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Form 424B3 - Form 10-Q Filed on November 10, 2021

Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-251529
 
Prospectus Supplement No. 13
(To Prospectus dated March 12, 2021)

OPENDOOR TECHNOLOGIES INC.
https://cdn.kscope.io/e556f5603348a7d068db4224bde7023a-image_0.jpg
 
This prospectus supplement updates, amends and supplements the prospectus dated March 12, 2021 (the “Prospectus”), which forms a part of our Registration Statement on Form S-1 (Registration No. 333-251529). Capitalized terms used in this prospectus supplement and not otherwise defined herein have the meanings specified in the Prospectus.
 
This prospectus supplement is being filed to update, amend and supplement the information included in the Prospectus with the information contained in our Quarterly Report on Form 10-Q filed with the SEC on November 10, 2021, which is set forth below.
 
This prospectus supplement is not complete without the Prospectus. This prospectus supplement should be read in conjunction with the Prospectus, which is to be delivered with this prospectus supplement, and is qualified by reference thereto, except to the extent that the information in this prospectus supplement updates or supersedes the information contained in the Prospectus. Please keep this prospectus supplement with your Prospectus for future reference.
 
Opendoor Technologies Inc.’s common stock is quoted on the Nasdaq Global Select Market under the symbol “OPEN.” On November 9, 2021, the closing price of our common stock was $21.00 per share.
 
INVESTING IN OUR SECURITIES INVOLVES CERTAIN RISKS. SEE “RISK FACTORS” BEGINNING ON PAGE 6 OF THE PROSPECTUS AND ON PAGE 59 OF OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
 
The date of this prospectus supplement is November 10, 2021

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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
OR
☐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)
Delaware98-1515020
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
410 N. Scottsdale Road,Suite 1600
Tempe,AZ85281
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareOPENThe 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.
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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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 cash484,476 92,863 
Marketable securities481,051 47,637 
Mortgage loans held for sale pledged under agreements to repurchase22,858 7,529 
Escrow receivable121,394 1,494 
Real estate inventory, net6,268,081 465,936 
Other current assets ($616 and $373 carried at fair value)
84,365 24,987 
Total current assets8,821,000 2,053,111 
PROPERTY AND EQUIPMENT – Net38,321 29,228 
RIGHT OF USE ASSETS43,800 49,517 
GOODWILL47,158 30,945 
INTANGIBLES – Net11,494 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 portion4,049,812 339,173 
Other secured borrowings19,728 7,149 
Interest payable9,746 1,081 
Lease liabilities - current portion4,637 20,716 
Total current liabilities4,239,953 393,389 
NON-RECOURSE ASSET-BACKED DEBT – Net of current portion1,367,989 135,467 
CONVERTIBLE SENIOR NOTES952,415 — 
WARRANT LIABILITIES— 47,349 
LEASE LIABILITIES – Net of current portion43,073 46,625 
OTHER LIABILITIES2,324 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 capital3,877,418 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,
2021202020212020
REVENUE$2,266,354 $338,613 $4,199,014 $2,334,235 
COST OF REVENUE2,063,865 302,802 3,740,622 2,152,803 
GROSS PROFIT202,489 35,811 458,392 181,432 
OPERATING EXPENSES:
Sales, marketing and operations153,496 27,336 319,087 156,290 
General and administrative90,105 40,168 502,800 99,074 
Technology and development27,295 13,184 102,360 45,809 
Total operating expenses270,896 80,688 924,247 301,173 
LOSS FROM OPERATIONS(68,407)(44,877)(465,855)(119,741)
DERIVATIVE AND WARRANT FAIR VALUE ADJUSTMENT3,499 (24,329)12,179 (25,219)
INTEREST EXPENSE(43,550)(12,376)(70,375)(57,393)
OTHER INCOME – Net51,965 764 53,601 3,619 
LOSS BEFORE INCOME TAXES(56,493)(80,818)(470,450)(198,734)
INCOME TAX EXPENSE(326)(35)(610)(234)
NET LOSS$(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:
Basic603,389 89,070 585,854 85,907 
Diluted603,389 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,
2021202020212020
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 EquityShareholders’ 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 StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders’
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
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 EquityShareholders’ 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 StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders’
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
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 EquityShareholders’ 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 StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders’
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
BALANCE-June 30, 202040,089,513 $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, 202040,089,513 $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 EquityShareholders’ 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 StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders’
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
BALANCE-December 31, 201940,089,513 $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, 202040,089,513 $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,
20212020
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 accretion26,551 31,114 
Amortization of right of use asset6,055 22,008 
Impairment of software development costs3,227 — 
Stock-based compensation465,059 9,162 
Derivative and warrant fair value adjustment(12,179)1,901 
Gain on settlement of lease liabilities(5,237)— 
Inventory valuation adjustment32,602 7,517 
Changes in fair value of derivative instruments(243)22,568 
Changes in fair value of marketable equity securities(51,013)— 
Payment-in-kind interest— 3,910 
Dividend-in-kind264 — 
Net fair value adjustments and gain (loss) on sale of mortgage loans held for sale(3,144)(2,131)
Origination of mortgage loans held for sale(153,789)(88,098)
Proceeds from sale and principal collections of mortgage loans held for sale141,624 78,360 
Changes in operating assets and liabilities:
Escrow receivable(119,900)11,241 
Real estate inventories(5,805,802)1,146,798 
Other assets(50,202)793 
Accounts payable and other accrued liabilities102,310 3,355 
Interest payable3,183 (2,530)
Lease liabilities(11,864)(9,646)
Net cash (used in) provided by operating activities(5,903,558)1,037,354 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment(22,878)(12,068)
Purchase of intangible assets(790)— 
Purchase of marketable securities(458,585)(174,530)
Proceeds from sales, maturities, redemptions and paydowns of marketable securities85,638 135,778 
Purchase of non-marketable equity securities(15,100)— 
Acquisitions, net of cash acquired(20,110)— 
Net cash used in investing activities(431,825)(50,820)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible senior notes, net of issuance costs953,066 — 
Purchase of capped calls related to the convertible senior notes(118,766)— 
Proceeds from exercise of stock options11,268 1,078 
Proceeds from warrant exercise22,402 — 
Proceeds from the February 2021 Offering886,067 — 
Issuance cost of common stock(28,876)— 
Proceeds from non-recourse asset-backed debt7,782,076 912,082 
Principal payments on non-recourse asset-backed debt(2,837,436)(1,949,165)
Proceeds from other secured borrowings150,748 85,996 
Principal payments on other secured borrowings(138,169)(74,720)
Payment of loan origination fees and debt issuance costs(9,274)(3,068)
Net cash provided by (used in) financing activities6,673,106 (1,027,797)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH337,723 (41,263)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning of period1,505,528 684,822 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period$1,843,251 $643,559 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during the period for interest$57,151 $47,977 
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OPENDOOR TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
DISCLOSURES OF NONCASH FINANCING ACTIVITIES:
Issuance of issuer stock rights in extinguishment of the 2019 Convertible Notes$— $212,940 
Issuance of common stock in extinguishment of warrant liabilities$(35,170)$— 
RECONCILIATION TO CONDENSED CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$1,358,775 $469,365 
Restricted cash484,476 174,194 
Cash, cash equivalents, and restricted cash$1,843,251 $643,559 


