10-Q

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Balance Sheets


		March 31,			December 31,
(in thousands, except par value per share) (Unaudited)		2025			2024
ASSETS
Current assets:
Cash and cash equivalents		$	30,826		$	43,018
Restricted cash			4,857			30,608
Accounts receivable			6,294			3,848
Real estate inventory			210,847			214,174
Prepaid expenses and other current assets			2,656			2,564
Total current assets			255,480			294,212
Property and equipment, net			9,840			9,127
Other non-current assets			9,158			9,714
TOTAL ASSETS	(1)	$	274,478		$	313,053
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	2,151		$	1,922
Accrued and other current liabilities			12,712			11,804
Secured credit facilities and other debt, net			155,285			195,378
Secured credit facilities and other debt - related party			55,682			41,861
Total current liabilities			225,830			250,965
Warrant liabilities			488			231
Other long-term liabilities			13,942			14,204
Total liabilities	(2)		240,260			265,400
Commitments and contingencies (Note 15)
Stockholders’ equity:
Class A common stock, $0.0001 par value; 2,000,000 shares authorized; 27,543 and 27,379 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively			3			3
Additional paid in capital			509,318			507,696
Accumulated deficit			(475,103	)		(460,046	)
Total stockholders’ equity			34,218			47,653
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	274,478		$	313,053

________________

(1)

Our consolidated assets as of March 31, 2025 and December 31, 2024 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs: Restricted cash, $4,857 and $30,608; Accounts receivable, $891 and $0; Real estate inventory, $210,847 and $214,174; Prepaid expenses and other current assets, $405 and $345; Total assets of $217,000 and $245,127, respectively.

(2)

Our consolidated liabilities as of March 31, 2025 and December 31, 2024 include the following liabilities for which the VIE creditors do not have recourse to Offerpad: Accounts payable, $806 and $591; Accrued and other current liabilities, $1,519 and $1,326; Secured credit facilities and other debt, net, $210,967 and $237,273; Total liabilities, $213,292 and $239,190, respectively.

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

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Operations


	Three Months Ended
	March 31,
(in thousands, except per share data) (Unaudited)	2025			2024
Revenue	$	160,698		$	285,358
Cost of revenue		150,191			262,763
Gross profit		10,507			22,595
Operating expenses:
Sales, marketing and operating		13,828			22,452
General and administrative		7,196			11,955
Technology and development		1,020			1,773
Total operating expenses		22,044			36,180
Loss from operations		(11,537	)		(13,585	)
Other income (expense):
Change in fair value of warrant liabilities		(257	)		344
Interest expense		(3,522	)		(4,905	)
Other income, net		296			754
Total other expense		(3,483	)		(3,807	)
Loss before income taxes		(15,020	)		(17,392	)
Income tax expense		(37	)		(123	)
Net loss	$	(15,057	)	$	(17,515	)
Net loss per share, basic	$	(0.55	)	$	(0.64	)
Net loss per share, diluted	$	(0.55	)	$	(0.64	)
Weighted average common shares outstanding, basic		27,564			27,339
Weighted average common shares outstanding, diluted		27,564			27,339

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

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, 2024		27,379	$	3	$	507,696		$	(460,046	)	$	47,653
Issuance of common stock upon vesting of restricted stock units		164		—		(160	)		—			(160	)
Stock-based compensation expense		—		—		1,782			—			1,782
Net loss		—		—		—			(15,057	)		(15,057	)
Balance at March 31, 2025		27,543	$	3	$	509,318		$	(475,103	)	$	34,218


	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		62		—		(43	)		—			(43	)
Stock-based compensation expense		—		—		3,867			—			3,867
Net loss		—		—		—			(17,515	)		(17,515	)
Balance at March 31, 2024		27,300	$	3	$	503,500		$	(415,402	)	$	88,101

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

OFFERPAD SOLUTIONS INC.

Condensed Consolidated Statements of Cash Flows


	Three Months Ended
	March 31,
($ in thousands) (Unaudited)	2025			2024
Cash flows from operating activities:
Net loss	$	(15,057	)	$	(17,515	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		206			166
Amortization of debt financing costs		341			818
Real estate inventory valuation adjustment		1,743			624
Stock-based compensation		1,782			3,867
Change in fair value of warrant liabilities		257			(344	)
Loss (gain) on disposal of property and equipment		75			(5	)
Changes in operating assets and liabilities:
Accounts receivable		(2,446	)		5,588
Real estate inventory		1,584			9,769
Prepaid expenses and other assets		465			670
Accounts payable		229			(568	)
Accrued and other liabilities		645			(684	)
Net cash (used in) provided by operating activities		(10,176	)		2,386
Cash flows from investing activities:
Purchases of property and equipment		(994	)		(353	)
Proceeds from sale of property and equipment		—			30
Net cash used in investing activities		(994	)		(323	)
Cash flows from financing activities:
Borrowings from credit facilities and other debt		162,795			242,142
Repayments of credit facilities and other debt		(189,408	)		(245,579	)
Proceeds from exercise of stock options		—			16
Payments for taxes related to stock-based awards		(160	)		(43	)
Net cash used in financing activities		(26,773	)		(3,464	)
Net change in cash, cash equivalents and restricted cash		(37,943	)		(1,401	)
Cash, cash equivalents and restricted cash, beginning of period		73,626			79,934
Cash, cash equivalents and restricted cash, end of period	$	35,683		$	78,533
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents	$	30,826		$	68,550
Restricted cash		4,857			9,983
Total cash, cash equivalents and restricted cash	$	35,683		$	78,533
Supplemental disclosure of cash flow information:
Cash payments for interest	$	4,593		$	6,427

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

Note 1. Nature of Operations and Significant Accounting Policies

Description of Business

Offerpad, dedicated to simplifying the process of buying and selling homes, is committed to providing comprehensive solutions that remove the friction from real estate. Our advanced real estate platform offers a range of services, from consumer cash offers to B2B renovation solutions and industry partnership programs, all tailored to meet the unique needs of our clients. Since 2015, we have leveraged local expertise in residential real estate alongside proprietary technology to guide homeowners at every step.

The Company is headquartered in Tempe, Arizona and operates in over 1,900 cities and towns in 27 metropolitan markets across 18 states as of March 31, 2025.

Basis of Presentation and Interim Financial Information

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to GAAP and SEC rules and regulations. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and note disclosures required by GAAP for complete financial statements. Therefore, this information should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2024 included in the Company’s 2024 Annual Report on Form 10-K as filed with the SEC on February 25, 2025.

The accompanying financial information reflects all adjustments which are, in the opinion of the Company’s management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Significant estimates include those related to the net realizable value of real estate inventory, among others. Actual results could differ from those estimates.

Principles of Consolidation

The Company’s condensed consolidated financial statements include the assets, liabilities, revenues and expenses of the Company, its wholly-owned operating subsidiaries and variable interest entities where the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.

Real Estate Inventory

Real estate inventory consists of acquired homes and is stated at the lower of cost or net realizable value, with cost and net realizable value determined by the specific identification of each home. Costs include initial purchase costs and renovation costs, as well as holding costs and interest incurred during the renovation period, prior to the listing date. Selling costs, including commissions and holding costs incurred after the listing date, are expensed as incurred and included in sales, marketing and operating expenses.

The Company reviews real estate inventory for valuation adjustments on a quarterly basis, or more frequently if events or changes in circumstances indicate that the carrying value of real estate inventory may not be recoverable. The Company evaluates real estate inventory for indicators that net realizable value is lower than cost at the individual home level. The Company generally considers multiple factors in determining net realizable value for each home, including recent comparable home sale transactions in the specific area where the home is located, the residential real estate market conditions in both the local market in which the home is located and in the U.S. in general, the impact of national, regional or local economic conditions and expected selling costs. When evidence exists that the net realizable value of real estate inventory is lower than its cost, the difference is recognized as a real estate inventory valuation adjustment in cost of revenue and the related real estate inventory is adjusted to its net realizable value.

For individual homes or portfolios of homes under contract to sell as of the real estate inventory valuation assessment date, if the carrying value exceeds the contract price less expected selling costs, the carrying value of these homes are adjusted to the contract price less expected selling costs. For all other homes, if the carrying value exceeds the expected sale price less expected selling costs, the carrying value of these homes are adjusted to the expected sale price less expected selling costs. Changes in the Company’s pricing assumptions may lead to a change in the outcome of the real estate inventory valuation analysis, and actual results may differ from the Company’s assumptions.

The Company recorded real estate inventory valuation adjustments of $1.7 million and $0.6 million during the three months ended March 31, 2025 and 2024, respectively. Refer to Note 2. Real Estate Inventory, for further details.

Recent Accounting Standards

Income Tax Disclosures

In December 2023, the FASB issued a new standard which is intended to improve an entity’s income tax disclosures, primarily through disaggregated information about an entity’s effective income tax rate reconciliation and additional disclosures about income taxes paid. The new standard is effective for annual periods beginning after December 15, 2024. Accordingly, the new standard is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, using either a prospective or retrospective approach. The Company is currently evaluating the impact that the standard will have on its condensed consolidated financial statements.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued a new standard which is intended to improve an entity’s expense disclosures, primarily by requiring disclosure of disaggregated information about certain income statement expense line items. The new standard is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Accordingly, the new standard is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2027, and subsequent interim periods, using either a prospective or retrospective approach. The Company is currently evaluating the impact that the standard will have on its condensed consolidated financial statements.

Note 2. Real Estate Inventory

The components of real estate inventory, net of applicable lower of cost or net realizable value adjustments, consist of the following as of the respective period ends:


	March 31,		December 31,
($ in thousands)	2025		2024
Homes preparing for and under renovation	$	49,455	$	38,479
Homes listed for sale		111,857		135,937
Homes under contract to sell		49,535		39,758
Real estate inventory	$	210,847	$	214,174

Note 3. Property and Equipment

Property and equipment consist of the following as of the respective period ends:


	March 31,			December 31,
($ in thousands)	2025			2024
Leasehold improvements	$	6,002		$	1,055
Rooftop solar panel systems		4,958			4,958
Office equipment and furniture		1,229			687
Software systems		386			386
Computers and equipment		242			242
Construction in progress		120			5,440
Property and equipment, gross		12,937			12,768
Less: accumulated depreciation		(3,097	)		(3,641	)
Property and equipment, net	$	9,840		$	9,127

Depreciation expense was $0.2 million during each of the three months ended March 31, 2025 and 2024.

