Offerpad Solutions Inc.

Previous wording

The following discussion and analysis provides information that Offerpad’s management believes is relevant to an assessment and understanding of Offerpad’s consolidated results of operations and financial condition. The discussion should be read together with the consolidated financial statements and accompanying notes included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2024 items and the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023. A discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022 has been reported previously in the 2023 Annual Report on Form 10-K, which was filed with the SEC on February 27, 2024, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Current wording

The following discussion and analysis provides information that Offerpad’s (the “Company”) management believes is relevant to an assessment and understanding of Offerpad’s consolidated results of operations and financial condition. The discussion should be read together with the consolidated financial statements and accompanying notes included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2025 items and the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously in the 2024 Annual Report on Form 10-K, which was filed with the SEC on February 25, 2025, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Previous wording

We are currently headquartered in Tempe, Arizona and operated in over 1,800 cities and towns in 26 metropolitan markets across 17 states as of December 31, 2024.

Current wording

We are headquartered in Tempe, Arizona and operate in over 1,800 cities and towns in 26 metropolitan markets across 17 states as of December 31, 2025.

Previous wording

Cost of Revenue and Gross Profit

Current wording

Our operating results during 2025 reflect these prevailing market conditions that have been challenging the residential real estate market for an extended period of time. As a result of these market dynamics, we maintained our focus on selling through our aged real estate inventory during 2025, which had a negative impact on our average real estate inventory holding period and gross profit margin during the year. This activity, combined with our ongoing intentional reduction in home acquisition pace as part of our effort to balance our real estate inventory levels to potentially optimize our return in the future, has resulted in a fewer number of homes in real estate inventory, which is also reflected in our operating results. Although our operating results were unfavorably impacted by these conditions and related strategies during 2025, our focus on cost reduction and operational efficiencies throughout the business continues to be reflected in our lower cost structure, as we achieved year-over-year improvement in our net loss for the third consecutive year.

Previous wording

As a result of these conditions, we have remained focused on proactively optimizing our capital allocation across our highest performing and most efficient markets. Additionally, we reduced our home acquisition pace during the second half of 2024 as we continue to balance our real estate inventory levels to optimize our return. These conditions have also required us to use pricing adjustments and other incentives in recent periods, which have had a negative impact on our operating results during the year. Further, there continues to be uncertainty regarding the near-term macroeconomic conditions, including the path of inflation in the broader economy, the direction of mortgage interest rates, which have continued to stay around 7% during the early stages of the first quarter of 2025, and the impact of geopolitical conflicts. Although it remains difficult to predict the near-term direction of consumer demand for residential real estate due to the many different factors that impact such demand, we anticipate that the sustained elevated and volatile mortgage interest rate environment, economic uncertainties and affordability pressures will continue to impact consumer demand for residential real estate during the early stages of 2025. As a result of these market dynamics, we may be required to use similar pricing adjustments and incentives in the future.

Current wording

Given the current market conditions, we remain focused on growing our other real estate service solution offerings, and within our Cash Offer solution, proactively optimizing our capital allocation across our highest performing and most efficient markets and using pricing adjustments and other incentives in an effort to drive consumer demand. These pricing adjustments have had a negative impact on our operating results over the past few years. Further, there continues to be an increased level of uncertainty regarding the near-term macroeconomic conditions, including the direction of mortgage interest rates. While the Federal Reserve Board lowered its benchmark interest rate on multiple occasions during 2025, and may lower rates further in future periods, it remains difficult to predict the near-term direction of consumer demand for residential real estate due to the many different factors that impact such demand. We anticipate that ongoing economic uncertainties and affordability pressures will continue to impact consumer demand for residential real estate during the first quarter of 2026. As a result of these market dynamics, we may be required to use similar pricing adjustments and incentives in the future, along with continuing to reduce our real estate inventory acquisition pace compared to our historical levels.

Previous wording

We believe that our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed and in Part I, Item 1A. “Risk Factors” of this Form 10-K.

