Opendoor Announces Fourth Quarter and Full Year 2020 Results
03/04/2021 - 04:05 PM
Exceeds prior expectations for fourth quarter and full year 2020 results Doubling of markets expected for 2021
SAN FRANCISCO, March 04, 2021 (GLOBE NEWSWIRE) -- Opendoor Technologies Inc. (Nasdaq: OPEN), a leading digital platform for residential real estate, today reported financial results for its fourth quarter and fiscal year ended December 31, 2020. Management will host a conference call at 2:00 p.m. Pacific Time today to discuss its operating results, which can be accessed on its investor relations website at https://investor.opendoor.com.
“We are making it possible to buy and sell a home at the tap of a button and building the future of the real estate transaction,” said Eric Wu, Co-Founder and CEO of Opendoor. “While 2020 was an unprecedented year, I’m proud of our team’s relentless focus on digitizing the transaction and delighting customers. As we reflect on Q4 and enter 2021, this focus has resulted in increasing business momentum. More customers are coming to us and choosing Opendoor than ever before, we are seeing healthy margins, and we plan on doubling our footprint to 42 markets. Since creating the category seven years ago, we have generated over $10 billion in home sales, served over 80,000 customers and demonstrated our ability to scale efficiently. While we are pleased with the progress and foundation we've built, we are just getting started.”
Recent Highlights
OPEN became publicly-traded via a merger with Social Capital Hedosophia Holdings Corp. II on December 18, 2020, raising net proceeds of $970 million Completed an underwritten follow-on public equity offering of $860 million of net proceeds in February 2021, adding to the Company’s cash and marketable securities balance of $1,460 million at the end of Q4 2020 Launched a completely digital, contactless consumer experience in all markets Tripled inventory balance from Q3 2020 to $466 million and 1,827 homes at year end Generated 15.4% Gross Profit margins and 12.6% Contribution Profit margins in the fourth quarter of 2020 Announced planned doubling of footprint to 42 markets during the course of 2021 Expanded leadership team with the addition of Andrew Low Ah Kee as President, Daniel Morillo as Chief Investment Officer, and Carrie Wheeler as Chief Financial Officer Fourth Quarter and Full Year 2020 Financial Summary Revenue and Homes Sold
For the fourth quarter, Total Homes Sold was 849, as compared to 5,013 for the prior year period, and Total Revenue was $248.9 million , as compared to $1,255.7 million for the prior year period. For the full year 2020, Total Homes Sold was 9,913, compared to 18,799 for the prior year, and Total Revenue was $2,583.1 million , as compared to $4,740.6 million for 2019. Margins
For the fourth quarter, GAAP Gross Profit was $38.4 million or 15.4% of total revenue, compared to $74.0 million or 5.9% of total revenue for the prior year period. Gross Profit per Home Sold was $45,188 compared to prior year Gross Profit per Home Sold of $14,754. Contribution Profit was $31.5 million and Contribution Margin was 12.6% , as compared to Contribution Profit of $18.2 million and Contribution Margin of 1.5% . Contribution Margin after Interest was 12.2% as compared to 0.2% . Contribution Profit per Home Sold was $37,052 compared to prior year period Contribution Profit per Home Sold of $3,635. For the full year, GAAP Gross Profit was $219.8 million or 8.5% of total revenue, compared to $301.3 million or 6.4% of total revenue for 2019. Gross Profit per Home Sold was $22,173 compared to 2019 Gross Profit per Home Sold of $16,025. Contribution Profit was $110.1 million and Contribution Margin was 4.3% as compared to Contribution Profit of $92.1 million and Contribution Margin of 1.9% . Contribution Margin after Interest was 3.2% as compared to 0.6% . Contribution Profit per Home Sold was $11,109 compared to prior year Contribution Profit per Home Sold of $4,897. Net Income (Loss) and Adjusted EBITDA
For the fourth quarter, GAAP Net Loss was $(87.8) million as compared to $(91.7) million for the prior year period. Non-GAAP Adjusted Net Loss was $(41.3) million as compared to $(86.6) million . Adjusted EBITDA was $(27.1) million or (10.9)% Adjusted EBITDA Margin, as compared to $(59.0) million or (4.7)%. For the full year, GAAP Net Loss was $(286.8) million as compared to $(339.2) million for 2019. Non-GAAP Adjusted Net Loss was $(175.1) million as compared to $(326.8) million . Adjusted EBITDA was $(98.0) million or (3.8)% Adjusted EBITDA Margin, as compared to $(217.9) million or (4.6)%. First Quarter 2021 Outlook $600 million and $625 million , which represents 146% sequential growth over Q4 2020 at the midpoint of the expected range. This first fiscal quarter is expected to mark a return to sequential revenue growth across existing markets with strong and increasing demand for Opendoor’s service and an accelerating pace of home acquisitions. The Company expects to launch six new markets in Q1.