See accompanying notes to condensed consolidated financial statements.
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OPENDOOR TECHNOLOGIES INC.
Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)

1.DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES
Description of Business
Opendoor Technologies Inc. (the “Company” and “Opendoor”) including its consolidated subsidiaries and certain variable interest entities (“VIEs”), is a leading digital platform for buying and selling homes. Opendoor streamlines the home selling and buying transaction and creates an end-to-end experience online. The Company was incorporated in Delaware on December 30, 2013.
Correction of Prior Period Amounts
On April 12, 2021, subsequent to the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, the Acting Director of the Division of Corporation Finance and the Acting Chief Accountant of the SEC issued a Staff Statement (the “Staff Statement”) on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”).
The Company took into consideration the guidance in the Staff Statement and Accounting Standards Codification 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity ("ASC 815-40") and evaluated the Public and Sponsor Warrants (each as defined herein and collectively the "Warrants"). The Warrants were issued in a private placement simultaneously with the closing of the initial public offering of Social Capital Hedosophia Holdings Corp. II (“SCH”), assumed by the Company through the Business Combination (as defined herein) on December 18, 2020, and classified in shareholders' equity as of and for the year ended December 31, 2020. While the Company concluded the Public Warrants meet the criteria to continue to be classified in shareholders' equity, the Company concluded the Sponsor Warrants do not meet the scope exception from derivative accounting prescribed by ASC 815-40 and should therefore be recorded as a liability on the Company’s consolidated balance sheet at fair value as of the closing of the Business Combination, with subsequent changes in their fair value recognized in the Company’s condensed consolidated statement of operations at each reporting date. The accounting for the Sponsor Warrants does not impact the Company's financial statements in any reporting periods prior to the Business Combination, as the Company assumed the Warrants through the Business Combination which was accounted for as a reverse recapitalization.
The fair value of the Sponsor Warrants as of the Closing Date on December 18, 2020 and December 31, 2020 amounted to $81.1 million and $47.3 million, respectively. The change in fair value from the Closing Date through December 31, 2020 amounted to a gain of $33.8 million. The impact of the misstatement as of December 31, 2020 resulted in an understatement of the warrant liability of $47.3 million, and an overstatement of accumulated deficit and additional paid-in capital of $33.8 million and $81.1 million respectively.
The Company evaluated the impact of error related to the accounting treatment of Sponsor Warrants with respect to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and determined, based on consideration of quantitative and qualitative factors, that the error had an immaterial impact, individually and in aggregate. As such, the Company corrected its accounting for Sponsor Warrants in its Quarterly Report on Form 10-Q for the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021.
The following table provides the impact of the correction on the Company's consolidated balance sheet as of December 31, 2020, as presented herein (in thousands):
Previously StatedAdjustmentsAs Corrected
Warrant liabilities$— 47,349 $47,349 
Total liabilities$575,575 47,349 $622,924 
Additional paid-in capital$2,677,155 (81,143)$2,596,012 
Accumulated deficit(1,077,243)33,794 (1,043,449)
Total shareholders' equity$1,600,007 (47,349)$1,552,658 
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OPENDOOR TECHNOLOGIES INC.
Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to generally accepted accounting principles in the United States of America (“GAAP”). The condensed consolidated financial statements as of September 30, 2021 and December 31, 2020 and for the three and nine month periods ended September 30, 2021 and 2020 include the accounts of Opendoor, its wholly owned subsidiaries and VIEs where the Company is the primary beneficiary. The accompanying unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements herein. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period's presentation.
As a result of the Business Combination completed on December 18, 2020, prior period share and per share amounts presented in the accompanying condensed consolidated financial statements and these related notes have been retroactively converted. See “Note 2— Business Combination” for additional information.
The accompanying interim condensed consolidated financial statements and these related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“Annual Report”) filed on March 4, 2021.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ materially from such estimates. Significant estimates, assumptions and judgments made by management include, among others, the determination of the fair value of common stock, share-based awards, warrants, derivatives, convertible senior notes, and inventory impairment (“real estate inventory valuation adjustment”). Management believes that the estimates and judgments upon which they rely are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s financial statements will be affected. The COVID-19 pandemic introduced significant additional uncertainties with respect to estimates, judgments and assumptions, which may materially impact these estimates.
Significant Risks and Uncertainties
The Company operates in a dynamic industry and, accordingly, can be affected by a variety of factors. For example, the Company believes that changes in any of the following areas could have a significant negative effect on the Company in terms of its future financial position, results of operations or cash flows: public health crises, like the COVID-19 pandemic; its rates of revenue growth; its ability to manage inventory; engagement and usage of its products; the effectiveness of its investment of resources to pursue strategies; competition in its market; the stability of the residential real estate market; the impact of interest rate changes on demand and its costs; changes in technology, products, markets or services by the Company or its competitors; the addition or loss of significant customers; its ability to maintain or establish relationships with listings and data providers; its ability to obtain or maintain licenses and permits to support its current and future businesses; actual or anticipated changes to its products and services; changes in government regulation affecting its business; the outcomes of legal proceedings; natural disasters and catastrophic events; scaling and adaptation of existing technology and network infrastructure; its management of its growth; its ability to attract and retain qualified employees and key personnel; its ability to successfully integrate and realize the benefits of its past or future strategic acquisitions or investments; the protection of customers’ information and other privacy concerns; the protection of its brand and intellectual property; and intellectual property infringement and other claims, among other things.
Concentrations of Credit Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, investments in marketable securities, and mortgage loans held for sale pledged under agreements to repurchase (“MLHFS”). The Company places cash and cash equivalents and investments with major financial institutions, which management assesses to be of high credit quality, in order to limit exposure of the Company’s investments.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
Similarly, the Company’s credit risk on mortgage loans held for sale is mitigated due to a large number of customers. Further, the Company’s credit risk on mortgage loans held for sale is mitigated by the fact that the Company typically sells mortgages on the secondary market within a relatively short period of time after which the Company’s exposure is limited to borrower defaults within the initial few months of the mortgage.
The Company’s significant accounting policies are discussed in “Part II – Item 8 – Financial Statements and Supplementary Data – Note 1. Description of Business and Accounting Policies” in the Annual Report. There have been no changes to these significant accounting policies for the nine month period ended September 30, 2021, except as noted below.
Marketable Securities
The Company's investments in marketable securities consist of debt securities classified as available-for-sale as well as marketable equity securities. The Company's available-for-sale debt securities are measured at fair value with unrealized gains and losses included in Accumulated other comprehensive income (loss) in shareholder's equity and realized gains and losses included in Other income. The Company's marketable equity securities are measured at fair value with changes in fair value recognized in Other income. See “Note 4 — Cash, Cash Equivalents, and Investments” for further discussion.