Note 4. Leases

The Company’s operating lease arrangements consist of its corporate headquarters in Tempe, Arizona, and field office facilities in most of the metropolitan markets in which the Company operates in the United States. These leases typically have original lease terms of 1 year to 10 years, and some leases contain multiyear renewal options. The Company does not have any finance lease arrangements.

The Company’s operating lease costs are included in operating expenses in the accompanying condensed consolidated statements of operations. During the three months ended March 31, 2025 and 2024, operating lease costs were $0.7 million and $0.9 million, respectively, and variable and short-term lease costs were less than $0.1 million during each of the respective periods.

Cash payments for amounts included in the measurement of operating lease liabilities were $0.1 million and $0.3 million during the three months ended March 31, 2025 and 2024, respectively. The Company utilized $0.8 million of tenant incentive allowances during the three months ended March 31, 2025. There were no right-of-use assets obtained in exchange for new or acquired operating lease liabilities during three months ended March 31, 2025. Right-of-use assets obtained in exchange for new or acquired operating lease liabilities were $7.9 million during the three months ended March 31, 2024.

As of March 31, 2025 and December 31, 2024, the Company’s operating leases had a weighted-average remaining lease term of 9.8 years and 9.7 years, respectively, and the weighted-average discount rate was 7.4% during each period.

The Company’s operating lease liability maturities as of March 31, 2025 are as follows:


($ in thousands)
Remainder of 2025	$	1,882
2026		2,089
2027		1,949
2028		1,922
2029		1,974
2030		2,029
Thereafter		9,834
Total future lease payments		21,679
Less: Imputed interest		(6,375	)
Total lease liabilities	$	15,304

The Company’s operating lease right-of-use assets and operating lease liabilities, and the associated financial statement line items, are as follows as of the respective period ends:


		March 31,		December 31,
($ in thousands)	Financial Statement Line Items	2025		2024
Right-of-use assets	Other non-current assets	$	8,112	$	8,580
Lease liabilities:
Current liabilities	Accrued and other current liabilities		1,362		963
Non-current liabilities	Other long-term liabilities		13,942		14,204
Total lease liabilities		$	15,304	$	15,167

Note 5. Accrued and Other Liabilities

Accrued and other current liabilities consist of the following as of the respective period ends:


	March 31,		December 31,
($ in thousands)	2025		2024
Home renovation	$	4,418	$	3,684
Payroll and other employee related expenses		1,500		1,895
Interest		1,497		1,293
Operating lease liabilities		1,362		963
Marketing		764		757
Legal and professional obligations		681		344
Other		2,490		2,868
Accrued and other current liabilities	$	12,712	$	11,804

The Company incurred advertising expenses of $2.3 million and $4.4 million during the three months ended March 31, 2025 and 2024, respectively.

Other long-term liabilities consists of the non-current portion of our operating lease liabilities as of March 31, 2025 and December 31, 2024.

Note 6. Credit Facilities and Other Debt

The carrying value of the Company’s credit facilities and other debt consists of the following as of the respective period ends:


	March 31,			December 31,
($ in thousands)	2025			2024
Credit facilities and other debt, net
Senior secured credit facilities with financial institutions	$	137,723		$	166,914
Senior secured credit facility with a related party		27,277			18,329
Senior secured debt - other		17,897			21,433
Mezzanine secured credit facilities with financial institutions		—			7,707
Mezzanine secured credit facilities with a related party		28,405			23,532
Debt issuance costs		(335	)		(676	)
Total credit facilities and other debt, net		210,967			237,239
Current portion - credit facilities and other debt, net
Total credit facilities and other debt, net		155,285			195,378
Total credit facilities and other debt - related party		55,682			41,861
Total credit facilities and other debt, net	$	210,967		$	237,239

The Company utilizes financing facilities consisting of senior secured credit facilities, mezzanine secured credit facilities and other senior secured borrowing arrangements to provide financing for the Company’s real estate inventory purchases and renovation. Borrowings under the Company’s credit facilities and other debt are classified as current liabilities on the accompanying condensed consolidated balance sheets as amounts drawn to purchase and renovate homes are required to be repaid as the related real estate inventory is sold, which is expected to be within 12 months.

As of March 31, 2025, the Company had a total borrowing capacity of $1,007.0 million under its senior secured credit facilities and mezzanine secured credit facilities, of which $233.0 million was committed. Any borrowings above the committed amounts are subject to the applicable lender’s discretion.

Under the Company’s senior secured credit facilities and mezzanine secured credit facilities, amounts can be borrowed, repaid and borrowed again during the revolving period. The borrowing capacity is generally available until the end of the applicable revolving period as reflected in the tables below. Outstanding amounts drawn under each senior secured credit facility and

mezzanine secured credit facility are required to be repaid on the facility maturity date or earlier if accelerated due to an event of default or other mandatory repayment event.

The Company’s senior secured credit facilities and mezzanine secured 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 corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities. The borrowing base for a given facility may be reduced as properties age beyond certain thresholds or the performance of the properties financed under that facility declines, and any borrowing base deficiencies may be satisfied through contributions of additional properties or partial repayment of the facility.

Senior Secured Credit Facilities

The following summarizes certain details related to the Company’s senior secured credit facilities (in thousands, except interest rates):


	Borrowing Capacity			Outstanding	Weighted- Average Interest	End of Revolving / Withdrawal	Final Maturity
As of March 31, 2025	Committed	Uncommitted	Total	Amount	Rate	Period	Date
Senior financial institution 1	$150,000	$250,000	$400,000	$128,193	7.12%	December 2025	June 2026
Senior financial institution 2	—	200,000	200,000	—	—	January 2026	July 2026
Senior financial institution 3	—	150,000	150,000	—	7.58%	January 2025	April 2025
Related party	30,000	20,000	50,000	27,277	9.32%	March 2025	September 2025
Senior financial institution 4	—	30,000	30,000	9,530	10.16%	August 2025	February 2026
Senior secured credit facilities	$180,000	$650,000	$830,000	$165,000


	Borrowing Capacity						Outstanding		Weighted- Average Interest
As of December 31, 2024	Committed		Uncommitted		Total		Amount		Rate
Senior financial institution 1	$	150,000	$	250,000	$	400,000	$	110,109		7.93	%
Senior financial institution 2		—		200,000		200,000		—		8.01	%
Senior financial institution 3		100,000		50,000		150,000		30,941		8.38	%
Related party		30,000		20,000		50,000		18,329		10.09	%
Senior financial institution 4		—		30,000		30,000		25,864		9.76	%
Senior secured credit facilities	$	280,000	$	550,000	$	830,000	$	185,243

As of March 31, 2025, the Company had five senior secured credit facilities, four with separate financial institutions and one with a related party, which holds more than 5% of our Class A common stock. Borrowings under the senior secured credit facilities accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate, plus a margin which varies by facility. Each of the Company’s senior secured credit facilities also have interest rate floors. The Company may also pay fees on its senior secured credit facilities, including a commitment fee and fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.

Borrowings under the Company’s senior secured credit facilities are collateralized by the real estate inventory financed by the senior secured credit facility. The lenders have legal recourse only to the assets securing the debt and do not have general recourse against the Company with limited exceptions. The Company has, however, provided limited non-recourse carve-out guarantees under its senior and mezzanine secured credit facilities for certain of the SPEs’ obligations. Each senior secured credit facility contains eligibility requirements that govern whether a property can be financed.

During April 2025, the Company amended its credit facility with senior financial institution 3, which among other things, extends the revolving period for the facility to January 2026 and the final maturity date to April 2026.

Mezzanine Secured Credit Facilities

The following summarizes certain details related to the Company’s mezzanine secured credit facilities (in thousands, except interest rates):


	Borrowing Capacity			Outstanding	Weighted- Average Interest	End of Revolving / Withdrawal	Final Maturity
As of March 31, 2025	Committed	Uncommitted	Total	Amount	Rate	Period	Date
Related party facility 1	$45,000	$25,000	$70,000	$21,680	13.00%	June 2025	December 2025
Mezzanine financial institution 1	—	45,000	45,000	—	—	January 2026	July 2026
Mezzanine financial institution 2	—	40,000	40,000	—	11.58%	January 2025	April 2025
Related party facility 2	8,000	14,000	22,000	6,725	13.00%	March 2025	September 2025
Mezzanine secured credit facilities	$53,000	$124,000	$177,000	$28,405


	Borrowing Capacity			Outstanding	Weighted- Average Interest
As of December 31, 2024	Committed	Uncommitted	Total	Amount	Rate
Related party facility 1	$45,000	$25,000	$70,000	$18,372	13.67%
Mezzanine financial institution 1	—	45,000	45,000	—	13.86%
Mezzanine financial institution 2	26,667	13,333	40,000	7,707	12.39%
Related party facility 2	8,000	14,000	22,000	5,160	13.59%
Mezzanine secured credit facilities	$79,667	$97,333	$177,000	$31,239

As of March 31, 2025, the Company had four mezzanine secured credit facilities, two with separate financial institutions and two with a related party, which holds more than 5% of our Class A common stock. Borrowings under the Company’s mezzanine secured credit facilities accrue interest at a rate based on a SOFR reference rate, plus a margin which varies by facility. Each of the Company’s mezzanine secured credit facilities also have interest rate floors. The Company may also pay fees on its mezzanine secured credit facilities, including a commitment fee and fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.

Borrowings under the Company’s mezzanine secured credit facilities are collateralized by a second lien on the real estate inventory financed by the relevant credit facility. The lenders have legal recourse only to the assets securing the debt, and do not have general recourse to Offerpad with limited exceptions.

