Better Home & Finance Holding Company 2026 Q3 Earnings Call

Please go ahead. Welcome to Better Home & Finance Holding Company's Third Quarter 2026 Earnings Conference Call.

My name is Tarek Afifi. I am Better's Corporate Finance Team. Joining me on today's call are Vishal Garg, Founder and Head of Product, Platform, and Innovation of Better, and Loveen Advani, Chief Financial Officer of Better. In addition to this conference call, please direct your attention to our third quarter earnings release, which is available on our investor relations website. Also available on our website is an investor presentation. Certain statements we make today may constitute forward-looking statements within the meaning of federal securities laws that are based on current expectations and assumptions. These expectations and assumptions are subject to risks, uncertainties, and other factors as discussed further in our SEC filings that could cause our actual results to differ materially from our historical results.

We assume no responsibility to update forward-looking statements other than as required by law. During today's discussion, management will discuss certain non-GAAP financial measures, which we believe are relevant in assessing the company's financial performance. These non-GAAP financial measures should not be considered replacements for and should be read together with our GAAP results. These non-GAAP financial measures are reconciled to GAAP financial measures in today's earnings release and investor presentation, both of which are available on the investor relations section of Better's website and when filed in our quarterly report on Form 10-Q with the SEC. More information as of and for the period ended September 30th, 2026, will be provided upon filing our quarterly report on Form 10-Q with the SEC. I will now turn the call over to Vishal.

Good afternoon, everyone, and thank you for joining us. Welcome to Better 2.0. It is so great to be back with you all. Getting here was a hard-fought battle, and we won the proxy contest because our shareholders believed in us. I would not be on this call today without you. To every shareholder who took the time to sign and send back a green consent card, to our employees who kept serving our customers through all of this, and to our business partners who stuck by us, thank you for continuing to believe in Better. You gave us the opportunity to get this company back on track, and now it is on us to deliver.

Better 2.0 is a return to the culture that grew this company exponentially in our early years, from $500 million in loan volume in 2017 to $58 billion in loan volume funded in 2021, from about $3 million a quarter in revenue to $430 million a quarter in revenue in 2021, and to a company that, at its peak, was generating $50 million a month in EBITDA. What drove that? Speed, ambition, accountability, and a relentless belief that AI and machine learning could help make mortgage and home finance better for all Americans by making it cheaper, faster, and easier. Somewhere along the way, we started adding a ton of things we didn't need.

Now that I'm back with perspective, having spent nearly two and a half months on the outside, I can clearly see what we need to do to bring that culture of growth and drive towards profitability back to Better. This is a company that, as Better 2.0, is centered on creating value for our shareholders, our customers, our partners, and our employees. I want to briefly recap what's happened over the past few months to provide the backdrop to our results. on August 3rd, I was removed as CEO. I spent the next week reflecting on what I do well, what this company does well, and what we both need to get better at. I sought advice from shareholders, partners, and people I trust, then we fought back.

Our advisors told us that only about 1.7% of proxy contests seeking to replace a public company board succeed, and that it could take a year to two. Shareholders representing 52% of the voting power supported us, and we won the proxy contest in two months, the fastest public company proxy return to date. During that time, decisions by the prior board and interim CEO Daniel Lewis hurt the business. $12.8 million of shareholder cash was spent on a proxy contest and a poison pill that was put in place. More specifically, during this time, partnership launches that we had lined up stalled, employee morale suffered, and our conversion, most importantly, slowed. We can see it in the operating data. During my absence under Daniel Lewis and the prior board, just within the months that I was out, loan officer talk time fell by 29%.

Emails and responses sent by salespeople to customers fell by 20%, and the production hours spent by our staff as logged in by our Tinman system fell over 25%. The fact is, the amount of effort and therefore productivity, and that reflected in our results, suffered. Our September and August results are therefore challenged, and this has carried into Q4. When I came back, we assessed the situation and concluded that in the current rate environment, where the 10-year rose 15% in Q3, we had to focus on changing the culture, increasing effort and productivity, and lowering our cost base. To that effect, since my return, we have delayered our management and corporate structure by letting go of managers across the company for over $3.5 million of annualized savings.

Those management responsibilities are now performed by AI agents and dashboards and delivered directly to the most senior people in each part of our organization. These cuts are not temporary. They are roles forever eliminated by AI and will not return as we scale volume. Furthermore, due to Tinman's capabilities, we can identify the employees who remained continuously productive and adapted to using AI. In this market, they found ways to do more with less, help customers, and earn more money. By way of example, since we have implemented AI lead routing, we have seen weekend lock volume 2X from October 24th to the 31st. In addition to these operational improvements, we began taking strategic actions, rebuilding the board by appointing Bing Gordon, founder of Electronic Arts, Steve Sarracino, founder of Activant Capital, and Linda Yaccarino, former CEO of X, to the board.

We removed the poison pill and dismissed the litigation. We finalized terms on the Birmingham Bank sale with the buyer placing 10 million pounds in escrow, which has now been converted into Tier 2 capital into the bank. We kicked off the share buyback program where we have repurchased 6.9% of Class A shares so far. We also committed to a new level of transparency. Every Tuesday, we publish a Better 2.0 scorecard showing what is complete, what remains outstanding, and where timelines have accelerated or have slowed down. As we have said before, we will keep publishing it until we reach Adjusted EBITDA break-even, which is our North Star. Through these scorecards, we have already announced completed actions expected to deliver $30.4 million in annualized savings towards our target of approximately $64.2 million. On a quarterly basis, these completed actions represent $7.6 million in savings.

In Q4, we expect to achieve an additional $7.4 million-$9.4 million in quarterly savings, and we expect Adjusted EBITDA basis operating expenses of $45 million-$47 million. Our goals for Better 2.0 are simple. First, reach break-even as soon as possible. This is our top financial priority, and we are pushing on every lever we control, converting more customers, taking costs out, and using AI to make our people more productive. Second, expand distribution. Adding new partners with large, established customer bases allows us to scale volume and revenue without upfront customer acquisition spending. Third, expand AI across sales, operations, and corporate functions. We are moving from a human-powered-by-AI company to an AI-first company where AI does the work first and the people focus on what AI cannot do. Fourth, establish clear ownership and accountability.

Every initiative in Better 2.0 has a target and a date, and you will see them in our weekly scorecard. Fifth, improve execution speed and consistency. We will hire and reward for ambition, agency, and achievement, and we will hold ourselves to industry standards or greater on every step of the funnel. Now, turning to third quarter results. Loan volume was $1.4 billion, up 15% year-over-year and within our guidance range, while industry volume remained flat over the same period. In our August 3rd board meeting, we expected over $53 million of Q3 revenue and believed that if it weren't for the proxy fight, we would have hit our target. Total net revenues were $45.1 million, up 9% year-over-year, and fell below our guidance range.

Both interest rate headwinds, oil prices, and the general uncertainty around the Iran war weighed on loan volume. We believe the prior board's proxy contest lowered conversion and pushed out partner launches. Our Adjusted EBITDA loss was $29.7 million for Q3. Excluding proxy-related legal, PR, and other expenses of $12.8 million, our Adjusted EBITDA loss would have been approximately $16.9 million, within our guidance range. However, in our August 3rd board meeting, we expected an Adjusted EBITDA loss of $12 million and believed that if it weren't for the proxy fight, we would have hit our target and beyond. Our Tinman AI platform was the principal driver of growth. Platform loan volume grew 64% year-over-year to $792 million, and 57% of total loan volume, up from 40% a year ago, as our channel mix continued to shift towards the platform.