- Strong quarter with Funded Loan Volume up 45%, Revenue up 41%,
and Total Expenses flat in Q2’24 as compared to Q1’24
- Continue leaning into growth opportunities and expect Q3’24
Funded Loan Volume of over $1 billion
- Positive early indications from investments in AI within the
Tinman platform geared towards loan team productivity and customer
experience
- Focused on managing towards profitability while growing through
improved technology efficiency and corporate cost reductions to
offset increased growth expenses
- Effecting a 1-for-50 Reverse Stock Split on Friday, August
16th
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
second quarter ended June 30, 2024.
“We are very pleased with the growth and continued progress
towards profitability we demonstrated in the second quarter of
2024, through a continued challenging macro environment with
persistently high rates. Our investments in purchase and home
equity products, where we see growth being less rate-sensitive,
generated sizable outperformance. We also saw strong early
performance in sales and operating efficiency through investments
in AI and our new commission model,” said Vishal Garg, CEO and
Founder of Better.
Second Quarter 2024 Financial Highlights:
GAAP Results:
- Revenue of approximately $31 million, an increase of 41% from
$22 million in Q1’24
- Net loss of approximately $42 million as compared with $51
million in Q1’24
- Ended Q2’24 with approximately $507 million of cash, restricted
cash, short-term investments, and self-funded loans, as defined by
Loans Held for Sale less Warehouse lines of credit
Key Operating Metrics and Non-GAAP Financial Measures:
- Adjusted EBITDA loss of approximately $25 million, compared to
$31 million in Q1’24
- Funded loan volume of $962 million, an increase of 45% from
Q1’24, across 2,995 Total Loans
- Purchase loan volume grew 50% quarter-over-quarter and
comprised 83% of Funded loan volume; HELOC loan volume (which
includes home equity lines of credit and closed-end second lien
loans) grew 76% quarter-over-quarter and comprised 9% of Funded
loan volume; and refinance loan volume declined 5%
quarter-over-quarter and comprised the remainder of Funded loan
volume
- D2C business grew 86% quarter-over-quarter and comprised 70% of
Funded loan volume, with B2B comprising the remainder
“In Q2 we continued leaning into a challenging market and
demonstrated operating leverage with our revenue growth outpacing
expense growth. We believe the efficiencies gained from continued
technology investments and corporate cost reductions will allow us
to further narrow our losses as we continue to grow,” said Kevin
Ryan, CFO of Better.
Second Quarter 2024 Highlights:
- Funded loan volume and revenue growth driven by Purchase and
HELOC loan volume growth
- Total Expenses were approximately flat quarter-over-quarter,
with increases to marketing spend and loan production team
compensation being offset by lower vendor and corporate
compensation expenses compared to the first quarter of 2024
- Shift from fixed compensation plans to commission-based
compensation plans for loan officers continues to yield positive
early results with respect to loan officer productivity and
customer conversion
- Certain nonrecurring benefits to Gain on Sale Revenue that
totaled approximately $9 million, including a positive
mark-to-market impact on our lock pipeline, and a recovery from a
release of our Loan Repurchase Reserve
- Certain nonrecurring expense benefits that totaled
approximately $1 million, including reductions in certain reserves
and a refund of a state tax refund
- Positive early indications from AI program investments
targeting improvements to sales and operating efficiency, customer
routing and data capture
- Piloting multiple B2B pilot programs, one example being an
early-stage partnership with a large national roofing and basement
contractor, to empower homeowners to leverage equity in their homes
to protect and invest in their homes by financing projects through
Better’s One Day HELOC products
- Effecting a reverse stock split of Better’s common stock at a
ratio of one post-split share for every 50 pre-split shares – see
additional details below
For more information, please see the detailed financial data and
other information available in the Company’s interim report on Form
10-Q, to be filed with the Securities and Exchange Commission (the
“SEC”), and the investor presentation on the investor relations
section of the Company’s website.
1-for-50 Reverse Stock Split:
Better today announced that it will effect a reverse stock split
of its common stock at a ratio of one post-split share for every 50
pre-split shares. At the Company’s annual meeting of stockholders
held on June 4, 2024, the Company’s stockholders approved the
proposal to authorize one or more amendments to the Company’s
Amended and Restated Certificate of Incorporation to effect one or
more reverse stock splits of the Company’s Class A common stock,
Class B common stock and Class C common stock, par value $0.0001
per share, at a ratio ranging from any whole number between 1-for-2
and 1-for-100 and in the aggregate not more than 1-or-100,
inclusive, as determined by the Company’s Board of Directors, in
its discretion. On August 1, 2024, the Company’s Board of Directors
approved a 1-for-50 reverse stock split ratio.
