Better Home & Finance Holding Co 10-Q for FY2024 Q1

Better Home & Finance Holding Co (BETR)

10-Q 2024-05-15 For: 2024-03-31

Added on April 11, 2026

About this 10-Q

Better Home & Finance Holding Co filed this 10-Q on May 15, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $22.25M; up 19.5% from $18.63M a year earlier
Net loss: $51.49M; compared with a net loss of $87.62M a year earlier
Diluted EPS: -$0.07; compared with -$0.29 a year earlier

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Delaware						93-3029990
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


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


Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

		Emerging growth company	x


			Page

Part I - Financial Information			1
Item 1. Financial Statements			1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			34
Item 3. Quantitative and Qualitative Disclosures About Market Risk			49
Item 4. Controls and Procedures			49
Part II - Other Information			50
Item 1. Legal Proceedings			50
Item 1A. Risk Factors			51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 3. Defaults Upon Senior Securities			52
Item 4. Mine Safety Disclosures			52
Item 5. Other Information			53
Item 6. Exhibits			54
Signatures			55


	March 31,		December 31,
(Amounts in thousands, except share and per share amounts)	2024		2023
Assets
Cash and cash equivalents	$	424,528	$	503,591
Restricted cash	26,075		24,475
Short-term investments	58,089		25,597
Mortgage loans held for sale, at fair value	166,214		170,150

Other receivables, net	11,486		16,888
Property and equipment, net	15,898		16,454
Right-of-use assets	18,840		19,988
Internal use software and other intangible assets, net	30,849		38,126
Goodwill	32,209		32,390
Derivative assets, at fair value	1,737		1,716
Prepaid expenses and other assets	55,661		56,179


Total Assets	$	841,586	$	905,554
Liabilities and Stockholders’ Equity
Liabilities
Warehouse lines of credit	$	126,161	$	126,218
Convertible Note	514,758		514,644


Customer deposits	11,831		11,839
Accounts payable and accrued expenses	55,721		66,558
Escrow payable and other customer accounts	3,760		3,376
Derivative liabilities, at fair value	560		949

Warrant and equity related liabilities, at fair value	1,509		2,331
Lease liabilities	29,199		31,202
Other liabilities (includes $334 and $390 payable to related parties as of March 31, 2024 and December 31, 2023, respectively)	21,797		25,837
Total Liabilities	765,296		782,954
Commitments and contingencies (see Note 11)

Stockholders’ Equity
Common stock $0.0001 par value; 3,300,000,000 shares authorized as of March 31, 2024 and December 31, 2023, and 755,578,694 and 751,773,361 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	75		74
Notes receivable from stockholders	(10,976)		(10,111)
Additional paid-in capital	1,844,786		1,838,427
Accumulated deficit	(1,755,568)		(1,704,076)
Accumulated other comprehensive loss	(2,027)		(1,714)

Total Stockholders’ Equity	76,290		122,600
Total Liabilities and Stockholders’ Equity	$	841,586	$	905,554


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31,
(Amounts in thousands, except share and per share amounts)		2024		2023
Revenues:
Gain on loans, net		$	15,652	$	12,761
Other revenue		2,817		4,944
Net interest income
Interest income		8,636		6,390
Interest expense		(4,854)		(5,469)
Net interest income		3,782		921
Total net revenues		22,251		18,626
Expenses:
Compensation and benefits		38,073		38,112
General and administrative		14,047		16,762
Technology		5,458		14,446
Marketing and advertising		4,554		7,760
Loan origination expense		2,577		5,202
Depreciation and amortization		9,074		11,477
Other expenses		(183)		11,065
Total expenses		73,600		104,824
Loss before income tax expense		(51,349)		(86,198)
Income tax expense/(benefit)		143		1,424
Net loss		(51,492)		(87,622)


Other comprehensive loss:
Foreign currency translation adjustment, net of tax		(313)		(152)
Comprehensive loss		$	(51,805)	$	(87,774)


