OPAD - NYSE

Good afternoon. Thank you for attending today's Offerpad Fourth Quarter 2022 Earnings Call. My name is Hannah, and I will be your moderator for today's call. [Operator Instructions] I'll now turn the call over to Stefanie Layton, Vice President of Investor Relations and ESG at Offerpad. Stefanie?

Thank you, and good afternoon, everyone. Welcome to Offerpad Solutions' fourth quarter and full year 2022 earnings call. Our Chairman and Chief Executive Officer, Brian Bair; and Chief Financial Officer, Mike Burnett, are here with me today. During the call today, management will make forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain, and events could differ significantly from management's expectations. Please refer to the risks, uncertainties and other factors relating to the company's business described in our filings with the US Securities and Exchange Commission. Except as required by applicable law, Offerpad does not intend to update or alter forward-looking statements, whether as a result of new information, future events or otherwise. On today's call, management will refer to certain non-GAAP financial measures. These metrics exclude certain items discussed in our earnings release under the heading non-GAAP financial measures. The reconciliation of Offerpad's non-GAAP measures to the comparable GAAP measures are available on the financial tables of the fourth quarter and full year 2022 earnings release on Offerpad's website. I'll now turn the call over to Brian.

Thanks, Stefanie. Hi everyone, appreciate you joining us today. I'll cover some company highlights, operational updates, market trends and our 2023 strategy. Mike will share our fourth quarter 2022 financial results and our first quarter expectations. Last year was truly a tale of two halves with the striking difference in market conditions from the first to the second half of the year. Still, we had some remarkable accomplishments in 2022. Last year, we sold over 10,000 homes in the year for the first time in Offerpad's history, completed 9,985 renovation projects, increased our cash offer request from the Agent Partnership Program by 90% year-over-year and increased our asset-light FLEX transactions, including listing, buying and mortgages by 90% year-over-year. However, the historic interest rate increases and decline in affordability left us with two significant challenges in the fourth quarter. First was selling inventory acquired prior to the market shift; second, was securing additional capital to strengthen our balance sheet. I'm happy to report we made significant progress on both. We have reduced our inventory of homes acquired prior to September 1 from a peak of nearly 4,000 to less than 225 legacy homes active on the market. This brings us near the end of our legacy inventory disposition process and puts us in a strong position to sell through the vast majority of the remaining inventory acquired during the first half of the year by our target completion date of March 31, 2023. In addition, homes acquired after September 1, 2022, that have sold are recording positive returns. Early results from these homes are consistent with our expectation for returns in more of a normalized market. I don't believe any amount of experience, technology or data could have predicted the rapid rise in mortgage rates, but navigating the climate provided valuable earnings we can use going forward. For example, with homes purchased in the fourth quarter, we adjusted the risk premium for factors like proximity to new builds and outlining areas where price reductions have been more significant. The return to positive performance on homes purchased late last year reflects our underwriting adjustments, updated assumptions and increased spreads as we continuously adapt. Second, on February 1, we announced receipt of an additional $90 million through a private placement. We received participation from early investors, including Roberto Sella, an Offerpad Board member and First American Financial, more recent existing investors and new investors. I increased my personal investment in the company by participating as well. The mere ability to raise capital in today's challenging macro environment is notable. In addition, participation by current shareholders demonstrates continued confidence in our strategy and our ability to drive long-term value for our customers and shareholders. With these two challenges largely behind us, we are ready to move forward and capitalize on future opportunities. The good news is the opportunities are near. We are starting to see signs of improving and stabilizing real estate market conditions. In addition to a significant amount of publicly available data, we review our internal data, including sentiment on a weekly basis. For the past four weeks, our internal data has improved in all major categories. For example, the number of homes with no offers have been steadily decreasing and showing activity has been increasing. Many of our market experts are now labeling their market condition as improving or stable instead of solid. Most of our market experts are citing positive