Convertible Senior Notes
The 0.25% convertible senior notes due in 2026 (the "2026 Notes") issued by the Company are accounted for wholly as debt in accordance with ASU 2020-06. The 2026 Notes have an initial carrying value equal to the net proceeds from issuance. Issuance costs associated with the 2026 Notes are amortized over the term using the effective interest method. Conversions are settled through payment of cash or a combination of cash and stock, at the Company's option. Upon conversion, the carrying amount of the 2026 Notes, including any unamortized debt issuance costs, is reduced by cash paid, with any difference being reflected as a change in equity. There will not be any gains or losses recognized upon a conversion.
Capped Calls
The Company purchased certain capped calls in connection with the issuance of the 2026 Notes in August 2021 which it expects to reduce potential dilution from conversions of the 2026 Notes. The capped calls were determined to be freestanding financial instruments that meet the criteria for classification in equity; as such, the capped calls were recorded as a reduction of Additional paid-in capital within shareholders' equity and will not be subsequently remeasured.
Derivative Instruments
The Company’s derivative instruments are comprised of interest rate caps, interest rate lock commitments (“IRLCs”), and embedded conversion options related to the convertible notes issued in 2019 (the "2019 Convertible Notes"). The Company’s derivative instruments are freestanding in nature and some are utilized as economic hedges. These derivative instruments are recorded at fair value with changes recognized as a gain or loss to operations. Beginning in 2021, the Company changed the fair value classification of IRLCs from Level 2 to Level 3 as the Company began to adjust observable input data for the estimated pull-through rate, a Company specific input that is unobservable to market participants. See “Note 5 — Derivative Instruments” and "Note 8 — Fair Value Disclosures" for further discussion.
Non-marketable Equity Securities
The Company's non-marketable equity securities are strategic investments in a privately held company. Non-marketable equity securities are investments that do not have a readily determinable fair value, which are measured at cost minus impairment, if any, adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Measurement Alternative”). All gains and losses on these investments, realized and unrealized, are recorded in Other income-net on the Company's condensed consolidated statements of operations. The Company assesses whether an impairment loss on its non-marketable equity securities has occurred due to declines in fair value or other
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
market conditions. If any impairment is identified for non-marketable equity securities, the Company writes down the investment to its fair value.
Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment and definite-lived intangible assets, among other long-term assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent the carrying amount of the underlying asset exceeds its fair value. Impairment loss of $0.7 million and $4.2 million was recognized for the three and nine months ended September 30, 2021, respectively. Of these amounts, $0.7 million and $3.2 million are included in Technology and development for the three and nine months ended September 30, 2021, respectively, and $0.0 million and $1.0 million are included in General and administrative for the three and nine months ended September 30, 2021, respectively. There was no impairment loss recognized for the three months ended September 30, 2020 while impairment loss of $1.8 million was recognized for the nine months ended September 30, 2020. Of this amount, $0.9 million is included in Technology and development and $0.9 million is included in General and administrative. The impairment loss recognized for the three and nine months ended September 30, 2021 is related to abandonment of property and equipment, impairment and abandonment of certain internally developed software projects, and sublease of certain right of use assets.