Per share data:
Loss per share attributable to common stockholders:
Basic		$	(0.07)	$	(0.29)
Diluted		$	(0.07)	$	(0.29)
Weighted average common shares outstanding — basic		753,993,530		297,514,644
Weighted average common shares outstanding — diluted		753,993,530		297,514,644


	Common Stock
(Amounts in thousands, except share and per share amounts)		Issued and Outstanding	Par Value		Notes Receivables from Stockholders		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit)
Balance - December 31, 2023		751,773,361	74		(10,111)		1,838,427		(1,704,076)		(1,714)		122,600
Adjustment of transaction costs related to the Business Combination		—	—		—		(2,372)		—		—		(2,372)
Issuance of common stock for options exercised		120,887	—		—		19		—		—		19
Cancellation of common stock		(673,973)	—		—		—		—		—		—
Stock-based compensation		—	—		—		9,143		—		—		9,143
Tax withholding upon vesting of restricted stock units		—	—		—		(1,288)		—		—		(1,288)
Share issued for vested restricted stock units		4,358,419	1		—		—		—		—		1
Vesting of common stock issued via notes receivable from stockholders		—	—		(865)		857		—		—		(8)
Net loss		—	—		—		—		(51,492)		—		(51,492)
Other comprehensive loss— foreign currency translation adjustment, net of tax		—	—		—		—		—		(313)		(313)
Balance - March 31, 2024		755,578,694	$	75	$	(10,976)	$	1,844,786	$	(1,755,568)	$	(2,027)	$	76,290


	Convertible preferred stock			Common Stock
(Amounts in thousands, except share and per share amounts)	Shares	Amount		Issued and Outstanding	Par Value		Notes Receivables from Stockholders		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit)
Balance - December 31, 2022	108,721,433	$	436,280	98,078,356	$	10	$	(53,225)	$	618,111	$	(1,167,656)	$	(1,423)	$	(604,183)


Recapitalization of shares due to Business Combination	223,593,304	—		201,705,065	—		—		—		—		—		—
Adjusted Balance as of December 31, 2022	332,314,737	436,280		299,783,421	10		(53,225)		618,111		(1,167,656)		(1,423)		(604,183)
Issuance of common stock	—	—		133,645	—		—		1,353		—		—		1,353
Repurchase or cancellation of common stock	—	—		(326,301)	—		—		(8)		—		—		(8)
Stock-based compensation	—	—		—	—		—		5,917		—		—		5,917
Shares issued for vested restricted stock units	—	—		1,048,752	—		—		—		—		—		—
Vesting of common stock issued via notes receivable from stockholders	—	—		—	—		(2,210)		172		—		—		(2,038)



Net loss	—	—		—	—		—		—		(87,622)		—		(87,622)
Other comprehensive loss— foreign currency translation adjustment, net of tax	—	—		—	—		(146)		—		—		(222)		(368)
Balance - March 31, 2023	332,314,737	$	436,280	300,639,517	$	10	$	(55,581)	$	625,545	$	(1,255,278)	$	(1,645)	$	(686,949)


	Three Months Ended March 31,
(Amounts in thousands)	2024		2023
Cash Flows from Operating Activities:
Net loss	$	(51,492)	$	(87,622)
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:
Depreciation of property and equipment	1,029		2,116
Impairments	—		4,542
Amortization of internal use software and other intangible assets	8,045		9,361
Gain on sale of loans, net	(9,821)		(12,524)
Non-cash interest and amortization of debt issuance costs and discounts	1,217		164
Change in fair value of warrants	(823)		(553)

Change in fair value of bifurcated derivative	—		1,887
Stock-based compensation	8,760		4,408
(Recovery of)/Provision for loan repurchase reserve	(3,563)		2,124
Change in fair value of derivatives	(410)		4,520


