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Filed Pursuant to Rule 424(b)(3) |
Registration No. 333-274947 |
PROSPECTUS SUPPLEMENT NO. 4
(to prospectus dated May 9, 2024)
Primary Offering of
Up to 9,808,405 Shares of Class A Common Stock Issuable Upon Exercise of Warrants
Secondary Offering of
Up to 85,964,719 Shares of Class A Common Stock
Up to 324,352,674 Shares of Class A Common Stock Issuable Upon Conversion of Class B Common Stock and Class C Common Stock
Up to 3,733,358 Shares of Class A Common Stock Issuable Upon Exercise of Warrants
Up to 3,733,358 Warrants to Purchase Class A Common Stock
This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated May 9, 2024 (as supplemented or amended from time to time, the “Prospectus”), with the information contained in our Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 8, 2024 (the “Current Report”). Accordingly, we have attached the Current Report to this prospectus supplement.
The Prospectus and this prospectus supplement relate to the issuance by us of up to an aggregate of 9,808,405 shares of our Class A common stock, par value $0.0001 per share (“Class A Common Stock”), which consists of (i) 6,075,047 shares of Class A Common Stock issuable upon exercise of warrants originally issued in connection with the initial public offering of Aurora Acquisition Corp. (“AURC”) (the “Public Warrants”) and (ii) 3,733,358 shares of Class A Common Stock issuable upon exercise of warrants issued in a private placement in connection with the initial public offering of AURC (the “Private Warrants” and, together with Public Warrants, “Warrants”).
The Prospectus and this prospectus supplement also relate to the offer and sale from time to time by the selling securityholders identified in the Prospectus, or their permitted transferees (the “Selling Securityholders”), of up to an aggregate of 414,050,751 shares of Class A Common Stock, which consists of (i) 85,964,719 shares of Class A Common Stock, (ii) 252,475,391 shares of Class A Common Stock issuable upon conversion of our Class B common stock, par value $0.0001 per share (“Class B Common Stock”), (iii) 71,877,283 shares of Class A Common Stock issuable upon conversion of our Class C common stock, par value $0.0001 per share (“Class C Common Stock” and together with Class A Common Stock and Class B Common Stock, the “Common Stock”), and (iv) 3,733,358 shares of Class A Common Stock issuable upon exercise of Private Warrants, and of up to 3,733,358 Private Warrants.
This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
Our Class A Common Stock and Public Warrants are listed on the Nasdaq Capital Market under the ticker symbols “BETR” and “BETRW,” respectively. On August 6, 2024, the closing price of our Class A Common Stock was $0.48 per share and the closing price of our Public Warrants was $0.09 per warrant.
Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 16 of the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is August 8, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 7, 2024
Better Home & Finance Holding Company
(Exact name of registrant as specified in its charter)
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| Delaware | 001-40143 | 93-3029990 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
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| 3 World Trade Center | |
| 175 Greenwich Street, 57th Floor | |
| New York, | NY | 10007 | |
| (Address of principal executive offices) (Zip Code) | |
(415) 523-8837
Registrant’s telephone number, including area code
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Class A common stock, par value $0.0001 per share | | BETR | | The Nasdaq Stock Market LLC |
| Warrants exercisable for one share of Class A common stock at an exercise price of $11.50 | | BETRW | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 7, 2024, Better Home & Finance Holding Company (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended June 30, 2024. A copy of the Company’s press release is attached as Exhibit 99.1 to this current report on Form 8-K (this “Report”).
The information in this Item 2.02 and Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of the 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
The Company has prepared materials for presentation to investors. The materials are furnished (not filed) as Exhibit 99.2 to this Report pursuant to Regulation FD.
The information in this Item 7.01 and Exhibit 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events.
At the 2024 annual meeting of stockholders of the Company held on June 4, 2024, the Company’s stockholders approved amendments to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to effect one or more reverse stock splits of the Company’s common stock at a ratio ranging from any whole number between one-for-2 and one-for-100 and in the aggregate not more than one-for-100, inclusive, as determined by the Board of Directors of the Company (the “Board” and, such amendment, the “Reverse Stock Split Authorization”) and to permit officer exculpation to the extent permitted by Delaware law (such amendment, the “Officer Exculpation Amendment”).
