Better Home & Finance Holding Company

Good morning. My name is Aaron, and I'll be your conference operator for today. At this time, I would like to welcome everyone to the Better Home and Finance Holding Company first quarter 2026 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. And at that moment, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. At any point, if you'd like to withdraw your question, simply hit star followed by the number one again. And with that, I'm pleased to turn the call over to Tarek Afifi, Senior Corporate Finance and Investor Relations Manager. Tarek, with that, you may begin.

Welcome to Better Home and Finance Holding Company's first quarter 2026 earnings conference call. My name is Tarek Afifi on Better's corporate finance team. Joining me on today's call are Vishal Garg, Founder and Chief Executive Officer of Better, and Levine Advani, Chief Financial Officer of Better. In addition to this conference call, please direct your attention to our first quarter earnings release, which is available on our investor relations website. Also available on our website is an investor presentation. Certain statements we make today may constitute forward-looking statements within the meaning of federal securities laws that are based on current expectations and assumptions. These expectations and assumptions are subject to risks, uncertainties, and other factors as discussed further in our IPC filings that could cause our actual results to differ materially from our historical results. We assume no responsibility to update forward-looking statements other than as required by law. During today's discussion, management will discuss certain non-GAAP financial measures which we believe are relevant in assessing the company's financial performance. These non-GAAP financial measures should not be considered replacements for and should be read together with our GAAP results. These non-GAAP financial measures are reconciled to GAAP financial measures in today's earnings release and investor presentation, both of which are available on the investor relations section of Better's website and when filed in our quarterly report on Form 10Q with the SEC. More information as of and for the period and in March 31st, 2026, will be provided upon filing our quarterly report on Form 10-Q of the SEC. I will now turn the call over to Vishal.