Public and Sponsor Warrants
On April 30, 2020, SCH consummated its initial public offering of 41,400,000 units, consisting of one share of Class A common stock and one third of one warrant exercisable for Class A common stock, at a price of $10.00 per unit. Each whole warrant entitled the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share (the “Public Warrants”). Simultaneously with the closing of the IPO, SCH completed the private sale of 6,133,333 warrants to SCH’s sponsor at a price of $1.50 per warrant (the “Sponsor Warrants”). Each Sponsor Warrant allowed the sponsor to purchase one share of Class A common stock at $11.50 per share.
The Sponsor Warrants and shares of common stock issuable upon the exercise of Sponsor Warrants were not able to be transferred, assigned, or sold until 30 days after the completion of a Business Combination. Additionally, the Sponsor Warrants were eligible for cash and cashless exercises, at the holder’s option, and were redeemable only if the reference value, as defined in the Warrant Agreement, was less than $18.00 per share. If the Sponsor Warrants were held by someone other than the sponsors and certain permitted transferees, the Sponsor Warrants would have been redeemable and exercisable on the same basis as the Public Warrants.
The Company evaluated the Public and Sponsor Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity, and concluded that the Sponsor Warrants do not meet the criteria to be classified in shareholders’ equity. Specifically, the exercise and settlement features for the Sponsor Warrants precluded them from being considered indexed to the Company’s own stock, given that a change in the holder of the Sponsor Warrants may alter the settlement of the Sponsor Warrants. Since the holder of the instrument is not an input to a standard option pricing model (a consideration with respect to the indexation guidance), the fact that a change in the holder could impact the value of the Sponsor Warrants means the Sponsor Warrants were not indexed to the Company’s own stock. Since the Sponsor Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities on the balance sheet at fair value upon the consummation of the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statement of operations at each reporting period. The Company concluded that the Public Warrants, which do not have the same exercise and settlement features as the Sponsor Warrants, meet the criteria to be classified in shareholders' equity.
On June 9, 2021, the Company filed a notice of redemption of all outstanding Public Warrants and Sponsor Warrants. The end of the redemption period was July 9, 2021, at which time the Company redeemed all unexercised warrants at a price of $0.10 per Warrant.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
Recently Issued Accounting Standards
Recently Adopted Accounting Standards