The reverse stock split is expected to become effective at 6:00
p.m. New York Time on Friday, August 16, 2024. The Company’s Class
A common stock is expected to begin trading on a split-adjusted
basis when the market opens on Monday, August 19, 2024. The
Company’s Class A common stock and public warrants will continue to
be traded on The Nasdaq Capital Market under the ticker symbols
“BETR” and “BETRW,” respectively.
Upon effectiveness of the reverse stock split, every 50 shares
of the Company’s issued and outstanding common stock will be
converted automatically into one issued and outstanding share of
Class A common stock, Class B common stock and Class C common
stock, as applicable. Stockholders holding their shares
electronically in book-entry form are not required to take any
action to receive post-split shares. Stockholders owning shares
through a bank, broker, or other nominee will have their positions
automatically adjusted to reflect the reverse stock split, subject
to their brokers’ particular processes, and will not be required to
take any action in connection with the reverse stock split. The
reverse stock split will affect all stockholders uniformly and will
not alter any stockholder’s percentage interest in the Company’s
equity, except to the extent that the reverse stock split would
result in a stockholder owning a fractional share. Fractional
shares will not be issued through the reverse stock split. Instead,
holders of the common stock that would otherwise receive fractional
shares will be entitled to receive a pro rata portion of cash
proceeds from the aggregation and sale of all fractional shares by
the exchange agent.
Proportional adjustments will be made to the number of shares of
common stock underlying the Company’s outstanding warrants and
convertible note, the number of shares issuable under equity awards
outstanding under the Company’s equity incentive plans, as well as
the exercise or conversion price, as applicable, of such warrants,
convertible note and equity awards.
Following the reverse stock split, the Company’s Class A common
stock will have a new CUSIP number 08774B508. The CUSIP number for
the Company’s Class B common stock, Class C common stock and public
warrants will not change.
In connection with the reverse stock split, the Company will
effect an adjustment to its authorized shares of common stock, such
that the 1,800,000,000 authorized shares of Class A common stock
will be reduced to 36,000,000 authorized shares of Class A common
stock, the 700,000,000 authorized shares of Class B common stock
will be reduced to 14,000,000 authorized shares of Class B common
stock and the 800,000,000 authorized shares of Class C common stock
will be reduced to 16,000,000 authorized shares of Class C common
stock. The par value per share of common stock and number of
authorized shares and par value of preferred stock will not
change.
Additional information about the reverse stock split can be
found in the Company’s definitive proxy statement filed with the
SEC on April 22, 2024, which is available free of charge at the
SEC’s website, www.sec.gov, and on the Company’s website at
www.better.com. Additional information regarding this reverse stock
split can be found in the Company’s Form 8-K expected to be filed
on August 8, 2024.
Webcast
Better will host a live webcast of its earnings conference call
beginning at 8:30am ET on August 8, 2024. To access the webcast and
related presentation, 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 Second
Quarter 2024 Results
Event Date: August 8, 2024 08:30 AM (GMT-04:00) Eastern Time (US
and Canada)
Attendee Registration Link:
https://events.q4inc.com/attendee/847122873
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. Better was named Best Online
Mortgage Lender by Forbes and Best Mortgage Lender for
Affordability by WSJ in 2023, 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 Company’s annual
report on Form 10-K and the Company’s quarterly reports on Form
10-Q, 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.
Amounts described as of and for the quarter ended June 30, 2024
represent a preliminary estimate as of the date of this earnings
release and may be revised upon filing our Quarterly Report on Form
10-Q with the SEC. More information as of and for the quarter ended
June 30, 2024 will be provided upon filing our Quarterly Report on
Form 10-Q with SEC.
SELECTED FINANCIAL
DATA, NON-GAAP MEASURES AND DEFINITIONS
Following are tables that present selected financial data of the
Company. Also included are reconciliations of non-GAAP measures to
their most comparable GAAP measures and definitions of certain key
metrics used herein.
Results of Operations
Three Months Ended June
30,
Three Months Ended March
31,
(Amounts in thousands)
2024
2024
Revenues:
Gain on loans, net
$23,382
$15,652
Other revenue
2,881
2,817
Net interest income
Interest income
9,397
8,636
Interest expense
(4,245)
(4,854)
Net interest income
5,152
3,782
Total net revenues
31,415
22,251
Expenses:
Compensation and benefits
35,254
38,073
General and administrative
15,156
14,047
Technology
6,582
5,458
Marketing and advertising
8,531
4,554
Loan origination expense
791
2,577
Depreciation and amortization
7,990
9,074
Other expenses
(879)
(183)
Total expenses
73,425
73,600
Loss before income tax expense
(42,010)
(51,349)
Income tax expense/(benefit)
203
143
Net loss
($42,213)
($51,492)
Summary Condensed Balance Sheet
(Amounts in thousands, except share and
per share amounts)
June 30,
2024
Assets
Cash and cash equivalents
$320,936
Restricted cash
26,464
Short-term investments
57,844
Mortgage loans held for sale, at fair
value
349,206
Loans held for investment (net of
allowance for credit losses)
31,260
Other combined assets
171,203
Total Assets
$956,913
Liabilities, Convertible Preferred
Stock, and Stockholders’ Equity (Deficit)
Liabilities
Warehouse lines of credit
$247,354
Accounts payable and accrued expenses
62,267
Convertible Note
516,394
Other combined liabilities
86,838
Total Liabilities
912,853
Stockholders’ Equity (Deficit)
Additional paid-in capital
1,852,344
Accumulated deficit
(1,797,781)
Other combined equity
(10,503)
Total Stockholders’ Equity (Deficit)
44,060
Total Liabilities, Convertible Preferred
Stock, and Stockholders’ Equity (Deficit)
$956,913
Use of Non-GAAP Measures and Other Financial Metrics
We include certain financial measures not presented in
accordance with generally accepted accounting principles (“GAAP”)
including Adjusted EBITDA, Adjusted Net Income (Loss) and other key
metrics.
