Opendoor: Q1 2026 Earnings - [Business Breakdowns, EP.245]

Diving into the history of a business, framing the nuanced competitive dynamics. Tracking key signposts around your thesis. And historically, that would take up material time that you do not have. But Portrait is basically like adding an army of analysts to your team. It's powered by an AI system specifically designed for investment research workflows.

So you get nuanced idea generation. Portrait assesses the same types of qualitative attributes that we discuss on this show, and that can help identify businesses which fit your framework. Portrait also customizes research report generation. And I used Portrait to generate a primer and lay out full bear cases ahead of today's episode to help frame the conversation.

And third, there's intelligent thesis monitoring. And that's where Portrait assesses thousands of data points across value chains each day, extracting the insights, driving the business. Again, all this work would typically take hours and hours and hours. It's at your fingertips now. Visit portraitresearch.com to start your free trial today. This is Matt Russell, and today I have Kaz Nejation, CEO of Open Door, Fresh Off, the First Quarter 2026 earnings release.

And we get into what is driving the strong execution quarter to quarter here. We've seen the product rollouts, the sales velocity, and the margin improvements that have open door ebot.positive as of April 1st, 2026. And on track to be adjusted net income positive by the end of the year. Kaz is a fascinating CEO to watch, to follow, to listen to, and he does not disappoint. So please enjoy our conversation.

structurally in much better shape than I thought it would be. Like the underlying models of the company, the underlying databases, the underlying processes are just in much better shape than I expected they would be. I think the company had kind of started this doom loop of going down and down and down.

It does feel a lot like in Raiders of the Lost Ark when there's a guy guarding the cup. There's a bunch of people here who were still guarding the cup and that had kept it in a really decent shape. But actually the underlying model is John's honestly in just very good shape. Uh we've invested a lot in it, but I'm actually very impressed. Second, I significantly underestimated the attached opportunity. I

I have basically done this whole like attached services thing my whole career. And I did not expect our first crack at this to go so well. Those are two two upsides generally. I'm just been very impressed. The main downside, honestly, just to be very like self-reflective. I was honestly shocked by

how the company was basically being run by outside consultants for so long. Like it feels like the people who were making decisions for the company basically had almost no stake in the outcome of those decisions. So the APEX was just honestly stupid. And not just stupid, but like spent on the wrong things. And I think that was actually offensive.

I wanna go back a little bit to your point on the attachment and even just higher level. When I f first came across Open Door, I had a very simple view that it was essentially A real estate asset manager based around tech. And that is overly simple. But you clearly distinguished it as a software plat.

A how do you think about the capital intensity and the underwriting skill set required to run the business when you're clearly aiding all that with the technology, but How do you think about that aspect of it, which I think many, let's say, traditional investors, the East Coast types can get hung up on?

You do one set of things. If you're a market maker and your fundamental job is to not hold assets for profit, you do a different set of things. Open Door is a market maker, not a prop desk, at core asset level. So do we have to be very good at underwriting? Damn right we do. We have the best underwriting engine in the business, there's nothing close to it, right? And I say this as a honest to goodness nerd.

But there is a very real difference about where that underwriting engine is pointed towards. If you look at a company like Citadel, Citadel gathers a crap ton of data. Why do they do it? Like the end matters as much as the means matters.

W what does it mean in practice to really focus on velocity really focusing on markets where there's higher turnover of homes? Is it really just focusing on capturing less spread, therefore we can sell faster? If you were to rank the really important drivers to that focus on velocity, what would those be?

Like the information is the point, right? When we buy lots of homes and sell them very quickly, we get very live feedback about actual market conditions, not just about the clearance price. Also, about the renovation process. Also, about the demand that impacts every other demand. We actually pick up data. In a way that no one else does. And by the way, we're ahead of the market. So even if you were scraping all data you could from MLS.

