Better Home & Finance Holding Company Announces Fourth Quarter and Full Year 2023 Results

Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) (“Better” or the “Company”), a New York-based digitally native homeownership company, today reported financial results for its fourth quarter and full year ended December 31, 2023.

“Through 2023 we navigated a very challenging market environment, and we are now beginning to see green shoots in 2024 and beyond. The addressable opportunity in our market continues to be massive, and we believe the megatrend towards digitization positions us favorably. A critical driver of our planned growth in 2024 is a fundamental change in our commercial operating model, which we tested in the fourth quarter of 2023 and implemented across the company in the first quarter. We have pivoted to hiring experienced Loan Officers on commission-based compensation plans, a significant deviation from our prior model. We are pleased to see early conversion improvements from this operating model pivot and the seasoned sales talent we are hiring, as well as greater alignment between our production volume and costs. Further, the experienced Loan Officers are providing our customers with an increased level of service, which enables us to improve revenue per loan while remaining market competitive.” said Vishal Garg, CEO and Founder of Better.

Fourth Quarter 2023 Financial Highlights:

GAAP Results:

• Revenue of $9 million
• Net loss of $59 million
• Ended 2023 with $554 million of cash, restricted cash, and short-term investments

Key Operating Metrics and Non-GAAP Results:

• Funded Loan Volume of $527 million across 1,633 Total Loans
• Adjusted EBITDA loss of $26 million

Full Year 2023 Financial Highlights:

GAAP Results:

• Revenue of $77 million
• Net loss of $534 million

Key Operating Metrics and Non-GAAP Results:

• Funded Loan Volume of $3 billion across 8,569 Total Loans
• Adjusted EBITDA loss of $163 million

“Given the additional capital raised in 2023, we are excited to grow and continue strategically investing in our technology and innovative products, such as digital One Day HELOC and One Day Mortgage. Through Better’s history, we have proven our ability to scale to over $100 billion of origination volume, reaching almost 2% in refinance market share at our peak in 2021. In 2023, with 91% of volume comprised of purchase loans, we have also demonstrated our digital purchase product resonates with consumers, creating an opportunity for us to further lean into purchase as we pivot to our new operating model. We expect to drive increased volume in 2024 compared to 2023, while seeking to manage expenses to be in-line with 2023. For the first quarter of 2024, we expect to generate Funded Loan Volume of approximately $600-650 million.” said Kevin Ryan, President and CFO of Better.

Full Year 2023 Business Highlights:

• Continued navigating through one of the most challenging mortgage macro environments in recent history with average 30-year fixed mortgage rates around 7% in 2023
• Continued to deliberately depress volumes by throttling marketing expenses to reduce losses in 2023
• D2C business comprised 55% of Funded Loan Volume in 2023, with B2B the remainder
• Purchase loans comprised 91% of Funded Loan Volume in 2023, refinance comprised 7%, and HELOC the remainder
• Launched new innovative products, including One Day HELOC, with weekly HELOC lock volume scaling 470% from Q1 2023 to Q4 2023, and One Day Mortgage with an average commitment letter turnaround time of 8.5 hours since Q1 2023
• Reduced Total Expenses by 71% year-over-year, with overall $1.1+ billion reduction in annual Total Expenses in 2023 compared to 2021
• Net loss improved 39% year-over-year in 2023 and 83% quarter-over-quarter in Q4 2023
• Adjusted EBITDA loss improved 69% year-over-year in 2023 and 53% quarter-over-quarter in Q4 2023
• Announced new partnerships with Infosys and Beyond.com, providing Better’s seamless digital mortgage experience to partners’ customers
• Continued loan quality with lower defect rates and delinquency rates on funded loans versus industry average

For more information, please see the detailed financial data and other information available in the Company’s annual report on Form 10-K, when filed with the Securities and Exchange Commission (the “SEC”). Amounts presented as of and for the year ended December 31, 2023 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Annual Report on Form 10-K with the SEC. More information as of and for the year ended December 31, 2023 will the provided upon filing our Annual Report on Form 10-K with SEC.

Webcast

Better will host a live webcast of its earnings conference call beginning at 8:30am ET on March 28, 2024. To access the webcast, or to register to listen to the call by phone, go to the investor relations section of the Company’s website at investors.better.com or click the “Attendee Registration Link” below. Please join the webcast at least 10 minutes prior to start time. A replay will be available on the investor relations website shortly after the call ends.

* Webcast Details *

Event Title: Better Home & Finance Holding Company Fourth Quarter and Full Year 2023 Results

Event Date: March 28, 2024 08:30 AM (GMT-04:00) Eastern Time (US and Canada)

Attendee Registration Link:

https://events.q4inc.com/attendee/821111407

About Better

Since 2017, Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) has leveraged its industry-leading technology platform, Tinman, to fund more than $100 billion in mortgage volume. Tinman allows customers to see their rate options in seconds, get pre-approved in minutes, lock in rates and close their loan in as little as three weeks. Better’s mortgage offerings include GSE-conforming mortgage loans, FHA and VA loans, and jumbo mortgage loans. Better launched its One Day Mortgage program in January 2023, which allows eligible customers to go from click to Commitment Letter within 24 hours. From 2019-2022, Better completed approximately $98 billion in mortgage volume and $39 billion in coverage written through its insurance arm. Better was named Best Online Mortgage Lender by Forbes and Best Mortgage Lender for Affordability by WSJ in 2023, and ranked #1 on LinkedIn’s Top Startups List for 2021 and 2020, #1 on Fortune’s Best Small and Medium Workplaces in New York, #15 on CNBC’s Disruptor 50 2020 list, and was listed on Forbes FinTech 50 for 2020. Better serves customers in all 50 US states and the United Kingdom.

