UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2021

OR

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

For the transition period from ___________ to ____________.

Commission file number 001-39253

Opendoor Technologies Inc.

(Exact name of registrant as specified in its charter)

Delaware			98-1515020
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
410 N. Scottsdale Road,		Suite 1600
Tempe,	AZ		85281
(Address of Principal Executive Offices)			(Zip Code)

(415) 896-6737

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	OPEN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of August 4, 2021 was approximately 604,641,158.

OPENDOOR TECHNOLOGIES INC.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Changes in Temporary Equity and Shareholders’ Equity (Deficit)	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	58
	Signatures	59

1

OPENDOOR TECHNOLOGIES INC.

As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Opendoor,” the “Company,” “we,” “us,” and “our,” and similar references refer to Opendoor Technologies Inc. and its wholly owned subsidiaries following the Business Combination (as defined herein) and to Opendoor Labs Inc. prior to the Business Combination.

As a result of the Business Combination completed on December 18, 2020, Opendoor Labs Inc. share and per share amounts presented in this Quarterly Report on Form 10-Q, for periods prior to the Business Combination, have been retroactively converted by application of the exchange ratio of 1.618. For more information regarding the business combination, please see “Part I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – The Business Combination”.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition; business strategy and plans; expectations regarding the impact of COVID-19; market opportunity and expansion and objectives of management for future operations, including our statements regarding the benefits and timing of the roll out of new markets, products, or technology; and efforts to remediate our material weaknesses in internal control over financial reporting, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast”, “future”, “intend,” “may,” “might”, “opportunity”, “plan,” “possible”, “potential,” “predict,” “project,” “should,” “strategy”, “strive”, “target,” “will,” or “would”, including their antonyms or other similar terms or expressions may identify forward-looking statements. The absence of these words does not mean that a statement is not forward-looking.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, which involve a number of judgments, risks and uncertainties, including without limitation, risks related to:

•our public securities’ potential liquidity and trading;

•our ability to raise financing in the future;

•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•the impact of the regulatory environment and complexities with compliance related to such environment;

•our ability to remediate our material weaknesses;

•factors relating to our business, operations and financial performance, including:

▪the impact of the COVID-19 pandemic;

▪our ability to maintain an effective system of internal controls over financial reporting;

▪our ability to grow market share in our existing markets or any new markets we may enter;

▪our ability to respond to general economic conditions;

▪the health of the U.S. residential real estate industry;

▪risks associated with our real estate assets and increased competition in the U.S. residential real estate industry;

▪our ability to manage our growth effectively;

▪our ability to achieve and maintain profitability in the future;

▪our ability to access sources of capital, including debt financing and securitization funding to finance our real estate inventories and other sources of capital to finance operations and growth;

▪our ability to maintain and enhance our products and brand, and to attract customers;

▪our ability to manage, develop and refine our technology platform, including our automated pricing and valuation technology;

▪the success of our strategic relationships with third parties; and

▪other factors detailed under the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q.

Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

1

OPENDOOR TECHNOLOGIES INC.

As a result of a number of known and unknown risks and uncertainties, including without limitation the important factors described in the “Risk Factors” section of this Quarterly Report on Form 10-Q and on Part I. Item 1A “ Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”), our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

		June 30, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	1,557,815	$	1,412,665
Restricted cash		131,652		92,863
Marketable securities		200,143		47,637
Mortgage loans held for sale pledged under agreements to repurchase		25,368		7,529
Escrow receivable		32,848		1,494
Real estate inventory, net		2,723,648		465,936
Other current assets ($811 and $373 carried at fair value)		67,149		24,987
Total current assets		4,738,623		2,053,111
PROPERTY AND EQUIPMENT – Net		33,962		29,228
RIGHT OF USE ASSETS		45,581		49,517
GOODWILL		30,945		30,945
INTANGIBLES – Net		7,754		8,684
OTHER ASSETS ($10,000 and $0 carried at fair value)		11,396		4,097
TOTAL ASSETS	(1)	$	4,868,261	$	2,175,582
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities		$	70,900	$	25,270
Current portion of credit facilities and other secured borrowings		1,690,878		346,322
Warrant liabilities - current		38,669		—
Interest payable		4,605		1,081
Lease liabilities - current portion		4,999		20,716
Total current liabilities		1,810,051		393,389
CREDIT FACILITIES – Net of current portion		595,579		135,467
WARRANT LIABILITIES		—		47,349
LEASE LIABILITIES – Net of current portion		44,593		46,625
OTHER LIABILITIES		117		94
Total liabilities	(2)	2,450,340		622,924
COMMITMENTS AND CONTINGENCIES (See Note 17)
SHAREHOLDERS’ EQUITY:
Common stock, $0.0001 par value; 3,000,000,000 shares authorized; 593,838,919 and 540,714,692 shares issued and outstanding, respectively		59		54
Additional paid-in capital		3,875,552		2,596,012
Accumulated deficit		(1,457,690)		(1,043,449)
Accumulated other comprehensive income		—		41
Total shareholders’ equity		2,417,921		1,552,658
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	4,868,261	$	2,175,582