shift to the active to pending ratio as well as a decrease in depreciation in accurately priced homes that are not directly competing with new builds. While markets are seeing price stocks slowing, concessions are rising. There are a few markets still indicating declining prices, including Atlanta, Charlotte and Phoenix. Notably, town homes and condos are currently attracting more interest than single-family homes in Colombia, Columbus, Dallas, Orlando and Raleigh, likely due to affordability. Also, a number of markets indicated that homes priced below $350,000 have the best overall velocity. Denver and Dallas have shown considerable improvement in sentiment. Overall, we are hearing more optimism from our market experts, although it is still early and durability of this trend is unclear. Before I talk about what's new with our 2023 plan, I want to review what's not. Our vision to provide a comprehensive platform for All Things Home have not changed. We have said from the beginning, we are more than just an iBuyer. Our mission is to be a one-stop solution center, where people can address all of their real estate needs. We continue to believe that only the entirety of the transaction is the best way to achieve our goal of simplifying the homeownership experience for customers. By providing one customer-centric source to buy, sell, finance and renovate a home, we can continue to grow our company and our ability to increase the value of our platform. Our ultimate goal and long-term vision remain unchanged, but we are constantly evolving our strategy to keep pace with changing conditions and shifting customer needs. In 2023, this means we plan to retain and build our foundational cash offer, listing service and mortgage business, response to grow our footprint with an increased focus on market penetration and expand our business-to-business partnerships and services, allowing Offerpad to grow our asset-light offerings, seamlessly assisting customers to start to finish, buying a new home, selling their current home, financing the purchase and providing a free local move removes friction from a homeownership experience. It also improves our financial health by increasing the number of transactions per customer and reduce our customer acquisition costs. While cash offers are a cornerstone of our foundation, it is truly the combination of our cash offers, listing service and mortgage business that provides the simplicity and control customers want. Our access to capital funnel, sophisticated renovation department, real estate expertise and customer solution center approach differentiate our model. In 2023, we will focus on increasing our engagement with each customer to enhance our value proposition and support our financial goals. Turning to our growth strategy. In 2023, we expect to accelerate our acquisition volume with a focus on increasing penetration in more affordable markets. In response to the broader real estate market slowdown, we reduced the pace of our acquisition and the size of our team. Mike will provide more details regarding our cost reduction efforts and rightsizing. As part of the reset, we will not be acquiring homes in California at this time. Our engagement in California will be limited to renovation projects and allow us to focus our resources on more affordable and established markets. We will look to build our acquisition volume on a market-by-market basis, targeting homes at price points near the median. Finally, a key pillar of our 2023 strategy will be developing our business-to-business partnerships and services. In December 2022, we expanded our renovation services to other businesses. Now more homeowners and companies can utilize Offerpad's renovation department to update their portfolio of homes for rent or to sell. We have already completed over 200 projects under our renovations as a service business model. This asset-light service leverages our existing logistics, operation and skill-sets. We are also expanding our relationship with other home buyers. Our new Direct Plus program allows other cash buyers and single-family rental companies to purchase homes directly from the homeowner, seamlessly matching cash buyers with sellers. We expect this program will allow Offerpad to help more homeowners sell even at the homes outside our existing markets. The service fee for this program presents another asset-light revenue stream, while the program itself can expand our ability to reach more customers. I expect 2023 will be an exciting year as we dive into the next evolution of our business. While change and innovation are given, we commit to moving forward in a manner that stays true to our guiding principles. That means balancing our goals to attain growth and sustainable profitability, striving for the best-in-class operational execution and building upon our foundation of real estate expertise with innovative technology building scale. No matter what market cycle we are in or how fast we transition, we will look to the heart of who we are, our mission, our vision and our strengths to propel us forward. I'll now turn the call over to Mike.