Current wording

We believe our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed in Part I, Item 1A. “Risk Factors” of this Form 10-K.

Previous wording

Residential real estate is one of the largest industries, with roughly $1.9 trillion in value of homes transacted in 2024 in the United States, and is highly fragmented with over 100,000 real estate brokerages, according to the National Association of Realtors (NAR). In 2024, we estimate that we captured roughly 0.4% market share of real estate transactions across our 26 active markets. Given this high degree of fragmentation, we believe that bringing a solutions-oriented approach to the market with multiple buying and selling services to meet the unique needs of customers could lead to continued market share growth and accelerated adoption of the digital model. We have demonstrated higher market share in certain markets, providing the backdrop to grow our overall market penetration as our offerings expand and evolve. By providing a consistent, transparent, and unique experience, we expect to continue to build upon our past success and further strengthen our brand and consumer adoption.

Current wording

The U.S. residential real estate market is substantial, with 4.4 million homes sold for a total transaction value of roughly $1.8 trillion during 2025, and is highly fragmented with a significant number of licensed real estate agents and real estate brokerages. In 2025, the total residential real estate transactions in our 26 active metropolitan markets covered roughly 22% of the 4.4 million homes sold during the year, and we estimate that we captured roughly 0.2% of such transactions. Given this high degree of fragmentation, we believe that giving homeowners more control, flexibility, and choice when buying and selling a home through our real estate service solutions could lead to continued market share growth and accelerated adoption of the digital model. We have demonstrated higher market share in certain markets over time, providing the backdrop to grow our overall market penetration as we focus on the expansion of our various real estate service solutions in existing markets. Additionally, we anticipate our market share will increase over time as we invest in additional brand marketing, strengthen our local partnerships and continue improving customer awareness of our offerings.

Previous wording

Since our launch in 2015, we have expanded into 26 markets as of December 31, 2024, which covered roughly 23% of the 4.8 million homes sold in the United States in 2024. Given this current coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion over the long-term. Also, because of our strategic approach to our asset-light platform offerings, we believe a significant portion of the total addressable market is serviceable with our business model. As we expand our reach through these other service offerings, we expect to continue to serve customers in markets beyond our direct service area. Further, this strategic approach has enabled us to enter into new markets to offer certain of our service offerings, without offering all of our buying and selling services in such markets. In connection with this approach, we began offering renovation services in two additional markets during 2024.

Current wording

Since our launch in 2015, we have expanded our real estate operations into 26 metropolitan markets as of December 31, 2025. We have been strategic in our approach to growing our market footprint and have focused on geographic diversification across high population growth cities with affordable median sales prices and increasing employment characteristics. Given this current coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion over the long-term. Also, because of our strategic approach in offering four complementary solutions that serve sellers and partners across multiple transaction paths, we believe a significant portion of the total addressable market is serviceable with our business model. As we expand our reach through our various service offerings, we expect to continue to serve customers in markets beyond our direct service area. Further, this strategic approach has historically enabled us to enter into new markets to offer certain of our service offerings, without offering all of our buying and selling services in such markets. In connection with this approach, we are currently offering renovation services in select markets in which we operate.

Previous wording

Although we recently expanded into two new markets, we have decelerated our market expansion plans in recent years given the uncertain economic outlook and uneven residential real estate market conditions, which has included uncertainty regarding the near-term macroeconomic conditions, including the path of inflation in the broader economy, the direction of mortgage interest rates and the impact of geopolitical conflicts. We intend to continue evaluating expansion plans on an ongoing basis in order to maintain our flexibility in assessing the overall timing of our expansion plan and appropriate market entry points in the future.

Current wording

Although we have expanded into new markets over the past few years, we have decelerated our market expansion plans in more recent years given the uncertain economic outlook and challenging residential real estate market conditions. We intend to continue evaluating expansion plans on an ongoing basis in order to maintain our flexibility in assessing the overall timing of our expansion plan and appropriate market entry points in the future.