Adjusted EBITDA1 is expected to be between $(33) million and $(28) million , which represents Adjusted EBITDA margins of (5)% at the midpoint of the expected range.
Conference Call and Webcast Details
Use of Non-GAAP Financial Measures
For more information on the Company’s non-GAAP financial measures, please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Measures” included at the end of this press release.
Forward Looking Statements
About Opendoor
Investors:
Media:
_____________________________1 Opendoor has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss) within this press release because the Company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include, but are not limited to, inventory impairment and stock-based compensation with respect to future grants and forfeitures. These items, which could materially affect the computation of forward-looking GAAP net income (loss), are inherently uncertain and depend on various factors, some of which are outside of the Company’s control. For more information regarding the non-GAAP financial measures discussed in this press release, please see “Use of Non-GAAP Financial Measures” below.
OPENDOOR TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 REVENUE $ 248,886 $ 1,255,654 $ 2,583,121 $ 4,740,583 COST OF REVENUE 210,521 1,181,693 2,363,324 4,439,333 GROSS PROFIT 38,365 73,961 219,797 301,250 OPERATING EXPENSES: Sales, marketing and operations 38,431 93,041 194,721 384,416 General and administrative 53,695 32,665 152,769 113,446 Technology and development 12,363 14,007 58,172 51,222 Total operating expenses 104,489 139,713 405,662 549,084 LOSS FROM OPERATIONS (66,124 ) (65,752 ) (185,865 ) (247,834 ) DERIVATIVE AND WARRANT FAIR VALUE ADJUSTMENT (722 ) (401 ) (25,941 ) 6,243 LOSS ON EXTINGUISHMENT OF DEBT (11,356 ) — (11,356 ) — INTEREST EXPENSE (10,413 ) (28,614 ) (67,806 ) (109,728 ) OTHER INCOME – Net 652 2,957 4,271 12,401 LOSS BEFORE INCOME TAXES (87,963 ) (91,810 ) (286,697 ) (338,918 ) INCOME TAX EXPENSE 171 88 (63 ) (252 ) NET LOSS (87,792 ) (91,722 ) (286,760 ) (339,170 ) LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — — 1,847 NET LOSS ATTRIBUTABLE TO OPENDOOR TECHNOLOGIES INC. $ (87,792 ) $ (91,722 ) $ (286,760 ) $ (341,017 ) Net loss per share attributable to common shareholders: Basic $ (0.49 ) $ (1.10 ) $ (2.62 ) $ (4.26 ) Diluted $ (0.49 ) $ (1.11 ) $ (2.62 ) $ (4.37 ) Weighted-average shares outstanding: Basic 178,975 83,135 109,301 79,977 Diluted 178,975 83,135 109,301 79,977
OPENDOOR TECHNOLOGIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of December 31, 2020 2019 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,412,665 $ 405,080 Restricted cash 92,863 279,742 Marketable securities 47,637 43,576 Mortgage loans held for sale pledged under agreements to repurchase 7,529 2,116 Escrow receivable 1,494 13,882 Real estate inventory, net 465,936 1,312,369 Other current assets ($373 and $100 carried at fair value) 24,987 30,879 Total current assets 2,053,111 2,087,644 PROPERTY AND EQUIPMENT – Net 29,228 34,606 RIGHT OF USE ASSETS 49,517 60,681 GOODWILL 30,945 30,945 INTANGIBLES – Net 8,684 12,414 OTHER ASSETS 4,097 5,394 TOTAL ASSETS $ 2,175,582 $ 2,231,684 LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ DEFICIT CURRENT LIABILITIES: Accounts payable and other accrued liabilities $ 25,270 $ 32,977 Current portion of credit facilities and other secured borrowings 346,322 1,074,125 Interest payable 1,081 5,808 Lease liabilities, current portion 20,716 13,472 Total current liabilities 393,389 1,126,382 CREDIT FACILITIES – Net of current portion 135,467 221,929 CONVERTIBLE NOTES — 140,096 DERIVATIVE AND WARRANT LIABILITIES — 46,235 LEASE LIABILITIES – Net of current portion 46,625 48,435 OTHER LIABILITIES 94 208 Total liabilities 575,575 1,583,285 COMMITMENTS AND CONTINGENCIES TEMPORARY EQUITY: Series A convertible preferred stock, zero and 40,089,513 shares authorized, respectively; zero and 40,089,513 shares issued and outstanding, respectively; liquidation preference of $0 and $9,807, respectively — 9,763 