OPAD Offerpad Solutions Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 2024

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: 001-39641

 

 

Offerpad Solutions Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware	85-2800538
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2150 E. Germann Road, Suite 1, Chandler, Arizona	85286
(Address of principal executive offices)	(Zip Code)
(844) 388-4539
(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
Class A common stock, $0.0001 par value per share		OPAD		The New York Stock Exchange

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 ☒

As of July 29, 2024, there were 27,353,992 shares of Offerpad’s Class A common stock outstanding.

 

 

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OFFERPAD SOLUTIONS INC.

FORM 10-Q

FOR THE QUARTER ENDED June 30, 2024

TABLE OF CONTENTS

 

		Page
Cautionary Note Regarding Forward-Looking Statements		3
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
SIGNATURES		39

 

 

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes statements that express Offerpad Solutions Inc.’s (“Offerpad,” the “Company,” “we,” “us,” and “our,” and similar references) opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in 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”). These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They may appear in a number of places throughout this Quarterly Report on Form 10-Q, including Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our future results of operations, financial condition and liquidity, our prospects, potential growth or expansion evaluations, strategies, including product and service offerings, macroeconomic trends, geopolitical concerns, and the markets in which Offerpad operates.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to:

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.

 

 

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Balance Sheets

 

				June 30,				December 31,
(in thousands, except par value per share) (Unaudited)				2024				2023
ASSETS
Current assets:
Cash and cash equivalents				$	56,906			$	75,967
Restricted cash					16,092				3,967
Accounts receivable					6,745				9,935
Real estate inventory					307,750				276,500
Prepaid expenses and other current assets					3,545				5,236
Total current assets					391,038				371,605
Property and equipment, net					4,492				4,517
Other non-current assets					11,095				3,572
TOTAL ASSETS		(1)		$	406,625			$	379,694
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable				$	2,838			$	4,946
Accrued and other current liabilities					13,095				13,859
Secured credit facilities and other debt, net					271,887				227,132
Secured credit facilities and other debt - related party					31,899				30,092
Total current liabilities					319,719				276,029
Warrant liabilities					136				471
Other long-term liabilities					9,203				1,418
Total liabilities		(2)			329,058				277,918
Commitments and contingencies (Note 16)
Stockholders’ equity:
Class A common stock, $0.0001 par value; 2,000,000 shares authorized; 27,329 and 27,233 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively					3				3
Additional paid in capital					506,748				499,660
Accumulated deficit					(429,184	)			(397,887	)
Total stockholders’ equity					77,567				101,776
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				$	406,625			$	379,694

________________

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Operations

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(in thousands, except per share data) (Unaudited)		2024				2023				2024				2023
Revenue		$	251,122			$	230,147			$	536,480			$	839,726
Cost of revenue			229,251				207,916				492,014				810,210
Gross profit			21,871				22,231				44,466				29,516
Operating expenses:
Sales, marketing and operating			20,230				29,040				42,682				71,391
General and administrative			10,538				12,713				22,493				27,192
Technology and development			964				2,312				2,737				4,553
Total operating expenses			31,732				44,065				67,912				103,136
Loss from operations			(9,861	)			(21,834	)			(23,446	)			(73,620	)
Other income (expense):
Change in fair value of warrant liabilities			(9	)			435				335				46
Interest expense			(4,581	)			(1,867	)			(9,486	)			(9,299	)
Other income, net			615				965				1,369				1,247
Total other expense			(3,975	)			(467	)			(7,782	)			(8,006	)
Loss before income taxes			(13,836	)			(22,301	)			(31,228	)			(81,626	)
Income tax benefit (expense)			54				(43	)			(69	)			(165	)
Net loss		$	(13,782	)		$	(22,344	)		$	(31,297	)		$	(81,791	)
Net loss per share, basic		$	(0.50	)		$	(0.82	)		$	(1.14	)		$	(3.21	)
Net loss per share, diluted		$	(0.50	)		$	(0.82	)		$	(1.14	)		$	(3.21	)
Weighted average common shares outstanding, basic			27,385				27,258				27,362				25,470
Weighted average common shares outstanding, diluted			27,385				27,258				27,362				25,470

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

 

		Common Stock								Additional Paid in				Accumulated				Total Stockholders’
(in thousands) (Unaudited)		Shares				Amount				Capital				Deficit				Equity
Balance at March 31, 2024			27,300			$	3			$	503,500			$	(415,402	)		$	88,101
Issuance of common stock upon vesting of restricted stock units			29				—				(1	)			—				(1	)
Stock-based compensation expense			—				—				3,249				—				3,249
Net loss			—				—				—				(13,782	)			(13,782	)
Balance at June 30, 2024			27,329			$	3			$	506,748			$	(429,184	)		$	77,567