________________

(1)The Company’s consolidated assets at June 30, 2021 and December 31, 2020 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs: Cash and cash equivalents, $1,002 and $15,849; Restricted cash, $122,379 and $81,408; Real estate inventory, net, $2,605,155 and $460,680; Escrow receivable, $32,686 and $1,364; Other current assets, $27,761 and $5,365; and Total assets of $2,788,983 and $564,666, respectively.

(2)The Company’s consolidated liabilities at June 30, 2021 and December 31, 2020 include the following liabilities for which the VIE creditors do not have recourse to Opendoor: Accounts payable and other accrued liabilities, $23,912 and $2,335; Interest payable, $4,541 and $1,059; Current portion of credit facilities and other secured borrowings, $1,666,522 and $339,173; Credit facilities, net of current portion, $599,000 and $135,467; and Total liabilities, $2,293,975 and $478,034, respectively.

See accompanying notes to condensed consolidated financial statements.

3

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
REVENUE	$	1,185,386	$	739,827	$	1,932,660	$	1,995,622
COST OF REVENUE	1,026,615		685,253		1,676,757		1,850,001
GROSS PROFIT	158,771		54,574		255,903		145,621
OPERATING EXPENSES:
Sales, marketing and operations	96,525		47,265		165,591		128,954
General and administrative	190,611		29,323		412,695		58,906
Technology and development	24,388		16,838		75,065		32,625
Total operating expenses	311,524		93,426		653,351		220,485
LOSS FROM OPERATIONS	(152,753)		(38,852)		(397,448)		(74,864)
DERIVATIVE AND WARRANT FAIR VALUE ADJUSTMENT	23,952		122		8,680		(890)
INTEREST EXPENSE	(15,826)		(17,290)		(26,825)		(45,017)
OTHER INCOME – Net	1,012		180		1,636		2,855
LOSS BEFORE INCOME TAXES	(143,615)		(55,840)		(413,957)		(117,916)
INCOME TAX EXPENSE	(190)		(79)		(284)		(199)
NET LOSS	$	(143,805)	$	(55,919)	(414,241)		(118,115)
Net loss per share attributable to common shareholders:
Basic	$	(0.24)	$	(0.66)	$	(0.72)	$	(1.40)
Diluted	$	(0.24)	$	(0.66)	$	(0.72)	$	(1.40)
Weighted-average shares outstanding:
Basic	588,374		84,588		576,941		84,308
Diluted	588,374		84,588		576,941		84,308

See accompanying notes to condensed consolidated financial statements.

4

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
NET LOSS	$	(143,805)	$	(55,919)	$	(414,241)	$	(118,115)
OTHER COMPREHENSIVE INCOME:
Unrealized (loss) gain on marketable securities	(6)		583		(41)		284
COMPREHENSIVE LOSS	$	(143,811)	$	(55,336)	$	(414,282)	$	(117,831)

See accompanying notes to condensed consolidated financial statements.

5

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY

EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

(In thousands, except number of shares)

(Unaudited)

	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-March 31, 2021	—	—		—	—		—	—		—	—		—	—		585,691,729	58		3,697,382		(1,313,885)		6		2,383,561
Issuance of common stock in connection with the February 2021 Offering	—	—		—	—		—	—		—	—		—	—		—	—		(28)		—		—		(28)
Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		329,042	—		29		—		—		29
Vesting of restricted stock units	—	—		—	—		—	—		—	—		—	—		3,163,113	—				—		—		—
Common stock issued upon exercise of warrants	—	—		—	—		—	—		—	—		—	—		504,477	—		5,801		—		—		5,801
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		4,150,558	1		6,470		—		—		6,471
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		165,898		—		—		165,898
Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(6)		(6)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(143,805)		—		(143,805)
BALANCE–June 30, 2021	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	593,838,919	$	59	$	3,875,552	$	(1,457,690)	$	—	$	2,417,921
	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-December 31, 2020	—	—		—	—		—	—		—	—		—	—		540,714,692	54		2,596,012		(1,043,449)		41		1,552,658
Issuance of common stock in connection with the February 2021 Offering	—	—		—	—		—	—		—	—		—	—		32,817,421	3		857,191		—		—		857,194
Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		660,269	—		45		—		—		45
Vesting of restricted stock units	—	—		—	—		—	—		—	—		—	—		14,899,985	1		—		—		—		1
Common stock issued upon exercise of warrants	—	—		—	—		—	—		—	—		—	—		504,477	—		5,801		—		—		5,801
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		4,242,075	1		6,736		—		—		6,737
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		409,767		—		—		409,767
Other comprehensive loss	—	—		—	—		—	—		—	—		—	—		—	—		—		—		(41)		(41)
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(414,241)		—		(414,241)
BALANCE–June 30, 2021	—	$	—	—	$	—	—	$	—	—	$	—	—	$	—	593,838,919	$	59	$	3,875,552	$	(1,457,690)	$	—	$	2,417,921