On August 1, 2024, the Board approved the Officer Exculpation Amendment and, pursuant to the Reverse Stock Split Authorization, the Board approved a reverse stock split (the “Reverse Stock Split”) and set a reverse stock split ratio of one-for-50 for the Company’s shares of common stock, provided that the Board reserves the right to modify or abandon the amendments prior to their filing with the Secretary of State of the State of Delaware. Upon effectiveness of the Reverse Stock Split, one post-split share will be issued in exchange for every 50 pre-split shares of the issued and outstanding Class A common stock, par value $0.0001 per share (“Class A Common Stock”), Class B common stock, par value $0.0001 per share (“Class B Common Stock”) and Class C common stock, par value $0.0001 per share (“Class C Common Stock”), as applicable. 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. Proportionate 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. The Reverse Stock Split and Officer Exculpation Amendment are expected to become effective at 6:00 p.m. New York time on August 16, 2024. 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.
The Company’s Class A Common Stock and public warrants will continue to trade on the Nasdaq Capital Market under the existing trading symbols “BETR” and “BETRW”, respectively. The Company’s Class A Common Stock is expected to begin trading on a split-adjusted basis when the market opens on August 19, 2024, with the new CUSIP number 08774B508. The CUSIP number for each of the Company’s Class B Common Stock, Class C Common Stock and public warrants will not change.
Computershare Inc. and its affiliate Computershare Trust Company, N.A. (collectively, “Computershare”) are acting as the exchange agent for the Reverse Stock Split. Stockholders holding shares of common stock registered directly in their name in book entry form or beneficially via a broker, bank, trust or other nominee are not required to take any action to receive post-split shares and will have their positions automatically adjusted to reflect the Reverse Stock Split. In lieu of fractional shares, cash will be distributed by Computershare to the appropriate stockholders in an amount equal to the pro rata portion of cash proceeds from the aggregation and sale of all fractional shares by Computershare.
Forward-Looking Statements
This Report and the information and documents incorporated by reference herein include “forward-looking statements.” These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding 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. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Report, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Report. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
The following exhibits relating to Item 9.01 shall be deemed to be furnished, and not filed:
| | | | | | | | |
| Exhibit | | Description |
| 99.1 | | |
| 99.2 | | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| BETTER HOME & FINANCE HOLDING COMPANY |
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| Date: August 8, 2024 | By: | /s/ Kevin Ryan |
| Name: | Kevin Ryan |
| Title: | Chief Financial Officer |
Better Home & Finance Holding Company Announces Second Quarter 2024 Results and 1-for-50 Reverse Stock Split
•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
New York, NY – August 7, 2024 – 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.
For Investor Relations Inquiries please email ir@better.com
Q2 2024 Investor Update August 2024
Disclaimer This presentation and any related oral presentation do not constitute an offer or invitation to subscribe for, purchase or otherwise acquire any securities or other instruments of Better Home & Finance Holding Company ("Better" or the "Company") and nothing contained herein or its presentation shall form the basis of any offer, contract or commitment whatsoever. The distribution of this presentation and any related oral presentation in certain jurisdictions may be restricted by law and persons into whose possession this presentation or any related oral presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdiction Forward Looking Statements This presentation 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 most recent annual report on Form 10-K, quarterly report on Form 10-Q and current reports on Form 8-K of Better Home & Finance Holding Company (“Better” or the “Company"), 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 presentation 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. Use of Non-GAAP Measures and Other Financial Metrics This presentation includes certain financial measures not presented in accordance with generally accepted accounting principles (“GAAP”), including Adjusted Net Income (Loss), Adjusted EBITDA 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. For a reconciliation of non-GAAP measures used in this presentation to the closest comparable GAAP measures, see the “Reconciliation of Non-GAAP Measures” section of this presentation. Key Metrics In this presentation, we refer 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. Refinance Loan Volume represents the aggregate dollar amount of refinance loans funded in a given period based on the principal amount of the loan at refinancing date. Purchase Loan Volume represents the aggregate dollar amount of purchase loans funded in a given period based on the principal amount of the loan at purchase date. HELOC Loan Volume represents the aggregate dollar amount of HELOC and closed-end second lien loans funded in a given period based on the principal amount of the loan at funding. D2C Loan Volume 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. B2B Loan Volume 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, HELOC loans and closed-end second lien loans. Self-Funded Loans represents Mortgage loans held for sale, at fair value as presented on the Consolidated Balance Sheets less Warehouse lines of credit as presented on the Consolidated Balance Sheets. Use of Data The data contained herein is derived from various internal and external sources we believe to be reliable. No representation is made as to the reasonableness of the assumptions within or the accuracy or completeness of any projections or modeling or any other information contained herein. Accordingly, any liability in respect of the information contained herein or in respect of this presentation (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. Any data on past performance or modeling contained herein is not an indication as to future performance, and the Company disclaims any obligation, except as required by law, to update or revise the information in this presentation, whether as a result of new information, future events or otherwise. 2
Executive Summary Large and Attractive Market Opportunity • Through cycles, U.S. home finance market is $3 trillion per year • Existing process is manual, costly and slow • Digital disruption is underway and accelerating Technology & Business Model Competitive Advantage Demonstrated Growth & Expense Discipline Well-Capitalized and Positioned for the Future • End-to-end proprietary origination technology powers faster, cheaper customer experience, lower manufacturing costs, and industry-leading products • Multiple distribution channels – D2C and B2B Partners (“Mortgage-as- a-Service”) • Reduced balance sheet and credit risk with large majority of Total Loans eligible for purchase by GSEs • In Q2’24, grew Funded Loan Volume 45% from Q1’24 and 83% from Q4’23 • In Q2’24, Total Expenses remained approximately flat to Q1’24 • Demonstrated growth through continued challenging market environment and concurrent expense discipline • Ended Q2’24 with $507 million of cash, restricted cash, short-term investments, and self-funded loans1 • Clear product roadmap and defined growth initiatives supported by differentiated technology and existing competitive advantage • Expect to continue leaning into growth while managing towards profitability in the medium term 1. Includes $321 million of Cash and Cash Equivalents, $26 million of Restricted Cash, $58 million of Short-term investments, and $102 million self-funded loans, as defined by Mortgage loans held for sale, at fair value less Warehouse lines of credit as of June 30, 2024 3
Our Vision Relentlessly making homeownership Better for our customers Faster Cheaper+ Better= Description Home Finance Full range of mortgage and home equity loan products LAUNCHED Jan 2016 One Day Mortgage Enhanced traditional mortgage product offering faster certainty LAUNCHED 1H 2023 Buy & Sell Homes Real estate agent matching engine LAUNCHED Nov 2018 Title One-click title policy matching service LAUNCHED Feb 2019 Homeowners Insurance One-click Homeowners Insurance policy matching service LAUNCHED Jan 2019 Our Progress Under one roof, with one-click, at the lowest price Powered by our proprietary technology, Tinman, and customer and property data HELOC Monetize home equity without resetting your rate LAUNCHED 1H 2023 Large and Attractive Market Opportunity 4 Consumer Banking Banking services offered in the U.K. through Bank of Birmingham ACQUIRED 1H 2023
Homeownership market is enormous $11 Trillion $13 Trillion $17+ Trillion ~4T2 Financial Network ~2T Insurance (Title & Home) ~33tn U.S. Housing Market ~11tn1 U.S. Mortgage Core Expansion $ 7 Consumer Financial Network $2.5T4 U.S. Home Finance $8T5 International Home Finance $2T6 Home Services Ecosystem Cumulative market size 1. National Association of Home Builders – Housing’s Contribution to Gross Domestic Product 2. Statista Research, ‘Number of new house sales in the United States from 2000 to 2022, by financing type’ 3. Census.gov – The Wealth of Households 2021 (including equity in own home, rental properties, and other real estate) 4. MBA average annual mortgage origination volume, 2017-2026E 5. Allied Market Research – Mortgage Lending Market Research, 2031 6. $1.3T of home rental (IBIS), $600B of home improvement (Farnsworth Group) $13bn of US appraisal and inspection (IBIS), $21bn of moving and storage (IBIS) 7. $1.4 trillion US insurance industry net premiums (Insurance Information Institute), $1.6 trillion student loan debt (Forbes), $1 trillion credit card debt (LendingTree) • Annual spend within the housing market accounted for on average $3 trillion per year, 15-18% of US GDP since 20011 • Since 2013, over 90% of new homes were purchased with a mortgage2 • For average households, home equity totals over 35% of net worth3 • In general, all mortgage transactions require at least one insurance product Large and Attractive Market Opportunity 5
Mortgage process remains challenging for consumers 1. Homelight – “Fees and Costs Associated with Selling a House in 2023” 2. Realtor.com - “How Long Does It Take to Get a Mortgage?” 3. CNN Money - “500-page Mortgage Applications are the New Normal” Trulia - “Sale Fail.” Large and Attractive Market Opportunity The homeownership status quo is broken: Our vision is to deliver an experience that is: Expensive Buyers pay fees to up to 10 intermediaries, accounting for ~10% of home price1 Slow The underwriting process can take up to 45 days2 Outdated Innovation is going backwards with incumbents using legacy systems Complicated Mortgage documents can reach 500 pages long3 Better Faster Cheaper 6
Our end-to-end proprietary technology, Tinman, powers our digital competitive advantage Home finance lifecycle Better Real Estate Better Title and Settlement Services Better Insurance Manual tasks to non- licensed team members Customer-facing tasks to licensed team members D2C B2B Better Team Members Loan Purchasers Buy Refi Cash- out HELOC Tinman is the backbone that drives our better, faster and cheaper customer experience Technology & Business Model 7
Our proprietary technology delivers tangible results Better Customer Experience Get certainty on mortgage eligibility and terms within 24-hours Lower Rates, Higher Approvals for Customers Pass technology cost savings through to the customers Increased labor productivity & lower labor cost Automation drives higher output and ability to leverage less specialized labor Flexibly launch new products to meet market demand Launched HELOC in Q1’23 and dramatically scaled locked volume to meet market demand 1 Superior loan quality Outperforming industry on defect and delinquency rates 1H 2023 1.3% 1.8% Post Closing Defect Rate3,6 2020 2023 Purchase Approval Rate 66% 75%10 hours Average Commitment Letter turnaround since program launch in Q1’23 Avg. from 2018 - 2023 4.43% 4.70% Average Rate on Fixed 30-yr Fannie Conforming Mortgage1,5 Closings per US Fulfillment Employee per Month2 HELOC Locks per Week Q1’23 (Launch) 13 Q2’24 174 1. Industry Source: MBA Weekly Application Survey - MBA: FRM 30-Year Contract Interest Rate and Points 2. Calculated as average Total Loans per month in Q2’24 divided by Better US fulfillment team members as of June 30, 2024. Industry Avg. Source: MBA Q1 2023 Market Performance Report (latest available) 3. Industry Source: ACES Quality Management: Mortgage QC Industry Trends, Q2 2023 4. Defined as percent of total D2C loans funded excluding HELOC loans in Q4 2023 5. Data updated annually 6. Represents latest available data Better Industry Average Technology & Business Model 10.2 4.8 Q2’24 2 3 4 5 8 Q1’24 Represented 84% of Q2’24 D2C loans
Tinman powers Better and our partners D2C Own entire customer experience end-to-end ✓ Direct customer acquisition ✓ Low-cost value proposition ✓ Better-branded, high quality customer experience Mortgage-as-a-Service (B2B) Zero-CAC, co-branding or white-label solutions ✓ Same digital-first experience as D2C ✓ Strong brand affinity ✓ Powered 100% by Better technology ✓ Provide bespoke experience by combining existing solutions and customizing functionality ✓ Piloting multiple B2B programs, including early-stage partnership with a national roofing and basement contractor for Better’s One Day HELOC and Closed End Home Equity Loan products Reduce costs, improve experience, improve quality Technology & Business Model 9
Key Technology Initiatives 10 AI Innovation Core Automation • Testing variety of applications of AI within Tinman, both for internal efficiency and consumer facing • Seek to drive sales and underwriting productivity • Improve customer routing • Expedite structured data capture • Drive end-to-end fulfillment productivity • Automated Initial Review (“AIR”), where Tinman completes initial underwriting and issues commitment letter, completed on 12% of loan files in Q2’24 • Fully autonomous initial data validation and calculations Goal: Reduce sales & fulfillment cost per fund, improve customer conversion Technology & Business Model
Q4’23 $69 Q1’24 $74 Total Expenses ($ millions) $73 Through growth, expenses relatively flat since Q4’23 Managing towards profitability while growing through improved technology efficiency and corporate cost reductions to offset increased growth expenses …and managing expenses while growing We are leaning into growth… Funded Loan Volume ($ millions) Q4’23 $527 Q1’24 $661 Q2’24 $962 Q3’24E $1,000+ 83% origination volume growth since Q4’23 Demonstrated Growth & Discipline 11 Q2’24
Second Quarter 2024 Financial Review • Continued leaning into growth while managing expenses through a challenging mortgage macro environment with average 30-year fixed mortgage rates above 7% through the first half of 2024 • Funded loan volume and revenue growth driven by home equity (which includes HELOCs and closed-end second lien loans), and purchase growth • Revenue increase 41% from Q1’24 to approximately $31 million • Q2’24 revenue included approximately $9 million of nonrecurring benefits, including a positive mark-to-market impact on our lock pipeline, and a recovery from a release of our Loan Repurchase Reserve • Total Expenses of approximately $73 million were flat compared to Q1’24, with increases to marketing spend and production team compensation being offset by lower vendor and corporate compensation expenses • Q2’24 expenses included approximately $1 million of nonrecurring benefits, including reductions in certain reserves and a refund of a state tax refund • GAAP Net Loss improved to approximately $42 million in Q2’24 from a loss of $51 million in Q1’24 • Adjusted EBITDA loss improved to approximately $25 million in Q2’24 from a loss of $31 million in Q1’24 $962 million Funded Loan Volume Key Financial Highlights Q2’24 Statistics 83% Purchase Volume 70% D2C Volume 2,995 Total Loans 9% HELOC Volume 2.43% Gain on Sale Margin Demonstrated Growth & Discipline 12
1. Includes $321 million of Cash and Cash Equivalents, $26 million of Restricted Cash, $58 million of Short-term investments, and $102 million self-funded loans, as defined by Mortgage loans held for sale, at fair value less Warehouse lines of credit as of June 30, 2024 2. Warehouse mortgage funding capacity available at June 30, 2024 Second Quarter 2024 Balance Sheet • We retain strong relationships with our warehouse financing counterparties to manage mortgage working capital even in a low-volume environment • Effecting reverse stock split of Better’s common stock at a ratio of one post-split share for every 50 pre-split shares • Reverse stock split will become effective at 6:00 p.m. New York Time on Friday, August 16, 2024 • Class A common stock will begin trading on a split-adjusted basis when the market opens on Monday, August 19, 2024, with no change to the ticker symbols “BETR” and “BETRW,” respectively • Reverse stock split is intended to increase the per share trading price of the Class A common stock to enable Better to regain compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market Key Highlights Statistics as of June 30, 2024 $507 million Cash, restricted cash, short-term investments and self-funded loans1 $5 million Interest Income from Investments generated in Q2’24 Three Warehouse Facilities $425 million Total Warehouse Capacity2 Well Capitalized and Positioned for the Future 13
Focus on Target Opportunities Funnel Conversion • Increase pull-through on approximately 60,000 monthly mortgage application starts through product & service enhancements • Strengthen relationships with real estate agents to improve purchase distribution • Continue hiring experienced Loan Officers with demonstrated customer service track records on highly variable, low fixed compensation plans to align incentives with business outcomes Acquisition Channel Diversification Continued Investment in Automation Fixed Cost Reduction for Improved Profitability • Increase acquisition spend in performing channels, while cautiously investing in new channels and brand marketing • Onboard additional B2B partners, leaning into home equity demand • Persist through extended B2B sales cycles given our platform advantage and favorable medium-term trends of banks and others exiting mortgage • Investments made over the past three years enable operating leverage as we grow, where we expect to grow revenue faster than expenses • Continued investments in One Day Mortgage to make customer experience highly automated and best in class • Continued investments in AI to reduce labor cost and customer time spent • Continued re-evaluation of vendor costs and criticality • Continued targeted reductions in corporate overheads • Sustain well capitalized positioning by cautiously managing liquidity Well Capitalized and Positioned for the Future 14
2H’24 Outlook: Continue leaning into growth while maintaining cost discipline • Continue leaning into growth with initiatives to increase Funded Loan Volume and market share • Continued disciplined cost management to target medium-term profitability Key Expectation Impacted FY2024 Metric versus FY2023 Total Expenses • Increase marketing spend in highest-returning channels to drive increased volume, particularly on purchase and second lien products • Continue adding origination capacity through hiring of experienced loan officers on low-fixed, highly-variable compensation plans Funded Loan Volume • Continued investments in AI and automation to improve Tinman • Continued investments in purchase and real estate agent relationships Conversion • Continued focused on adding partners and nurturing pipeline • Largest opportunities have multi-year sales and integration cycles • Expect 2024 growth to be driven by the D2C channel MaaS Prospects • Targeted marketing around enabling customers to flexibly tap into home equity during rate environment uncertainty through second lien and cash-out refinance products • Demonstrate positive results in B2B home equity pilot programs HELOC Volume Well Capitalized and Positioned for the Future 15We expect 2024 Revenue to increase and Adjusted EBITDA to improve vs. 2023
Reconciliation of Non-GAAP Measures 16 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 and equity related liabilities, 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 and equity related liabilities, 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)
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Grafico Azioni Better Home and Finance (NASDAQ:BETR)
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Da Ott 2024 a Nov 2024
Grafico Azioni Better Home and Finance (NASDAQ:BETR)
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Da Nov 2023 a Nov 2024