 

		Common Stock								Additional Paid in				Accumulated				Total Stockholders’
(in thousands) (Unaudited)		Shares				Amount				Capital				Deficit				Equity
Balance at March 31, 2023			26,507			$	3			$	493,614			$	(340,116	)		$	153,501
Issuance of common stock upon exercise of stock options			1				—				4				—				4
Issuance of common stock upon vesting of restricted stock units			3				—				(5	)			—				(5	)
Exercise of pre-funded warrants			714				—				—				—				—
Stock-based compensation expense			—				—				2,055				—				2,055
Net loss			—				—				—				(22,344	)			(22,344	)
Balance at June 30, 2023			27,225			$	3			$	495,668			$	(362,460	)		$	133,211

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

 

		Common Stock								Additional Paid in				Accumulated				Total Stockholders’
(in thousands) (Unaudited)		Shares				Amount				Capital				Deficit				Equity
Balance at December 31, 2023			27,233			$	3			$	499,660			$	(397,887	)		$	101,776
Issuance of common stock upon exercise of stock options			5				—				16				—				16
Issuance of common stock upon vesting of restricted stock units			91				—				(44	)			—				(44	)
Stock-based compensation expense			—				—				7,116				—				7,116
Net loss			—				—				—				(31,297	)			(31,297	)
Balance at June 30, 2024			27,329			$	3			$	506,748			$	(429,184	)		$	77,567

 

		Common Stock								Additional Paid in				Accumulated				Total Stockholders’
(in thousands) (Unaudited)		Shares				Amount				Capital				Deficit				Equity
Balance at December 31, 2022			16,479			$	2			$	402,544			$	(280,669	)		$	121,877
Issuance of common stock upon exercise of stock options			14				—				53				—				53
Issuance of common stock upon vesting of restricted stock units			17				—				(53	)			—				(53	)
Issuance of pre-funded warrants, net			—				—				89,216				—				89,216
Exercise of pre-funded warrants			10,715				1				10				—				11
Stock-based compensation expense			—				—				3,898				—				3,898
Net loss			—				—				—				(81,791	)			(81,791	)
Balance at June 30, 2023			27,225			$	3			$	495,668			$	(362,460	)		$	133,211

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Cash Flows

 

		Six Months Ended
		June 30,
($ in thousands) (Unaudited)		2024				2023
Cash flows from operating activities:
Net loss		$	(31,297	)		$	(81,791	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation			314				380
Amortization of debt financing costs			1,153				1,980
Real estate inventory valuation adjustment			1,168				7,454
Stock-based compensation			7,116				3,898
Change in fair value of warrant liabilities			(335	)			(46	)
Change in fair value of derivative instruments			—				715
Loss on disposal of property and equipment			29				30
Changes in operating assets and liabilities:
Accounts receivable			3,190				871
Real estate inventory			(32,418	)			446,124
Prepaid expenses and other assets			2,091				313
Accounts payable			(2,108	)			1,693
Accrued and other liabilities			(902	)			(10,126	)
Net cash (used in) provided by operating activities			(51,999	)			371,495
Cash flows from investing activities:
Purchases of property and equipment			(362	)			(90	)
Proceeds from sale of property and equipment			44				—
Purchases of derivative instruments			—				(1,872	)
Net cash used in investing activities			(318	)			(1,962	)
Cash flows from financing activities:
Borrowings from credit facilities and other debt			495,955				411,990
Repayments of credit facilities and other debt			(450,546	)			(889,773	)
Payment of debt financing costs			—				(172	)
Proceeds from exercise of stock options			16				53
Payments for taxes related to stock-based awards			(44	)			(52	)
Borrowings from warehouse lending facility			—				18,488
Repayments of warehouse lending facility			—				(17,336	)
Proceeds from issuance of pre-funded warrants			—				90,000
Proceeds from exercise of pre-funded warrants			—				11
Issuance cost of pre-funded warrants			—				(784	)
Net cash provided by (used in) financing activities			45,381				(387,575	)
Net change in cash, cash equivalents and restricted cash			(6,936	)			(18,042	)
Cash, cash equivalents and restricted cash, beginning of period			79,934				140,299
Cash, cash equivalents and restricted cash, end of period		$	72,998			$	122,257
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents		$	56,906			$	115,599
Restricted cash			16,092				6,658
Total cash, cash equivalents and restricted cash		$	72,998			$	122,257
Supplemental disclosure of cash flow information:
Cash payments for interest		$	12,624			$	13,932

The accompanying notes are an integral part of these condensed consolidated financial statements.

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