We calculate Adjusted Net Income (Loss) as net income (loss)
adjusted for the impact of stock-based compensation expense, change
in the fair value of warrants, change in the fair value of
bifurcated derivative, and other non-core operational expenses. We
calculate Adjusted EBITDA as net income (loss) adjusted for the
impact of stock-based compensation expense, change in the fair
value of warrants, change in the fair value of bifurcated
derivative, and other non-recurring or non-core operational
expenses, as well as interest and amortization on non-funding debt
(which includes interest on the Convertible Note (as defined in our
Form 10-Q)), depreciation and amortization expense, and income tax
expense. These non-GAAP financial measures should not be considered
in isolation and are not intended to be a substitute for any GAAP
financial measures. These non-GAAP measures provide supplemental
information that we believe helps investors better understand our
business, our business model and how we analyze our performance. We
also believe these non-GAAP financial measures improve investors’
and analysts’ ability to compare our results with those of our
competitors and other similarly situated companies, which commonly
disclose similar performance measures.
However, our calculation of Adjusted EBITDA and Adjusted Net
Income (Loss) may not be comparable to similarly titled performance
measures presented by other companies. Further, although we use
these non-GAAP measures to assess the financial performance of our
business, these measures exclude certain substantial costs related
to our business, and investors are cautioned not to use such
measures as a substitute for financial results prepared according
to GAAP. Non-GAAP financial measures have limitations in their
usefulness to investors because they have no standardized meaning
prescribed by GAAP and are not prepared under any comprehensive set
of accounting rules or principles. As a result, non- GAAP financial
measures should be viewed as supplementing, and not as an
alternative or substitute for, our financial results prepared and
presented in accordance with GAAP.
Reconciliation of Non-GAAP
Metrics
Three Months Ended June
30,
Three Months Ended March
31,
(Amounts in thousands)
2024
2024
Adjusted Net Loss
Net (loss) income
($42,213)
($51,492)
Stock-based compensation expense
7,565
8,760
Change in fair value of warrants and
equity related liabilities
102
(823)
Restructuring, impairment, and other
expenses
184
721
Adjusted Net Loss
($34,362)
($42,834)
Adjusted EBITDA
Net (loss) income
($42,213)
($51,492)
Income tax expense / (benefit)
203
143
Depreciation and amortization expense
7,990
9,074
Stock-based compensation expense
7,565
8,760
Interest and amortization on non-funding
debt
1,668
2,664
Restructuring, impairment, and other
expenses
184
721
Change in fair value of warrants and
equity related liabilities
102
(823)
Adjusted EBITDA
($24,501)
($30,953)
Key Metrics
This press release refers to the following key metrics:
Funded Loan Volume represents the aggregate dollar amount of all
loans funded in a given period based on the principal amount of the
loan at funding. Purchase Loan Volume represents the aggregate
dollar amount of purchase loans funded in a given period based on
the principal amount of the loan. Refinance Loan Volume represents
the aggregate dollar amount of refinance loans funded in a given
period based on the principal amount of the loan. D2C represents
the aggregate dollar amount of loans funded in a given period based
on the principal amount of the loan at funding that have been
generated from direct interactions with customers using all
marketing channels other than our B2B partner relationships. HELOC
loan volume represents the aggregate dollar amount of HELOC loans
funded in a given period based on the principal amount of the loan
at funding. B2B represents the aggregate dollar amount of loans
funded in a given period based on the principal amount of the loan
at funding that have been generated through one of our B2B partner
relationships. Total Loans represents the total number of loans
funded in a given period, including purchase loans, refinance loans
and HELOC loans. Self-funded loans is defined as our Loans Held for
Sale as presented on our Balance Sheet less our Warehouse Lines of
Credit as presented on our Balance Sheet.
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version on businesswire.com: https://www.businesswire.com/news/home/20240807377799/en/
For Investor Relations Inquiries please
email ir@better.com
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