Thank you, Jara. Good morning, everyone. Q1 was a strong quarter for Better. We generated approximately $1.64 billion in funded loan volume, exceeding the high end of our prior guidance and growing funded loan volume approximately 89% year over year. Revenue from continuing operations grew approximately 52% year-over-year to $47.5 million. And our adjusted EBITDA loss was approximately $19 million, which was a 48% improvement year-over-year. Just as importantly, we continued scaling the Tin Man AI platform and expanding our partnership ecosystem, which remained the core drivers of our long-term strategy. Before discussing product innovation and partnerships, I want to address the macro environment directly and explain how we are thinking about the business in the current rate debt backdrop. The company entered 2026 with strong momentum, generating funded loan volume of $450 million, $521 million, and $673 million in January, February, and March, respectively. A month, over a month growth of 16% and 29% in February and March. What's more, in late April, Pre-approval volume for our biggest Tin Man AI platform partner went from approximately $100 million per day in pre-approved customer volume to over $200 million per day in pre-approved customer volume. That being said, the prolonged conflict in the Middle East has started to show a marked impact on interest rates across the mortgage industry, with rates for consumers on our platform growing from 5.75% to well over 6.5% in the last few weeks. And this is causing consumers to get stuck in the middle of the funnel, hesitating to lock at a higher rate, particularly if they feel the rate increase is temporary due to the situation in the Middle East. With our partner's help, we are converting some of these customers who need cash now to HELOCs. But for those looking just for savings for months, we are in a waiting pattern where we will go back to them with a lock as soon as rates come back down. So the bad news is that conversion rates are down from where they were in Q1 due to macro factors. The good news is that partner volume continues to increase dramatically as the partner opens up to a broader section of their customer base and products. Despite the macronoids, we are structurally better positioned than most mortgage platforms for three reasons. Our partnership model creates structurally lower customer acquisition costs and scalable distribution and doesn't require us to spend money up front, which then can get hung up when conversion cycles bloat during volatile market periods. Hinman AI continues to improve conversion efficiency and operating leverage. Our diversified product mix spans across purchase, refi, and HELOC. And when refis become more difficult, we can convert a segment of those into HELOCs, which is a tool we didn't have in prior rate cycles. As positioning reflected in our Q2 guidance, we expect funded loan volume of approximately $1.65 billion, representing approximately 37% year-over-year growth, slower than what we had originally anticipated going into Q2. Importantly, while funded loan volumes are expected to remain approximately flat sequentially, revenue is still expected to grow meaningfully due to continued makeshift towards higher-margin HELOC products. We currently expect approximately 15% sequential revenue growth in Q2, which we believe is an important signal that the strategy works and the platform works despite the macro backdrop. We also continue to believe the business is positioned for substantial operating leverage as volumes recover. At the same time, we want to be direct with investors. The timing on when we achieve our $1 billion monthly funded volume target will depend in part on the rate environment. It looked highly doable this time last month, and right now, sitting for this month, it looks like it's going to be deferred. The long-term trend remains intact, but near-term visibility continues to be impacted by macro volatility and what that does to consumer benefit on a refund. That said, if rates improve meaningfully, we believe the lead funnel is already in place and positions us to accelerate towards that target relatively quickly. Regardless of the environment, we continue to execute aggressively. In April, we announced a series of deliberate steps to strengthen operations and continue our progress towards profitability. These actions are on track and are even more important against the backdrop I just described. First, we're removing at least $25 million of annualized costs from our operations beginning in June 20, 2026. Second, we expanded our total warehouse capacity by 48% to $850 million since the start of Q1. And third, in early April, we raised $69 million in equity that further strengthened liquidity and operational flexibility. All of these actions, along with greater focus on AI efficiencies, deep cuts in corporate overhead, and the adjusted revenue growth, and the change in the mix to ELOX versus REFI, means we remain in sight of the target of adjusted even to operate even by the end of Q3 2026. Turning to partnerships, our Credit Karma Finance of America and top five non-bank originator partnerships are all live and rampant. These partnerships are especially important because they leverage existing customer ecosystems rather than paid acquisition channels. For example, an increasing portion of Credit Karma's 140 million members are exposed to Credit Karma home loans powered by Better. That's zero upfront cap to us. We believe that structural CAC advantage will become increasingly important as the industry consolidates. In late January, we marked the one-year anniversary of our partnership with NEO. NEO grew from a $1.5 billion run rate at onboarding to $2.9 billion in March 2026. Our 1099 platform generated approximately $821 million in funded loan volume during Q1, accounting for approximately 50% of total funded loan volume. up from 44% in Q4. That progression is important. Tin Man represented 0% of funded loan volume in 2024, approximately 36% in full year 2025, and now approximately half of total funded loan volume. We expect that percentage to continue increasing in the coming quarters ahead. Now to product innovation. We had two recent launches I want to highlight, both of which serve buyers in this environment. Last week, we announced the launch of the Better Home Equity Card in partnership with Stripe. The card is a master card linked to a better HELOC, letting customers spend funds drawn from their line with a single flight. Even more, customers get 1% cash back on all spend, which further lowers their total cost of financing and extends their stickiness in the better ecosystem from a one-time transaction to a 30-year relationship. We believe HELOC demand remains durable across rate environments, and this product materially simplifies homeowner access to instant long-term liquidity against the value of their home. In March, we also launched the first FAME-eligible token-backed mortgage in partnership with Coinbase. Qualified customers of Coinbase can pledge Bitcoin or USDC as collateral to fund their down payment without liquidating their holdings, triggering a taxable event. We have a large pipeline of Coinbase customers who are signed up on waitlists for the official commercial release of the product in Q2. We see digital assets increasingly becoming part of mainstream consumer finance infrastructure, and we intend for better to lead that transition inside mortgage origination, to leverage DeFi technology to fundamentally lower the interest rates on home finance products for our consumers. We believe the foundation is now in place for better across our tech platform. Our distribution partnerships, our product expansion, and our cost structure and the food points are becoming visible in revenue growth and path to profitability insight despite a choppy macro environment. With that, I'll turn it over to Levine.