6

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY

EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT)

(In thousands, except number of shares)

(Unaudited)

	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-March 31, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	84,427,317	—		$	60,794	$	(852,679)	$	(281)	$	(792,166)
Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		345,209	—		38		—		—		38
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		210,535	—		275		—		—		275
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		3,670		—		—		3,670
Other comprehensive gain	—	—		—	—		—	—		—	—		—	—		—	—		—		—		583		583
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(55,919)		—		(55,919)
BALANCE–June 30, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	84,983,061	$	—	$	64,777	$	(908,598)	$	302	$	(843,519)
	Temporary Equity															Shareholders’ Equity (Deficit)
	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Series C Convertible Preferred Stock			Series D Convertible Preferred Stock			Series E Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
BALANCE-December 31, 2019	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	83,748,443	—		$	57,362	$	(790,483)	$	18	$	(733,103)
Vesting of restricted stock	—	—		—	—		—	—		—	—		—	—		786,535	—		74		—		—		74
Exercise of stock options	—	—		—	—		—	—		—	—		—	—		448,083	—		701		—		—		701
Stock-based compensation	—	—		—	—		—	—		—	—		—	—		—	—		6,640		—		—		6,640
Other comprehensive gain	—	—		—	—		—	—		—	—		—	—		—	—		—		—		284		284
Net loss	—	—		—	—		—	—		—	—		—	—		—	—		—		(118,115)		—		(118,115)
BALANCE–June 30, 2020	40,089,513	$	9,763	23,840,816	$	20,049	29,070,700	$	80,519	63,470,884	$	257,951	157,952,523	$	1,013,220	84,983,061	$	—	$	64,777	$	(908,598)	$	302	$	(843,519)

See accompanying notes to condensed consolidated financial statements.

7

OPENDOOR TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(414,241)	$	(118,115)
Adjustments to reconcile net loss to cash, cash equivalents, and restricted cash (used in) provided by operating activities:
Depreciation and amortization – net of accretion	16,608		20,065
Amortization of right of use asset	4,260		8,712
Impairment of software development costs	2,515		—
Stock-based compensation	403,048		6,640
Derivative and warrant fair value adjustment	(8,680)		890
Gain on settlement of lease liabilities	(5,237)		—
Inventory valuation adjustment	942		7,452
Changes in fair value of derivative instruments	(438)		(527)
Payment-in-kind interest	—		2,704
Dividend-in-kind	143		—
Net fair value adjustments and gain (loss) on sale of mortgage loans held for sale	(2,032)		(829)
Origination of mortgage loans held for sale	(83,360)		(42,636)
Proceeds from sale and principal collections of mortgage loans held for sale	67,566		34,397
Changes in operating assets and liabilities:
Escrow receivable	(31,354)		4,178
Real estate inventories	(2,249,488)		1,035,088
Other assets	(37,057)		10,809
Accounts payable and other accrued liabilities	34,569		(8,881)
Interest payable	96		(3,044)
Lease liabilities	(9,968)		(6,556)
Net cash (used in) provided by operating activities	(2,312,108)		950,347
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(10,957)		(10,753)
Purchase of intangible assets	(240)		—
Purchase of marketable securities	(238,464)		(113,833)
Proceeds from sales, maturities, redemptions and paydowns of marketable securities	85,638		55,666
Purchase of non-marketable equity securities	(10,000)		—
Net cash used in investing activities	(174,023)		(68,920)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	6,739		688
Proceeds from warrant exercise	4,823		—
Proceeds from the February 2021 Offering	886,067		—
Issuance cost of common stock	(28,876)		—
Proceeds from credit facilities and other secured borrowings	3,241,692		824,597
Principal payments on credit facilities and other secured borrowings	(1,438,136)		(1,723,443)
Payment of loan origination fees and debt issuance costs	(2,239)		(2,386)
Net cash provided by (used in) financing activities	2,670,070		(900,544)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH