Opendoor wants to give residential real estate brokerages a run for their money, but its first quarter earnings suggest the company is not quite there yet.   

The San Francisco-based instant homebuyer announced a net income loss of $270 million on Tuesday, a 421 percent jump compared to the first quarter of 2020’s $62 million deficit. The Q1 2021 loss approached Opendoor’s $280 million net income loss for all of 2020.

A leap in losses can be a hazard of a growing company, even those with bountiful capital backing. And by some secondary measurements, Opendoor is growing.

Customers can now sell and buy homes with Opendoor in 27 different markets compared to 21 one year ago. Also, Opendoor bought 3,594 homes in the first quarter, a significant increase from prior three-month periods, and a sign the company has ramped up operations after a pandemic pause.

But Opendoor’s first-quarter revenue was $747 million, a 40% drop from the first quarter in 2020. Opendoor generates the majority of its revenue from reselling the homes it buys, and the company sold 2,462 homes in the first quarter, a decline from prior periods.

How Opendoor could sell comparably fewer homes in Q1 amid historically high demand and low inventory was not addressed on a Tuesday earnings call.

Instead, CEO Eric Wu and Chief Financial Officer Carrie Wheeler painted a picture seemingly at odds with the figures listed on the balance sheet.   

“We are getting better and more efficient at this,” Wu said, providing as evidence that Opendoor sold more homes during the first weekend on market and for higher prices per sale – phenomena that touched every corner of the housing market at the start of 2021.

Wheeler described Opendoor as, “Having an exceptional first quarter.”

Market analysts on the call did not question Wu and Wheeler, and instead discussed matters such as Opendoor’s entry into title and mortgage, and whether the company is disproportionately affected by the well-documented lumber shortage (answer: not really).

Founded in 2014, Opendoor is a pioneer in cash home-buys moving online, and an alternative to home sellers having to work with real estate agents. The company grew partly thanks to venture capital money, including from Tokyo-based SoftBank Group.

But Opendoor’s revenue – which is mainly selling the homes it buys and collecting a 5% fee on home purchases – have not kept up with expenses.  

In Q1 2021, for example, Opendoor’s $747 million in revenue was countered by $650 million in “costs of revenue,” a figure tied to cash Opendoor offered for homes.

That generated a $97 million gross profit for the company. But the firm additionally had $342 million in operating expenses. This included $224 million on general administrative expenses, $51 million on technology and development, and $69 million on sales and marketing.

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