Series B convertible preferred stock, zero and 23,840,816 shares authorized, respectively; zero and 23,840,816 shares issued and outstanding, respectively; liquidation preference of $0 and $20,182, respectively — 20,049 Series C convertible preferred stock, zero and 29,070,700 shares authorized, respectively; zero and 29,070,700 shares issued and outstanding, respectively; liquidation preference of $0 and $77,160, respectively — 80,519 Series D convertible preferred stock, zero and 63,956,147 shares authorized, respectively; zero and 63,470,884 shares issued and outstanding, respectively; liquidation preference of $0 and $248,333, respectively — 257,951 Series E convertible preferred stock, zero and 165,941,619 shares authorized, respectively; zero and 157,952,523 shares issued and outstanding, respectively; liquidation preference of $0 and $1,011,319, respectively — 1,013,220 Total temporary equity — 1,381,502 SHAREHOLDERS’ EQUITY (DEFICIT): Common stock, $0.0001 and $0.00001 par value, respectively; 3,000,000,000 and 485,262,910 shares authorized, respectively; 540,714,692 and 83,748,443 shares issued and outstanding, respectively 54 — Additional paid-in capital 2,677,155 57,362 Accumulated deficit (1,077,243 ) (790,483 ) Accumulated other comprehensive income 41 18 Total shareholders’ equity (deficit) 1,600,007 (733,103 ) TOTAL LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ EQUITY (DEFICIT) $ 2,175,582 $ 2,231,684
OPENDOOR TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (286,760 ) $ (339,170 ) Adjustments to reconcile net loss to cash, cash equivalents, and restricted cash provided by (used in) operating activities: Depreciation and amortization – net of accretion 38,604 27,372 Amortization of right of use asset 23,744 11,940 Stock-based compensation 38,005 12,606 Warrant fair value adjustment 2,622 (6,243 ) Inventory valuation adjustment 7,596 31,885 Changes in fair value of derivative instruments 23,043 1,102 Payment-in-kind interest 3,910 2,052 Net fair value adjustments and gain (loss) on sale of mortgage loans held for sale (3,390 ) (447 ) Origination of mortgage loans held for sale (127,658 ) (23,194 ) Proceeds from sale and principal collections of mortgage loans held for sale 125,635 21,525 Changes in operating assets and liabilities: Escrow receivable 12,388 (3,110 ) Real estate inventories 834,143 16,951 Other assets 4,315 (7,518 ) Accounts payable and other accrued liabilities (3,995 ) (4,331 ) Interest payable (3,145 ) 475 Lease liabilities (7,146 ) (13,945 ) Net cash provided by (used in) operating activities 681,911 (272,050 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (17,341 ) (27,972 ) Purchase of marketable securities (174,530 ) (79,319 ) Proceeds from sales, maturities, redemptions and paydowns of marketable securities 170,005 45,025 Acquisitions, net of cash acquired — (32,812 ) Net cash used in investing activities (21,866 ) (95,078 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of Series D preferred stock 3 35,000 Proceeds from issuance of Series E preferred stock 2,156 — Proceeds from issuance of Series E-2 preferred stock — 282,875 Issuance cost of Series E-2 preferred stock — (237 ) Proceeds from issuance of common stock 82 — Proceeds from issuance of convertible notes — 178,200 Proceeds from exercise of stock options 7,557 3,358 Proceeds from Business Combination and PIPE offering 1,013,926 — Issuance cost of common stock (43,449 ) — Capital distributions of non-controlling interest — (3,276 ) Proceeds from credit facilities and other secured borrowings 1,433,798 3,664,217 Principal payments on credit facilities and other secured borrowings (2,250,192 ) (3,495,411 ) Payment of loan origination fees and debt issuance costs (3,220 ) (15,137 ) Repurchase of common stock at fair value — (3,410 ) Net cash provided by financing activities 160,661 646,179 NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 820,706 279,051 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – Beginning of year 684,822 405,771 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of