Slide 1: Opendoor
Opendoor
Slide 2: Disclaimer
Disclaimer 2 Confidentiality and Disclosures This presentation has been prepared for use by Social Capital Hedosophia Holdings Corp . II (“Social Capital”) and Opendoor Labs Inc . (“Opendoor”) in connection with their proposed business combination . This presentation is for information purposes only
Slide 3: Incredible upgrade opportunity: My journey started at 2004 Mitchell Street
“Incredible upgrade opportunity” My journey started at 2004 Mitchell Street
Slide 4: Product, Engineering, Design, Marketing, Operations, Finance leadership
4 Product Engineering Design & Marketing Operations Finance Brian Tolkin Head of Seller Product Product, Uber Mark Kinsella Head of Engineering Director, Lyft Paul Smith Head of Design Director, Uber Megan Meyer Head of Operations Ops, Bain Capital Rajiv Krishnarao Head of Finance Director, Uber Dav
Slide 5: Buy, sell & move at the tap of a button
Buy, sell & move 5 at the tap of a button Unlock homeownership for millions of Americans
Slide 6: An Opendoor story: Charlisa's next chapter
6 An Opendoor story Charlisa’s next chapter Read and watch her story www.opendoor.com/w/stories/charlisa - boyd
Slide 7: We are the innovator and market leader
18,799 Homes sold (2019) #2 Competitor #3 Competitor 7 We are the innovator and market leader 2017 2019 Revenue ($B) $0.7 $1.8 $4.7 21 $10B 80K Markets Homes sold Homeowners served Key metrics Markets, Homeowners served and Homes sold metrics since Company inception through August 31, 2020; Homeowne
Slide 8: Investment highlights: Significant upside ahead
Significant upside ahead Revenue growth and margin improvement expected via market penetration and adjacent services Investment highlights 8 Massive, fragmented market U.S. real estate industry is ripe for disruption Superior consumer experience Digital experience transforming a highly inefficient p
Slide 9: Massive market
4% 50+ annual transactions 66% 0 - 15 annual transactions 31% 15 - 50 annual transactions Real estate Used autos Food $1.0T/yr $841B/yr 68% of Americans are homeowners 5 million homes sold annually Fragmented incumbents $1.6T/yr 9 Massive market Data sourced from public company filings, U.S. Bureau
Slide 10: Today, 89% of buyers and sellers use an agent, and this is their experience
Today, 89% of buyers and sellers use an agent, and this is their experience Agent use, 89%, per National Association of Realtors report List days, home visits and fall - through metrics based on analysis of Multiple Listing Service (MLS) and Company data Per transaction $ values indicative based on
Slide 11: Receive an offer and sell on your timeline
11 Online cash offer Flexible close date Digital closing Receive an offer and sell on your timeline
Slide 12: New experience to search, visit and buy thousands of homes
New experience to search, visit and buy thousands of homes 12 Self - tour homes Financing in - app Digital offer process
Slide 13: Offering greater simplicity, certainty, speed and safety
Offering greater simplicity, certainty, speed and safety 13 Complex Slow Uncertain Human intensive Average of 6 counter parties to manage ~20% of transactions fall through Inflexible timelines to closing Average of 87 days to close on the market Averaging 12 visitors per listing with months of open
Slide 14: Home sellers are choosing Opendoor
20 % Real sellers High intent customers 80% Browsing for a quote 14 34% 2019 real seller conversion High conversion 25% 23% 24% 26% 30% 31% 35% 38% 40% 46% 44% >10% 9.5% 8.5% 7.5% 6.5% <6.0% Even at 10% fees conversion is 23% And at 6% fees conversion is 44%+ Real seller conversion vs. fees Based on
Slide 15: Net Promoter Score: customers are delighted by our experience
Rental Car Traditional… Category Leaders 15 Traditional… Mortgage Title Opendoor 70 Net Promoter Score NPS metrics based on Company data, public filings and 3rd - party research Note: And are delighted by our experience
Slide 16: We've rebuilt the entire real estate service stack
Foundation of software and data science Pricing Real - time models to predict the current and future value of a home Home Ops Inspections, data collection, repairs and renovations Fulfillment Automated closing, title and escrow processes Customer Experience Centralized sales and support teams to man
Slide 17: Pricing advantage: data, accuracy and automation
Feature level home data 145 Unique features per inspection 175K On - site inspections 25M Home level data inputs 1B Home level adjustments 17 1Q16 1Q18 1Q20 41% 63% With step - function increases in automation Meaningful improvements in accuracy 2Q18 acquisition cohort 2Q19 acquisition cohort Predic
