Offerpad (OPAD)

Technology real estate company Offerpad (NYSE:OPAD) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 36.2% year on year to $132.7 million. Next quarter’s revenue guidance of $112.5 million underwhelmed, coming in 23.4% below analysts’ estimates. Its GAAP loss of $0.37 per share was 12.1% below analysts’ consensus estimates.

Company Overview

Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE:OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.

Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.

Offerpad's primary competitors include Zillow (NASDAQ:ZG), Opendoor (NASDAQ:OPEN), Redfin (NASDAQ:RDFN), and eXp World (NASDAQ:EXPI).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Offerpad’s demand was weak and its revenue declined by 11.6% per year. This was below our standards and suggests it’s a low quality business.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Offerpad’s recent performance shows its demand remained suppressed as its revenue has declined by 40.1% annually over the last two years.

Offerpad also discloses its number of homes sold and homes purchased, which clocked in at 367 and 203 in the latest quarter. Over the last two years, Offerpad’s homes sold averaged 32.7% year-on-year declines while its homes purchased averaged 11.8% year-on-year declines.

This quarter, Offerpad missed Wall Street’s estimates and reported a rather uninspiring 36.2% year-on-year revenue decline, generating $132.7 million of revenue. Company management is currently guiding for a 35.4% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 8.7% over the next 12 months. While this projection implies its newer products and services will fuel better top-line performance, it is still below average for the sector.

Offerpad’s operating margin has been trending down over the last 12 months and averaged negative 5.2% over the last two years. Unprofitable consumer discretionary companies with falling margins deserve extra scrutiny because they’re spending loads of money to stay relevant, an unsustainable practice.

In Q3, Offerpad generated a negative 5.1% operating margin. The company's consistent lack of profits raise a flag.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although Offerpad’s full-year earnings are still negative, it reduced its losses and improved its EPS by 48.9% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

In Q3, Offerpad reported EPS of negative $0.37, up from negative $0.49 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Offerpad to improve its earnings losses. Analysts forecast its full-year EPS of negative $1.94 will advance to negative $0.89.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Offerpad broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.

Offerpad’s free cash flow clocked in at $39.95 million in Q3, equivalent to a 30.1% margin. This result was good as its margin was 11.5 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Offerpad’s five-year average ROIC was negative 17%, meaning management lost money while trying to expand the business. Its returns were among the worst in the consumer discretionary sector.

Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.

Offerpad posted negative $28.67 million of EBITDA over the last 12 months, and its $156.8 million of debt exceeds the $33.64 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

We implore our readers to tread carefully because credit agencies could downgrade Offerpad if its unprofitable ways continue, making incremental borrowing more expensive and restricting growth prospects. The company could also be backed into a corner if the market turns unexpectedly. We hope Offerpad can improve its profitability and remain cautious until then.

We struggled to find many positives in these results. Its number of homes purchased missed and its number of homes sold fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 9.5% to $2.10 immediately after reporting.

Updated: December 4, 2025 at 10:07 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Offerpad.

We see the value of companies helping consumers, but in the case of Offerpad, we’re out. To begin with, its revenue has declined over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its number of homes purchased has disappointed. On top of that, its Forecasted free cash flow margin suggests the company will ramp up its investments next year.

Offerpad’s forward price-to-sales ratio is 0.1x. The market typically values companies like Offerpad based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.

Wall Street analysts have a consensus one-year price target of $1.38 on the company (compared to the current share price of $1.97).