year $ 1,505,528 $ 684,822 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION – Cash paid during the period for interest $ 56,937 $ 85,910 DISCLOSURES OF NONCASH FINANCING ACTIVITIES: Conversion of preferred stock to common stock $ 1,385,632 $ — Issuance of issuer stock rights in extinguishment convertible notes 212,940 — Vesting of early exercised stock options 124 1,060 Conversion of convertible notes to Series E-1 preferred stock — — Noncash financing, issuance of common stock for acquisition — 6,650 RECONCILIATION TO CONSOLIDATED BALANCE SHEETS: Cash and cash equivalents $ 1,412,665 $ 405,080 Restricted cash 92,863 279,742 Cash, cash equivalents, and restricted cash $ 1,505,528 $ 684,822
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
To provide investors with additional information regarding our margins and return on inventory acquired, we have included Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest, 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 supplemental measures used by management in evaluating unit level economics and our operating performance in our key 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 adjacent 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 inventory as of the end of the period. Contribution Profit provides investors a measure to assess Opendoor’s ability to generate returns on homes sold during a reporting period after considering home purchase costs, renovation and repair costs, holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs 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 given period.
Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest 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 inventory at the end of the period, costs required to be recorded under GAAP in the same period. These measures also exclude the impact of certain restructuring costs that are required under GAAP. 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) inventory impairment in the current period, (2) inventory impairment in prior periods, plus (3) restructuring in cost of revenue. Restructuring in cost of revenue reflects the costs associated with the reduction in our workforce in 2020, a portion of which were related to personnel included in cost of revenue. Inventory impairment in the current period is calculated by adding back the inventory impairment charges recorded during the period on homes that remain in inventory at period end. Inventory impairment in prior periods is calculated by subtracting the inventory impairment 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 home pricing, service fees and renovation performance for a specific resale cohort.
Contribution Profit / Margin
We calculate Contribution Profit as Adjusted Gross Profit, minus (1) holding costs incurred in the current period on homes sold during the period, minus (2) holding costs incurred in prior periods on homes sold in the current period, and (3) direct selling costs incurred on homes sold during the current period. The composition of our holding costs is described in the footnotes to the reconciliation table below. Contribution Margin is 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 outflows directly associated with a specific resale cohort.
Contribution Profit / Margin After Interest
We define Contribution Profit After Interest as Contribution Profit, minus interest expense under our senior revolving credit facilities incurred on the homes sold during the period. This may include interest expense recorded in periods prior to the period in which the sale occurred. Our senior revolving credit facilities are secured by our homes in 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. We do not include interest expense associated with our mezzanine term debt facilities in this calculation as we do not view such facilities as reflective of our expected long term capital structure and cost of financing. Contribution Margin After Interest is 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 expected long-term costs of financing.