Thank you, Vishal. The Cuban financials reflect continued progress and growing operating leverage from our platform and improving efficiency in our business model. Funded loan volume grew approximately 89% year over year to $1.64 billion, while revenue from continuing operations increased approximately 52% year over year to $47.5 million. Importantly, total expenses grew approximately 27% year over year. That spread between revenue growth and expense growth reflects the operating leverage embedded within the Tin Man AI platform. At Tin Man AI volume scale, revenue growth outpaces headcount and infrastructure growth. In Q1 2026, our adjusted EBITDA loss was approximately $19 million. That's a 48% improvement year-over-year and a 16% improvement quarter-over-quarter. looking at product trends in Q1, refinance grew 542% year-over-year, home equity grew 30% year-over-year, and purchase grew 2% year-over-year. By product mix, 52% of funded loan volume in Q1 was refinance, 36% was purchase, and 12% was home equity. By channel, approximately half of funded loan volume in Q1 came through the Tinman AI platform, and the other half through direct-to-consumer. As we shall discuss, we're starting to see the impact of the prolonged conflict in the Middle East on rates. However, one of the most important dynamics in our model today is makeshift. HELOC products carry materially higher gain-on-sale economics, which allows revenue growth to outperform funded volume growth, which is reflected in our Q2 guidance. In Q2, we expect funded loan volume of 1.575 billion to 1.725 billion, of which the midpoint represents 37% growth year-over-year. We expect total net revenues of 53 million to 56 million, of which the midpoint represents 28% growth year-over-year. We also expect an adjusted EBITDA loss in the range of $12.5 million to $14 million, of which the midpoint represents 42% improvement year-over-year. Importantly, we continue making progress on our plans towards breakeven while simultaneously strengthening the balance sheet and improving liquidity. We previously announced at least $24 million of analyzed cost reductions beginning in Q2 2021. These reductions are underway and include lower corporate overhead, vendor rationalization, and the planned investor of our U.K. bank. On the balance sheet, we ended Q1 2026 with approximately $136 million of liquidity, which includes cash and cash equivalents, restricted cash, and net assets held for sale. This does not reflect our recent capital raise of $69 million, which closed after quarter end. we believe the balance sheet today is materially stronger and appropriately positioned to support our path towards profitability. In addition, we expanded warehouse capacity from approximately $575 million at year-end to approximately $850 million today, representing a 48% increase. That expansion reflects both lender confidence in our platform and the infrastructure required to support future partnership growth. As Vishal discussed earlier, based on our current operating structure and ongoing cost initiatives, we remain focused on adjusting without break-even by the end of Q3. The timing for reaching that level will depend in part on the macro environment and the pace of rate normalization, but the operating model continues to move in the right direction. We believe Bennett today is materially more efficient, more diversified, and more scalable than it was even 12 months ago. With that, I'll turn back to the operator for Q&A.

Thank you. Ladies and gentlemen, once again, if you would like to ask a question today, remember it's star followed by the number one in your telephone keypad. Our first question for today comes from the line of Kyle Peterson with Needham. Your line is live.

Great. Good morning, guys. Thank you for taking the questions. I guess I just wanted to first start off and clarify a couple of the moving pieces in the guide. I guess one, have you guys assumed that the macro and kind of this frozen pipeline due to some of the Middle East tensions, have you seen any improvement or resolution in the back half a quarter or more of a status quo? And then I guess also could you guys just give us a quick reminder on some of the relative gain on sale rates, specifically on the Hebox side. Obviously, it seems like that's really offsetting some of the volume difference, but I think a reminder there would be helpful for everyone on the call.

Sure. I mean, we are assuming no resolution. And so I think we've been very conservative with respect to what we're guiding towards because going into April, we knew that volume top of funnel was about to almost double. And going into April, we were very confident in the number that we were quoting, which was $1 billion of volume. And then, you know, the rate spike, the escalation in the Middle East, basically all that new volume came top of funnel. I think we shared that it went from about $100 million a day top of funnel for pre-approval volume to $200 million a day in the back of April. but those customers are not converting at nearly the same rate. We're converting a bunch of them to HELOCs, but a bunch of them that come in just to do a rate term refi or do a debt consolidation to bring down all the rates, they're going to save more If they waited out, then they would getting into it right now. And so we have to give them the right advice for them, and that's what we've always done, prioritize the long term over the short term. So that's what we're doing. And we think that that's a coil spring for when things die down in the Middle East, you're going to see some bumper months as we convert all those customers who are effectively on a wait list to lock when rates come back down. On the gain on sale, HELOCs are averaging between six to seven points total gain on sale, you know, in combination of origination fees and gain on sale premium, whereas traditionally mortgage on D2C has averaged two and a half points and on NEO has averaged three and a half points.