Previous wording

Our B2B Renovate business services represent an important component of our asset-light platform offerings. Through this offering, we are able to leverage our existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell. When providing renovation services, we receive a renovation project fee, and are also typically compensated with a service fee that is based on a percentage of the overall renovation project fee. Although our B2B Renovate business services offering is in the early stages, we believe these services could be a more significant component of our business over time.

Current wording

Through our Renovate services, we are able to leverage our existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell. When providing these third-party renovation services, we receive a renovation project fee, and are also typically compensated with a service fee that is based on a percentage of the overall renovation project fee.

Previous wording

Another component of our asset-light platform offerings includes our program that allows investors and single-family rental companies an opportunity to purchase homes from homeowners, matching investors with sellers. These transactions occur in several forms, including assigning the original purchase contract to the end buyer and collecting a fee at closing. We expect this program will allow us to help more homeowners sell their home and expand our ability to reach more customers, while also providing customers with the benefit of receiving an optimized offer for their home.

Current wording

Our Cash Offer Marketplace, which includes Direct+ partners, provides third-party buyers with an opportunity to purchase homes from homeowners. In this solution, qualified cash offers are routed through a marketplace of third-party buyers, preserving speed and certainty for sellers. These transactions occur in several forms, including assigning the original purchase contract to the end buyer and collecting a fee at closing. We expect our Cash Offer Marketplace will help more homeowners sell their home and has the potential to expand our ability to reach more customers, allowing us to increase transaction flexibility and scale transaction volume across market cycles, while also providing customers with the benefit of receiving an optimized offer for their home.

Previous wording

We aim to deliver other additional products and services tied to the core real estate transaction in a smooth, efficient, digital driven platform, focused on transparency and ease of use. Although further developing these products and services will require significant investment, growing our current offerings and offering additional ancillary products and services, potentially including energy efficiency solutions, smart home technology, insurance, and home warranty services, we believe will strengthen our unit economics and allow us to better optimize pricing. Generally, the revenue and margin profiles of our ancillary products and services are different from our Cash Offer service that accounts for the substantial majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.

Current wording

Over the long term, we aim to deliver other additional products and services tied to the core real estate transaction in a smooth, efficient, digital-driven platform, focused on transparency and ease of use. Although further developing these products and services will require significant investment, growing our current offerings and offering additional ancillary products and services, potentially including energy efficiency solutions, smart home technology, insurance, and home warranty services, we believe will strengthen our unit economics and allow us to better optimize pricing. Generally, the revenue and margin profiles of our ancillary products and services are different from our Cash Offer service, which accounts for the substantial majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.

Previous wording

Continued optimization of acquisition, renovation, and resale processes and strategies, as we increase our market penetration in existing markets;

Current wording

Continued optimization of acquisition, renovation, and resale processes and strategies, including our underwriting processes, as we increase our market penetration in existing markets;

Previous wording

Introducing and scaling additional ancillary products and services to complement our core Cash Offer solution.

Current wording

Introducing and scaling additional ancillary products and services to complement our core Cash Offer solution, over the long term.

Previous wording

We utilize our technology and product teams to design systems and workflows to make our operations teams more efficient and able to support and scale with the business. Many positions are considered volume based, and as our business grows, we focus on developing more automation tools to gain additional leverage. Additionally, in periods when our business is growing, we expect to be able to gain operating leverage on portions of our cost structure that are more fixed in nature as opposed to purely variable. These types of costs include general and administrative expenses and certain marketing and information technology expenses, which generally grow at a slower pace than proportional to revenue growth.

Current wording

We utilize our technology and product teams to design systems and workflows to make our operations teams more efficient and able to support and scale with the business. Many positions are considered volume based, and as our business grows over the longer term, we plan to focus on developing more automation tools to gain additional leverage. Additionally, in periods when our business is growing, we expect to be able to gain operating leverage on portions of our cost structure that are more fixed in nature as opposed to purely variable. These types of costs include general and administrative expenses and certain marketing and information technology expenses, which generally grow at a slower pace than proportional to revenue growth.