Slide 18: Cost advantage: applying technology to reduce costs
18 Centralization & automation Traditional agent Opendoor We are 12x more efficient than a traditional agent Transactions / person App to manage all home ops workflows Opendoor Scout Opendoor productivity based on 2019 total closes and average operator headcount; Traditional agent based on National
Slide 19: Growth
Growth 19
Slide 20: Our first 6 markets reached $2.7B run-rate revenue in 1Q20
Phoenix Dallas - Fort Worth Las Vegas Atlanta Raleigh - Durham Orlando $1.0B run - rate revenue 4.2% market share $206M run - rate revenue 1.9% market share $329M run - rate revenue 1.7% market share $664M run - rate revenue 4.6% market share $388M run - rate revenue 5.5% market share $1
Slide 21: Today, we are in 21 markets and just scratching the surface
Phoenix Dallas - Fort Worth Las Vegas Atlanta Raleigh - Durham Orlando Charlotte San Antonio Sacramento Houston Tampa Portland Denver Nashville Jacksonville Austin Minneapolis - St.Paul Riverside Tucson Los Angeles Salt Lake City 21 $5.0B 1Q20 Run - rate rev
Slide 22: Track record of new market launches
22 Track record of new market launches Market share Market share by market maturity Month of operation 0.0% 0.3% 0.5% 0.8% 1.0% 1.3% 1.5% 1 2 3 4 5 6 7 8 9 10 11 12 Phoenix Next 5 Next 15 Infrastructure in place to launch efficiently Centralized customer operations Centralized teams to service selle
Slide 23: Our current playbook takes us to $50B in revenue
23 Our current playbook takes us to $50B in revenue $50B Run - rate revenue 4% Market share 100 Markets Phoenix Atlanta Orlando Las Vegas Sacramento Tampa Raleigh - Durham Portland Denver Nashville Jacksonville Minneapolis - St.Paul Washington, DC Seattle Philadelphia B
Slide 24: U.S. market potential of $1.3T
Phoenix Dallas - Fort Worth Atlanta Orlando Las Vegas Sacramento Tampa Raleigh - Durham Portland Charlotte Nashville Jacksonville San Antonio Austin Minneapolis - St.Paul Washington, DC Seattle Philadelphia Baltimore Chicago Riverside Los Angeles Boston
Slide 25: And this is just the beginning
25 And this is just the beginning
Slide 26: Early stages of the digital transformation in real estate
26 Category % Online Market leader Market capitalization Retail Transportation Used auto sales Real estate 14% 4% 1% < 1% ~$1.5T ~$50B ~$30B Online penetration metrics are based on public filings and third party research Market capitalization values are approximated as of August 31, 2020 Early stage
Slide 27: Customers are prioritizing safety
27 Customers are prioritizing safety Opendoor provides a digital, contact - less way to buy and sell a home Customers are demanding digital first experiences De - urbanization is occurring as buyers avoid dense areas Demand for housing in our markets is strengthening COVID - 19 has accelerated shift
Slide 28: Consumers demand digital experiences for services around the home
Home maintenance Title and Escrow Financing Upgrades Warranty Insurance Moving services 28 Consumers demand digital experiences for the services that revolve around the home
Slide 29: We've transformed how people sell a home; tomorrow we transform how people move
29 We’ve transformed how people sell a home Today Sold in a few taps The picture can't be displayed. As the market leader, we are just getting started Tomorrow We will transform how people move Digital one - stop shop to move
Slide 30: Financial overview
Financial overview 30
Slide 31: We have proven, positive unit economics
31 We have proven, positive unit economics Contribution Margin 3.1% 1Q20 Margin Performance Phoenix TotalCo All metrics presented are non - GAAP, see reconciliation in Appendix for TotalCo. Phoenix market metrics use same methodology as t otal company equivalents $8K/home Contribution Margin After I
Slide 32: The vast majority of our markets are CM positive
Phoenix Contribution Margin per home by market (1Q20) 32 $8K / home TotalCo Contribution Margin $11K / home 4.0% All metrics presented are non - GAAP, see reconciliation in Appendix. Based on 1Q20 performance for 19 markets. Excludes ramping m arkets with fewer than 50 Resale Closes in 1Q20 The vast
Slide 33: Demonstrated success in adding high margin services
33 Adjacent services roadmap First proof point with title & escrow Quarter since launch 7,031 103 510 1,134 2,381 3,951 4,720 5,394 20% 40% 60% 80% 8,157 82.9% 75.9% 78.4% 75.8% 74.5% 57.8% 36.1% 21.6% 5.7% Title & escrow transactions (#) Attach rate (%) Attach rate based on total acquisition and Re