Okay. That's really helpful. And then I guess a follow-up. on the HELOC card initiative that you guys have launched. That seems, you know, like a really interesting product, I guess. How are you guys thinking about when that goes live later this year, you know, ways whether that increases engagement, gives you a competitor edge or modernization opportunities, just any more color there on how you think that fits in and could potentially help you guys kind of continue to accelerate growth in HELOCs would be great.

Yeah, so I think there are many utility functions of the home card. The first utility function is it tracks all your home spend. So it helps you effectively monitor that, and, you know, it provides discounts on things that you use for your home. Two, you get 1% cash back. So for a customer, you know, they're effectively getting their rate or fees bought down as a result of that 1% cash back. Three, it creates a 30-year relationship with the consumer for us versus having a one-time transaction, which means that recurring refis for that consumer, cash-out refis, will be nearly system-instant. and creates a super engaged customer base for which then we can market other products like what we've done with homeowners insurance, which typically comes up for renewal every year, life insurance, any of these other products that we've traditionally had. We can then have an always-on relationship with the consumer versus a once-every-three-, five-, seven-year relationship with the consumer. I think it moves into... basically better being a home finance, home operating system for the consumer, rather than just a one-time home transaction system. and we think that our partners have already started asking for it. It's just another really good way for a partner to service their customer and maintain that. So a number of our partners are already asking us to replicate what we're doing internally for our D2C business for that. So it gives us another feather in our cap when we go – and pitch HELOCs or home equity as a service to other companies or mortgage as a service to other companies.

Very helpful. Thank you for all the color.

Thank you for your questions. Our next question is from the line of Ramzi El-Assal with Cantor Fitzgerald. Your line is live.

Hi, good morning. Thanks for taking my question. Has the more challenging macro backdrop caused any slowdown in your partnership discussions or partnership pipeline conversion?

I think it's accelerated it, especially within the traditional mortgage broker and retail mortgage lender channel. A lot of people were hoping 26 was the year that they were going to thrive in, and it's looking like With the Middle East conflict, things are tougher, so more and more banks are still looking to get into the business. Of course... The Middle East conflict and higher elevated rates and oil prices has an impact on the number of customers eligible for a refi, but it has an even bigger impact on unsecured consumer credit. And so we're starting to see a lot of inbound from other fintechs, other large consumer credit companies to pivot from their traditional unsecured offerings into a secured offering like the HELOC.

Okay. Okay. And could you also comment on the loan mix between, you know, Tin Man and Direct and kind of how the changing environment might, you know, play out in terms of your target there? I think it was 60% Tin Man by the end of the year. I was just curious if the changing backdrop here has any impact on that target.

I think we're well on our way to achieving that target.

Yeah, I think, Ramsey, you're hitting on a great point. Had we been a traditional D2C play, we would have spent money on these leads up front and not have them convert. Because we're now relying on our partnership volumes, we're somehow de-risking ourselves from that eventuality.

Interesting. Thank you very much.

Thanks for your questions. Our next question is from Milenev Rohit. Kovkarni with Roth Capital Partners. Your line is live.

Hey, thanks, guys. One kind of just comparison of unit economics to the exchange you can. Can you just flag what's the difference between a 10-minute platform-generated volume versus D2C specifically, like relative kind of cap profile, gain on sale, and longer term? Do you see a scenario where the contribution margin for the platform volume would actually be structurally higher than your traditional D2C business?

That's a great question. Right now, we try to price our platform partnerships so we make the same amount of contribution margin. Revenue can change, right, because different partners are asking us to do different services for them. But we try to make the same contribution margin that we do on D2C in our platform business. And so, you know, as we scale, we're hoping to make sort of, you know, around $2,000 per loan contribution margin on mortgage and slightly less than that on HELOCs in our Tin Man AI platform business. Over time, as the sale becomes more and more software, like the margin profile is much better on Tin Man AI platform. But right now, the gains from AI are captured first in D2C, which is why you saw our continued improvement of our unit economics on the D2C business. And then we port those things that work in D2C into the Tin Man AI platform business.

Okay, thank you. And regarding the current macro environment and rate kind of changes in the last 45 days. Historically, what is the typical lag in consumer behavior and how that impacts your business, assuming there is a pathway towards more stable macro in the next 60, 90 days? How do you anticipate that to impact your business business and over what duration and sorry for the multi-parter here and that are you assuming any improvement in macro in your 2Q guide?