OPENDOOR TECHNOLOGIES INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES
The following table presents a reconciliation of our Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest to our gross profit, which is the most directly comparable GAAP measure, for the periods indicated:
Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 Gross profit (GAAP) $ 38,365 $ 73,961 $ 219,797 $ 301,250 Gross Margin 15.4 % 5.9 % 8.5 % 6.4 % Adjustments: Inventory impairment – Current Period(1) 79 7,985 119 10,363 Inventory impairment – Prior Periods(2) (216 ) (11,339 ) (10,544 ) (14,941 ) Restructuring in cost of revenue(3) — — 1,902 — Adjusted Gross Profit 38,228 70,607 211,274 296,672 Adjusted Gross Margin 15.4 % 5.6 % 8.2 % 6.3 % Adjustments: Direct selling costs(4) (5,243 ) (38,314 ) (72,928 ) (149,221 ) Holding costs on sales – Current Period(5)(6) (778 ) (4,532 ) (16,787 ) (42,837 ) Holding costs on sales – Prior Periods(5)(7) (750 ) (9,538 ) (11,436 ) (12,561 ) Contribution Profit 31,457 18,223 110,123 92,053 Homes sold in period 849 5,013 9,913 18,799 Contribution Profit per Home Sold 37 4 11 5 Contribution Margin 12.6 % 1.5 % 4.3 % 1.9 % Adjustments: Interest on homes sold – Current Period(8)(9) (714 ) (6,844 ) (17,946 ) (51,388 ) Interest on homes sold – Prior Periods(8)(10) (464 ) (8,845 ) (10,488 ) (13,179 ) Contribution Profit After Interest 30,279 2,534 81,689 27,486 Contribution Margin After Interest 12.2 % 0.2 % 3.2 % 0.6 %
________________
(1) Inventory impairment — Current Period is the inventory valuation adjustments recorded during the period presented associated with homes that remain in inventory at period end. (2) Inventory impairment — Prior Periods is the inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented. (3) Restructuring in cost of revenue consists mainly of severance and employee termination benefits that were recorded to cost of revenue. On April 15, 2020, we carried out a reduction in workforce following the outbreak of the COVID-19 pandemic. (4) Represents selling costs incurred related to homes sold in the relevant period. This primarily includes broker commissions, external title and escrow-related fees and transfer taxes. (5) Holding costs include mainly property taxes, insurance, utilities, association dues, cleaning and maintenance costs. Holding costs are included in Sales, marketing, and operations on the Consolidated Statements of Operations. (6) Represents holding costs incurred in the period presented on homes sold in the period presented. (7) Represents holding costs incurred in prior periods on homes sold in the period presented. (8) This does not include interest on mezzanine term debt facilities or other indebtedness. (9) Represents the interest expense under our senior revolving credit facilities incurred on homes sold for the current period during the period. (10) Represents the interest expense under our senior revolving credit facilities incurred on homes sold for the current period during prior periods.
Adjusted Net Loss and Adjusted EBITDA
We also present Adjusted Net Loss and Adjusted EBITDA, which are non-GAAP financial measures that management uses to assess our underlying financial performance. These measures are also commonly used by investors and analysts to compare the underlying performance of companies in our industry. We believe these measures provide investors with meaningful period over period comparisons of our underlying performance, adjusted for certain charges that are non-recurring, non-cash, not directly related to our revenue-generating operations or not aligned to related revenue.
Adjusted Net Loss and Adjusted EBITDA are supplemental measures of our operating performance and have important limitations. For example, these measures exclude the impact of certain costs required to be recorded under GAAP. These measures also include impairment costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in inventory at the end of the period, impairment costs required to be recorded under GAAP in the same period. These measures 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. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is net loss.
Adjusted Net Loss
We calculate Adjusted Net Loss as GAAP net loss adjusted to exclude non-cash expenses of stock-based compensation, derivative and warrant fair value adjustment and intangible amortization. It also excludes non-recurring restructuring charges, loss on extinguishment of debt, and convertible note payment-in-kind (“PIK”) interest and issuance discount amortization. Adjusted Net Loss also aligns the timing of impairment charges recorded under GAAP to the period in which the related revenue is recorded in order to improve the comparability of this measure to our non-GAAP financial measures of unit economics, as described above. Our calculation of Adjusted Net Loss does not currently include the tax effects of the non-GAAP adjustments because our taxes and such tax effects have not been material to date.