Forward-looking Statements

This press release contains certain forward-looking statements within the meaning of federal securities laws. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. Such factors can be found in the Registration Statement on Form S-1 filed with the SEC by the Company on December 20, 2023, as well as, when filed, the Company’s annual report on Form 10-K, the Company’s quarterly reports on Form 10-Q and current reports on Form 8-K, which are available, free of charge, at the SEC’s website at www.sec.gov. New risks and uncertainties arise from time to time, and it is impossible for Better to predict these events or how they may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and Better undertakes no obligation, except as required by law, to update or revise the forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise.

Results of Operations
	Year Ended December 31,							Three Months Ended December 31, 2023				Three Months Ended September 30,
(Amounts in thousands, except per share amounts)		2023			2022				2023				2023
Revenues:
Mortgage platform revenue, net	$	61,328		$	106,144			$	6,401			$	14,207
Cash offer program revenue		304			228,721				—				—
Other platform revenue		11,293			38,362				1,938				1,333
Net interest income (expense):									—				—
Interest income		15,575			26,714				3,048				3,667
Warehouse interest expense		(11,680	)		(17,059	)			(2,136	)			(2,758	)
Net interest income (expense)		3,895			9,655				912				909
Total net revenues		76,820			382,882				9,251				16,449
Expenses:
Mortgage platform expenses		84,664			326,480				13,855				19,166
Cash offer program expenses		397			230,144				(1	)			—
Other platform expenses		13,076			59,501				1,289				3,161
General and administrative expenses		146,394			187,232				33,002				59,189
Marketing and advertising expenses		22,083			69,008				4,961				5,128
Technology and product development expenses		84,053			124,308				17,414				20,732
Restructuring and impairment expenses		15,375			247,693				3,577				679
Total expenses		366,042			1,244,366				74,097				108,055
Loss from operations		(289,222	)		(861,484	)			(64,846	)			(91,606	)
Interest and other expense, net:
Other income (expense)		13,614			3,556				8,427				977
Interest and amortization on non-funding debt		(19,916	)		(13,450	)			(1,679	)			(11,939	)
Interest on Bridge Notes		—			(272,667	)			—				—
Change in fair value of warrants		(507	)		—				(1,368	)			861
Change in fair value of convertible preferred stock warrants		266			28,901				—				—
Change in fair value of bifurcated derivative		(236,603	)		236,603				—				(237,667	)
Total interest and other expenses, net		(243,146	)		(17,057	)			5,380				(247,768	)
Loss before income tax expense		(532,368	)		(878,541	)			(59,466	)			(339,374	)
Income tax expense / (benefit)		1,998			1,100				(541	)			659
Net loss		(534,366	)		(879,641	)			(58,925	)			(340,033	)
Reconciliation of Non-GAAP Metrics:
	Year Ended December 31,							Three Months Ended December 31, 2023				Three Months Ended September 30,
(Amounts in thousands, except share and per share amounts)		2023			2022				2023				2023
Adjusted Net (Loss) Income
Net (loss) income	$	(534,366	)	$	(879,641	)		$	(58,925	)		$	(340,033	)
Stock-based compensation expense		54,412			30,542				17,014				25,044
Change in fair value of warrants		507			—				1,368				(861	)
Change in fair value of convertible preferred stock warrants		(266	)		(28,901	)			—				—
Change in fair value of bifurcated derivative		236,603			(236,603	)			—				237,667
Interest on Pre-Closing Bridge Notes		—			272,667				—				—
Restructuring, impairment, and other expenses		15,375			247,693				3,577				679
Adjusted Net (Loss) Income		(227,735	)		(500,219	)			(36,966	)			(77,504	)
Adjusted EBITDA
Net (loss) income		(534,366	)		(879,641	)			(58,925	)			(340,033	)
Income tax expense / (benefit)		1,998			1,100				(541	)			659
Depreciation and amortization expense		42,891			49,042				10,100				10,491
Stock-based compensation expense		54,412			30,542				17,014				25,044
Interest and amortization on non-funding debt		19,916			13,450				1,679				11,939
Interest on Pre-Closing Bridge Notes		—			272,667				—				—
Restructuring, impairment, and other expenses		15,375			247,693				3,577				679
Change in fair value of warrants		507			—				1,368				(861	)
Change in fair value of convertible preferred stock warrants		(266	)		(28,901	)			—				—
Change in fair value of bifurcated derivative		236,603			(236,603	)			—				237,667
Adjusted EBITDA		(162,930	)		(532,011	)			(25,728	)			(54,415	)
Summary Condensed Balance Sheet:
(Amounts in thousands, except share and per share amounts)	December 31,			December 31,
		2023			2022
Assets
Cash and cash equivalents	$	503,591		$	317,959
Mortgage loans held for sale, at fair value		170,150			248,826
Bifurcated derivative		—			236,603
Loan commitment asset		—			16,119
Other combined assets		233,001			266,563
Total Assets		906,742			1,086,070
Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
Liabilities
Warehouse lines of credit		127,085			144,049
Corporate line of credit, net		—			144,403
Convertible Note		514,644			—
Pre-Closing Bridge Notes		—			750,000
Other combined liabilities		144,473			216,844
Total Liabilities		786,202			1,255,296
Convertible preferred stock		—			436,280
Stockholders’ Equity (Deficit)
Additional paid-in capital		1,836,796			618,890
Accumulated deficit		(1,703,449	)		(1,169,083	)
Other combined equity		(12,807	)		(55,313	)
Total Stockholders’ Equity (Deficit)		120,540			(605,506	)
Total Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)		906,742			1,086,070

 

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