Slide 34: Significant margin upside from additional services and cost optimization
Ancillary Gross Margin Ancillary Gross Margin Vehicle Gross Margin Vehicle Gross Margin Expect ~50 / 50 long - term unit margin composition, similar to other “trade - in” business models 34 1Q20 Contribution Margin Cost optimization Additional services Long - term target Contribution Margin $11K/hom
Slide 35: Rapid growth at scale and improving profitability
35 Adjusted EBITDA Margin 1Q20 (8.0%) (7.1%) (4.6%) (2.3%) Homes sold 2017 2018 2019 1Q20 Run Rate 3,127 7,470 18,799 19,632 2017 2018 2019 1Q20 Run Rate Revenue ($B) $0.7 $1.8 $4.7 $5.0 Rapid growth at scale and improving profitability Note: Adjusted EBITDA Margin is a non - GAAP metric, see reconc
Slide 36: Scalable, efficient financing in place
2016 2018 2020 36 Scalable, efficient financing in place (1) As of June 30, 2020. Debt facilities restricted use for the purchase of homes (2) Advance rate and Senior debt cost as representative. Advance rate represents the combined senior and mezzanine advance on the pu rchase price of homes at tim
Slide 37: COVID-19: Systems built to react quickly to changing market conditions
37 COVID - 19: Systems built to react quickly to changing market conditions 15,192 First offers sent (#) 7,362 Paused offers Feb - 20 Jul - 20 $1,019 $172 Inventory ($M) De - risked balance sheet Adjusted Gross Margin (%) 7.1% >6.8% 5.6% Adjusted Gross Margin is a non - GAAP metric, see reconciliati
Slide 38: Projecting continued strong growth and path to profitability
38 Projecting continued strong growth and path to profitability 2022P $2.5 $3.5 $6.2 $9.8 Revenue ($B) 2020P 2021P 2022P 2023P (5.7%) (5.4%) (2.0%) 0.1% Adjusted EBITDA Margin 2022P 3.0% 4.1% 4.7% 5.5% Contribution Margin ($M) $72 $142 $290 $539 Note: Contribution Margin and Adjusted EBITDA Margin a
Slide 39: Summary financials
2017 2018 2019 2020P 2021P 2022P 2023P Homes Sold 3,127 7,470 18,799 9,673 13,458 24,030 37,689 % YoY Growth 113% 139% 152% (49%) 39% 79% 57% Total Revenue ($B) $0.7 $1.8 $4.7 $2.5 $3.5 $6.2 $9.8 % YoY Growth 109% 159% 158% (48%) 41% 79% 58% Adjusted Gross Profit ($M) $66 $146 $297 $172 $269 $521 $8
Slide 40: Long-term margin targets
(1) Assumes home sale price of $250K All metrics presented are non - GAAP, see reconciliation in Appendix 40 Metric 2018 2019 1Q20 Long - Term Target Key Drivers Total Contribution Margin 3.5% 1.9% 3.1% 7 - 9% ($20K/home) • Maturation of existing, launched markets • Continuing optimization of cost s
Slide 41: Investment summary
41 Investment summary Massive, fragmented market $1.6T Existing home sales <1% Online penetration Superior consumer experience T 70 Customer NPS 34% Real seller conversion Market leader with low cost platform 12x More efficient 40%+ Scale cost savings Rapid growth and scale $4.7B 2019 revenue 150%+
Slide 42: Opendoor
Opendoor
Slide 43: Transaction overview
Transaction overview 43
Slide 44: Pro forma valuation and sources and uses
44 Pro forma valuation Sources and uses IPOB illustrative share price $10.00 Pro forma shares outstanding (M) 630.7 Total equity value $6,307 Cash on balance sheet $1,539 Total enterprise value $4,768 Total Enterprise Value / Revenue 1.0x (based on 2019 Revenue of $4.7B) 0.5x (based on 2023 Revenue
Slide 45: Pro forma enterprise value of $4.8B
45 Pro forma enterprise value of $4.8B $200M from affiliated entities, led by $100M from Chamath Palihapitiya, Founder and CEO of SCH, and $58M from Hedosophia, with the remainder invested by existing Opendoor shareholders, Access Industries and Lennar, along with Opendoor management Over $1.5B of p
Slide 46: Appendix
Appendix 46
Slide 47: Non-GAAP reconciliations
47 2017 2018 2019 1Q20 GAAP Gross Profit ($M) $66 $133 $301 $91 Adjustments: Net Impairment $0 $13 ($5) ($2) Adjusted Gross Profit $66 $146 $297 $89 Adjusted Gross Margin 9.3% 7.9% 6.3% 7.1% Direct Selling Costs ($26) ($62) ($149) ($37) Holding Costs on Sales ($9) ($19) ($55) ($14) Contribution Prof
Slide 48: Non-GAAP reconciliations
48 2017 2018 2019 4Q19 1Q20 GAAP Gross Profit ($M) $66 $133 $301 $74 $91 Adjustments: Net Impairment $0 $13 ($5) ($3) ($2) Adjusted Gross Profit $66 $146 $297 $71 $89 Adjusted Gross Margin 9.3% 7.9% 6.3% 5.6% 7.1% Non - GAAP reconciliations Financials may not sum due to rounding Net Impairment refle
Slide 49: Non-GAAP reconciliations
49 2017 2018 2019 1Q20 GAAP Net Income ($M) ($85) ($240) ($339) ($62) Adjustments: Stock Based Compensation $4 $15 $13 $3 Warrant Expense $0 $18 ($6) $1 Net Impairment $0 $13 ($5) ($2) Intangibles Amortization Expense $0 $1 $3 $1 Restructuring $0 $0 $3 $1 Convertible Note Interest & Discount Amortiz