Change in fair value of mortgage loans held for sale	829		36,683
Change in operating lease of right-of-use assets	1,148		622
Change in operating assets and liabilities:
Originations of mortgage loans held for sale	(650,505)		(828,671)
Proceeds from sale of mortgage loans held for sale	662,965		696,635
Operating lease liabilities	(2,003)		(3,968)
Other receivables, net	5,404		(4,027)
Prepaid expenses and other assets	519		(3,818)
Accounts payable and accrued expenses	(14,534)		18,219
Escrow payable and other customer accounts	384		(273)
Other liabilities	45		(2,584)
Net cash used in operating activities	(42,806)		(162,759)
Cash Flows from Investing Activities:
Purchase of property and equipment	(473)		(48)
Proceeds from sale of property and equipment	—		115
Capitalization of internal use software	(386)		(3,456)
Acquisitions of businesses, net of cash acquired	—		(2,658)

Maturities of short-term investments	22,638		—
Purchase of short-term investments	(55,165)		—
Net cash used in investing activities	(33,386)		(6,047)
Cash Flows from Financing Activities:




Net (repayments)/ borrowings on warehouse lines of credit	(57)		94,105
Repayments on finance lease liabilities	—		(205)

Net decrease in customer deposits	(8)		—
Repayments on corporate line of credit	—		(20,000)



Principal payments on convertible notes	(1,103)		—


Proceeds from exercise of stock options	20		—

Repurchase or cancellation of common stock	—		(104)
Net cash (used in)/ provided by financing activities	(1,148)		73,796
Effects of currency translation on cash, cash equivalents, and restricted cash	(123)		(368)
Net Decrease in Cash, Cash Equivalents, and Restricted Cash	(77,463)		(95,378)
Cash, cash equivalents, and restricted cash—Beginning of period	528,066		346,065
Cash, cash equivalents, and restricted cash—End of period	$	450,603	$	250,687


(Amounts in thousands)		Three Months Ended March 31, 2023
	Caption name change	As previously reported		Reclassifications		As reclassified
Revenues:
Mortgage platform revenue, net	Gain on loans, net	$	15,964	$	(3,203)	$	12,761
Cash offer program revenue		3		(3)		—
Other platform revenue	Other revenue	3,845		1,099		4,944
Net interest income
Interest income		3,925		2,465		6,390
Interest expense		(2,779)		(2,690)		(5,469)
Net interest income		1,146		(225)		921
Total net revenues		20,958		(2,332)		18,626

Expenses:
Compensation and benefits		—		38,112		38,112
Mortgage platform expenses	Loan origination expense	30,623		(25,421)		5,202
Cash offer program expenses		103		(103)		—
Other platform expenses	Other expenses	4,693		6,372		11,065
General and administrative expenses		28,828		(12,066)		16,762
Marketing and advertising expenses		8,623		(863)		7,760
Technology and product development expenses		23,606		(9,160)		14,446
Restructuring and impairment expenses		9,137		(9,137)		—
Depreciation and amortization		—		11,477		11,477
Total expenses		105,613		(789)		104,824



Interest and other income (expense), net
Other income (expense)		2,481		(2,481)		—
Interest and amortization on non-funding debt		(2,690)		2,690		—
Change in fair value of convertible preferred stock warrants		553		(553)		—
Change in fair value of bifurcated derivative		(1,887)		1,887		—
Total interest and other expense, net		(1,543)		1,543		—

Loss before income tax (benefit) expense		(86,198)		—		(86,198)
Income tax (benefit) expense		1,424		—		1,424
Net loss		$	(87,622)	$	—	$	(87,622)


(Amounts in thousands)	Maturity	Facility Size		March 31, 2024		December 31, 2023
Funding Facility 1 (1)	July 31, 2024	$	100,000	$	40,266	$	61,709


Funding Facility 2 (2)	December 6, 2024	150,000		61,673		40,088
Funding Facility 3 (3)	August 2, 2024	175,000		24,222		24,421
Total warehouse lines of credit		$	425,000	$	126,161	$	126,218