The Company’s mezzanine secured credit facilities are structurally and contractually subordinated to the related senior secured credit facilities.

During April 2025, the Company amended its credit facility with mezzanine financial institution 2, which among other things, extends the revolving period for the facility to January 2026 and the final maturity date to April 2026.

Maturities

Certain of the Company’s secured credit facilities mature within the next twelve months following the date these condensed consolidated financial statements are issued. The Company expects to enter into new financing arrangements or amend existing arrangements to meet its obligations as they come due, which the Company believes is probable based on its history of prior credit facility renewals. The Company believes cash on hand, together with proceeds from the resale of homes and cash from future borrowings available under each of the Company’s existing credit facilities or the entry into new financing arrangements, will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these condensed consolidated financial statements are issued.

Covenants for Senior Secured Credit Facilities and Mezzanine Secured Credit Facilities

The Company’s secured credit 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 facilities and related financing documents require the Company 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 tangible net worth).

As of March 31, 2025, the Company was in compliance with all covenants and no event of default had occurred. During 2025, including during the second quarter of 2025, the Company has obtained temporary waivers of a minimum liquidity covenant under the related party facilities described above in connection with discussions regarding the renewal of these facilities.

Senior Secured Debt - Other

The Company has a borrowing arrangement with a financial institution to support purchases of real estate inventory. Borrowings under this arrangement accrue interest at a rate based on a SOFR reference rate, plus a margin. As of March 31, 2025 and December 31, 2024, the weighted-average interest rate under the Company’s other senior secured debt was 9.02% and 9.24%, respectively.

Note 7. Warrant Liabilities

As of March 31, 2025, the Company had 16.1 million public warrants outstanding and 5.7 million private placement warrants outstanding, with every 15 warrants being exercisable to purchase one share of Class A common stock at an exercise price of $172.50 per share.

Public Warrants

A holder may exercise its public warrants only for a whole number of shares of Class A common stock. The public warrants will expire on September 1, 2026, or earlier upon redemption or liquidation. Pursuant to the terms of the warrant agreements, the Company may call the public warrants for redemption for cash or redeem the outstanding warrants for shares of Class A common stock under certain scenarios. The public warrants are traded on an over-the-counter market.

Private Placement Warrants

The private placement warrants have terms and provisions that are substantially identical to those of the public warrants, with the exception of certain redemption rights, options to exercise and registration rights when the private placement warrants are owned by specified holders.

Note 8. Fair Value Measurements

The fair values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and certain prepaid and other current assets and accrued expenses approximate carrying values because of their short-term nature. The Company’s credit facilities are carried at amortized cost and the carrying value approximates fair value because of their short-term nature.

The Company’s liabilities that are measured at fair value on a recurring basis consist of the following (in thousands):


As of March 31, 2025	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Public warrant liabilities	$	318	$	—	$	—
Private placement warrant liabilities	$	—	$	—	$	170


As of December 31, 2024	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Public warrant liabilities	$	128	$	—	$	—
Private placement warrant liabilities	$	—	$	—	$	103

Public Warrants

The public warrants are traded on an over-the-counter market. The fair value of the public warrants is estimated based on the quoted market price of such warrants on the valuation date. The Company recorded changes in the fair value of the public warrants of $0.2 million and $(0.3) million during the three months ended March 31, 2025 and 2024, respectively. These changes are recorded in Change in fair value of warrant liabilities in our condensed consolidated statements of operations.

Private Placement Warrants

The following summarizes the changes in the Company’s private placement warrant liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the respective periods:


	Three Months Ended March 31,
($ in thousands)	2025		2024
Beginning balance	$	103	$	166
Change in fair value of private placement warrants included in net loss		67		(91	)
Ending balance	$	170	$	75

The Company generally uses the Black-Scholes-Merton option-pricing model to determine the fair value of the private placement warrants, with assumptions including expected volatility, expected life of the warrants, associated risk-free interest rate, and expected dividend yield.

There were no transfers between Levels 1, 2, and 3 during the three months ended March 31, 2025 and 2024.

Note 9. Stockholders’ Equity

Authorized Capital Stock

The Company is authorized to issue 2,100,000,000 shares of capital stock, which consists of 2,000,000,000 shares of Class A common stock and 100,000,000 shares of preferred stock, both of which have a par value $0.0001 per share.

Class A Common Stock

Our Class A common stock trades on the New York Stock Exchange under the symbol “OPAD” and our public warrants trade on the OTC Markets Group Pink Market under the symbol “OPADW.”

As of March 31, 2025, we had 27,543,087 shares of Class A common stock issued and outstanding.

We also have outstanding warrants to purchase shares of our Class A common stock. Refer to Note 7. Warrant Liabilities for further details.

Preferred Stock

As of March 31, 2025, there were no shares of preferred stock issued and outstanding.

Dividends

Our Class A common stock is entitled to dividends if and when any dividend is declared by our Board, subject to the rights of all classes of stock outstanding having priority rights to dividends. We have not paid any cash dividends on common stock to date. We may retain future earnings, if any, for the further development and expansion of our business and have no current plans to pay cash dividends for the foreseeable future. Any future determination to pay dividends will be made at the discretion of our Board and will depend on, among other things, our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our Board may deem relevant.

Note 10. Stock-Based Awards

2021 Equity Incentive Plans

Incentive Award Plan

Pursuant to the terms of the Offerpad Solutions Inc. 2021 Incentive Award Plan (the “2021 Plan”), the number of shares of the Company’s Class A common stock available for issuance under the 2021 Plan increases annually on the first day of each calendar year through January 1, 2031. Pursuant to the annual increase, the overall share limit was automatically increased on January 1, 2025, following which there were 2,619,035 shares reserved for issuance under the 2021 Plan as of March 31, 2025.

As of March 31, 2025, the Company has granted stock options, restricted stock units (“RSUs”), performance-based RSUs (“PSUs”) and other stock or cash-based awards under the 2021 Plan.

Employee Stock Purchase Plan

Pursuant to the terms of the Offerpad Solutions Inc. 2021 Employee Stock Purchase Plan (“ESPP”), the number of shares of the Company’s Class A common stock available for issuance under the ESPP increases annually on the first day of each calendar year through January 1, 2031. As of March 31, 2025, there were 283,876 shares reserved for issuance under the ESPP, and no shares have been issued.

Restricted Stock Units

The following summarizes RSU award activity during the three months ended March 31, 2025:


	Number of RSUs (in thousands)			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2024		898		$	8.11
Granted		278			2.24
Vested and settled		(241	)		6.20
Forfeited		(67	)		5.71
Outstanding as of March 31, 2025		868			6.95

As of March 31, 2025, 0.2 million RSUs have vested, but have not yet been settled in shares of the Company’s Class A common stock, pursuant to elections made by certain non-employee members of our Board to defer settlement thereof under the Offerpad Solutions Inc. Deferred Compensation Plan for Directors.

As of March 31, 2025, the Company had $2.5 million of unrecognized stock-based compensation expense related to unvested RSUs. This expense is expected to be recognized over a weighted average period of 1.99 years. The fair value of RSUs that vested and settled during the three months ended March 31, 2025 and 2024 was $1.5 million and $1.7 million, respectively.

Other Cash or Stock-Based Awards

The Company did not grant any other cash or stock-based awards during the three months ended March 31, 2025.

As of March 31, 2025, the Company had $2.2 million of unrecognized stock-based compensation expense related to unvested other cash or stock-based awards granted in prior periods. This expense is expected to be recognized over a weighted average period of 2.70 years.

Stock Options

The following summarizes stock option activity during the three months ended March 31, 2025:


	Number of Shares (in thousands)			Weighted- Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2024		844		$	11.30		3.16	$	—
Granted		—			—
Exercised		—			—
Forfeited, canceled or expired		(62	)		18.58
Outstanding as of March 31, 2025		782			10.72		2.67		—
Exercisable as of March 31, 2025		776			10.64		2.63		—
Vested and expected to vest as of March 31, 2025		782			10.72		2.67		—

No stock options were exercised during three months ended March 31, 2025. The total intrinsic value of stock options exercised during the three months ended March 31, 2024 was less than $0.1 million.

As of March 31, 2025, the Company had unrecognized stock-based compensation expense related to unvested stock options of $0.2 million. This expense is expected to be recognized over a weighted average period of 0.97 years. The fair value of stock options that vested during the three months ended March 31, 2025 and 2024 was $0.2 million and $0.4 million, respectively.

Performance-Based Restricted Stock Units

The following summarizes PSU award activity during the three months ended March 31, 2025:


	Number of PSUs (in thousands)			Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2024		110		$	70.81
Granted		—			—
Vested		—			—
Forfeited		(110	)		70.81
Outstanding as of March 31, 2025		—			—

The PSU performance period ended during the first quarter of 2025, with none of the pre-determined price per share goals being achieved. Accordingly, the PSUs were automatically forfeited and terminated without consideration.

Stock-based Compensation Expense

The following details stock-based compensation expense for the respective periods:


	Three Months Ended March 31,
($ in thousands)	2025		2024
Sales, marketing and operating	$	479	$	1,176
General and administrative		1,145		2,400
Technology and development		158		291
Stock-based compensation expense	$	1,782	$	3,867

Note 11. Variable Interest Entities

The Company formed certain special purpose entities (each, an “SPE”) to purchase and sell residential properties. Each SPE is a wholly-owned subsidiary of the Company and a separate legal entity, and neither the assets nor credit of any such SPE are available to satisfy the debts and other obligations of any affiliate or other entity. The credit facilities are secured by the assets and equity of one or more SPEs. These SPEs are variable interest entities, and the Company is the primary beneficiary as it has the power to control the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses of the SPEs or the right to receive benefits from the SPEs that could potentially be significant to the SPEs. The SPEs are consolidated within the Company’s condensed consolidated financial statements.