In August 2020, the FASB issued ASU 2020-06, to simplify accounting for certain financial instruments. This guidance eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. The standard also amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The Company adopted this ASU as of January 1, 2021 using the modified retrospective method. The adoption of this ASU did not have a material impact to the Company’s condensed consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04 which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Inter- Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. This guidance is effective from March 12, 2020 through December 31, 2022. Entities may elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company may elect to take advantage of this optional guidance in its transition away from LIBOR within certain debt contracts. The Company is currently evaluating the impact of adopting this guidance on the Company's financial position, results of operations or cash flows.
2.BUSINESS COMBINATION
Opendoor Labs Inc. entered into a merger agreement (the “Merger Agreement”) with Social Capital Hedosophia Holdings Corp. II, (“SCH”) on September 15, 2020. Pursuant to the Merger Agreement, Hestia Merger Sub Inc., a newly formed subsidiary of SCH (“Merger Sub”), merged with and into Opendoor Labs Inc. Upon the completion of the transactions contemplated by the terms of the Merger Agreement (the “Closing”) on December 18, 2020, the separate corporate existence of Merger Sub ceased and Opendoor Labs Inc. survived the merger and became a wholly owned subsidiary of SCH. On December 18, 2020, SCH also filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SCH was domesticated as a Delaware corporation, changing its name from “Social Capital Hedosophia Holdings Corp. II” to “Opendoor Technologies Inc.” These transactions are collectively referred to as the “Business Combination.”
The Business Combination was accounted for as a reverse recapitalization whereby SCH was determined as the accounting acquiree and Opendoor Labs Inc. as the accounting acquirer. This accounting treatment is equivalent to Opendoor Labs Inc. issuing stock for the net assets of SCH, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination are those of Opendoor Labs Inc. At the Closing, the Company received consideration of $376.6 million in cash as a result of the reverse recapitalization.
In connection with the Business Combination, SCH entered into subscription agreements with certain investors, whereby it issued 60,005,000 shares of common stock at $10.00 per share (“PIPE Shares”) for an aggregate purchase price of $600.1 million (“PIPE Investment”), which closed simultaneously with the consummation of the Business Combination. Upon the Closing, the PIPE Shares were automatically converted into shares of the Company's common stock on a one-for-one basis.
Upon the Closing, holders of Opendoor Labs Inc. common stock received shares of Opendoor Technologies common stock in an amount determined by application of the exchange ratio of 1.618 (“Exchange Ratio”), which was based on Opendoor Labs Inc.’s implied price per share prior to the Business Combination. For periods prior to the Business Combination, the reported share and per share amounts have been retroactively converted (“Retroactive Conversion”) by applying the Exchange Ratio.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
In connection with the Business Combination, the Company incurred approximately $43.6 million of equity issuance costs, consisting of underwriting, legal, and other professional fees, which are recorded to additional paid-in capital as a reduction of proceeds.
Other Acquisitions
On September 3, 2021, the Company acquired 100% of the outstanding equity of Services Labs, Inc., including its consolidated subsidiaries (“Pro.com”), in exchange for $21.8 million in cash consideration. The Company acquired Pro.com, a construction project platform, for its technology and talent. Acquired intangible assets consist of developed technology valued at $4.2 million which will be amortized over one year.
3.REAL ESTATE INVENTORY
The following table presents the components of inventory, net of applicable real estate inventory valuation adjustments, as of the dates presented (in thousands):
September 30,
2021		December 31,
2020
Work-in-process$2,759,984 $183,004 
Finished goods3,508,097 282,932 
Total real estate inventory$6,268,081 $465,936 
4.CASH, CASH EQUIVALENTS, AND INVESTMENTS
The amortized cost, gross unrealized gains and losses, and fair value of cash, cash equivalents, and marketable securities as of September 30, 2021 and December 31, 2020, are as follows (in thousands):
September 30, 2021
Cost
Basis
Unrealized
Gains
Unrealized
Losses
Fair Value
Cash and Cash
Equivalents
Marketable
Securities
Cash$83,893 $— $— $83,893 $83,893 $— 
Money market funds974,657 — — 974,657 974,657 — 
Time deposit300,225 — — 300,225 300,225 — 
Corporate debt securities205,805 17 (120)205,702 — 205,702 
Mutual fund200,264 — — 200,264 — 200,264 
Equity securities61,013 — — 61,013 — 61,013 
Asset-backed securities4,907 — (1)4,906 — 4,906 
Certificates of deposit4,750 — — 4,750 — 4,750 
Sovereign bonds4,418 — (2)4,416 — 4,416 
Total$1,839,932 $17 $(123)$1,839,826 $1,358,775 $481,051 
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
December 31, 2020
Cost
Basis
Unrealized
Gains
Unrealized
Losses
Fair Value
Cash and Cash
Equivalents
Marketable
Securities
Cash$709,924 $— $— $709,924 $709,924 $— 
Money market funds618,197 — — 618,197 618,197 — 
Commercial paper81,037 1 — 81,038 81,038 — 
Corporate debt securities29,891 26 (2)29,915 3,506 26,409 
Asset-backed securities12,518 19 (4)12,533 — 12,533 
U.S. agency securities6,993 2 — 6,995 — 6,995 
U.S. Treasury securities1,700 — — 1,700 — 1,700 
Total$1,460,260 $48 $(6)$1,460,302 $1,412,665 $47,637 
A summary of debt securities with unrealized losses aggregated by period of continuous unrealized loss is as follows (in thousands):
Less than 12 Months12 Months or GreaterTotal
September 30, 2021Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Corporate debt securities$174,669 $(120)$— $— $174,669 $(120)
Asset-backed securities4,906 (1)— — 4,906 (1)
Certificate of deposit4,750 — — — 4,750 — 
Sovereign bonds4,416 (2)— — 4,416 (2)
Total$188,741 $(123)$— $— $188,741 $(123)
Less than 12 Months12 Months or GreaterTotal
December 31, 2020Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Commercial paper$19,296 $— $— $— $19,296 $— 
Corporate debt securities7,538 (2)— — 7,538 (2)
Asset-backed securities4,611 (4)— — 4,611 (4)
Total$31,445 $(6)$— $— $31,445 $(6)
The scheduled contractual maturities of marketable securities as of September 30, 2021 are as follows (in thousands):
September 30, 2021Fair Value
Within
1 Year
After
1 Year
through
5 Years
Corporate debt securities$205,702 $58,452 $147,250 
Asset-backed securities4,906 2,044 2,862 
Certificate of deposit4,750 4,750 — 
Sovereign bonds4,416 4,416 — 
Total$219,774 $69,662 $150,112 
As of September 30, 2021, the Company had $5.1 million of non-marketable equity securities without a readily determinable fair value, measured using the Measurement Alternative. The Company did not record any adjustments to the carrying value of its non-marketable equity securities. As of December 31, 2020, the Company had no non-marketable equity securities without a readily determinable fair value.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
5.DERIVATIVE INSTRUMENTS
The Company uses certain types of derivative instruments in the normal course of business and the Company’s use of derivatives includes interest rate caps to manage interest rate risk, IRLCs with respect to our MLHFS, and embedded conversion options with respect to the Company’s 2019 Convertible Notes. Derivative transactions can be measured in terms of notional amount, but this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which interest and other payments are determined.
Interest Rate Caps
The Company uses free-standing derivative instruments in the normal course of business as economic hedges to manage interest rate risks with respect to its variable senior credit facilities. The interest rate caps were carried at fair value in Other current assets with changes in fair value included in Other income. The Company’s interest rate cap position expired in November 2020.
Interest Rate Lock Commitments
In originating mortgage loans, the Company enters into IRLCs with prospective borrowers which are freestanding derivative instruments. IRLCs are a commitment that binds the Company, subject to loan underwriting and approval process, to fund the loan at a specified interest rate, regardless of fluctuations in the market interest rates between commitment date and funding date. The interest rate risk associated with the fluctuations in market interest rates between commitment date and funding date with respect to IRLCs is mitigated as the Company operates under the best effort basis whereby at the time of commitment, the Company enters into a sales commitment with a third-party for the same prospective loan. The fair value of interest rate lock commitments is presented in Other current assets. The change in fair value on IRLCs is a component of Other revenue.
Embedded Conversion Options
The Company bifurcated the embedded conversion features associated with the 2019 Convertible Notes. The 2019 Convertible Notes and the related bifurcated embedded conversion options were extinguished in September 2020. Prior to extinguishment, the embedded conversion options were measured at fair value and were presented in Derivative and warrant liabilities. The change in fair value of the embedded conversion options is a component of Derivative and warrant fair value adjustment.
The following table presents the total notional amounts and fair values for the Company’s derivatives (in thousands):
Notional
Amount
Fair Value Derivatives
September 30, 2021AssetLiability
Interest rate lock commitments$34,146 $616 $— 
Notional
Amount
Fair Value Derivatives
December 31, 2020AssetLiability
Interest rate lock commitments$15,130 $373 $— 
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
The following table presents the net gains and losses recognized on derivatives within the respective line items in the statement of operations for the periods indicated (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2021202020212020
Revenue$(195)$222 $243 $753 
Derivative and warrant fair value adjustment$— $(23,317)$— $(23,317)
Other income, net$— $— $— $(4)
6.VARIABLE INTEREST ENTITIES
The Company utilizes VIEs in the normal course of business to support the Company’s financing needs. The Company determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with the VIE and reconsiders that conclusion on an on-going basis.
The Company established certain special purpose entities (“SPEs”) for the purpose of financing the Company’s purchase and renovation of real estate inventory through the issuance of asset-backed debt. The Company is the primary beneficiary of the various VIEs within these financing structures and consolidates these VIEs. The Company is determined to be the primary beneficiary based on its power to direct the activities that most significantly impact the economic outcomes of the SPEs through its role in designing the SPEs and managing the real estate inventory they purchase and sell. The Company has a potentially significant variable interest in the entities based upon the equity interest the Company holds in the VIEs.
The following table summarizes the assets and liabilities related to the VIEs consolidated by the Company as of September 30, 2021 and December 31, 2020 (in thousands):
September 30,
2021		December 31,
2020
Assets
Cash and cash equivalents$11,567 $15,849 
Restricted cash475,305 81,408 
Real estate inventory6,131,362 460,680 
Other(1)
141,938 6,729 
Total assets$6,760,172 $564,666 
Liabilities
Non-recourse asset-backed debt$5,417,801 $474,640 
Other(2)
75,547 3,394 
Total liabilities$5,493,348 $478,034 
________________
(1)Includes escrow receivable and other current assets.
(2)Includes accounts payable and other accrued liabilities and interest payable.
The creditors of the VIEs generally do not have recourse to the Company’s general credit solely by virtue of being creditors of the VIEs, with the exception of limited guarantees provided by an Opendoor subsidiary for credit facilities. See “Note 7 — Credit Facilities and Long-Term Debt” for further discussion of the recourse obligations with respect to the VIEs.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
7.CREDIT FACILITIES AND LONG-TERM DEBT
The following tables summarize certain details related to the Company's credit facilities and long-term debt as of September 30, 2021 and December 31, 2020 (in thousands, except interest rates):
Outstanding Amount
September 30, 2021
Borrowing
Capacity
CurrentNon-Current
Weighted
Average
Interest Rate
End of Revolving / Withdrawal Period
Final Maturity
Date
Non-Recourse Asset-Backed Debt:
Asset-Backed Senior Credit Facilities
Revolving Facility 2018-2$1,000,000 $999,206 $— 2.84 %September 23, 2022December 23, 2022
Revolving Facility 2018-3750,000 650,000 — 2.47 %May 26, 2024May 26, 2024
Revolving Facility 2019-1900,000 632,366 — 2.84 %June 30, 2023June 30, 2023
Revolving Facility 2019-21,030,000 1,028,206 — 2.55 %July 8, 2023July 8, 2023
Revolving Facility 2019-3925,000 627,938 — 3.25 %August 22, 2022August 21, 2023
Revolving Facility 2021-1125,000 112,096 — 2.15 %October 31, 2022October 31, 2022
Term Debt Facility 2021-S1400,000 — 250,000 3.48 %April 1, 2024April 1, 2025
Term Debt Facility 2021-S2600,000 — 500,000 3.20 %September 10, 2024September 10, 2025
Total$5,730,000 $4,049,812 $750,000 
Issuance Costs(3,234)
Carrying Value$746,766 
Asset-Backed Mezzanine Term Debt Facilities
Term Debt Facility 2016-M1$324,000 $— $324,000 10.00 %October 31, 2023March 31, 2025
Term Debt Facility 2020-M1300,000 — 300,000 10.00 %January 23, 2023January 23, 2026
Total$624,000 $— $624,000 
Issuance Costs(2,777)
Carrying Value$621,223 
Total Non-Recourse Asset-Backed Debt$6,354,000 $4,049,812 $1,367,989 
Recourse Debt - Other Secured Borrowings:
Mortgage Financing
Repo Facility 2019-R1$100,000 $19,728 $— 1.84 %May 26, 2022May 26, 2022
Total Recourse Debt$100,000 $19,728 $— 