We're assuming no improvement in the macro in our 2-2 guide, and so we're being conservative there. And the typical cycle is you can start to see on refis in particular, you can see immediately within a week if a consumer comes in as a pre-approval, if they're going to lock or not, or if they're hesitant. And usually when they are hesitant, we register in our data the price point at which they would transact, and then we hold them until they come back. You know, kind of like think of it like a limit order in stock trading. And then so we see that behavior manifest itself out in replies. Purchase, as you know, is like a six-month cycle. And HELOC, depending on the use case, if it's for debt control, it can take, you know, the consumer a month to decide on what debts to pay off or not, you know, what things that they care about or not. If it's, you know, more for home improvement or tuition or other things like that, they typically have a need that needs to be satisfied within a week, two weeks, three weeks.

Yeah, Roy, I think the way to go with this is as we think about beyond the second quarter period, If the environment stays where it is, we'll have increased indexation towards HELOCs and less so towards ReFi. And if the macro changes, then that equation will flip.

I see. I got you. And then I know you reaffirmed the even EBITDA by end of Q3, Q2. is still close to negative $13 million in EBITDA. Can you tell us kind of what specifically bridges that Q2 to Q3? What are the factors under your control? And maybe just layer in the $25 million cost reduction program, how much of that is in Q2 and what other levers do you have in Q3?

Absolutely. Yeah, that's a great question. So today... Our current financials exclude the UK business, which is, we're considering that as system-genered ops, right? As we think about getting to our breakeven targets, our current cash OPEX is about $68 million. That's the guidance that we're giving, right? So for us to get to profitability by the end of Q3, we'll have to get to a revenue mix or a revenue component of around $1. low to mid 70s for us to break even at the end of Q3.

Okay. I'll go back to the Q. Thank you, guys.

Thank you for your questions. Our next question is from the line of Owen Rickert with Northland Capital Markets. Your line is live.

Hi, guys. Thanks for taking my questions here. Could you talk a bit more about how some of those newer partnerships are ramping today? Are you seeing encouraging trends in engagement and conversion rates so far? And how have those partnerships trended on a monthly basis throughout the quarter?

The newest partnerships are ramping up extremely well. I mean, we literally in the month of April went from $100 million a day top of funnel to to $200 million a day top of funnel. $200 million a day top of funnel just multiplied by 250 business days is $50 billion of pre-approval volume. And we're still just scratching the surface. Our biggest partner, Credit Karma, we have exposed in many of the products to less than 1% of their customer base. For the top five retail lender, we're just ramping up their salespeople on the HELOC product, and they have hundreds of billions of dollars of MSR on their books that we're going to be targeting, which has a very, very high conversion rate. Our top three fintech, they're scaling. They're becoming a reasonably decent size of our HELOC volume, and so you've seen monthly HELOC volumes start to continue to trend up. A little bit of that has been them. And then we've got a couple banks in the queue off of our chat GPT announcement that we did, I think, about two months ago, and we're hoping to get them closed and operational and live shortly.

Got it. Thank you. And then on the technology side, where are you seeing the biggest operational or customer-facing benefits from tools like Betsy, Tin Man AI, in the broader machine learning initiatives?

The biggest benefit is in customer contact capability, where consumers are now able to transact with Betsy 24-7, 365. And we're increasing the exposure of Betsy branded for our partners in their funnels. So I think the biggest uplift is going to actually be when we are able to fully deploy Betsy in our partner funnels, not just in our D2C funnel.

Great.

Thank you.

Thanks for your questions. Ladies and gentlemen, once again, if you would like to ask a question today, remember it is star followed by the number one on your telephone keypad. Our next question comes from the line of Kartik Nessa with North Coast Research. Your line is live.

Hey, good morning, Vishal. You know, one thing you've talked about are partnerships, and your partnerships are growing. If in the interim the mortgage markets stay soft, but all of a sudden we get a big bump up, you know, if the war is over and all of a sudden you get a lot of activity, how do you manage the infrastructure if a demand spikes?