The following summarizes the assets and liabilities related to the VIEs as of the respective period ends:


	March 31,		December 31,
($ in thousands)	2025		2024
Assets
Restricted cash	$	4,857	$	30,608
Accounts receivable		891		—
Real estate inventory		210,847		214,174
Prepaid expenses and other current assets		405		345
Total assets	$	217,000	$	245,127
Liabilities
Accounts payable	$	806	$	591
Accrued and other current liabilities		1,519		1,326
Secured credit facilities and other debt, net		210,967		237,273
Total liabilities	$	213,292	$	239,190

Note 12. Earnings Per Share

Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares plus the incremental effect of dilutive potential common shares outstanding during the period. In periods when losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

The components of basic and diluted earnings per share are as follows:


	Three Months Ended March 31,
(In thousands, except per share data)	2025			2024
Numerator:
Net loss	$	(15,057	)	$	(17,515	)
Denominator:
Weighted average common shares outstanding, basic		27,564			27,339
Dilutive effect of stock options (1)		—			—
Dilutive effect of restricted stock units (1)		—			—
Weighted average common shares outstanding, diluted		27,564			27,339
Net loss per share, basic	$	(0.55	)	$	(0.64	)
Net loss per share, diluted	$	(0.55	)	$	(0.64	)
Anti-dilutive securities excluded from diluted loss per share:
Anti-dilutive stock options (1)		816			973
Anti-dilutive restricted stock units (1)		742			130
Anti-dilutive performance-based restricted stock units		72			119
Anti-dilutive warrants		1,452			1,452

(1) Due to the net loss during each of the three months ended March 31, 2025 and 2024, no dilutive securities were included in the calculation of diluted loss per share because they would have been anti-dilutive.

Note 13. Income Taxes

The Company determines its interim tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to its income (loss) before income taxes for the period. The Company’s effective tax rate is dependent on several factors, such as tax rates in state jurisdictions and the relative amount of income the Company earns in the respective jurisdiction.

The Company recorded income tax expense of less than $0.1 million and $0.1 million during the three months ended March 31, 2025 and 2024, respectively, and the Company’s effective tax rate was an expense of 0.2% and 0.7% for the respective periods. The Company’s effective tax rate during the three months ended March 31, 2025 differed from the federal statutory rate of 21% primarily due to net operating loss carryforwards and state taxes. The valuation allowance recorded against our net deferred tax assets was $125.9 million as of March 31, 2025.

As of March 31, 2025, we continue to have a full valuation allowance recorded against our net deferred tax assets and will continue to evaluate our valuation allowance in future periods for any change in circumstances that causes a change in judgment about the realizability of the deferred tax assets. The amount of the deferred tax assets considered realizable, however, could be adjusted in future periods if estimates of future taxable income during the carryforward period are increased, if objective negative evidence in the form of cumulative losses is no longer present, and if we employ tax planning strategies in the future.

The Internal Revenue Code contains provisions that limit the utilization of net operating loss carryforwards and tax credit carryforwards if there has been an ownership change. Such ownership change, as described in Section 382 of the Internal Revenue Code, may limit the Company’s ability to utilize its net operating loss carryforwards and tax credit carryforwards on a yearly basis. To the extent that any single-year limitation is not utilized to the full amount of the limitation, such unused amounts are carried over to subsequent years until the earlier of utilization or the expiration of the relevant carryforward period. The Company determined that an ownership change occurred on February 10, 2017. An analysis was performed and while utilization of net operating losses would be limited in years prior to December 31, 2020, subsequent to that date, there is no limitation on the Company’s ability to utilize its net operating losses. As such, the ownership change has no impact to the carrying value of the Company’s net operating loss carryforwards or ability to use them in future years.

Note 14. Related-Party Transactions

LL Credit Facilities

As of March 31, 2025, we have one senior secured credit facility and two mezzanine secured credit facilities with affiliates of LL Capital Partners I, L.P., a related party. The following summarizes certain details related to these facilities:


	As of March 31, 2025				As of December 31, 2024
($ in thousands)	Borrowing Capacity		Outstanding Amount		Borrowing Capacity		Outstanding Amount
Senior secured credit facility with a related party	$	50,000	$	27,277	$	50,000	$	18,329
Mezzanine secured credit facilities with a related party	$	92,000	$	28,405	$	92,000	$	23,532

Since October 2016, we have been party to a loan and security agreement (the “LL Funds Loan Agreement”), with LL Private Lending Fund, L.P. and LL Private Lending Fund II, L.P., both of which are affiliates of LL Capital Partners I, L.P., which holds more than 5% of our Class A common stock. Additionally, Roberto Sella, who is a member of our Board and holds more than 5% of our Class A common stock, is the managing partner of LL Funds. The LL Funds Loan Agreement is comprised of a senior secured credit facility and a mezzanine secured credit facility, under which we may borrow funds up to a maximum principal amount of $50.0 million and $22.0 million, respectively. The LL Funds Loan Agreement also provides us with the option to borrow above the fully committed borrowing capacity, subject to the lender’s discretion. Refer to Note 6. Credit Facilities and Other Debt, for further details about the facilities under the LL Funds Loan Agreement.

Since March 2020, we have also been party to a mezzanine loan and security agreement (the “LL Mezz Loan Agreement”), with LL Private Lending Fund II, L.P., which is an affiliate of LL Capital Partners I, L.P. Under the LL Mezz Loan Agreement, we may borrow funds up to a maximum principal amount of $70.0 million. Refer to Note 6. Credit Facilities and Other Debt, for further details about the mezzanine facility under the LL Mezz Loan Agreement.

During 2025, including during the second quarter of 2025, the Company has obtained temporary waivers of a minimum liquidity covenant under the related party facilities described above in connection with discussions regarding the renewal of these facilities.

We paid interest for borrowings under the LL credit facilities of $1.2 million and $1.0 million during the three months ended March 31, 2025 and 2024, respectively.

Use of First American Financial Corporation’s Services

First American Financial Corporation (“First American”), which holds more than 5% of our Class A common stock, through its subsidiaries is a provider of title insurance and settlement services for real estate transactions and a provider of property data services. Additionally, Kenneth DeGiorgio, who is a member of the Company’s Board, was the chief executive officer of First American through early April 2025. We use First American’s services in the ordinary course of our home-buying and home-selling activities. We paid First American $0.9 million and $1.7 million during the three months ended March 31, 2025 and 2024, respectively, for its services, inclusive of the fees for property data services.

Compensation of Immediate Family Members of Brian Bair

Offerpad has historically employed Brian Bair’s brothers, Mr. Vaughn Bair and Mr. Casey Bair, and Mr. Brian Bair’s sister-in-law, Ms. Katie Bullard. The following details the total compensation paid to the immediate family members of Brian Bair during each of the respective periods:


	Three Months Ended March 31,
($ in thousands)	2025		2024
Mr. Vaughn Bair (1)	$	209	$	163
Mr. Casey Bair (2)		108		153
Ms. Katie Bullard (1)		50		36
	$	367	$	352

(1) Compensation for Mr. Vaughn Bair and Ms. Katie Bullard includes both base salary and annual performance-based cash incentives during each of the respective periods.

(2) Compensation for Mr. Casey Bair during the three months ended March 31, 2025, includes severance payments in connection with his separation from service with the Company in August 2024. Compensation during the three months ended March 31, 2024, includes both base salary and annual performance-based cash incentives.

During the three months ended March 31, 2025, the Company granted 20,433 RSUs to Mr. Vaughn Bair and no equity awards were granted to Ms. Katie Bullard. During the three months ended March 31, 2024, the Company did not grant any equity awards to immediate family members of Brian Bair.

Note 15. Commitments and Contingencies

Homes Purchase Commitments

As of March 31, 2025, the Company was under contract to purchase 245 homes for an aggregate purchase price of $71.1 million.

Lease Commitments

The Company has entered into operating lease agreements for its corporate headquarters in Tempe, Arizona and field office facilities in most of the metropolitan markets in which the Company operates in the United States. Refer to Note 4. Leases, for further details.

Legal and Other Matters

The Company is subject to various actions, claims, suits and other legal proceedings that arise in the ordinary course of business, including, without limitation, assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters. The Company records accruals for loss contingencies when it is probable that a loss will occur, and the amount of such loss can be reasonably estimated. The Company is not currently a party to any actions, claims, suits or other legal proceedings arising in the ordinary course of business, the outcome of which, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the Company’s condensed consolidated financial statements.

The following is a description of pending litigation that falls outside the scope of ordinary and routine litigation incidental to the Company’s business.

Class Action Alleging Breach of Fiduciary Duties

On August 26, 2024, a purported stockholder of Offerpad filed a complaint against Alexander Klabin, Spencer Rascoff, Ken Fox, Jim Lanzone, Gregg Renfrew, Rajeev Singh, Robert Reid, Michael Clifton, Supernova Partners, LLC (the “Supernova Defendants”), Brian Bair, and Michael Burnett (the “Offerpad Defendants”). The case is captioned In re Supernova Partners Acquisition Co. SPAC Litigation, C.A. No. 2024-0887 (Del. Ch.) (the “Complaint”). The Complaint generally alleges that the Supernova Defendants breached their fiduciary duties, with the Offerpad Defendants aiding and abetting these breaches, in connection with the merger between OfferPad, Inc. and Supernova Partners Acquisition Company, Inc. on September 1, 2021. The Complaint seeks, among other things, monetary damages, disgorgement of any unjust enrichment, rescissory damages, pre-judgment and post-judgment interest, and reasonable attorneys’ fees and costs. On September 19, 2024, proceedings related to the Complaint were temporarily stayed. On February 24, 2025, the court dismissed the Offerpad Defendants and Supernova Partners, LLC from the Complaint without prejudice, which terminated the case as to the Offerpad Defendants. In

regard to the remaining allegations against the remaining Supernova Defendants, because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to the Company at present, the Company is unable to reasonably estimate a range of loss associated with its indemnification obligations in connection with this matter in excess of its accrual as of March 31, 2025.