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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
Outstanding Amount
December 31, 2020CurrentNon-Current
Weighted
Average
Interest Rate
Non-Recourse Asset-Backed Debt:
Asset-Backed Senior Credit Facilities
Revolving Facility 2018-1$— $— 4.28 %
Revolving Facility 2018-2— — 4.36 %
Revolving Facility 2018-325,385 — 4.19 %
Revolving Facility 2019-132,535 — 3.58 %
Revolving Facility 2019-2230,352 — 3.08 %
Revolving Facility 2019-350,901 — 3.60 %
Total$339,173 $— 
Asset-Backed Mezzanine Term Debt Facilities
Term Debt Facility 2016-M1$— $40,000 10.00 %
Term Debt Facility 2020-M1— 100,000 10.00 %
Total$— $140,000 
Issuance Costs(4,533)
Carrying Value$135,467 
Total Non-Recourse Asset-Backed Debt$339,173 $135,467 
Recourse Debt - Other Secured Borrowings:
Mortgage Financing
Repo Facility 2019-R1$7,149 $— 1.94 %
Total Recourse Debt$7,149 $— 
Non-Recourse Asset-backed Debt
The Company utilizes inventory financing facilities consisting of asset-backed senior credit facilities and asset-backed mezzanine term debt facilities to provide financing for the Company’s real estate inventory purchases and renovation. The credit facilities are secured by the assets and equity of one or more SPEs. Each SPE is a consolidated subsidiary of Opendoor and a separate legal entity. Neither the assets nor credit of any such SPE are generally available to satisfy the debts and other obligations of any other Opendoor entities, except to the extent other Opendoor entities are also a party to the financing arrangements. These facilities are non-recourse to Opendoor and, with limited exceptions, non-recourse to other Opendoor subsidiaries. These SPEs are variable interest entities and Opendoor is determined to be the primary beneficiary based on its power to direct the activities that most significantly impact the economic outcomes of the entities through its role in designing the entities and managing the real estate inventory purchased and sold by the entities. The Company has potentially significant variable interest in the entities based upon the equity interest the Company holds in the VIEs.
Asset-backed Senior Credit Facilities
The Company classifies the senior revolving credit facilities as current liabilities on the Company’s condensed consolidated balance sheets as amounts drawn to acquire and renovate homes are required to be repaid as the related real estate inventory is sold, which the Company expects to occur within 12 months. The Company classifies its senior term debt facilities as long-term liabilities on the Company's condensed consolidated balance sheets because its borrowings under these facilities are generally not required to be repaid until the final maturity date.
Undrawn borrowing capacity amounts under the senior credit facilities as reflected in the table above are in some cases not fully committed and any borrowings above the fully committed amounts are subject to the applicable lender’s discretion. As of September 30, 2021, the Company had fully committed borrowing capacity with respect to the Company’s senior credit facilities of $3,837.4 million. The total outstanding amount presented above includes $4,049.8 million of current liabilities and $750.0 million of non-current liabilities; the carrying value of the non-current liabilities is reduced by issuance costs of $3.2 million. Outstanding amounts drawn under each senior credit facility are required to be repaid on the facility maturity date
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
or earlier if accelerated due to an event of default or other mandatory repayment event. The final maturity dates and revolving/withdrawal period end dates reflected in the table above are inclusive of any extensions that are at the sole discretion of the Company. These facilities may also have extensions subject to lender discretion that are not reflected in the table above.

These borrowings are collateralized by cash, equity in the real estate owning SPEs, and the real estate inventory funded by the relevant facility. The lenders have legal recourse only to the real estate-owning SPE borrowers, certain SPE guarantors, and the assets securing the debt, and do not have general recourse to the Company.
The senior revolving credit facilities are typically structured with an initial 24 month revolving period during which time amounts can be borrowed, repaid and borrowed again. The borrowing capacity is generally available until the end of the applicable revolving period as reflected in the table above.
Borrowings under the senior revolving credit facilities accrue interest at a rate based on a LIBOR reference rate plus a margin that varies by facility. The Company may also pay fees on certain unused portions of the committed borrowing capacity, as defined in the respective credit agreements. The Company’s senior revolving credit facility arrangements typically include upfront fees that may be paid at execution of the applicable agreements or be earned at execution and payable over time. These facilities are generally fully prepayable at any time without penalty other than customary LIBOR breakage costs.
The senior revolving credit facilities have aggregated borrowing bases, which increase or decrease based on the cost and value of the properties financed under a given facility and the time that those properties are in the Company’s possession. When the Company resells a home, the proceeds are used to reduce the outstanding balance under the related senior revolving credit facility. The borrowing base for a given facility may be reduced as properties age beyond certain thresholds and any borrowing base deficiencies may be satisfied through contributions of additional properties or partial repayment of the facility.
The senior term debt facilities are typically structured with an initial 36 month withdrawal period during which the outstanding principal amounts are generally not required to be repaid when homes financed through those facilities are sold and instead are intended to remain outstanding until final maturity for each facility. Borrowings under the senior term debt facility accrue interest at a fixed rate. The Company's senior term debt facilities may include upfront issuance costs that are capitalized as part of the facilities' respective carrying values. These facilities are fully prepayable at any time but may be subject to certain customary prepayment penalties.
The senior term debt facilities have aggregated property borrowing bases, which increase or decrease based on the cost and the value of the properties financed under the facilities, how long the Company has possessed such properties and the amount of cash collateral pledged by the SPE borrowers. The borrowing bases for the facilities may be reduced as properties age beyond certain thresholds and any borrowing base deficiencies may be satisfied through contributions of additional properties, cash or through partial repayment of the facilities.
Asset-backed Mezzanine Term Debt Facilities
The Company classifies its mezzanine term debt facilities as long-term liabilities on the Company’s condensed consolidated balance sheets because its borrowings under these facilities are generally not required to be repaid until the applicable final maturity date. These facilities are structurally and contractually subordinated to the related senior revolving credit facilities.
As of September 30, 2021, there were no undrawn amounts under the mezzanine term debt facilities. Any amounts repaid reduce total borrowing capacity as repaid amounts are not available to be reborrowed. The final maturity dates as reflected in the table above are inclusive of any extensions at the sole discretion of the Company. The Company’s mezzanine term debt facilities may also have extensions subject to lender discretion that are not reflected in the table above. See Note 18 — Subsequent Events” for further information regarding the amendment of the Company's asset-backed mezzanine term debt facilities.
Borrowings under a given term debt facility accrue interest at a fixed rate. The Company’s mezzanine term debt facility arrangements may include upfront issuance costs that are capitalized as part of the facilities’ respective carrying values. These facilities are fully prepayable at any time but may be subject to certain prepayment penalties.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
These borrowings are collateralized by cash and equity in certain holding companies that own the Company’s real estate owning SPEs. The lenders generally have legal recourse only to the applicable borrowers of the debt and their assets securing the debt and do not have recourse to Opendoor and, with limited exceptions, do not have recourse to other Opendoor subsidiaries.
The mezzanine term debt facilities have aggregated property borrowing bases, which increase or decrease based on the cost and the value of the properties financed under a given facility and time in the Company’s possession of those properties and the amount of cash collateral pledged by the relevant SPE borrower. The borrowing base for a given facility may be reduced as properties age beyond certain thresholds and any borrowing base deficiencies may be satisfied through contributions of additional properties or cash or through partial repayment of the facility.
Covenants
The Company’s inventory financing facilities include customary representations and warranties, covenants and events of default. Financed properties are subject to customary eligibility criteria and concentration limits.
The terms of these inventory financing facilities and related financing documents require Opendoor to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to equity). As of September 30, 2021, the Company was in compliance with all financial covenants and no event of default had occurred.
Mortgage Financing
To provide capital for Opendoor Home Loans, the Company utilizes a master repurchase agreement (the “Repurchase Agreement”) which is classified as a current liability on its condensed consolidated balance sheets. In March 2019, the Company entered into the Repurchase Agreement with a lender to provide short-term funding for mortgage loans originated by Opendoor Home Loans. The facility provides short-term financing between the issuance of a mortgage loan and when Opendoor Home Loans sells the loan to an investor. In accordance with the Repurchase Agreement, the lender agrees to pay Opendoor Home Loans a negotiated purchase price for eligible loans and Opendoor Home Loans simultaneously agrees to repurchase such loans from the lender within a specified timeframe and at an agreed upon price that includes interest. Opendoor Labs Inc. is the guarantor with respect to the Repurchase Agreement and the obligation to repurchase loans previously transferred under the arrangement for the benefit of the lender.
As of September 30, 2021, the Repurchase Agreement has a borrowing capacity of $100.0 million, of which $20.0 million is fully committed. The Repurchase Agreement includes customary representations and warranties, covenants and provisions regarding events of default. As of September 30, 2021, $20.6 million in mortgage loans were financed under the facility, and Opendoor was in compliance with all financial covenants and no event of default had occurred.
Transactions under the Repurchase Agreement bear interest at a rate based on one-month LIBOR plus an applicable margin, as defined in the Repurchase Agreement, and are secured by residential mortgage loans available for sale. The Repurchase Agreement contains margin call provisions that provide the lender with certain rights in the event of a decline in the market value of the assets purchased under the Repurchase Agreement. The Repurchase Agreement is recourse to Opendoor Labs Inc.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
Convertible Senior Notes
In August 2021, the Company issued the 2026 Notes in an aggregate principal amount of $977.5 million. The tables below summarizes certain details related to the 2026 Notes (in thousands, except interest rates):
September 30, 2021
Aggregate Principal Amount
Unamortized Debt Issuance CostsNet Carrying Amount
2026 Notes$977,500 $(25,085)$952,415 

September 30, 2021Maturity DateStated Cash Interest RateEffective Interest RateSemi-Annual Interest Payment DatesConversion RateConversion Price
2026 NotesAugust 15, 20260.25 %0.77 %February 15; August 1551.9926$19.23 
The 2026 Notes will be convertible at the option of the holders before February 15, 2026 only upon the occurrence of certain events. Beginning on August 20, 2024, the Company has the option to redeem the 2026 Notes upon meeting certain conditions related to price of the Company's common stock. Beginning on February 15, 2026 and until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2026 Notes are convertible at any time at election of each holder. The conversion rate and conversion price are subject to customary adjustments under certain circumstances. In addition, if certain corporate events that constitute a make-whole fundamental change occur, then the conversion rate will be adjusted in accordance with the make-whole table within the Indenture. Upon conversion, the Company may satisfy its conversion obligation by paying cash or providing a combination of cash and the Company's common stock, at the Company's election, based on the applicable conversion rate.
For the three and nine months ended September 30, 2021, total interest expense on the Company's convertible senior notes were $694 thousand, with coupon interest of $278 thousand and amortization of debt issuance costs of $416 thousand.
Capped Calls
In August 2021, in connection with the issuance of the 2026 Notes, the Company purchased capped calls (the "Capped Calls") from certain financial institutions at a cost of $118.8 million. The Capped Calls cover, subject to customary adjustments, the number of shares of the Company's common stock underlying the 2026 Notes. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event of a conversion of the 2026 Notes settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the 2026 Notes its common stock price exceeds the conversion price. The Capped Calls have an initial strike price of $19.23 per share and an initial cap price of $29.59 per share or a cap price premium of 100%.
8.FAIR VALUE DISCLOSURES
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.
Following is a discussion of the fair value hierarchy and the valuation methodologies used for assets and liabilities recorded at fair value on a recurring and nonrecurring basis and for estimating fair value for financial instruments not recorded at fair value.
Fair Value Hierarchy
Fair value measurements of assets and liabilities are categorized based on the following hierarchy:
Level 1 — Fair value determined based on quoted prices in active markets for identical assets or liabilities.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)
(Unaudited)
Level 2 — Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.
Level 3 — Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.
Estimation of Fair Value
The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions, and classification of the Company’s assets and liabilities.
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Notes to Condensed Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share amounts, ratios, or as noted)