Previous wording

Our business model requires significant capital to purchase real estate inventory. Real estate inventory financing is a key enabler to our growth and we rely on our non-recourse asset-backed financing facilities, which primarily consist of senior and mezzanine secured credit facilities to finance our home purchases. The loss of adequate access to these types of facilities, or the inability to maintain these types of facilities on favorable terms, would impair our performance. See“—Liquidity and Capital Resources—Financing Activities.”

Current wording

Our business model requires significant capital to purchase real estate inventory. Real estate inventory financing is a key enabler to our growth and we rely on our non-recourse asset-backed financing facilities, which primarily consist of senior and mezzanine secured credit facilities to finance our home purchases. Though we may from time to time reduce our available capacity under such credit facilities to align with our required usage, the loss of adequate access to these types of facilities, or the inability to maintain these types of facilities on favorable terms, would impair our performance. See“—Liquidity and Capital Resources—Financing Activities.”

Previous wording

Our business model is based upon acquiring homes at a price which will allow us to provide a competitive offer to the consumer, while being able to add value through the renovation process, and relist the home so that it sells at a profit and in a relatively short period of time. We have invested significant resources into our underwriting and asset management systems. Our real estate operations team, including our pricing team, together with our software engineering and data science teams are responsible for underwriting accuracy, portfolio health, and workflow optimization. Our underwriting tools are constantly updated to adjust to the latest market conditions, leveraging inputs from our internal data systems, as well as third-party and other proprietary data sources. This allows us to assess and adjust to changes in the local housing market conditions based on our technology, analysis and local real estate experience, in order to mitigate our risk exposure. Further, our listed homes are typically in market-ready and move-in ready condition following the repairs and renovations we conduct.

Current wording

A significant portion of our business model is based upon acquiring homes at a price which will allow us to provide a competitive offer to the consumer, while being able to add value through the renovation process, and relisting the home so that it sells at a profit and in a relatively short period of time. Since our inception, we have invested significant resources into our underwriting and asset management systems, and expect to continue doing so in the future. Our real estate operations team, including our pricing team, together with our software engineering and data science teams are responsible for underwriting accuracy, portfolio health, and workflow optimization. Our underwriting tools are constantly updated to adjust to the latest market conditions, leveraging inputs from our internal data systems, as well as third-party and other proprietary data sources.

Previous wording

To provide investors with additional information regarding our margins, we have included Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins), which are non-GAAP financial measures. We believe that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across our markets. Each of these measures is intended to present the economics related to homes sold during a given period. We do so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in real estate inventory as of the end of the period presented. Contribution Profit provides investors a measure to assess

Current wording

To provide investors with additional information regarding our margins, we have included Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins), which are non-GAAP financial measures. We believe that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across our markets. Each of these measures is intended to present the economics related to homes sold during a given period. We do so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in real estate inventory as of the end of the period presented. Contribution Profit provides investors a measure to assess Offerpad’s ability to generate returns on homes sold during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs (including senior and mezzanine secured credit facilities and other senior secured debt) attributable to homes sold during a reporting period. We believe these measures facilitate meaningful period over period comparisons and illustrate our ability to generate returns on assets sold after considering the costs directly related to the assets sold in a presented period.

Previous wording

We calculate Contribution Profit as Adjusted Gross Profit, minus (1) direct selling costs incurred on homes sold during the presented period, minus (2) holding costs incurred in the current period on homes sold during the period recorded in sales, marketing, and operating, minus (3) holding costs incurred in prior periods on homes sold in the current period recorded in sales, marketing, and operating, plus (4) other income, net which is primarily composed of interest income earned on our cash and cash equivalents and fair value adjustments of derivative financial instruments. The composition of our holding costs is described in the footnotes to the reconciliation table below. We define Contribution Margin as Contribution Profit as a percentage of revenue.