We are already – getting geared up for something like that. The best thing that we can do is, in the old days, we had to rely on humans to staff up and pick up the phone, work late shifts, work weekends, and now we are able to simply leverage Betsy. Betsy loan officer, Betsy loan processor, Betsy loan underwriter, and In preparation for some of that, we're actually taking off some of the gloves where Betsy was recommending a particular task or a particular path to both a consumer or an internal person, and then the internal person was sending it out. We're now just having Betsy be on autopilot after close to over a year and a half of learning data. And so I think that that's just going to crush the operating cost framework and allow us to capture all the volume as it comes in.

And, you know, a couple of partnerships, you're not the only mortgage provider, but it seems as though you have a competitive advantage because of your technology. Have you seen your partners or talked to your partners about comparing your ability to serve their customers versus others that might be on the platform? And so, you know, what type of advantage is that giving you?

Yeah. our partners typically see an improvement of two X relative to the incumbent in terms of both productivity and customer served. So that's really the promise that we make to them is we're going to, you know, help you double revenue and we're going to help you cut your cost structure by 30 to 50%. And you'll make four or five, six times more money. And that's how it's playing out for our existing partners. That's why there's a wait list of people to get on the Tin Man AI platform, the chat UPT enterprise edition. We just are continuing to work through that, and the value prop to the partners is high. But as you know, the mortgage industry is an industry that the Internet basically forgot. And so we have lots and lots and lots of mortgage people who are still operating on really old, antiquated systems And what we're also finding is that their staff are used to just those systems. So frequently we go in and they tell us that, hey, you know, we'll keep this staff and then the rest of them, you know, why don't you, like, adapt them to the new system? And what they find eventually is that we have to do it all for them. So I think that is also, you know, upside in the margin profile that we land with a particular product or a particular implementation and then we expand from there.

Perfect. Thank you very much. Appreciate it.

Thanks for your questions. Our next question is from the line of Brendan McCarthy with . Your line is live.

Great. Good morning, everyone. Appreciate you taking my questions here. Just wanted to ask a quick question on Birmingham Bank, the UK-based bank. I know you classified it as discontinued operations, sell for sale. Can you give us any detail on when we might expect a sale regarding timing? Can you give us any color on potential capital release from that sale or perhaps sale proceeds?

Yeah. So, Brendan, this is Levine. We're in an active sale process. We've had an investment bank to lead that. We're in active discussions with potential buyers. That's all I want to disclose at this time, given that we're in active discussions. Even if you do sign, there's a regulatory approval process in the U.K., which is going to take about two to four months. So think of the impact in Q4.

Understood. Thanks for that, Levine. Looking at the Coinbase partnership with the crypto-backed mortgage product, can you kind of walk us through the economics of that, you know, the revenue profile there, and perhaps the launch timeline of when we might see an impact in the P&L?

The currently publicly stated launch timeline is sometime in late Q2. The revenue profile from that product is starting to manifest itself. Obviously, we have more pricing power in that product than we do in your traditional, you know, direct-to-consumer product. And so you should start to see, like, NEO-like margins on that product.

Got it. That's helpful. Thanks, Michelle. Last question, just back to the Q3 breakeven for adjusted EBITDA. Just to clarify, I know you mentioned you're assuming a pretty stable environment as it relates to the macro, but is there any risk to achieving that breakeven if, you know, rates move meaningfully higher or maybe the Middle East conflict is more prolonged than expected?

We're going to have to cut costs deeper. I think we're pretty committed to that number.

Understood. Thanks, everybody. That's all from me.

Thank you for your questions. And, ladies and gentlemen, that will conclude our Q&A session for today. Vishal, I'd like to turn it back over to you for any closing comments. Thank you.

Thanks, everyone. Q1 was a really good quarter for us. We signed a bunch of really big deals, and we executed on our plan, and we beat guidance. I know it's disappointing for the Q2 guidance for us to not get to the billion-dollar mark of loan originations that we had planned to in May. But we're going to make up for that in the context of cost-cutting, deeper change to a HELOC product, which... doesn't have a $350,000 balance, has a $100,000 balance, but makes basically the same amount of revenue. And, you know, using that to continue to drive revenue growth and a path towards profitability, which is what we're expecting in our Q2 guidance. And we're confirming again that we will achieve by the end of Q3 2026. So thank you all for continuing to have an interest in believing in better. And we appreciate you all. Thank you, everybody. Have a great day.