Like 90, 120 days behind us. Because we're picking it up live. We have access to data in a way that like very few people do, right? Like when you are a market maker or a stock exchange, everyone sees the up and down. We have a ninety to a hundred and twenty-day advantage on the market. It's a very real thing. But you can't use that advantage. if you decide you want to have very high margin on every single trade. Right, let's say you want to have high spreads in buying an asset.

So I come to you, you think your home is worth four hundred thousand dollars, I agree it's worth four hundred thousand dollars. If I offer you three hundred thousand dollars for it, You will tell me to take a hike. The only scenario under which you will not tell me to take a hike is if you know things I do not know. I am paying. For a negative feedback loop. I'm not actually getting a hundred thousand dollars a spread. There isn't that much arb in real estate.

But if I actually am able to have very tight spreads such so you can say, look, if I list my home, I have to pay realtor fees, taxes, holding costs, I have to have an odd of the home falling through. I have to have 90 to 120-day hold periods, so it has a cost to me. If I can add those up and I can come to you saying, look, I will do it for you faster, cheaper, more certain. You'll say yes to me as a rational human being. And I still have significant room for margin. If I can cuss compress that

So I can buy from you at a better deal with more certainty that you would sell into market and sell to the next person at a better deal, more certain that they would buy from the market. I'm just increasing my information advantage. And by the way. As we've shown, we also have significant attach opportunities. We own a title and escrow business, which is growing very quickly. We have uh a mortgage product which is like Plus Excel.

And the things you need to do to underwrite a home to acquire it, underwrite the home for mortgage and underwrite a home for insurance. are all identical to each other. In a traditional market maker world, like in the stock market, the attached opportunities aren't as significant, whereas in this world the attached opportunities are significant. So as long as I can move fast, the business works.

But open door they bought a home from Open Door'cause it was a great deal. They took a mortgage from Open Door'cause it was a great deal and they sold a home to open door'cause it was objectively a great deal. But it wasn't that like the they value certainty, obviously. But they could have tested the market and they would have been worse off. My job is to go to family and say the product genuinely is better for you.

And that's what we want to do, right? And by the way, like overwhelmingly that is Like now we are going to get better and better at this, our spreads are gonna get tighter and tighter over time. But my job is to make sure that when you want to take your next move and you want to buy a home, sell a home, that you think of open door the way you think about Uber. The way you think about Amazon, the way you think about your market making.

There is home care, there is satellite, there's like there's satellite, there's uh there's solar, all these things add up, right? Some of these are friction, some of these are premium problems. Some of the things you have to have, like mortgage isn't an option for most people. You have to have a mortgage provider. If I can take a series of services in a highly fragmented market, All of whom have very low N NPS scores.

And jam them all together and say, Great, all the profit made by all these players in the stack and all the inefficiencies by all these players in the stack, because they all have to pay for CAC, and I don't. they'll have to pay for gathering of information. I don't. That's like the Opportunity and look, it is the single largest market in the world. It is significantly bigger than the stock market. And I think you can believe like whatever you want about the underlying business of Open Door.

You have a variety of opinions about open door and me. What I think is very hard to say. Is that the largest real estate company on the public market in the United States? Should not be very large. There isn't a$100 billion market cap real estate company in a public market. That doesn't feel like a flaw in the mix.

On title Nescrow, like once we solve that, lots of other things the system just becomes simpler. It's public that we have a mortgage product live in Colorado and we'll have a bunch of other states soon. That's obviously second. I think home warranty is very high on the priority stack. Then insurance, and then a bunch of other services. I think for what it's worth, I think like it's not that hard to imagine why Open Door is almost an ideal provider of solar services.