Current wording

We calculate Contribution Profit as Adjusted Gross Profit, minus (1) direct selling costs incurred on homes sold during the presented period, minus (2) holding costs incurred in the current period on homes sold during the period recorded in sales, marketing, and operating, minus (3) holding costs incurred in prior periods on homes sold in the current period recorded in sales, marketing, and operating, plus (4) other income, net which is primarily composed of interest income earned on our cash and cash equivalents. The composition of our holding costs is described in the footnotes to the reconciliation table below. We define Contribution Margin as Contribution Profit as a percentage of revenue.

Previous wording

Interest expense capitalized represents all interest related costs, including senior and mezzanine secured credit facilities, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

Current wording

Interest expense capitalized represents all interest related costs under our senior and mezzanine secured credit facilities and other senior secured debt, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

Previous wording

Other income, net principally represents interest income earned on our cash and cash equivalents and fair value adjustments of derivative financial instruments.

Current wording

Other income, net principally represents interest income earned on our cash and cash equivalents.

Previous wording

Represents both senior and mezzanine interest expense incurred on homes sold in the period presented and expensed to interest expense on the Consolidated Statements of Operations.

Current wording

Represents interest expense under our senior and mezzanine secured credit facilities and other senior secured debt incurred on homes sold in the period presented and expensed to interest expense on the Consolidated Statements of Operations.

Previous wording

Represents both senior and mezzanine secured credit facilities interest expense incurred in prior periods on homes sold in the period presented and expensed to interest expense on the Consolidated Statements of Operations.

Current wording

Represents interest expense under our senior and mezzanine secured credit facilities and other senior secured debt incurred in prior periods on homes sold in the period presented and expensed to interest expense on the Consolidated Statements of Operations.

Previous wording

Amortization of capitalized interest represents all interest related costs, including senior and mezzanine interest related costs, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

Current wording

Amortization of capitalized interest represents all interest related costs under our senior and mezzanine secured credit facilities and other senior secured debt, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

Previous wording

Cost of revenue consists of the initial home purchase costs, renovation costs, holding costs and interest incurred during the renovation period, prior to the listing date and real estate inventory valuation adjustments, if any. These costs are accumulated in real estate inventory up until the home is ready for resale, and then charged to cost of revenue under the specific identification method when the property is sold.

Current wording

Cost of revenue primarily consists of the initial home purchase costs, renovation costs, holding costs and interest incurred during the renovation period, prior to the listing date and real estate inventory valuation adjustments, if any. These costs are accumulated in real estate inventory up until the home is ready for resale, and then charged to cost of revenue under the specific identification method when the property is sold.

Previous wording

Sales, marketing and operating expenses consist of real estate agent commissions, advertising, and holding costs on homes incurred during the period that homes are listed for sale, which includes utilities, taxes, maintenance, and other costs. Sales, marketing and operating expense also includes headcount expenses in support of sales, marketing, and real estate inventory operations such as salaries, benefits, and stock-based compensation. Sales, marketing and operating expenses are charged to operations as incurred.

Current wording

Sales, marketing and operating expenses primarily consist of real estate agent commissions, advertising, and holding costs on homes incurred during the period that homes are listed for sale, which includes utilities, taxes, maintenance, and other costs. Sales, marketing and operating expense also includes headcount expenses in support of sales, marketing, and real estate inventory operations such as salaries, benefits, and stock-based compensation. Sales, marketing and operating expenses are charged to operations as incurred.

Previous wording

General and administrative expenses consist primarily of headcount expenses, including salaries, benefits and stock-based compensation for our executive, finance, human resources, legal and administrative personnel. General and administrative expense also includes third-party professional service fees, insurance, and rent expense.

Current wording

General and administrative expenses primarily consist of headcount expenses, including salaries, benefits and stock-based compensation for our executive, finance, human resources, legal and administrative personnel. General and administrative expense also includes third-party professional service fees, insurance, and rent expense.