	As of March 31, 2024
(Amounts in thousands, except useful lives)	Weighted Average Useful Lives (in years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with finite lives
Internal use software and website development	3.0	$	137,655	$	(111,572)	$	26,083
Other	5.7	1,000		(294)		706



Total Intangible assets with finite lives, net		138,654		(111,866)		26,788
Intangible assets with indefinite lives
Domain name		1,820		—		1,820
Licenses and other		2,241		—		2,241


Total Internal use software and other intangible assets, net		$	142,715	$	(111,866)	$	30,849


	As of December 31, 2023
(Amounts in thousands, except useful lives)	Weighted Average Useful Lives (in years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with finite lives
Internal use software and website development	3.0	$	136,879	$	(103,587)	$	33,292
Intellectual property and other	5.7	1,008		(254)		754


Total Intangible assets with finite lives, net		137,887		(103,841)		34,046
Intangible assets with indefinite lives
Domain name		1,820		—		1,820
Licenses and other		2,260		—		2,260


Total Internal use software and other intangible assets, net		$	141,967	$	(103,841)	$	38,126


(Amounts in thousands)	March 31, 2024		December 31, 2023
Funding Facility 1	$	40,582	$	63,483

Funding Facility 2	64,620		42,316
Funding Facility 3	26,473		26,894
Total LHFS pledged as collateral	131,675		132,693
Company-funded LHFS	7,072		12,386
Company-funded Home Equity Line of Credit	28,295		25,098
Total LHFS	167,042		170,177
Fair value adjustment	(828)		(27)
Total LHFS at fair value	$	166,214	$	170,150


	Three Months Ended March 31,
	2024
(Amounts in thousands)	Average Balance		Average Rate Paid
Notice	$	2,406	2.85	%
Term	5,432		3.77	%
Savings	4,260		2.28	%


Total Deposits	$	12,098	2.97	%


(Amounts in thousands)	As of March 31, 2024
Demand deposits	$	4,389
Maturing In:
2024	3,583
2025	2,376
2026	1,174
2027	309
2028	—
Thereafter	—
Total	$	11,831


	March 31, 2024
(Amounts in dollars, except percentages)	Range	Weighted Average
Level 3 Financial Instruments:
IRLCs
Pull-through factor	5.12% - 100.00%	76.3	%


	As of March 31,		As of December 31,
(Amounts in thousands)	2024		2023
Prepaid expenses	$	25,430	$	27,859
Tax receivables	8,473		8,348


Security Deposits	13,858		15,179
Loans held for investment	7,900		4,793



Total prepaid expenses and other assets	$	55,661	$	56,179


	Three Months Ended March 31,
(Amounts in thousands, except for share and per share amounts)	2024		2023
Basic net loss per share:
Net loss	$	(51,492)	$	(87,622)
Income allocated to participating securities	—		—
Net loss attributable to common stockholders - Basic	$	(51,492)	$	(87,622)
Diluted net loss per share:
Net loss attributable to common stockholders - Basic	$	(51,492)	$	(87,622)
Interest expense and change in fair value of bifurcated derivatives on convertible notes	—		—
Income allocated to participating securities	—		—
Net loss income attributable to common stockholders - Diluted	$	(51,492)	$	(87,622)
Shares used in computation:
Weighted average common shares outstanding	753,993,530		297,514,644
Weighted-average effect of dilutive securities:	—		—
Assumed exercise of stock options	—		—
Assumed exercise of warrants	—		—
Assumed conversion of convertible preferred stock	—		—
Diluted weighted-average common shares outstanding	753,993,530		297,514,644
Earnings (loss) per share attributable to common stockholders:
Basic	$	(0.07)	$	(0.29)
Diluted	$	(0.07)	$	(0.29)


