Better Home & Finance Holding Company Announces Fourth Quarter and Full Year 2023 Results
- Better Home & Finance Holding Company reported its first annual financial results as a public company after a business combination, unlocking $565 million of capital.
- The company maintains a positive outlook on the large addressable market and consumer trends favoring digitization and price transparency.
- Strategic investments in Better's proprietary technology platform, Tinman, aim to enhance mortgage fulfillment efficiency.
- Innovative product launches like One Day Mortgage, One Day HELOC, and digital VA loans focus on improving customer experience.
- Cost reduction initiatives are being executed to enhance operational efficiency.
- The company is optimistic about growth opportunities in the macro environment in 2024 while emphasizing cost discipline.
- Key financial highlights for the fourth quarter of 2023 include revenue of $9 million and a net loss of $59 million.
- The company ended 2023 with $554 million in cash, restricted cash, and short-term investments.
- Funded Loan Volume for the quarter was $527 million across 1,633 Total Loans, with an Adjusted EBITDA loss of $26 million.
- Full-year 2023 financial highlights feature revenue of $77 million, a net loss of $534 million, Funded Loan Volume of $3 billion across 8,569 Total Loans, and an Adjusted EBITDA loss of $163 million.
- The company aims to drive increased loan volume in 2024 while managing expenses in line with 2023.
- Better Home & Finance Holding Company emphasizes its ability to scale and its focus on digital purchase products to drive growth.
- The company navigated a challenging mortgage macro environment in 2023, deliberately reducing volumes by controlling marketing expenses.
- Various innovative products like One Day HELOC and One Day Mortgage have shown promising results in terms of volume and customer experience improvement.
- Total expenses were reduced by 71% year-over-year in 2023, leading to improvements in net loss and Adjusted EBITDA loss.
- New partnerships with Infosys and Beyond.com aim to enhance Better's digital mortgage experience for partners' customers.
- Overall, the company has maintained loan quality with lower defect and delinquency rates compared to industry averages.
- None.
Insights
The reported financial results from Better Home & Finance Holding Company indicate a significant net loss of $534 million for the full year of 2023, despite a capital infusion of approximately $565 million from a business combination. This loss is substantial and raises concerns about the company's profitability and cash burn rate. The cash position, ending with $554 million, suggests a strong liquidity status, which is essential for weathering ongoing operational losses. However, the company's strategy to pivot to commission-based compensation for Loan Officers could potentially improve cost efficiency and drive revenue per loan. The shift towards a purchase-driven business model, with 91% of volume from purchase loans, aligns with current housing market trends where refinancing activity has slowed due to higher interest rates.
Investors should note the company's efforts in cost reduction, which have resulted in a 71% decrease in total expenses year-over-year. This aggressive cost-cutting, coupled with strategic investments in technology and product innovation, such as One Day HELOC and One Day Mortgage, may position the company for future growth in a more favorable macro environment. However, the sustainability of these investments and their long-term payoff remains to be proven. The reported improvement in net loss and adjusted EBITDA loss on a year-over-year and quarter-over-quarter basis suggests that the company's restructuring efforts may be starting to yield results, albeit from a high loss base.
The digital mortgage industry is experiencing a significant shift towards digitization and consumer-facing technologies. Better's proprietary technology platform, Tinman and the launch of innovative products like One Day Mortgage are indicative of the company's commitment to staying at the forefront of this transformation. By focusing on digital purchase products, Better is capitalizing on the favorable consumer trend towards digital solutions in the homeownership space. This strategy could increase the company's competitive edge, especially as the mortgage industry moves away from traditional, paper-based processes.
However, the performance metrics reveal a mixed picture. While the funded loan volume of $3 billion across 8,569 total loans demonstrates the company's ability to maintain a certain level of operational activity, the significant net loss underscores the challenges of converting technological investments and market opportunities into profitable growth. The reported improvements in HELOC volume and commitment letter turnaround time reflect operational efficiencies that could enhance customer satisfaction and retention. The partnerships with Infosys and Beyond.com could also extend Better's reach and market penetration, leveraging these platforms' existing customer bases to drive loan volume.
The broader economic context in which Better operates is characterized by high mortgage rates, with the average 30-year fixed rate around 7% in 2023. This environment has dampened refinancing activity, which has traditionally been a significant revenue stream for mortgage companies. Better's shift towards purchase loans, constituting 91% of their funded loan volume, is a strategic adaptation to this economic reality. The company's deliberate throttling of marketing expenses to reduce losses is a prudent measure in response to the challenging macroeconomic conditions.
Looking forward, the company's expectation of increased loan volume in 2024 suggests optimism about a more favorable macro environment. This optimism may be based on projections of stabilizing or lowering interest rates, which could spur market activity. However, the ability to manage expenses in line with 2023 levels will be critical for the company's financial health. Investors should monitor economic indicators such as interest rates, housing market trends and consumer confidence, as these will significantly influence Better's performance in the upcoming year.
-
Reporting first annual financial results as a public company, after closing business combination in August 2023, which unlocked approximately
$565 million - Maintaining conviction in large addressable market and favorable consumer trends towards digitization and price transparency
- Continued strategic investments in Better’s leading proprietary technology platform, Tinman, to improve mortgage fulfillment efficiency
- Continued launching innovative products to improve customer experience, including One Day Mortgage, One Day HELOC and digital VA loans
- Continued execution of cost reduction initiatives
- Leaning into growth in a more favorable macro environment in 2024, while maintaining cost discipline
“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
Key Operating Metrics and Non-GAAP Results:
-
Funded Loan Volume of
$527 million -
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 -
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
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 comprised7% , 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 -
Net loss improved
39% year-over-year in 2023 and83% quarter-over-quarter in Q4 2023 -
Adjusted EBITDA loss improved
69% year-over-year in 2023 and53% 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
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
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 |
|
||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240328910287/en/
For Investor Relations Inquiries please email ir@better.com
Source: Better Home & Finance Holding Company
FAQ
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