Better Home & Finance Holding Company Announces First Quarter 2024 Results
Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) reported a strong Q1 2024, with revenues up 26% to $22 million and funded loan volume increasing by 25% to $661 million compared to Q4 2023. While facing a challenging purchase and refinance market, Better saw increased demand from homeowners tapping into home equity. The company ended Q1 2024 with $509 million in cash, though it reported a net loss of $51 million, consistent with Q4 2023. Total expenses decreased by 30% year-over-year. Better launched a new Home Equity Loan product and hired Chad Smith as President and COO of Better Mortgage
- Revenue increased 26% to $22 million in Q1 2024 from Q4 2023.
- Funded loan volume grew by 25% to $661 million in Q1 2024.
- Purchase loan volume increased by 12% quarter-over-quarter.
- Refinance loan volume surged by 232% quarter-over-quarter.
- HELOC loan volume grew by 54% quarter-over-quarter.
- Total expenses decreased by 30% year-over-year.
- Introduction of Better Home Equity Loan, offering access to up to 90% of home equity.
- Shift to commission-based compensation plans increased loan officer productivity.
- Growth driven by HELOC and Cash Out Refinance products.
- Reported a net loss of $51 million, unchanged from Q4 2023.
- Adjusted EBITDA loss of $31 million, up from $27 million in Q4 2023.
- Total expenses increased less than revenue, highlighting continued financial strain.
- Potential challenges in purchase and refinance markets anticipated.
- Increased growth expenses could strain profitability despite cost-cutting measures.
Insights
The increase in revenue by
However, the Adjusted EBITDA loss widening to
Better Home & Finance’s performance reflects broader consumer trends towards digitization and price transparency in the mortgage market. The significant growth in HELOC and Cash Out Refinance products suggests that homeowners are increasingly looking to tap into their home equity, likely due to rising home values and economic uncertainty. The launch of the fully digital Better Home Equity Loan underscores the company's commitment to expanding its digital product suite, which could capture more market share among tech-savvy consumers.
Despite the positive growth in loan volume, the company faces headwinds from the challenging purchase and refinance markets. The macroeconomic environment, including interest rate fluctuations and housing market conditions, will play a important role in determining future performance. Investors should monitor how these external factors impact Better’s ability to sustain its growth trajectory and move towards profitability.
The continued investment in Better's proprietary technology platform, Tinman™, is a strategic move to enhance mortgage fulfillment efficiency. Tinman™ likely leverages advanced algorithms and automation to streamline processes, reduce costs and improve customer experiences. This technological advantage positions Better well against traditional mortgage lenders, but the effectiveness of these investments will be seen in the long-term impact on operational efficiency and market share.
However, technology investments often come with high upfront costs, which could explain part of the increased growth expenses. Investors should weigh the potential long-term benefits of a more efficient platform against these initial costs and consider how well the technology scales with the company's growth ambitions.
-
Strong quarter with Funded Loan Volume up
25% and Revenue up26% in Q1’24 as compared to Q4’23 - Maintaining conviction in large addressable market and favorable consumer trends towards digitization and price transparency
-
Continued leaning into growth opportunities and expect Q2’24 Funded Loan Volume above
$800 million - Continued strategic investments in Better’s leading proprietary technology platform, Tinman™, to improve mortgage fulfillment efficiency
- Focused on managing towards profitability while growing through improved technology efficiency and corporate cost reductions to offset increased growth expenses
“We are pleased to announce strong first quarter sequential funded loan volume and revenue growth, which we believe sets the stage for the continued growth we expect through the rest of 2024. While we believe it is likely the purchase and refinance markets may continue to remain challenging in the near term, we are seeing increased demand from homeowners looking to tap into their home equity, as well as from new homebuyers looking to make a move this purchase season. We expect these green shoot opportunities to help us achieve our growth goals for the year,” said Vishal Garg, CEO and Founder of Better.
First Quarter 2024 Financial Highlights:
GAAP Results:
-
Revenue of
$22 million 26% from$18 million -
Net loss of
$51 million $51 million -
Ended Q1’24 with
$509 million
Key Operating Metrics and Non-GAAP Financial Measures:
-
Funded loan volume of
$661 million 25% from Q4’23, across 1,991 Total Loans -
Purchase loan volume grew
12% quarter-over-quarter and comprised80% of Funded loan volume; Refinance loan volume grew232% quarter-over-quarter and comprised12% of Funded loan volume; and HELOC loan volume grew54% quarter-over-quarter and comprised the remainder of Funded loan volume -
D2C business comprised
54% of Funded loan volume, with B2B comprising the remainder -
Adjusted EBITDA loss of
$31 million $27 million
“We are excited to report that Better is growing funded loan volume and revenue sequentially while continuing to be laser focused on maximizing operating efficiency. Total Expenses were down by approximately
First Quarter 2024 Highlights:
- Funded loan volume and revenue growth driven by HELOC and Cash Out Refinance products, with borrowers seeking to tap into their home equity, as well as improved conversion of purchase customers
-
Launched Better Home Equity Loan, the latest addition to a suite of digital home equity products including a cash-out refinance and HELOC. The addition of this fully digital offering enables qualified homebuyers to access up to
90% of their home equity as cash at a fixed annual percentage rate - Total Expenses increased less than Revenue grew quarter-over-quarter, demonstrating that while leaning into certain growth expenses to produce higher volumes, the Company managed other expenses to maintain losses approximately in line quarter-over-quarter
- Shift from fixed compensation plans to commission-based compensation plans for loan officers has yielded positive early results with respect to loan officer productivity and customer conversion
- Hired mortgage industry veteran Chad Smith as President and Chief Operating Officer of Better Mortgage Corporation to drive further growth and efficiency
Amounts presented as of and for the quarter ended March 31, 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 March 31, 2024 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC.