Thanks, Brian. Last quarter, we talked about the challenging residential real estate environment that we are all too familiar with by now and our expectations for a continuation of these conditions in the near-term. We also laid out our operational approach to dealing with these challenges, which included: one, a heightened focus on our legacy inventory to optimize the trade-off between price and time to sale, knowing that we'd be accepting losses; and two, slowing down the acquisition side of the business to ensure that homes that we do acquire produce positive returns. Throughout the fourth quarter and into the first quarter, we have successfully executed against this plan. As Brian noted, we have reduced our inventory at homes acquired prior to September from a peak of nearly 4,000 to our current position in February, where we have less than 6% of those homes remaining to be sold or put under contract. With this progress and consistent with our outlook from last quarter, we expect to have this cohort of homes largely sold or under contract by the end of the first quarter. On the acquisition side, we have and continue to be very conservative in our underwriting and disciplined in our acquisition pace. We acquired over 500 homes in the fourth quarter and have reduced our overall inventory count to approximately 1,800 homes at year-end. In the short-term, we are trading-off volume for ensuring that we are acquiring homes at the right price to generate positive returns during this period of market dislocation. The homes we acquired after August that we have sold have produced returns in line with our expectations during a more normalized market, further validating our approach. Executing against this plan is enabling us to navigate the challenging climate and is positioning us to capitalize on our strategy for rebuilding and growing into more stable market conditions and reengaging our path to profitability. Turning to the fourth quarter results. We generated $677 million of revenue, exceeding the top-end of our Q4 guidance range. Our revenue was supported by the sale of 1,865 homes, which also exceeded the top-end of our guidance range at an average selling price of $363,000. Our adjusted EBITDA for the quarter was negative $103.7 million. This amount includes a $44 million inventory impairment charge. Absent this charge, adjusted EBITDA for the quarter would have been $59.7 million and within our original guidance range. The impairment charge further affected the cohort of homes acquired before the September time-frame as we made the strategic decision to reduce prices or access offers at a reasonable threshold below our listing price based on current market conditions and the outlook for that particular market or location. Phoenix, Denver and Austin continue to be affected at the greatest degree. The cumulative charge over the past three quarters has amounted to less than a 6.5% reduction in the August inventory value. We continue to use a combination of bulk sales and strategic price adjustments to work through the inventory on a market-by-market basis. During the fourth quarter, we completed three bulk sale transactions covering an aggregate of just over 250 homes and continue to make good progress addressing the portfolio. As expected and consistent with the extreme market disruption over the past six months, along with our lower acquisition pace, our time to cash for holding period increased in the quarter to 142 days, well above our goal of 100 days in a normal market. We expect this to peak in Q1 and then to decline back to normalized levels in the second half of the year. On the cost side of the business, we have taken action commensurate with the slowdown in our volumes. Since our peak headcount in August last year, we have reduced our overall workforce in the aggregate by approximately 50%, including a recent reduction in February, resulting in a combined total annual savings of approximately $40 million. With the business now right-sized and more in line with our expectations for 2023, we are positioned to efficiently and effectively execute against our operating plan. From a balance sheet perspective, we reduced our debt balance by nearly $0.5 billion in the quarter, primarily through the sale of homes as our inventory balance decreased to $665 million at year-end. Our unrestricted cash balance was $97 million, driven by the net loss in the quarter as well as net debt reductions. Importantly, this past month, we successfully completed a $90 million private placement of prepaid warrants, which are convertible in the common stock. This capital raise not only reflects the continued support from our early investors, but also included more recent existing investors and new investors as well. This capital will position the company to continue to execute our strategy as we begin to rebuild and capitalize on the opportunities ahead of us. As we move towards a stabilizing market, we expect Q4 will represent the low-point of the transition period, and our Q1 results will reflect sequential bottom line improvement. Specifically, in the first quarter of 2023, we expect to sell between 1,300 and 1,450 homes, generating revenue of between $480 million and $540 million. We also expect adjusted EBITDA to be between negative $35 million and negative $55 million, which represents a significant sequential improvement and the first step-back toward achieving positive adjusted EBITDA again. The sequential lower top line revenue range for the first quarter of 2023 reflects the purposeful decrease in homes acquired during the latter half of 2022. In the fourth quarter, we acquired 539 homes, and we again expect to have lower acquisition volume in Q1 before increasing our acquisition pace in the second quarter and into the second half of the year. The expected improvement in our adjusted EBITDA is also supported by the previously mentioned changes we have made to right-size the organization and reduce costs. We anticipate these reductions in addition to other spending cuts will appropriately position the company to leverage our cost structure into the second half growth. Our continuous focus on cost management, the infusion of incremental capital, our nearing completion of the disposition of the legacy inventory, along with the positive performance of homes purchased during the fourth quarter, all support our expectations that Q4 results represented the low point of our reported net income, and we expect to see sequential bottom line improvements beginning in Q1 2023. With our measured approach to growth and responsible cost management, Offerpad has demonstrated its ability to execute on a strategy that can adapt in response to changing conditions and capitalize on new opportunities. The combination of building upon our foundational services, cash offers and our listing service and introducing new asset-light services moves us closer to the true vision of a holistic simplified solution that meets the unique needs of each customer. I'll now turn the call over to the operator to begin the question-and-answer session.