How correlated is a risk to leasing someone a solar panel to the underlying home? How correlated is that risk to a mortgage? How correlated are all these risks to insurance? I think that you you'll get to a point where You used to actually buy cars have a very interesting history. You used to buy your engine separately from the carriage. It was like actually a real thing. The people who make the body of the car, they were people who make the engine and they just go buy them. But

We decide that was exceptionally dumb. Uh but we still buy homes the same way. The way we buy cars is we usually get financing from the person who sells us the car. And the car usually comes the way we want it. But the way we buy a home is we deal with a couple of dozen different parties in the system and they all hate each other. It's a very, very weird hack on the system that has been maintained.

own a restaurant in New York and you went to get a your payment provider and said, hey, I'm considering getting this tax. Can you do tax for me? Oh no, you should stay with us because it's so complicated. Look, are there complexity in the system? Of course there are. Of course there are. But for 80% of people, hundred percent of these services are relatively vanilla. 80% of the people are the margin opportunity that pays for 20% of complexity. That just seems terrible for those 80%.

So do I think someone who wants to buy a$14 million mansion who has no US residency who has Trusts all over the world and multiple cars should be able to use you know open door home loan and open door insurance and all the other services because no. I don't think they should use that.

But I don't think the average American living in South Dakota should pay to mar like pay for that s subsidy. Like our job is to make life easier for the average person, the home like the school teacher, the plumber, the electrician. Like they should not have to pay more because complexity exists in a system. And by the way, I say it as a guy who has complexity in his life. There's no reason why the average person should subsidize my life. That sounds insane.

But like that's what we had. That's the world we live in, right? My job is this at Open Door. I want the teacher in Kansas City. You have a one-click mortgage title escrow and home buying experience and home selling experience. That's what we're gonna work on. We're gonna solve this for a teacher in Kansas City. But the dudes living where you live uh with their Maseratis can go to someone else.

philosophically, i how you approach that because you know sometimes you wanna heavily invest when there's an opportunity to go after something. You've made it clear that that path to profitability uh at certain points in time in terms of EBITDA positive and adjusted net income positive by year end. How are you balancing that with whatever neither is to reinvest back in the business or how you're gonna balance the investment back in the business with that.

Because it has been able to reach for capital markets over and over again. And I think that has been actually bad for open door. So I think it's incredibly important for us to be incredibly disciplined and this will be painful as hell. It'll just be painful. This will hopefully be the last job I ever have, and I care about my job and a company I'm running a decade from now.

And the best thing I can do for that company is ensure this company is the most disciplined and most aggressive tech company in the market. That's the real answer. Now, am I foregoing area of growth that I would not foregrow if I had lots of profits? Yes, I am. For sure am. But I think there's a very real thing, man, where I think this is healthy discipline. I think it's healthy. Uh and I think it's important that open door be funded by its cash.

I think it actually would surprise people to learn how few engineers work at Open Door. Open Door has fewer than 70 engineers. I think that would surprise most people. We're getting a crap ton done with those seventy engineers, but I promise you I know what every single one of them is working on. because uh we don't have the luxury of waiting.

make some pretty powerful changes within the business uh along the lines of engineering changes, but they did it with AI system. So it's actually a nice segue into into that question. I mean, how much is your ability to operate with seventy engineers, just the power of both those engineers and those without an engineering background able to do a lot more in that regard.

So we have like excellent, just genuinely excellent engineers here. So we have excellent engineers. But there's like a division of labor between the systems that create leverage for other people and those front ends, right? So our engineers spend their time Creating systems that allow other people who are not engineers to create leverage for themselves. When I got here, we had an entire service whose job it was

To calculate and was maintained by an engineer whose job was to calculate RSU allocations for employees. I can't tell you how nutty a waste of time that is for an engineer, but basically all companies have this. I'm like, why is an engineer working on Like, look, if you cannot using Claude Or Chat GPT or Codecs or GROS. to write a SQL query,you should not be working in a tech company.This is a tech

I can see actually our head of internal com internal comms right there. Our uh PR consultants all quit when I joined. Actually on Rage quit. Uh and I can tell you our the head of internal comms who now actually side of her desk does this work for us. spends most of her time on Claude and so is everyone else in the company. And I think that is different than most other companies.