Note 16. Segment Reporting

We operate in the U.S. residential real estate industry and our operating segments have been determined based on the method by which our Chief Executive Officer, who is our chief operating decision maker (“CODM”), evaluates performance and allocates resources. We have four operating segments, none of which have been aggregated, and one reportable segment. The following segment reporting presentation includes our Cash Offer reportable segment and Other, which includes our three remaining operating segments, along with Offerpad corporate activities:

•

Cash Offer, in which customers can access our website or mobile application to receive a competitive cash offer range for their home within minutes and quickly close without the major inconveniences associated with traditional real estate selling.

•

Other, which includes:

B2B Renovate business, in which we leverage our existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell;

Direct+ institutional buyer program, which allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers; and

Agent Partnership Program, in which our partner agents and brokerages can request a cash offer on behalf of their clients, have the ability to list an acquired home prepared for resale, and can gain access to sellers in defined zones, and markets.

During 2024, we revised the internal management reporting deliverables provided to our CODM and determined Cash Offer, B2B Renovate business, Direct+ institutional buyer program and Agent Partnership Program are separate operating segments. Accordingly, we have changed our presentation of the three months ended March 31, 2024 to reflect our revised segment reporting.

Our CODM evaluates performance based on operating segment gross profit and uses this measure when making decisions about the allocation of operating resources to each segment, including through the annual budget and forecasting process, along with regular budget-to-actual variance analyses.

No individual customer accounted for more than 10% of our consolidated revenue during the three months ended March 31, 2025 and 2024.

The following details segment financial information for the respective periods:


	Three Months Ended March 31,
($ in thousands)	2025			2024
Revenue:
Cash Offer	$	153,833		$	277,845
Other		6,865			7,513
Total revenue		160,698			285,358
Cost of revenue:
Cash Offer (1)		145,735			257,650
Other		4,456			5,113
Total cost of revenue		150,191			262,763
Gross profit:
Cash Offer		8,098			20,195
Other		2,409			2,400
Total gross profit		10,507			22,595
Operating expenses:
Sales, marketing and operating		13,828			22,452
General and administrative		7,196			11,955
Technology and development		1,020			1,773
Total operating expenses		22,044			36,180
Loss from operations		(11,537	)		(13,585	)
Other income (expense):
Change in fair value of warrant liabilities		(257	)		344
Interest expense		(3,522	)		(4,905	)
Other income, net		296			754
Total other expense		(3,483	)		(3,807	)
Loss before income taxes	$	(15,020	)	$	(17,392	)

(1) Includes real estate inventory valuation adjustments of $1.7 million and $0.6 million during the respective periods.

Our CODM is not provided with, and does not review, segment assets when evaluating performance and allocating resources to our operating segments. Accordingly, segment asset information has not been provided.

Note 17. Subsequent Events

The Company has determined that there have been no events that have occurred that would require recognition in the condensed consolidated financial statements or additional disclosure herein, except as described elsewhere in the notes to the condensed consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis provides information that Offerpad’s management believes is relevant to an assessment and understanding of Offerpad’s consolidated results of operations and financial condition. The discussion should be read together with the unaudited interim condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and accompanying notes included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2025.

This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q. Offerpad’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in Part I, Item 1A of Offerpad’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Overview

Our Business

We are headquartered in Tempe, Arizona and operated in over 1,900 cities and towns in 27 metropolitan markets across 18 states as of March 31, 2025.

Current Economic Conditions and Health of the U.S. Residential Real Estate Industry

Our business and operating results are impacted by the general economic conditions and the health of the U.S. residential real estate industry, particularly the single-family home resale market. Our business model primarily depends on a high volume of residential real estate transactions throughout the markets in which we operate. This transaction volume affects substantially all of the ways that we generate revenue, including our ability to acquire new homes and generate associated fees, and our ability to sell homes that we own.

The uncertain economic outlook and uneven residential real estate market conditions that challenged our operating results during 2024 continued into the first quarter of 2025, with the average thirty-year fixed mortgage rate generally remaining between the mid-6% range and 7%. The sustained elevated and volatile mortgage interest rate environment continues to negatively impact housing affordability and create uncertainty for home buyers, which has hindered consumer demand for residential real estate for an extended period of time. This uncertainty has been further amplified by macroeconomic and geopolitical concerns, which have been heightened by the trade-related tensions resulting from the recent tariff announcements made by the U.S. and other governments. The cumulative impact of these conditions, including without limitation future or additional tariffs or retaliatory tariffs, continues to cause uncertainty in the market and challenge consumer confidence, resulting in lower than normal real estate transaction volumes, and may impact the costs of materials and supplies used in our home renovations, which could in turn impact our margins.

These uncertain market conditions, combined with the impact of our intentional reduction in home acquisition pace during the second half of 2024 as part of our effort to balance our real estate inventory levels to optimize our return, are reflected in our operating results for the first quarter of 2025. We sold 460 homes during the first quarter of 2025, generating $160.7 million of revenue and $10.5 million of gross profit. Although our transaction volumes were lower during the first quarter of 2025 compared to recent periods, we achieved quarter-over-quarter improvement in our gross profit margin, along with both quarter-over-quarter and year-over-year improvement in our net loss, as we have continued to focus on cost reduction and operational efficiencies throughout the business.

Given the current market conditions, we remain focused on proactively optimizing our capital allocation across our highest performing and most efficient markets and using pricing adjustments and other incentives in an effort to drive consumer demand. These pricing adjustments have had a negative impact on our operating results over the past few years. Further, there continues to be an increased level of uncertainty regarding the near-term macroeconomic conditions, including the direction of mortgage interest rates, which have continued to stay around 7% during the early stages of the second quarter of 2025, and the impact of the global trade conditions. Although it remains difficult to predict the near-term direction of consumer demand for residential real estate due to the many different factors that impact such demand, we anticipate that the sustained elevated and

volatile mortgage interest rate environment, economic uncertainties and affordability pressures will continue to impact consumer demand for residential real estate during the second quarter of 2025. As a result of these market dynamics, we may be required to use similar pricing adjustments and incentives in the future.

New York Stock Exchange Listing Notice

On April 10, 2025, we received written notice (the “NYSE Notification”) from the NYSE that we are not in compliance with Section 802.01B of the NYSE Listed Company Manual because our average global market capitalization over a consecutive 30 trading-day period and, at the same time, our last reported stockholders’ equity were each less than $50 million. The NYSE Notification has no immediate impact on the listing of our Class A common stock.

On April 18, 2025, we notified the NYSE that we intend to submit a plan to cure the deficiency and to return to compliance with the NYSE continued listing standards. As required by NYSE, within 45 days of our receipt of the NYSE Notification, we plan to submit a business plan advising the NYSE of the definitive action(s) we are taking or plan to take that would bring us into compliance with NYSE continued listing standards within 18 months of receipt of the NYSE Notification (the “Cure Period”). Pursuant to applicable NYSE rules, the NYSE will review the plan and, within 45 days of its receipt, determine whether we have made a reasonable demonstration of an ability to conform to the relevant standards in the Cure Period.

If the NYSE accepts the plan, our Class A common stock will continue to be listed and traded on the NYSE during the Cure Period, subject to our compliance with the other continued listing standards of the NYSE and continued periodic review by the NYSE of our progress with respect to its plan. If the plan is not submitted on a timely basis or is not accepted by the NYSE, the NYSE could initiate delisting proceedings.

Factors Affecting Our Performance

We believe that our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed below.

Market Penetration in Existing Markets

Residential real estate is one of the largest industries, with roughly $1.9 trillion in value of homes transacted in 2024 in the United States, and is highly fragmented with over 100,000 real estate brokerages, according to the National Association of Realtors (NAR). In 2024, we estimate that we captured roughly 0.4% market share of real estate transactions across our 26 active markets as of December 31, 2024. Given this high degree of fragmentation, we believe that bringing a solutions-oriented approach to the market with multiple buying and selling services to meet the unique needs of customers could lead to continued market share growth and accelerated adoption of the digital model. We have demonstrated higher market share in certain markets, providing the backdrop to grow our overall market penetration as our offerings expand and evolve. By providing a consistent, transparent, and unique experience, we expect to continue to build upon our past success and further strengthen our brand and consumer adoption.

Expansion into New Markets

Since our launch in 2015, we have expanded into 26 markets as of December 31, 2024, which covered roughly 23% of the 4.8 million homes sold in the United States in 2024. Given this current coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion over the long-term. Also, because of our strategic approach to our asset-light platform offerings, we believe a significant portion of the total addressable market is serviceable with our business model. As we expand our reach through these other service offerings, we expect to continue to serve customers in markets beyond our direct service area. Further, this strategic approach has enabled us to enter into new markets to offer certain of our service offerings, without offering all of our buying and selling services in such markets. In connection with this approach, we began offering renovation services in two additional markets during 2024, followed by one additional market during the first quarter of 2025.

Although we recently expanded into three new markets, we have decelerated our market expansion plans in recent years given the uncertain economic outlook and uneven residential real estate market conditions, which has included uncertainty regarding the near-term macroeconomic conditions, including the direction of mortgage interest rates and the impact of global trade conditions. We intend to continue evaluating expansion plans on an ongoing basis in order to maintain our flexibility in assessing the overall timing of our expansion plan and appropriate market entry points in the future.

B2B Renovate Business Services

Our B2B Renovate business services represent an important component of our asset-light platform offerings. Through this offering, we are able to leverage our existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell. When providing renovation services, we receive a renovation project fee, and are also typically compensated

with a service fee that is based on a percentage of the overall renovation project fee. As we continue to develop our B2B Renovate business services offering, we believe these services could be a more significant component of our business over time.

Direct+ institutional buyer program

Another component of our asset-light platform offerings includes our program that allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers. These transactions occur in several forms, including assigning the original purchase contract to the end buyer and collecting a fee at closing. We expect this program will allow us to help more homeowners sell their home and expand our ability to reach more customers, while also providing customers with the benefit of receiving an optimized offer for their home.