	March 31, 2024
(Amounts in thousands)	Level 1		Level 2		Level 3		Total
Mortgage loans held for sale, at fair value	$	—	$	166,214	$	—	$	166,214
Derivative assets, at fair value (1)	—		20		1,717		1,737

Total Assets	$	—	$	166,234	$	1,717	$	167,951
Derivative liabilities, at fair value (1)	$	—	$	518	$	42	$	560

Warrants and equity related liabilities, at fair value	$	638	$	871	$	—	$	1,509
Total Liabilities	$	638	$	1,389	$	42	$	2,069


(Amounts in thousands)	Notional Value		Derivative Asset		Derivative Liability
Balance as of March 31, 2024
IRLCs	$	262,715	$	1,717	$	42
Forward commitments	$	356,000	20		518
Total			$	1,737	$	560
Balance as of December 31, 2023
IRLCs	$	227,380	$	1,716	$	77
Forward commitments	$	265,000	—		872
Total			$	1,716	$	949


(Amounts in thousands)	Gross Amount of Recognized Assets		Gross Amount of Recognized Liabilities		Net Amounts Presented in the Condensed Consolidated Balance Sheet
Offsetting of Forward Commitments - Assets
Balance as of:
March 31, 2024:	$	—	$	—	$	—
December 31, 2023	$	—	$	—	$	—

Offsetting of Forward Commitments - Liabilities
Balance as of:
March 31, 2024:	$	311	$	(828)	$	(517)
December 31, 2023	$	168	$	(1,041)	$	(872)


Key Business Metric	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023
Home Finance
Funded Loan Volume	$	661		$	847
Refinance Loan Volume	$	81		$	70
Purchase Loan Volume	$	529		$	775
HELOC Volume	$	51		$	2
D2C Loan Volume	$	360		$	488
B2B Loan Volume	$	301		$	359
Total Loans (number of loans, not millions)	1,991			2,366
Average Loan Amount ($ value, not millions)	$	332,111		$	357,792
Gain on Sale Margin	2.37		%	1.51		%
Total Market Share	0.2		%	0.3		%
Better Plus
Better Real Estate Transaction Volume	$	36		$	161
Insurance Coverage Written	$	1,068		$	1,462


	Three Months Ended March 31,
(Amounts in thousands, except per share amounts)	2024		2023
Revenues:
Gain on loans, net	$	15,652	$	12,761
Other revenue	2,817		4,944
Net interest income
Interest income	8,636		6,390
Interest expense	(4,854)		(5,469)
Net interest income	3,782		921
Total net revenues	22,251		18,626
Expenses:
Compensation and benefits	38,073		38,112
General and administrative	14,047		16,762
Technology	5,458		14,446
Marketing and advertising	4,554		7,760
Loan origination expense	2,577		5,202
Depreciation and amortization	9,074		11,477
Other expenses	(183)		11,065
Total expenses	73,600		104,824
Loss before income tax expense	(51,349)		(86,198)
Income tax expense/(benefit)	143		1,424
Net loss	$	(51,492)	$	(87,622)
Earnings (loss) per share attributable to common stockholders (Basic)	$	(0.07)	$	(0.29)
Earnings (loss) per share attributable to common stockholders (Diluted)	$	(0.07)	$	(0.29)


	Three Months Ended March 31,
(in thousands)	2024		2023
Net cash (used in) provided by operating activities	$	(42,806)	$	(162,759)
Net cash (used in) provided by investing activities	$	(33,386)	$	(6,047)
Net cash provided by (used in) financing activities	$	(1,148)	$	73,796


			1.			I have reviewed this Quarterly Report on Form 10-Q of Better Home & Finance Holding Company;


			2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


			3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


			4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


			a.			Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b.			Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			c.			Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			d.			Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


			a.			All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


			b.			Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



			Vishal Garg
			Chief Executive Officer
			(Principal Executive Officer)



			Kevin Ryan
			Chief Financial Officer
			(Principal Financial Officer)