Previous wording

Technology and development expenses consist of headcount expenses, including salaries, benefits and stock-based compensation expense for employees and contractors engaged in the design, development, and testing of website applications, mobile applications, and software development. Technology and development expenses are charged to operations as incurred.

Current wording

Technology and development expenses primarily consist of headcount expenses, including salaries, benefits and stock-based compensation expense for employees and contractors engaged in the design, development, and testing of website applications, mobile applications, and software development. Technology and development expenses are charged to operations as incurred.

Previous wording

Interest expense consists primarily of interest on borrowings, including amortization of debt issuance costs related to our senior secured credit facilities, mezzanine secured credit facilities, and other debt. Borrowings under the senior secured credit facilities and mezzanine secured credit facilities, and other debt accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate plus a margin.

Current wording

Interest expense primarily consists of interest on borrowings, including amortization of debt issuance costs related to our senior secured credit facilities, mezzanine secured credit facilities, and other debt. Borrowings under the senior and mezzanine secured credit facilities, and other debt accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate plus a margin. Interest expense also includes interest on the revolving credit facility, which accrues at a fixed rate, and amortization of the associated debt issuance costs.

Previous wording

Other income, net consists primarily of interest income earned on our cash and cash equivalents, changes in the fair value of derivative financial instruments that are entered into to manage risks that are principally associated with interest rate fluctuations, and gains or losses from the disposal of property and equipment.

Current wording

Other income, net primarily consists of interest income earned on our cash and cash equivalents and gains or losses from the disposal of property and equipment.

Previous wording

The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce our provision for income taxes.

Current wording

The amount of the deferred tax assets considered realizable could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce our provision for income taxes.

Previous wording

The following details our consolidated results of operations and includes a discussion of our operating results and significant items explaining the material changes in our operating results during the periods presented:

Current wording

The following details our consolidated results of operations and includes a discussion of our operating results and significant items explaining the material changes in our operating results during the year ended December 31, 2025 compared to year ended December 31, 2024:

Previous wording

Other cost of revenue decreased by $3.1 million, or 16.4%, to $16.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was primarily attributable to lower volumes associated with our historical listing service offering as we transitioned our focus to our partner network, which was partially offset by an increase in costs associated with our B2B Renovate business due to higher renovation volumes during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Current wording

Other cost of revenue decreased by $1.2 million or 65.5%. This decrease was primarily driven by lower volumes associated with our historical listing service offering as we transitioned our focus to our partner network that generates higher margins profiles.

Previous wording

Other gross profit margin was 33.5% for the year ended December 31, 2024 compared to 37.1% for the year ended December 31, 2023. This decrease in gross profit margin was primarily due to a shift in the product mix of the asset-light platform offerings included in Other during 2024. B2B Renovate, which generally has lower margins compared to the other offerings included within Other, represented a larger component of Other cost of revenue during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Current wording

Other gross profit margin was 89.5% for the year ended December 31, 2025 compared to 69.8% for the year ended December 31, 2024. This increase in gross profit margin was primarily due to a shift in the product mix of the solution offerings included in Other. Our Cash Offer Marketplace offering, which includes Direct+ partners, generally has one of the higher margin profiles of the offerings included within Other, and represented a larger component of Other gross profit during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Previous wording

Sales, marketing and operating expense decreased by $43.5 million, or 37.3%, to $73.1 million, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in expense was primarily attributable to a $18.8 million decrease in advertising expense as we repositioned and optimized our marketing efforts in response to the ongoing challenging residential real estate market conditions, decreased average employee headcount and a decrease in variable costs associated with the decrease in homes sold.

Current wording

Sales, marketing and operating expense decreased by $27.3 million, or 37.3%, to $45.8 million, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease in expense was primarily attributable to a lower average employee headcount, a decrease in variable costs associated with the decrease in homes sold, and a $4.9 million decrease in advertising expense as we repositioned and optimized our marketing efforts in response to the ongoing challenging residential real estate market conditions.

