 and $135,467; and Total liabilities, $5,493,348 and $478,034, respectively.

See accompanying notes to condensed consolidated financial statements.

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OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
REVENUE	$	2,266,354	$	338,613	$	4,199,014	$	2,334,235
COST OF REVENUE	2,063,865		302,802		3,740,622		2,152,803
GROSS PROFIT	202,489		35,811		458,392		181,432
OPERATING EXPENSES:
Sales, marketing and operations	153,496		27,336		319,087		156,290
General and administrative	90,105		40,168		502,800		99,074
Technology and development	27,295		13,184		102,360		45,809
Total operating expenses	270,896		80,688		924,247		301,173
LOSS FROM OPERATIONS	(68,407)		(44,877)		(465,855)		(119,741)
DERIVATIVE AND WARRANT FAIR VALUE ADJUSTMENT	3,499		(24,329)		12,179		(25,219)

INTEREST EXPENSE	(43,550)		(12,376)		(70,375)		(57,393)
OTHER INCOME – Net	51,965		764		53,601		3,619
LOSS BEFORE INCOME TAXES	(56,493)		(80,818)		(470,450)		(198,734)
INCOME TAX EXPENSE	(326)		(35)		(610)		(234)
NET LOSS	$	(56,819)	$	(80,853)	(471,060)		(198,968)


Net loss per share attributable to common shareholders:
Basic	$	(0.09)	$	(0.91)	$	(0.80)	$	(2.32)
Diluted	$	(0.09)	$	(0.91)	$	(0.80)	$	(2.32)
Weighted-average shares outstanding:
Basic	603,389		89,070		585,854		85,907
Diluted	603,389		89,070		585,854		85,907

See accompanying notes to condensed consolidated financial statements.

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OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
NET LOSS	$	(56,819)	$	(80,853)	$	(471,060)	$	(198,968)
OTHER COMPREHENSIVE INCOME:
Unrealized (loss) gain on marketable securities	(106)		(158)		(147)		126
Currency translation adjustment	(2)		—		(2)		—
COMPREHENSIVE LOSS	$	(56,927)	$	(81,011)	$	(471,209)	$	(198,842)

See accompanying notes to condensed consolidated financial statements.

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OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY

EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

(In thousands, except number of shares)

(Unaudited)


	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-June 30, 2021	—	—		—	—		—	—		—	—		—	—		593,838,919	59		3,875,552		(1,457,690)		—		2,417,921



Issuance of common stock in connection with the February 2021 Offering	—	—		—	—		—	—		—	—		—	—		—	—		—		—		—		—


Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		318,929	—		11		—		—		11
Vesting of restricted stock units	—	—		—	—		—	—		—	—		—	—		2,812,297	—				—		—		—
Common stock issued upon exercise of warrants	—	—		—	—		—	—		—	—		—	—		7,695,674	1		51,771		—		—		51,772
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		2,549,414	—		4,532		—		—		4,532


Purchases of Capped Calls related to the 2026 Notes	—	—		—	—		—	—		—	—		—	—		—	—		(118,766)		—		—		(118,766)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		64,318		—		—		64,318


Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(108)		(108)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(56,819)		—		(56,819)
BALANCE–September 30, 2021	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	607,215,233	$	60	$	3,877,418	$	(1,514,509)	$	(108)	$	2,362,861

	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-December 31, 2020	—	—		—	—		—	—		—	—		—	—		540,714,692	54		2,596,012		(1,043,449)		41		1,552,658



Issuance of common stock in connection with the February 2021 Offering	—	—		—	—		—	—		—	—		—	—		32,817,421	3		857,191		—		—		857,194


Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		979,198	—		56		—		—		56
Vesting of restricted stock units	—	—		—	—		—	—		—	—		—	—		17,712,282	1		—		—		—		1
Common stock issued upon exercise of warrants	—	—		—	—		—	—		—	—		—	—		8,200,151	1		57,572		—		—		57,573
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		6,791,489	1		11,268		—		—		11,269


Purchases of Capped Calls related to the 2026 Notes	—	—		—	—		—	—		—	—		—	—		—	—		(118,766)		—		—		(118,766)
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		474,085		—		—		474,085


Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(149)		(149)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(471,060)		—		(471,060)
BALANCE–September 30, 2021	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	607,215,233	$	60	$	3,877,418	$	(1,514,509)	$	(108)	$	2,362,861

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OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY

EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

(In thousands, except number of shares)

(Unaudited)


	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-June 30, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	84,983,061	—		$	64,777	$	(908,598)	$	302	$	(843,519)


Issuance of issuer stock rights in extinguishment of the 2019 Convertible Notes	—	—		—	—		—	—		—	—		—	—		—	—		212,940		—		—		212,940



Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		336,665	—		21		—		—		21


Exercise of stock options	—	—		—	—		—	—		—	—		—	—		163,121	—		397		—		—		397



Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		2,522		—		—		2,522


Other comprehensive gain	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(158)		(158)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(80,853)		—		(80,853)
BALANCE–September 30, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	85,482,847	$	—	$	280,657	$	(989,451)	$	144	$	(708,650)

	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-December 31, 2019	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	83,748,443	—		$	57,362	$	(790,483)	$	18	$	(733,103)


Issuance of issuer stock rights in extinguishment of the 2019 Convertible Notes	—	—		—	—		—	—		—	—		—	—		—	—		212,940		—		—		212,940



Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		1,123,200	—		95		—		—		95


Exercise of stock options	—	—		—	—		—	—		—	—		—	—		611,204	—		1,098		—		—		1,098



Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		9,162		—		—		9,162


Other comprehensive gain	—	—		—	—		—	—		—	—		—	—		—	—		—		—		126		126
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(198,968)		—		(198,968)
BALANCE–September 30, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	85,482,847	$	—	$	280,657	$	(989,451)	$	144	$	(708,650)

See accompanying notes to condensed consolidated financial statements.

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OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(471,060)	$	(198,968)
Adjustments to reconcile net loss to cash, cash equivalents, and restricted cash (used in) provided by operating activities:
Depreciation and amortization – net of accretion	26,551		31,114
Amortization of right of use asset	6,055		22,008
Impairment of software development costs	3,227		—
Stock-based compensation	465,059		9,162
Derivative and warrant fair value adjustment