Agent Partnership Program

We have increased our focus on our partner network in recent years, which includes our homebuilder services, our agent partnership program and our agent referral network, to drive growth in our existing markets by expanding our reach and serving a greater number of customers. Our agent partnership program provides referral fees to agents who sell or select our cash offer. This program is designed to enable customers to utilize our services in a way that best suits their home-selling situation, while also serving as a valuable resource for real estate agents.

Additionally, under our enhanced agent partnership program, our partner agents and brokerages can request a cash offer on behalf of their clients, have the ability to list an acquired home prepared for resale, and can gain access to sellers in defined zones, and markets. Further, partner agents in the top tier of the program have access to sellers in defined zones and have the potential to list other Offerpad-owned homes in their zone.

We also have an integration with Realtor.com, allowing customers to request a cash offer from Offerpad directly through the Realtor.com website. We anticipate this integration will further expand our reach and diversify our lead sources.

Ancillary products and services

We aim to deliver other additional products and services tied to the core real estate transaction in a smooth, efficient, digital driven platform, focused on transparency and ease of use. Although further developing these products and services will require significant investment, growing our current offerings and offering additional ancillary products and services, potentially including energy efficiency solutions, smart home technology, insurance, and home warranty services, we believe will strengthen our unit economics and allow us to better optimize pricing. Generally, the revenue and margin profiles of our ancillary products and services are different from our Cash Offer service that accounts for the substantial majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.

While we have offered a variety of ancillary products and services over time, our title and escrow services represent the most notable ancillary service that we currently provide. We have a national relationship with a leading title and escrow company, through which we are able to leverage our size and scale to provide exceptional title and escrow closing services with a favorable economic impact principally in our Cash Offer service.

Unit Economics

We view Contribution Margin and Contribution Margin after Interest (see “—Non-GAAP Financial Measures”) as key performance indicators for unit economic performance, which are currently primarily driven by our cash offer transactions. Future financial performance improvements are expected to be driven by expanding unit level margins through initiatives such as:

•

Continued optimization of acquisition, renovation, and resale processes and strategies, as we increase our market penetration in existing markets;

•

Effectively increasing and expanding our Cash Offer solution, optimizing customer and agent community engagement and increasing conversion of requests for home purchases; and

•

Introducing and scaling additional ancillary products and services to complement our core Cash Offer solution.

Operating Leverage

We utilize our technology and product teams to design systems and workflows to make our operations teams more efficient and able to support and scale with the business. Many positions are considered volume based, and as our business grows, we focus on developing more automation tools to gain additional leverage. Additionally, in periods when our business is growing, we expect to be able to gain operating leverage on portions of our cost structure that are more fixed in nature as opposed to purely variable. These types of costs include general and administrative expenses and certain marketing and information technology expenses, which generally grow at a slower pace than proportional to revenue growth.

Real Estate Inventory Financing

Our business model requires significant capital to purchase real estate inventory. Real estate inventory financing is a key enabler to our growth and we rely on our non-recourse asset-backed financing facilities, which primarily consist of senior and mezzanine secured credit facilities to finance our home purchases. The loss of adequate access to these types of facilities, or the inability to maintain these types of facilities on favorable terms, would impair our performance. See “—Liquidity and Capital Resources—Financing Activities.”

Seasonality

The residential real estate market is seasonal and varies from market to market. Typically, the greatest number of transactions occur in the spring and summer, with fewer transactions occurring in the fall and winter. Our financial results, including revenue, margins, real estate inventory, and financing costs, have historically had seasonal characteristics generally consistent with the residential real estate market, a trend we expect to continue in the future, subject to the market conditions discussed above.

Risk Management

Our business model is based upon acquiring homes at a price which will allow us to provide a competitive offer to the consumer, while being able to add value through the renovation process, and relist the home so that it sells at a profit and in a relatively short period of time. We have invested significant resources into our underwriting and asset management systems. Our real estate operations team, including our pricing team, together with our software engineering and data science teams are responsible for underwriting accuracy, portfolio health, and workflow optimization. Our underwriting tools are constantly updated to adjust to the latest market conditions, leveraging inputs from our internal data systems, as well as third-party and other proprietary data sources. This allows us to assess and adjust to changes in the local housing market conditions based on our technology, analysis and local real estate experience, in order to mitigate our risk exposure. Further, our listed homes are typically in market-ready and move-in ready condition following the repairs and renovations we conduct.

Historically, we have been able to manage our portfolio risk in part by our ability to manage holding periods for our real estate inventory. Traditionally, resale housing pricing moves gradually through cycles; therefore, shorter real estate inventory holding periods limit pricing exposure.

During 2024, the average holding period of homes sold remained steady at approximately 110 days during the first three quarters of the year, before increasing to 142 days during the fourth quarter of 2024. This increase continued into the first quarter of 2025, when our average real estate inventory holding period was 165 days. The increase in our average real estate inventory holding period over the past two quarters reflects our intentional reduction in home acquisition pace during the second half of 2024, along with the normal seasonal increase that occurs in the fall and winter months. The reduction in home acquisition pace allowed us to manage overall real estate inventory growth in light of the sustained elevated and volatile mortgage interest rate environment, which continues to negatively impact housing affordability and velocity, and create uncertainty for home buyers, challenging consumer demand for residential real estate.

Based on our current expectations, we anticipate our average real estate inventory holding period will decline in the second quarter of 2025 as we sell through our aged real estate inventory and our overall real estate inventory mix shifts and includes a higher composition of newer acquired homes. However, as the residential real estate market conditions remain volatile, we intend to continue balancing our home acquisition pace to manage our real estate inventory levels, and ultimately, our average real estate inventory holding period.

Non-GAAP Financial Measures

In addition to our results of operations below, we report certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). These measures have limitations as analytical tools when assessing our operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net income. We may calculate or present our non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures we report may not be comparable with those of companies in our industry or in other industries.

Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins)

To provide investors with additional information regarding our margins, we have included Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins), which are non-GAAP financial measures. We believe that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across our markets. Each of these measures is intended to present the economics related to homes sold during a given period. We do so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such

home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in real estate inventory as of the end of the period presented. Contribution Profit provides investors a measure to assess Offerpad’s ability to generate returns on homes sold during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs (including senior and mezzanine secured credit facilities) attributable to homes sold during a reporting period. We believe these measures facilitate meaningful period over period comparisons and illustrate our ability to generate returns on assets sold after considering the costs directly related to the assets sold in a presented period.

Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest (and related margins) are supplemental measures of our operating performance and have limitations as analytical tools. For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in real estate inventory at the end of the period, costs required to be recorded under GAAP in the same period.

Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is gross profit.

Adjusted Gross Profit / Margin

We calculate Adjusted Gross Profit as gross profit under GAAP adjusted for (1) net real estate inventory valuation adjustment plus (2) interest expense associated with homes sold in the presented period and recorded in cost of revenue. Net real estate inventory valuation adjustment is calculated by adding back the real estate inventory valuation adjustment charges recorded during the period on homes that remain in real estate inventory at period end and subtracting the real estate inventory valuation adjustment charges recorded in prior periods on homes sold in the current period. We define Adjusted Gross Margin as Adjusted Gross Profit as a percentage of revenue.

We view this metric as an important measure of business performance, as it captures gross margin performance isolated to homes sold in a given period and provides comparability across reporting periods. Adjusted Gross Profit helps management assess performance across the key phases of processing a home (acquisitions, renovations, and resale) for a specific resale cohort.

Contribution Profit / Margin

We calculate Contribution Profit as Adjusted Gross Profit, minus (1) direct selling costs incurred on homes sold during the presented period, minus (2) holding costs incurred in the current period on homes sold during the period recorded in sales, marketing, and operating, minus (3) holding costs incurred in prior periods on homes sold in the current period recorded in sales, marketing, and operating, plus (4) other income, net which is primarily composed of interest income earned on our cash and cash equivalents and fair value adjustments of derivative financial instruments. The composition of our holding costs is described in the footnotes to the reconciliation table below. We define Contribution Margin as Contribution Profit as a percentage of revenue.

We view this metric as an important measure of business performance as it captures the unit level performance isolated to homes sold in a given period and provides comparability across reporting periods. Contribution Profit helps management assess inflows and outflow directly associated with a specific resale cohort.

Contribution Profit / Margin After Interest

We define Contribution Profit After Interest as Contribution Profit, minus (1) interest expense associated with homes sold in the presented period and recorded in cost of revenue, minus (2) interest expense associated with homes sold in the presented period, recorded in costs of sales, and previously excluded from Adjusted Gross Profit, and minus (3) interest expense under our senior and mezzanine secured credit facilities and other senior secured debt incurred on homes sold during the period. This includes interest expense recorded in prior periods in which the sale occurred. Our senior and mezzanine secured credit facilities and other senior secured debt are secured by our homes in real estate inventory and drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold. See “—Liquidity and Capital Resources—Financing Activities.” We define Contribution Margin After Interest as Contribution Profit After Interest as a percentage of revenue.

We view this metric as an important measure of business performance. Contribution Profit After Interest helps management assess Contribution Margin performance, per above, when fully burdened with costs of financing.