[Operator Instructions] The first question is from the line of Dae Lee with JPMorgan. You may proceed.

Great, thanks for taking the question. First one, Brian, given the greater push towards FLI revenue stream, I'm curious to hear your policy on the long-term potential of the cash offer model and how do you expect the mix of your business to change over-time? And then secondly, Mike, I think you alluded to this in your prepared remarks. How should we think about adjusted EBITDA as we progress through the year and when do you expect to be able to see EBITDA profitable again?

Yes. As far as the cash, that's always going to be core of what we do is the cash offers. We've talked about a lot is that we've never looked at this as we're an iBuyer, we've looked at a solution center, specifically for transactions for the customer. And so as we will continue to roll-out more products that are more asset-light, we still have a focus on the cash offer. Now potentially, that doesn't mean that will be our cash as we look at Direct Plus and some of the other things that we do, but cash offers will be core of what we do.

Dave, can I ask you to repeat the question? You broke up a little bit there for me.

Yes. Sorry, Mike, I think you alluded to this in your prepared remarks, but how should we expect adjusted EBITDA to progress as we move through the year and when do you expect to be adjusted EBITDA profitable in.

Yeah. What I think and obviously, we've got a lot of volatility in terms of the backdrop, interest rates, et cetera, but the way we see it today is we will successfully get through the legacy piece of the inventory largely by the end of the first quarter. So I think that's certainly where we see our trough from an EBITDA standpoint for the year. And then we'll see some gradual build into the latter three quarters. I think because we've slowed down acquisition pace, I think we'll see some moderate improvement going from quarter one to quarter two and then we'll see where we get into, how much we can restart the growth engine again to rebuild in the second half. So I won't really put a timeline on when we get back to EBITDA positive at this point. I think we still need to see how we shake-out in terms of our ability to really reengage on the acquisition side. But we are seeing good signs of improvement and stability in the markets. And so I think it's really just a matter of time. Obviously, we've shown that we've been able to do that consistently in the past under various conditions. So I'm confident that we'll get there. It's just a matter of the time-frame.

Got it. Thank you.

Thank you, Mr. Lee. The next question is from the line of Nick Jones with JMP Securities. Please proceed.

Great, thanks for taking the questions. On the first one - just how do you feel your algorithm has adjusted to kind of deal with more volatile interest rates? It sounds like the homes you're clearing now are performing how you expect? So is that really just stabilization in the market or is kind of you're buying patterns or the way you're charging fees kind of structurally different and maybe prepared to manage kind of ongoing volatility in interest rates?

Yes, great, great question. The market always helps, when the markets were consistent that you know, we can we have it more consistently we can underwrite the homes. And so that's what we you know, that always helps. But as far as the algorithm and how we underwrite that, that's always key to everything that we do. And so the adjustments we make can build in more risk, and that's from time to cash, how long you're going to own the home to the type of homes that we're buying, like, for example, derisking ourselves for median home price homes is really important. Where we're buying, we're more focused on affordability right now as we look through segmentation and property scoring. So all of that is key to underwriting so right now, we still are underwriting a lot of risk into the homes, but we are seeing as Mike said. We are seeing a lot more stability in some of these markets, all with the big question mark of what interest rates are going to do, because there's still affordability in all markets, but in general, we're - seeing more consistency in those markets and all that. But it starts and stops with underwriting and the risks that we build in and we definitely are seeing strong performance of the homes that we're underwriting now under these new conditions.

Right, and then it's great and a follow up on some of the kind of B2B services is, you kind of offer repair type services, does that potentially leave you spread too thin as you want to ramp back into high buying, particularly as you kind of right size the cost structure? I guess, how should we think about that and its impact on the overall high buying business as you know, things stabilize? Thank you.

Yes great. Yes, one of the, over the last six years, we have built a really strong machine to do transaction volume and that's for renovation, that's from customer experience, that's from a call center, really across the board. And so as we outsource to do business-to-business with other companies, we're built to do that a lot of variable costs, just like opening a market ourselves, we can grow into that into that volume as well. And so, the machine that we've built here is ready and able to do that and our performance, especially on the renovation side speaks for itself and like we mentioned, we did over 10,000 renovations last year just for Offerpad and so a lot of that we have built in internal with the great teams that we have there.

Thank you, Mr. Jones. Next question is from the line of Ryan Tomasello with Stifel. Please proceed.

Hi everyone, thanks for taking the questions. Just wanted to touch on the expense piece first, following these headcount reduction, you called out if you feel like the current expense structure, the company has properly, properly aligned with this go forward business model that incorporates asset light fee streams, and presumably a lower volume pace, at least over the near term. And Mike could be helpful if you could talk about where run rate OpEx is here, heading into next quarter, however you prefer to define it?

