Better Home & Finance Holding Company

Good morning and welcome to the Better Home and Finance Holding Company third quarter 2020 results conference call. Please note that this call is being recorded. All participants are now in listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. I will now turn the call over to Hannah Kosla, Vice President of Investor Relations. Please go ahead.

Welcome to Better Home and Finance Holding Company's third quarter 2023 earnings conference call. My name is Hannah Kosla, and I am the Vice President of Investor Relations at Better. Joining me on today's call are Vishal Garg, Founder and Chief Executive Officer, and Kevin Ryan, President and Chief Financial Officer. The presentation for today's call can be found on the Better Investor Relations website. Certain statements we make today may constitute forward-looking statements that are subject to risks, uncertainties, and other factors, as discussed further in our SEC pilot, 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 webcast presentation. both of which are available on the investor relations section of Better's website and in our quarterly report on Form 10Q files of the SEC. I will now turn the call over to Vishal.

Thank you, Hannah, and welcome to our third quarter earnings call. We appreciate everyone joining us today. Since this is our first quarterly earnings call as a public company and many are new to the Better story, we wanted to first spend some time introducing the business. Better was founded as a digitally native mortgage company seeking to fundamentally transform the entire homeownership process by delivering the best experience to customers at the lowest cost. We currently have approximately 760 hardworking, mission-driven, customer-focused employees across the U.S., India, and the United Kingdom. Our mission is to make homeownership better, faster, and cheaper by building a technology platform that revolutionizes the experience of finding, financing, and selling homes. Since our founding in 2016, we've achieved over $100 billion in loan origination volume entirely digitally and offer multiple product solutions across the mortgage, real estate, and insurance verticals. The homeownership journey remains mired in legacy and efficiency. High transaction costs, regulatory complexity, legacy systems, and multiple middlemen come at the expense of the consumer and slow the pace of digital innovation and adoption. Relative to almost any other consumer category, the homeownership experience remains slow, costly, and analog. In some, we believe it is unnecessarily broken. We see a future in which every customer can seamlessly buy, sell, refinance, and insure their home digitally online instantly. The home is among the world's largest and oldest tangible asset classes, with spend across the global housing market accounting for approximately $13 trillion annually, and specifically residential mortgage origination in the United States being over $2.5 trillion annually. Our market is enormous and we are penetrating less than half of a percent of that today, leaving tremendous room for growth. We are seeking to disrupt the antiquated model by leveraging our proprietary technology platform, TinMan, to improve the efficiency and customer experience of the mortgage process. We aim to reduce the cost to produce a loan and create a single one-stop shop platform with multiple home ownership products embedded into a highly automated single flow from lead to fund, allowing us to pass along savings from automation to our customers in the form of a lower rate and an improved experience. While it's well understood that the mortgage macroeconomic environment has recently been challenging, we've remained focused on what we do best, optimizing the customer experience and innovating on our products and technology. The long-term opportunity remains resilient with clear secular tailwind towards home ownership. We believe low-cost, customer-friendly, transparent, and digital home ownership products have strong consumer demand throughout macroeconomic cycles. No doubt about it, just like in most major e-commerce categories, consumers prefer a digital experience and are becoming increasingly comfortable completing their mortgage and real estate transactions online. We're just getting started. I'd like to discuss our market positioning and share just how unique and differentiated Fedora is in the industry. Allow me to expand on each differentiating factor. First, we were founded as a digitally native platform and launched our product in 2015 with our proprietary technology at the forefront of our innovation since day one. We rebuilt the entire end-to-end loan origination infrastructure from scratch, leveraging digital automation to remove manual tasks and expedite the locking, processing, underwriting, and closing of a loan. We believe our production cost is significantly lower than the industry average, and our fulfillment team productivity in the third quarter of 2023 was approximately three times the industry average. with our U.S. fulfillment employees closing an average of 9.6 loans per month. In turn, this enables us to offer lower mortgage rates to our customers and a vastly superior customer experience. For example, we believe that our one-day mortgage offering, with an average turnaround time since the product launch of eight hours from locking the loan to receiving a commitment letter, compares to the 25 to 40-day week that we believe is industry standard. Demonstrates how our platform's efficiency has a direct impact on customer experience. Further, digitizing the process in a single end-to-end system brings us a unique data advantage. For example, we capture over 10,000 data points per loan, all on the same system. This data advantage provides transparency and auditability into the underwriting of each loan file, results in lower defects and higher loan quality. It's all made possible through our machine-driven workflow engine, Kinman. Kinman sits at the center of our loan manufacturing process, interacting with customers, loan team members, marketplace participants, and loan purchasers. Tin Man's decision engine breaks down each loan file into a series of tasks, many of which can be completed autonomously by the system. Second, we position our platform to scale quickly when we market demand returns. As a reminder, we grew our funded loan volume 10x from 2019 through 2021, reaching over $100 billion of cumulative funded loan volume in under five years. It's the breadth and flexibility of Tin Man across product and customer journey pathways that sets us up to scale. by providing a superior end-to-end integrated home ownership experience to customers, agnostic to whether they are seeking a purchase, refinance, cash-out, or HELOC loan. Our platform is modular in nature, and new products and partners can be added quickly using the same core code and systems architecture. As an example, we were able to launch our HELOC product in the first quarter of 2023 and have already scaled to do with over 100 HELOC funds per month. In a challenging rate environment, our HELOC product provides a solution for those who want to tap into their home's equity without impacting the lower rate on their first lien mortgage. Third, our business model is asset-like, with the majority of production eligible for purchase by government-sponsored enterprises such as Fannie Mae and Freddie Mac. This provides access to liquidity for our loans through micro-cycles and allows us to reduce our balance sheet risk and capital requirements. And finally, we offer multiple services within the home transaction ecosystem on an integrated platform with an ability to cross-sell real estate insurance services directly within the mortgage fund. We go to market through two channels, direct-to-consumer and B2B, or mortgage-as-a-service, as we call it. Our direct-to-consumer channel is focused on digital customer acquisition through online channels, including Google, Facebook, and other performance marketing channels under the Better brand. Through our mortgage-as-a-service partnerships, we partner with leading consumer brands and use Tin Man technology to power their businesses, either through co-branded advertising relationships or fully integrated mortgage origination models. Turning to our strategic plan, we have two principal growth strategies. The first strategy is to drive improved customer conversion. The second strategy is to expand the methods and channels by which we reach customers. Let me begin with our first strategy of improving customer conversion. We plan to do this through three key pillars. The first pillar is to increase the conversion of customers who begin their mortgage applications with us, approximately 18,500 per month into closed loans, which trended less than 700 per month on average in the FedCorp. We are working to do this by enhancing the product and customer experience, increasing the breadth of our acronyms, specifically FHA, VA, and other non-conforming loan types, while still providing highly competitive rates compared to other market offers. We believe that our conversion rate today is near the bottom of the industry and therein lies the opportunity for improvement. The second pillar is to grow our purchase business by partnering with local real estate agents and integrating the agent experience deeper into the Tin Man platform. As trusted advisors to most home buyers, agents play a critical role in the purchase transaction. While purchase made up 90% of our funded loan volume in the third quarter of 2023, There's significant opportunity to grow in aggregate to improve purchase distribution and conversion. The third pillar is to continue innovating our technology, making the platform even more efficient and scalable. As we continue reducing labor costs to investments in automation, we seek to continue passing a portion of those savings back to our customers in the form of lower rates, thereby driving the conversion platform. In the third quarter, we continue to invest in building our network of realtor agents, which now includes nearly 500 local partner agents that make sizable strides in our HELOC business. We continue to meet customer demand for faster turnaround time through our one-day mortgage offering, which made up 70% of loans from our direct-to-consumer channel in the third quarter. Our second strategy is to expand our methods of customer acquisition. We plan to do this through two key pillars. The first pillar is focused on reaching more customers through improved data-driven marketing. Examples include further optimizing performance marketing, pay-per-click, digital media channels, and content marketing. We also think about potential investments in our brands, something we have done very little of historically, and in doing so, we would take a highly prudent approach. The second pillar is to add new B2B partners and grow our mortgages and service offerings. Partnering with existing strong brand names in the financial services space and enabling them to leverage our proprietary technology to originate loans more efficiently helps us reach a wider audience of customers and reduces our customer acquisition costs. Last week, we were excited to announce the launch of our partnership with Infosys. Infosys serves many of the largest financial services clients across a range of verticals, including mortgage. We believe integrating our offering with Infosys' client penetration and financial services will enable us to reach mortgage-as-a-service customers far more effectively. In the third quarter, our B2B business made up 47% of our funded loan volume, made up predominantly by our relationship with allies. where how better is the backend origination infrastructure powering allied mortgage originations? We hope this provides a helpful overview of it. We are proud to have successfully listed on the NASDAQ as a public company during the third quarter, which provided us with $565 million of new primary capital to execute on our growth plan and building a household name in home ownership. While the market has been very challenging with continued macro uncertainty ahead, we are starting to see green shoots. We focus on what we can control We are well capitalized and well positioned to emerge as a leader once the market turns. I'm incredibly excited about the opportunities ahead. Let me now turn it over to Kevin Ryan, our president and chief financial officer, who will discuss the quarterly performance and our financial strategy.

Kevin. Thank you, Vishal, and thank you again to all of you for joining us. We cannot overstate the importance of closing our two-and-a-half-year-long SPAC journey and recapitalizing our company at a time when 30-year mortgage rates were quickly approaching 8%. We believe this capital provides us more than sufficient runway and sets us up to be a long-term leader in the industry. During the third quarter of 2023, we had funded loan volume of $731 million, revenue of $16.4 million, and an adjusted EBITDA loss of $54.4 million. Our third quarter volume was 53% generated to our direct-to-consumer channel and 47% to our B2B partner channel. Volume was 90% purchase, 6% refinance, and 4% HELOC by dollar volume. Our third quarter results reflect disciplined expense management through a very difficult market environment characterized by high rates, historic lack of affordability, and reduced home sales. Compared to the third quarter of 2022, our funded loan volume declined 36%. Our revenue, excluding better cash offer, declined 13%. And our total expenses, excluding better cash offer, declined 45%, which was a dramatic reduction in expenses relative to our revenue decline period over period. Add to this fact that our third quarter total expenses, net loss, and adjusted EBITDA include several one-time expenses relating to the closing of our D-SPAC transaction that we do not expect to recur in future periods. Throughout this market cycle, we are focused on corporate efficiencies. which in turn we believe will help us to maximize the runway of the capital received from the public listings and drive operating leverage as we grow, with the goal of reaching break-even sooner. We believe through a combination of our disciplined expense management and capital raise through the listing that we have enough runway for our operations over the next several years and have no plans or current needs to raise any capital. We have taken out over 1 billion in annualized costs year over year in the nine months ending September 30th versus the first nine months of 2022 and even more than a billion dollars since 2021. We decreased our global footprint from a peak of approximately 10,500 full-time employees in the fourth quarter of 2021 to 760 as of the end of third quarter of 2023. Additionally, we dramatically decreased our marketing spend, which intentionally reduced our volume, market share, and revenue to focus only on the most profitable business in this tough market environment. We believe this was the right decision, as it allows us to reserve capital and drive long-term shareholder value. We continue to reevaluate the tradeoffs between marketing spend and volume as the market evolves, but at this time, we remain most focused on expense reduction. That being said, we will not sacrifice our investments in our future. We plan to continue to invest in our proprietary technology, Tin Man, to improve the customer experience and further drive down labor costs through automation, making our platform more efficient and more scalable. Since this is our first earnings call as a public company, I'd like to expand on how we make money. We generate revenue through the production and sale of loans and other product offerings through our platforms. We generate substantially all of our mortgage platform revenue by selling our loans and related mortgage servicing rights to our loan purchaser network, recognizing revenue for each transaction. We have historically sold substantially all of our loans in MSR shortly after closing, which reduces our balance sheet risk and makes us capital-like. Additionally, in certain B2B relationships, we receive a fixed fee per loan produced from our partner, and therefore we incur no marketing expenses. The nine months ended September 30th, 2023, 96% of our total loans were eligible for purchase by the GSEs, including Fannie and Freddie Mac, providing us continued access to a deep pool of liquidity for our loans, even during periods of market stress. Within our GAAP revenue, we mark the market the value of our loans held for sale for any changes in the rate environment, which includes both our locked loan pipeline as well as any funded loans we hold on our balance sheet. We hedge our loans held for sale portfolio with the intention of offsetting rate movements and thus revenue volatility during the duration of a holding period, ahead of the loans being sold to loan purchasers. Additionally, from time to time, we are required to repurchase loans with defects from our loan purchasers, sometimes as a loss that can negatively impact our balance sheet reserve and require a reserve true-out, which creates a revenue loss in the P&L. That being said, one of the advantages of Tin Man is reducing high-quality loans, and therefore our critical defect rates are below what we believe the industry average to be, and therefore help us minimize any buyback losses. We also generate revenue through our Better Plus marketplace of non-mortgage home ownership products. Better Plus includes real estate agent services, title and settlement services, and homeowners insurance. Now to touch briefly on our balance sheet and capital position. As mentioned, we closed our D-SPAC transaction to finish the third quarter of 2023 with $584 million of cash and short-term investments. We believe our cash position provides us with liquidity to continue executing against our vision and corporate objectives. We retain strong relationships with our financing counterparties to manage working capital, even in a low mortgage volume environment. As of September 30th, 2023, we had three warehouse facilities for a total capacity of $424 million. The capital raised in the D-SPAC transaction is primarily in a form of a convertible note with a five-year maturity, an extremely attractive 1% annual interest rate that's either cash pay or pick at betters options. In addition to the runway, the capital raised, It also provides us with a way to generate incremental revenue stream from investing the capital in low risk assets. Maybe the silver lining of high interest rates is that we can now generate meaningful returns on these low risk assets as we wait for the market to turn. Turning to our outlook for the fourth quarter of 2023. The first two weeks of November have clearly felt better than October, given the recent rally in interest rates and improvements of better. That being said, we obviously still see continued softness in the housing market, record low affordability, and historical slowness in the fourth quarter, a seasonal period. Therefore, we expect our funded loan volume of approximately $500 million, which we down from the third quarter. Accordingly, given the operating environment and the lower volumes, we expect to continue to discipline cost management. As a result, we expect our total expenses to be down in the fourth quarter versus the third quarter, and therefore, our fourth quarter adjusted EBITDA should improve versus the third quarter. That being said, we continue to expect an adjusted EBITDA loss for the quarter. Thank you for your time, and I'll now turn it back to the operator for Q&A.

Thank you. At this time, we will open the line for your questions. A reminder, I'd like to ask a question. Please press star one. Your first question comes from John Blackledge with TD Cowan. Please go ahead.

Great. Thank you. What do you see as the opportunity set in the B2B mortgage as a service space and kind of what's the value prop of the product and what are the benefits to the bank partners? Thank you. Thanks so much. That's a great question. Starting off with the opportunity, banks and financial services companies have strong brand recognition and deep customer relationships with the customers that they've cultivated over the long haul. And it's critical for banks and their whole customer experience to have this offering. If not, they could potentially lose their customers to a competitor when it comes time for most households to go and enter into their largest financial transaction, which is where they expect their bank to show up. And post the financial crisis, banks and financial services companies have extremely high costs to originate mortgages given their legacy technology infrastructure and their high fixed costs of regulatory and compliance requirements. Partnering with Better and giving them access to Tin Man and Mortgage as a Service's backend infrastructure is allowing them to do what they did pre-financial crisis with companies like PHH, where they were able to outsource the bulk of the process of originating a mortgage and funding a mortgage out to third party companies. It allows them to maintain their brand and customer awareness. Our platform can be fully customized to their customer experience like we do with the Ally Powered by Better platform. It allows them to have a substantially lower origination cost per loan, higher efficiency, lower fixed costs, and much more of a variable model. So they can scale up when times are good and scale down when times are bad. High loan quality underwriting and much lower critical defects and delinquencies than average. and the ability to offer multiple mortgage, real estate, and insurance products all in one seamless flow across 50 states without needing to maintain the licensing and compliance infrastructure themselves to be able to do that themselves. For better, the mortgage as a service offer provides a huge opportunity to leverage our core technology to power existing leading household brands in the financial services space, reducing our need to spend on customer acquisition cost and marketing. We're super excited to have announced Infosys as a new mortgage as a service partner last week. Infosys is financial services clients can now use the Tin Man platform to power an integrated end-to-end digital mortgage experience. And, you know, with respect to where we are going, we have a fairly strong pipeline and are in a number of conversations for 2024 for our mortgage as a service offering.

Yeah, John and Kevin, I'd quickly add, as Charles just said, our pipeline feels better And it never has. And I think a part of that is in a lower volume industry right now, the economics of doing it yourself without a partner at the banks are not as compelling as they were when everybody was making money back in 2021 in mortgage. And so it's actually, it may be counterintuitive.

It's actually a tailwind for our pipeline. Thank you.

Next question comes from Ryan Tomasello with KBW. Please go ahead.

Hi, everyone. Thanks for taking the questions this morning. I guess I wanted to ask about the strategy around mortgage servicing. What's driven the decision to not retain servicing historically, and is that something you might revisit going forward? Thanks. Sure.

Thanks for the question, Ryan. It's Kevin. Look, we understand the customer retention and ecosystem platform benefits of retaining MSR. We think about it all the time. Michelle, myself, our board, our senior leadership team talk about this all the time. And given the capital we've recently raised, we have the ability to retain the MSRs, and we think about it. And, you know, in the past, it wasn't as obvious that we should or bluntly even could. I mean, for two reasons. to 2021, the company was growing so quickly, 400% year-over-year volume growth, that our working capital needs were more than doubling in short periods of time, haircuts in warehouse, margin call reserves, et cetera. And so we valued the free cash flow generation, selling the MSR in the co-issue market, taking the cash in and then filing it right back into the technology and into the origination business. Then, you know, the market turned dramatically, as I think we all know super well, And beginning in 2022, it was not clear or SPAC took us about two and a half years that how long it would take or whether it would ever get done. And so for similar reasons, we valued the cash generation of selling, servicing, release. Today, the market's more stable, albeit on a very low base. Our cash position relative to our volume is extremely high, right? If you think about where we got in Q4, we have more cash on hand than what we expect our total volume to be in Q4. We have all the capital flexibility to re-examine the decision. We haven't pulled the trigger yet. Two reasons. People are paying up for MSRs right now. They're valuing the recapture greatly. And so we have to convince ourselves that we'll recapture at least at those rates. And we think about it and we work on it. But that's important. I mean, people are bidding them up and paying nicely for the MSR. And then really our investment dollars, our CapEx, our MindShare has really been focused on improving our technology. Now building out mortgage of service, one day mortgage as we, you know, Michelle talked about and prepared remarks. So that's really been where we are. So, and then, you know, last point, 2021, we had no MSRs, no recapture strategy. We got the 2% market share and refinance. And that was based off, you know, we believe really good rates to the customer and a great digital experience. And now with the refi is a much more efficient process for the customer. and more of an experience-based process and rate-based process. And so the long-term winner in refi should be the company with speed, certainty, easy digital experience, and price. And particularly with one-day mortgage, which we did not have in 2021 during the refi boom, which really fits quite nicely for refi, probably better than purchase. We rolled it out in the purchase market. That's when it was ready. We feel like we should be able to really excel at refi with or without the recapture opportunity. We also have millions of customers in our database, people that have come to the site that we just didn't have in 2019 because the company was so young. So we feel well set up for refi, but to your question, we do think about it and we'll continue to evaluate it, and we'll keep sharing our thoughts along the way.

Thanks for taking the question.

Your next question comes from Spencer Anson with Susquehanna. Please go ahead.

Great. Thank you. Can you just talk more about your purchase strategy? What are the strategies you're using to grow the purchase business through the cycle?

Thank you. Totally. You know, when we think about our purchase strategy, we've proven that our refi product works. We reach over 2% market share at our peak. And our volume today is managed purchase. It's on a small base and we're seeking to grow it on a value, absolute basis. The two key components of our purchase strategy are, you know, one tried and tested, partnering with agents to make them promoters of a better mortgage product. The real estate agent is ultimately focused on what is going to help them close the transaction. And our one day mortgage product is something that's been well received by agents. And then two, improving the purchase customer experience through continued technology automation. When a customer chooses to go with Better for their mortgage versus their incumbent or their local lender, they've got to have certainty that Better is going to be able to close. And that too, one day mortgage helps provide them that certainty that they're going to be able to close so fast that they don't need to have to consider their local lender options out there when they're choosing to upload their purchase contract. So, how are we going to grow our penetration within the agent? Agents are critical influencers in the purchase transaction. If they don't believe that Better or other online lenders are able to close a loan on time, or we'll close a loan on the terms that were specified, they lose trust in those lenders on a transaction and you lose the ability to kind of get referral volume back from them. What we've been doing to build trust with our agents is actually helping those agents win more business. So when a consumer comes in and, you know, a ton of consumers come in every month to Better.com seeking to get pre-approved who do not have a real estate agent. attached and they haven't picked out their real estate agents. They're just trying to figure out how much house they can afford. What we're doing is helping those agents, those customers connect with local real estate agents and build a network of local real estate agents that can serve as promoters of the better offerings. We now have built a direct network with local real estate agents and we have over 500 partner local real estate agents onboarded onto our network who are experts on the better platform and on the better value proposition. We're also in the early stages of piloting a program where we're enabling agents to become loan officers and grow their revenue base. That program is in its early stages, but we feel that that will be another way for us to integrate real estate agents directly core into Tin Man and turn them from detractors or into promoters of the better platform. On the purchase loan, on conversion, right now they require increased customer service and manual labor compared to refinance loans. And ultimately that creates more friction in the transaction for our customers. We're leveraging technology to make that gap smaller and smaller. And our continued investment in Tin Man and driving one day mortgage will help us be able to offer a one-day commitment letter to more and more customers. And the more and more we're able to do that, and the more we're able to eventually get the word out about that, we think that that's in the very early stages. We think that that's going to be a game changer on changing the conversion rate of our purchase transaction. So as you remember, we said we have over 18,500 applications a month, and we're funding less than 1,000 loans a month. So narrowing that gap from application to fund and improving that conversion rate is going to be something that, you know, we think is very similar to the early days of online commerce when return rates were high and conversion rates were low. We think that we can eventually get those conversion rates up to be 3x, 5x better than where they are today. And that will substantially change the economics of our purchases.

Great, that was helpful. And just one more for me. Could you just expand on your tech and how it's differentiated from other market offerings? I know you touched on some of it, but anything else you can expand on there?

Yeah. So the big difference between Tin Man, there are really two core differences. The first is Tin Man is fully integrated all the way end-to-end one system, whereas most of the technology in the industry is They're relying on a point-of-sale system, you know, that may be like a Blend or a Roostify or, you know, a software offering from Ellie Mae. Then they're taking that data and transferring it into a loan origination system, right, which might be in Compass or in PowerPro. And then from there, they're integrating in a pricing engine. Then they're integrating in a rules engine. Then they're integrating in an underwriting engine. software, then they're integrating in closing software, and then right there at the end, they're integrating in the funding software and the warehouse line software. All of that means data is moving from system to system. The average loan officer has to learn seven different systems in order to fulfill a loan all the way through. And what we've done is slowly but surely over the past seven years built all of that functionality into one integrated system, Tin Man, that is the only one of its kind in the industry. This means that we're able to, one, move a loan across the assembly line much, much, much faster. Two, we're able to do it with the most important component, which is the system tells the loan officers and the processors and the underwriters what it needs next and what to do next versus them having to figure it out for themselves. This was core to our competitive advantage and building up scale to 2% market share when the refi boom took place last time. There was no other way that we would have been able to hire and grow as rapidly as we did without that. What this allows us to do over time is gives us great scalability, both the ability to scale up, as we did in 2019 to 2021, and then the ability to scale down, which is what we've done over the past two years. And lastly, the advantage that we get out of all of this is that the system compiles into one clean data file over 10,000 data points that are the home and the property graph and the consumer's financial graph. And we're able to tune to do that through our, and drop that into all of our partners' labs, especially our B2B mortgage and service partners, who can then use that very rich data file to then provide other products and services to our customers. The deliverables that our technology delivers are one day to mortgage, taking a customer from a locked loan to a commitment letter in an average of eight hours since we launched the program in Q1 of 2023. Lower rates, 26 basis points cheaper on average than the average for a 30-year fixed rate standing conforming mortgage. Fulfillment efficiency at almost three times the industry average with our U.S. fulfillment employees closing 9.6 loans a month compared to the industry average of 3.3. And also enabling us to launch new products like our new HELOC offering, which we launched in Q1, is now doing over 45 blocks a week. So we're able to take a multi-fold approach to delivering for our consumers through this integrated platform. And it creates benefits. It makes us cheaper, faster, and easier to use than we believe any other system out there. And we hope that over time, that will manifest itself in market share gains.

Great.

Thank you. That's all for me.

Your next question comes from Jeff Cantwell with Seaport Research. Please go ahead.

Hey, thanks very much. I wanted to ask you, since you cut costs significantly, if the market does turn back up, how are you positioned or prepared to scale back up quickly? Thanks.

So that's a really great question. We think about that all the time. Ultimately, when we scaled in 2019 to 2021, we were a private company. We made the conscious decision, let us be our own venture capitalists and seize the moment. And we took the business, which in 2019 was 50% purchase, 50% refinance, and took it to basically 90% plus refinance because there was money on the table to be gained from refinances. When we believe what we did there was very manual. Tin Man was only half built at that time. And we had components that were legacy systems, and we had components that were our own system. And scaling took a lot of effort, and it took a lot of people. We believe we're much, much more productive now than we were before. And Tin Man is one unified system from click to funding for our customers, for all of our customers today. And so we believe we would be able to scale far more rapidly this time than even what we did last time. I can't give you factors or orders of magnitude because we haven't been able to do it yet, but we think it's going to be massive operational efficiency as we scale here. Now, last time we had, you know, nearly zero customer lift. Prior to 2019, in 2016, 2017, 2018, we've done less than $5 billion of mortgages, right? We've now done $100 billion of mortgages, and we have millions of customers in our database. And what we're going to be able to do is reach out and market to those customers a one-day refinance product. And that is something that the rest of the industry simply does not have. And so if you want to get your new risk tomorrow, you're going to come to Better.com. And we think that from both an operational perspective and a marketing perspective, we're going to be able to offer something that the industry's never seen before when it comes time to scale up again.

You know, Jeff, one other thing we'd add is We've burned down the expense base really low, as you said or mentioned, and you get to a place where you start to fix out your costs. Tin Man is so much better than it was going into the last cycle, as Vishal just mentioned, that we think we'll be able to grow volume and revenue materially faster than expenses on the way back up. And so we're set up very well with operating leverage because you've gotten to a place where our market share It's so small, but you want to keep your 50 state licenses, your capabilities, your engineers investing in tech. And so you really only need one of those on the way back up. You don't need to hire there on the way back up. And so, yes, there'll be some more expenses on the way back up, but it'll grow much slower than the revenue and volume will.

Okay, great. Thanks a lot, Collar. Appreciate it.

Your final question comes from Michael K. with Wells Fargo. Please go ahead.

Hi. Thanks for taking my question. How much of an increase in industry origination bonds do you think you need to see to get the mortgage platform back to profitability? The next year's MBA forecast is about $1.9 trillion get there. I know you probably can't give guidance, but is there any way to dimensionalize it? Yeah, it's a great question, Michael.

And I, we're going to try to do an investor analyst say in early 24 and we're going to try to give you an exact number to that question. But let me just mention it out a little bit because it's something we think about. I actually think it's a very, very good question. So, so a few things. The first one is, as I said in a prepared remarks, the important thing we had to do was close the SPAC transaction. We took in $565 million of cash, you know, obviously pretty expensive, but $565 million of gross cash to do the deal. That gives us a very long runway, years and years, you know, four or five years of runway. And we've taken out over a billion dollars of expenses. And so then we sit there and say the most – and so, look, we were under no illusion that taking a digital mortgage company public with 8% mortgage rate was going to be a hit day one in the capital markets, but we were also under no illusion that we were able to raise that kind of capital which took the minimus solutions in any other form given the operating environment. So we plowed ahead and that's what we focused on in 2022 and 2023, cutting expenses and raising money. That was really all our focus. Now we've done both of those things, but we still have a very difficult operating environment. for the reasons that shaw went through on the way up we're going to have tremendous operating leverage so if you'd like to think back in 2022 we lost a lot of money did 11 billion a volume if we were to do 11 billion a volume today we're not going to do 11 billion volume right if you just take what we've done with your three quarters plus our guide you're going to bump around that 3 billion of volume for 2023 if you got anywhere near 11 billion volume we feel very good about, you know, about our prospects break even and, you know, actually putting up an EBITDA margin. So we're going to try to like exactly answer that question going forward, but we've got a long runway and it doesn't take much in the market, to your point, and we look at the MBA and Fannie forecasts all the time for us to see a scenario where we're quickly quickly break even and well inside of our runway. If you look at the deck we put up, right, we're not going through the deck, but we show you that if we just take 1% of the incremental refi market share that the NBA and Fannie forecast over the next two years, that drives over $100 million of revenue. And that's just 1% on the incremental, that's not 1% in aggregate. And as Michelle and I both said, we used to be at 2%. So it's not gonna take a lot of a turn in the market um for us to get to that place but at eight percent interest rates it's really hard for us to do it right now but so we're going to keep taking out costs but but you know we're not that far away is is probably the way i'd say it okay thank you so much ladies and gentlemen this concludes today's conference call thank you for joining us you may now disconnect