The following table presents a reconciliation of our Adjusted Gross Profit, Contribution Profit (Loss) and Contribution Profit (Loss) After Interest to our Gross Profit, which is the most directly comparable GAAP measure, for the periods indicated:


	Three Months Ended March 31,
(in thousands, except percentages and homes sold, unaudited)	2025			2024
Gross profit (GAAP)	$	10,507		$	22,595
Gross margin		6.5	%		7.9	%
Homes sold		460			847
Gross profit per home sold	$	22.8		$	26.7
Adjustments:
Real estate inventory valuation adjustment - current period (1)		1,743			623
Real estate inventory valuation adjustment - prior period (2)		(2,211	)		(645	)
Interest expense capitalized (3)		1,422			1,669
Adjusted gross profit	$	11,461		$	24,242
Adjusted gross margin		7.1	%		8.5	%
Adjustments:
Direct selling costs (4)		(4,388	)		(6,969	)
Holding costs on sales - current period (5)(6)		(535	)		(887	)
Holding costs on sales - prior period (5)(7)		(690	)		(483	)
Other income, net (8)		296			754
Contribution profit	$	6,144		$	16,657
Contribution margin		3.8	%		5.8	%
Homes sold		460			847
Contribution profit per home sold	$	13.4		$	19.7
Adjustments:
Interest expense capitalized (3)		(1,422	)		(1,669	)
Interest expense on homes sold - current period (9)		(1,617	)		(2,521	)
Interest expense on homes sold - prior period (10)		(2,883	)		(2,426	)
Contribution profit after interest	$	222		$	10,041
Contribution margin after interest		0.1	%		3.5	%
Homes sold		460			847
Contribution profit after interest per home sold	$	0.5		$	11.9

(1)

Real estate inventory valuation adjustment – current period is the real estate inventory valuation adjustments recorded during the period presented associated with homes that remain in real estate inventory at period end.

(2)

Real estate inventory valuation adjustment – prior period is the real estate inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.

(3)

Interest expense capitalized represents all interest related costs, including senior and mezzanine secured credit facilities, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

(4)

Direct selling costs represents selling costs incurred related to homes sold in the period presented. This primarily includes broker commissions and title and escrow closing fees.

(5)

Holding costs primarily include insurance, utilities, homeowners association dues, property taxes, cleaning, and maintenance costs.

(6)

Represents holding costs incurred on homes sold in the period presented and expensed to Sales, marketing, and operating on the Condensed Consolidated Statements of Operations.

(7)

Represents holding costs incurred in prior periods on homes sold in the period presented and expensed to Sales, marketing, and operating on the Condensed Consolidated Statements of Operations.

(8)

Other income, net principally represents interest income earned on our cash and cash equivalents and fair value adjustments of derivative financial instruments.

(9)

Represents both senior and mezzanine interest expense incurred on homes sold in the period presented and expensed to interest expense on the Condensed Consolidated Statements of Operations.

(10)

Represents both senior and mezzanine secured credit facilities interest expense incurred in prior periods on homes sold in the period presented and expensed to interest expense on the Condensed Consolidated Statements of Operations.

Adjusted Net Income (Loss) and Adjusted EBITDA

We also present Adjusted Net Income (Loss) and Adjusted EBITDA, which are non-GAAP financial measures, which our management team uses to assess our underlying financial performance. We believe these measures provide insight into period over period performance, adjusted for non-recurring or non-cash items.

We calculate Adjusted Net Income (Loss) as GAAP Net Income (Loss) adjusted for the change in fair value of warrant liabilities. We define Adjusted Net Income (Loss) Margin as Adjusted Net Income (Loss) as a percentage of revenue.

We calculate Adjusted EBITDA as Adjusted Net Income (Loss) adjusted for interest expense, amortization of capitalized interest, taxes, depreciation and amortization and stock-based compensation expense. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue.

Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental to our operating performance measures calculated in accordance with GAAP and have important limitations. For example, Adjusted Net Income (Loss) and Adjusted EBITDA exclude the impact of certain costs required to be recorded under GAAP and could differ substantially from similarly titled measures presented by other companies in our industry or companies in other industries. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

The following table presents a reconciliation of our Adjusted Net Income (Loss) and Adjusted EBITDA to our GAAP Net Income (Loss), which is the most directly comparable GAAP measure, for the periods indicated:


	Three Months Ended March 31,
(in thousands, except percentages, unaudited)	2025			2024
Net loss (GAAP)	$	(15,057	)	$	(17,515	)
Change in fair value of warrant liabilities		257			(344	)
Adjusted net loss	$	(14,800	)	$	(17,859	)
Adjusted net loss margin		(9.2	)%		(6.3	)%
Adjustments:
Interest expense		3,522			4,905
Amortization of capitalized interest (1)		1,422			1,669
Income tax expense		37			123
Depreciation and amortization		206			166
Amortization of stock-based compensation		1,782			3,867
Adjusted EBITDA	$	(7,831	)	$	(7,129	)
Adjusted EBITDA margin		(4.9	)%		(2.5	)%

(1)

Amortization of capitalized interest represents all interest related costs, including senior and mezzanine interest related costs, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

Results of Operations

The following details our consolidated results of operations and includes a discussion of our operating results and significant items explaining the material changes in our operating results during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024


	Three Months Ended March 31,
(in thousands, except percentages)	2025			2024			$ Change			% Change
Revenue	$	160,698		$	285,358		$	(124,660	)		(43.7	)%
Cost of revenue		150,191			262,763			(112,572	)		(42.8	)%
Gross profit		10,507			22,595			(12,088	)		(53.5	)%
Operating expenses:
Sales, marketing and operating		13,828			22,452			(8,624	)		(38.4	)%
General and administrative		7,196			11,955			(4,759	)		(39.8	)%
Technology and development		1,020			1,773			(753	)		(42.5	)%
Total operating expenses		22,044			36,180			(14,136	)		(39.1	)%
Loss from operations		(11,537	)		(13,585	)		2,048			(15.1	)%
Other income (expense):
Change in fair value of warrant liabilities		(257	)		344			(601	)		(174.7	)%
Interest expense		(3,522	)		(4,905	)		1,383			(28.2	)%
Other income, net		296			754			(458	)		(60.7	)%
Total other expense		(3,483	)		(3,807	)		324			(8.5	)%
Loss before income taxes		(15,020	)		(17,392	)		2,372			(13.6	)%
Income tax expense		(37	)		(123	)		86			(69.9	)%
Net loss	$	(15,057	)	$	(17,515	)	$	2,458			(14.0	)%

Revenue

Revenue decreased by $124.7 million, or 43.7%, to $160.7 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily due to lower sales volumes. We sold 460 homes during the three months ended March 31, 2025 compared to 847 homes during the three months ended March 31, 2024, representing a decrease of 45.7%. This decrease was primarily due to our intentional reduction in home acquisition pace during the second half of 2024 as we adjusted our home purchase criteria through more conservative acquisition underwriting, resulting in higher expected internal rates of return based on current residential real estate market conditions. This reduction in home acquisition pace, which resulted in a fewer number of homes in real estate inventory during the first quarter of 2025, has allowed us to manage overall inventory growth in light of the sustained elevated and volatile mortgage interest rate environment, as the average thirty-year fixed mortgage rate generally remained between the mid-6% range and 7% during the first quarter of 2025. This mortgage interest rate environment continues to negatively impact housing affordability and velocity, and create uncertainty for home buyers, challenging consumer demand for residential real estate.

The decrease in homes sold was partially offset by a modest increase in the average resale home price from $332,000 in the three months ended March 31, 2024 to $340,000 in the three months ended March 31, 2025. This increase was primarily due to a shift in the mix of homes sold in the respective periods, with a greater percentage of homes sold in geographic markets that tend to share relatively higher median price points during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Cost of Revenue and Gross Profit

Cost of revenue decreased by $112.6 million, or 42.8%, to $150.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was primarily attributable to lower sales volumes, which was partially offset by an increase in the real estate inventory valuation adjustment.

Gross profit margin was 6.5% for the three months ended March 31, 2025 compared to 7.9% for the three months ended March 31, 2024. The decrease in gross profit margin was primarily due to an increase in the real estate inventory valuation adjustment, from $0.6 million during the three months ended March 31, 2024 to $1.7 million during the three months ended March 31, 2025. The decrease in gross profit margin was also due to an increase in the average real estate inventory holding period over the past two quarters, along with our increased use of pricing adjustments and other incentives in recent periods as we focused on selling our legacy real estate inventory.

Sales, Marketing and Operating

Sales, marketing and operating expense decreased by $8.6 million, or 38.4%, to $13.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily attributable to decreased average employee headcount, a decrease in variable costs associated with the decrease in homes sold, and a $2.1 million decrease in advertising expense as we continued to reposition and optimize our marketing efforts in response to the ongoing uneven residential real estate market conditions.

General and Administrative

General and administrative expense decreased by $4.8 million, or 39.8%, to $7.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily attributable to decreased average employee headcount and a decrease in fees associated with our credit facilities.

Technology and Development

Technology and development expense decreased by $0.8 million, or 42.5%, to $1.0 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily attributable to decreased average employee headcount.

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities represents a loss of $0.3 million for the three months ended March 31, 2025 and a gain of $0.3 million for the three months ended March 31, 2024, as a result of the fair value adjustment of our warrant liabilities.

Interest Expense

Interest expense decreased by $1.4 million, or 28.2%, to $3.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily attributable to a $33.1 million decrease in the average outstanding balance of our senior and mezzanine secured credit facilities, from $257.7 million during the three months ended March 31, 2024 to $224.6 million during the three months ended March 31, 2025. The decrease was also due to a 0.6% decrease in the weighted average variable interest rates associated with our secured credit facilities and other debt.

Other Income, Net

Other income, net principally represents interest income earned on our cash and cash equivalents during each of the three months ended March 31, 2025 and 2024. Other income, net also includes gains or losses from the disposal of property and equipment in both periods.

Income Tax Expense

We recorded income tax expense of less than $0.1 million and $0.1 million during the three months ended March 31, 2025 and 2024, respectively, and our effective tax rate was an expense of 0.2% and 0.7% for the respective periods. Our effective tax rate during the three months ended March 31, 2025 differed from the federal statutory rate of 21% primarily due to net operating loss carryforwards and state taxes.

Segment Operating Performance

Revenue

Our Cash Offer solution represents the substantial majority of our business, generating over 95% of our consolidated revenue during each of the three months ended March 31, 2025 and 2024.