Yes Ryan - we have, unfortunately gone through a couple two or three reductions in force over the past few months, really getting to the point where we do feel like we've right sized the business for where we're at, and where we're going over the next few quarters here. You know, even with the addition of some of the asset light components of the business, I think we're appropriately structured now from a headcount both on the front end and the back office as well. So I think we've landed in a good place there, in terms of your run rate going forward on the OpEx, it's so much of it is going to be really, as a percent of revenue, based on where the top line goes. And again, I think we're going to see, definitely the impact of slower buying and the ramping up of the other businesses in the first part of the year. So I'm hesitant to give you kind of a number here. But in terms of, you know, the annualized savings of the headcount reductions, we've mentioned that it's about $40 million of annual impact. We did the last component of that in February, so you can't exactly straight line that, but benefiting certainly Q2, Q3 and Q4 at a clip of $10 million, a quarter, I think, is reasonable to assume.

Got it thanks for that. And then, you know, similarly on the capital position, congrats on getting that the raise done in February. Since it sounds like the cash offer product will continue to be a core piece of the platform. If you can just talk about your comfort level, with the current capital position, if you feel like the $90 million raise, puts you on a good footing to scale the business from here?

Yes Ryan, right with the steps we've taken in the business - through our slowdown in the home acquisitions are more conservative underwriting, the cost reductions and expansion into more asset light offerings. And we have a business plan that supports our current level of capital. Obviously, from the debt standpoint, we continue to work with our lenders and have good relationships built with them, they continue to support the company. And so, we've had good success there. We're rightsizing the business across all fronts there so that we've got the appropriate amount of capital and not an excess of unused capital that's inefficient in that process. So, I think from where we can see today, and given the current conditions, we're comfortable with where we're at.

Great. thanks for taking the questions.

Thank you, Mr. Tomasello. The next question is from the line of Michael Ng with Goldman Sachs. Please proceed.

Hi, good afternoon. Thank you for the question. First, I just wanted to ask about the quarter of homes that were acquired after August that you said have produced returns that expected as expected. I was just wondering if you might be able to give us a little bit more detail there, whether that's, you know, measured by contribution, profit per home or adjusted gross margin percentage? And then similarly, what are the biggest changes in purchase strategy today relative to prior to September? I know you talked about California, so any incremental detail around geographies or changing underwriting process would be helpful? Thank you.

Sure, Michael, I'll start with your first question. Generally, when we're looking at kind of normalized profitability levels, we've always spoken to the unit economics in terms of contribution margin after interest. Our range has always been a range of 3% to 6% there. And so that's generally where we see things. And of course, as we're coming back online and moving into a more stabilized period, you'll see a start at the bottom of that range. And then hopefully continue to be able to maintain within that, but that that's so far what we're seeing.

Yes, and then as far as the assumptions, and underwriting, again as we're right now, I'll just give you a couple of examples. Outline areas have been affected more than most, you know, most areas. So the outline areas were being cautious next to do home builders. But as your underwriting, just like you do it to an accelerating market to a decelerating market. You can underwrite those risks, and there as well, there still is a supply issue of homes. Affordability is still there, but there's still a supply issues of homes. And so, we're definitely focused more on the median home price, allowing some more time to sell that home once we acquire that home, and then build it in other assumptions like for closing costs contributions for when we go to sell the home to help the buyer on that, and that's something that, when the markets on the uptick, you don't have to underwrite it, but we're underwriting that in there as well. And so, there's a lot of different levers that we pull there to really derisk and a lot of it is just really the buy boxes, the median home price, the more affordable the home, the more people that can afford it. And so as we're really, hyper focused on that, you know, that second third tier home, the $700,000 to $900,000 home right now that, we're not as focused on that inventory right now, just because of the affordability.

Thanks Brian.

The other thing that I'll just highlight - yes one other point on that is that, what we're seeing when we talk about more consistency in the market, if you remember the last time we talked, they said that there's so much equity that homeowners have in their home, the price reductions they were doing were very inconsistent. They were inconsistent with what we've seen before, because there's so much equity homeowners had, well, those, you know, that and I think I also said as those can't last forever from massive price reductions. And so we're seeing more consistent there and as people are reducing prices, or you know, is looking at inventory, we're not seeing the mass price reductions we were seeing early on last year as people were trying to free up their liquidity.

Excellent. Thank you for the results Brian, and Mike appreciate it.

Great, thanks.

Thank you, Mr. Ng. The next question is from the line of Jay McCanless with Wedbush. Please proceed.

Good afternoon. I wanted to ask first about the disclosure, I think it was February 1, 8-K, that the B Class shares would be converted to A Class shares after the upcoming shareholder meeting. Can you talk about that disclosure, as well as the timing and some of the reasons behind it?