Previous wording

General and administrative expense decreased by $9.5 million, or 18.9%, to $40.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in expense was primarily attributable to a decrease in fees associated with our credit facilities, decreased average employee headcount, lower insurance costs, and decreased accounting and other professional fees.

Current wording

General and administrative expense decreased by $14.4 million, or 35.5%, to $26.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease in expense was primarily attributable to decreased average employee headcount, a decrease in lender fees in connection with reduced borrowings on our credit facilities, lower insurance costs and decreased fees associated with legal and other professional obligations.

Previous wording

Technology and development expense decreased by $3.4 million, or 43.1%, to $4.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in expense was primarily attributable to decreased average employee headcount.

Current wording

Technology and development expense decreased by $1.1 million, or 24.7%, to $3.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease in expense was primarily attributable to decreased average employee headcount and lower third-party consulting fees.

Previous wording

Change in fair value of warrant liabilities for the years ended December 31, 2024 and 2023 represents gains of $0.2 million and $0.1 million, respectively, as a result of the fair value adjustment of our warrant liabilities.

Current wording

Change in fair value of warrant liabilities for the years ended December 31, 2025 and 2024 represents a loss of $0.1 million and a gain of $0.2 million, respectively, as a result of the fair value adjustment of our warrant liabilities.

Previous wording

Interest expense decreased by $0.2 million, or 0.9%, to $18.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in expense was primarily attributable to a $172.0 million decrease in the average outstanding balance of our secured credit facilities and other debt, from $420.6 million during the year ended December 31, 2023 to $248.6 million during the year ended December 31, 2024. This decrease was partially offset by a 0.5% increase in the weighted average variable interest rates associated with our secured credit facilities and other debt.

Current wording

Interest expense decreased by $5.3 million, or 28.3%, to $13.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease in expense was primarily attributable to an $83.0 million decrease in the average outstanding balance of our secured credit facilities and other debt, from $248.6 million during the year ended December 31, 2024 to $165.6 million during the year ended December 31, 2025. This decrease in expense was also due to a 0.7% decrease in the weighted average variable interest rates associated with our secured credit facilities and other debt. These decreases were partially offset by interest expense associated with our revolving credit facility which was entered into during July 2025.

Previous wording

We recorded income tax expense of less than $0.1 million and $0.2 million during the years ended December 31, 2024 and 2023, respectively, and our effective tax rate was an expense of (0.1%) for both of the respective periods. Our effective tax rate for each of the years ended December 31, 2024 and December 31, 2023 differed from the federal statutory rate of 21% primarily due to the valuation allowance recorded on our deferred tax assets and state taxes. We record a full valuation allowance on our deferred tax assets, such that our income tax expense reflects only state taxes which are revenue or commerce based.

Current wording

We recorded income tax expense of $0.4 million and less than $0.1 million during the years ended December 31, 2025 and 2024, respectively, and our effective tax rate was an expense of (1.0)% and (0.1)% for the respective periods. Our effective tax rate for each of the years ended December 31, 2025 and December 31, 2024 differed from the federal statutory rate of 21% primarily due to the valuation allowance recorded on our deferred tax assets and state taxes. We record a full valuation allowance on our deferred tax assets, such that our income tax expense reflects only state taxes which are revenue or commerce based.

Previous wording

Cash and cash equivalents balances consist of operating cash on deposit with financial institutions. Our principal sources of liquidity have historically consisted of cash generated from our operations and financing activities. As of December 31, 2024, we had cash and cash equivalents of $43.0 million and had a total undrawn borrowing capacity under our senior and mezzanine secured credit facilities of $790.5 million, $169.0 million of which is committed and $621.5 million uncommitted.

Current wording

Cash and cash equivalents balances consist of operating cash on deposit with financial institutions. Our principal sources of liquidity have historically consisted of cash generated from our operations and financing activities.