Cash Offer revenue decreased by $124.0 million, or 44.6%, to $153.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily attributable to lower sales volumes. We sold 460 homes during the three months ended March 31, 2025 compared to 847 homes during the three months ended March 31, 2024, representing a decrease of 45.7%. This decrease in homes sold was partially offset by a modest increase in the average resale home price from $332,000 in the three months ended March 31, 2024 to $340,000 in the three months ended March 31, 2025. This increase was primarily due to a shift in the mix of homes sold in the respective periods, with a greater percentage of homes sold in geographic markets that tend to share relatively higher median price points during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Other revenue decreased by $0.6 million, or 8.6%, to $6.9 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily attributable to a decrease in revenue associated with the transition from our historical listing service offering as we shifted our focus to our referral partner networks, which includes our homebuilder services, our agent partnership program and our agent referral network. This decrease in revenue was partially offset by a slight increase in B2B Renovate revenue due to a higher average renovation transaction value per home during three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Cost of Revenue and Gross Profit

Our asset-light platform offerings included in Other generally earn a smaller average revenue per transaction than our Cash Offer service, but typically generate higher margins.

Cash Offer cost of revenue decreased by $111.9 million, or 43.4%, to $145.7 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was primarily attributable to lower sales volumes, which was partially offset by an increase in the real estate inventory valuation adjustment.

Cash Offer gross profit margin was 5.3% for the three months ended March 31, 2025 compared to 7.3% for the three months ended March 31, 2024. The decrease in gross profit margin was primarily due to an increase in the real estate inventory valuation adjustment, from $0.6 million during the three months ended March 31, 2024 to $1.7 million during the three months ended March 31, 2025. The decrease in gross profit margin was also due to an increase in the average real estate inventory holding period over the past two quarters, along with our increased use of pricing adjustments and other incentives in recent periods as we focused on selling our legacy real estate inventory.

Other cost of revenue decreased by $0.7 million, or 12.9%, to $4.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was primarily attributable to lower volumes associated with our historical listing service offering as we transitioned our focus to our partner network, which was partially offset by an increase in costs associated with our B2B Renovate business due to a higher average renovation transaction cost per home during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Other gross profit margin was 35.1% for the three months ended March 31, 2025 compared to 31.9% for the three months ended March 31, 2024. This increase in gross profit margin was primarily due to a shift in the product mix of the asset-light platform offerings included in Other during the first quarter of 2025 compared to the first quarter of 2024. Our Agent Partnership Program, which generally has higher margins compared to the other offerings included within Other, represented a larger component of Other gross profit during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Liquidity and Capital Resources

Overview

Cash and cash equivalents balances consist of operating cash on deposit with financial institutions. Our principal sources of liquidity have historically consisted of cash generated from our operations and financing activities. As of March 31, 2025, we had cash and cash equivalents of $30.8 million and had a total undrawn borrowing capacity under our senior and mezzanine secured credit facilities of $813.6 million, $49.1 million of which is committed and $764.5 million uncommitted.

With the exception of the year ended December 31, 2021, during which we generated net income, we have incurred losses each year from inception and during the three months ended March 31, 2025, and may incur additional losses in the future. Since our launch in 2015, we have invested in the development and expansion of our operations. These investments include improvements in infrastructure and a continual improvement to our software and technology platform. We have also invested in sales and marketing as we have increased our market penetration in existing markets, and grown our business through new market expansion and the increased offering of asset-light platform services.

We expect our working capital requirements to continue to increase over the long term, as we seek to increase our real estate inventory and expand our operations. We believe our cash on hand, together with proceeds from the resale of homes and cash from future borrowings available under each of our existing credit facilities, or the entry into new debt financing arrangements or the issuance of equity instruments, will be sufficient to meet our short-term working capital and capital expenditure requirements for at least the next twelve months. However, our ability to fund our working capital and capital expenditure requirements depends on the residential real estate market conditions in the markets in which we operate and in the U.S. in general, and various other general economic, financial, competitive, legislative, regulatory, geopolitical and other conditions that may be beyond our control. Uncertain economic outlook and uneven residential real estate market conditions have impacted, and may continue to impact, our business negatively. Based on these and other current market conditions, we are seeking and plan to continue to seek additional financing. Volatility in the credit markets, rising interest rates and softened consumer demand for residential real estate may have an adverse effect on our ability to obtain debt financing on favorable terms or at all. If we are not able to obtain necessary capital to meet our business objectives, we may need to further stall, moderate or decelerate our expansion activities, which may include various restructuring alternatives and options, including more significant cost reductions, product and operational changes focused on reductions in working capital requirements, including pausing or reducing real estate inventory acquisitions, and other actions to enhance the preservation of cash. If we are able to raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, or may require us to agree to unfavorable terms, and our existing stockholders may experience significant dilution.

Financing Activities

Our financing activities primarily include borrowing under our senior secured credit facilities, mezzanine secured credit facilities and new issuances of equity (including the issuance of the pre-funded warrants, as discussed above). Historically, we have required access to external financing resources in order to fund growth, increase penetration in existing markets, expansion into new markets and other strategic initiatives, and we expect this to continue in the future. Our access to capital markets can be impacted by factors outside our control, including economic conditions.

Buying and selling high-valued assets, such as single-family residential homes, is very cash intensive and has a significant impact on our liquidity and capital resources. We use non-recourse secured credit facilities, consisting of both senior secured credit facilities and mezzanine secured credit facilities, to finance a significant portion of our real estate inventory and related home renovations. Our senior and mezzanine secured credit facilities, however, are not fully committed, meaning the applicable lender may not be obligated to advance new loan funds if they choose not to do so. Our ability to obtain and maintain access to these or similar kinds of credit facilities is significant for us to operate the business.

Senior Secured Credit Facilities

The following summarizes certain details related to our senior secured credit facilities (in thousands, except interest rates):


	Borrowing Capacity						Outstanding		Weighted- Average Interest			End of Revolving / Withdrawal	Final Maturity
As of March 31, 2025	Committed		Uncommitted		Total		Amount		Rate			Period	Date
Senior financial institution 1	$	150,000	$	250,000	$	400,000	$	128,193		7.12	%	December 2025	June 2026
Senior financial institution 2		—		200,000		200,000		—		—		January 2026	July 2026
Senior financial institution 3		—		150,000		150,000		—		7.58	%	January 2025	April 2025
Related party		30,000		20,000		50,000		27,277		9.32	%	March 2025	September 2025
Senior financial institution 4		—		30,000		30,000		9,530		10.16	%	August 2025	February 2026
Senior secured credit facilities	$	180,000	$	650,000	$	830,000	$	165,000

As of March 31, 2025, we had five senior secured credit facilities that we use to fund the purchase of homes and build our real estate inventory, four with separate financial institutions and one with a related party, which holds more than 5% of our Class A common stock. Borrowings under the senior secured credit facilities accrue interest at a rate based on a SOFR reference rate, plus a margin which varies by facility. Each of our senior secured credit facilities also have interest rate floors. We may also pay fees on our senior secured credit facilities, including a commitment fee and fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.

Borrowings under our senior secured credit facilities are collateralized by the real estate inventory financed by the senior secured credit facility. The lenders have legal recourse only to the assets securing the debt and do not have general recourse against us with limited exceptions. We have, however, provided limited non-recourse carve-out guarantees under our senior and mezzanine secured credit facilities for certain of the SPEs’ obligations. Each senior secured credit facility contains eligibility requirements that govern whether a property can be financed. When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities.

Mezzanine Secured Credit Facilities

In addition to the senior secured credit facilities, we use mezzanine secured credit facilities which are structurally and contractually subordinated to the related senior secured credit facilities. The following summarizes certain details related to our mezzanine secured credit facilities (in thousands, except interest rates):


	Borrowing Capacity						Outstanding		Weighted- Average Interest			End of Revolving / Withdrawal	Final Maturity
As of March 31, 2025	Committed		Uncommitted		Total		Amount		Rate			Period	Date
Related party facility 1	$	45,000	$	25,000	$	70,000	$	21,680		13.00	%	June 2025	December 2025
Mezzanine financial institution 1		—		45,000		45,000		—		—		January 2026	July 2026
Mezzanine financial institution 2		—		40,000		40,000		—		11.58	%	January 2025	April 2025
Related party facility 2		8,000		14,000		22,000		6,725		13.00	%	March 2025	September 2025
Mezzanine secured credit facilities	$	53,000	$	124,000	$	177,000	$	28,405

As of March 31, 2025, we had four mezzanine secured credit facilities, two with separate financial institutions and two with a related party, which holds more than 5% of our Class A common stock. Borrowings under the mezzanine secured credit facilities accrue interest at a rate based on a SOFR reference rate, plus a margin which varies by facility. Each of our mezzanine secured credit facilities also have interest rate floors. We may also pay fees on our mezzanine secured credit facilities, including a commitment fee and fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.

Borrowings under our mezzanine secured credit facilities are collateralized by a second lien on the real estate inventory financed by the relevant credit facility. The lenders have legal recourse only to the assets securing the debt, and do not have general recourse against us with limited exceptions. When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured revolving credit facilities.

Covenants for Senior Secured Credit Facilities and Mezzanine Secured Credit Facilities

Our secured credit 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 facilities and related financing documents require the Company 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 tangible net worth).

Senior Secured Debt - Other


Delaware	85-2800538
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
433 S. Farmer Avenue, Suite 500, Tempe, Arizona	85281
(Address of principal executive offices)	(Zip Code)
(844) 388-4539
(Registrant’s telephone number, including area code)


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


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


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
3.1	Fourth Restated Certificate of Incorporation, dated June 13, 2023	8-K	001-39641	3.1	6/13/23
3.2	Amended and Restated Bylaws	8-K	001-39641	3.3	6/13/23
10.1	Employment Agreement, effective March 1, 2025, by and between James Grout and Offerpad Solutions Inc.	8-K	001-39641	10.1	2/28/25
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101*	Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	OFFERPAD SOLUTIONS INC.

Date: May 5, 2025	By:	/s/ Brian Bair
		Brian Bair
		Chief Executive Officer and Chairman of the Board (Principal Executive Officer)

Date: May 5, 2025	By:	/s/ Peter Knag
		Peter Knag
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)


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


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


		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	7
	Notes to Condensed Consolidated Financial Statements	8
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	35

PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37

SIGNATURES		38