Webcast
Better will host a live webcast of its earnings conference call beginning at 8:30am ET on May 14, 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 First Quarter 2024 Results
Event Date: May 14, 2024 08:30 AM (GMT-04:00) Eastern Time (US and
Attendee Registration Link:
https://events.q4inc.com/attendee/784767542
About Better
Since 2017, Better Home & Finance Holding Company (NASDAQ: BETR; BETRW) has leveraged its industry-leading technology platform, Tinman™, to fund more than
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.
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 March 31, |
Three Months
|
||||
(Amounts in thousands) |
2024 |
|
2023 |
|
2023 |
Revenues: |
|
|
|
|
|
Gain on loans, net |
|
|
|
|
|
Other revenue |
2,817 |
|
4,944 |
|
2,445 |
Net interest income |
|
|
|
|
|
Interest income |
8,636 |
|
6,390 |
|
11,025 |
Interest expense |
(4,854) |
|
(5,469) |
|
(3,815) |
Net interest income |
3,782 |
|
921 |
|
7,210 |
Total net revenues |
22,251 |
|
18,626 |
|
17,673 |
Expenses: |
|
|
|
|
|
Compensation and benefits |
38,073 |
|
38,112 |
|
25,298 |
General and administrative |
14,047 |
|
16,762 |
|
17,632 |
Technology |
5,458 |
|
14,446 |
|
7,473 |
Marketing and advertising |
4,554 |
|
7,760 |
|
3,599 |
Loan origination expense |
2,577 |
|
5,202 |
|
(970) |
Depreciation and amortization |
9,074 |
|
11,477 |
|
10,100 |
Other expenses |
(183) |
|
11,065 |
|
5,946 |
Total expenses |
73,600 |
|
104,824 |
|
69,077 |
Loss before income tax expense |
(51,349) |
|
(86,198) |
|
(51,404) |
Income tax expense/(benefit) |
143 |
|
1,424 |
|
(533) |
Net loss |
( |
|
( |
|
( |
Summary Condensed Balance Sheet |
|||
March 31, |
December 31, |
||
(Amounts in thousands) |
2024 |
2023 |
|
Assets |
|
|
|
Cash and cash equivalents |
|
|
|
Mortgage loans held for sale, at fair value |
166,214 |
|
170,150 |
Other combined assets |
250,844 |
|
231,813 |
Total Assets |
|
|
|
Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) |
|
|
|
Liabilities |
|
|
|
Warehouse lines of credit |
|
|
|
Accounts payable and accrued expenses |
55,721 |
|
66,558 |
Convertible Note |
514,758 |
|
514,644 |
Other combined liabilities |
68,657 |
|
75,534 |
Total Liabilities |
765,297 |
|
782,954 |
Stockholders’ Equity (Deficit) |
|
|
|
Total Stockholders’ Equity (Deficit) |
76,289 |
|
122,600 |
Total Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) |
|
|
|
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 March 31, |
Three Months
|
||||
(Amounts in thousands) |
2024 |
|
2023 |
|
2023 |
Adjusted Net Loss |
|
|
|
|
|
Net (loss) income |
( |
|
( |
|
( |
Stock-based compensation expense |
8,760 |
|
4,408 |
|
5,694 |
Change in fair value of warrants and equity related liabilities |
(823) |
|
— |
|
1,368 |
Change in fair value of convertible preferred stock warrants |
— |
|
(553) |
|
— |
Change in fair value of bifurcated derivative |
— |
|
1,887 |
|
— |
Restructuring, impairment, and other expenses |
721 |
|
9,137 |
|
5,956 |
Adjusted Net Loss |
( |
|
( |
|
( |
Adjusted EBITDA |
|
|
|
|
|
Net (loss) income |
( |
|
( |
|
( |
Income tax expense / (benefit) |
143 |
|
1,424 |
|
(533) |
Depreciation and amortization expense |
9,074 |
|
11,477 |
|
10,100 |
Stock-based compensation expense |
8,760 |
|
4,408 |
|
5,694 |
Interest and amortization on non-funding debt |
2,664 |
|
2,690 |
|
1,679 |
Restructuring, impairment, and other expenses |
721 |
|
9,137 |
|
5,956 |
Change in fair value of warrants and equity related liabilities |
(823) |
|
— |
|
1,368 |
Change in fair value of convertible preferred stock warrants |
— |
|
(553) |
|
— |
Change in fair value of bifurcated derivative |
— |
|
1,887 |
|
— |
Adjusted EBITDA |
( |
|
( |
|
( |
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.
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For Investor Relations inquiries please email ir@better.com
Source: Better Home & Finance Holding Company
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