Yes, as we mature as a company, what I have learned over the last several months of being public is, you know, investors don't like don't like the high vote and on those things. And so, as we get more, you know, more, I guess, mature as a company, that's something that's been important to me is, you know, it's, -- what's the best thing for the company going forward? And we've we feel strongly that is, and so that's why you saw the change there.

Okay, thank you. And I guess, not to be flipped, but the median price settlement, I think, in a lot of markets is not only what Offerpad's looking for, but a lot of consumers are as well. I guess, with the new Buy Box, is the 500 something homes that you acquired this quarter? Is that achievable in this current environment where supply still seems to be pretty tight, or we shouldn't be expect something lower than the number we saw in 4Q?

We believe it is, and you know, the same - the same thing that we that we've seen over the last several years is that that even though there's more buyers at that level, you know, our cash offer, having the convenience and the control is really important to sellers and not have to deal with some of the financing and finance was going through with variable rates and different things. And so that has been something as we continue to see and we've talked about before, you know more sellers coming to us first to sell us their home which has been great. We're just more cautious right now of what we're buying, making sure it's around there. But so that's how we're looking at it.

And then I guess the other question I had, just this mid-300s ASP, is that sort of a reasonable number to assume that the Buy Box is going to fall on as the year progresses?

Yes, I think that's probably a pretty good place to be that and what we're seeing now is a little bit underneath that. But I think as you see the market continue to normalize a little bit as we go month by month here, you'll see more activity around there. So I think by enlarge, that's a decent place to be more of our activity more recently has been a little bit below that. But it's the right zip code.

Okay, thanks to my questions.

Thank you.

Thank you, Mr. McCanless. The next question is a follow-up question from the line of Ryan Tomasello with Stifel. Please proceed.

Yes, thanks for taking the follow up. Just with respect to the $44 million impairment, just trying to tie that together with your comments about the pre-September homes. And the more recent homes that you said are within your target economics, I guess the 44 million, I guess must have related to more than just the 225 homes you have left on the books from August, given the size and I assume that those 225 homes probably have a carrying value, sub 100 million. So just any color on what the drivers were the impairment you took this quarter would be helpful?

Yes, Ryan, I think we got a couple of things to sort out there. One is that the 225 is more of a real time marker. So that's - that is the number in the legacy cohort, you know, around now, in February here that have not been sold or not under contract. The service attain to everything that we had on the books as of 12/31. So a much larger number there we had over 1100 homes in that cohort that were still on the books at year end. So that's the difference there. I think that's huge amount up a little bit, hopefully.

Okay, got it. Yes, that's helpful. And then one more I'll sneak in here, just with respect to the B2B partnerships. Specifically on the direct plus platform, any color you can provide around, you know, parameters for scaling that business, if how meaningful of an opportunity, you think that is, any color around the number of institutional buyers you currently have plugged into that platform. And any plans for scaling that targeting specific markets sooner, that are more prone to scaling that platform?

I'm actually really excited about direct plus. Just as a reminder, direct is something we've had since we began as once we put a house under contract, we will -- we have a site that investors can go to and they can bid on that home, before it hits the market. So that's been direct. The difference between direct and network direct plus is direct plus is giving other investors top of funnel access. So they're able to bid on their own the same time that we can bid on the home. And what I really like about that is that, it's a win, win, win for everybody involved, it's as far as that, what we want to do is be a solution center to every customer to have an option for them, is exchange their home and so. So moving them to the top of funnel where they can, they can bid on the home with us as well and get the customer potentially, the offer that works for that customer. And then secondarily is that they'll close it the same time that the customer wants it closed, instead of us putting it on our balance sheet, they'll close at the same time. So that's the difference direct plus, we've had investors that have wanted this for a long, long time to have that kind of access. And so we're excited, we definitely have a lot of a lot of interest there. We're also being very selective about who we allow in the direct plus filters, we want, you know that we want the customer to have the exact same experience as they get with Offerpad, and then it's -- as it closes, but we just want to make sure we have the right -- we have the right partners in there. So a lot of interest on that, on that end of it. And you know, not just from the SFR world but from short term investors to other people that maybe are buying different types of homes on the fix and flip side that they can access there as well. So a large appetite for that we think is going to be -- it's going to be very successful. And then on top of that, a lot of these services, a lot of these people need renovation services as well, which ties perfectly into our renovation pipeline. So you know, to be able to provide top of funnel but then also our renovation skill set to them is really -- it's a product that people will really like and groups that really like. So we are focused a lot on that right now. And we expect some good things to happen there over the next year.

Thanks. Appreciate that.