Adjusted EBITDA
We calculated Adjusted EBITDA as Adjusted Net Loss adjusted for depreciation and amortization, property financing and other interest expense, interest income, and income tax expense. Adjusted EBITDA is a supplemental performance measure that our management uses to assess our operating performance and the operating leverage in our business.
The following table presents a reconciliation of our Adjusted Net Loss and Adjusted EBITDA to our net loss, which is the most directly comparable GAAP measure, for the periods indicated:
Three Months Ended Year Ended December 31, March 31, December 31, December 31, (in thousands, except percentages) 2020 2020 2019 2020 2019 Net loss (GAAP) $ (87,792 ) $ (62,196 ) $ (91,722 ) $ (286,760 ) $ (339,170 ) Adjustments: Stock-based compensation 28,843 2,970 3,206 38,005 13,196 Derivative and warrant fair value adjustment(1) 721 1,012 401 25,940 (6,243 ) Intangibles amortization expense(2) 580 1,080 1,057 3,714 2,945 Inventory impairment – Current Period(3) 79 6,221 7,985 119 10,363 Inventory impairment – Prior Periods(4) (216 ) (8,421 ) (11,339 ) (10,544 ) (14,941 ) Restructuring(5) 211 889 1,245 30,752 3,428 Convertible note PIK interest and discount amortization (6) 14 2,695 2,506 7,838 4,102 Loss on extinguishment of debt 11,356 — — 11,356 — Other(7) 4,882 (44 ) 58 4,515 (498 ) Adjusted Net Loss (41,322 ) (55,794 ) (86,603 ) (175,065 ) (326,818 ) Adjustments: Depreciation and amortization, excluding amortization of intangibles and right of use assets 4,744 5,046 4,594 21,755 15,043 Property financing(8) 5,561 18,210 20,478 37,571 84,314 Other interest expense(9) 4,839 6,822 5,630 22,398 21,312 Interest income(10) (725 ) (2,680 ) (2,976 ) (4,732 ) (11,999 ) Income tax expense (171 ) 119 (88 ) 63 252 Adjusted EBITDA (27,074 ) (28,277 ) (58,965 ) (98,010 ) (217,896 ) Adjusted EBITDA Margin (10.9 )% (2.3 )% (4.7 )% (3.8 )% (4.6 )%
________________
(1) Represents the gains and losses on our derivative and warrant liabilities, which are marked to fair value at the end of each period. (2) Represents amortization of intangibles acquired in the OS National LLC and Open Listings Co acquisitions which contribute to revenue generation and are recorded as part of purchase accounting. The acquired intangible assets have useful lives ranging from 2 to 5 years and amortization is expected until the intangible assets are fully amortized. (3) Inventory impairment — Current Period is the inventory impairment charge recorded during the period presented associated with homes that remain in inventory at period end. (4) Inventory impairment — Prior Periods is the inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented. (5) Restructuring costs consist mainly of employee termination benefits, relocation packages and retention bonuses as well as costs related to the exiting of certain non-cancelable leases. In 2020, these costs related mainly to a reduction in workforce implemented in April 2020 as well as our exercise of the early termination option related to our San Francisco headquarters. In 2019, these costs related mainly to the centralization of our administrative and selling functions, including the relocation of local teams to Phoenix. (6) Includes non-cash payment-in-kind (“PIK”) interest and amortization of the discount on the convertible notes issued from July through November 2019. We exclude convertible note PIK interest and amortization from Adjusted Net Loss since these are non-cash in nature and were converted into equity in September 2020 when the Company entered into a Convertible Notes Exchange Agreement with the convertible note holders. (7) Includes primarily gain or loss on disposal of fixed assets, gain or loss on interest rate lock commitments, gain or loss on the sale of marketable securities, accrued legal matters and sublease income. (8) Includes interest expense on our senior revolving credit facilities and our asset-backed mezzanine term debt facilities. (9) Includes amortization of debt issuance costs and loan origination fees, commitment fees, unused fees, and other interest related costs on our senior revolving credit facilities and our mezzanine term debt facilities. (10) Consists mainly of interest earned on cash, cash equivalents and marketable securities.
