Better trims its losses in first public earnings

Digital lender Better Home & Finance posted a $45.5 million net loss in the second quarter, according to results released days after the firm's difficult debut on Wall Street.

The newly public company improved upon its $89.9 million net loss at the end of March, it disclosed Monday. Better last week completed its business combination with a special purpose acquisition company, and in doing so received a capital infusion totalling around $567 million, according to Securities and Exchange Commission filings. 

Company founder and CEO Vishal Garg in a statement Monday touted the firm's investment in its technology platform and its One-Day Mortgage offering. The business didn't host an earnings conference call, and didn't respond to a request for comment.

Enduring prolonged criticism since an ill-fated mass firing over Zoom in December 2021, Better was in the spotlight again last Thursday when its stock had a lukewarm debut. The company, trading under the "BETR" symbol, opened at $1.98 per share and ended its first day at $1.15 per share. The SPAC it merged with, Aurora Acquisition Corp., had ended the prior day trading at $17.44 per share under the "AURC" symbol. A Nasdaq tracker shows the companies' stock performances as one.

Better's debut also came on the same day Freddie Mac reported that mortgage rates were averaging at a 22-year high, a factor that Better, in SEC filings Monday, said was impacting its business. 

The lender's net loss in the first half of this year of $135.4 million was another improvement over the loss it posted in the same time last year, at $399.3 million for the six months ending last June. It also funded $1.7 billion over the first six months of 2023, compared to $9.7 billion in the first half of last year. 

Refinances across the industry have all but dried up, and Better's earnings reflected the larger trend, with $131 million in funded loan volume through the year's first six months compared to $4.9 billion over the same period in 2022. The company also posted a 2.34% gain on sale margin in the first half of this year, against a 0.99% GOS margin in the same time last year.

Since the first half of 2022, Better reduced its expenses from $903 million to $183 million. The savings came in part due to a massive downsizing, with the company ending last year with just 1,300 employees from a peak of 10,400 in 2020. 

The lender counted $0.8 billion in mortgage warehouse facilities as of June 30. It let a $150 million line mature earlier this month but also agreed to a new $175 million facility. It also had an outstanding corporate line of credit balance of $123.6 million after failing to meet a minimum revenue threshold on a trailing 12-month basis per a 2021 facility, it said. The company paid the remaining balance before the close of its business combination. 

Better's capital infusion included $528.6 million from an affiliate of SoftBank. Sponsor NaMa Capital declined to provide an additional $100 million of financing at the time of the SPAC merger, an agreement it reached with the companies earlier this year. 

The firm's leaders said they plan to expand their business partnerships with their Tinman loan origination platform, but as of June 30 only had a partnership with Ally Bank. The company also maintains cash offer, title insurance and settlement, and homeowners insurance divisions. It ended June with 0.2% of market share, compared to 0.7% at the end of last June.